Accounting standards

The Securities and Exchange Commission filed, and settled, civil fraud charges against Tenet Healthcare Corp. and four former senior executives.

The Securities and Exchange Commission announced that its six district offices will become regional offices and report directly to the commission's Washington headquarters as of April 2.

The Securities and Exchange Commission announced last week that Nicor Inc., a Chicago-area natural gas distributor, and Jeffrey Metz, its former assistant vice president and controller, will pay more than $10 million to settle charges that they engaged in improper transactions, made material misrepresentations, and failed to disclose material information.The SEC filed a settled civil injunctive action against Nicor and Metz, alleging financial fraud lasting from 1999 to 2002. The funds Nicor and Metz agreed to pay in disgorgement and civil penalties will be placed in a fund for distribution to affected shareholders. Nicor also agreed to be permanently enjoined from violating the antifraud and reporting provisions of the federal securities laws.

Following a long period of assimilation, the London-based International Accounting Standards Board has released an exposure draft on accounting principles under International Financial Reporting Standards for the small and midsized sector.The IASB's goal was to provide a simplified, self-contained set of accounting principles that are appropriate for smaller, non-listed companies, but nevertheless based on IFRS - the guidelines developed primarily for listed European Union companies that are now in use or being adopted by 100 different countries around the world. American and EU regulators are currently embroiled in an ongoing convergence project between IFRS and U.S. generally accepted accounting principles.

The Sarbanes-Oxley Act brought the tax manager into the financial statement reporting process as never before. As SOX Section 404 internal control certifications were made with respect to each input into the financial statements, it became clear that one of the weakest areas for SOX 404 compliance was accounting for income taxes.Under FASB Statement No. 109, Accounting for Income Taxes, the process of providing for deferred income taxes had become so subjective and subject to differing interpretations that certification of the results was difficult, and comparability across financial statements appeared to be lacking.

After much criticism and debate over the best approach to regulating business, in December the Public Company Accounting Oversight Board proposed a new audit standard for Sarbanes-Oxley Section 404 implementation.Concurrently, the Securities and Exchange Commission introduced interpretive guidance for management's assessment of internal control. Both exposure drafts, which solicited feedback through February, promise change through a risk-based approach.

A federal appeals court ruled that the Securities and Exchange Commission overstepped its authority in updating rules governing brokers who offer financial advice.

The Public Company Accounting Oversight Board has scheduled an open meeting on April 3 to consider proposing an auditing standard, “Evaluating Consistency of Financial Statements.”

The International Accounting Standards Board has issued a revised standard on borrowing costs.

The Securities and Exchange Commission announced it will hold an open meeting on April 4, to discuss the Public Company Accounting Oversight Board’s proposed auditing standard for Section 404 of the Sarbanes-Oxley Act and the coordination of the proposed changes with the SEC’s own guidance concerning implementation.

In a recent interview with Practical Accountant, Judith O’Dell, the recently-appointed chairwoman of the Private Company Financial Reporting Committee, explained the mandate that the committee will be following as it explores the need for different reporting standards for public and private companies in the following months.

The Financial Accounting Foundation said that it will give the Securities and Exchange Commission the opportunity to propose and review candidates for open positions at either the foundation, or the board the foundation oversees, the Financial Accounting Standards Board.

The Securities and Exchange Commission has charged two former in-house lawyers at Enron Corp. with securities fraud over a Brazilian scheme to move losses off the company’s balance sheet.

In a strategy designed to help modernize the business-reporting model, board members of the American Institute of CPAs’ recently restructured Center for Audit Quality will embark on a multi-city “listening tour."The aim of the tour is for members to engage investors, regulators, academics and business leaders and, subsequently, offer a series of recommendations.

The Securities and Exchange has censured Ernst & Young, ordering the Big Four firm to pay $1.6 million to settle charges of compromising its independence and contributing to faulty accounting by a client in 2001.As part of the settlement, E&Y neither admitted nor denied the agency’s allegations, made in connection with the firm’s audit work for Pittsburgh-based regional bank PNC Financial Services Group.

The Securities and Exchange Commission's Office of the Chief Accountant has selected four professional accounting fellows to serve two-year terms beginning this summer.

The Certified Financial Planner Board of Standards Inc. has released a second exposure draft of proposed changes to its, “Standards of Professional Conduct.”

Representatives from the Public Company Accounting Oversight Board meet with its Japanese, Korean and Chinese counterparts last week, as well as accepting an invitation to become a member of the newly-formed International Forum of Independent Audit Regulators.Chairman Mark Olson and board member Charles Niemeier participated in a meeting of the forum in Tokyo, where they discussed ways to foster cooperation between regulators responsible for the oversight of public company auditors. They also met privately with the PCAOB’s counterpart in Japan, the Certified Public Accountants and Auditing Oversight Board and the Japanese Financial Services Agency.

The Securities and Exchange Commission censured the American Stock Exchange last week, along with the exchange’s former chairman and chief executive, for failing to enforce securities laws and maintain proper records.

A federal judge has dismissed a lawsuit filed by a small Nevada audit firm challenging the constitutionality of the Public Company Accounting Oversight Board.