Regulatory actions and programs

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!

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.

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.

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

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.

A trio of state accounting boards have objected to the 'jointness' of a joint project from the Financial Accounting Standards Board and the American Institute of CPAs to form a committee to look at the financial accounting and reporting standard-setting process for private companies.

The International Federation of Accountants' Professional Accountants in Business Committee has released a publication summarizing key internal control frameworks, highlighting recent legislative and other initiatives, and discussing the role of internal control in enhancing corporate governance.

The Public Company Accounting Oversight Board will host a Boston forum on auditing in the small business environment.

One of the aspects of the Internet that many I and many others love is its interactive nature. Using a news search engine's push technology, news summaries on accounting firms are sent to me daily.

The International Federation of Accountants' education standards board has proposed new guidance outlining the skills accountants need to perform competently in a variety of information technology roles.

The Securities and Exchange Commission has released some enforcement statistics through July -- 10 month's into the agency's 2006 fiscal year.