Regulatory actions and programs

Securities and Exchange Commission chief accountant Donald Nicolaisen is scheduled to testify this week before a House subcommittee about the commission's decision that Fannie Mae violated accounting rules.

Holtz Rubenstein Reminick LLP, based here, has expanded its litigation and valuation services group via a merger with Long Island-based Rand Consulting Group Inc., a boutique firm specializing in litigation support, forensic accounting and valuation services.

The U.S. occupation authority in Iraq tasked with overseeing the use of money appropriated by Congress for relief and reconstruction there didn't have proper accounting controls for $8.8 billion in funds, a report released this week alleged.

Fannie Mae has reportedly recruited former Securities and Exchange Commission chair Richard C. Breeden to help it deal with a potential $9 billion restatement, while its former chief executive has relinquished two board seats.

A former partner at Big Four firm Ernst & Young was sentenced to a year in federal prison and a $5,000 fine after pleading guilty to tampering with audit records for NextCard Inc., an issuer of online credit cards, the AP reported. As part of the sentence, Thomas Trauger, 42, must also undergo two years of supervised release. He is scheduled to be taken into custody March 30. He initially faced up to five years in prison. In October, Trauger confessed to tampering with the now-bankrupt NextCard's audit records after regulators had raised doubts about NextCard's accounting practices. He was charged with subsequently destroying key documents in an effort to mask the fraudulent changes.

The American Institute of CPAs named Ben Neuhausen, national director of accounting at BDO Seidman, as chairman-elect of its Accounting Standards Executive Committee.Neuhausen will succeed KPMG's Mark Bilstein in that post following the conclusion of the next AcSEC meeting.As an AcSEC member, Neuhausen chaired the AICPA task force on real estate time-share transactions. He also has served as a member of FASB's Interpretation 46 Resource Group and its Liabilities and Equities Resource Group. From 1979 to 1981, he was a Financial Accounting Standards Board fellow.Prior to joining BDO in 2002, Neuhausen was a partner in the Professional Standards Group at Andersen.The institute's AcSEC unit provides accounting guidance and serves as the organization's voice on financial reporting matters. It includes members from academia, business and industry, and public practice.

A critic from Washington-based think tank the American Enterprise Institute has called on Congress to terminate the Public Company Accounting Oversight Board within five years and fold the oversight body into the Securities and Exchange Commission.

With the audit implosion at the Roslyn, N.Y., school district still reverberating in the profession's ears, American Institute of CPAs president and chief executive Barry Melancon warned some 400 attendees at a conference here that the resulting backlash of a nonprofit scandal could be as devastating to the profession as the ruins left by Enron and WorldCom.

The American Institute of CPAs' Auditing Standards Board is poised to issue an exposure draft of five proposed statements and amendments to statements relating to auditors' risk assessment.

Big Four firm KPMG LLP recorded its 10th consecutive year of revenue growth, with reported revenue of $4.1 billion for fiscal 2004, up 8 percent over the prior year's revenue of $3.8 billion.

As part of its fraud prevention program, the American Institute of CPAs has expanded its portfolio of resources for audit committees with new guides on understanding management override of internal controls and issues related to whistleblowers.

Penthouse International Inc., one of its former officers and a shareholder are facing civil charges by the Securities and Exchange Commission related to allegations that the former Penthouse magazine publisher violated federal securities laws and improperly booked $1 million in revenue.

Jonathan B. Orlick, former general counsel of Gemstar-TV Guide International Inc., was barred from serving as an officer or director of a public company for 10 years and agreed to pay more than $305,000 to settle charges brought against him by the Securities and Exchange Commission for his alleged role in helping the firm overstate revenue by more than $248 million over a three-year period.

The CPA firm under fire for its audit of a Long Island school district that is mired in an accounting fraud is reportedly shutting its doors.

The Public Company Accounting Oversight Board has fallen behind in its plan to recruit a small army of veteran auditors for the coming year.

One plank in the Sarbanes-Oxley Act is Section 302, a provision that chief executive officers as well as chief financial officers make certain certifications regarding financial and other information contained in companies' annual and quarterly reports.

Accounting firm consolidator Century Business Services Inc. has acquired the San Diego-based CPA and consulting firm Nation Smith Hermes Diamond.

A significant increase in sales prices for CPA firms in 2005 was one of several predictions made by a panel of experts at a recent accounting conference here.

Taxpayers who misreported their income to snare unjustified Earned Income Tax Credits are draining $2 billion a year from the U.S. Treasury, auditors at the Government Accountability Office recently told Congress.

Thanks to the help of the Financial Accounting Standards Board, more American jobs may stay in America in the near future.