Audit

Accounting firm Lovoy, Summerville & Shelton has acquired Granberry & Associates, allowing the firm to expand its client base beyond its home town of Birmingham to Granberry's turf in the Auburn-Opelika area of Alabama.

The Public Company Accounting Oversight Board released its report on its 2006 inspection of KPMG's auditing work, outlining a number of deficiencies.

My friends at the Aurora Financial Group, especially Roccy DeFrancesco, clued me in on what they consider the seven deadly sins of many financial advisors. They say they have seen over the past 40 years a weakness in the advice that any advisors have given. And, here they are: Sin 1: Failing to look at the biggest asset: the house. Most of the financial advisors, Aurora says, are comfortable talking about all the rest of the clients’ assets and investments but when it comes to their mortgage, they note that their eyes glaze over. Sin 2: Failing to advise clients that they could better protect the equity in their house from litigation, natural disaster, downsizing of employment, or down turns in property values. Sin 3: Exposing themselves to possible litigation for not advising clients of all the best investments in terms of their risk tolerance and particular needs. Sin 4: Specializing in areas such as business insurance, college planning, retirement planning, health plans, business continuation, et al, without looking at the big picture for the client that requires a global review of the client’s situation. Aurora says it is vital that advisors surround themselves with people and companies that they can trust so that they can address the bigger picture for all of their clients. Sin 5: Not keeping up with and understanding all the concepts that could be a benefit to the client. Surely, the biggest concern that most clients have is adequate planning for retirement so that there are enough funds for a successful plan, but how many people have adequately planned? Clearly, not enough. Sin 6: Chasing the whale but overlooking the mainstream clients. As Aurora likes to put it, you are more likely to build a successful business on the principles of working with the masses than trying to close the china egg, which may never happen. Sin 7: Not earning the hearts of the clients to the point of getting referrals to be a simple and automatic process. Aurora points out that clients have more choices and have better business acumen that they had in the past. So, they are looking for the value added of working with someone. Keep in mind that people today are able to access more current information by use of search engines and the Internet. Accordingly, financial advisors really need to work hard and to focus on that value added concept.

KPMG, through its private foundation, has awarded 10 more $10,000 minority doctoral scholarships for accounting students, on top of the 35 it has already handed out in the 2007-2008 academic year.

Financial business intelligence software developer Razorsight said it plans to provide spend-analytics software for Kintera's Fundware line of nonprofit and government accounting software.

The Securities and Exchange Commission has approved the Public Company Accounting Oversight Board's new internal control auditing standard, known as AS5, by a 5-0 vote.

Accounting firm BDO Seidman saw its revenue increase $31 million to $589 million in the fiscal year ended June 30, 2007.

The Public Company Accounting Oversight Board has proposed a new ethics rule on communicating with audit committees concerning independence.

United States v. Stein, a U.S. District Court for the Southern District Court opinion (July 17, 2007) by District Judge Lewis Kaplan, is fascinating reading, and may have significant implications for a number of firms.

LogicManager released an upgrade to its LogicERM enterprise risk management software that takes advantage of the new AS5 risk-based audit standard.

Significant internal control weaknesses remain in the preparation of the U.S. government's consolidated financial statements, according to a report from the Government Accountability Office.

DREAMS INC. ENGAGES FRIEDMAN COHENSports memorabilia and licensing concern Dreams Inc. has named Friedman, Cohen, Taubman & Co. as its auditor.

With the exploding interest in and acceptance for market-value-based information in financial statements, we thought we would rerun a couple of columns from several years back as part of our summer tradition.This one was published in spring 2001, and talks about the hole in generally accepted accounting principles, even value-based GAAP, that continues to insist that there is a difference between unrealized and realized gains and losses. At the heart of this anachronistic practice is confusion between income and cash flows, which are two different things best described in two different financial statements.

