Audit & Accounting

CVB ENGAGES KPMGCVB Financial Corp., an Ontario, Calif.-based holding concern for Citizens Business Bank, has hired Big Four firm KPMG as its independent accountant, replacing McGladrey & Pullen.

By now, your clients should have heard the term "REIT," or real estate investment trust, in the investment world, but they may be wondering what one is and how it works.First, they should know that REITs are not new. They've been around for more than 45 years. However, it has only been since the 1990s that REITs have gained popularity.

IRS RULES ON PARTIAL TERMINATIONThe Internal Revenue Service ruled that a partial termination of a qualified plan occurred where 23 percent of a plan's participants were no longer active due to the closing of one of the employer's four locations. Therefore, all plan participants were fully vested.

The Financial Accounting Standards Board said it is looking for suggestions on whether it should pursue a project on accounting for insurance contracts, and whether it should team up with the International Accounting Standards Board, which has been working on a similar project.

Connecticut Governor Jodi Rell vetoed a bill that would have allowed Connecticut to set its own accounting standards."I have serious concerns about the potential fiscal impact this bill may have," said Rell. "The plain language of this bill would allow the comptroller to issue financial statements in whatever standards she prescribed."

It may seem belated, but the Governmental Accounting Standards Board has just recently gotten around to defining such fundamental accounting concepts as "asset" and "liability."It has also defined a pair of distinct financial statement elements that are new to accounting and whose definitions should clarify certain questions that have confounded governmental accountants and auditors for years.

Fewer taxpayers took advantage of the Internal Revenue Service's free electronic tax return filing service in 2007 than in previous years, according to a new audit report released by the Treasury Inspector General for Tax Administration.Moreover, the audit identified multiple calculation errors made by the commercial software of Free File Alliance firms.

The more we consider what the Financial Accounting Standards Board accomplished with SFAS 159, the more we're warming up to the sea change it represents. This standard, titled "The Fair Value Option for Financial Assets and Financial Liabilities," permits without requiring managers to account for financial assets and liabilities using their fair values, with unrealized gains and losses flowing through the income statement. Some have disparaged SFAS 159 for not mandating full fair-value reporting, while others have criticized its "optionality."We see it quite differently. For years we have endorsed the Quality Financial Reporting paradigm that calls managers to step out on their own and try to meet the needs of the capital markets for useful information. In effect, SFAS 159 provides a nudge in this direction by allowing, even encouraging, innovative managers to jump into QFR by applying fair value without waiting for everyone else to get into the pool. We've often said that the biggest rewards will go to those who start providing better financial statements, so we're gratified that FASB seems to have seen it our way.

The Certified Financial Planner Board of Standards has now bolstered its ethical standards for financial planners who can use its CFP certification designation. The intent is to get the American consumer to the point of trusting that their financial planners who have this particular mark will be placing the clients’ interests well ahead of their own. According to Karen Schaeffer, who chairs the CFP’s Board of Directors, the demand for financial planning is high and growing. “Each day millions of Americans must make important financial decisions, from Baby Boomers on the verge of retirement to the younger generations looking for ways to build their nest eggs.” She adds, “As company-sponsored pensions are being replaced by self-administered 401(k)s and IRAs, and as more responsibility for medical coverage shifts to individuals, Americans today are often required to make a broader range of fiduciary decisions than the decisions their parents made, and more people are finding professional financial planning assistance a necessity.” Interestingly-enough, in a recent survey commissioned by the CFP Board, 97 percent of the more than 1,100 participants identified trustworthiness a the most important factor they considered when looking for a professional financial advisor. That’s pretty much where that code of ethics and practice standards come in, and it also helps to explain the CFP Board’s dedication (and rightly so) in making ethical financial planning available to the public. By the way, some recent updates to these ethical standards, which take effect in July of next year, significantly strengthens the ethical requirements for the more than 55,000 CFP professionals. The CFP people even help the consumer by listing a series of questions that a consumer might want to consider when retaining a financial planner, such as: What experience do you have? What services do you offer? What is your approach to financial planning? Will you be the only person working with me? How will I pay for your services? How much do you typically charge? Could someone besides me benefit from your recommendations? Have you ever been publicly disciplined for any unlawful or unethical actions? Can I have it in writing? I love that last one! According to Schaeffer, “Integrity, competence, and the desire to create trusting relationships with consumers are the cornerstones of CPR certification.” The CFP people deserve a big ovation. They certainly are following through on that.

Scandal-tainted Japanese accounting firm Misuzu Audit, formerly known as ChuoAoyama PricewaterhouseCoopers, has disbanded after 39 years, according to Kyodo News.