Audit & Accounting

In a good news/bad news scenario for many publicly traded companies, a recent poll of financial executives showed that while the costs of audit fees rose in year-over-year comparisons, there was a marked decline in Sarbanes-Oxley 404 compliance expenses.According to a recent survey of 185 companies conducted by Financial Executives International, larger companies, or accelerated public filers — which comprised about 90 percent of the respondents — spent an average of $3.6 million on total audit fees last year, up nearly 2 percent from 2006.

With governmental accounting changing fast in a fast-changing financial environment, the Governmental Accounting Standards Board has added projects to its agenda to deal with the increasing variety of public/private partnerships, the common presentation of financial statements for reporting units that do not qualify as reporting entities, and for developments in pension accounting.The decision to review existing standards on post-employment benefits was based on an extensive research project that began in early 2006.

The May 2008 issue of The Journal of Accountancy ran opinion pieces on the role of accounting in the subprime crisis and subsequent bursting of the credit market bubble. Paul Miller was invited to comment on a controversial claim that mark-to-market practices made things worse. The critics claim that GAAP practices weakened institutions that invested in collateralized debt obligations by revealing large losses when the CDOs’ market values evaporated.They assert that financial statements would better serve the public interest if managers can keep unrealized losses (which they consider to be unreal) out of their financial statements. By a huge leap of ego, they conclude that they and everyone else would be better off if nobody is aware that those losses had occurred. After all, everyone knows they aren’t real because they are always followed by gains. Except when they aren’t, of course.

The Financial Accounting Standards Board may change some accounting rules to make it more difficult for banks to get subprime loans off their books.At an accounting conference held last month in New York, FASB Chairman Robert Herz said that the rules might require banks to keep loans on their books that they previously have been able to package and sell off or securitize.

The American Institute of CPAs has sent the Internal Revenue Service a spreadsheet-full of comments on the draft instructions for the revised Form 990 that will be used by tax-exempt organizations to file their returns next year.

The Public Company Accounting Oversight Board issued the latest inspection report of Deloitte & Touche, noting problems with nine audits performed by the firm last year.

The MetLife Mature Market Institute has available to consumers, especially those who are not in "traditional families," some tips on how to make the right choices in preparing for retirement, notwithstanding the challenges they face.

The Securities and Exchange Commission has charged a former Ernst & Young partner, an investment banker and her father with insider trading involving information about potential M&A transactions.

The U.S. Financial Accounting Standards Board and the International Accounting Standards Board said they are seeking public comment on two documents that are part of their joint project for developing an improved conceptual framework for future accounting standards.

CPA firm Marcum & Kliegman is expanding from New York to New Jersey by merging with RosenfarbWinters, a specialist in forensic accounting.