Audit & Accounting

The Securities and Exchange Commission voted to adopt a sweeping anti-fraud rule that targets money managers who deliberately mislead investors.The new rule, which was first proposed by the SEC in December, also has been expanded to include hedge funds.

The IRS said it is reconsidering some of the private letter rulings its associate chief counsel’s office has issued regarding the gift tax consequences of trusts that employ distribution committees.The IRS’s chief counsel has discovered that some of the conclusions in the rulings may disagree with some prior revenue rules.

I first came across the term a number of years ago when consultants stressed to me the importance of identifying where a business was in its life cycle. These consultants believed businesses and industries have a life cycle, and the key is identifying where the business is at that time. In the case of a business, its life cycle includes progressive identifiable stages, such as the “seed,” start-up, growth, established, etc.

A survey of internal auditors around the world found increasing adherence to standardization and a growing impact on organizational governance and risk management.

Accounting firm Spear Safer has agreed to pay $3.5 million to settle allegations of improperly auditing a financial company, Mutual Benefits, accused of defrauding 30,000 investors out of $830 million.

Thinking about expanding your services to encompass financial planning? Ask yourself this: Are you entering into the business for the right reasons?"I think the first thing a CPA should consider is the why. Why do they want to be in the business?" asked Bob Palmer, president of Plante Moran Financial Advisors in Southfield, Mich. "I think the proper answer is because [CPAs] are being asked by their clients for help in this area. They think they have a unique perspective because of the intimate relationship they've developed, the knowledge of the history of the individuals and their businesses."

E&Y DISMISSED AS CYGNE AUDITORCygne Designs, a New York-based clothier, dismissed its auditor, Big Four firm Ernst & Young, and named Mahoney Cohen & Co. as its new independent accountant.

This column is approximately the 250th that has appeared under the title of "The Spirit of Accounting." Paul Miller has been around for all of them, and Paul Bahnson for the latest 150. As we were looking ahead to what to write about next, we looked back to the first few columns we published to see whether their messages might still be relevant for today.It turns out that they were, and we thought it would be insightful to reprint this one that first appeared in September 2000. One of the issues being debated at that time was the question of whether non-audit fees could compromise auditor independence. In those days, Enron was considered to be an amazing company, instead of the economic disaster that we now know was going to happen in 2001.

Donor-advised funds have captured headlines since the millennium changed, often for their meteoric rise in popularity. There was an estimated $5.5 billion in donor-advised funds nationwide in 1995, while the current estimate is nearly $20 billion.These giving vehicles have existed for more than 70 years. Despite their longevity and impressive growth, numerous misperceptions about donor-advised funds persist. These common "myths" underplay the real value that a DAF can have in helping you meet your clients' philanthropic needs.

SEC WON'T APPEAL COURT DECISIONThe Securities and Exchange Commission said that it would ask a court to allow four months for investors and their brokers to respond in light of a court decision affecting an estimated 1 million fee-based brokerage accounts.