Accounting standards

A business group including some of the country's largest companies said that corporate governance practices are improving and that the percentage of companies adopting pay-for-performance measures for senior executives continues to rise.

A paper from the Governmental Accounting Standards Board has outlined key differences between the needs of users of state and local government financial information and users interested in for-profit businesses.

Although they are supporting new audit rules that give public companies the option to report the elimination of a material weakness in internal control over financial reporting, the Big Four accounting firms have called on the Securities and Exchange Commission to issue more detailed guidance for making these disclosures.At issue: the Public Company Accounting Standards Board's new Auditing Standard No. 4, which recently won SEC approval. That standard allows the management of audited companies to voluntarily commission their auditors to report whether a previously reported material weakness continues to exist - an option that accountants at PricewaterhouseCoopers described as "a useful tool" for providing the public with assurance that a previously reported internal control problem no longer exists.

A handful of boldface names from the financial world lent their signatures to a letter to federal regulators, asking that no public company be exempted from the internal controls provisions of the Sarbanes-Oxley Act.Former Securities and Exchange chair Arthur Levitt, former Federal Reserve chair Paul Volcker and former comptroller general Charles Bowsher joined John Biggs, former chair and chief executive of TIAA-CREF, and John Bogle, former chair of the Vanguard Group Inc., in signing the letter. The Feb. 13 letter was addressed to current SEC chair Christopher Cox and the acting chair of the Public Company Accounting Oversight Board, William Gradison.

Taxation: Everybody does it, but the world has yet to agree on how to account for it.But that may soon change.

The effort to achieve convergence by ushering in a single accountancy system for the global economy is getting hammered in nearly every aspect by one of Europe's key figures in that sector.Pervenche Berès, the chairwoman of the European Parliament's Economic and Monetary Affairs Committee, is warning that the world's present governance system for accountancy institutions could lead to problems, including "the financialization of the [world] economy."

A new proposed Governmental Accounting Standards Board standard on accounting for pollution remediation may not decontaminate America's brownfields, but if adopted, it should make governmental financial statements a little neater.The proposal establishes a consistent way for governments to report certain costs and long-term obligations relating to pollution remediation. Any one of five triggering events would require a government to recognize a liability and apply an expected cash-flow measurement technique to recognize related liabilities, expenses and expenditures.

Congress is currently at work on legislation that includes, among other things, a two-year extension of dividend and capital gains tax cuts that were scheduled to expire at the end of 2008, and a one-year extension of alternative minimum tax relief.Without this relief, the AMT would cause higher taxes starting in 2006 for an estimated 16 million additional taxpayers to whom it was not intended to apply. Perhaps not surprisingly, House Republicans have sought to finalize the dividend and capital gains extension first, even though the AMT problem is much more immediate.

With a proposal that would let companies opt to report selected financial instruments at fair value, the Financial Accounting Standards Board has opened the possibility of a significant move toward more fair value measurement.The board has issued the proposal as an exposure draft in hopes that comments will support it as a reduction in the complexity of accounting and in volatility in earnings.

Retail drugstore chain CVS Corp. said the Securities and Exchange Commission has launched an informal probe into how the company accounted for a 2000 transaction.

After 16 years, the executive director of the Securities and Exchange Commission will step down to pursue opportunities in the private sector.

The Securities and Exchange Commission and the Financial Services Authority, the regulator of financial services providers in the United Kingdom, have signed an agreement to increase cooperation in market oversight and supervision.

The Securities and Exchange Commission is seeking public comment on the Public Company Accounting Oversight Board's proposed ethics and auditor independence rules concerning independence, tax services and contingent fees.

The U.S. Chamber of Commerce said that the Securities and Exchange Commission is overstepping its bounds in seeking to punish corporate wrongdoing.

The Securities and Exchange Commission announced a series of roundtables that will be held throughout the year, with a focus on speeding the implementation of new Internet tools to help provide investors and analysts with better financial information about companies and funds.

Online fraud and the use of the Internet to perpetrate insider trading, market manipulations and other securities violations will be the focus of the Securities and Exchange Commission Historical Society's first "Fireside Chat" for 2006.

Kroger Co., the largest supermarket company in the country, will restate its earnings for the past three years for errors in accounting of deferred taxes.

The Securities and Exchange Commission Advisory Committee on Smaller Public Companies has published an exposure draft of its final report, outlining changes to the Sarbanes-Oxley Act for micro-cap and small-cap public companies.

After halting subpoenas issued to two Dow Jones & Co. columnists on Feb. 7, the Securities and Exchange Commission announced that its staff is preparing guidelines for demanding information from journalists.

The Auditing Standards Board of the American Institute of CPAs has approved eight new statements on auditing standards, collectively referred to as the risk assessment standards.