Accounting standards

Congress, in the waning days of its 2005 session, after failing to carry out significant parts of its tax agenda for the year, has managed to pass a Gulf Coast recovery tax act. As is common with the "last stagecoach out of town" for the year, a lot of things managed to "jump on."The hurricane provisions take up 84 pages of bill text, but the legislation goes on for another 100 pages. Among the areas addressed beyond hurricane recovery and relief are a few extensions of expiring provisions, a couple of miscellaneous items, and a huge package of technical corrections covering 10 pieces of tax legislation going back as far as 1987.

Factors such as changes to estate tax laws and the initial wave of retirement for the Baby Boomers will bring a year of significant change for financial advisors and their clients.According to a survey conducted by Impact Technologies Group Inc., a provider of financial sales software for the banking, capital markets and insurance industries, its annual industry trends forecast for 2006 predicted that action by the federal government to change the tax code and reform or repeal the estate tax will have the most impact on how advisors handle their clients' financial plans.

The Financial Accounting Standards Board has issued a proposal that would provide companies with the option to report financial assets and liabilities at fair value.

Speaking at the at the Financial Service Institute's 2006 Broker-Dealer Conference in San Diego, Securities and Exchange Commissioner Cynthia Glassman said that brokerages were the focus of more investor complaints to the SEC in the 2005 fiscal year than any other type of business.

The American Institute of CPAs' Auditing Standards Board has reissued its exposure draft containing a proposed statement on standards for attestation engagements.

Without providing details, a lawyer for former Qwest finance chief Robin Szeliga said that her deal with the Securities and Exchange Commission had collapsed.

Barry Goldsmith, the enforcement chief of brokerage regulator NASD, will step down in March to return to private law practice, and his deputy was named as his acting replacement.

The Securities and Exchange Commission voted unanimously to propose a number of changes to the disclosure rules for executive pay packages.

The Securities and Exchange Commission has launched a formal investigation into an accounting change made by IBM in 2005.

The Securities and Exchange Commission has opened an informal inquiry into how Home Depot Inc. records the credits it receives from vendors for defective merchandise.

Alan L. Beller, director of the Division of Corporation Finance at the Securities and Exchange Commission, will return to the private sector next month.

McAfee Inc., a manufacturer of computer security software, agreed to pay a $50 million civil penalty to settle securities fraud charges brought by the Securities and Exchange Commission.

If you've had problems applying Auditing Standard No. 2, the Public Company Accounting Oversight Board says you're not alone.The board has known of widespread difficulties applying the new standard, "An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements," since audit firms first began grappling with its complex and often undefined demands.

"Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed on the taxpayer by any governmental taxing authority or agency." (Proposed Circular 230 disclaimer language from Deloitte.)Going forward, tax clients across the country, whether they seek advice from a Big Four Firm, a tax attorney or even a sole practitioner, can expect to see disclaimers like this accompanying all correspondence and written advice.

The ambitious road map to give the world a single accountancy standard - by converging U.S. generally accepted accounting principles with International Financial Reporting Standards by 2008 - may be fraught with bumps, potholes and even worse along the way, it was revealed at a recent conference of the European Accountants Federation, here.Delegates at the conference heard that the convergence plan would involve much more than a simple "clean up" of the U.S rules-based accountancy system dating back to the 1930s and the EU's brand-new principles-based system.

Edward Knauf didn't take long to get to work after rising to the chairmanship of the American Institute of CPAs' Technical Issues Committee. Within a month of his appointment, he met with the three organizations of most concern to the small and midsized accounting firms that comprise the TIC's constituents.All three - the Financial Accounting Standards Board, the Auditing Standards Board, and the AICPA's Professional Ethics Executive Committee - are, in the diligent pursuit of their respective missions, putting increased pressure on auditors, who are already stretched in one direction by the demands put upon them and in another by the scarcity of human resources available to satisfy those demands.

ISO 22222, the Standard on Personal Financial Planning, has been approved as an international standard. All ISO members (standardization institutes in approximately 150 countries around the world) can now adopt ISO 22222 as a national standard.According to Stuart Kessler, chairman of the International Standards Organization's blue-ribbon committee on personal financial planning, "ISO 22222 is by nature not legally binding, but a document of 'good practice' that can be applied voluntarily, unless there is a reference to it in legislation or it is part of a contract, in which case it might become binding."

Brian Cartwright, a law school and, later, law firm colleague of Securities and Exchange Commission Chairman Christopher Cox, was named general counsel at the regulator.

The Governmental Accounting Standard Board has published a Guide to Implementation of GASB Statement 44 on the Statistical Section.

The Treasury Department and the Internal Revenue Service have issued final regulations regarding Sections 401(k) and 401(m) related to designated Roth IRA contributions.