SEC may include KPMG in Xerox case
New York - Signaling plans to broaden its case against Xerox, the Securities and Exchange Commission has reportedly informed two former Xerox executives and former Xerox auditor KPMG LLP that it may file civil charges against them.
Michael Conway, a KPMG partner who co-headed the Xerox audit, former Xerox chairman Paul Allaire and former chief financial officer Barry Romeril are reportedly among at least a half-dozen individuals who’ve received so-called Wells notices. The SEC’s Wells notices inform potential targets that the agency’s enforcement division is inclined to recommend to the full SEC that civil charges be filed against them. Xerox fired KPMG as its auditor six months ago.
Xerox April 1 agreed to pay a $10 million civil penalty - reportedly the largest ever by a company for financial-reporting violations - and restate its books back to 1997 to settle SEC charges that include fraud. It neither admitted nor denied the allegations.
Last week, the copy maker said its restatement could involve reallocating more than $2 billion of revenue recorded from 1997 through 2000. This will be Xerox’s second restatement in a year, according to reports. Last June, it restated results for 1998-2000, after saying it had "misapplied" certain accounting rules. The company said it had used a $100 million reserve for merger costs in a way that made operating profits look better in later quarters.
KPMG spokesman George Ledwith confirmed that the firm has been talking with the SEC "about the possibility of a proceeding against the firm" related to Xerox.
House kills campaign tax bill
Washington - Campaign finance reform advocates scuttled a Republican-sponsored bill which sought to exempt certain political groups from Internal Revenue Service reporting requirements.
The Democrats who helped defeat the measure claim Republicans were trying to insert a loophole into a 2000 law which requires tax-exempt political groups to report their financial activities to the IRS.
The key provision in the bill would have exempted from these requirements groups who are involved solely in state or local campaigns if they disclose "substantially similar" information to state or local regulators.
The bill’s sponsors countered that the measure was not designed as a loophole, but as a way to avoid duplication.
According to wire service reports, a private watchdog group found that 25 of the groups affected by the new law have already raised $67 million over the past 18 months to pay for phone banks, issue ads and direct mail campaigns.
AICPA: Member dissatisfaction with Institute not a "problem"
New York – Despite a string of public relations disasters like the ill-fated global credential and controversy over the CPA2Biz portal which led the American Institute of CPAs’ president to divest his financial interest in the venture, the Institute says there’s no need for a shakeup at the top and feels it is moving the profession in the right direction.
During a wide-ranging press briefing with the editors of Electronic Accountant, Accounting Today, Accounting Technology and Practical Accountant, AICPA president Barry Melancon and chairman James Castellano were asked to comment on the apparent growing dissention within the membership over the way the AICPA is being run.
"It’s a challenge – I don’t know if it’s a problem. We have a lot of happy members too," said Castellano.
Institute president Melancon also defended the leadership’s forays into new business areas, saying that if even 10 percent of the group’s initiatives eventually move the profession forward, the risks and failures will be worth the effort.
He distanced the AICPA from the global credential fiasco, however, saying, "We never said we thought the credential would pass. We always said that the membership should decide on the credential and we would abide by that decision 100 percent."
Melancon added that despite a petition currently circulating to oust him from his post, he has no intentions of leaving the Institute.
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