Make no mistake about it: The Institute of Management Accountants supports the Sarbanes-Oxley Act. It has even said that the legislation was long overdue.But that doesn't mean that the IMA thinks SOX is working.

Almost nine full years have passed since the $250,000/$500,000 exclusion of gain on the sale of a principal residence first became available. Little did many of us imagine how much would change in nine years.While the basic sale-of-a-principal-residence provision has remained the same, except for some minor congressional tinkering, the world in which it lives has not. The real estate "boom," capital gains rate reduction, subsequent rulings and other developments have all played a part in making this a particularly dynamic area of tax planning. A review of recent trends and developments over the past year is especially illuminating.

In four months flat, the Financial Accounting Standards Board has cranked out a proposal for a new standard on accounting for post-retirement benefit plans, including pensions.Not only has the board been quick to write the proposal, but it may be quick to implement it as well. If approved soon, it will be effective for fiscal years ending after Dec. 15, 2006.

On March 31, the Financial Accounting Standards Board issued an anticipated exposure draft that proposed significant changes in accounting for defined-benefit pension and health plans. As we explained a couple of columns back, it will recognize net plan assets and/or liabilities, accompanied by accumulated comprehensive income for deferred gains and losses that are currently off-balance sheet.Because of the large amounts and the generally bad news that this new accounting will declare more openly, FASB will be inundated with many negative comments from defenders of the status quo of bad accounting.

As of late December, the Public Company Accoun- ting Oversight Board had published on its Web site the results of some 173 inspections of audit firms.The purpose of this article is to attempt to identify the more prevalent audit performance deficiencies cited in the inspection reports.

PricewaterhouseCoopers announced that it will create a new audit firm in Japan after an alliance with a partner was ordered to halt auditing services for two months.

Raymond James Financial Inc. announced an initiative that would require the restructuring of variable annuities offered through financial advisors at the firm's broker/dealer subsidiaries, Raymond James Financial Services and Raymond James & Associates.

Excess inventory retailer Overstock.com Inc. announced that the Securities and Exchange Commission has issued the company a subpoena requesting information on accounting policies, targets and projections.

The Internal Revenue Service has issued an updated and expanded revision of a revenue procedure governing its popular voluntary correction program for employee retirement plans -- the Employee Plans Compliance Resolution System.

Responding to continuing complaints from corporate America about the excessive cost of complying with Sarbanes-Oxley Act internal control audit reporting requirements, top officials from the Securities and Exchange Commission and the Public Company Accounting Oversight Board told accountants and private sector financial execs that relief is on the way.

Morgan Stanley & Co. will pay $15 million to settle a civil lawsuit from the Securities and Exchange Commission. The SEC said that the company failed to produce tens of thousands of e-mails it requested as part of a probe.

In one of the largest fines ever handed down to an individual charged with accounting fraud, a federal judge has ordered the former chairman and chief executive of Gemstar-TV Guide International Inc. to pay $22 million in penalties, interest and restitution.

Citing the disproportionate costs of Sarbanes-Oxley on small filers, GOP Senators Olympia Snowe of Maine and Mike Enzi of Wyoming are urging the Securities and Exchange Commission to adopt "clear and practical" rules for small businesses with regards to SOX compliance.

The Public Company Accounting Oversight Board is soliciting nominations for members of its Standing Advisory Group.

The Public Company Accounting Oversight Board announced that its next round of inspections would focus on the costs of internal control audits mandated under the Sarbanes-Oxley Act.

Another federal regulator has publicly floated the idea of the government requiring the release of tax information from public companies.

The Securities and Exchange Commission and the Public Company Accounting Oversight Board announced the panelists for a May 10 roundtable on Year Two experiences with the internal controls provisions of the Sarbanes-Oxley Act.

Passage of a forthcoming European Union directive that would tighten auditing standards - but which does permit, under specified conditions, the European profession to supply customers with some other services - could lie behind a survey that reveals that the principles-based approach to auditor independence is now widely used throughout Europe.The survey was conducted by the European Federation of Accountants on the regulation of auditor independence, and follows the implementation of a 2002 EU "recommendation" on auditor independence.

Owners of closely held businesses demand a full skill set from their financial advisors. These clients have their personal and business lives uniquely intertwined. Add to that the high concentration of wealth in an illiquid asset, and the tax, legal, investment and personal issues become a challenge to unwind.The No. 1 driver of financial plans for this group of clients is succession planning. All the planning issues come into play in the decision of how and when to leave the company the client has built, and in whose hands to leave it. But the owner needs to consider both the personal side of the transition and the need to create income from the illiquid asset.

HBK SORCE and PRESQUE ISLE UNVEIL MERGER: CPA and business advisory firm Hill, Barth and King has merged Presque Isle Capital Management into its financial planning unit, HBK Sorce Advisory LLC.Terms were not disclosed.