Accounting standards

Dell filed its past-due financial reports from fiscal 2003 through 2006 and the first quarter of fiscal 2007, while shedding light on some of the accounting missteps that led to its financial restatements and delays.

Many firms conduct surveys and issue releases summarizing them hoping for the maximum press coverage. Grant Thornton is one of the “best” at it.

Fitch Ratings has released a report on the recent disruptions in the credit market and the effect of two new accounting standards.

A majority of CFOs and senior comptrollers do not agree with proposals to allow companies to file financial statements in International Financial Reporting Standards instead of U.S. generally accepted accounting principles, according to a newly released survey by accounting firm Grant Thornton.

The Senate Banking Committee held a hearing on allowing U.S. companies to use International Financial Reporting Standards.

SEC Commissioner Paul Atkins told U.S. business leaders in Japan that a recently issued auditing standard should have the effect of cutting audit fees.

A former Arthur Andersen audit partner has settled charges brought against him by the Securities and Exchange Commission alleging that he assisted in a $300 million fraud committed by an audit client in 2000.Without admitting or denying the charges, Fred Gold agreed to a $100,000 fine, a permanent anti-fraud injunction, and an administrative order barring him from appearing or practicing before the commission.The SEC alleged that Gold should have known that the 2000 financial statements of American Tissue -- the audit of which he supervised and approved -- included fraudulently inflated assets and earnings, and also that in 2001 Gold altered work papers to prevent discovery of the fraud in a peer review, and later tried to hide the audit failure by destroying documents and e-mails after another accounting firm discovered American Tissue's overvalued inventory.Earlier, former Andersen audit manager John Parson and senior accountant Brendon McDonald settled SEC charges in the same matter; Parson for $50,000 and permanent suspension from practicing before the commission, and McDonald for a $30,000 penalty and a five-year suspension.

The Treasury Department has selected a Kansas professor to study the effects of financial restatements.The department picked Susan Scholz, a professor at the University of Kansas, to carry out the study, which will look at the impact of public company financial restatements and the reasons behind them. Treasury Secretary Henry Paulson discussed the need for a better understanding of these issues back in May.While Sarbanes-Oxley requirements and tougher auditing standards have forced companies to issue a growing number of restatements, some observers have questioned whether immaterial restatements might unnecessarily harm investor confidence.Scholz will examine the factors triggering public company financial restatements, describe the restatements, analyze their impact, and evaluate their significance.The Treasury Department chose Scholz through the competitive bidding process. She is an associate professor and Harper Faculty Fellow at the University of Kansas School of Business, and received her doctorate in business administration from the University of Southern California.

The Public Company Accounting Oversight Board released a report on the issues it has identified from inspections of U.S. firms that audit 100 or fewer public companies.

Because of the thousands upon thousands of press releases that I have seen, very few impress or take me by surprise. But the one at www.healthsouth.com/who_we_are/press_releases.asp did just that. In the release, HealthSouth Corporation announced that it has received a $440 million tax recovery from the IRS “for overstatements of taxable income attributable to financial fraud perpetrated by members of prior management.” This recovery includes a $296 million tax refund for the tax years 1996 through 1999, and $144 million of associated interest income.

1987: A TOUGH ENTRANCEIt was not, perhaps, the best of times for the accounting profession: Scandals, including the implosion that summer of the brazenly fraudulent ZZZZ Best, had tarnished auditors' reputations, malpractice insurance rates were soaring, college students were staying away in droves, and the Federal Trade Commission claimed that the American Institute of CPAs' rules on professional activities violated restraint-of-trade rules.

Investors harmed by financial shenanigans at mortgage lender Fannie Mae will collectively receive a whopping payout of $356 million, thanks to the Securities and Exchange Commission.

As tax prep suites have evolved to meet the needs of the particular market segment targeted by each product, practitioners now have a variety of products from which to choose - each of which will do the job."The desktop market is becoming extremely competitive, with each producer giving as much new functionality and offering it as cheaply as they can," said John Vora, chief executive of Parsippany, N.J.-based TaxSimple.

Securities and Exchange Commission chair Christopher Cox said that data tags have been developed for the entire system of U.S. generally accepted accounting principles, advancing the use of the Extensible Business Reporting Language for automating financial reporting.XBRL will allow investors and analysts to download financial information filed with the SEC into Excel spreadsheets and other software, so they can more easily compare the information across companies and industries. Preparers can also automate the process of closing a company's books and submitting statements to the SEC.

Internal accountants and other corporate employees who report financial wrongdoing at their companies may not be able to count on Sarbanes-Oxley Act "whistleblower" provisions to protect them from retaliation.Although those provisions were inserted into the law by Congress to encourage corporate insiders to step forward and report accounting or securities fraud, a new analysis by researchers at the University of Nebraska College of Law found gaping holes in the SOX whistleblower protections.

The European Union has rebuffed the International Accounting Standards Board's proposed standards for small to midsized businesses, labeling the package "too complicated" for the nature of SMBs."The feedback we have received from member states, the European Parliament and stakeholders is that the current IASB draft is not simple enough to be applicable for the bulk of SMBs in the EU," said EU Commissioner for Internal Markets Charlie McCreevy. "Therefore, at this stage, I do not intend to propose that the IASB draft be endorsed for application in the EU."

The Internal Revenue Service position on Circular 230 monetary penalties has generated concern and comments from the American Institute of CPAs, while the American Bar Association Tax Section intends to submit its own comments on the matter.The penalties were announced in Notice 2007-39 earlier this year to implement Section 822 of the American Jobs Creation Act of 2004, which expanded the sanctions that the IRS can impose for certain prohibited conduct to include monetary penalties.

Concerned that companies are investing much in internal controls but then risking it all by not monitoring those controls, COSO, the Committee of Sponsoring Organizations of the Treadway Commission, has issued a discussion document that may eventually become a full set of guidelines on monitoring.COSO chairman Larry Rittenberg said he has been pondering this project ever since the Sarbanes-Oxley Act of 2002's Section 404 went into effect.

Life insurance agents and companies have always tried to find ways of making costs paid by business owners tax deductible.The situation became ridiculous a few years ago with outrageous claims about how Sections 419A(f)(5) and (6) of the Internal Revenue Code exempted employers from any tax-deduction limitations. Finally, the Internal Revenue Service put a stop to such egregious misrepresentations in 2002 by issuing regulations and naming such plans as "potentially abusive tax shelters" (or "listed transactions") that needed to be registered and disclosed to the IRS.

Gerrit Zalm, the former deputy prime minister and finance minister of the Netherlands, has been selected as the new chairman of the trustees of the International Accounting Standards Committee Foundation, which oversees the International Accounting Standards Board, in a sign of the growing influence of the European Union on the standards-setting process.