Audit & Accounting

The Securities and Exchange Commission stepped up to a formal probe its previous informal inquiry into accounting issues at mortgage giant Fannie Mae this week, the company disclosed in an SEC filing.

Social Security and Supplemental Security Income recipients will see a 2.7 percent bump in their benefits starting in 2005 under a cost of living adjustment announced Tuesday.

The Public Company Accounting Oversight Board will provide its full inspection reports to states that agree to honor Sarbanes-Oxley confidentiality provisions, the board's chairman told state regulators this week.

The Securities and Exchange Commission has named former Andersen partner Julie A. Erhardt to serve as deputy chief accountant.

Big Four firm PricewaterhouseCoopers named former Andersen and BearingPoint executive Edgardo Pappacena to global strategy leader Ñ a newly created post where he will be charged with facilitating the development and execution of business, political and regulatory strategies for the firm.Prior to coming aboard at PwC, Pappacena served as a managing director and global leader of the strategic transformation practice at consulting giant BearingPoint. He also spent 24 years at Arthur Andersen, most recently as global managing partner of the firm's business consulting group."Edgardo brings a unique combination of both global client service and operating skills to this new role, and we expect that he will enhance the firm's ability to navigate our rapidly changing environment and aggressively strengthen our competitive advantage and position in the market," said Samuel DiPiazza, global chief executive at PwC.

Sen. Mike Enzi, R-Wyo., the sole accountant in the Senate, is spearheading a bipartisan effort to block the proposal by the Financial Accounting Standards Board to require the expensing of stock options, claiming that it would harm the small business owner.Last week, FASB said that it would delay the implementation of its options expensing proposal by six months. However, Enzi's effort wants to derail the proposal entirely.In a statement, Enzi said, "FASB is right to slow down its stock option proposal, but a delay should occur because FASB is working to test the accuracy of the evaluation formulas, not because it wants to give companies more time to prepare for implementing a flawed proposal. The development of entrepreneurial companies and the small business community should not have to absorb the shock of a proposal that has not been thoroughly tested and could cause irreversible harm."Enzi has also voiced concerns that FASB's plans for estimating the value of options are inaccurate.Enzi earlier had offered up S. 1890 -- a bill requiring options expensing only for larger companies -- but that measure has met with a cold reception from colleagues such as Senate Banking Committee chair Richard Shelby, R-Ala., and Sen. Peter Fitzgerald, R-Ill.Meanwhile, in July, the House passed H.R. 3574, a diluted options expensing measure that requires companies to expense options given to the top five executives. Supporters of FASB's expensing plan are fearful that Enzi and like-minded allies will avail themselves of FASB's six-month delay to gather enough support to kill the proposal.

The Financial Accounting Foundation, overseer of the Financial Accounting Standards Board, named former Paine Webber/UBS managing director Donald M. Young to the board of the accounting standard-setter.Young's three-year term is effective Jan. 1, 2005. He will compete the term of Gary S. Schieneman, who resigned.In addition to a five-year stint at Paine Webber/UBS, Young's resume includes two years as managing director at Prudential Securities, as well as serving as a director and senior vice president at Lehman Bros.He also held a number of marketing and finance posts at Burroughs Corp., now called Unisys Corp.

When President Bush signs the FSC/ETI bill, the days of small business owners and professionals such as doctors and lawyers expensing luxury SUVs are over.Writers of the 600-page measure closed a tax break that allowed business owners to save as much as $33,000 on the purchase of a $1000,000 vehicle, according to Tax Analysts.The Jobs and Growth Tax Relief Reconciliation Act of 2003 created the break by increasing from $25,000 to $100,000 the amount that small businesses can expense in the first year for buying a vehicle weighing 6,000 pounds or more.The incentive was originally written to assist farmers and contractors to invest in larger equipment, but the floodgates opened when it was discovered that luxury SUVs also qualified.The amendment reduces the SUV deduction to $25,000, while still allowing the farmers and contractors the break.

When it comes to measuring the non-financial aspects of corporate performance, most board members and executives say that companies fall short, according to a Deloitte Touche Tohmatsu survey.

Taxware, a provider of tax calculation and compliance solutions and a subsidiary of First Data Corp, has launched TaxSolver 4.2, tax return generation software with Sarbanes Oxley compliance functionality.