Audit

PWC RESIGNS AS ALLIANCE AUDITOR: Big Four firm PricewaterhouseCoopers resigned as accountant to Alliance Semiconductor Corp. At presstime, a replacement had not been named. Santa Clara, Calif.-based Alliance, a provider of analog and mixed-signal and chip-to-chip connectivity products, networking controllers and high-performance memories, reported no disagreements with its former auditor. However, PwC said that its accounting staff lacked skill and depth with relation to applying generally accepted accounting principles, and added that Alliance has ineffective controls over inventory and the accounting for an equity-method investment.AEHR ENGAGES BURR, PILGER & MAYER: Aehr Test Systems, a Fremont, Calif.-based manufacturer and developer of test equipment for the semiconductor industry, retained the firm of Burr, Pilger & Mayer as its new auditor, replacing PwC. PwC's reports on the company's financial statements for the years ended May 31, 2005 and 2004, did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principle.

It's hard to believe 10 years and 220 columns (without missing a deadline) have passed since the debut of The Spirit of Accounting, but that is indeed so.Born out of a collaboration between Ed Ketz of Penn State University and Paul Miller of the University of Colorado at Colorado Springs, it has brought issues to the attention of a wide range of accounting professionals, from neophytes still in college up to those in corner suites in corporations, public accounting firms, professional associations and regulatory agencies.

Cardinal Health Inc., a manufacturer of medical supplies, has reached a tentative settlement with the Securities and Exchange Commission to end a two-year investigation into the company's accounting practices.

CPA Wealth Provider, the magazine for CPAs who are now in, or want to enter, the financial planning world is in its fifth year and as each issue goes by, the call for financial planning gets even louder. Now, according to a new report from Spectrem Perspective, a strategic consulting firm that specializes in the retirement markets, what are called "Barely Boomers" requires advisors with a broad range of skills.

The Financial Accounting Standards Board has issued a proposal that would provide companies with the option to report financial assets and liabilities at fair value.

Speaking at the at the Financial Service Institute's 2006 Broker-Dealer Conference in San Diego, Securities and Exchange Commissioner Cynthia Glassman said that brokerages were the focus of more investor complaints to the SEC in the 2005 fiscal year than any other type of business.

The U.S. Chamber of Commerce's report on the auditing profession is equal parts suggestions for legislative protections and doomsday suppositions for the industry.

A white paper from the U.S. Chamber of Commerce says that the auditing industry is "severely contracted' and could eventually lead to complete erosion of public confidence in the market.

The inspection division of the Public Company Accounting Oversight Board said that there's room for improvement in how the young agency conducts its inspections of auditing firms.

Barry Goldsmith, the enforcement chief of brokerage regulator NASD, will step down in March to return to private law practice, and his deputy was named as his acting replacement.

The Public Company Accounting Oversight Board will continue its forums on auditing in the small business environment throughout 2006.

The Securities and Exchange Commission voted unanimously to propose a number of changes to the disclosure rules for executive pay packages.

The Securities and Exchange Commission has launched a formal investigation into an accounting change made by IBM in 2005.

Many of the 19 former tax professionals facing trial over the sale of KPMG tax shelters, whose legality has been questioned by the federal government, have asked for the dismissal of the charges in a variety of joint motions.

The Securities and Exchange Commission has opened an informal inquiry into how Home Depot Inc. records the credits it receives from vendors for defective merchandise.

Alan L. Beller, director of the Division of Corporation Finance at the Securities and Exchange Commission, will return to the private sector next month.

BANK OF SOUTH CAROLINA JETTISONS KPMG: The Bank of South Carolina has dismissed its auditor - Big Four firm KPMG - and hired Elliot Davis as its new independent accountant.In a federal filing, the company said that it made the decision to change auditors because it felt that it could get the same services at a lower fee structure from another audit firm.

More times than we can count, we have written that the preferable resolution of most financial accounting issues involves reporting values of assets and liabilities on the balance sheet and changes in those values on the income statement when they happen, not before and certainly not after.We have written about this point in the context of specific items, such as investments, receivables, inventories, tangible and intangible assets, payables, stock options, other derivatives, and pension assets and liabilities. We have also advocated this change on a theoretical level, especially as we reviewed the Financial Accounting Standards Board's new Conceptual Framework project.

Nearly half of all business organizations worldwide have been victims of fraud in the past two years, according to the 2005 PricewaterhouseCoopers' Global Economic Crime Survey released in late November.The survey found that the number of companies reporting fraud increased from 37 percent to 45 percent since 2003, a 22 percent increase. The cost to companies was an average of $1.7 million in losses from "tangible frauds," those resulting in immediate and direct financial loss, like asset misappropriation, false pretences or counterfeiting.

If you've had problems applying Auditing Standard No. 2, the Public Company Accounting Oversight Board says you're not alone.The board has known of widespread difficulties applying the new standard, "An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements," since audit firms first began grappling with its complex and often undefined demands.