Audit

PCAOB to Consider New Ethics and Independence Rule

The Securities and Exchange Commission will decide next Monday on its plans for any requirements and timeline for public companies to file their financial statements in an interactive data format.

KPMG said it has set a goal of reducing its member firms' carbon emissions by 25 percent between 2007 and 2010 as part of a "global green initiative."

The Public Company Accounting Oversight Board released a copy of its annual inspection of Grant Thornton, noting several deficiencies in the firm's audits of five clients.

Two former Arthur Andersen auditors have settled charges with the Securities and Exchange Commission accusing them of failing to exercise due professional care and skepticism in their 2001 audits of bankrupt telecommunications giant WorldCom.

Lately, it seems like the concepts of fair value measurement and mark-to-market accounting have been taking a lot of blame in the hand-wringing over what is causing the fallout in the credit and mortgage securities markets.

Piano maker Steinway Musical Instruments has opted to tune out Deloitte & Touche as its outside auditor and replace the Big Four firm with UHY, after its audit committee decided UHY offered a better price.

House Approves Taxpayer Assistance and Simplification Act

It is my belief that despite the various newsletters, publications and sections on the AICPA Website, what the AICPA is doing that directly impacts its members can be publicized better by the AICPA.

The International Auditing and Assurance Standards Board has revised the international standards requiring management to provide auditors with a clear written statement that auditors have received all the information they need.

In mid-February, we received an e-mail about our off-balance-sheet financing column (“Off-balance-sheet financing: Holy Grail or holey pail?” Accounting Today, Feb. 11-24, 2008, page 13) from Craig Bruya, currently chief financial officer of a Microsoft division, a former Andersen auditor and an erstwhile accounting instructor.We don’t mind getting under readers’ skins if it jars them loose from complacency. In this case, it appears we did the former, but not the latter. We think others would learn from seeing his challenges (which appear in italics but have been edited for prolixity) and our replies.

The Treasury Department and the Internal Revenue Service have issued proposed regulations to provide funding guidance for single-employer defined-benefit plans.

The fiscal year 2007 audit rate for the nation's largest corporations has plunged to its lowest level in the past two decades, according to a new report.

UHY Advisors has become a services partner of business software developer SAP America.

Until 1991, the accounting profession was largely guided by historical cost, transaction-based accounting.Granted, fair market value and historical cost at the point of the transaction were deemed equivalent, provided that arm’s-length transactions were involved. However, those making decisions — investors, auditors and regulators — grasped that unless someone gave and accepted consideration for something, its underlying value was arguable.

As investors and regulators increasingly question the role of fair value measurements and mark-to-market accounting in contributing to the global economic downturn, a group of speakers weighed in at a panel discussion sponsored by the CFA Institute Centre for Financial Market Integrity.

At the Financial Planning Association business solutions conference last month, Julie Littlechild, president of Advisor Impact, presented new information based on a survey of investors about the economics of loyalty. In effect, she was showing what turns a client from satisfied-but-passive to actively engaged in the growth of an advisor’s business. “Client engagement is the outcome of a practice that is structured effectively and a driver of future growth in an advisor’s business,” she says. “Advisors can achieve a balance between a level of service that is both meaningful to their clients and profitable to then, but which encourages clients to be actively engaged in the growth of the advisor’s business.” Vanguard Financial Advisory Services sponsored the study and notes the results underscores that there is a direct economic correlation between having engaged clients and having a thriving practice. Littlechild says that of the investors surveyed (some 1,000), 17 percent were disgruntled, 19 percent were complacent, 31 percent were content, and 33 percent were “engaged.” Actually all of those in the disgruntled section had thought about switching advisors. Obviously, the thrust of any practice is to move clients into the “engaged” category because the economics of loyalty are simply too great to ignore. Keep in mind that the higher up the scale clients move—from disgruntled to complacent to content to engaged—the more services they utilize, including comprehensive financial planning, retirement income planning, tax planning, estate planning, and trust services. Also, it may go without saying that the engaged clients are more loyal clients. They are unlikely to switch advisors. So, how to get clients into this category? Littlechild offers a few tips:

A team of accounting students from Brigham Young University has captured first place honors as winners of the Deloitte National Student Case Study Competition.

PricewaterhouseCoopers has released a report showing an increase in federal class-action shareholder lawsuits last year, after two straight years of decline.

A study of corporate audit committees finds that members increasingly expect their companies' internal auditors to focus on operational, strategic and business risks.