Audit & Accounting

The American Institute of CPAs has urged the Internal Revenue Service to withdraw regulations the IRS and Treasury Department proposed in April for changing the open account debt rules between S corporations and shareholders.

The Securities and Exchange Commission's Enforcement Division came under fire in a report that criticized the division's oversight of its caseload.

The American Institute of CPAs and the Financial Accounting Standards Board have set a date for FASB's Private Company Financial Reporting Committee to meet.

The American Institute of CPAs has sent comments to the Internal Revenue Service recommending changes in the redesigned form for tax-exempt nonprofit organizations.

Forensic accounting is hot for a number of reasons. The most obvious is that as a specialty it has become very lucrative. So much so, I know of firms that have stopped during traditional tax and accounting work. Also, accounting and auditing standards are increasingly delineating new obligations with regard to practitioners’ duty to protect against fraud.

The Center for Audit Quality named three of its first public board members, including a former SEC commissioner, Harvey Goldschmid.

Proxy researcher Glass Lewis & Co. has rolled out its ESG Watch List Service, a tool that enables Glass Lewis' proxy voting clients to track companies with environmental, social or governance policies and/or practices that may create operational, performance, financial, legal or accounting risks. The service incorporates ratings from IW Financial, a provider of research, analytics and consulting services that enable investors to incorporate ESG factors into the investment process. ESG Watch List Service notifies users when the practices or the ESG performance of a company within their portfolio approaches a level that may be of concern based on evaluation criteria established for the list by the client. Glass Lewis ViewPoint clients can set up one or more pre-set profiles, or can elect to create custom profiles for rating the 3,000 U.S. companies in the Glass Lewis-IW Financial databank.

The Securities and Exchange Commission has charged some 37 audit firms and 32 audit partners with reviewing the financials of public companies without undergoing mandatory registration with the Public Company Accounting Oversight Board.According to the regulator, the unregistered firms and partners conducted some 60 audits between November 2003 and October 2005.

Heading the list of trends that will shape the future of wealth management are taxes and 30-plus-year retirement planning, so says the results of a survey from the Dow Jones Wealth Management Advisory Council. This is s a group of top wealth managers that are dedicated to promoting the practice of wealth management, facilitating industry discussion, and representing the needs and concerns of the profession. Actually, in its report Wealth Trends, there are five key trends that it says will have a great influence on wealth management over the next five years. They are: 1) Taxation. James Covell, senior vp of RBC Dain Rauscher, says that tax concerns will no longer take a back seat to returns if the capital gains tax doubles. He believes that the first priority for wealth managers will be to find tax-efficient investments that ensure clients hold onto their returns. 2) The 30-Plus-Year Retirement. Joseph Montgomery, managing director of investments for Wachovia Securities, opines that no one can really live on relative returns and that with each passing year, life expectancy increases and retirement age decreases. He feels that wealth managers need to ensure that their clients consistently gain real returns rather than getting pulled into investments that follow the swings of the market. 3) Complexity of Investments. According to George Schietinger, director of Credit Suisse Private Banking USA, investment opportunities are both structurally and geographically more complicated than ever and it will only increase. Accordingly, he says that wealth managers must understand the intricate investment options and be able to explain the risks and rewards associated with these opportunities. 4) Team Approach. Montgomery stresses that the stand-alone manager will face challenges and that the future of wealth management, he believes, lies in a team approach involving disciplines such as law, accounting, trust advisory, and financial planning. He adds that each team member must bring a specialty to support the wealth manager. 5) Diversity. Michael Sawyer, managing director, wealth management, for Smith Barney, points out that wealth managers are becoming more reflective of their clientele and that the next five years will see an increase in women and minorities entering the field and reflect the make-up of the high-net-worth market. The Council members agreed that the next half decade will see a shift in the wealth management industry requiring professionals to be more responsive and knowledgeable. They point out that the clients’ need for advice will continue to grow due to an increasingly complicated financial landscape and that tomorrow’s successful wealth managers must have the support of an expert team that will provide both the information and attention to detail that clients require.

The American Institute of CPAs has issued an exposure draft of a proposed audit and accounting guide for the airline industry and is looking for comments.