Audit & Accounting

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.More than 25 motions were filed in Manhattan's U.S. District Court, several requesting that the charges against the professionals be dropped entirely, as no court has ever actually ruled the shelters to be illegal. Many additional motions asked for the dismissal of charges because the defendants said that they were being unfairly singled out from other KPMG officials who sold similar shelters.

The overriding objective of the Sarbanes-Oxley Act is to strengthen the public securities market by holding management accountable for material information filed with the Securities and Exchange Commission and released to investors. To help achieve this overall goal, Sarbanes-Oxley includes several underlying objectives, specifically improving corporate governance, promoting ethical business practices, enhancing the transparency of financial statements and disclosures, and ensuring that company executives are aware of material information emanating from their business.Sarbanes-Oxley is not law for nonprofit organizations, but its guidelines for achieving its underlying objectives can be applied to all organizations, including nonprofits. By adopting the principles and best practices promoted by Sarbanes-Oxley - customized to meet an organization's unique nature and needs - a nonprofit organization can better realize its mission and meet the expectations of its key stakeholders.

The Roth 401(k) contribution option, even with almost five years of advance warning, is taking a while to catch on.Reports are that fewer than 20 percent of eligible 401(k) plans now have them, with the rest sticking with tried-and-true pre-tax deferral contributions. If field data is accurate, however, this tepid reception is about to change. When employers, especially those also wearing the hat of the highly paid employee, begin to run the numbers, Roth 401(k) accounts are looking very attractive. This view is especially true following the recent release of favorable final regulations on Roth 401(k) contributions.

The Governmental Accounting Standards Board's agenda for 2006 will rank among its most ambitious ever.Within the first few months of the year, it may have six or more projects underway, with exposure drafts going out the door as comment letters are coming in.

On Dec. 6, 2005, Financial Accounting Standards Board Chairman Robert Herz addressed the American Institute of CPAs National Conference on Current Securities and Exchange Commission and Public Company Accounting Oversight Board Reporting Developments in Washington.The chair traditionally speaks at this venue, but often the remarks are only perfunctory. This time, though, Herz showed his leadership by calling on capital market participants to lay aside their self-interest and work together to achieve "progress ... in improving the quality and transparency of financial reporting."

Canada's Accounting Standards Board has agreed to adopt international accounting standards for the country's public companies over the course of the next five years.The accounting rules known as Canadian GAAP will cease to exist as a separate basis of financial reporting after the end of the implementation program. The 25-member board also agree to pursue separate strategies for three major categories of reporting entities, including public companies, private businesses and not-for-profit organizations.

The Securities and Exchange Commission named John W. White to the post of director of the regulator's division of corporate finance.

Approval of the $195 million settlement between KPMG and investors in possibly illegal tax shelters has stalled, as the sides reportedly renegotiate the terms of the deal.

The heads of the investor protection agencies for the United States and the European Union both said that they expect U.S. GAAP will ultimately be deemed equivalent to the E.U.'s International Financial Reporting Standards.

In one of the largest regulatory settlements ever, American International Group Inc. will pay more than $1.6 billion to settle allegations that it used deceptive accounting practices to mislead investors and regulators.