FLOTEK INDUSTRIES ENGAGES UHY: Flotek Industries, a Houston-based manufacturer and marketer of innovative specialty chemicals, and downhole drilling and production equipment, dismissed UHY Mann Frankfort Stein & Lipp LLP as its auditor and engaged UHY LLP as its replacement.In a filing, Flotek said that UMFSL resigned as the company's auditors as a result of joining UHY, an accounting firm consolidator with which UMFSL had an affiliation.

On July 6, 2006, SEC Commissioner Paul Atkins spoke at the 11th Annual Conference of the International Corporate Governance Network (see www.sec.gov/news/speech/2006/spch070606psa.htm).The ICGN is a U.K. nonprofit that aims to "develop and encourage adherence to corporate governance standards and guidelines, and to promote good corporate governance worldwide." What a great audience to come before to display how this most powerful regulatory agency is committed to protecting the capital markets!

DELOITTE SURVEY FINDS GOVERNMENTS NEED TO CLOSE LOOPHOLES ON UNDERFUNDED PENSIONS: As the number of underfunded public pension funds has risen dramatically over the past five years, state and local governments need to close loopholes, adjust the level of employee contributions and rethink overall fund management, or risk a crisis, according to a Deloitte Research study.The report, titled "Paying for Tomorrow,"' also warned that the pending crisis could be aggravated by the coming wave of Baby Boomer retirees tapping into their pension accounts, unless fund managers move quickly to adopt a solution. Among the areas of greatest concern cited are:

Many profitable small-business owners would like to have a retirement plan that can provide more than $50,000 of deductible contributions to the owners and other key employees.A defined-benefit plan is perhaps the only tax-qualified retirement plan that can achieve this. However, in traditional DB plans, the worker benefit costs are too high to make them practical. A cash-balance plan is the solution (see box).

A worker's Social Security benefits are reduced for each month that the worker starts getting the benefit before reaching full Social Security retirement age. The reduction is five-ninths of 1 percent of the primary insurance amount of that worker for each of the first 36 months before full Social Security retirement age, and five-twelfths of 1 percent for each additional month.Thus, if a worker retires exactly 36 months before reaching full Social Security retirement age, his benefit will be reduced by 20 percent (36 x 5/9 of 1 percent) of the PIA. If a worker retires 48 months before reaching full retirement age, the benefit will be reduced by 25 percent (36 x 5/9 of 1 percent plus 12 x 5/12 of 1 percent).

The Public Company Accounting Oversight Board named Kyra Armstrong, Ray Hamm and Jerry Decker as deputy directors in the Division of Enforcement and Investigations unit.In their new positions, they will oversee and supervise the board's investigations process. Decker was also given the additional title of chief trial counsel, with primary responsibilities related to litigation that stems from any PCAOB disciplinary proceedings.

The Auditing Standards Board recently issued eight new auditing standards, Nos. 104-111, collectively referred to as the risk assessment standards. The new standards will change many of the planning and risk assessment procedures performed during an audit (though most of the steps performed throughout the audit process remain largely the same).Implementation of the new standards should increase the effectiveness of financial statement audits, as auditors will now be required to:

A study sponsored by the Institute of Management Accountants indicated that some of the problems with the Sarbanes-Oxley Act might stem from a professional bias that emphasizes public accountancy over management accounting.IMA president and chief executive Paul Sharman said that the public, professional and governmental assumption that public accountancy is the only accountancy has resulted in regulation that cannot be implemented, and the use of an auditing standard as an accounting standard.

Schedule M-3 is part of the effort by the Internal Revenue Service to get a better handle on abusive tax shelters and other aggressive tax techniques by getting sufficient detail on book/tax differences that it can guide IRS auditors to transactions in need of further examination.The IRS is sufficiently confident in its ability to track book/tax differences on Schedule M-3 that earlier this year it removed book/tax differences as a criteria required for reportable transactions. While the former Schedule M-1 required only 10 lines of information, Schedule M-3 expands that to 90 lines of information, with an emphasis on making a distinction between temporary and permanent book/tax differences.

The Public Company Accounting Oversight Board recently issued its inaugural audit practice alert, warning auditors to be on the watch for problems with the timing of, and the accounting for, stock-option grants."Auditors planning or performing an audit should be alert to the risk that the issuer may not have properly accounted for stock-option grants and ... may have materially misstated its financial statements," the alert said, alluding to recent investigations by the Securities and Exchange Commission and the Internal Revenue Service into whether companies routinely backdate, spring-load or otherwise manipulate stock-options grants to top executives.

Pension reform had a longer shelf life than anticipated, finally winning legislative approval after a number of false steps.The Pension Protection Act of 2006 passed the House by a margin of 279 to 131. Meanwhile, the Senate voted 93 to 5 to approve the bill, clearing it for President Bush's signature.

"The individual investor should act consistently as an investor and not as a speculator. This means that he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning that satisfies him that he is getting more than his money's worth for his purchase."

Nationwide bookseller Barnes & Noble Inc., operator of book stores under the Barnes & Noble and B. Dalton brands, has received a subpoena from the U.S. Attorney for the Southern District of New York requesting documents on its practice of awarding stock options.The company said that it intends to cooperate fully with the probe.

Big Four firm PricewaterhouseCoopers is being audited by the Internal Revenue Service for possible tax reporting violations, according to a published report.

China's government has told its auditors to maintain a clean image after one of their colleagues reportedly died of alcohol poisoning while on an auditing assignment.

After nine years, a federal report says that college tuition tax credits aren't necessarily providing the boon originally intended for poorer families.

Edward W. Trott, a member of the Financial Accounting Standards Board since 1999, will step down from his position in June 2007.

The New York State Society of Public Accountants, the oldest state accounting association, representing approximately 30,000 CPAs, has offered certain suggestions regarding pending legislation in Congress affecting estate planning-- specifically emphasizing the pressing need for certainty and ease of administration with respect to the transfer tax.

Home mortgage giant Fannie Mae said that it won't face criminal charges over the company's massive accounting irregularities.

The widening options-timing scandal contributed mightily to a record-setting number of large U.S. corporations filing late financial reports for the second quarter, according to a study from market research firm Glass Lewis & Co.