The Latest

Judge James Robertson of the Federal District Court of the District of Columbia has ruled that the Interior Department "unreasonably delayed" its accounting for billions of dollars that should have gone to Native American landholders and that it was now impossible to remedy the problems.

The Public Company Accounting Oversight Board released expanded versions of two reports it had originally issued in 2005 on two audit firms, highlighting problems with technical competence.

The Securities and Exchange Commission has begun a cost-benefit study of the upcoming attestation requirement for smaller companies under Section 404(b) of the Sarbanes-Oxley Act.

Did you know that today most investment advice zeroes in on the development of portfolios that are on the “efficient frontier,” which is one where no added diversification can lower a portfolio’s risk for a given return expectation? At least, that’s according to my friend Larry Swedroe who is the principal and director of research for both Buckingham Asset Management and BAM Advisor Services in St. Louis. He’s also the author of the recently released Wise Investing Made Simple plus a half dozen other best sellers. His words are deemed golden. In any event, working with this efficient frontier, Swedroe says that investment advisors can then tailor portfolios to the individual investor’s unique situation but unfortunately far too many investors and their advisors focus only on the risks of the investments themselves. Swedroe believes that when developing the overall financial plan, there are other risks that are important to consider and that not integrating the management of these risks can cause the best investment plans to fail. These other risks are human capital (which means wage earning), mortality, and longevity. Taking these one at a time, Swedroe notes that as we age and accumulate financial assets and the time we have remaining in the labor force decreases, the percentage of human capital to financial assets shrink. “This shift over time should be considered in terms of the asset allocation decision.” He also considers that with all else being equal, people with a high earning capability have a greater ability to take more financial risk because ether can moiore easily recover from losses. “However, they also have a lower need to take risk.” As to mortality, he believes that protecting the capital via the purchase of life insurance should be part of the overall financial plan. “Life insurance is the perfect hedge for mortality risk as its return is 100 percent negatively correlated with the human capital asset.” Looking at longevity risk, which he defines as the risk that you will outlive the ability of your portfolio to support your desired lifestyle, he suggests that investors might consider purchasing annuities at around 65 years of age and certainly buying them before reaching 85. All in all, in general younger investors with more labor capital should invest more in stocks than older investors and that individuals with safer human capital have a greater ability to invest more in risky assets. Of course, those whose human capital more highly correlates with equity risks should allocate more to safer fixed income investments. Swedroe also believes that individuals should diversify their human capital, minimizing investments in assets that correlate with their labor income and should hedge their human capital risks through the use of insurance contracts such as disability, life and long-term health care. Finally, individuals should consider hedging their longevity risk through the use of payout annuities.

The Treasury Department and the Internal Revenue Service issued guidance on new pension-funding rules included in the Pension Protection Act of 2006.

Accountants Mike Karlins and Glea Ramey have purchased the Woodlands, Texas office of UHY Advisors TX and opened an independent firm, Karlins & Ramey LLC, CPAs.

The Internal Revenue Service has issued changes to the 2007 instructions for Form 1040 and Form 1040NR because of the Tax Technical Corrections Act of 2007.

Taxpayers in the United Kingdom faced problems filing their taxes in time for the deadline when the government's Inland Revenue site returned error messages.

Thomson has acquired TaxStream, a software provider that helps companies comply with income tax demands.

Super-regional CPA and business advisory firm Dixon Hughes said it would merge with Rhea & Ivy PLC. effective Feb. 1. Terms were not disclosed. The union will add some 70 employees and 12 partners to Dixon Hughes. Upon completion of the merger, Rhea & Ivy, headquartered here, will operate under the Dixon Hughes brand. The Rhea & Ivy team will remain in Memphis, while an existing Dixon Hughes office in Memphis -- whose client roster is comprised primarily of auto dealerships -- will combine with the new Memphis practice, bringing that team to more than 90 people. Ranked No. 17 on Accounting Today's 2007 Top 100 Firms list, Dixon Hughes generated annual revenues of $155 million.