Audit & Accounting

During conference calls with auditors this week, Securities and Exchange Commission staff said that accountants should be on the lookout for improper selling strategies designed to take advantage of FAS 159, “Fair Value Option.”

A year after the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 became law, government statistics show that the number of bankruptcy filings nationwide dropped nearly 70 percent last year.The total number of filings last year dropped to 618,000, down from a record of 2.1 million in 2005, when people were rushing to file before the new laws were enacted, according to statistics from the Administrative Office of the U.S. Courts. The American Bankruptcy Institute said that the 2006 number was the lowest level since 1988.

A new report from the Public Company Accounting Oversight Board looks to draw some conclusions out of its inspections of approximately 275 audits of internal controls over financial reporting performed by registered public accounting firms.The report specifically looks at the second year implementation of the board’s Auditing Standard No. 2, “An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements.” Nearly a year ago, the PCAOB announced that during 2006 it would conduct inspections to determine whether auditors were achieving the objectives of the standard with the least expenditure of resources.

The Financial Accounting Standards Board issued a proposal to improve the accounting for financial guarantee insurance contracts.The proposal, “Accounting and Reporting by Insurance Enterprises: An Interpretation of FASB Statement No. 60,” is aimed at reducing diversity in accounting treatment and providing financial statement users with clearer, more comparable information and expanded disclosures. The proposal has also been written in a new format intended to improve its understandability.

Internal Revenue Service Commissioner Mark Everson will leave the agency to become president and chief executive of the American Red Cross next month.Everson, 52, has served as IRS commissioner since May 2003. During his time with the agency, he has publicly focused his attention on efforts to better serve taxpayers, continue the agency’s modernization of its systems and enhance its enforcement activities. In recent months, Everson has heard increased clamoring from Congress over how the agency and the Treasury Department should best work to address the nation’s growing tax gap -- estimated at $345 billion for the 2001 tax year.

The U.S. Supreme Court said that it would not revisit the decision made by lower courts to vacate the conviction of Kenneth Lay, the late founder and former chairman of Enron Corp.In October, U.S. District Judge Sim Lake dismissed the federal indictment used to bring Lay to trial. Lay was unable to exhaust the appeals process after dying of a heart attack in early July, less than two months after a jury convicted him on six charges of conspiracy and fraud and Lake found him guilty on four charges of bank fraud.

Carbis Walker LLP, a firm specializing in public accounting and consulting, is offering manufacturers and distributors the opportunity to participate in a national benchmarking survey through a partnership with McGladrey & Pullen LLP.

It figures that it would be Tom Allen who took on the single biggest accounting issue in the country, if not the world.It was Allen who, as chairman of the Governmental Accounting Standards Board, ushered in Statement 34, which moved state and local governments to accrual accounting - arguably one of the biggest changes ever to impact governmental accounting.

Your clients probably want to leave as much as possible to their heirs. However, if they don't take minimum distributions from their Individual Retirement Accounts after they reach 70-1/2, the government could take a substantial amount of those assets.The Internal Revenue Service can charge an excise tax of up to 50 percent if clients don't take the required minimum distribution from their IRA accounts or qualified retirement plans by April 1 of the year after the year they turn 70-1/2.

USE OF ALTERNATIVE INVESTMENTS TO INCREASE AHEAD OF BOOMERSRegistered investment advisors intend to ratchet up their use of alternative investments such as hedge funds, real estate, commodities and currencies in the next five years, according to a national survey released by Rydex AdvisorBenchmarking.