Audit & Accounting

While lawmakers on Capitol Hill were embroiled in a heated filibuster debate, not far away, members of the ruling Council of the American Institute of CPAs passed a much less contentious vote, agreeing to support the development of standards for private and nonprofit entities.

The Governmental Accounting Standards Board has issued a preliminary views document on accounting for pollution remediation obligations, and though the board hopes to hammer it into a proposed accounting standard by the end of the year, some are predicting a heated debate over an estimated cash flow technique for recording costs.

Since its first meeting in February, the president's Advisory Panel on Federal Tax Reform has heard testimony and statements from more than 80 witnesses, and examined everything from the philosophical underpinnings and history of our current tax system, to the economic impact of potential tax systems.

Section 404 of the Sarbanes-Oxley Act, which deals with auditing internal controls, has brought widespread agreement with the act's intentions and equally widespread complaints of increased costs and a disturbing lack of specificity on some aspects of the rules.

While corporate scandals in the U.S. have received a great deal of attention, Europe has its own versions of Enron and WorldCom. Parmalat, the Italian agribusiness giant, and Ahold, the Dutch retailer, are two recent examples. The scandals and the resulting loss of investor confidence have increased global efforts to create a regulatory framework that improves transparency in financial reporting for both publicly traded companies and government agencies.

The Securities and Exchange Commission has released a report recommending that the Financial Accounting Standards Board reform accounting standards for such front-burner issues as pension and lease accounting.

The regulator that oversees mortgage concerns Fannie Mae and Freddie Mac said this week that the condition of both enterprises "warrants significant supervisory concern."

The leadership change at Big Four firm KPMG became official Wednesday, as the firm's 1,600 U.S. partners ratified the election of Timothy P. Flynn, 48, as chairman and chief executive, and John B. Veihmeyer, 49, as deputy chairman and chief operating officer.

Big Four firm KPMG LLP, which is in talks with the Justice Department related to the agency's ongoing tax shelter probe, said that it takes "full responsibility" for the past unlawful conduct by some its former partners.

Mortgage finance giant Freddie Mac said that it expects to post a loss because of anticipated claims likely to stem from various lawsuits and enforcement actions related to its multi-billion-dollar earnings restatement.