TAX EVASION PROSECUTIONS DECLINE SLIGHTLYSyracuse, N.Y. — The number of tax evasion prosecutions fell 5.3 percent last year, continuing a steady decline for at least two decades, according to a new study.

Tax Analysts and the Transactional Record Access Clearinghouse, a data-gathering and research organization at Syracuse University, published the study of Justice Department data. They found that during fiscal year 2007, the government reported 196 new prosecutions whose lead charge was “attempt to evade or defeat tax,” down from the 207 reported in 2006 and 214 reported five years ago.

Prosecutions fell 49.4 percent from the 387 reported in 1997, and 68.7 percent from the 626 reported in 1987. The Internal Revenue Service was the lead investigative agency for 93.4 percent of the prosecutions last fiscal year. Manhattan was the most active district with 12 prosecutions, followed by 11 prosecutions in Los Angeles and 10 in Fort Worth.


San Francisco — The number of financial restatements finally began to decline last year after a decade-long increase, and will probably continue to fall as the Securities and Exchange Commission makes it easier for companies to avoid restatements that aren’t likely to greatly affect investors.

According to a new report by research firm Glass Lewis, companies with U.S.-listed securities filed 1,270 restatements in 2007, down 17 percent from the peak year of 2006. One out of every 10 companies filed a restatement last year, compared to one out of every nine in 2006.

Last year’s decline can be attributed in part to four years of compliance with Section 404 of Sarbanes-Oxley by the largest public companies and the tightening of their internal controls. New guidelines proposed by an SEC advisory committee promise to further reduce the number of “unnecessary” restatements. Glass Lewis also found that restatements by companies complying with SOX 404 fell 5 percent last year and 15 percent a year earlier. Restatements by non-SOX 404 companies fell 24 percent after rising 41 percent. One third of larger companies and half of microcap companies that restated still claimed to have effective internal controls in place.


New York — The American Institute of CPAs has issued a new standard that tightens ethics requirements for members on indemnification and limitation of liability.

Under the new standard, failure to comply with a regulator's requirements on the use of indemnification and limitation-of-liability provisions will be considered an act discreditable to the profession. Various regulators, including the Securities and Exchange Commission, state insurance commissions and federal banking agencies, currently prohibit organizations under their jurisdiction from entering into certain types of indemnification and limitation-of-liability provisions in agreements for the performance of audit or other attest services, according to the AICPA.

A new interpretation by the AICPA’s Professional Ethics Executive Committee prohibits members from using their provisions when contracting for audit and other attest services when their employer or client is subject to the requirements of one of these regulators.

“Current AICPA standards allow certain indemnification and limitation-of-liability provisions to be included in agreements for audit and attest services,” said AICPA vice president of member quality and state regulation Susan Coffey in a statement. “However, in cases where a regulator’s requirements are more restrictive than AICPA standards, our members must comply with the more restrictive standard.”

The standard goes into effect on July 31.

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