Audit & Accounting

In recent hearings before the House Ways and Means Subcommittee on Select Revenue Measures, both the American Institute of CPAs and the New York State Society of CPAs called for the repeal of the oft-debated alternative minimum tax.

Appointed to serve as the first executive director of the Center for Audit Quality, Cindy Fornelli is guiding the new organization in its mission to bolster confidence in the audit process, and to aid investors by promoting constructive suggestions for change.Still affiliated with the American Institute of CPAs, the center is the revamped version of the AICPA’s former Center for Public Company Audit Firms. The CAQ Governing Board consists of representatives from the AICPA, the major public company auditing firms and independent public members.

In a major shift of its normal timetable, the Public Company Accounting Oversight Board issued its 2006 inspection report for Ernst & Young this week.

The Government Accountability Office has asked Congress to consider enacting a statute period longer than three years for taxpayers involved in questionable offshore activities.

"Boomers have both unrivaled influence and rich networks of peer advisors,” says Dr. Leslie Gaines-Ross, chief reputation strategist at Weber Shandwick, one of the world’s leading public relations firms.

The International Accounting Standards Board has published its preliminary views on accounting for insurance contracts in a discussion paper.

The Public Company Accounting Oversight Board is soliciting nominations and re-nominations for members of its Standing Advisory Group. Created in 2003, the 31-member SAG assists the audit firm overseer in carrying out its standards-setting responsibilities. The PCAOB is currently seeking nominations and re-nominations annually to fill 15 positions. Appointments are for two-year terms. Nomination forms are available on the PCAOB Web site, www.pcaobus.org. The deadline for submissions is June 15, 2007. Appointments will be announced by the end of October, and the new terms will begin in January 2008. The group, chaired by the PCAOB chief auditor and director of professional standards, Thomas Ray, meets roughly three times a year.

In the ongoing movement toward the convergence of U.S. and international accounting standards, President Bush and German Chancellor Angela Merkel have sealed an agreement that would clear a path toward a unified set of accounting standards by 2009. The agreement will establish a "Transatlantic Economic Council" to help lower regulatory barriers between the U.S. and the European Union. The council, will co-chaired by White House economic adviser Allan Hubbard and European Commission vice president Guenter Verheugen and will submit annual reports on the progress top both EU and U.S. leaders. The signing comes as the Securities and Exchange Commission is mulling whether to allow foreign companies registered in the U.S. to file their statements using international financial reporting standards in lieu of generally accepted accounting principles.

The Center for Audit Quality, the group backed by the profession's six largest audit firms as well as the American Institute of CPAs, has lured aboard a pair of high-level staffers from the Securities and Exchange Commission. Lori Schock, the SEC's acting director of investor education, and general counsel Robert Burns will join the new group in May. Schock will assume the post of director of outreach, while Burns becomes the CAQ's new director of research. The group, which evolved from the AICPA's Center for Public Company Audit Firms, currently has about 800 members. Its executive director, Cindy Fornelli, and director of operations, Jane Cobb, are both former senior-level directors at the SEC. Fornelli served as deputy director of the SEC's investment management division, while Cobb helmed the regulator's legislative affairs office. Fornelli and several of the CAQ board are scheduled to embark on a multi-city "listening tour" to elicit feedback from investors, regulators, academics and business leaders to hone the business reporting model.

Financial Executives International, a 15,000-member body of chief financial officers, controllers and other c-level financial executives, has thrown its support behind the Senate's efforts to modify Sarbanes-Oxley's Section 404. In a letter to Sens. Chris Dodd, D-Conn., and Richard Shelby, R-Ala., the chairman and ranking Republican, respectively, of the Senate Banking Committee, FEI president and chief executive Michael Cangemi lauded their leadership in "allowing the SEC and the PCAOB to resolve the challenges of improving Section 404." Cangemi told Dodd and Shelby that FEI's position is that "Section 404 needs to be made more efficient. However, we remain encouraged that the forthcoming SEC and PCAOB guidance will achieve a greater balance in the implementation of the annual compliance process of Section 404." FEI's letter comes on the heels of an overwhelming 62-35 defeat in the Senate of an amendment put forth by Sen. Jim DeMint, R-S.C., which would have made 404 compliance optional for companies below a certain market cap. Shortly thereafter, the chamber voted unanimously 97-0 to approve an amendment from Dodd, suggesting that the SEC and the PCAOB forge ahead with their previously announced plans to develop guidance for smaller filers to make SOX more manageable.