Accounting standards

The Securities and Exchange Commission has appointed Paul A. Beswick to serve as senior advisor in the SEC Office of the Chief Accountant.

The Securities and Exchange Commission has set up a new unit to speed the move to interactive financial reporting by public companies.

The Center for Audit Quality (CAQ) is living up to its name, as it has issued three white papers in response to the so-called “liquidity crisis” that began in the subprime mortgage-related markets and, according to CAQ, has spread to other corners of the credit markets with “a potentially pervasive impact on public companies generally with respect to investments held.”

The Internal Revenue Service has lost the first round in a much-anticipated test case against Textron Inc., in which it sought judicial approval for a new program seeking tax accrual workpapers during the examination of corporate clients.The IRS is interested in Textron's and others' workpapers, since they document what the company considers its questionable tax positions.

The Internal Revenue Service is not doing enough to match incorrect or missing identification numbers on income and wage statements with existing tax accounts, charged the Treasury Inspector General for Tax AdministrationThe TIGTA noted that in tax year 2004 alone, the IRS received about 3.8 million income statements reporting approximately $150 billion in earnings that could not be matched to a filed tax return because of missing or erroneous ID numbers. Compared to 2001, that represented a 63 percent increase.

In a vote that may have a wide-ranging effect on the accounting profession, House lawmakers voted 220-175 to overhaul patent rules and place a ban on tax-planning-method patents.HR 1908, the Patent Reform Act of 2007, primarily contains provisions that would make it harder to get patents and harder for companies to be sued for patent infringement. However, it also contains a provision that would protect accounting firms from lawsuits over tax-planning methods.

The deadline for compliance with final Section 409A regulations, scheduled for Dec. 31, 2007, should be extended for a year, according to 92 of the largest law firms in the nation.The new regulations, finalized in April, require deferred-compensation plans to be amended to comply with the Internal Revenue Code.

The last few months have seen the problems in sub-prime lending start to have a national and even international impact on the credit and stock markets.The combination of expanded sub-prime lending programs with mortgage rates that adjust upward after two to five years, reduced or eliminated down-payment requirements, and a housing market that has seen real estate prices actually decline in many markets, has left many marginal borrowers unable to pay higher monthly mortgage payments, unable to refinance to more traditional mortgages, and unable to sell homes at a price sufficient to cover the mortgage obligation.

The International Auditing and Assurance Standards Board issued new requirements for auditing group financial statements.

Tax technology vendor Vertex said it planned a major hiring initiative that would double the size of its consulting group over the next six months.

Software developer Rivet Software is introducing software to convert financial reports and documents into the interactive format that the Securities and Exchange Commission has been promoting.

Former Dynegy CFO Robert Doty Jr. will pay the Securities and Exchange Commission $375,000 for his role in a $300 million accounting fraud.

AICPA CEO Barry Melancon and other accounting profession luminaries have been appointed to the Treasury Department's new Advisory Committee on the Auditing Profession.

The trend toward convergence of accounting standards seems to be picking up speed after a bumpy start, but there are still plenty of hurdles ahead.

Robert Herz, chairman of the Financial Accounting Standards Board, has said he is in favor of a single set of global accounting standards.

The Internal Revenue Service has issued a new set of allowable living expense standards that it will use to determine the ability of a taxpayer to pay a delinquent tax liability.

The Federal Home Loan Mortgage Corporation, or Freddie Mac, agreed to pay a $50 million penalty after the Securities and Exchange Commission charged it with securities fraud.

The Internal Revenue Service has issued proposed regulations governing patents on tax strategies and advice as a bill works its way through Congress outlawing such patents.

Securities and Exchange Commission Chairman Christopher Cox said that data tags had been developed for the entire system of U.S. generally accepted accounting principles, advancing the use of the Extensible Business Reporting Language for automating financial reporting information.

The Internal Revenue Service has issued regulations governing practice before the agency.