PCAOB

Disclosures of Control Weaknesses Way Up from 2003

Fifty-six companies reported material weaknesses or significant deficiencies in internal controls last month, compared with 14 companies one year earlier, according to Compliance Week.A total of 582 companies made these kinds of disclosures in 2004, the newsletter reported, with about half of them related to financial systems and procedures, such as problems with the financial close process, account reconciliation or inventory processes. Personnel issues accounted for about 30 percent of the disclosures.

European Companies Grappling with SOX Compliance

Some European companies are wondering if the benefits of being listed on U.S. exchanges is worth the cost of Sarbanes-Oxley compliance, IT-Analysis.com reported.With public and private companies alike struggling to comply with the rigid new requirements intended to improve transparency and accountability, international companies are weighing the pros and cons. Companies with 300 or more U.S.
Tax

PCAOB Slashes 2005 Budget, Reports Recruitment Shortfall

The Public Company Accounting Oversight Board last week approved a revised budget for calendar year 2005 reducing the Board’s 2005 accounting support fee from $152.5 million to $136.1 million.
A&A

FEI Outlines Top Financial Reporting Challenges for 2005

Financial Executives International has identified the top 10 financial reporting challenges for 2005. These challenges will impact the way companies manage their businesses, report their financial results, and compensate their employees. The challenges include:Stock option expensing. The Financial Accounting Standards Board (FASB) has mandated that all stock compensation be expensed beginning June 30, 2005 for most public companies. Smaller public companies and private firms have until the first annual reporting period after Dec.
Community News

SEC Creates Committee to Examine SOX Impact on Small Public Companies

Securities and Exchange Commission Chairman William H. Donaldson announced on Friday the establishment of an advisory committee to assist the Commission in examining the impact of the Sarbanes-Oxley Act and other aspects of the federal securities laws on smaller public companies. Appearing at a press conference today with the two individuals named as Co-Chairs of the committee, Chairman Donaldson stated, "The Sarbanes-Oxley Act has already been of enormous benefit to America's investors and markets and will spur further improvements.
Tax

SEC’s Nicolaisen Welcomes PCAOB Involvement in Independence Standards-Setting

In response to the Public Company Accounting Oversight Board (PCAOB) action earlier this week, proposing certain ethics and independence rules for public comment, the Commission’s Chief Accountant, Donald T. Nicolaisen, noted that he welcomed PCAOB involvement in this important area. The PCAOB’s proposed rules grew out of its public roundtable on auditor independence held in July, and address issues relating to tax services and contingent fees.
Tax

Board Proposes Rules Concerning Independence, Tax Services, and Contingent Fees

The Public Company Accounting Oversight Board voted unanimously at its open meeting to propose for public comment certain ethics and independence rules concerning independence, tax services, and contingent fees.The Board’s proposed rules fall into three areas. First, the proposed rules would identify three circumstances in which the provision of tax services impairs an auditor's independence: Proposed Rule 3521 would treat registered public accounting firms as not independent of their audit clients if they enter into contingent fee arrangements with those clients.
A&A

SEC May Reject PCAOB's Budget

The Securities and Exchange Commission may not approve the budget of the accounting oversight board, which offers an average salary of $203,000 a year.The Public Company Accounting Oversight Board (PCAOB), which has requested $153 million, offers salary increases of 30 percent a year, according to a report by Bloomberg, which cited people familiar with the matter.The PCAOB, formed in 2002 in the aftermath of massive corporate scandals and bankruptcies, is funded by publicly traded companies.

Judge Upholds Sarbanes-Oxley In Scrushy Fraud Case

Arguments that the Sarbanes-Oxley corporate reform law is unconstitutionally vague did not convince a federal judge, who has rejected Richard Scrushy's claims in his HealthSouth fraud case.Attorneys for Scrushy, HealthSouth's former chief executive, said the law should not be part of the indictment accusing him of fraud, the Associated Press reported. U.S. District Judge Karon O.

SEC Grants Extension On Internal Controls Reporting

The U.S. Securities and Exchange Commission on Tuesday issued an exemptive order to grant certain accelerated filers up to an additional 45-days to include in their annual reports management’s report on internal control over financial reporting and the related auditor’s report on management’s assessment of internal control over financial reporting. Both internal control reports are required under Commission rules implementing Section 404 of the Sarbanes-Oxley Act of 2002.
Community News

Few Audit Committees Are Implementing Key Practices, According to Report

As audit committees struggle implementing the requirements of Sarbanes-Oxley, fewer than one-third implement a majority of practices that lead to higher ratings of the financial audit process, according to the J.D. Power and Associates 2004 Audit Committee Best Practices Report(SM) released this week. The report is a comprehensive, independent study of audit performance in the wake of the Sarbanes-Oxley Act of 2002, which established new compliance and procedural requirements for corporate financial accountability of public companies.

