Accounting standards

The incoming chair of the Securities and Exchange Commission, Mary Schapiro, criticized the International Accounting Standards Board and expressed reluctance to move to International Financial Reporting Standards.

With the election over, we now must focus on what real changes will advance the markets.

The Securities and Exchange Commission has released its congressionally mandated report on mark-to-market accounting, calling for improvements in the standards, but not their suspension. The 211-page report's recommended improvements include reconsidering the accounting for impairments and the development of more guidance for determining the fair value of investments in situations where market prices are not readily available.The report noted that investors generally believe that fair value accounting increases reporting transparency and facilitates better investment decision-making. It also indicates that fair value accounting did not appear to play a meaningful role in the bank failures in 2008.

Though the Governmental Accounting Standards Board expects to issue only one new standard in 2009, the year should be productive enough to position the board for significant advances over the subsequent two years.You could call it a year of research and deliberation - some of it conducted in-house by staff, and some by requests for comments and ideas from the field of state and local governments and the users of government financial information.

On Dec. 16, 2008, the Internal Revenue Service released the long-awaited final tax return preparer regulations. Although they had been expected to be issued in November, they were further delayed by the changes to Code Sec. 6694 included in the Emergency Economic Stabilization Act of 2008. In addition to the final regulations, the agency also promulgated Notice 2009-5, providing some interim guidance for the 2008 tax filing season, and Revenue Procedure 2009-11, updating the list of IRS forms that are subject to the preparer penalties.The final regulations do not differ significantly from the proposed regulations, but make several changes in response to comments received. The interim guidance responds to the statutory changes made by the Emergency Economic Stabilization Act and can be relied on by tax return preparers until final guidance is issued. Tax return preparers will want to make sure that they are familiar with these new requirements to avoid penalties as the 2008 tax return season gets underway.

The Senate has approved Mary Schapiro by a unanimous vote as the next Securities and Exchange Commission chairman.

The Securities and Exchange Commission will make sure that companies are properly using fair value accounting and not deceiving investors, warned an SEC official.

The Securities and Exchange Commission's Office of Economic Analysis has extended the deadline to January 31 for public companies to participate in a Web-based survey about the costs and benefits of Section 404 of the Sarbanes-Oxley Act.

The Group of 30, a set of economists from around the world, has produced a report recommending a series of reforms to address the financial crisis and provide financial stability.

Mary Schapiro, President-elect Barack Obama's choice as chairman of the Securities and Exchange Commission, signaled that she could delay the planned transition to International Financial Reporting Standards.

Henry R. Keizer is global head of audit for KPMG International and also serves as U.S. vice chair, audit, for the U.S. member firm, KPMG LLP.

Fitch Ratings predicts that 2009 will be a pivotal year for accounting, particularly in terms of fair value measurement and standards convergence.

The Private Company Financial Reporting Committee met with the Financial Accounting Standards Board to discuss some of the problems that led to deferring controversial rules for accounting for uncertainty in income taxes.

The Public Company Accounting Oversight Board said the financial statements of non-public broker-dealers now need to be certified by PCAOB-registered auditing firms.

The Securities and Exchange Commission has appointed James L. Kroeker as acting chief accountant, replacing Conrad Hewitt, who retired Monday.

SEC Inspector General H. David Kotz told a congressional panel that the Securities and Exchange Commission is ramping up its investigation of Bernard Madoff and his $50 billion Ponzi scheme.

Fear that the U.S. economic meltdown will encourage corporations to cut accounting corners has helped spur the Public Company Accounting Oversight Board to approve a 9 percent budget increase for itself during 2009, to $157.6 million."Current market conditions suggest that our inspectors may be dealing with even more complex issues next year when they review 2008 audits," PCAOB Chairman Mark W. Olson said in announcing the new budget.

Securities and Exchange Commission Chief Accountant Conrad Hewitt announced that he will leave the regulator as the Obama administration takes over. Also leaving will be John White, the director of the Division of Corporate Finance.SEC Chairman Christopher Cox had said previously that he will leave upon the change in administration.

The Financial Accounting Standards Board by its own accounts had a very productive 2008, and it looks like its output will be even higher in 2009.Though much of 2008 was dedicated to issuing discussion papers that may eventually lead to standards and documents in 2009, the past year saw new standards on accounting for financial guarantee insurance contracts, the hierarchy of generally accepted accounting principles, and disclosures about derivative instruments and hedging activities.

The Financial Accounting Standards Board has released a staff position officially deferring the effective date of FASB Interpretation 48, "Accounting for Uncertainty in Income Taxes," for nonpublic pass-through entities and nonprofit organizations, and released guidance on accounting for the assets in postretirement plans.