Audit

Just saw a demo of a rather interesting idea. Of course, it is not unique, but the demo is rather good. Now what is this all about?

Four new members have been appointed to the International Financial Reporting Interpretations Committee.The trustees of the International Accounting Standards Committee Foundation, part of the Interational Accouting Standards Board, made the three-year appointments, which will be up in June 2010.

J.H. Cohn LLP has acquired the practice of Berenson LLP, a New York accounting firm specializing in solid apparel and import specialization practices.

A beef over legal fees could mean that the fate of a $10 million verdict won by a pair of Atlanta millionaires against PricewaterhouseCoopers is in greater limbo than previously thought.

Go ahead, say it: Forensic accounting is sexy. At least, that's how those in the field describe this fast-growing niche that incorporates investigation and auditing expertise to provide analysis in a judicial setting."I see more general service firms saying on their Web sites, 'We do forensic accounting,'" said Howard Silverstone, CPA, FCA, CFE and co-founder of Forensic Resolutions Inc., based in Haddonfield, N.J. "Part of it I think it's because it's sexy, and part of it is because they realize there's a legitimate market for it and people really understand it enough now that they are going to be looking for people like us."

To argue the success of the Sarbanes-Oxley Act of 2002, one can point to the strength and integrity of the capital markets and financial systems. If optimistically inclined, one could claim that the rules and procedures are quietly averting crises and major headline news.

PWC DECLINES RE-ELECTION AS AMERIGON AUDITOR

We hate to say how long we have been watching accounting standard-setting, but trust us, it has been a long time. Over those eons, we have been frustrated at the lack of attention granted to the interests of financial statement users and the perennial promotion of the interests of auditors and statement preparers. This imbalance simply does not work for the economy's good, because the capital markets are inefficient if users don't have ready access to the information they need for allocating capital to the right places at the right prices.

The partners of Grant Thornton U.K. LLP and RSM Robson Rhodes LLP announced an agreement last week to merge the two firms.Financial terms of the deal, expected to be completed on July 1, were not disclosed. The combined firm will operate under the Grant Thornton name.

Two major accounting associations have announced the recipients of research grants for the 2007-08 year.

The Public Company Accounting Oversight Board concluded its first International Auditor Regulatory Institute last week.

Appointed to serve as the first executive director of the Center for Audit Quality, Cindy Fornelli is guiding the new organization in its mission to bolster confidence in the audit process, and to aid investors by promoting constructive suggestions for change.Still affiliated with the American Institute of CPAs, the center is the revamped version of the AICPA’s former Center for Public Company Audit Firms. The CAQ Governing Board consists of representatives from the AICPA, the major public company auditing firms and independent public members.

In a major shift of its normal timetable, the Public Company Accounting Oversight Board issued its 2006 inspection report for Ernst & Young this week.

The Government Accountability Office has asked Congress to consider enacting a statute period longer than three years for taxpayers involved in questionable offshore activities.

"Boomers have both unrivaled influence and rich networks of peer advisors,” says Dr. Leslie Gaines-Ross, chief reputation strategist at Weber Shandwick, one of the world’s leading public relations firms.

The Public Company Accounting Oversight Board is soliciting nominations and re-nominations for members of its Standing Advisory Group. Created in 2003, the 31-member SAG assists the audit firm overseer in carrying out its standards-setting responsibilities. The PCAOB is currently seeking nominations and re-nominations annually to fill 15 positions. Appointments are for two-year terms. Nomination forms are available on the PCAOB Web site, www.pcaobus.org. The deadline for submissions is June 15, 2007. Appointments will be announced by the end of October, and the new terms will begin in January 2008. The group, chaired by the PCAOB chief auditor and director of professional standards, Thomas Ray, meets roughly three times a year.

The Center for Audit Quality, the group backed by the profession's six largest audit firms as well as the American Institute of CPAs, has lured aboard a pair of high-level staffers from the Securities and Exchange Commission. Lori Schock, the SEC's acting director of investor education, and general counsel Robert Burns will join the new group in May. Schock will assume the post of director of outreach, while Burns becomes the CAQ's new director of research. The group, which evolved from the AICPA's Center for Public Company Audit Firms, currently has about 800 members. Its executive director, Cindy Fornelli, and director of operations, Jane Cobb, are both former senior-level directors at the SEC. Fornelli served as deputy director of the SEC's investment management division, while Cobb helmed the regulator's legislative affairs office. Fornelli and several of the CAQ board are scheduled to embark on a multi-city "listening tour" to elicit feedback from investors, regulators, academics and business leaders to hone the business reporting model.

