IASB PROPOSES FINANCIAL INSTRUMENT ACCOUNTING CHANGES
London - The International Accounting Standards Board has proposed changing the accounting standards for measuring and classifying financial instruments in response to concerns raised by the financial crisis.
The proposals are intended to eliminate the confusing distinctions among various impairment approaches for available-for-sale assets and assets measured using amortized cost. The IASB is working closely with the U.S. Financial Accounting Standards Board on the changes.
The IASB plans to finalize the classification and measurement proposals in time for non-mandatory application in 2009 year-end financial statements.
The rules would essentially create two classifications for financial assets - loans and assets with basic loan features that are managed on a contractual yield basis, which would be measured at amortized cost, and just about everything else, which would be marked to market.
The IASB wants comments on the proposals by Sept. 14.
In addition to releasing its new ED, the IASB also plans to address the related subjects of impairment methodology and hedge accounting as part of a plan to replace the IAS 39 standards next year. Mandatory application of the new standards will not come before January 2012, however.
For more, visit www.iasb.org.
AUDIT PROBLEMS FOUND AT BDO, GRANT
Washington, D.C. - The Public Company Accounting Oversight Board has released reports on the audit deficiencies that its inspectors found last year at BDO Seidman and Grant Thornton.
In the BDO report, the PCAOB found deficiencies in testing of revenue in five audits, saying that the firm failed to obtain sufficient evidence to support its audit opinion.
In response, BDO said that the appropriate audit procedures had been performed and evidence obtained at three of the audit clients in the report, but that it enhanced its workpaper documentation of previously completed procedures or performed some additional procedures at another audit client. However, the performance of the additional procedures did not impact the firm's conclusions and previously issued reports.
In the report on Grant Thornton, the PCAOB found deficiencies in the testing of assets held by company pension plans in five of the firm's audits. The firm defended its work in response to the report: "We believe these judgments were appropriately supported and well-reasoned."
MADOFF ACCOUNTANT PLEADS NOT GUILTY
Bernard Madoff's former accountant, David Friehling, pleaded not guilty to fraud charges. In late July, prosecutors filed a criminal information in Manhattan federal court charging him with securities fraud, aiding and abetting investment advisor fraud, and four counts of filing false audit reports with the SEC.
Friehling was a partner with Friehling & Horowitz, which acted as the auditor for Madoff for decades. Prosecutors have accused the firm of not performing audits of Madoff's investment management firm, even though Friehling regularly signed off on its financial statements.
CORRECTIONS
Our Wealth Magnets feature (July 20-Aug. 16, 2009) failed to include Schneider Downs Wealth Management Advisors and Anchin Wealth Management, both of which should have been in the $100+ Million Club, with $432 million and $350 million in assets under management, respectively. Our apologies for the omissions.
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