Audit & Accounting

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.

NASD ENFORCEMENT CHIEF STEPS DOWN: Barry Goldsmith, the enforcement chief of brokerage regulator NASD, will step down in March to return to private law practice, and his deputy James Norris was named as his acting replacement. Goldsmith, 56, will become a partner at law firm Gibson Dunn & Crutcher in Washington, a firm known for its securities practice. Goldsmith joined NASD, then known as the National Association of Securities Dealers, a decade ago. As enforcement chief, he led investigations into initial public stock offerings by big securities dealers and conflicts of interest involving research analysts, as well as mutual fund and hedge fund misconduct - including overseeing penalties against Merrill Lynch and Wells Fargo.According to NASD, the number of new enforcement actions under Goldsmith reached record levels, from 975 in 1995, to 1,399 in 2005. Fines collected rose to $127.5 million in 2005, from $5.3 million in 1995.

Business owners may face a number of issues when confronted with the death, disability or retirement of an employee, partner or shareholder.Some of the dilemmas they face may include paying off business debts, having sufficient funds to pay estate taxes, leaving behind a stable operating business, and preserving the value of the business assets for heirs or family members.