Financial reporting

The European Commission said it would propose a law allowing U.S. and Japanese companies with listings on European exchanges to file financial statements in accordance with U.S. generally accepted accounting principles without first reconciling them with International Financial Reporting Standards.

With tax season now behind us, accountants can turn their attention to the clients who are on extension and provide advice to other clients to help them save money in the year ahead.

The Office of Federal Housing Enterprise Oversight has issued examination guidance regarding Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.”

James K. Smith, chief financial officer of Phonom Corp., and James Stevenson, CFO of ABS Capital Partners, have joined the Private Company Financial Reporting Committee.

People are cutting back on their spending to save money as the U.S. economy slows, according to a survey by Harris Interactive for the American Institute of CPAs.

The Private Company Financial Reporting Committee, a joint effort of the Financial Accounting Standards Board and the American Institute of CPAs, is set to meet later this month.

From what I can glean, there is definitely a retirement crisis beginning to bubble in this country. Or is that an understatement? How so? Well, it seems to be affecting some 50 million retirees because according to MotleyFool.com, more than 39 percent of investors who are presently in or near retirement have saved less than $25,000 for their golden years. Yes, you read that right, $25,000. Astonishing, eh? Clearly, this is the lowest American savings rate since the Great Depression. Jon Hagan Hicks, who is the chief investment officer for J. Hagan/Warren Wealth Advisors based in Louisville, Ky., says that retirees are behind the eight-ball for saving enough for retirement. “We expect interest rates to remain low and the stock market to be very volatile for 2008. This is a very bad combination for retirees to earn a reasonable rate of return in traditional investments.” Hicks has a reputation as being quite astute when it comes to this subject and his words are well respected in the industry. He specializes in alternative investments, financial management theory, and asset management. As president of J. Hagan Wealth Advisors, Hicks has created and managed traditional investments, real estate portfolios, hedge funds, and mortgage-backed securities. He says that although younger investors may have enough time to weather the storm in the equity markets, he expresses concern about retirees. A lot, he notes, have lost principal recently and he sees many savings in low-yielding accounts. “If food, energy, and healthcare costs keep increasing at their recent rates, many retirees’ portfolios may expire before they do.” As to a solution, Hicks maintains that a retiree must seek out expert advice to avoid as much volatility as possible in their portfolios while still looking to maintain a healthy income stream. But he does throw up a red flag. He says the biggest problem is that many retirees are trying to manage their finances on their own without expert help. In fact, it is noted that nine out of 10 investors don’t even have a financial plan. Basically, not only have people not saved enough but they don’t even know where they are going. I can attest to this when I look at many of my friends, again most of whom do not have any specific plan and they are all at retirement age. Hicks doesn’t prop up any specific vehicle. He is too honest for that. When he is asked about specific investments, he simply advises that every individual investor has different objectives and needs and that no specific product is right for everyone. That’s the primary reason he advocates getting expert advice. In sum, he reiterates specific steps that retirees can take to better position themselves.

Presidential hopeful Sen. Barack Obama, D-Ill., released the 2007 tax return for himself and his wife Michelle.

The Internal Revenue Service said it would be watching to make sure charities and religious organizations don't violate their tax-exempt status by engaging in political activities this campaign season.

The Securities and Exchange Commission will decide next Monday on its plans for any requirements and timeline for public companies to file their financial statements in an interactive data format.

The Internal Revenue Service has released draft instructions for the redesigned Form 990, the return that tax-exempt organizations such as nonprofit charities, hospitals and universities must file annually.

Lately, it seems like the concepts of fair value measurement and mark-to-market accounting have been taking a lot of blame in the hand-wringing over what is causing the fallout in the credit and mortgage securities markets.

An Oregon federal court has permanently barred John Fitzgerald of Portland and his three daughters - Marilyn Dial, Martha Farr Sharp and Karen Gray - from marketing a tax fraud scheme involving sham nonprofit corporations that customers used to evade federal taxes, the Justice Department said.

It is my belief that despite the various newsletters, publications and sections on the AICPA Website, what the AICPA is doing that directly impacts its members can be publicized better by the AICPA.

FIDELITY: RETIREES NEED $225,000 FOR HEALTH CAREFidelity Investments has released a report estimating that a 65-year-old couple retiring in 2008 would need approximately $225,000 to cover their medical costs in retirement, a 4.7 percent increase over the 2007 estimate of $215,000. Fidelity has been calculating retiree health care cost estimates annually since 2002. The number has risen a total of 41 percent since then, with an average annual increase of 5.8 percent. The 2008 estimate assumes that individuals do not have employer-sponsored health care coverage. The estimate includes expenses associated with Medicare Part B and D premiums, Medicare cost-sharing provisions such as co-payments and deductibles, and out-of-pocket costs for prescription drugs. It does not include other health-related expenses, such as over-the-counter medications, most dental services and long-term care.

The Treasury Department and the Internal Revenue Service have issued proposed regulations to provide funding guidance for single-employer defined-benefit plans.

UHY Advisors has become a services partner of business software developer SAP America.

When the Governmental Accounting Standards Board issued Statement 34, requiring government-wide accrual accounting and modified accrual accounting for governmental funds, it improved financial reporting enormously, but inevitably created some confusion.Part of that confusion was over one of the most widely used pieces of government financial information — fund balance. Grappling with vague definitions of “reserved” funds, state and local governments have been reporting restricted net assets and reserved fund balances inconsistently.

As investors and regulators increasingly question the role of fair value measurements and mark-to-market accounting in contributing to the global economic downturn, a group of speakers weighed in at a panel discussion sponsored by the CFA Institute Centre for Financial Market Integrity.

At the Financial Planning Association business solutions conference last month, Julie Littlechild, president of Advisor Impact, presented new information based on a survey of investors about the economics of loyalty. In effect, she was showing what turns a client from satisfied-but-passive to actively engaged in the growth of an advisor’s business. “Client engagement is the outcome of a practice that is structured effectively and a driver of future growth in an advisor’s business,” she says. “Advisors can achieve a balance between a level of service that is both meaningful to their clients and profitable to then, but which encourages clients to be actively engaged in the growth of the advisor’s business.” Vanguard Financial Advisory Services sponsored the study and notes the results underscores that there is a direct economic correlation between having engaged clients and having a thriving practice. Littlechild says that of the investors surveyed (some 1,000), 17 percent were disgruntled, 19 percent were complacent, 31 percent were content, and 33 percent were “engaged.” Actually all of those in the disgruntled section had thought about switching advisors. Obviously, the thrust of any practice is to move clients into the “engaged” category because the economics of loyalty are simply too great to ignore. Keep in mind that the higher up the scale clients move—from disgruntled to complacent to content to engaged—the more services they utilize, including comprehensive financial planning, retirement income planning, tax planning, estate planning, and trust services. Also, it may go without saying that the engaged clients are more loyal clients. They are unlikely to switch advisors. So, how to get clients into this category? Littlechild offers a few tips: