Regulatory actions and programs

The Governmental Accounting Standards Board's agenda for 2006 will rank among its most ambitious ever.Within the first few months of the year, it may have six or more projects underway, with exposure drafts going out the door as comment letters are coming in.

On Dec. 6, 2005, Financial Accounting Standards Board Chairman Robert Herz addressed the American Institute of CPAs National Conference on Current Securities and Exchange Commission and Public Company Accounting Oversight Board Reporting Developments in Washington.The chair traditionally speaks at this venue, but often the remarks are only perfunctory. This time, though, Herz showed his leadership by calling on capital market participants to lay aside their self-interest and work together to achieve "progress ... in improving the quality and transparency of financial reporting."

Canada's Accounting Standards Board has agreed to adopt international accounting standards for the country's public companies over the course of the next five years.The accounting rules known as Canadian GAAP will cease to exist as a separate basis of financial reporting after the end of the implementation program. The 25-member board also agree to pursue separate strategies for three major categories of reporting entities, including public companies, private businesses and not-for-profit organizations.

The Securities and Exchange Commission named John W. White to the post of director of the regulator's division of corporate finance.

The heads of the investor protection agencies for the United States and the European Union both said that they expect U.S. GAAP will ultimately be deemed equivalent to the E.U.'s International Financial Reporting Standards.

In one of the largest regulatory settlements ever, American International Group Inc. will pay more than $1.6 billion to settle allegations that it used deceptive accounting practices to mislead investors and regulators.

Joining an anti-tax group in questioning the constitutionality of the Public Company Accounting Oversight Board is a one-partner Law Vegas auditing firm, Beckstead and Watts LLP.

The American Institute of CPAs has released two new standards, one on auditing professional requirements, which includes a section on attestation engagements, and a second dealing with audit documentation.

The general counsel of the Public Company Accounting Oversight Board will leave his post in late March.

More than three years after its passage, and months after the largest players in the auditing field have had to face the new meaning of internal controls, the centerpiece of the Sarbanes-Oxley Act -- the creation of the Public Company Accounting Oversight Board -- looks to be facing a court battle that carries some weight.

In a case that may wind up in the Supreme Court, an unnamed accounting firm is poised to lodge a legal challenge questioning the constitutionality of the Public Company Accounting Oversight Board.

Alongside the release of President Bush's budget proposal for 2007, the White House asked Congress to create a new regulator for home mortgage giants Fannie Mae and Freddie Mac. The regulator would be directed to cut the $1.4 trillion investment portfolios held by the companies.

Insurer American International Group is expected to announce a settlement with federal and state regulators requiring the company to pay $1.6 billion in order to settle charges covering a range of regulatory issues, according to reports.

Stricter pension accounting rules from the Financial Accounting Standards Board could cost billions for shareholders, HR company Towers Perrin said.

Five former executives at the reinsurance unit of Berkshire Hathaway Inc. and insurer American International Group Inc. have been charged in a fraud probe of the two companies, the Securities and Exchange Commission and Justice Department announced.

Consulting firm BearingPoint Inc., the spinoff of KPMG's former consulting business, reported a $546.2 million loss for 2004 and said that it still faces liability issues under the Foreign Corrupt Practices Act.

The Governmental Accounting Standards Board issued an exposure draft that would require governments to account for all the obligations and costs related to pollution remediation.

The head of the European Commission's financial markets division said that public companies from the United States and Japan will be given another year to bring their accounting standards closer to new European Union standards.

In mid-January, the Public Company Accounting Oversight Board issued reports on its 2004 inspections of Grant Thornton LLP and Crowe Chizek & Co. LLC -- outlining "audit deficiencies" similar to other recently released reviews from the board.

In an effort to address major gaps in international accounting requirements for governments, the International Public Sector Accounting Standards Board of the International Federation of Accountants has issued a proposed standard on the financial reporting of revenue from non-exchange transactions, including taxes and transfers.