Audit & Accounting

The Securities and Exchange Commission said it would distribute over $48 million to more than 12,000 investors who had been affected by Vivendi Universal's fraudulent financial reporting.

Deloitte & Touche and its audit client General Motors agreed to settle a securities class-action lawsuit for a total of $303 million.

Ernst & Young is engaged in lawsuits with Entrepreneur Media Inc. over the use of the term "entrepreneur of the year" by Entrepreneur Magazine.

Prudential Financial has settled with the Securities and Exchange Commission over charges that it engaged in improperly accounting for reinsurance agreements.

KPMG has released a publication on transfer pricing controversies, highlighting how tax authorities worldwide are relying on specific "red flags" to tighten their enforcement and audit efforts.

I am never ceased to be amazed at the misinterpretations of what a certain financial planner does or how the planner acts in conjunction with the client. Let me explain. For one, there is the definition of commission-based and fee-based. Actually, there are three aspects here. A fee-only planner is one who is paid based on a set hourly rate, a project rate, an annual retainer, a percentage of assts under management, or some combination. The planner does not receive any compensation contingent on the sale or purchase or a financial product. A commission-based planner may include brokers who receive compensation based upon commissions paid by the client or by the mutual fund company or insurance company, or other product provider, each time the client is sold a security. A fee-based compensation is not to be confused with fee-only. This indicates that compensation occurs by way of both fees and/or commissions. Now as to those artful terms of advisor, planner, et al, consider this. The term investment advisor describes a rather wide range of people who are in the business of giving advice about securities and they may use a variety of titles such as investment manager, investment counsel, asset manager, wealth manager, or portfolio manager. An investment advisor then provides ongoing management of investments based on the client’s objectives. The terms broker and broker-dealer refer to firms who are in the business of buying and selling securities on behalf of customers. Individual salespeople employed by brokerage firms are usually called stockbrokers and are officially referred to as registered representatives of the brokerage firm. They may also use other titles such as financial consultant, financial advisor, and investment consultant. A financial planner, unlike an investment advisor and broker, is not a legally defined term and it usually refers to providers who develop, and may also implement, comprehensive financial plans for clients based on their long-term goals, or who may prepare plans to address specific issues their clients may face such as retirement income planning, funding of educational expenses, and the like. When you talk about a comprehensive financial plan, you can turn to the National Association of Personal Financial Advisors who defines comprehensive financial planning advice as the coordinated consideration of each of the following areas for a client: income tax, cash flow, retirement planning, estate planning, investments, risk management, and any special needs planning.

Ernst & Young has settled charges with the Securities and Exchange Commission for $2.9 million alleging a conflict of interest in its audits of three companies.

The Financial Accounting Standards Board has issued a revised exposure draft of a proposed standard on earnings per share, along with a staff position on endowments for nonprofit organizations.

The Internal Revenue Service and the Treasury Department have issued a ruling to discourage companies from transferring pension plans to unrelated firms.

The Securities and Exchange Commission has issued a warning about the use of 401(k) debit cards that allow employees at some companies to borrow money from their retirement plans.