PCAOB Adopts Temporary Rule Relating to Auditing Standard No. 2

The Public Company Accounting Oversight Board on Tuesday adopted a temporary transitional rule relating to PCAOB Auditing Standard No. 2, "An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements." Section 404 of the Sarbanes-Oxley Act of 2002 and the related implementing rules of the Securities and Exchange Commission require certain companies to include in their annual reports filed with the Commission a report on management’s assessment of the effectiveness of those companies’ internal control over financial reporting.

More Executives Saying 'No Thanks' to CFO Job

Some executives who long dreamt of seeing the title 'Chief Financial Officer' on their business cards are starting to wonder why they ever wanted the job in the first place. The CFO job, thanks to regulatory changes and a push for greater accountability in corporate America, has changed dramatically over the last few years. More scrutiny, more pressure, a huge workload and the stress that goes along with it are causing some professionals to leave the fancy title behind, the New York Times reported.E.
Technology

Increased Scrutiny of Internal Controls on the Rise

Awareness of the Sarbanes-Oxley Act of 2002 had surged in the not-for-profit industry over the past year. According to the second annual Grant Thornton Board Governance Survey for Not-for-Profit Organizations, 83 percent of survey respondents say they are “very” or “somewhat” familiar with the act, compared to 56 percent in the 2003.The survey, which includes responses from more than 700 not-for-profit entities, also found that these organizations are not only aware of the act, but many are also taking action because of it.

SOX 404 Trends for Next Year Beginning to Emerge

As public companies strive to meet compliance deadlines for Section 404 of the Sarbanes-Oxley Act, trends related to how companies will implement an efficient and effective process beyond the initial year of compliance are beginning to emerge, according to the results of a new survey released by Ernst & Young.

SOX Compliance Costs Average $16M Per Company

Survey of corporate boards released this week by RHR International and Directorship reveals annual Sarbanes-Oxley compliance costs average $16 million--a jump of 77 percent from last year. Findings of the first annual Directorship/RHR International Board Survey also reveal that nearly half (47 percent) of companies surveyed do not have a CEO successor in place, although 61 percent expect that CEO leadership transition will go smoothly, according to the poll of almost 270 board directors at U.S. companies.
Community News

PCAOB Releases Additional Guidance for Audits of Internal Control

The Public Company Accounting Oversight Board (PCAOB) this week released the third in a series of staff questions and answers to assist in the implementation of PCAOB Auditing Standard No. 2, regarding audits of public companies' internal control over financial reporting. The questions and answers, prepared by the PCAOB’s Office of the Chief Auditor, emphasize the flexibility provided by Auditing Standard No.
Tax

OSHA Orders Whistleblower Reinstated

Whistleblower David Windhauser, a controller for the Trane Corporation, must be reinstated and paid more than $105,000 in back wages, ruled the Department of Labor's Occupational Safety and Health Administration (OSHA). OSHA referred to the whistelblowing provisions of the Sarbanes-Oxley Act of 2002 when making its ruling that Windhauser's termination after he raised questions about the company's accounting practices to his supervisors, Business & Legal Reports (BLR.com) reported.Windhauser complained to OSHA's New York regional office after he was terminated. Patricia K.
Tax

PCAOB, Advisory Group Propose Audit, Tax Standards for 2005

The Public Company Accounting Oversight Board (PCAOB) on Wednesday sought the advice of its Standing Advisory Group on a series of topics for consideration as possible auditing and related professional practice standards during the group’s meeting in Washington, DC. “We appreciate the expertise of the members of the Standing Advisory Group as we plan the Board’s standards-setting agenda for 2005,” said PCAOB Chief Auditor Douglas R. Carmichael.
Tax

Senators Press for SEC Enforcement of Whistle-blower Law

Two senators are ratcheting up pressure on the Securities and Exchange Commission to enforce a tough whistle-blower law. With a government finding that a publicly traded company retaliated against a whistle-blower, Iowa Republican Charles Grassley and Vermont Democrat Patrick Leahy asked for “aggressive enforcement” in a letter last week to SEC Chairman William H. Donaldson, the Associated Press reported. Donaldson was also asked for details of the agency's enforcement plans.

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