Audit & Accounting

The Securities and Exchange Commission has launched a formal investigation into an accounting change made by IBM in 2005.

Many of the 19 former tax professionals facing trial over the sale of KPMG tax shelters, whose legality has been questioned by the federal government, have asked for the dismissal of the charges in a variety of joint motions.

The Securities and Exchange Commission has opened an informal inquiry into how Home Depot Inc. records the credits it receives from vendors for defective merchandise.

Alan L. Beller, director of the Division of Corporation Finance at the Securities and Exchange Commission, will return to the private sector next month.

McAfee Inc., a manufacturer of computer security software, agreed to pay a $50 million civil penalty to settle securities fraud charges brought by the Securities and Exchange Commission.

Practitioners who have been adding tax planning services to their basic preparation are taking an additional step to extend their practice into year-round financial planning."There's a natural progression from tax preparation into financial planning," said Stephen Parezo, media manager at Fiducial.

Planning for college expenses is becoming a central focus for families as the costs of higher education continue to skyrocket.Exorbitant price tags that may approach $50,000 per year are making headlines, as parents and their financial advisors look for solutions that don't delay retirement or limit a student's future. Advisors subsequently have devised a combination of savings plans, tax strategies and admissions planning to minimize the impact of pricey college expenses on families' financial plans.

BANK OF SOUTH CAROLINA JETTISONS KPMG: The Bank of South Carolina has dismissed its auditor - Big Four firm KPMG - and hired Elliot Davis as its new independent accountant.In a federal filing, the company said that it made the decision to change auditors because it felt that it could get the same services at a lower fee structure from another audit firm.

More times than we can count, we have written that the preferable resolution of most financial accounting issues involves reporting values of assets and liabilities on the balance sheet and changes in those values on the income statement when they happen, not before and certainly not after.We have written about this point in the context of specific items, such as investments, receivables, inventories, tangible and intangible assets, payables, stock options, other derivatives, and pension assets and liabilities. We have also advocated this change on a theoretical level, especially as we reviewed the Financial Accounting Standards Board's new Conceptual Framework project.

Nearly half of all business organizations worldwide have been victims of fraud in the past two years, according to the 2005 PricewaterhouseCoopers' Global Economic Crime Survey released in late November.The survey found that the number of companies reporting fraud increased from 37 percent to 45 percent since 2003, a 22 percent increase. The cost to companies was an average of $1.7 million in losses from "tangible frauds," those resulting in immediate and direct financial loss, like asset misappropriation, false pretences or counterfeiting.