Audit

A certain advisor had a 35-year relationship with his client/friend. He helped him with businesses, financial plans, estate plans, and the like. When the client died, and then subsequently his wife, the family advisor was called to the home by the daughter to discuss the next steps regarding the estate. He asked the daughter what she wanted to do with the vast collection of art and antiques. The daughter, who had just lost both parents and was herself in the middle of a divorce, said she trusted the advisor and ended with “Can you handle this?” The advisor called a local auction house and was pleased to see the auction results yielded more than $500,000, with one piece of furniture in particular selling for $68,000. When he reported this to the daughter, she said, “That was Mom’s favorite piece.” Well, eight months later the daughter’s aunt called the advisor to say that the piece of furniture that sold for $68,000 was subsequently sold in a New York auction for $725,000. Does the advisor see a lawyer calling him? This story is related by Michael Mendelsohn who a few months ago launched The Briddge Group to meet the growing demand for art succession planning advocates. He created it in partnership with some of the nation’s foremost art, legal, and financial experts. Mendelsohn says that “Collectors and their advisors need an advocate who knows how to lift art and collectibles out of the estate planning process and treat them with the special handling every collection deserves.” He also listed the top 10 art succession planning mistakes made by financial and legal advisors: 1. Failure to understand the effect a large art inheritance will have on your clients’ children and future generations. 2. Assuming that if a piece is “undeclared” and passed quietly to an heir (the empty hook approach), it can avoid taxation—that approach can actually cause serious tax problems. 3. Failure to understand the difference between clients who accumulate common objects and clients who are collectors. 4. Neglecting to collect proper documentation, including cost basis, proper title, provenance, and current opinion of valuation for each piece in a collection. 5. Failure to take advantage of current tax laws which allow a collector to reduce current income tax, eliminate capital gains, and estate taxation on art assets. 6. Failure to leverage/arbitrage your clients’ art holdings for the benefit of their favorite charities. 7. Failure to develop a plan to protect art assets from creditors’ claims. 8. Failure to understand the art headlines in the press—those big auctions often mean panic selling, a huge reduction in value, and/or a lost legacy. 9. Confusing estate planning with art succession planning. There are different rules and different opportunities for art assets. 10. Failure to use a team approach when planning for their clients’ art assets—collectors and their advisors need specialized advocates. For more information, contact Annette@briddgegroup.com

Bank of America's audit committee has hired PricewaterhouseCoopers to replace KPMG as the auditor for its recently acquired Countrywide Financial unit.

The Public Company Accounting Oversight Board has voted to propose seven new auditing standards related to risk assessment.

Two-thirds of certified financial planners have seen an increase in potential clients as economic turbulence has increased in the past several weeks, according to a new survey.

More than half of internal auditors say they are not familiar with new technology that provides interactive data tags for financial statements, according to a new survey.

Former Federal Reserve Chairman Alan Greenspan tried to explain his version of the reasons for the global economic crisis to a congressional panel, while expressing shock and disbelief that the problems had spread so far.

The Treasury Department has selected two of the Big Four accounting firms, PricewaterhouseCoopers and Ernst & Young, to help administer the Emergency Economic Stabilization Act's Troubled Asset Relief Program.

Proxy research and advisory concern Glass Lewis & Co. said it would expand its partnership with IW Financial, a provider of environmental, social, and governance research, to include a broader range of research offerings, including global security risk/terrorism and custom research.

The New York State Society of CPAs and its Foundation for Accounting Education plan to hold an auditing conference on Oct. 27.

The recent surge in financial institution failures has sparked an uptick in governmental investigations into the imploding entities.

An Internal Revenue Service employee has been sentenced to one year's probation for improperly accessing tax information about one of his acquaintances.

In what can be termed a shift in placement, the Governmental Accounting Standards Board and the American Institute of CPAs are proposing that certain guidance in the latter's literature belongs in the literature of the former.

One benefit of the academic life is flexibility to spend some time each summer catching up on our reading.

KPMG HOLDS VIRTUAL JOBS FAIR

“Every day, we receive phone calls or e-mails that begin, ‘I just inherited (or acquired) a coin collection. What do I do?’ Unfortunately, all of us in the rare coin business have heard horror stories over the years about widows who sold their late husband’s collections at a fraction of the true value because they didn't have enough information. We've set up this new service so heirs can quickly get accurate information and find reputable dealers,” says Ron Guth, President of Professional Coin Grading Service (PCGS), one of the world’s largest, third-party rare coin authentication companies.

The Internal Revenue Service announced cost-of-living adjustments on the dollar limitations for pension plans and other items in tax year 2009, even as Social Security benefits are expected to rise next year.

The Financial Accounting Standards Board is considering delaying implementation of its controversial standard on accounting for uncertainty in income taxes for private entitiies.

The International Accounting Standards Board and its U.S. counterpart, the Financial Accounting Standards Board, plan to create a global advisory group to review financial reporting issues related to the credit crisis.

Accounting firm LarsonAllen has combined with yet another firm - Davis, Keller and Wiggins - expanding its presence in the St. Louis area and its automobile dealership client base.

The tax shelter trial of three former KPMG executives and an outside attorney began in a New York courtroom Wednesday, but with most of the original defendants no longer present.