Audit & Accounting

Repealing the federal estate tax could end up choking off billions of dollars in contributions to charities whose resources have been stretched thin by the Hurricane Katrina relief effort, a top tax policy researcher warned Congress.Testifying on behalf of the Brookings Institution's Tax Policy Center, economist William Gale cited a variety of studies suggesting that "estate tax repeal would reduce charitable bequests by between 22 and 37 percent" - a drop that would drain between $3.6 billion and $6 billion each year from the nation's charities.

Calling the proposal for a "return-free" filing system "flawed" and "dangerous to taxpayers," 14 groups have written the President's Advisory Panel on Tax Reform to urge that it be taken off the table in any final report.While the timetable for a final report has been delayed by Hurricane Katrina relief efforts, with the final two scheduled meetings postponed, the return-free concept is one of the proposals under consideration by the panel.

New guidance from Securities and Exchange Commission regulators sets limits on ways to determine the cost of stock options, though the new SEC chairman said that the report was "tentative."Chief accountant Donald Nicolaisen, who will leave the SEC in October, wrote in a statement that he had doubts as to whether the creation of a financial instrument to mimic employee stock options would be an accurate tool. And chief economist Chester Spatt wrote in a memo from the SEC's Office of Economic Analysis that such an instrument would face the inherent difficulty of reconciling market price with the fair value of stock options.

Environmentalism has arrived, and it's here to stay. And apparently the time to account for it has also come. The question is how.Many corporations have seen real, market-driven reasons to report on their environmental impact and sustainability. Consumers are paying attention. Investors are worried about what they're investing in and how environmental liabilities could impact their investments. In many countries, environmental regulation agencies are requiring some degree of reporting.

BearingPoint Inc., a spinoff of Big Four firm KPMG's former consulting business, said that the Securities and Exchange Commission has launched a formal investigation of the company.Along with providing an update to the progress of the company's plans to release its 2004 financial statements, BearingPoint said that the SEC has issued a formal order of investigation into the company. In a statement, BearingPoint said that it believes the matters involved are the same as the informal investigation that it announced in March.

Two state pension funds and other large investors have sued Delphi Corp. and its auditor, Deloitte & Touche, saying that the auto parts supplier made deals with third-party vendors to hide the company's financial problems.

The Securities and Exchange Commission released a request for information on interactive financial data as part of its ongoing efforts to make financial disclosure more useful and accessible to investors.

PricewaterhouseCoopers was ordered to pay $182.9 million in connection with audits it performed for Ambassador Insurance Co., more than 20 years after the company collapsed into bankruptcy.

The Louisiana Division of Administration is soliciting accounting firms to provide oversight of the federal funds received to rebuild in the wake of Hurricanes Katrina and Rita. Proposals are due Oct. 6.

Intuit, which is ramping up an aggressive expansion of its product line for small businesses, is also jumping into the financial planning market.