Accounting standards

Many aspects of business organizations today are challenged to do more with less, and the internal audit activity is no exception. As executive management and boards are increasingly recognizing the criticality of managing risks throughout their organizations, they are expecting more of their internal auditors than ever before.

Phillip Bennett, former chairman and CEO of the investment group Refco, has settled with the Securities and Exchange Commission over charges that he concealed hundreds of millions of dollars in trading losses and operating expenses.

The Internal Revenue Service has proposed amending its regulations to provide further guidance to taxpayers in the home construction industry.

The Securities and Exchange Commission's Advisory Committee on Improvements to Financial Reporting voted Thursday to approve the recommendations in its final report, which the SEC will present publicly on Friday.

Under pressure from banks and regulators, the Financial Accounting Standards Board has decided to reverse itself and postpone the effective date of an accounting rule that would have forced financial institutions to move assets and liabilities from special-purpose entities such as mortgage-backed securities onto their balance sheets.

The Securities and Exchange Commission signed a memorandum of understanding with the Labor Department to make permanent the sharing of information to help protect the retirement savings of American workers.

The Securities and Exchange Commission plans to hold a roundtable discussion on Aug. 4 to compare the performance of International Financial Reporting Standards and U.S. generally accepted accounting principles during the recent period of market turmoil caused by the subprime loan crisis.

The Public Company Accounting Oversight Board has adopted rules and a related form to govern when a firm would be allowed to succeed to the registration status of a predecessor firm following a merger or other change in the registered firm's legal status.

Conrad Hewitt joined the Securities and Exchange Commission as chief accountant in August 2006. Hewitt is charged with establishing and enforcing accounting and auditing policy to enhance the transparency and relevancy of financial reporting at the SEC. His office also aims to improve the professional performance of public company auditors in order to ensure that financial statements used for investment decisions are presented fairly and have credibility. Lately he has been much involved with planning for the transition from U.S. accounting standards to international standards. WebCPA talked with him and his department's chief legal counsel, Jeff Minton, about the convergence of U.S. generally accepted accounting principles and International Financial Reporting Standards.

The Public Company Accounting Oversight Board plans to consider adopting rules on succession to a predecessor's registration status. The PCAOB has scheduled an open meeting for Tuesday, July 29, at 9:30 am in the board's open meeting room at 1666 K St. NW, Washington, D.C. The board will consider adopting rules and a corresponding form that govern when a firm would be allowed to succeed to the registration status of a predecessor firm following a merger or other change in the registered firm's legal form. The meeting will be open to the public and Webcast via a link on the PCAOB's Web site (www.pcaobus.org) that will be made available the day of the meeting. The meeting also will be available via podcast later in the day.

The Securities and Exchange Commission and the Federal Reserve are each pushing to gain regulatory authority over investment banks. At a hearing on Capitol Hill, SEC Chairman Christopher Cox and New York Federal Reserve President Timothy F. Geithner each outlined plans for the monitoring of commercial and investment banks. Both laid blame for the "patchwork" of regulatory agencies in lieu of one overseer for much of the current roiling of the financial markets. Cox urged lawmakers to give his agency responsibility over investment banks pointing out that the commission currently has authority over the markets in which they operate. Earlier this year, the Treasury Department proposed merging the SEC and the Commodity Futures Trading Commission into a single entity while expanding the oversight capacity of the Federal Reserve.

The Financial Accounting Standards Board has decided to defer the development of a new accounting model for lessors, saying the project will now only address lessee accounting.

The Center for Audit Quality capped a 10-city tour focusing on the modernization of financial information with a stop in the nation’s capital.

The Securities and Exchange Commission has settled accounting fraud charges with ProQuest, a company that produces databases of archived information, and its former CFO.

The trustees of the International Accounting Standards Committee have proposed changes in the International Accounting Standards Board that would expand the number of members, alter its geographic composition, and impose new oversight from government regulators.

More than 28 percent of large public companies are not fully meeting disclosure requirements for tax reserve estimates, according to a new report.

The Governmental Accounting Standards Board issued for comment a proposed technical bulletin to help government accountants determine the annual required contribution for post-employment benefits.

After a storm of protest from banking interests against the principle of booking asset values at a forced exit price for fear of a potential downward spiral in asset values, bankers in the European Union have eased their position on the fair value principle.Following a meeting held at the European Parliament Financial Services Forum here, banks are finally warming to the fair value platform with discussions on mark-to-model techniques for evaluating assets in illiquid markets.

Accounting for hedging activities has never been easy, but by year’s end, if a proposal from the Financial Accounting Standards Board meets approval, it might get a little simpler.FASB has proposed an amendment to Statement 133, Accounting for Derivative Instruments and Hedging Activities. The proposed statement, Accounting for Hedging Activities, issued as an exposure draft, would eliminate most of the many methods of hedge accounting. The result: financial statements that are simpler, more transparent and more comparable.

The Public Company Accounting Oversight Board has adopted rules requiring audit firms to submit reports at least once a year on fees, disciplinary actions and other information that will be posted on its Web site.Each of the more than 1,800 public accounting firms registered with the PCAOB must provide basic information about audit reports issued during the year and the disciplinary history of people who have joined the firm during that time. They must also report information about fees billed to audit clients in various categories of services as a percentage of the firm’s total fees billed.