A possible reprieve on expensing?
New York - The Securities and Exchange Commission is reportedly expected to change the effective date for new stock option accounting rules that will require companies to include stock option compensation as an expense on their earnings reports, giving most U.S. companies a six-month reprieve.
An announcement of the SEC's decision could come as early as mid-April, according to published reports.
At presstime, the SEC's staff has reportedly recommended that SEC commissioners vote to change the deadline, so that the rules instead would take effect for fiscal years starting after June 15, pushing back by six months the required effective date for U.S. companies whose next fiscal years begin Jan. 1, 2006. SEC staff members - including Donald Nicolaisen, the agency's chief accountant - have been pressing for the change to allow companies to devote additional time and resources toward the new rules' requirements, according to reports.
The recommendation to delay the rules' effective date reportedly has the support of SEC Chairman William Donaldson, and was expected to be approved unanimously by the five commissioners without a public meeting.
Report: IRS favoring finance firms
Syracuse, N.Y. - Tax audits by the Internal Revenue Service on companies in the financial sector are undertaken far less frequently than those in other sectors, according to a report from Syracuse University's Transactional Records Access Clearinghouse. The financial services sector received less than one-fifth of the audit frequency of other sectors during the years 2002 to 2004. The TRAC study examined the audit rates of companies in a number of sectors, each of which had at least $250 million in assets.
The IRS contended that the data was flawed due to the fact that an audit of a financial concern would be reported as a manufacturing sector audit if the branch conducting the examination did not have a financial industry specialist on staff.
GASB issues concepts statement
Norwalk, Conn. - The Governmental Accounting Standards Board has released Concepts Statement No. 3, Communication Methods in General Purpose External Financial Reports that Contain Basic Financial Statements, providing guidelines for presenting financial disclosure information.
The methods include recognition in basic financial statements, disclosure notes to financial statements, and presenting supplementary information. GASB said that the definitions and criteria in Statement No. 3 should aid the board or the preparers of financial reports in determining the best methods to use.
The statement can be ordered by calling (800) 748-0659, or via GASB's Web site at www.gasb.org.
Global Crossing ends 3-year probe
Washington - Long-distance carrier Global Crossing and three of its former executives have settled a three-year investigation by regulators into the company's accounting practices.
The Securities and Exchange Commission ordered former executive vice president of finance Joseph P. Perrone, former chief financial officer Dan Cohrs, and former chief executive Thomas J. Casey to pay $100,000 fines and demanded that both the company and the executives not commit future violations.
The settlement ended a protracted investigation into whether Global Crossing artificially inflated revenue by swapping fiber-optic network capacity with other telecommunications carriers. The company did not admit or deny the findings.
