Regulatory actions and programs

The Internal Revenue Service has released updated draft instructions for the new Schedule M-3, filed by large and midsized corporations, and which should be rolled out for the 2006 tax year.

Supermarket chain Ingles Markets Inc. settled charges that it improperly accounted for vendor rebates and allowances with the Securities and Exchange Commission.

The Securities and Exchange Commission announced an effort to provide broader and more timely public notice of important actions.

Securities and Exchange Commission Chairman Christopher Cox has said that the agency is leaning towards opening another public-comment period on its stalled governance rules for mutual funds.

In an exchange of correspondence, where the irony couldn't have been not lost on any of the authors, the Government Accountability Office offered 14 recommendations to improve the internal controls of the Securities and Exchange Commission.

The Panel on the Nonprofit Sector, composed of leaders from charitable organizations, has offered additional recommendations to Congress and the nonprofit sector as part of its continuing effort to strengthen the accountability of the nation's 1.3 million charitable organizations.

Companies are fighting more than just the internal controls provisions of the Sarbanes-Oxley Act -- according to published reports, the whistleblower protections outlined under the law are also coming under fire in court.

Reuben E. Price & Co. Public Accountancy Corp., a small firm based in San Francisco, has been censured by the Public Company Accounting Oversight Board for failing to take action after one of the firm's clients issued an annual report that appeared to be, but was not, audited.

The Public Company Accounting Oversight Board announced that the Securities and Exchange Commission has approved the board's recommended ethics and independence rules for auditor independence, tax services and contingent fees.

The International Federation of Accountants has released its 2006 handbook of standards.

With an advisory panel poised to formally propose that the Securities and Exchange Commission relax the internal controls provisions of the Sarbanes-Oxley Act for some public companies, the panel's chairman is seeing audit troubles of a company on whose board he serves dragged into the spotlight.

An independent report, backed by data from Big Four clients, shows that corporate auditing costs for Sarbanes-Oxley 404 compliance dropped significantly in 2005.

The Securities and Exchange Commission announced that the former chief financial officer of discount retailer Dollar General Corp. will pay $1.2 million to settle charges that he engaged in accounting fraud and insider trading.

Tyco International Ltd. will pay $50 million to settle allegations by the Securities and Exchange Commission that the company inflated its earnings by more than $1 billion between 1996 and 2002.

Investors around the globe are demanding that businesses embrace tougher corporate governance standards, according to a survey from research and consulting firm Institutional Shareholder Services.

New York State does not have a mandatory peer review process, despite the fact that 41 other states have opted into the American Institute of CPAs' nearly 30-year-old peer review program.All this may change, however, as both the New York State Society of CPAs and the AICPA have come out with proposals that urge peer review to be made part of the CPA licensing process. The New York position, in fact, goes a step further by suggesting that the process involve disciplinary teeth, as well as educational and remedial programs.

The Public Company Accounting Oversight Board named Laura Phillips and Jennifer Rand to the position of deputy chief auditor. Both will report to Tom Ray, the PCAOB's chief auditor and director of professional standards.A former auditor at Big Four firm Ernst & Young, Phillips, 36, joined the PCAOB staff in July 2003 and was named associate chief auditor in February 2004. She played a substantial role in developing PCAOB Auditing Standard No. 2, which implements the internal control audit requirement established by the Sarbanes-Oxley Act.

The U.S. Chamber of Commerce said that the Securities and Exchange Commission is overstepping its bounds in seeking to punish corporate wrongdoing.In a report, the Chamber of Commerce, which lobbies for 3 million U.S. companies and 830 business associations and has been one of the commission's most vocal critics, recommended that the agency appoint an advisory committee to study its enforcement practices.

In the latest turf battle to come to light between the two groups, the American Institute of CPAs and the National Association of State Boards of Accountancy skirmished over NASBA's interest in the details of public company audit inspection reports.In a recent alert sent out from the AICPA Center for Public Company Audit Firms, director Lillian Ceynowa wrote that member firms were not required to comply with inquiries from some state boards requesting the identities of individuals and companies referred to in Public Company Accounting Oversight Board inspection reports.

In a move to simplify accounting for servicing assets and liabilities, the Financial Accounting Standards Board has issued a standard that makes it easier for mortgage bankers and other servicers of financial assets to report on the value of derivatives to offset risks associated with securitizations and other types of servicing.The new standard, SFAS 156, "Accounting for Servicing Financial Assets," amends SFAS 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" - itself a replacement of FASB Statement No. 125. It allows servicers to choose between fair value and amortization measurements to report the value of derivatives, as well as the assets or liabilities related to them.