Financial reporting

MCGLADREY SUED IN MADOFF CASENew York - McGladrey & Pullen has been sued by a hedge fund for failing to detect red flags in Bernard Madoff's investment schemes, leading the hedge fund to lose $280 million.

As the economy worsens and unemployment continues to rise, many people who have stayed invested may be asking themselves if they made a mistake by not selling out and remaining in cash.Conversely, those who have cashed out and have been sitting on the sidelines are patting themselves on the back for a job well done. However, at some point they will need to figure out how and when to get back in the market.

As the Financial Accounting Standards Board tinkers with amendments to its Statement 140 and Interpretation 46R, the FASB staff has issued a staff position that expands disclosures about corporate involvement with variable-interest entities and transferred financial assets.The FSP is a stopgap statement, and will likely become part of the more extensive amendments now being deliberated.

We have a perennial puzzle we just can't explain to our satisfaction.Here it is: Why are managers so willing to go overboard in product development and promotion, yet so blissfully content in doing the least required when it comes to financial reporting?

Mary Lloyd says that retirement is simply not for old folks, anymore! In fact, she is out to change the concept that retirement means sitting in rocking chairs, watching sunsets, and playing shuffleboard, with the big night out every week consisting of a bus ride to the bingo hall. To young people, that seems as attractive as a long, slow root canal without Novocain. Lloyd is the author of Super-Charged Retirement from Hankfritz Press (www.mining-silver.com), and her view is that retirement doesn’t mean retreating from life, but rather, embracing it and all the things that drive one’s passions and fuel one’s fire. “The current version of retirement doesn’t work because we are living too long to be satisfied with a life that is focused primarily on leisure,” says Lloyd. “To make this stage of life meaningful, it needs to be shaped according to the values and preferences of each individual. That’s not as easy as it sounds and we need more resources to help us find the right things to create a satisfying life once we are old enough to retire.” Her advice doesn’t come from studies or data, but by walking the walk. By the time she was 47, she was working as a division manager for a Fortune 200 company, and found retirement a financially feasible option. So, in 1993, she left her job to embark on her “last” career, which was as a fiction writer. Given the tough ladder she had climbed in the business world, she didn’t think this next phase of her life would be difficult. After trying everything from a multi-month world cruise to deploying to Texas with the Red Cross in the aftermath of Hurricane Rita – with a few adventures in between – Lloyd finds herself singing a different song in 2009. Her message is simple: the current approach of retirement doesn’t work. Her tips for her baby-boomer brethren include: *The 100 percent leisure model of retirement (“the Golden Years”) is just a marketing spin for “get out of the way.” *We need some kind of work to thrive once we retire, even if we don’t do it for pay. Retiring doesn’t mean we have to stop making a difference. *By this time in our lives, each of us has a unique set of skills, talents and abilities. We need to mesh that with a personal sense of what’s important to define our own individual sense of purpose. *Living through our sense of purpose is as essential as breathing. Once we lose that, we lose the ability to make the choices we need to thrive. *Much of what we blame on aging is really the result of mindset and lifestyle decisions. It is within our capability to change and alter those elements of our lives, and master our destiny, rather than be a slave to circumstances. “The RV model might work for some, but most of us need a goal to work toward to feel worthwhile,” Lloyd says. “To retire well, we need learn how to include that and still relax and have fun.”

Sixty-eight percent of CFOs have taken steps to boost employee morale in the midst of the economic crisis, according to a new survey, but 26 percent haven’t done anything.

Interactive data-tagging technology could assist government auditors in monitoring the spending done under the $700-billion-plus financial bailout plan.

The Internal Revenue Service has been spending tens of thousands of hours auditing nonprofit credit counseling agencies and ordering changes at the vast majority of them, according to newly released data.

The Financial Accounting Standards Board and its parent organization, the Financial Accounting Foundation, sent a comment letter to the Securities and Exchange Commission giving a thumbs-up to the proposed roadmap to International Financial Reporting Standards, but they urged more consultation and study.

The average settlement as a result of securities class-action litigation dropped more than 50 percent in 2008, to $31.2 million, according to a report from Cornerstone Research.

Bernard Madoff pleaded guilty to 11 charges in connection with a gigantic Ponzi scheme that swindled his clients out of up to $65 billion.

Financial Accounting Standards Board Chairman Robert Herz was pressed to make changes in mark-to-market accounting standards in as soon as three weeks during a contentious congressional hearing.

The adoption of International Financial Reporting Standards in the U.S. looks to be increasingly in doubt.

Tennessee Governor Phil Bredesen has tapped a CPA, Charles L. Harrison, to lead the state’s “implementation” of the stimulus funding it receives.

Accounting firm BDO Seidman anticipates that shareholder meetings this year will be dominated by concerns about excessive executive compensation, recession plans and credit concerns.

Federal Reserve Chairman Ben Bernanke said that accounting standards need to be modified to deal better with valuing illiquid assets.

The Association of Chartered Certified Accountants wants world leaders who attend the G20 summit next month to endorse International Financial Reporting Standards, and to leave fair value accounting alone.

Multiple generations are handling the economic crisis in very different ways.

So, do you get the feeling that American seniors will be living longer but on less money? Well, according to a new study from the Senior Economic Security Index, a new research project developed by the Institute on Assets and Social Policy at Brandeis University and Demos, a national public policy and research organization, some three out of four senior households lack the economic security needed to sustain them through their lives. The study points out that older Americans have experienced huge, negative financial shifts that now make it more difficult to enter retirement with sustainable economic security. In fact, 87 percent of all senior households are financially vulnerable when it comes to their ability to meet essential expenses and to cover projected costs over their lifetimes. It also notes that single households, African-American households, and Latino households are the most likely groups of seniors to be financially vulnerable. Particular areas of vulnerability include: *45 percent of seniors households spend nearly a third of their income on housing while 31 percent either rent or have no home equity to draw on in tough times *40 percent of senior households spend more than 15 percent of their income on healthcare *One in three senior households has no money whatsoever left over after meeting essential expenses *More than half of senior households (some 54 percent) do not have sufficient financial resources to meet median projected expenses based on their current financial net worth, projected Social Security, and pension incomes. However, it’s not all doom and gloom. Tatjana Meschede, lead author of Living Longer on Less: The New Economic (In)Security of Seniors, says that “Even in their current precarious state, it is important to note that today’s seniors are better prepared for retirement than subsequent generations will be. They have benefited from pensions, jobs with significant retirement benefits, and a stronger social safety net than subsequent generations will enjoy.” But, left unchanged, the report points out that the current decline in employer-based retirement savings, the weakening of Social Security and Medicare, and rising debt experienced by younger Americans will add up to even greater vulnerability as they retire, “Younger generations who face historically low savings rates, declining assets, and an unsure future for their retirement accounts and Social Security itself, must urge our policy leaders to take action to strengthen the security of today’s seniors and to ensure their own,” says Jennifer Wheary, a co-author of Living Longer on Less. For more information and to download the report, go to iasp.brandeis.edu and demos.org.

The internal audit function has become crucial to helping companies cope with the economic crisis and complex regulatory requirements, according to a new guidebook.