Audit & Accounting

McAfee Inc., a manufacturer of computer security software, agreed to pay a $50 million civil penalty to settle securities fraud charges brought by the Securities and Exchange Commission.

Practitioners who have been adding tax planning services to their basic preparation are taking an additional step to extend their practice into year-round financial planning."There's a natural progression from tax preparation into financial planning," said Stephen Parezo, media manager at Fiducial.

Planning for college expenses is becoming a central focus for families as the costs of higher education continue to skyrocket.Exorbitant price tags that may approach $50,000 per year are making headlines, as parents and their financial advisors look for solutions that don't delay retirement or limit a student's future. Advisors subsequently have devised a combination of savings plans, tax strategies and admissions planning to minimize the impact of pricey college expenses on families' financial plans.

BANK OF SOUTH CAROLINA JETTISONS KPMG: The Bank of South Carolina has dismissed its auditor - Big Four firm KPMG - and hired Elliot Davis as its new independent accountant.In a federal filing, the company said that it made the decision to change auditors because it felt that it could get the same services at a lower fee structure from another audit firm.

More times than we can count, we have written that the preferable resolution of most financial accounting issues involves reporting values of assets and liabilities on the balance sheet and changes in those values on the income statement when they happen, not before and certainly not after.We have written about this point in the context of specific items, such as investments, receivables, inventories, tangible and intangible assets, payables, stock options, other derivatives, and pension assets and liabilities. We have also advocated this change on a theoretical level, especially as we reviewed the Financial Accounting Standards Board's new Conceptual Framework project.

Nearly half of all business organizations worldwide have been victims of fraud in the past two years, according to the 2005 PricewaterhouseCoopers' Global Economic Crime Survey released in late November.The survey found that the number of companies reporting fraud increased from 37 percent to 45 percent since 2003, a 22 percent increase. The cost to companies was an average of $1.7 million in losses from "tangible frauds," those resulting in immediate and direct financial loss, like asset misappropriation, false pretences or counterfeiting.

AMERIPRISE TO SETTLE TRADING CHARGES: Ameriprise Financial - the entity spun off by former parent American Express - and its broker/dealer arm agreed to pay $57.3 million to settle charges of illegal trading and brokerage misconduct.The Securities and Exchange Commission charged that Minneapolis-based Ameriprise Financial Services - the company's broker/dealer - failed to "adequately" disclose millions in revenue-sharing payments that it received from a group of mutual fund companies dating back to 2001.

Mutual fund portfolio managers used to be as inaccessible as the Wizard of Oz.Fund companies for the most part hid their ideas and activities behind a wall of wholesalers and scripted messages on brochures. When Morningstar began trying to contact portfolio managers in the late 1980s, their analysts often were greeted with phone hang-ups.

If you've had problems applying Auditing Standard No. 2, the Public Company Accounting Oversight Board says you're not alone.The board has known of widespread difficulties applying the new standard, "An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements," since audit firms first began grappling with its complex and often undefined demands.

"Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed on the taxpayer by any governmental taxing authority or agency." (Proposed Circular 230 disclaimer language from Deloitte.)Going forward, tax clients across the country, whether they seek advice from a Big Four Firm, a tax attorney or even a sole practitioner, can expect to see disclaimers like this accompanying all correspondence and written advice.