Audit & Accounting

The doubling of restatements by U.S. companies last year could signal that the changes made under the Sarbanes-Oxley Act are having their intended impact.

After halting subpoenas issued to two Dow Jones & Co. columnists on Feb. 7, the Securities and Exchange Commission announced that its staff is preparing guidelines for demanding information from journalists.

The Auditing Standards Board of the American Institute of CPAs has approved eight new statements on auditing standards, collectively referred to as the risk assessment standards.

Ernst & Young has launched Ernst & Young University-Tax, a virtual resource for higher tax learning and development.

The head of the Securities and Exchange Commission said that he was not consulted before his agency's enforcement division subpoenaed two writers for Dow Jones & Co.

Ernst & Young warned some Bay Area clients that it had lost some sensitive data, including Social Security numbers, which could be possibly be used by identity thieves.

The most sweeping changes to federal bankruptcy law in over a quarter century went into effect in October 2005. Distressed businesses and their creditors face new challenges, and comprehensive pre-bankruptcy planning will now need to be undertaken by debtors to ensure a successful reorganization.CPAs can play an integral role in this planning process.

In mid-January, the Public Company Accounting Oversight Board issued reports on its 2004 inspections of Grant Thornton LLP and Crowe Chizek & Co. LLC - outlining "audit deficiencies" similar to other recently released reviews from the board.In its Grant Thornton inspection report, released on January 19, the board highlighted problems that it found in audits for 15 of the firm's public company clients between May and October 2004. The problems included failure to disclose related-party transactions and testing of information technology controls, as well as accounting problems for:

BROOKLYN FEDERAL JETTISONS KPMG: Brooklyn Federal Bancorp, the parent to Brooklyn Federal Savings Bank, dismissed its auditor, Big Four firm KPMG, and retained Beard Miller Co. as its replacement.According to a federal filing, KPMG's audit reports on Brooklyn Federal's financials didn't contain any adverse opinion or disclaimer of opinion. There were no disagreements between KPMG and the company over accounting matters.

When the Auditing Standards Board met in mid-January, it resolved to propose a new standard on auditor communication. The board also started a discussion on whether quality control should be linked to compensation control.While the proposal on communication was the biggest product of the meeting, the concept of a cause-and-effect connection between auditor compensation and audit quality may ultimately have greater reverberations in the profession.