Audit & Accounting

An expert in global fraud protection, Frank Piantidosi has spent the past two decades on forensic investigations, uncovering illegal financial activity around the world.

The International Accounting Standards Committee Foundation, the oversight body for the International Accounting Standards Board, has taken several steps to enhance its governance structure and allow more input from government securities regulators, as well as investors.

Internal auditors are finally starting to adapt to the post-SOX era and "rebalancing" some of their priorities as they return to more traditional audit functions.

The Securities and Exchange Commission has released a staff accounting bulletin that revises and rescinds some of the rules for written loan commitments to make them more consistent with recent accounting rules.

Accounting firm LarsonAllen has merged with three other firms, expanding its presence in Minnesota and Southwest Florida.

Congressional tax writers have issued a subtle warning to charities and other nonprofit organizations: Start placing a heavier emphasis on serving diverse communities, or you may risk losing your tax-exempt status.That was the veiled threat leveled at tax-exempt organizations during a round of hearings before the House Ways and Means Oversight Subcommittee. In announcing the hearing, Chairman John Lewis, D-Ga., noted that while "charitable organizations play a key role in our country's ability to respond to the needs of its communities, those communities are becoming increasingly diverse."

Barry Melancon, president and chief executive of the American Institute of CPAs, and a number of other accounting profession luminaries such as Tim Flynn, chief executive at Big Four firm KPMG, have been named to the Treasury Department's new Advisory Committee on the Auditing Profession.The 21-member group will spend roughly a year examining issues facing the auditing profession, including such front-burner topics as audit firm concentration, auditor liability caps, recruiting young people to the profession, the effect of Sarbanes-Oxley and the move toward international standards.

In medieval times, scores of religious contemplatives grappled with such esoterica as how many angels could fit on the head of a pin - comfortably or otherwise. Despite failing religious education for two consecutive years, I don't feel that a theology pedigree is a requirement to ascertain that they probably never reached a consensus on such matters.Fast-forwarding several hundred years, Treasury Secretary Henry Paulson recently assembled what he hopes are the best minds to develop recommendations on more practical matters, such as how to sustain a "vibrant audit profession." The committee will spend one year wrestling with that equation, and along the way will tackle ancillary issues like audit firm concentration, audit quality, the process of recruiting and training accountants, auditor independence (not that again!), and the possibility of capping auditor liability in cases of corporate fraud. A 21-member committee, comprised of representatives from business, academic and regulatory circles, will carry out those ambitious marching orders. (For a full roster, see page 3.)

Like many others, we're interested in the work of the Securities and Exchange Commission's recently created advisory Committee on Improvements to Financial Reporting. Improvement is something that everybody likes, at least if it doesn't really change very much, and certainly not the important stuff. The committee has some outstanding members, as well as others we don't expect to come up with much new because they've had other, even better, platforms for initiating change but didn't get it done in the past.The chair is Robert Pozen, the non-executive chairman of MFR Investment Management, one of seven American subsidiaries of the Canadian Sun Life Financial group. On the one hand, his affiliation with a mutual fund company is promising because it might mean that Pozen thinks like a financial statement user. However, he is an attorney by training and has been a general counsel in the industry, but never an analyst. Indeed, his present position might make him think more like a statement preparer than a user. Only time will tell which perspective he will apply, although evidence suggests the former will prevail.

Individuals managing their own assets receive no legal guidance on the standards for prudent investing.Fortunately, they can look to the Uniform Prudent Investor Act for guidelines. The act sets forth standards that govern the investment activities of trustees, and is currently the law in almost every state. While those standards do not apply to individuals managing their own assets, they do provide guidance on what the courts consider prudent investing.