Regulatory actions and programs

San Diego’s City Council has approved paying another $2.2 million to KPMG for the Big Four firm’s long overdue 2003 audit. The additional spending approval brings the city’s total KPMG tab to $6.6. million.

I am working on an article for the January issue of Practical Accountant on the risk assessment standards that apply to all non-public company audits. They are effective for audits of financial statements for periods beginning on or after Dec. 15, 2006.

The former chairman and chief executive of CNA Insurance Cos. has been named chairman of the Financial Accounting Standards Advisory Council.

Just a few days after receiving the Public Company Accounting Oversight Board’s proposed budget for 2007, the Securities and Exchange Commission unanimously approved the document, which includes a 4.2 percent increase in funds, setting next year’s outlays at $136.4 million.The board’s budget, less registration fees collected from accounting firms throughout 2006, form the basis for assessment of accounting support fees in 2007. The budget also includes a provision that the board will tap into an excess of its working capital reserve fund to reduce the overall accounting support fee by $10 million next year.

Recently, I was asked by my town officials to become a member of the fire sprinkler inspection team, whose purpose as explained to me, is to ensure that all emergency sprinkler systems within our area’s municipal buildings are up to code and functional.

The Public Company Accounting Oversight Board approved a $136.4 million budget for the 2007 calendar year, an increase of 4.2 percent over last year.Under the Sarbanes-Oxley Act, which created the accounting regulator, the board’s budget, less registration fees collected from accounting firms throughout 2006, form the basis for assessment of accounting support fees in 2007. The board will agreed to tap into an excess of its working capital reserve fund to reduce the overall accounting support fee by $10 million next year.

Hitachi America Ltd. XBRL Business Unit announced the launch of its Xinba 2.0 Reader and Analyzer, a desktop-based Microsoft Excel add-in that gives users the capability to import, open and manipulate Extensible Business Reporting Language directly in the program.XBRL is a technology that tags financial information through disparate applications and carries it through the business reporting chain. Software that can actually manipulate the data into usable form is only just beginning to be introduced on a broad base.

The International Accounting Education Standards Board is seeking comment on an exposure draft of its strategic plan for 2007-09.

The Committee on Capital Markets Regulation, which has the support of Treasury Secretary Henry Paulson, released a report urging legislators to consider overhauling the country’s enforcement policies and litigation system.

Scott Taub, the longest serving of the Securities and Exchange Commission’s deputy chief accountants, will leave the commission later this year.Taub, 38, had served as acting chief accountant for nine months beginning in late 2005 until Conrad Hewitt started in the position in mid-August. Prior to serving as a deputy, Taub spent most of career with Arthur Andersen and as a professional accounting fellow in the Office of the Chief Accountant between 1999 and 2001. He returned to the office in September 2002.

A report released by Huron Consulting Group found that the number of accountants on audit committees has doubled over the last four years. In its research, however, the group found six out of 10 companies did not have at least one accountant on its audit committee in 2005.

The two organizations that police stock brokers and others working in the securities industry will form a new, single self-regulatory body.

With the close of 2006 approaching, we asked industry leaders to share their ideas of what the accounting profession will look like in five years: What will be its major concerns? Challenges? Hot new service areas? What will shape will the firm landscape have taken?In the final part of the series, among others, managing director of research for research firm Glass Lewis & Co. Lynn Turner, Information Technology Group Inc. principal David Cieslak and Internal Federation of Accountants chief executive Ian Ball take a stab at forecasting what the future holds for the profession. The managing partner of Beckstead and Watts, Brad Beckstead, the firm involved in the legal challenge over the constitutionality of the Public Company Accounting Oversight Board, wraps things up.

The Public Company Accounting Oversight Board will meet Thursday, Nov. 30, to consider adoption of its budget for the 2007 fiscal year.As outlined under the Sarbanes-Oxley Act, the board -- which sets its fiscal year according to the calendar -- must set a budget for the upcoming year no later than one month before the end of the current fiscal year. Once approved by the board, the budget will be submitted to the Securities and Exchange Commission for approval.

After years of sounding the fiscal imbalance bell, Comptroller General David Walker, the head of the Government Accountability Office, has committed a to-do list to paper for the 110th Congress.In a letter dated Nov. 17, Walker outlines a number of areas his federal watchdog agency, says the newly-elected politicians should consider in getting a “jump-start” on legislative planning.

SENIOR CAPITAL DISMISSES KPMG: Senior Capital Living Corp., a Dallas-based operator of senior residential communities, jettisoned its auditor, Big Four firm KPMG, and named Ernst & Young as its new independent accountant.KPMG's audit report for the year ended Dec. 31, 2005, noted ineffective internal controls over financial reporting. The auditor stated that SCLC's policies and procedures, and allocation of resources, did not provide for an effective review of the company's accounting for income taxes, which was prepared by tax consultants and third-party advisors.

High-profile corporate scandals in recent years have seriously eroded public confidence in published financial results.Reliance on the accuracy of financial statements is essential if investors are to own equity or debt instruments of corporations. With the passage of the Sarbanes-Oxley Act in 2002 leading the way, the governance role and function of boards of directors are evolving and expanding for public and private companies, as well as nonprofit organizations.

The controversy over options backdating just won't go away, and with good reason.According to the latest count, more than 120 companies are under investigation for doing it. In September, the heretofore-worshipped Steve Jobs was in the news with an apology for past backdating misdeeds at Apple. Even though he denied receiving any backdated options, he apparently approved some, but claims he was unaware of any accounting impropriety.

Federal prosecutors will not challenge a judge’s ruling that vacates the conviction of Enron founder Ken Lay, who died in July after being found guilty for his role in the massive corporate accounting scandal.

The Securities and Exchange Commission is closing in on an early Christmas present for corporate critics of the Sarbanes-Oxley Act - a new plan that would reduce the compliance problems associated with the legislation's prickly Section 404 auditing requirements.But the expected reforms - which are scheduled for public consideration at an SEC meeting in mid-December - are not likely to quiet the chorus of criticism from Congress and the wider business community that blames SOX for making American capital markets uncompetitive, driving stock listings overseas and creating massive new costs for small companies.