Audit & Accounting

As part of its broader initiative to improve financial reporting for insurance accounting, the Financial Accounting Standards Board is seeking constituent comment and perspective on the potential bifurcation of insurance and reinsurance contracts into insurance components and financing components.FASB said that the invitation to comment aligns with the standards-setter's concerns about a potential lack of transparency in the financials of both policyholders and reinsurance companies.

The Securities and Exchange Commission requested that the Public Company Accounting Oversight Board delay issuing guidance related to backdating stock options.According to The Wall Street Journal, the PCAOB had planned to issue an alert to accounting firms about the front-burner topic, which would have advised auditors about grant issues they should examine in audits.

Don't expect many heavy pronouncements from the Financial Accounting Standards Board during the second half of 2006, but behind the scenes there will be a lot of progress and a good number of lesser documents on technical implementation.The only final statement on accounting standards projected for the remainder of the year is on post-retirement benefit obligations, including pensions. A comment period on the proposed standard ended in May; roundtable discussions were scheduled for the end of June.

Congressional investigators have uncovered a new breed of tax chiselers - deadbeat charities that shortchange the government and their own employees by failing to pay millions of dollars in payroll taxes.As tax-exempt organizations, or EOs, charities are excused from income tax liability, but are required to withhold and pay employment taxes for their workers. With one in 12 U.S. civilian workers now employed by exempt organizations, even a small percentage of non-compliance by charities can add up to a significant drain for federal tax collectors.

The Securities and Exchange Commission announced that securities lawyer Andrew N. Vollmer will serve as its deputy general counsel.Vollmer, 52, is a partner in the international law firm of Wilmer Cutler Pickering Hale and Dorr LLP, and has represented corporate clients in SEC investigations and proceedings. He currently serves as vice chair of the firm's Securities Department, and previously served as one of two partners managing the London office.

KPMG LLP announced that it has formed a U.S.-based India Tax Center of Excellence to assist and advise companies that have, or are planning, operations in India. The center will also provide tax services to India-based companies with investment interests in the United States.

The Financial Accounting Standards Board and the International Accounting Standards Board have published the first draft chapters of a document laying out their views for an enhanced conceptual framework.

Yale University officials said that they have received three subpoenas as federal regulators have launched a probe into the Ivy League school's accounting practices surrounding its government research grants.According to published reports, Yale received the subpoenas from the Department of Health and Human Services, the Department of Defense and the National Science Foundation. The subpoenas cover some 47 grants valued at roughly $45 million.

James Lockhart, director of the Office of Federal Housing Enterprise Oversight, said that mortgage finance concerns Fannie Mae and Freddie Mac should each be allowed to prop up the U.S. home mortgage market in periods of financial malaise.In an interview with The Wall Street Journal, Lockhart said the companies, whose combined mortgage portfolio is roughly $1.4 trillion, creates a serious risk if they fail to control their interest-rate risks, but nevertheless both have a role for their portfolios, albeit on a smaller scale, to ensure monies available for home loans.

The Securities and Exchange Commission is looking into the relationship between the former First Union Corp. and KPMG, according to published reports.