House approves $10.5B for IRS

The U.S. House of Representatives passed a Treasury appropriations bill in early July to provide the Internal Revenue Service with $10.5 billion in fiscal year 2006. The Senate has yet to take up consideration of the bill.

The bill easily won passage with a 405-18 vote, after representatives rejected two contentious amendments, the first barring corporate expatriates from competing for federal contracts, and a second halting IRS plans to outsource debt collection. The IRS will also be able to pursue a plan, first announced in May, to close 68 taxpayer assistance centers. Some representatives had discussed requiring that an independent report on the centers be issued before any action was taken.

The bill represents a $313 million increase from fiscal 2005, but the amount is still less than the original budget request after the House shaved off $446 million requested for tax enforcement. The $10.5 billion includes $4.5 billion for enforcement, up $218 million from the fiscal 2005 IRS budget.

Bush nominates Cox as SEC chair

President Bush formally nominated Rep. Christopher Cox, R-Calif., to become the next chairman of the Securities and Exchange Commission, succeeding William Donaldson, who stepped down June 30 after nearly two-and-a-half years at the helm of the regulator. In the interim, the president appointed SEC commissioner Cynthia Glassman to serve as acting SEC chair until Cox is confirmed.

A confirmation hearing for Cox - whose appointment requires Senate approval - could occur in July.

Meanwhile, Senate Minority leader Harry Reid, D-Nev., has recommended that Bush nominate Annette Nazareth, currently the SEC's market regulation division director, for the commissioner post that will be vacated when Harvey Goldschmid leaves in the fall for a teaching post at Columbia Law School.

SEC settles with KPMG Canada

The Securities and Exchange Commisson has settled with KPMG Canada and two of its partners for the audit firm's lack of independence related to its audit of Southwestern Water Exploration Co., a now-bankrupt Colorado concern.

KPMG Canada provided bookkeeping services to Southwestern and then audited its own work, issuing what were supposed to be independent audit reports on Southwestern's financials for the years 1999-2002.

The SEC's order censures KPMG Canada without the firm admitting or denying guilt. KPMG Canada also agreed to adopt new auditor independence policies and procedures and pay $73,682 - its fees for the audit of Southwestern, plus interest.

In addition, two KPMG Canada partners - Gary Bentham, the audit engagement partner, and John Gordon, the concurring and SEC reviewing partner - are prohibited from auditing SEC issuers for two years and nine months, respectively.

Ebbers to settle civil litigation

Facing a potential prison sentence of 85 years for his conviction in the massive accounting fraud at WorldCom, former chief executive officer Bernie Ebbers agreed to pay $5 million and transfer the majority of his assets to a liquidation fund to settle all civil charges related to the company's $11 billion scandal.

The trust would subsequently divest Ebbers' assets, including his Clinton, Miss., home and his ancillary business interests. The settlement stems from a class-action lawsuit by WorldCom investors lodged against former executives and board members, in addition to securities underwriters and auditor Arthur Andersen.

Although still subject to approval by a federal judge, the settlement stipulates that 75 percent of the sale proceeds would go to the class-action plaintiffs, with the remainder earmarked for MCI, as WorldCom is now known.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access