Regulatory actions and programs

The Public Company Accounting Oversight Board will continue its forums on auditing in the small business environment throughout 2006.

The Securities and Exchange Commission voted unanimously to propose a number of changes to the disclosure rules for executive pay packages.

The Securities and Exchange Commission has launched a formal investigation into an accounting change made by IBM in 2005.

The Securities and Exchange Commission has opened an informal inquiry into how Home Depot Inc. records the credits it receives from vendors for defective merchandise.

Alan L. Beller, director of the Division of Corporation Finance at the Securities and Exchange Commission, will return to the private sector next month.

McAfee Inc., a manufacturer of computer security software, agreed to pay a $50 million civil penalty to settle securities fraud charges brought by the Securities and Exchange Commission.

BANK OF SOUTH CAROLINA JETTISONS KPMG: The Bank of South Carolina has dismissed its auditor - Big Four firm KPMG - and hired Elliot Davis as its new independent accountant.In a federal filing, the company said that it made the decision to change auditors because it felt that it could get the same services at a lower fee structure from another audit firm.

More times than we can count, we have written that the preferable resolution of most financial accounting issues involves reporting values of assets and liabilities on the balance sheet and changes in those values on the income statement when they happen, not before and certainly not after.We have written about this point in the context of specific items, such as investments, receivables, inventories, tangible and intangible assets, payables, stock options, other derivatives, and pension assets and liabilities. We have also advocated this change on a theoretical level, especially as we reviewed the Financial Accounting Standards Board's new Conceptual Framework project.

If you've had problems applying Auditing Standard No. 2, the Public Company Accounting Oversight Board says you're not alone.The board has known of widespread difficulties applying the new standard, "An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements," since audit firms first began grappling with its complex and often undefined demands.

"Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed on the taxpayer by any governmental taxing authority or agency." (Proposed Circular 230 disclaimer language from Deloitte.)Going forward, tax clients across the country, whether they seek advice from a Big Four Firm, a tax attorney or even a sole practitioner, can expect to see disclaimers like this accompanying all correspondence and written advice.

The ambitious road map to give the world a single accountancy standard - by converging U.S. generally accepted accounting principles with International Financial Reporting Standards by 2008 - may be fraught with bumps, potholes and even worse along the way, it was revealed at a recent conference of the European Accountants Federation, here.Delegates at the conference heard that the convergence plan would involve much more than a simple "clean up" of the U.S rules-based accountancy system dating back to the 1930s and the EU's brand-new principles-based system.

Edward Knauf didn't take long to get to work after rising to the chairmanship of the American Institute of CPAs' Technical Issues Committee. Within a month of his appointment, he met with the three organizations of most concern to the small and midsized accounting firms that comprise the TIC's constituents.All three - the Financial Accounting Standards Board, the Auditing Standards Board, and the AICPA's Professional Ethics Executive Committee - are, in the diligent pursuit of their respective missions, putting increased pressure on auditors, who are already stretched in one direction by the demands put upon them and in another by the scarcity of human resources available to satisfy those demands.

ISO 22222, the Standard on Personal Financial Planning, has been approved as an international standard. All ISO members (standardization institutes in approximately 150 countries around the world) can now adopt ISO 22222 as a national standard.According to Stuart Kessler, chairman of the International Standards Organization's blue-ribbon committee on personal financial planning, "ISO 22222 is by nature not legally binding, but a document of 'good practice' that can be applied voluntarily, unless there is a reference to it in legislation or it is part of a contract, in which case it might become binding."

Brian Cartwright, a law school and, later, law firm colleague of Securities and Exchange Commission Chairman Christopher Cox, was named general counsel at the regulator.

On the heels of the $11.2 million audit scandal at the Roslyn, N.Y., school district that resulted in the convictions of the superintendent and several associates, New York State Comptroller Alan Hevesi has singled out a number of school districts in Westchester and Rockland Counties for audits.

The Governmental Accounting Standard Board has published a Guide to Implementation of GASB Statement 44 on the Statistical Section.

The Treasury Department and the Internal Revenue Service have issued final regulations regarding Sections 401(k) and 401(m) related to designated Roth IRA contributions.

Larry E. Bergmann, senior associate director in the Securities and Exchange Commission's Division of Market Regulation, will retire from the regulator in January to join the law firm of Willkie Farr & Gallagher.

In a report, Australia's auditor-general has criticized poor accounting methods in the country's Defense Department for making it impossible to vouch for more than $4 billion in financial statements.

The Securities and Exchange Commission has told a federal judge the Justice Department was too lenient in striking a plea deal with the former chief executive of Gemstar-TV Guide International.