Accounting standards

The Public Company Accounting Oversight Board has proposed a new ethics rule on communicating with audit committees concerning independence.

Significant internal control weaknesses remain in the preparation of the U.S. government's consolidated financial statements, according to a report from the Government Accountability Office.

India plans to bring its accounting standards in line with International Financial Reporting Standards by April 1, 2011.

In a major step toward an eventual convergence of accounting standards, the Securities and Exchange Commission put out a proposal to allow non-U.S. companies that list on U.S. exchanges to reconcile their financials using International Financial Reporting Standards, instead of U.S. generally accepted accounting principles.The measure, according to SEC Chairman Christopher Cox, is a movement to have all companies "speak the same language," while serving to attract more international companies to U.S. markets. Business leaders have complained that investors are bypassing the U.S. in favor of London and Hong Kong as a result of over-regulation and the costs of having to file in two sets of accounting rules.

The new discussion draft Form 990, dubbed "the biggest thing the Exempt Organizations Division at the IRS has done in the last quarter century," by division director Lois Lerner, could be both a boon and a burden for preparers.The Internal Revenue Service hopes that the form, already released for comment, will be ready for use for tax year 2008.

Have you heard the joke about the sales tax audit? No one has.There is nothing funny about a sales tax audit.

Summertime brings with it the "high season" for clients who are seriously considering purchasing vacation homes, or switching from one vacation home to another.The majority are looking to take advantage of certain tax breaks to help them carry the property. For others, tax savings are an added bonus to validate their decision. In either case, tax advisors often get a hurried call to explain the options.

At the request of Connecticut State Comptroller Nancy S. Wyman, the state's General Assembly has voted to allow the comptroller to set generally accepted accounting principles for the state, starting in 2009.Wyman, however, said that she has no intention of modifying GAAP, as set by the Governmental Accounting Standards Board, for external reporting.

The European reaction as to how a proposed standard on fair value needs to be revised in order to be suitable for International Financial Reporting Standards is starting to emerge as a more of a "back to basics" cry.Among other things, regulatory experts within the EU are requesting a more principles-based approach and shorter documents than the 12 pages on FAS 157 and the 20-plus pages of guidance. They also maintain that any debate on the subject should not begin with the assumption that fair value needs to be reflected on the balance sheet. Others have forwarded suggestions on clarifying the language of the standard.

The Securities and Exchange Commission has settled charges with four former finance executives of SmartForce related to the software company's overstatement of revenue and income.

The Securities and Exchange Commission announced Thursday that Chester Spatt, Chief Economist and Director of the Office of Economic Analysis (OEA), will leave the agency to return to academia at the end of July, according to an SEC press release.

The Public Company Accounting Oversight Board said it plans to hold a meeting to consider a new ethics and independence rule concerning communication with audit committees.

Stephen Cooper, a managing director and head of valuation and accounting research at UBS Investment Bank, has been appointed to the International Accounting Standards Board.

Securities and Exchange Commission Chairman Christopher Cox told a Town Hall Los Angeles meeting that he wants Congress to give more power to the Governmental Accounting Standards Board so GASB can police accounting practices at the state and local government level and better regulate the municipal bond market.He would like the SEC to be able to enforce GASB accounting rules when it sees a violation by a state or local government, similar to the way the SEC can take action against companies that flout Financial Accounting Standards Board rules. Texas and Connecticut have both passed bills recently allowing alternative accounting rules, although Connecticut Governor Jodi Rell has vetoed that state’s bill.

The Public Company Accounting Oversight Board is forging closer ties with Australian regulators.The PCAOB has signed a statement of protocol with the Australian Securities and Investments Commission to improve cooperation in their oversight of auditors and public accounting firms that practice in the United States and Australia.

The European Union has released a report praising the ongoing convergence of accounting standards in Europe, the United States and other parts of the world, but says there's still work to do.EU Internal Market Commissioner Charlie McGreevy welcomed the progress made so far to bring accounting standards in the U.S., Canada, Japan, China and India more in line with International Financial Reporting Standards. The European Commission report also lauded the U.S. Securities and Exchange Commission's announcement that it would consider allowing companies to file IFRS financial statements without first reconciling them with GAAP.

The Securities and Exchange Commission won't require amended filings to correct misclassifications of a new Financial Accounting Standards Board standard for defined-benefit pension plans, says a recent alert from the AICPA's Center for Audit Quality.The new standard, SFAS 158, requires that employers move any surpluses or deficits in their retirement benefit plan funding off the footnotes and onto the face of the balance sheet, while making an adjustment in the ending balance of "accumulated other comprehensive income."

The Securities and Exchange Commission voted to adopt a sweeping anti-fraud rule that targets money managers who deliberately mislead investors.The new rule, which was first proposed by the SEC in December, also has been expanded to include hedge funds.

The IRS said it is reconsidering some of the private letter rulings its associate chief counsel’s office has issued regarding the gift tax consequences of trusts that employ distribution committees.The IRS’s chief counsel has discovered that some of the conclusions in the rulings may disagree with some prior revenue rules.

Accounting firm Spear Safer has agreed to pay $3.5 million to settle allegations of improperly auditing a financial company, Mutual Benefits, accused of defrauding 30,000 investors out of $830 million.