FEDS SHAVE CAUSEY'S TIMEHOUSTON - Former Enron Corp. chief accounting officer Richard Causey was sentenced to serve 66 months in prison for signing off on the bookkeeping that led to the company's historic bankruptcy.
Causey, 46, was the last of Enron's top executives to be sentenced. He had pleaded guilty in December to securities fraud, striking a deal with prosecutors shortly before he was to be tried along with Enron founder Kenneth Lay and former chief executive Jeffrey Skilling on conspiracy, fraud and other charges related to the company's collapse.
As part of the original deal, Causey also agreed to pay $1.25 million to the government, forfeit a claim to about $250,000 in deferred compensation and serve seven years in prison, which prosecutors could recommend be reduced to five if they were pleased with his cooperation. He never ended up testifying in the trial, though unlike other Enron defendants, Causey didn't skim millions of dollars for himself.
IRS ISSUES GUIDANCE ON PER DIEMS
WASHINGTON - New guidance from the Internal Revenue Service stresses the need for employers to track the amount of expense reimbursement allowances paid to employees on a per-diem basis.
In a revenue ruling, the IRS said that if employers routinely pay per-diem allowances in excess of the federal per-diem rates - but do not track the allowances, require employees to either substantiate the expenses or pay back the excess amounts, and do not include the excess amounts in the employee's income and wages - then the entire amount of the expense allowances is subject to income and employment tax.
The ruling is effective immediately, though the agency is issuing instructions to its agents not to apply the results under the revenue ruling for taxable periods ending on or before Dec. 31, unless there has been intentional noncompliance. The ruling is available at www.irs.gov/pub/irs-drop/rr-06-56.pdf.
SEC SANCTIONS CITY OF SAN DIEGO
WASHINGTON - The Securities and Exchange Commission has entered an order sanctioning the City of San Diego for committing securities fraud by failing to disclose information about its pension and retiree health care obligations.
To settle the action, the city agreed to cease and desist from future securities fraud violations and to retain an independent consultant for three years to foster compliance with its disclosure obligations under federal securities laws.
The SEC order found that the city failed to disclose an unfunded liability to its pension plan that was projected to dramatically increase, growing from $284 million at the beginning of fiscal year 2002 to an estimated $2 billion by 2009, prior to the sale of municipal bonds in 2002 and 2003. Similarly, the city didn't disclose that its liability for retiree health care was an estimated $1.1 billion.
Further, the SEC said that the city also failed to disclose that it had intentionally underfunded its pension obligations so that it could increase pension benefits but defer the costs.
The city consented to the issuance of the order without admitting or denying the findings.
SACRAMENTO FIRMS MERGE
SACRAMENTO, CALIF. - Sacramento-headquartered CPA and management consulting firm Macias Gini & O'Connell LLP announced that it has entered into an agreement to acquire cross-town accounting firm Essary, Dal Porto & Lowe LLP.
Financial terms of the deal, bringing together one of the city's oldest firms with one of its largest, were not disclosed.
EDL has provided tax and audit services to area businesses and individuals for 50 years. Founded in 1987, MGO has offices in the San Francisco Bay area, Los Angeles and San Diego.
CORRECTION
"Providing Outsourcing Solutions," an article in Growing Beyond Borders, a Special Report that accompanied the Nov. 6-26, 2006, Accounting Today, quoted information from an outdated American Payroll Association survey. According to the most recent APA survey (2005), 54.2 percent of its members process payroll in-house, while 45.8 percent receive at least some services from an outside provider.
