Audit & Accounting

Responding to clients' need to manage massive amounts of electronic information, the forensic and dispute services practice of Deloitte & Touche LLP has launched AFTnet Services, a scaleable solution that links data collection, management, discovery and investigation.

The American Institute of CPAs lauded the introduction of legislation this week that would amend the privacy provision of the Gramm-Leach-Bliley Act applicable to CPAs.

In response to requests from tax practitioners and professional organizations for clarification, the Internal Revenue Service and the Treasury Department issued revisions to the new Circular 230 standards -- rules related to written tax advice issued last December.

Companies complying with Section 404 of Sarbanes-Oxley should, among other things, have internal experts develop the plan for documentation and testing; should maintain open and continuous communication between management and the internal and external auditors; and should include the external auditors in internal audit training sessions, according to a new report detailing 404 best practices.

The College for Financial Planning, based here, is offering advisor training for a financial planning designation that focuses on issues related to working with seniors -- a fast-growing age group that it says will represent 20 percent of the population within the next 25 years.

In response to concerns raised at a Securities and Exchange Commission roundtable last month on implementing internal control reporting provisions, the Public Company Accounting Oversight Board has published additional guidance for auditors on how to implement its standard related to the audits of internal controls over financial reporting. The guidance on Auditing Standard No. 2 is expected to lower the costs associated with internal control audits, the board's chairman and chief auditor said Monday. PCAOB Auditing Standard No. 2, which refers to the auditor's attestation as an audit of internal control over financial reporting, is the standard that auditors must use to satisfy their obligations under Section 404 of the Sarbanes-Oxley Act. The main purpose of the guidance is to "clarify Auditing Standard No. 2 and to show that if it is applied correctly, the way we meant it to be applied, in addition to being very important, it should be cost-beneficial," PCAOB Chairman William McDonough told reporters during a conference call. "We're working on improving the methodology, and the improvement in methodology will result in lower costs," McDonough said. PCAOB chief auditor Douglas Carmichael noted that if companies are successful in integrating their financial statement and internal control audits, "they'll have some reduction in cost in each audit." "Fees should come down for a variety of reasons," said Carmichael. "The integration of the audits, and the learning curve -- companies will get better at doing this. With our new FAQs, we're giving specific advice on things that can be done to make audits more effective and more efficient. That way, companies can spend less time in areas that are truly low-risk." The guidance includes a board policy statement on the implementation of the standard, which McDonough said passed last Friday in a unanimous vote, and a series of staff questions and answers that he said gives "more technical guidance to issuers and especially auditors." The Board Policy Statement and the FAQ both focus primarily on the scope of the internal control audit and how much testing of a company's internal control over financial reporting is required, which the PCAOB said are the issues that primarily drive cost. According to the policy statement, auditors should: * Integrate audits of internal control with financial statement audits, so evidence gathered and tests conducted in the context of either audit contribute to completion of both audits; * Exercise judgment to tailor audit plans to the risks facing individual clients, instead of using standardized "checklists" that may not reflect an allocation of audit work weighted toward high-risk areas; * Use a top-down approach that begins with company-level controls, to identify for further testing only those accounts and processes that are, in fact, relevant to internal control over financial reporting, and use the risk assessment required by the standard to eliminate from further consideration those accounts that have only a remote likelihood of containing a material misstatement; * Take advantage of the flexibility that the standard allows to use the work of others; and, * Engage in direct and timely communication with audit clients when those clients seek auditors' views on accounting or internal control issues before those clients make their own decisions on such issues, implement internal control processes under consideration, or finalize financial reports. "Auditors didn't seem to be engaging in as full a dialogue with client as is legal and makes sense," McDonough said. "The concentration on retaining independence may have led people to exaggerate how little communication they can have. This is easily managed by the issuer asking for a view on something they already think rather than asking the [auditor], 'What should I do?'" The board's Standing Advisory Group will meet on June 8 and 9 to discuss implementation of the standard. "We'll have the opportunity to consult with them to see if any additional administrative clarification is necessary or if it's necessary to reopen [AS2]. It's not likely, but not impossible," McDonough said. "Some fine-tuning may be needed in the future, but that doesn't appear to be the case now. But we need clarification to applied so we get more cost benefit out of it." He added, "If we have to reopen [the standard], then we get into rulemaking and that would take about six months. What we can do administratively is much more beneficial."

Cost accounting got you down?You're not alone. As much as 80 percent of Amercan management accountants agree that their current methods just aren't good enough for current business.

FPA SEEKS BOARD NOMINATIONS: The Financial Planning Association is currently accepting nominations for its 2006 board of directors.Members of the FPA's 2005 board will elect the 2006 board from candidates nominated by June 30, 2005. The 2006 board of directors will consist of up to 18 members, including three officers. The new members elected in 2005 will each serve three-year terms beginning on Jan. 1, 2006.

With more than 76 million Baby Boomers moving toward retirement, the need to save more money for a secure financial future is clear.These individuals, who currently constitute 29 percent of the U.S. population, are putting away only one third of the estimated amount that they need to retire comfortably.

Generally, property inherited from a decedent gets a basis equal to the property's fair market value on the date the decedent died. This rule applies regardless of whether a federal estate tax return is filed.However, the fiduciary of the decedent's death can elect to value all the property includible in the decedent's estate on the alternate valuation date, but only if that will result in a decrease in both: