AccountingWEB Weekly News Wrap-Up - Issue 144
1. Andersen's Baptist Foundation Trial Begins
2. FASB to Set "Squeak-Through" Standards Over Protests
3. Three Big Five Firms Get Sued Over "McScandal"
4. Raiders From Rival Firms Roil Andersen's Retired Partners
5. SEC Proposes New Rules on "Critical" Accounting
6. FASB Releases Flurry of Publications, Awaits Reform Bill
7. Negative Billboards Aimed at Accounting Profession to be Removed
8. SEC Announces Investor's Summit
9. Andersen's Settlement and Delay Request Denied
10.IRS Seeks Volunteers For Taxpayer Advocacy Panel
"Do or do not. There is no 'try'." This line, which comes from Yoda in "Star Wars: The Empire Strikes Back" was quoted today by David Maister, the world's foremost expert in managing professional services firms in a presentation with Patrick McKenna to AccountingWEB members on the Art of Managing a Group of Professionals. In that phrase, Mr. Maister highlights the reality in today's business world that one of the key ways of standing out as a truly exceptional professional is to simply do what you say you are going to do. Far too many people make too many promises and fail to deliver, causing frustration, unmet expectations and negative impressions. So when you commit to a project or a meeting or a deliverable with your clients or colleagues, fulfill your commitments and you will rise above your peers. Food for thought ...
A jury was selected on Monday and on Tuesday opening arguments were presented in a trial that is expected to last two to three months. Arthur Andersen LLP is being sued by a trust for the Baptist Foundation of Arizona after the Big Five firm signed off on audits of the organization for 15 years. The Baptist Foundation's bankruptcy, the largest not-for-profit bankruptcy in U.S. history, surprised thousands of investors.
In a controversial move greeted with considerable skepticism by accounting firms and their clients, the Financial Accounting Standards Board has changed the voting requirement for setting accounting standards.
Three Big Five accounting firms were dismayed this week to find themselves named as defendants in a lawsuit over the "McScandal" from the rigging of McDonald’s promotional games. The lawsuit alleges that the firms failed to oversee the distribution of the "high value game pieces" used in McDonald's Monopoly and Who-Wants-to-Be-a-Millionaire promotions.
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A group of retired Andersen partners has requested a restraining order to prevent rival firms from making deals to buy Andersen's business units at less than fair value and hire its partners despite non-compete contracts. The retired partners are seeking emergency arbitration to enforce non-compete and member firm contracts and secure the funding of their pensions and other retiree benefits.
In its first Webcast meeting, the Securities & Exchange Commission approved the issuance for comment of rule proposals on disclosures about "critical" accounting estimates. The Commission's rule proposals introduce possible requirements for qualitative disclosures about both the "critical" accounting estimates made by a company in applying its accounting policies and disclosures about the initial adoption of an accounting policy by a company.
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On May 1, as leaders of the House Energy and Commerce Committee put the final touches on a radical reform bill to be titled the "Financial Accounting Standards Board Act," the standards board itself rushed to post a flurry of publications to its Web site.
Kentucky distillery Maker's Mark has agreed to remove billboards for its product, which pokes fun at the troubles currently facing the accounting profession. The billboards, showing a bourbon bottle turned over on its side, read, "Disappears faster than a Big Five accounting firm."
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Hoping to restore investor confidence, the Securities and Exchange Commission has scheduled its first-ever Investor Summit to be held simultaneously live and in an Internet Webcast on Friday, May 10. The summit will provide individual investors an opportunity to ask questions and offer comments on the SEC's actions in the aftermath of Enron's collapse and the recent accounting failures.
Facing a May 6 court date for felony obstruction of justice charges, Big Five firm Andersen attempted to negotiate a settlement with the Department of Justice late last week. Andersen also requested a delay of a month or more for the start date of the trial, claiming that leaks of information from the government about the type of information they have are unfairly influencing potential jurors. Both requests were denied.
The Treasury Department announced on April 29, 2002 that the Taxpayer Advocacy Panel (TAP) is being expanded from 10 to all 50 states, and the Internal Revenue Service (IRS) is inviting civic-minded individuals to apply for positions on the volunteer panel.
Visit our Q&A Forum to post your questions and share your ideas with the members of AccountingWEB! Simply click on the "Add Comments" option at the bottom of any question to add your response and comments.
Here is a sample of the questions that have been posted this week. Post your own questions or see if you can lend a hand to others looking for help.
Go to the AccountingWEB Q&A Forum.
1. Return on Investment: How does one evaluate ROI when a firm has invested in another private company using bonds? For example, Company X buys bonds offered by Company Y representing 50% of invested capital in Y. Company Y has net income for the year. Does the return on investment include just interest and a proportionate share of Y's earnings? Just interest? Also, what if X also owns stock in Y? Do you include in your ROI just invested stock or stock and bonds?
2. Allocation of DL and Indirect Expenses: When allocating direct labor and indirect costs to inventory, should you include the royalty expense, and if so, why?
3. Excel - Deletion of a Row Automatically Based on a Condition: How can one create a feature that when the value of a cell is zero, then a specific row is deleted automatically? For example, if the interest paid is zero, then the row of heading with "Interest Paid" will be deleted and it will not appear in the Income Statement.
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