FANNIE PICKS DELOITTE, INTERIM CRO
Washington - Two weeks after ousting former auditor KPMG LLP, beleaguered mortgage giant Fannie Mae has hired Deloitte & Touche LLP to perform its 2004 audit and to re-audit prior-period financial statements that it will restate. Fannie Mae said that it will review the terms of the engagement with its regulator, the Office of Federal Housing Enterprise Oversight. As part of its agreement with the OFHEO, the board in early January named as interim chief risk officer Adolfo Marzol, Fannie Mae's senior vice president for corporate strategy. Marzol previously served as the company's chief credit officer.
In late December, the mortgage finance concern ousted two top executives and its long-time auditor, KPMG, following a Securities and Exchange Commission decision that Fannie Mae violated accounting rules, leaving it faced with a massive restatement. In early January, Fannie Mae revealed in a filing that KPMG had notified the company that it had discovered indications of weaknesses in its internal controls.
DALLAS LAW FIRM SETTLES SHELTER CLAIMS
Dallas - After 14 months of negotiations, law firm Jenkens & Gilchrist PC, based here, agreed to pay $81.55 million in a class-action settlement to put claims related to its tax shelter work behind it. The final settlement is $6.55 million more than the initial settlement announced in April 2004. Jenkens & Gilchrist also agreed to settle even though some members of the class elected to opt out of the settlement. Under the initial settlement, the firm had retained the right to terminate the settlement if any class members elected to opt out.
David Deary, lead counsel for the class members and a partner with the Dallas law firm Deary Montgomery DeFeo & Canada LLP, said that the settlement has provided class members with crucial information on the role other accounting, law and investment firms played in promoting, selling and implementing tax strategies to the class members. Deary said that his clients will continue to pursue claims against others, including Ernst & Young, BDO Seidman, Grant Thornton, KPMG, Bank One, American Express and Deutsche Bank.
RSM ACQUIRES BDO OFFICE
Minneapolis - H&R Block subsidiary RSM McGladrey Inc. has boosted its presence in northern Illinois with the acquisition of the non-attest assets of the Rockford office of BDO Seidman LLP. McGladrey & Pullen LLP acquired the audit and attest assets of the Rockford office in a separate transaction.
BDO Seidman's exit from Rockford makes RSM McGladrey the only national provider of accounting, tax and business consulting services in the area, and boosts RSM McGladrey's Rockford presence by about 15 people to 145. The deal marks the firm's first acquisition in the area since 1996, when it acquired the local office of then-Coopers & Lybrand.
GASB ISSUES STATEMENT 46
Norwalk, Conn. - The Governmental Accounting Standards Board has released Statement No. 46, Net Assets Restricted by Enabling Legislation, an amendment to its Statement No. 34.
Statement 46 was drafted to help government entities determine when net assets have been restricted by the passage of enabling legislation, and to specify how those net assets should be reported in financial statements when there are changes in the circumstances surrounding said legislation.
Statement 46 clarifies that "legally enforceable" refers to external parties - i.e. citizens, public interest groups or the judiciary - that can compel a government entity to use resources only for the purposes stipulated by the enabling legislation. It also confirms that the determination of legal enforceability is a matter of professional judgment, and that it might entail reviewing the legislation and determinations made for similar legislation, as well as obtaining legal counsel.
It is effective for periods beginning after June 15, 2005.
