Following its earlier decision to delay the implementation of a proposed standard to mandate stock option expensing, members of the Financial Accounting Standards Board decided that the standard will apply to private companies and small business issuers for fiscal years beginning after Dec. 15, 2005, as originally planned.

The European Commission has proposed changes to European Union accounting rules that it says will help shore up confidence in financial reporting.

Members of the Professional Ethics Executive Committee of the American Institute of CPAs acknowledged a series of practitioner's concerns with regard to PEEC's revised interpretation of rules governing members who offer non-attest services to attest clients.

Thomas C. Newkirk, associate director in the Securities and Exchange Commission's Division of Enforcement, will depart the commission in November after 19 years of service to become a partner in the Washington office of the law firm of Jenner & Block LLP.

In two separate votes at a meeting today, one split and one unanimous, the Securities and Exchange Commission decided to require the registration of most hedge funds, and to propose new rules for companies seeking an initial public offering. Chairman William Donaldson and two Democratic commissioners voted against the two Republican commissioners to push through the tough new rules for hedge funds, which had previously been only lightly regulated. Traditionally investment vehicles for the extraordinarily wealthy, hedge funds have grown enormously over the past few years, both in terms of their assets under management and the types of investors involved. Of particular concern to many are the number of banks and pension plans that have turned to hedge funds as stock market returns have diminished from their dot-com highs. SEC registration would impose new record-keeping and information-sharing burdens on the industry, and require them to allow SEC inspections. Industry groups have complained that the new rules would hit funds with unfairly heavy costs for registration and compliance personnel, among other things. The other, unanimous decision by the commissioners was to propose changes for IPO-seeking companies that would, in some cases, eliminate the 70-year-old "quiet period" before the offering when they must remain incommunicado. "Well-known, seasoned issuers" would be allowed to distribute much more information than they currently can, in the form of media interviews, press releases and even possibly advertising. The proposal will now be sent out for public comment, with opinions required with 75 days of the proposal's publication in the Federal Register.

The Public Company Accounting Oversight Board approved a hefty $152.8 million operating budget for itself during 2005 -- an increase that will allow the PCAOB to expand its staff by 50 percent over the coming year. Most of the 150 new staff positions envisioned by the budget plan will be earmarked for an expansion of the PCAOB's team of auditors responsible for conducting inspections of the 1,389 accounting firms that have registered with the board to audit U.S. corporations. Under the new budget plan, the organization will engage in "an aggressive recruiting effort to hire experienced auditors," and by the end of 2005 the total inspection staff is expected to rise by 90 billets to 220, PCAOB chief financial officer Thomas Hohman said in the meeting at which the budget was approved. But even with a 70 percent boost in manpower, the board's inspection staff could be stretched thin next year. "We would like more [experienced auditors on the team], but we recognize this is a very tight employment market," Hohman said in outlining the budget plan to the five-member board. To achieve these recruiting goals, the board must be in a position to offer "outstanding" career advancement opportunities, as well as salary and benefits that are competitive with the private sector, human resources director Sara Bridwell said. Those sentiments were echoed by PCAOB Chairman William McDonough, who expressed appreciation for Congress' decision to allow the board to set staff salary levels high enough to recruit top prospects. Concluding that the PCAOB would not be able to fulfill its Sarbanes/Oxley Act requirements without such compensation flexibility, McDonough said, "I wholeheartedly support the aggressive recruiting effort we have embarked upon." The PCAOB's entire 2005 budget -- which must still be approved by the Securities and Exchange Commission -- will be funded by accounting support fees and other assessments paid by the U.S. and foreign audit firms that the board regulates. Personnel expenses (including training and recruitment costs, as well as salaries and benefits) will account for the lion's share of next year's budget ($98,900,000), with the rest going for information technology-related expenses, consulting fees and the cost of opening new regional offices in Chicago, Denver, and Costa Mesa, Calif., during 2005. At the meeting, the PCAOB also proposed new rules outlining the procedures under which accountants facing disciplinary actions before the board may seek authority to subpoena documents or witnesses for their defense. Under the proposal, parties subject to disciplinary proceedings before the board will have no "entitlement" to subpoena rights, but will be allowed to request a subpoena from the hearing officer assigned to their case. The hearing officer would have discretion to approve the request if he determines that there is a reasonable basis for the subpoena, and that the evidence subpoenaed would be relevant to the board's decision in the case. The SEC, however, would also have to approve the subpoena before it could be issued.

The American Jobs Creation Act of 2004, signed into law by President Bush last Friday, seems to have achieved its main goal of getting the European Union to lift $4 billion worth of sanctions on U.S. goods.