Audit & Accounting

Roth 401(k) accounts will - with the blessing of the Internal Revenue Service - make their debut effective Jan. 1, 2006.Unlike the 401(k), which is funded with pretax dollars, the Roth 401(k) is funded with after-tax dollars from the employee. Any employer match would remain taxable.

Financial planning is usually not a static process. When your clients ask you for advice in investing their resources, one of the more difficult tasks is getting them to make decisions on not only what their ultimate investing goals are (besides becoming wealthy or wealthier), but just how much risk they want to take along the way.As a client's economic and life conditions change, often their goals do as well. Many successful planning professionals find that periodic re-analysis of each client's holdings is a good idea. By examining how well a client's investment portfolio is performing and what progress is being made towards meeting a client's ultimate and near-term goals, you are best serving your clients, and very possibly generating additional fees for your practice.

The Public Company Accounting Oversight Board announced it has selected deputy chief auditor and former KPMG partner Thomas Ray as its chief auditor.

Until now, individual taxpayers who were unable to meet the April 15 tax return filing deadline could file a Form 4868 and receive an automatic four-month filing extension until August 15. And if August 15 didn't provide enough time to get the tax return completed, taxpayers could provide a good reason for the delay on a Form 2688 and request another extension for two months until October 15.Effective for tax returns due after Jan. 1, 2006, the kinder, gentler, more cost-effective Internal Revenue Service has done away with the second extension request and changed the initial automatic extension period from four months to six. Not only will this action remove the need for taxpayers to come up with a reason for requesting the extra two months to file tax returns, it will cut back on lots of paperwork and processing time.

Public companies, for better or worse, have completed the first year of compliance with the Sarbanes-Oxley Act. Now is a good time for CPAs in industry and their external auditors to reflect on the Year One experience, identify lessons learned, and change their compliance strategies accordingly.For example, many companies only cleared the Year One Sarbanes-Oxley hurdle via an "all hands on deck" approach. Sarbanes-Oxley compliance, however, is not a one-time event; it is an ongoing requirement. So this tack is too disruptive to be allowed to continue.

One of the many things that make investors sweat is the state of corporate pensions and other post-retirement benefit plans. How well are they funded? Are there enough assets available in the plan, or must the employer satisfy obligations?Investors aren't the only ones who sweat. Employees and retirees are also concerned. Their futures hang on the numbers, and the numbers can get pretty big, especially the red ones - possibly $600 billion in all, according to the Government Accountability Office.

Blaming a computer for accounting errors, mortgage financier Freddie Mac announced that it has cut about $220 million in profits from its statements for the first half of 2005. Freddie said that it earned $1.4 billion in the first six months of 2005, not the $1.6 billion it reported on Aug. 31.The company said that the difference "reflects the correction of interest accruals recorded for certain mortgage-related securities stemming from miscalculations since 2001 in a legacy computer system." The company also pointed out that the amended profit represents less than 1 percent of its core capital as of June 30.

Diane M. Rubin, a partner at San Francisco-based Novogradac & Co. LLP, was recently installed as chairwoman of the National Association of State Boards of Accountancy for 2005-06.The election was held on Nov. 1 at NASBA's 98th Annual Meeting in Tucson, Ariz.

A vast majority of American investors are lacking the "investor survival skills" needed to build their savings into a retirement nest egg, according to the Securities Investor Protection Corporation /Investor Protection Trust survey conducted by Opinion Research Corp.

The Securities and Exchange Commission unanimously voted to propose rules to make it easier for foreign companies to stop listing their securities for trading in the country in order to avoid the expense of complying with U.S. securities laws.