Bob Levy of New York City-based Levy & Associates called to tell me about a CPA Career Day and The Singing CPA. I thought the idea a superb one. You see, students from the Academy of Finance schools in New York City had the opportunity to get a firsthand look inside the world of accounting at this year’s CPA Career Day, an event that featured speakers from Goldman Sachs as well as music from “The Singing CPA,” who played songs spiced with accounting-related lyrics. Sponsored by the Academy of Finance and the New York Society of CPAs, it was attended by high school students, many of whom are considering the field of accounting in their future. According to Joshelyn Vivas, a junior at John Dewey High School, the event was not only informative but motivating, as well. “After listening to the speakers it makes me want to be a CPA and take the exam. An accounting firm is where I want to be.” Julie Levin, a Goldman Sachs vice president in their tax department, notes that putting in the hours is one of the most surprising things for students. “I kind of tell people that you’re likely to start out working about 55 hours and that doesn’t include email time, coffee, or lunch breaks.” Regina Flannery, Director of the Academy of Finance, points out, “The fact that the students have the opportunity to gain access to successful professionals in the accounting field will prove extremely beneficial. What we’re really trying to do is give the students a three-dimensional look at a potential career choice. While many of these students may not choose accounting as their profession, they’ll at least have had the chance to see what the field has to offer.” This is extremely important says Levin because in the end she feels that it’s really the students who have to decide what they want to do with their future. “No one can make that decision for them. It’s all about taking your career in your own hands. If you want to do international travel, you really have to let people know.” Providing much of the entertainment was Steven Zelin, also known as “The Singing CPA.” He currently works at Societe Generale, a large corporate investment bank, in addition to having his own consulting CPA practice. “I enjoy sharing my experience as a CPA with young people,” says Zelin. “A lot of the students think first off that being a CPA is all about the numbers, but it’s really being able to work well with other people as well as understanding business and accounting concepts.” He adds that becoming a CPA provides a strong foundation for many types of careers in business. “I think that the training you get from studying accounting provides a terrific foundation for developing a good financial perspective on life.” He also stresses that becoming a member of the NYS Society of CPAs would be a sound financial investment to students looking to go into the field. The Academy of Finance is a partnership of the New York City Department of Education, the National Academy Foundation, and the New York business community. The Academy introduces students to a variety of career opportunities in the financial services industry while equipping them with the conceptual and practical tools they need to choose their future profession. The National Academy Foundation creates partnerships between business leaders and education through an innovative educational model. Its small public school-based learning communities empower high school students to successfully go on to higher education and professions of their choosing. Thanks, Bob.

Judge Lewis A. Kaplan, who dismissed charges against 13 of the defendants in the KPMG tax shelter case earlier this week, has issued a temporary stay on his own decision.

The Public Company Accounting Oversight Board said it plans to hold a meeting to consider a new ethics and independence rule concerning communication with audit committees.

Securities and Exchange Commission Chairman Christopher Cox told a Town Hall Los Angeles meeting that he wants Congress to give more power to the Governmental Accounting Standards Board so GASB can police accounting practices at the state and local government level and better regulate the municipal bond market.He would like the SEC to be able to enforce GASB accounting rules when it sees a violation by a state or local government, similar to the way the SEC can take action against companies that flout Financial Accounting Standards Board rules. Texas and Connecticut have both passed bills recently allowing alternative accounting rules, although Connecticut Governor Jodi Rell has vetoed that state’s bill.

A group of companies and organizations in the United Kingdom has responded to the Financial Reporting Council's report on constraints in the audit market that have forced most large public companies to rely on one of the Big Four accounting firms for audit services.

Louisiana accounting firms LaPorte Sehrt Romig Hand CPAs and the Gautreau Group plan to merge on October 1.

A federal judge has dropped the charges against 13 defendants in the KPMG tax shelter case.Judge Lewis A. Kaplan of the U.S. District Court in Manhattan blamed prosecutors for forcing the Big Four accounting firm to stop paying the legal fees of the 13 defendants and said their constitutional rights had been violated.