Audit & Accounting

Section 404 of the Sarbanes-Oxley Act, which deals with auditing internal controls, has brought widespread agreement with the act's intentions and equally widespread complaints of increased costs and a disturbing lack of specificity on some aspects of the rules.

While corporate scandals in the U.S. have received a great deal of attention, Europe has its own versions of Enron and WorldCom. Parmalat, the Italian agribusiness giant, and Ahold, the Dutch retailer, are two recent examples. The scandals and the resulting loss of investor confidence have increased global efforts to create a regulatory framework that improves transparency in financial reporting for both publicly traded companies and government agencies.

The Securities and Exchange Commission has released a report recommending that the Financial Accounting Standards Board reform accounting standards for such front-burner issues as pension and lease accounting.

The regulator that oversees mortgage concerns Fannie Mae and Freddie Mac said this week that the condition of both enterprises "warrants significant supervisory concern."

The leadership change at Big Four firm KPMG became official Wednesday, as the firm's 1,600 U.S. partners ratified the election of Timothy P. Flynn, 48, as chairman and chief executive, and John B. Veihmeyer, 49, as deputy chairman and chief operating officer.

Big Four firm KPMG LLP, which is in talks with the Justice Department related to the agency's ongoing tax shelter probe, said that it takes "full responsibility" for the past unlawful conduct by some its former partners.

Mortgage finance giant Freddie Mac said that it expects to post a loss because of anticipated claims likely to stem from various lawsuits and enforcement actions related to its multi-billion-dollar earnings restatement.

The Securities and Exchange Commission has opened a formal investigation into OfficeMax Inc.'s accounting for vendor income, the company disclosed.

HealthSouth Corp. will pay $100 million to settle charges brought against it by the Securities and Exchange Commission alleging that it cooked its books by more than $2 billion over several years.

Tax and accounting software provider CCH has added Securities and Exchange Commission comment letters to its Accounting Research Manager 10-K Lookup tool.