Accounting standards

A recent study by the Australian Bureau of Statistics showed more than 1,400 accountants left the country to work overseas permanently last year, according to Australia’s Daily Telegraph.According to experts in the industry, that trend is only likely to worsen in the common years as the rest of the world adjusts to the International Financial Reporting Standards, which have been in place in Australia since January 2005. Those standards are set to be widely adopted in 2008.

Robert H. Herz has been reappointed to a second five-year term as chairman of the Financial Accounting Standards Board.

A new report from the Public Company Accounting Oversight Board summarizes how practitioners have been implementing interim standards relating to auditor responsibility to detecting fraud.

Speaking at a New York State Society of CPAs conference earlier this week, Conrad Hewitt declined to speak in absolutes when it came to across-the-board implementation of the Sarbanes-Oxley Act’s infamous Section 404.The Securities and Exchange Commission chief accountant avoided absolutes when speaking on the question of compliance for micro-cap companies -- the first time that I’ve heard a federal regulator hedge their bets on implementation that’s currently planned for 2008. It would be far from the first deferral for companies will market capitalizations under $75 million -- but the first ray of hope for those small companies since the SEC declined to strongly move forward on a number of recommendations outlined last year by an advisory committee.

There have been calls by financial statement users for increased transparency with regard to financial statements. It seems the regulators are taking those demands seriously, not just by enacting standards aimed at increasing transparency, but also by ensuring that the standard-setting process is more transparent.

A board within the International Federation of Accountants has released a standard identifying disclosures to be made by governments and other public sector entities that make their budgets publicly available.According to the International Public Sector Accounting Standards Board, such disclosures will contribute greatly to improving accountability. The new standard, IPSAS 24, “Presentation of Budget Information in Financial Statements,” applies to entities that adopt the accrual basis of financial reporting. Additionally, the cash basis standard, “Financial Reporting under the Cash Basis of Accounting,” has been updated to include both required and encouraged disclosures that apply to entities that adopt the cash basis of financial reporting.

The Financial Accounting Standards Board has unanimously voted to move forward in implementing new rules that require public companies to take a more structured approach in reporting uncertain tax positions on their financial statements.

The Securities and Exchange Commission recently settled civil fraud charges against the former general counsel of Comverse Technology Inc.

Two major standards setters have announced the 18 members of a new international working group established as part of a joint project to reconsider their standards on lease accounting.

This year should be one of expansion and progress at the Financial Accounting Standards Board. Though the profession will not see the issuance of many final standards, the year's projects should lead up to a productive 2008.Accountants will be keeping their eyes on several crucial projects - but the most fundamentally important may be that of the Conceptual Framework. This project will set the underlying philosophy of accountancy, the basic concepts on which generally accepted accounting standards are built.

A company's obligation to a worker for federal tax purposes depends primarily on whether the worker is an employee or an independent contractor, according to G. J. Stillson MacDonnell, a shareholder at the national labor and employment law firm of Littler Mendelson. "There is no other option," she said.While independent contractor status provides benefits to companies and individuals, it draws hostility from the Internal Revenue Service and state tax agencies, she said.

The Internal Revenue Service announced a formula allowing businesses and tax-exempt organizations to estimate their federal telephone excise tax refunds.In May, the government announced that it would stop collecting the federal excise tax on long-distance telephone service beginning Aug. 1, 2006, and provide refunds for taxes billed after Feb. 28, 2003.

Tax strategies don't just come from nowhere. They arise out of necessity and typically are reactive, constructed as work-arounds to avoid certain tax pitfalls or to meet certain rules. Viewed from this perspective and appropriate to the start of a New Year, we offer our list of the Top 10 tax developments of 2006 that will shape tax strategies in 2007.* No. 1: The IRS's use of the economic substance doctrine. Under the economic substance doctrine as adroitly used by the Internal Revenue Service Chief Counsel's Office in the Coltec case, Black & Decker and other tax-shelter-related litigation, a tax strategy can conform to the letter of the Revenue Code, yet fail to win the desired result.

In pursuit of auditing standards that would be clear to auditors around the world, the International Auditing and Assurance Standards Board has issued exposure drafts of existing international standards that have been recast in a clearer form.While the changes do not affect auditors in the U.S., who audit under the standards of the Auditing Standards Board, that board may soon begin a similar clarification process, perhaps following the IAASB model, or perhaps devising its own.

The Financial Accounting Standards Board has created a new committee comprised of a dozen individuals from the investment community who regularly focus on accounting and financial reporting matters.

Rep. Barney Frank said that wage inequality among U.S. workers is his No. 1 priority as he prepares to take over chairmanship of the House Financial Services Committee this week.In a speech at the National Press Club, Frank, D-Mass., said that he will hold hearings about wages over the next two years in an attempt to address the gap between economic growth and workers' wages.

As president and chief executive of the Institute of Management Accountants for the past three years, Paul Sharman has worked to establish a new direction for the association.Sharman’s ultimate goal is to reposition management accountants at the forefront of the accountancy profession, and in recent years the IMA has focused on advancing the management accounting and finance profession through certification, superior professional ethical standards and competence-based continuing education.

It was just this July that I authored a column praising Securities and Exchange Commission Chairman Christopher Cox for successfully navigating through a number of potentially sensitive issues during his first year on the job.Among one of the examples I cited was Cox’s handling of a number of investigations involving the practice of stock-options granting to executives. Now, just four months after implementing tough new rules on how companies have to disclose executive compensation, the SEC issued a quiet statement on Dec. 22 saying that it would take another look at those rules.

The International Federation of Accountants is proposing the first major revisions to its code of ethics for accountants since late 2001.

The President's Identity Theft Task Force announced that it is seeking public comment on various recommendations to improve the effectiveness and efficiency of the federal government's efforts to reduce identity theft.