Accounting standards

A study sponsored by the Institute of Management Accountants indicated that some of the problems with the Sarbanes-Oxley Act might stem from a professional bias that emphasizes public accountancy over management accounting.IMA president and chief executive Paul Sharman said that the public, professional and governmental assumption that public accountancy is the only accountancy has resulted in regulation that cannot be implemented, and the use of an auditing standard as an accounting standard.

Schedule M-3 is part of the effort by the Internal Revenue Service to get a better handle on abusive tax shelters and other aggressive tax techniques by getting sufficient detail on book/tax differences that it can guide IRS auditors to transactions in need of further examination.The IRS is sufficiently confident in its ability to track book/tax differences on Schedule M-3 that earlier this year it removed book/tax differences as a criteria required for reportable transactions. While the former Schedule M-1 required only 10 lines of information, Schedule M-3 expands that to 90 lines of information, with an emphasis on making a distinction between temporary and permanent book/tax differences.

The Public Company Accounting Oversight Board recently issued its inaugural audit practice alert, warning auditors to be on the watch for problems with the timing of, and the accounting for, stock-option grants."Auditors planning or performing an audit should be alert to the risk that the issuer may not have properly accounted for stock-option grants and ... may have materially misstated its financial statements," the alert said, alluding to recent investigations by the Securities and Exchange Commission and the Internal Revenue Service into whether companies routinely backdate, spring-load or otherwise manipulate stock-options grants to top executives.

Pension reform had a longer shelf life than anticipated, finally winning legislative approval after a number of false steps.The Pension Protection Act of 2006 passed the House by a margin of 279 to 131. Meanwhile, the Senate voted 93 to 5 to approve the bill, clearing it for President Bush's signature.

Nationwide bookseller Barnes & Noble Inc., operator of book stores under the Barnes & Noble and B. Dalton brands, has received a subpoena from the U.S. Attorney for the Southern District of New York requesting documents on its practice of awarding stock options.The company said that it intends to cooperate fully with the probe.

Edward W. Trott, a member of the Financial Accounting Standards Board since 1999, will step down from his position in June 2007.

Home mortgage giant Fannie Mae said that it won't face criminal charges over the company's massive accounting irregularities.

The widening options-timing scandal contributed mightily to a record-setting number of large U.S. corporations filing late financial reports for the second quarter, according to a study from market research firm Glass Lewis & Co.

A trio of state accounting boards have objected to the 'jointness' of a joint project from the Financial Accounting Standards Board and the American Institute of CPAs to form a committee to look at the financial accounting and reporting standard-setting process for private companies.

One of the aspects of the Internet that many I and many others love is its interactive nature. Using a news search engine's push technology, news summaries on accounting firms are sent to me daily.

The International Federation of Accountants' education standards board has proposed new guidance outlining the skills accountants need to perform competently in a variety of information technology roles.

The Securities and Exchange Commission has released some enforcement statistics through July -- 10 month's into the agency's 2006 fiscal year.

The Treasury Department and the Internal Revenue Service have issued proposed regulations clarifying the treatment of expenditures incurred in selling, acquiring, producing or improving tangible assets.

After filling the top slot at the Public Company Accounting Oversight Board by naming Mark W. Olson as chairman in June, Securities and Exchange Commission chair Christopher Cox filled another gaping vacancy in July - the position of SEC chief accountant.Late last month, Cox named former Ernst & Young partner and California banking regulator Conrad W. Hewitt as the nation's top accountant, a post that had been empty for nearly 10 months since the departure of Don Nicholaisen.

In response to widespread criticism of the cost and burden of implementing Section 404 of the Sarbanes-Oxley Act of 2002, on internal controls, the Committee of Sponsoring Organizations of the Treadway Commission has issued comprehensive guidance and principles that should help smaller companies comply.In a July Webcast that introduced the new guidance, COSO chairman Larry Rittenberg emphasized that it does not specify prescriptive solutions to internal control problems.

Taking a big step toward erecting a stronger foundation beneath the world's accounting standards, the International Accounting Standards Board and the Financial Accounting Standards Board recently issued a joint document suggesting a more clearly defined objective of financial reporting, and more clearly delineated qualitative characteristics of decision-useful financial information.The preliminary views document, the result of Phase A of the boards' conceptual framework project, eliminates small but crucial differences in the basic building blocks of the accounting principles promulgated by the boards. Decisions at this fundamental level will ripple through accounting principles established over the course of decades, and could necessitate amendments to current standards.

DePaul University's College of Commerce has launched the Center for Global Accountancy Education, Benchmarking and Research Center, which will work to improve financial accounting in the developing world by policing three specific areas: international auditing standards, financial reporting and accounting education.

The Securities and Exchange Commission announced that Diego Tomás Ruiz, a long-time business executive with Spanish-language media group Univision Communications Inc., will serve as its new executive director.

A number of prominent economists and finance experts have lent their names to a call to repeal a stock option-reform measure adopted last year by the Securities and Exchange Commission.

The former chief executive of Comverse Technology Inc., who was charged last week with conspiracy related to backdating stock options, is now being regarded as a fugitive by the federal government.