Audit

KPMG was on the losing side of a $17.6 million verdict in a case involving an investor who claimed the firm gave him bad tax advice.

Tax preparers in Oregon may set a standard for future regulation of tax preparers nationwide, according to a new report from the Government Accountability Office.

The Financial Accounting Standards Board has issued three exposure drafts of proposed financial standards and amendments relating to accounting for transfers of financial assets.

"Have you heard of this group?" asks Howard, my editor, handing me a printout.

The Internal Revenue Service has reached a settlement with the law firm Arnold & Porter, which has paid an undisclosed penalty for promoting tax shelters.

The American Institute of CPAs has issued a proposed update to its audit guide for the gambling industry that takes into account some recent issues faced by casinos.

The Financial Accounting Standards Board has issued a staff position aimed at improving disclosures about credit derivatives.

I just received my quarterly report from Fidelity Investments which has a pretty good article by Nate Hardcastle on ways to avoid risk and the steps to help manage it. Fidelity has a superb research unit and its report, “Beyond Conventional Wisdom: New Strategies for Lifetime Income,” is quite important when you are advising retirees, especially about the area of risk management. Retirees, as you already know, pretty much draw from their various savings and retirement accounts a certain amount each year to meet their expenses, which, as you also know, keeps rising so that there is left a rather small amount in which to generate any income. Then, you have to add to that the increasing life expectancy so that many financial planners today when talking to a 65-year old aimed at retiring now spins life out for another 30 years.

A federal appeals court upheld a $182.9 million jury award that PricewaterhouseCoopers will have to pay to policyholders of a defunct insurance company audited by its predecessor Coopers & Lybrand.

The International Accounting Standards Board and the Financial Accounting Standards Board have updated their 2006 memorandum of understanding and set a goal of completing their major joint projects on convergence of International Financial Reporting Standards with U.S. generally accepted accounting principles by 2011.

Deloitte has taken over an anti-money laundering group and plans to expand its mission.

PricewaterhouseCoopers has released three new guides to help companies make the transition to International Financial Reporting Standards.

Crowe Chizek has changed its name to Crowe Horwath to reflect the firm's membership in the Horwath International network.

Rising gas prices, a declining housing market, the weakening of the dollar and fear of a recession — today’s economic conditions continue to point south, with no light at the end of the tunnel. Critical to these issues is the role of internal accounting and finance professionals, who in large part are responsible for making decisions that contribute to the success or downfall of an organization.For our economy to remain competitive, there needs to be a renewed emphasis on proper regulation and guidance within the profession. The demise of financial institutions over the years (the collapse of Bear Stearns, as an example) continues to validate why fundamental changes should be made to help ensure that financial reporting and internal control standards shift to a globally accepted method of risk management.

When the hot-air balloon lifted off, the dawn weather was impeccable. Shortly thereafter, a terrible storm hit and engulfed the airship in thick clouds, heavy rain and unpredictable winds. After hours of bad weather, the pilot was relieved to once again see the ground, but the landscape was unrecognizable. Soon, however, he spotted a strolling figure and cried out, “Where am I?” The person on the ground shouted: “You’re in the basket of a hot air balloon!” The pilot cried out: “You must be a CPA!” The surprised stranger answered: “How did you know?” The pilot smiled and shouted, “Because you gave me very accurate but totally useless information.”The CPA on the ground in this after-dinner-speech ice-breaker reminds us of those in our profession, probably a majority, who still cling to the status quo in spite of plentiful evidence and common sense that it no longer serves the purpose that it once might have, many decades ago.

Ernst & Young has settled charges with the Securities and Exchange Commission for $2.9 million alleging a conflict of interest in its audits of three companies.The case involved a series of interviews that Ernst & Young distributed on audio CDs with the chief executives of various companies. The interviews were conducted by executive coach Mark C. Thompson, who was also a board member of three companies audited by the firm.

In a pair of proposals that may eliminate much of the confusion surrounding audits of companies that outsource certain functions, such as payroll processing, the Auditing Standards Board has approved the issuance of an exposure draft that splits Statement of Auditing Standards 70 into two separate kinds of standards.Chuck Landes, American Institute of CPAs vice president of professional standards and services, said that the new standards follow the natural lines of division between types of audits — those of audit clients, and those of “service organizations” that perform outsourced functions.

By now I am sure you might have heard about the wildly successful inaugural financial planning conference held in July in Chicago by this publication under the Accountants Media Group umbrella. Although the idea for the conference started back in March (a rather short period of time to get the word out), it was nevertheless a huge success and brought in attendees from all over the country wanting to know how to move upwards in the financial planning niche. Interestingly enough, two-thirds of the attendees were not already in financial planning but were looking for how to enter the field; only one-third were already in practice. Four major companies saw the opportunity in such a topic to sponsor the conference: Five Star Financial Solutions, Rochdale Investment Management, Honkamp Krueger Financial Services, and Oppenheimer. The speakers came from the upper tiers of financial planning from Stuart Kessler and Rebecca Pomering as keynote speakers to Sidney Blum, Gale Crosley, Garrett D’Alessandro, Mitchell Freedman, Jim Files, Gene Garrelts, Keith Heichel, James Herrig, Peter Jaworski, Bernard Kiely, Michael Parness, Larry Swedroe, Enrique Vasquez, Troy Waugh, Clare Wherley, Stephen Wild, and Stuart Zimmerman. The topics were wide-ranging from why financial planning makes sense to selecting the right business model to marketing and selling such services to success stories (including costly false starts and failures) to the importance of critical strategic partners to financial planning software to best practices. You can see where this was heading. The results from the attendees, sponsors, and speakers were highly laudatory, so much so that we are now looking at a conference for next year that will go into this area even more deeply with some nuts and bolts tactics such as exactly how to go about getting licenses and stories from those who just started up a financial planning practices with their personal pros and cons. If you wish to be on the mailing list for advanced information, by all means e-mail me.

Plante & Moran has gone south of the border, opening an office in Monterrey, Mexico.

Technology hurdles are forcing the Internal Revenue Service to again delay the effective date of a revenue ruling that gave employers guidance on the use of smart cards, debit cards and credit cards to provide transportation fringe benefits to employees.