Audit & Accounting

Tax practice for CPAs is changing. Recent modifications to Circular 230, the U.S. Treasury Department regulations that govern practice before the Internal Revenue Service, have established several changes that leave CPAs with a new standard for the practice of taxation.The rationale for the revised regulations is part of an IRS effort to promote ethical tax practices and curb abusive tax avoidance programs promoted by some tax professionals. Some CPA and law firms were coming up with tax-motivated transactions for clients and then packaging those transactions to sell to other companies.

Advanced degrees are being obtained by a higher percentage of the middle- and upper-class population than ever before. Many of these students hold full-time jobs. The recent development of online universities has only served to fuel this trend. The ability of working students to take a business expense deduction for tuition expenses likewise has grown in importance.With MBAs being one of the hot degrees to have as of late, because of its apparent ticket to success in many different business settings, it's a small wonder that a recent Tax Court decision has attracted more than its share of attention. That case (Allemeier Jr., T.C. Memo. 2005-207) appears to have opened up the possibility that the expense for obtaining a larger number of MBA degrees can be written off as a trade or business expense.

As the American Institute of CPAs' director of auditing and attestation, Chuck Landes has guided the Auditing Standards Board through the upheavals of the Sarbanes-Oxley Act, and in late October, he saw the board issue 11 inaugural standards for the audits of private companies."This was a monumental meeting," Landes said of the most recent ASB meeting. "I am just thrilled. I'm very proud of the technical staff, who have worked very hard and are finally seeing the fruits of all their labor come to fruition in the issuance of these new auditing standards. These standards make significant changes in how some auditors perform their work, and clearly they will improve the quality of auditing."

The Financial Services Authority, re gulator of financial service providers in the U.K., has expressed worries about the systemic risk that comes with the dominance of the Big Four accounting firms.

KPMG LLP has been selected by the YAI/National Institute for People with Disabilities Network as its 2005 Corporation of the Year. Past honorees include Pfizer, Avon Products, RJR Nabisco and Time.

The Public Company Accounting Oversight Board will meet prior to the Thanksgiving holiday in order to address a number of items.

In one of his last public speaking appearances before stepping down as chairman of the Public Company Accounting Oversight Board November 30, William McDonough told a roomful of financial and accounting executives that, while much progress had been made in restoring public confidence, maintenance is an ongoing mission.

The Public Company Accounting Oversight Board has released critical inspection reports for the audits of PricewaterhouseCoopers and Ernst & Young, saying that the firms' work has so many deficiencies, their evaluations of companies' finances may be questionable.

Financial Executives Research Foundation, the research affiliate of Financial Executives International, has released two new reports on Sarbanes-Oxley compliance and management reports on internal controls.

By a wide majority, the Senate passed legislation to hopefully strengthen corporate pension programs and provide aid to pension insurance agencies already in debt. A similar bill rewriting pension rules has received approval from two House committees.