Accounting standards

The American Institute of CPAs has written to the Treasury Department and the Internal Revenue Service about proposed regulations for automatic contributions to 401(k) plans, as well as cafeteria plans.

Every once and a while you come across a firm that knocks your socks off. Dezan Shira & Associates (dezshira.com) is just such a firm.

Securities and Exchange Commission Chairman Christopher Cox said he expects to see the SEC start allowing U.S. companies to file financial statements in accordance with International Financial Reporting Standards in the year ahead.

The Securities and Exchange Commission has begun a cost-benefit study of the upcoming attestation requirement for smaller companies under Section 404(b) of the Sarbanes-Oxley Act.

The Internal Revenue Service warned taxpayers to beware of several current e-mail and telephone scams that use the IRS name as a lure.The goal of the scams is to trick people into revealing personal and financial information, such as Social Security, bank account or credit card numbers, which the scammers can use to commit identity theft. Typically, identity thieves use a victim's personal and financial data to empty the victim's financial accounts, run up charges on the victim's existing credit cards, apply for new loans, credit cards, services or benefits in the victim's name, file fraudulent tax returns or even commit crimes. Most of these fraudulent activities can be committed electronically from a remote location, including overseas. Committing these activities in cyberspace allows scammers to act quickly and cover their tracks before the victim becomes aware of the theft. The most recent scams brought to IRS attention are the rebate phone call, in which a bogus IRS employee tells the consumer he is eligible for a sizable rebate for filing his taxes early; a link for a refund that is e-mailed to tax-exempt organizations bearing the supposed signature of the IRS Exempt Organizations business division; and an e-mail inviting recipients to click on a series of links to download information on changes in the tax law, but which downloads malware onto the recipient's computer. A new scam, not seen before by the IRS, notifies the recipient by e-mail that his or her tax return will be audited. The e-mail instructs the recipient to click on links to complete forms with personal and account information that the scammers will use to commit identity theft.

David B. Duncan, former global engagement partner for Enron at the defunct audit firm Arthur Andersen, agreed to an injunction by the Securities and Exchange Commission to settle charges that he broke securities laws when he signed false and misleading audit reports.

The Public Company Accounting Oversight Board has voted to adopt Auditing Standard No. 6, "Evaluating Consistency of Financial Statements," and an accompanying set of amendments to its interim auditing standards.

The Securities and Exchange Commission said it has issued settled administrative orders against eight auditors who improperly issued audit reports on the financial statements of public companies while the audit firms were not registered with the Public Company Accounting Oversight Board.

The Public Company Accounting Oversight Board plans to consider adopting an auditing standard on evaluating the consistency of financial statements at a meeting on Tuesday.

The Securities and EXchange Commission has issued a final rule on accepting financial statements prepared by foreign companies in accordance with International Financial Reporting Standards without reconciling them with U.S. GAAP.The SEC noted that it was accepting statements prepared in accordance with IFRS as issued by the International Accounting Standards Board, leaving out regional variations such as those approved by the European Union.

Securities and Exchange Commission Chairman Christopher Cox plans to propose another year’s delay in imposing Sarbanes-Oxley Section 404 requirements for small public companies.In testimony before the House Small Business Committee in mid-December, Cox said that he thought the additional delay would allow regulators to assimilate the results of a study now underway on the costs of 404 compliance. “I intend to propose to the commission that we authorize a further one-year delay in implementation for small businesses in order to base our decision on final implementation of Section 404(b) on the best available cost data,” he said.

Completing their first major joint project, the Financial Accounting Standards Board and the International Accounting Standards Board have agreed on two new standards on accounting for business combinations.FASB member G. Michael Crooch termed the new guidance “a significant convergence milestone [that] improves reporting while eliminating differences” between the standards that were previously promulgated by the two boards.

There may be 2-D bar codes in the future of paper-filed returns, if recommendations from the Government Accountability Office are followed.In its end-of-year report on last year’s tax season, the GAO said that the Internal Revenue Service exceeded the previous year’s performance by most measures. However, it noted a number of opportunities to realize additional savings and increase tax compliance, with the barcoding of paper returns among them.

In the last few days before Congress adjourned for 2007, a number of tax law changes finally made it through the two chambers and on to President Bush. The president has either already signed or indicated his willingness to sign each piece of legislation. Several of the provisions enacted will have an impact on 2007 tax returns.Even with this flurry of activity, a number of pieces of legislation, including most of the energy-related tax proposals, an agriculture bill with tax provisions, military tax relief, and the extension of expiring provisions, as well as a fairly extensive list of offsetting revenue raisers, got left off the table and will be addressed again in 2008. The following is a summary of each of the tax laws enacted, the principal provisions, and the impact, if any, on 2007 tax returns.

On my first visit to Washington, D.C., I almost missed the Jefferson Memorial because there were so many other memorials to look at. The same can be said of Financial Accounting Standards Board projects, because several projects are currently in progress. However, one project, referred to as the FASB Codification, is a "must see" because it is sure to create significant changes for anyone who researches accounting or financial reporting issues.The FASB Codification project is designed to present all of the relevant U.S. accounting and financial reporting literature in a single, authoritative, integrated offering in an online, real-time database. That is, the goal is to provide all generally accepted accounting principles in one location for financial professionals to access and use.

The Financial Accounting Standards Board has agreed to defer the effective date of Interpretation No. 48, "Accounting for Uncertainty in Income Taxes," for nonpublic entities to years beginning after Dec. 15, 2007.

Andrew McKelvey, the former CEO of job listing provider Monster Worldwide, has agreed to pay $275,989.72 to the Securities and Exchange Commission to settle charges of stock options backdating.

The Financial Accounting Standards Board began testing a codification of U.S. generally accepted accounting principles that reorganizes thousands of U.S. GAAP pronouncements to make them easier to find.

Edgar Online and Microsoft announced a deal under which Edgar Online will provide financial filings from the Securities and Exchange Commission's Edgar database and other content to Microsoft's MSN Money, while Microsoft will provide advertising around Edgar Online's content.

The chief executives of the six largest accounting firms pushed for global convergence of accounting standards, better audit quality and principles-based accounting standards at a symposium.