AccountingWEB Weekly News Wrap-Up - Issue 158
- SEC Deadline Passes Quietly - Accounting Jitters Subside
- Andersen Won't Dissolve When Audit Practice Ends
- Insurers Demand Assurance of Accounting Reform
- KPMG Consulting Reports 98% Drop in Earnings
- Accounting Firms Expect Double Digit Hikes in Audit Fees
- AOL's Non-Financial Metrics Add Fuel to Reporting Debate
- Report Issued in Grant Thornton's Special Investigation
- Warren Buffet Takes on The IRS
- Centerprise's Basten to Step Down After Gehrig's Diagnosis
- EY to Offer Online Tax Research Through CPA2Biz
August 14 - the SEC's deadline for CEO and CFO personal
certification of companies' financial statements - has come
and gone. The $64,000 question is 'will this new requirement restore investor confidence?' We sure hope so, and we certainly need it, as evidenced by an e-mail that I received from a friend of mine the other day, see excerpt below:
"This intriguing stock theory is said to have originated from the desk of John A. Millard of Shearman & Sterling in New York. "If you had bought $1,000 worth of Nortel stock one year ago, it would now be worth $49.00. With Enron, you would have $16.50 of the original $1,000. With WorldCom, you would have less than $5.00 left. If you had bought $1,000 worth of Budweiser (the beer, not the stock) one year ago, drank all the beer, then turned in the cans for the 5-cent deposit, you would have $107. Based on the above, my current investment advice is to drink heavily and recycle."
Here's hoping for a bull market soon. Cheers!
Michael Platt, CEO
The SEC's certification requirements cleared an important hurdle when the August 14th deadline passed quietly, revealing no major new accounting scandals. Both the markets and the media responded favorably.
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Although Andersen is scheduled to discontinue its audit practice on August 31, 2002, the firm has said in a legal document filed in Houston that it will not dissolve at that time and it has no plans to dissolve in the future.
Although they play a less visible role than the Securities and Exchange Commission, insurance companies carry a big stick today when it comes to enforcing accounting reform.
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The financial reports for KPMG Consulting for the current quarter show a 19 percent drop in revenues and a 98 percent drop in net income.
Research by the Wall Street Journal indicates audit fees have increased approximately 5% per year in recent years, but the fee could increase as much as 25% this year at some companies.
The clamor for more information about AOL's subscriber base helps to fuel the debate about future reporting. Key questions involve the needs for disclosure requirements, standards and assurances.
A Special Master found Grant Thornton guilty of negligence in the Carnegie International lawsuit against the firm. Grant Thornton must pay the cost of the investigation, which could amount to $1 million or more. Still a spokesperson said the findings are favorable to Grant on all significant points.
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Warren Buffett, the colorful chairman and CFO of investment firm Berkshire Hathaway, Inc., has filed a lawsuit against the Internal Revenue Service claiming the agency incorrectly denied his company deductions of $16.3 million.
Bob Basten, Chairman and CEO of Centerprise Advisors Inc., has been diagnosed with amyotrophic lateral sclerosis (ALS), more commonly referred to as Lou Gehrig's disease. Mr. Basten, 42, will resign his CEO post immediately. He will remain as Chairman of the Board.
Ernst & Young has announced it will offer its Online Tax Advisor service to CPAs in other firms through CPA2Biz, the distribution arm of the American Institute of CPAs.
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