Accounting standards

FASB DELAYS FIN 48 FOR PRIVATE COS.Norwalk, Conn. - The Financial Accounting Standards Board has decided to defer the effective date for FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, for nonpublic entities.

The House has voted to approve a $78 billion bill that would provide a temporary fix to prevent the alternative minimum tax from spreading to about 23 million more taxpayers this coming tax season.Congress was under pressure to pass an AMT fix in time to allow the Internal Revenue Service to produce the necessary tax forms without delaying processing and refunds. However, in a sign of the controversy over provisions to raise taxes on some high-income taxpayers and close loopholes, no Republicans voted for the bill and eight Democrats voted against it.

Creating opportunities for mid-tier audit firms to enter the international market could include relaxing ownership rules to permit investment from outsiders - non-accounting professionals - according to an independent study prepared for the European Commission.The report suggested that such a revision would result in opportunities for the mid-level firms to cope with the needs of larger clients, most of whom are currently served by the Big Four.

The current wrangling over the alternative minimum tax is a symptom of the larger problems with having a Tax Code built on patchwork over nearly a century, to the point that it resembles a Rube Goldberg contraption, according to David A. Lifson, president of the New York State Society of CPAs and a co-managing partner at New York-based Hays & Co. LLP.Lifson, who recently testified before the Select Revenue Measures Subcommittee of the House Ways and Means Committee on the AMT, also chaired the NYSSCPA Committee on Tax Reform that issued a comprehensive proposal to revise the current tax system.

One week after Ways and Means Committee Chairman Rep. Charles Rangel, D-N.Y., introduced his massive, dream tax reform proposal, and after acknowledging that that proposal had no chance of passage this year, Chairman Rangel introduced a more modest stop-gap proposal, H.R. 3996, including primarily one-year fixes for expiring provisions and some proposals to address the mortgage crisis.Most commentators seem to feel that this legislation has a fairly good chance of passing this year in something close to its present form.

Our previous two columns addressed the Securities and Exchange Commission's recently appointed Committee on Improvements to Financial Reporting, which has been charged with suggesting things that can be done to strengthen the system.Specifically, we have looked at some of the premises and other points in a discussion paper produced by the chair, Robert Pozen (available online at www.sec.gov), finding a few flaws here and there.

The Institute of Management Accountants hailed Securities and Exchange Commission Chairman Christopher Cox's plan to delay implementation for one year of Sarbanes-Oxley Section 404(b) requirements for small public companies, but expressed some reservations.

During a roundtable discussion revealing top issues in its advisory services practice, Big Four firm PricewaterhouseCoopers talked about how change and current market trends are transforming its clients' needs.

SEC Chairman Christopher Cox told the House Small Business Committee that he planned to propose a one-year delay in imposing Sarbanes-Oxley Section 404 requirements for small public companies to audit their internal controls.

The Securities and Exchange Commission plans to host two roundtable discussions this month on International Financial Reporting Standards.

Responding to the meltdown in the mortgage and credit markets, the Public Company Accounting Oversight Board has issued a staff audit practice alert to remind auditors of their responsibilities for auditing fair value measurements of financial instruments, and how much reliance to place on the work of specialists.

The Securities and Exchange Commission settled a civil fraud action against the city of San Diego's independent auditor, Thomas J. Saiz and his firm Calderon, Jaham & Osborn, after he agreed to pay a $15,000 penalty.

The real meat of Proposed Interpretation 501-8, “Failure to Follow Requirements of Governmental Bodies, Commissions, or Other Regulatory Agencies on Indemnification and Limitation of Liability Agreements with a Client,” by the AICPA Professional Ethics Division isn’t in the text of the proposed interpretation, but rather in what was specifically avoided.

Former UnitedHealth chairman and CEO William W. McGuire agreed to pay a record settlement of $468 million to settle a stock options backdating case with the Securities and Exchange Commission.

The Internal Revenue Service issued a revenue procedure that describes the conditions under which changes to certain subprime mortgage loans will not cause the Internal Revenue Service to challenge the tax status of certain securitization vehicles holding the loans.

The Securities and Exchange Commission has released a previously announced set of computer labels corresponding to generally accepted accounting principles that companies can use to make their financial statements more interactive.

Financial Accounting Standards Board Chairman Robert Herz envisions a day when FASB will become part of the International Accounting Standards Board, but there are some hurdles to overcome first.

The Public Company Accounting Oversight Board voted to issue for public comment a proposed policy statement that would allow it to rely on audits done by oversight bodies abroad on non-U.S. firms.

The U.S. Supreme Court issued a unanimous decision that will allow railroads to challenge state methods for determining the value of railroad property, as well as how those methods are applied.

The Financial Accounting Standards Board has issued two statements as it continues on the road to international convergence: on business combinations and on noncontrolling interests in consolidated financial statements.