Audit & Accounting

In an effort to ease the implementation of the new risk-assessment standards from the American Institute of CPAs, tax and accounting products provider CCH has released ProSystem fx Knowledge Tools -- a product collaboration between CCH and audit process and services concern AuditWatch. The new offering, which is predicated on the guidelines of the knowledge-based audit, is available as an integrated module for ProSystem fx Engagement, or as a stand-alone application. The Knowledge Tools' KBA methodology uses a set of integrated procedures, from the pre-engagement stage through evaluating, concluding and reporting. The results from each audit stage are fed into a communication "hub," which enables audit team members to view summaries of the significant matters, risks and findings uncovered during the audit. The KBA documents contain steps and procedures required by generally accepted auditing standards. In addition Knowledge Tool users have access to: * Practice points - additional information in completing the associated section of the audit program, checklist, or workpaper; * Audit alerts - information such as upcoming changes to audit pronouncements; * Examples - example workpapers and explanations regarding how a section could be completed; * Optional workpapers - workpapers that can be brought in to complete the documentation for a specific step; and, * References - links to books, such as industry guides, and original pronouncements. CCH said it would offer training in the new methodology, as well as training on the Knowledge Tools software. For more information, go to

In working toward finalizing a reporting system and rules, the Public Company Accounting Oversight Board today pushed back the 2007 deadlines for the first round of annual reports to be filed and registration fee payments by accounting firms. Last May, the audit watchdog proposed that the first annual reports would need to be filed by June 30, 2007, with the first annual fee payment due by July 31, 2007. However, since the board had not finalized its rules and forms for either, it said it would push back both to as-yet-undetermined deadlines. The board said that once the rules become final, it would give registrants enough lead time to comply.

Norwalk, Conn. -- The Financial Accounting Foundation, overseer to both the Financial Accounting Standards Board and the Governmental Accounting Standards Board, appointed Girard Miller and Jan I. Sylvis to five-year terms on GASB. Their terms begin July 1. Miller and Sylvis will succeed outgoing GASB board members Cynthia Green and Edward Mazur, respectively. Miller previously served as president of Janus Funds and chief operating officer of asset manager Janus Capital Group. Sylvis currently is the chief of accounts for Tennessee's Department of Finance & Administration, where she serves as state controller.

Don’t know whether you saw this, but Schwab Institutional has released the findings of the “Independent Advisor Outlook Study,” a new semi-annual survey of independent investment advisors that measures their views on the geopolitical landscape, economy and investments. By the end of last year, there were more than 15,000 RIAs across the country, managing some $1.8 trillion of U.S. wealth, says Cerulli, and that nearly 1400 independent investment advisors with some $347 billion in assets under management participated in the study.So, what did they have to say?

Former Senator Paul Sarbanes, D-Md., who, as the head of the Senate Banking Committee, co-authored the sweeping Sarbanes-Oxley reform act said he supports developing additional guidance for smaller filers but, not surprisingly, dismisses exempting those companies from compliance with the legislation's rigid Section 404. "Stop and think about that for a moment," said Sarbanes in a speech before attendees at a conference on financial reporting and governance presented by Pace University's Lubin School of Business, here. "That would mean that you would be exempting 80 percent of public companies from compliance."

Distilling the nation's complex tax code is the key to reducing the $290 billion tax gap, the American Institute of CPAs told lawmakers. In a hearing before the House Small Business Committee, James Brennan, chair of the AICPA's IRS Practice and Procedures Committee, said simplification should be the foundation to begin stripping away the mammoth deficit.

If XBRL is going to evolve to the financial reporting standard of the future, the accounting profession is going to have to step up its communication efforts on the tagging language, according to a survey of CFOs and controllers by global CPA firm Grant Thornton. According to the GT poll, roughly 85 percent of the survey participants indicated that the profession was not effectively communicating the benefits of using XBRL or Extensible Business Reporting Language for either internal or external financial reporting.

Maintaining that auditor concentration and litigation issues erect barriers to better pricing and service, Grant Thornton chief executive Ed Nusbaum called for the U.S. to undertake a comprehensive study on the domestic audit sector. More specifically, Nusbaum said the U.S. needs to produce a similar study to the one released this week in the U.K., "Financial Reporting Council's Market Participants' Group," which examined concentration and choice in the U.K. audit market. "In addition to the fear of one of the large accounting firms failing, there is no question that audit concentration, along with uncontrolled litigation exposure, is undermining the U.S. economic business model that served so well for so many years: More accounting firms means greater competition and increases quality and lowers costs to the end user," said Nusbaum. "We need a similar U.S. auditor concentration study with accompanying action steps to address the issue."

A report by the Government Accountability Office has raised questions regarding the value of consumer-mandated credit counseling as required by the 2005 Bankruptcy Protection Act. The auditor general's study, which examined the BPA's requirement for consumers to undergo credit counseling and debtor education courses before having debts discharged, said that by the time most clients receive the counseling, their financial situations are dire, leaving them with no viable alternative to bankruptcy. The counseling was intended to help consumers make informed choices about bankruptcy and its alternatives. The auditor general's report was intended to address growing concerns over potential abuses by credit counseling agencies in the wake of the counseling/education requirement. Among other things, the GAO report examined: * The process of approving counseling and education providers; * The content and results of the counseling and education sessions, * The fees charged, and; * The availability of and challenges to accessing services. The GAO has recommended that the Justice Department's U.S. Trustee Program analyze the outcomes of pre-filing credit counseling and issue formal guidance on what constitutes "ability to pay." As of October 2006, the Trustee Program had approved 153 credit counseling and 268 debtor education providers. For the report, go to: www.gao.gov/cgi-bin/getrpt?GAO-07-203.

The Private Companies Practice Section of the American Institute of CPAs has developed an online toolkit to help members understand and implement Statement on Auditing Standards No. 112, "Communication of Internal Control Related Matters Identified in an Audit." SAS 112 is effective for audits performed on or after Dec. 15, 2006. The product -- accessible to PCPS member firms -- is available at www.pcps.org. It includes talking points, a newsletter template and a client communication letter, among other resources. For interested parties, a free FAQ sheet and SAS 112 Web forum archive are available on the Web site.