AccountingWEB Weekly News Wrap-Up - Issue 148
1. Department of Justice v. Arthur Andersen LLP
2. AICPA Signs Controversial Deal For CPA Exams
3. IRS Launches Test of Online Taxpayer Service
4. New Evidence Relates to Kmart's Accounting Irregularities
5. New Nasdaq Rules Will Put Audit Opinions in The News
6. Court Denies KPMG's Appeal of Charges by SEC
7. SEC Talks Tough on Changes in Store For FASB
8. Bookkeeping Errors Contribute to $17.3 Billion Federal Loss
9. IRS Extends Tax Breaks From Net Operating Losses
10.Peregrine Fires KPMG, Moves on to Third Big Five Auditor
News of promising progress came out of the IRS this week with the announcement that tests are being run on a new online service that will allow taxpayers and tax practitioners to have online access to check the status of their tax refunds. With so many negative reports of foul-ups, blunders and lack of progress in government agencies, it's nice to be able to share some real technical progress being made that can help all taxpayers and tax practitioners. Read the full story.
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1. Department of Justice v. Arthur Andersen LLP
Andersen began presenting its defense this week in the obstruction of justice trial going on in the U.S. District Court in Houston. The defense is expected to rest by May 31, with closing arguments scheduled for the week of June 3 and then fate of the Big Five firm will be in the hands of the jury. Andersen has been charged with one count of obstruction of justice stemming from the firm's destruction of documents relating to its Enron audit.
These stories recap the week's events:
On May 28, the American Institute of Certified Public Accountants, the National Association of State Boards of Accountancy, and Prometric announced the signing of a joint agreement to deliver a computerized Uniform CPA Examination. The agreement is seen as controversial for two reasons - state boards were divided in their support for a proposal regarding the computerized exam, and Prometric is a company seen by some as too closely affiliated with one of the major investors in CPA2Biz.
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The Internal Revenue Service has launched an online taxpayer service that will ultimately save taxpayers and IRS agents the time and frustration that accompanies long waits in telephone queues. Taxpayers can check the status of their refunds online and receive information about when a refund was mailed or what type of problem may be causing a delay. The IRS also provides information on how to resolve problems relating to refunds.
Discount retailer Kmart is under investigation for irregular accounting practices. In January an anonymous letter initiated an internal probe of the company's accounting practices. Now, the Detroit News has obtained a copy of the letter that contains allegations pointing to senior Kmart officials as purposely violating accounting principles with the knowledge of the company's auditors, PricewaterhouseCoopers.
On May 24 the Nasdaq Stock Market announced that its board of directors has approved several important rule changes, including one that will put going concern audit opinions front and center and readily accessible by investors.
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In a decision dated May 14, a court of appeals denied KPMG's request for a reconsideration of an independence action brought against the firm by the Securities and Exchange Commission. The court's decision to back the SEC was especially significant because the American Institute of CPAs supported KPMG's position.
The media may be calling him the "wishy-washiest watchdog since Scooby-Doo," but Securities and Exchange Commission Chairman Harvey Pitt is talking tough about reforming accounting standards. If he follows through on this tough talk, the Financial Accounting Standards Board may be in for big changes.
Making Enron's $600 million restated financial statements look like a mistake in a child's allowance, the U.S. Treasury has admitted an accounting error and a resulting loss of $17.3 billion.
The Job Creation and Worker Assistance Act of 2002 brought some level of tax relief, but many taxpayers were unable to take advantage of the breaks because they filed their tax returns before this new law was passed.. As a result, the IRS has extended the time period for claiming tax breaks to individuals and businesses with net operating losses in tax years ending in 2001 or 2002.
Software firm Peregrine has fired its Big Five auditor. Again. The San Diego-based firm fired Andersen less than two months ago - one of more than 500 firms that has done so this spring. KPMG was hired to replace Andersen, but now that firm too has been fired. PricewaterhouseCoopers is now the auditor of choice, but PwC's future with Peregrine is not at all certain.
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