When I was 15, my father caught me sneaking a cigarette in our backyard. It was dusk and I thought I had successfully camouflaged myself behind our hedges to avoid detection. Following a fleet introduction between my backside and his size 12 Bostonian loafer, he informed me that not only was I grounded for two weeks, but my TV viewing privileges were revoked as well. When I protested that it should be one or the other, he introduced me to the concept of bargaining leverage in a negotiation and, as a rule, teenagers, caught smoking in a house where it was prohibited were not imbued with a whole lot of it. Since my younger brother was with me, he was on the receiving end of the punishment as well, even though he had not violated the no-smoking policy at Chez Carlino. My father called it guilt by association. As a result, I read roughly four books in that span and, in retrospect, undoubtedly came out better for it. I was reminded of my tobacco-induced quarantine last week when I attended a financial reporting conference keynoted by former Maryland Senator Paul Sarbanes, one-half of the now-famous hyphenate that drastically reshaped the corporate landscape. The senator told attendees that when he assumed the chairmanship of the Senate Banking Committee, he was more concerned with drafting money-laundering legislation in the wake of 9-11 than reforming the financial reporting process. But then the floodgates of scandal began to creak and, eventually, burst open with billion-dollar restatements and bankruptcies headlined by the poster children for corporate greed and fraud, Enron and WorldCom. Hence we were introduced to Sarbanes-Oxley, which no doubt gave as big a jolt to corporate America as my father's right foot did to my ability to sit down. Unfortunately, like my younger brother who endured being homebound for a fortnight for a peccadillo he didn't commit, many public companies that had adhered to ethical and legal financial reporting standards were also bound to its time-consuming and often expensive compliance. In the nearly five years that SOX has been law, there have been myriad opinions of whether the legislation has accomplished what it intended to - coupled with occasion movements toward full or partial rollbacks. But if there was any doubt as to whether lawmakers were solidly behind the bill or portions of it, I offer up last week's overwhelming defeat of an amendment put forth by Sen. Jim DeMint of South Carolina, who proposed that filers with a market cap of less than $700 million would be able to opt the act's 404 requirement. The measure was routed out of the chamber by a 62-35 margin. By contrast, lawmakers also voted 97-0 to approve an amendment from Sarbanes' successor at the SBC, Sen. Christopher Dodd, D-Conn., suggesting the SEC and the PCAOB forge ahead with their previously announced plans to develop guidance for smaller filers to make SOX more manageable. A long time ago I learned about bargaining power and when you don't have it. Unfortunately those companies that conducted business in an above-board fashion, were lumped in with those that didn't. And now as a result of compliance requirements, their costs have risen. I guarantee my brother can vouch for their pain.

In an effort to ease the implementation of the new risk-assessment standards from the American Institute of CPAs, tax and accounting products provider CCH has released ProSystem fx Knowledge Tools -- a product collaboration between CCH and audit process and services concern AuditWatch. The new offering, which is predicated on the guidelines of the knowledge-based audit, is available as an integrated module for ProSystem fx Engagement, or as a stand-alone application. The Knowledge Tools' KBA methodology uses a set of integrated procedures, from the pre-engagement stage through evaluating, concluding and reporting. The results from each audit stage are fed into a communication "hub," which enables audit team members to view summaries of the significant matters, risks and findings uncovered during the audit. The KBA documents contain steps and procedures required by generally accepted auditing standards. In addition Knowledge Tool users have access to: * Practice points - additional information in completing the associated section of the audit program, checklist, or workpaper; * Audit alerts - information such as upcoming changes to audit pronouncements; * Examples - example workpapers and explanations regarding how a section could be completed; * Optional workpapers - workpapers that can be brought in to complete the documentation for a specific step; and, * References - links to books, such as industry guides, and original pronouncements. CCH said it would offer training in the new methodology, as well as training on the Knowledge Tools software. For more information, go to

In working toward finalizing a reporting system and rules, the Public Company Accounting Oversight Board today pushed back the 2007 deadlines for the first round of annual reports to be filed and registration fee payments by accounting firms. Last May, the audit watchdog proposed that the first annual reports would need to be filed by June 30, 2007, with the first annual fee payment due by July 31, 2007. However, since the board had not finalized its rules and forms for either, it said it would push back both to as-yet-undetermined deadlines. The board said that once the rules become final, it would give registrants enough lead time to comply.