Audit

Don’t know whether you saw this, but Schwab Institutional has released the findings of the “Independent Advisor Outlook Study,” a new semi-annual survey of independent investment advisors that measures their views on the geopolitical landscape, economy and investments. By the end of last year, there were more than 15,000 RIAs across the country, managing some $1.8 trillion of U.S. wealth, says Cerulli, and that nearly 1400 independent investment advisors with some $347 billion in assets under management participated in the study.So, what did they have to say?

Former Senator Paul Sarbanes, D-Md., who, as the head of the Senate Banking Committee, co-authored the sweeping Sarbanes-Oxley reform act said he supports developing additional guidance for smaller filers but, not surprisingly, dismisses exempting those companies from compliance with the legislation's rigid Section 404. "Stop and think about that for a moment," said Sarbanes in a speech before attendees at a conference on financial reporting and governance presented by Pace University's Lubin School of Business, here. "That would mean that you would be exempting 80 percent of public companies from compliance."

If XBRL is going to evolve to the financial reporting standard of the future, the accounting profession is going to have to step up its communication efforts on the tagging language, according to a survey of CFOs and controllers by global CPA firm Grant Thornton. According to the GT poll, roughly 85 percent of the survey participants indicated that the profession was not effectively communicating the benefits of using XBRL or Extensible Business Reporting Language for either internal or external financial reporting.

Maintaining that auditor concentration and litigation issues erect barriers to better pricing and service, Grant Thornton chief executive Ed Nusbaum called for the U.S. to undertake a comprehensive study on the domestic audit sector. More specifically, Nusbaum said the U.S. needs to produce a similar study to the one released this week in the U.K., "Financial Reporting Council's Market Participants' Group," which examined concentration and choice in the U.K. audit market. "In addition to the fear of one of the large accounting firms failing, there is no question that audit concentration, along with uncontrolled litigation exposure, is undermining the U.S. economic business model that served so well for so many years: More accounting firms means greater competition and increases quality and lowers costs to the end user," said Nusbaum. "We need a similar U.S. auditor concentration study with accompanying action steps to address the issue."

A report by the Government Accountability Office has raised questions regarding the value of consumer-mandated credit counseling as required by the 2005 Bankruptcy Protection Act. The auditor general's study, which examined the BPA's requirement for consumers to undergo credit counseling and debtor education courses before having debts discharged, said that by the time most clients receive the counseling, their financial situations are dire, leaving them with no viable alternative to bankruptcy. The counseling was intended to help consumers make informed choices about bankruptcy and its alternatives. The auditor general's report was intended to address growing concerns over potential abuses by credit counseling agencies in the wake of the counseling/education requirement. Among other things, the GAO report examined: * The process of approving counseling and education providers; * The content and results of the counseling and education sessions, * The fees charged, and; * The availability of and challenges to accessing services. The GAO has recommended that the Justice Department's U.S. Trustee Program analyze the outcomes of pre-filing credit counseling and issue formal guidance on what constitutes "ability to pay." As of October 2006, the Trustee Program had approved 153 credit counseling and 268 debtor education providers. For the report, go to: www.gao.gov/cgi-bin/getrpt?GAO-07-203.

The Private Companies Practice Section of the American Institute of CPAs has developed an online toolkit to help members understand and implement Statement on Auditing Standards No. 112, "Communication of Internal Control Related Matters Identified in an Audit." SAS 112 is effective for audits performed on or after Dec. 15, 2006. The product -- accessible to PCPS member firms -- is available at www.pcps.org. It includes talking points, a newsletter template and a client communication letter, among other resources. For interested parties, a free FAQ sheet and SAS 112 Web forum archive are available on the Web site.

On the heels of its financial reporting roundtable last month, the Securities and Exchange Commission said it may allow U.S. filers to choose what standards they want to use to report their financials.

As expected, KPMG flung some mud of its own back at home mortgage giant Fannie Mae last week, accusing the government-subsidized company of breach of contract and fraudulent misrepresentation -- claiming that the problems leading to Fannie Mae’s $6.3 billion restatement were largely of the mortgage lender’s own making.

Eide Bailly LLP, North Dakota’s largest accounting firm, announced that it will merge with Sioux Falls, S.D.-based Henry Scholten & Co. LLP.

KPMG says that a lack of controls and ineffective oversight are to blame for the problems that have haunted San Diego’s financial statements.

A new survey from Deloitte says that there is a strong relationship between work-life balance and positive ethical behaviors at work.

As expected, H&R Block Inc. announced that it has signed an agreement to sell its struggling Option One Mortgage Corp. lending arm, though unit subsidiary H&R Block Mortgage Corp. is not part of the deal.

As an aspiring writer, my mother was once approached by a huckster-in-training in her Brooklyn neighborhood of Sheepshead Bay, who assured the-then impressionable 10-year old he could get her an “almost new” typewriter for the grand total of two cents.

I come from a family of pretty good athletes. Well, let me amend that. Of the four males in the household, my youngest brother was terrible -- always falling over his feet, my middle brother and I were pretty decent athletes, having played in high school and college. My father was a duffer and even though he had the most expensive golf clubs on the market, his handicap practically equaled the national debt.

During conference calls with auditors this week, Securities and Exchange Commission staff said that accountants should be on the lookout for improper selling strategies designed to take advantage of FAS 159, “Fair Value Option.”

A year after the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 became law, government statistics show that the number of bankruptcy filings nationwide dropped nearly 70 percent last year.The total number of filings last year dropped to 618,000, down from a record of 2.1 million in 2005, when people were rushing to file before the new laws were enacted, according to statistics from the Administrative Office of the U.S. Courts. The American Bankruptcy Institute said that the 2006 number was the lowest level since 1988.

A new report from the Public Company Accounting Oversight Board looks to draw some conclusions out of its inspections of approximately 275 audits of internal controls over financial reporting performed by registered public accounting firms.The report specifically looks at the second year implementation of the board’s Auditing Standard No. 2, “An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements.” Nearly a year ago, the PCAOB announced that during 2006 it would conduct inspections to determine whether auditors were achieving the objectives of the standard with the least expenditure of resources.

The Financial Accounting Standards Board issued a proposal to improve the accounting for financial guarantee insurance contracts.The proposal, “Accounting and Reporting by Insurance Enterprises: An Interpretation of FASB Statement No. 60,” is aimed at reducing diversity in accounting treatment and providing financial statement users with clearer, more comparable information and expanded disclosures. The proposal has also been written in a new format intended to improve its understandability.

The U.S. Supreme Court said that it would not revisit the decision made by lower courts to vacate the conviction of Kenneth Lay, the late founder and former chairman of Enron Corp.In October, U.S. District Judge Sim Lake dismissed the federal indictment used to bring Lay to trial. Lay was unable to exhaust the appeals process after dying of a heart attack in early July, less than two months after a jury convicted him on six charges of conspiracy and fraud and Lake found him guilty on four charges of bank fraud.

Carbis Walker LLP, a firm specializing in public accounting and consulting, is offering manufacturers and distributors the opportunity to participate in a national benchmarking survey through a partnership with McGladrey & Pullen LLP.