Accounting standards

Treasury Secretary Henry Paulson is set to act more formally on efforts to make the United States an easier place to do business, according to published reports.

The Securities and Exchange Commission's Office of the Chief Accountant announced the selection of three academic accounting fellows, who will serve one-year terms beginning this summer.

Prabhat Goyal, the former chief financial officer of software manufacturer McAfee Inc., was convicted on 15 counts of securities fraud last week.

The Securities and Exchange Commission plans to issue a proposal to have new rules in place for corporate annual meetings in 2008, according to published reports.

Criticism is nothing new to either the Financial Accounting Standards Board or the Governmental Accounting Standards Board. They get it from investors who want more information. They get it from corporations that say they already offer too much information. And recently, they've gotten it from both the Securities and Exchange Commission and from a former SEC chairman.

The Securities and Exchange Commission endorsed the recommendations of the agency's professional staff to eliminate "waste and duplication" in companies' compliance with Sarbanes-Oxley. The change is particularly aimed at providing relief for smaller companies.

In recent hearings before the House Ways and Means Subcommittee on Select Revenue Measures, both the American Institute of CPAs and the New York State Society of CPAs called for the repeal of the oft-debated alternative minimum tax.

Appointed to serve as the first executive director of the Center for Audit Quality, Cindy Fornelli is guiding the new organization in its mission to bolster confidence in the audit process, and to aid investors by promoting constructive suggestions for change.Still affiliated with the American Institute of CPAs, the center is the revamped version of the AICPA’s former Center for Public Company Audit Firms. The CAQ Governing Board consists of representatives from the AICPA, the major public company auditing firms and independent public members.

The International Accounting Standards Board has published its preliminary views on accounting for insurance contracts in a discussion paper.

The Public Company Accounting Oversight Board is soliciting nominations and re-nominations for members of its Standing Advisory Group. Created in 2003, the 31-member SAG assists the audit firm overseer in carrying out its standards-setting responsibilities. The PCAOB is currently seeking nominations and re-nominations annually to fill 15 positions. Appointments are for two-year terms. Nomination forms are available on the PCAOB Web site, www.pcaobus.org. The deadline for submissions is June 15, 2007. Appointments will be announced by the end of October, and the new terms will begin in January 2008. The group, chaired by the PCAOB chief auditor and director of professional standards, Thomas Ray, meets roughly three times a year.

In the ongoing movement toward the convergence of U.S. and international accounting standards, President Bush and German Chancellor Angela Merkel have sealed an agreement that would clear a path toward a unified set of accounting standards by 2009. The agreement will establish a "Transatlantic Economic Council" to help lower regulatory barriers between the U.S. and the European Union. The council, will co-chaired by White House economic adviser Allan Hubbard and European Commission vice president Guenter Verheugen and will submit annual reports on the progress top both EU and U.S. leaders. The signing comes as the Securities and Exchange Commission is mulling whether to allow foreign companies registered in the U.S. to file their statements using international financial reporting standards in lieu of generally accepted accounting principles.

Financial Executives International, a 15,000-member body of chief financial officers, controllers and other c-level financial executives, has thrown its support behind the Senate's efforts to modify Sarbanes-Oxley's Section 404. In a letter to Sens. Chris Dodd, D-Conn., and Richard Shelby, R-Ala., the chairman and ranking Republican, respectively, of the Senate Banking Committee, FEI president and chief executive Michael Cangemi lauded their leadership in "allowing the SEC and the PCAOB to resolve the challenges of improving Section 404." Cangemi told Dodd and Shelby that FEI's position is that "Section 404 needs to be made more efficient. However, we remain encouraged that the forthcoming SEC and PCAOB guidance will achieve a greater balance in the implementation of the annual compliance process of Section 404." FEI's letter comes on the heels of an overwhelming 62-35 defeat in the Senate of an amendment put forth by Sen. Jim DeMint, R-S.C., which would have made 404 compliance optional for companies below a certain market cap. Shortly thereafter, the chamber voted unanimously 97-0 to approve an amendment from Dodd, suggesting that the SEC and the PCAOB forge ahead with their previously announced plans to develop guidance for smaller filers to make SOX more manageable.

Thomson Tax & Accounting has released "PPC's Guide to Audits of Nonpublic Companies," which helps integrate the requirements of the newly released risk assessment standards that go into effect for financial statement audits beginning on or after Dec. 15, 2006. The new tome fuses two existing products -- "PPC's Guide to Audits of Small Businesses" and "PPC's Guide to Risk-Based Audits" - into a single guide for all nonpublic, non-industry-specific audit engagements. The manual includes checklists, forms and audit programs to help firms transition their audit approach to reflect the new standards. The guide is available in a variety of formats including TTA's proprietary Checkpoint platform. The risk-assessment guide also contains in-depth coverage of new requirements for communicating internal control deficiencies under SAS No. 112 and communicating with those charged with governance under SAS No. 114.

Norwalk, Conn. -- The Financial Accounting Foundation, overseer to both the Financial Accounting Standards Board and the Governmental Accounting Standards Board, appointed Girard Miller and Jan I. Sylvis to five-year terms on GASB. Their terms begin July 1. Miller and Sylvis will succeed outgoing GASB board members Cynthia Green and Edward Mazur, respectively. Miller previously served as president of Janus Funds and chief operating officer of asset manager Janus Capital Group. Sylvis currently is the chief of accounts for Tennessee's Department of Finance & Administration, where she serves as state controller.

Former Senator Paul Sarbanes, D-Md., who, as the head of the Senate Banking Committee, co-authored the sweeping Sarbanes-Oxley reform act said he supports developing additional guidance for smaller filers but, not surprisingly, dismisses exempting those companies from compliance with the legislation's rigid Section 404. "Stop and think about that for a moment," said Sarbanes in a speech before attendees at a conference on financial reporting and governance presented by Pace University's Lubin School of Business, here. "That would mean that you would be exempting 80 percent of public companies from compliance."

Distilling the nation's complex tax code is the key to reducing the $290 billion tax gap, the American Institute of CPAs told lawmakers. In a hearing before the House Small Business Committee, James Brennan, chair of the AICPA's IRS Practice and Procedures Committee, said simplification should be the foundation to begin stripping away the mammoth deficit.

If XBRL is going to evolve to the financial reporting standard of the future, the accounting profession is going to have to step up its communication efforts on the tagging language, according to a survey of CFOs and controllers by global CPA firm Grant Thornton. According to the GT poll, roughly 85 percent of the survey participants indicated that the profession was not effectively communicating the benefits of using XBRL or Extensible Business Reporting Language for either internal or external financial reporting.

On the heels of its financial reporting roundtable last month, the Securities and Exchange Commission said it may allow U.S. filers to choose what standards they want to use to report their financials.

The President’s Identity Theft Task Force rolled out a strategic plan this week, outlining a number of recommendations for increased federal prevention of identity theft.

In anticlimactic news, former HealthSouth chief executive Richard Scrushy will pay $81 million to settle civil charges brought by the Securities and Exchange Commission.While SEC spokespeople have said that the amount of the deal is among the most expensive for an executive settlement, a federal judge ruled that the judgments in three other civil cases brought against Scrushy could count as a $71.5 million credit toward the disgorgement to the SEC.