Accounting standards

The Public Company Accounting Oversight Board issued its first-ever audit practice alert, warning auditors to be on the watch for problems in the timing and accounting of 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 both 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.

A federal appeals court upheld the conviction and 25-year prison sentence handed to former WorldCom Inc. chief executive Bernard Ebbers a year ago.

The Securities and Exchange Commission will require public companies to provide more information about the pay given to top executives under rules unanimously adopted by the Securities and Exchange Commission.

As expected, Conrad W. Hewitt, a former Big Four managing partner and commissioner of California's department of financial institutions and superintendent of banking for the state, will take over the top accounting job at the Securities and Exchange Commission.

The Securities and Exchange Commission has barred Conseco Inc.'s former chief financial officer and chief accounting officer from auditing the books of public companies for at least the next five years.

Conrad W. Hewitt, a former Big Four managing partner and commissioner of California's department of financial institutions and superintendent of banking for the state, is expected to be named the chief accountant of the Securities and Exchange Commission.

When Mark Olson starts his new job as chairman of the Public Company Accounting Oversight Board in July, his commute into work won't be all that much different from his most recent gig - a few blocks away at the Federal Reserve Board.But there's little doubt that the course he'll be setting with the accounting firm regulator will be markedly different from his duties over the last five years as a Fed governor.

Among the many disasters lurking behind the scenes of the U.S. economy is that of pensions and other post-retirement benefits. It has been estimated that in 2005 there were $472 billion of unrecorded obligations for pension and other post-retirement benefit plans, and that the after-tax effect of these obligations would reduce shareholders' equity by $248 billion or more.Perhaps to give the Senate Committee on Banking, Housing and Urban Affairs an inkling of hope, Financial Accounting Standards Board Chairman Robert Herz and International Accounting Standards Board Chairman Sir David Tweedie presented their plans to require the underlying economic effects of post-retirement plans to be more faithfully and transparently reported through better accounting practices.

Having gotten down to the building blocks of the federal books, the Federal Accounting Standards Advisory Board has issued a concepts statement exposure draft on the definitions and recognition of the elements of accrual-basis financial statements.The 16-year-old developer of federal accounting standards abides by the four fundamental concepts that are covered in the proposed statement: asset, liability, net position and revenue/expense.

QuickBooks parent and tax and small business software provider Intuit Inc. has become the latest in a series of companies to have the Securities and Exchange Commission question their stock-option grants.The regulator served Intuit with an informal inquiry notice in June, after a Center for Financial Research and Analysis report questioned Intuit's granting policies, and the company later announced that it had implemented a self-review.

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The Securities and Exchange Commission has filed the first charges in its stock options practices investigations, charging the former chief executive of Brocade Communications Systems Inc. Gregory Reyes with misconduct linked to option grant practices.

As expected, the Financial Accounting Standards Board formally added a project to its agenda to reconsider the current accounting standards for leases.

By my count, Securities and Exchange Commission Chairman Christopher Cox must have stamped out at least another couple of brushfires over these recent summer months.

Kathleen L. Casey was sworn in as the 88th Securities and Exchange Commission commissioner by Chairman Christopher Cox on Monday.

The Financial Accounting Standards Board is likely to formally add a project on lease accounting to its agenda this week, according to published reports.

Late last month, the SEC announced the institution and simultaneous settlement of an enforcement action against Morgan Stanley (Morgan Stanley & Co. Incorporated and Morgan Stanley DW Inc.). The SEC action alleged that Morgan Stanley failed to maintain and enforce adequate written policies and procedures to prevent the misuse of insider information in its possession.

More than 2,000 companies appear to have used backdated stock options, according to a new paper from professors at the University of Iowa and Indiana University.

New rules will allow the New York State Board of Regents stronger local oversight of CPAs who are disciplined by the Securities and Exchange Commission.

The Financial Accounting Standards Board issued an interpretation that clarifies the way companies account for uncertainty in income taxes.