Audit & Accounting

KPMG LLP has admitted 134 new partners in its 2006 class. A year ago, the Big Four firm admitted a record 166 new partners. Chairman and chief executive Timothy Flynn said in statement that the partners have each distinguished themselves by delivering KPMG’s promise of professionalism, reflected the firm’s focus on creating “an unmatched client experience, rooted in quality service and professional advice based on deep industry knowledge, regulatory knowledge and the highest standards of integrity.” Of the total new partners, 54 work in the audit practice, 36 in the advisory practice, 25 in tax and an additional 19 in national support services. With the addition of the new group, the firm’s U.S. partnership now totals 1,742 partners. KPMG LLP, the U.S. member firm of KPMG International, employs about 20,000 workers throughout 93 offices across the country. KPMG International’s member firms have 104,000 professionals, including 6,700 partners, in 144 countries.

A $39.5 million settlement between PricewaterhouseCoopers and investors in a mortgage loan fund is a done deal, now that the California Supreme Court has officially dismissed the original filing. The state’s highest court had agreed to hear the case back in March, just days before the plaintiffs reached a settlement after agreeing to mediation with the Big Four firm. That settlement has since received approval from both a federal bankruptcy court as well as the Alameda County Superior Court. Both sides requested a dismissal of the case in early September. The plaintiffs sued PwC in 2002, accusing the firm of abetting a fraudulent scheme carried out by then general partner, James Hillman, of two partnerships in which they had invested. Hillman and the director of the mortgage fund were sued in 2001 by the Securities and Exchange Commission. According to court filings, PwC audited the financial statements of the two partnerships in 1999, but ended its audit after telling Hillman he had given the firm falsified audit reports. The case itself had questioned whether PwC was required to inform investors of the fraudulent scheme. The money will go into a fund established under a global settlement agreement reached in federal court in 2002, and be distributed to plaintiffs.

The Internal Revenue Service has launched its much-anticipated Income Verification Express Service or IVES, a program offering immediate electronic delivery of client tax and income information to financial lenders such as mortgage companies.

Lawmakers have passed a provision as part of the sweeping Financial Services Regulatory Relief Act of 2006, that exempts CPAs from the Gramm-Leach-Bliley Act’s requirement that they send clients an annual privacy notice.

Just one week after the Treasury Department released a report on its strategy for closing the $300 billion tax gap, the ranking minority member of the Senate Finance Committee labeled the plan “incomplete” and not credible.Sen. Max Baucus, D-Mont., said he would continue to hold up the nomination of Eric Solomon as the assistant Treasury secretary for tax policy.

Several more 2007 Toyota models have been certified by the Internal Revenue Service to qualify for the hybrid tax credit enacted by the Energy Policy Act of 2005.

When the Auditing Standards Board met back in August, its discussions were appropriate for a mid-to-late summer session - relatively quiet, with no pronouncements issued, no exposure drafts, just some pensive ponderings on progress soon to come.While topics included communication, clarity and auditor reports, and although it did not reach any decisions, the board felt that the roundtables could eventually lead to broad and substantive changes in the nature and form of information relating to audits.

FOREST OIL TAPS E&Y: Denver-based Forest Oil Corp. dismissed its auditor, Big Four firm KPMG, and hired Ernst & Young as its new independent accountant. In a filing, the oil and gas exploration concern said that the decision to jettison KPMG was approved by its executive committee. KPMG's reports on Forest Oil's two most recent fiscal years ended Dec. 31, 2004 and 2005, did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.ENTRAVISION ENGAGES PWC: Spanish-language media concern Entravision Communications Corp. terminated McGladrey & Pullen as its independent accountant and named Big Four firm PricewaterhouseCoopers as its replacement.

Edward W. Trott, a member of the Financial Accounting Standards Board, said that he would step down from that position in June 2007, after eight years on the board of the standard-setter.Trott had accepted a second five-year term in July 2004, but at that time had advised the trustees of the Financial Accounting Foundation - the body responsible for the oversight, administration and finances of both FASB and its counterpart for state and local government, the Governmental Accounting Standards Board - that in 2006 he would re-evaluate his ability to complete that term. The foundation is also responsible for selecting the members of both the FASB and GASB boards. FASB's board is currently comprised of seven members.

In July, the Financial Accounting Standards Board announced that its agenda now includes a major project on lease accounting. As justification, the board cited encouragement from its own advisory councils and the Securities and Exchange Commission staff, all of which apparently concurred that "current lease standards fail to provide complete and transparent information."The announcement also stated that "lease arrangements have evolved considerably over the past 30 years and the standards are outdated." We're tempted to say, "Well, duh!" but we won't because of our great satisfaction that the board is preparing to throw out this example of WYWAP (Whatever You Want Accounting Principles) and POOP (Pitifully Old and Obsolete Principles).