Audit

Mutual fund research company Morningstar has begun rating hedge funds.

The Securities and Exchange Commission's Advisory Committee on Improvements to Financial Reporting has released a progress report on its work to date.

XBRL US named Alfred R. Berkeley as the new chairman who will lead the board in 2008.

KPMG is holding a five-week competition among auditing students from more than 27 colleges and universities around the country.

Catapult Communications Corporation recently announced that it is changing accounting firms. What was intriguing about the press release was the detailed reason given for changing from a Big Four to a regional firm. It made the change “to significantly reduce its accounting expenses.”

An appeals court has overruled $300,000 in penalties levied against accounting firm Grant Thornton in a case involving the firm's audit of the First National Bank of Keystone.

A study of internal auditors around the world has uncovered similarities and sharp differences within the profession.

One dirty little secret of financial reporting is off-balance-sheet financing.

Two accounting statements from the Financial Accounting Standards Board could have a large impact on accounting firms and their business clients, said accounting firm BDO Seidman.

Are your clients pointed in the right direction? Gail Cunningham of the National Foundation for Credit Counseling recommends that people review where they are in order to determine where they’re headed, as well as encouraging them to consider implementing certain tips. The NFCC was founded back in 1951 and is the nation’s largest and longest serving national nonprofit credit counseling organization. She says that a few simple steps can make a dramatic difference in one’s financial life.

KPMG has signed a three-year agreement with champion golfer Phil Mickelson under which he will wear the KPMG logo on his headgear at all of his golf-related appearances.

A significant number of initial public offerings were in the U.S. markets' pipeline in the fourth quarter of 2007, according to a quarterly report issued by Ernst & Young.

Larry Rodda, a former principal and managing director of KPMG Consulting, has agreed to pay an $80,000 penalty to the Securities and Exchange Commission to settle charges that he deceived investigators over accounting fraud at Peregrine Systems.

The Financial Accounting Standards Board has decided to issue final guidance that would defer for a year the effective date on which private and public entities would have to account for fair value measurements.

An advisory committee to the Securities and Exchange Commission intends to make its decision on Feb. 11 on whether to issue an eagerly anticipated report on improvements to financial reporting.

Deloitte Financial Advisory Services has introduced a service that issues fairness opinions on the consideration offered to companies on financial deals such as mergers, acquisitions, going-private transactions and divestitures.

The Public Company Accounting Oversight Board released expanded versions of two reports it had originally issued in 2005 on two audit firms, highlighting problems with technical competence.

The Securities and Exchange Commission has begun a cost-benefit study of the upcoming attestation requirement for smaller companies under Section 404(b) of the Sarbanes-Oxley Act.

Did you know that today most investment advice zeroes in on the development of portfolios that are on the “efficient frontier,” which is one where no added diversification can lower a portfolio’s risk for a given return expectation? At least, that’s according to my friend Larry Swedroe who is the principal and director of research for both Buckingham Asset Management and BAM Advisor Services in St. Louis. He’s also the author of the recently released Wise Investing Made Simple plus a half dozen other best sellers. His words are deemed golden. In any event, working with this efficient frontier, Swedroe says that investment advisors can then tailor portfolios to the individual investor’s unique situation but unfortunately far too many investors and their advisors focus only on the risks of the investments themselves. Swedroe believes that when developing the overall financial plan, there are other risks that are important to consider and that not integrating the management of these risks can cause the best investment plans to fail. These other risks are human capital (which means wage earning), mortality, and longevity. Taking these one at a time, Swedroe notes that as we age and accumulate financial assets and the time we have remaining in the labor force decreases, the percentage of human capital to financial assets shrink. “This shift over time should be considered in terms of the asset allocation decision.” He also considers that with all else being equal, people with a high earning capability have a greater ability to take more financial risk because ether can moiore easily recover from losses. “However, they also have a lower need to take risk.” As to mortality, he believes that protecting the capital via the purchase of life insurance should be part of the overall financial plan. “Life insurance is the perfect hedge for mortality risk as its return is 100 percent negatively correlated with the human capital asset.” Looking at longevity risk, which he defines as the risk that you will outlive the ability of your portfolio to support your desired lifestyle, he suggests that investors might consider purchasing annuities at around 65 years of age and certainly buying them before reaching 85. All in all, in general younger investors with more labor capital should invest more in stocks than older investors and that individuals with safer human capital have a greater ability to invest more in risky assets. Of course, those whose human capital more highly correlates with equity risks should allocate more to safer fixed income investments. Swedroe also believes that individuals should diversify their human capital, minimizing investments in assets that correlate with their labor income and should hedge their human capital risks through the use of insurance contracts such as disability, life and long-term health care. Finally, individuals should consider hedging their longevity risk through the use of payout annuities.

Accountants Mike Karlins and Glea Ramey have purchased the Woodlands, Texas office of UHY Advisors TX and opened an independent firm, Karlins & Ramey LLC, CPAs.