Audit & Accounting

SEC ADOPTS FRAUD MEASUREThe Securities and Exchange Commission voted to adopt a sweeping anti-fraud rule that targets money managers who deliberately mislead investors.

Computer maker Dell said its audit committee has finished its investigation into the company's accounting and financial reporting issues and has identified significant errors and irregularities.

On a muggy July day five years ago, President George W. Bush put his pen to the Sarbanes-Oxley Act, an expansive piece of corporate reform legislation designed to help restore investor confidence in a nation scarred by an apparently unending series of accounting scandals.The 11-section measure, which essentially changed the way public companies do business, ushered in a cascade of new reforms, service prohibitions and standards for public issuers, their boards and the CPA firms that audit them. It was the most deliberately invasive regulatory reform passed since the Roosevelt administration, touching nearly every aspect of the financial reporting process.

Is the Governmental Accounting Standards Board in trouble? "Trouble" may be too strong a word, but it's been a bumpy couple of months for the state and local government standard-setter.In December, the Government Financial Officers Association voted to "re-assess GASB's role as the authoritative accounting standard-setting body for state and local governments."

The Securities and Exchange Commission approved the Public Company Accounting Oversight Board's new internal control auditing standard by a 5-0 vote in late July.Registered audit firms are now required to use the new standard for all audits of internal controls no later than for fiscal years ending on or after Nov. 15, 2007. Auditing Standard No. 5 replaces the older AS2.

This coming January officially marks the three-year countdown before the axe falls on the lower individual capital gains rates now in place.Since May 6, 2003, thanks to the Jobs and Growth Tax Relief Reconciliation Act of 2003, gain from the sale of most long-term capital assets is subject to a maximum tax rate of 15 percent (5 percent for individuals in the 10 percent or 15 percent tax bracket). Starting in 2011, however, these rates are scheduled to revert to their former pre-May 6, 2003, levels of 20 percent and 10 percent, respectively. Nevertheless, before the party ends, a 0 percent rate will replace the 5 percent rate for tax years beginning after Dec. 31, 2007.

The Governmental Accounting Standards Board has unveiled a new standard on accounting and reporting for intangible assets, clearing up a requirement of Statement 34 that had caused widespread uncertainty in the preparation and comparison of governmental financial reports.GASB Statement 51, Accounting and Financial Reporting for Intangible Assets, adopts a clear and simple description of intangibles as assets that have no physical substance, are non-financial in nature, and have a useful life extending beyond a single reporting period. Such assets would include easements, internally generated and third-party computer software, water and timber rights, patents, and trademarks.

On the heels of a conviction against former Brocade Communications CEO Gregory Reyes, the Securities and Exchange Commission has filed fraud charges against Michael Byrd, the company's former CFO and COO.

PricewaterhouseCoopers and IBM agreed to pay about $5.3 million to settle a lawsuit brought by the Justice Department over accusations that they paid and solicited kickbacks for technology contracts with government agencies.

Thomson Tax & Accounting's Practitioners Publishing Co. unit has beefed up its audit guidance line with two products aimed at auditing construction contractors and financial institutions.