AccountingWEB Weekly News Wrap-Up - Issue 178
- Ernst & Young Faces Off With Equitable Life
- IRS Offers Amnesty For Taxpayers With Offshore Accounts
- AICPA Chairman Steps up to Rift in Profession
- NY Times Discloses Private Financial Details of E&Y
- SEC to Expand Definition of "Financial Expert"
- AICPA Responds to SEC's Proposed Independence Rules
- PwC Charged by San Francisco Under Consumer Laws
- Mark Everson Chosen to Head IRS
- SEC Finalizes Reg G on Non-GAAP Financial Measures
- Concerns Mount Over Proposed Curbs on Tax Services
This week, a court in Indiana made public all of the intimate financial information of Big Four firm Ernst & Young as part of the divorce proceedings for E&Y's Global Chief Executive. Firm earnings, profit margins, equity positions, and partner compensation numbers were all revealed, much to the dismay of the firm's partners.
The private financial details of public accounting firms have long been a well-hidden secret - not only from the public but also from the staff of those organizations. The justification for the privacy has always been that the firm can maintain competitive advantages, that the public isn't prepared to find out just how much partners make, that the staff may not understand the discrepancy between their pay and owners' pay, and that attorneys are always looking for proof of deep pockets when bringing on new lawsuits.
But what would happen if certain financial information, such as average partner salaries, were made generally available? Perhaps the perception of the value of CPAs would increase. Perhaps client expectations of fees they need to pay their accounting professionals would be raised. Perhaps staff would be more encouraged to pursue the partner track. And perhaps the lure of big dollars would attract more people into the profession. Trade secrets are generally good, but maybe it's time for additional disclosure in this area, and maybe that would turn out to be a good thing for the profession.
Michael Platt, CEO
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The Internal Revenue Service has announced a new program, the Offshore Voluntary Compliance Initiative, designed to round up promoters of and participants in offshore banking and credit card accounts.
In an interview with Business Week, AICPA Chairman William Ezzell, stepped up to some pointed questions about a rift in the accounting profession.
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CPA firm financial information is among the most guarded pieces of information about the profession. But a divorce proceeding in Indiana involving Ernst & Young Global Chief Executive Richard S. Bobrow has forced the unveiling of part of the hidden world of Big Four finances.
Accountants and retired audit partners hoping to serve on corporate boards may be disappointed to hear of changes in the SEC's definition of "financial expert." This has proven to be a highly controversial aspect of Sarbanes-Oxley rule-making.
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The AICPA has submitted a 60-page comment letter to the Securities and Exchange Commission in response to the auditor independence rules that the SEC proposed in November 2002.
The City of San Francisco has accused PwC of violating the state's consumer protection laws. If successful, this will be the first time these laws are used against auditors for knowing about fraud and failing to report it.
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Mark W. Everson, currently the deputy director of the White
House Office of Management and Budget, has been named to the position of commissioner of the Internal Revenue Service. Mr. Everson, if confirmed by the Senate, will replace former commissioner Charles O. Rossotti who completed his five-year term in November, 2002.
The SEC voted on January 15, 2003 to adopt Regulation G, which will apply to non-GAAP financial measures. The new rule is one of several adopted in a regulatory scramble to meet the deadline imposed by the Sarbanes-Oxley Act.
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Concerns are mounting among both accounting firms and consumer groups over SEC's proposed rules to limit the tax services provided by auditors. The rule proposal took a compromise position that no one likes.
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