Financial reporting

HOUSE CONSIDERS MANDATING EMPLOYER IRA PLANSThe House Ways and Means Select Revenue Measures Subcommittee held hearings on bills that would encourage employers to automatically enroll their employees in individual retirement account plans. One bill is aimed at creating automatic payroll deposit IRAs for workers who do not have access to employer-sponsored pension plans.

Few people actually know what a credit score represents. For example, less than one-third of Americans understand that credit scores indicate risk of not repaying a loan and not knowledge of, or attitude toward, consumer credit. That is what has come out, among other things, from a new survey commissioned by the Consumer Federation of America (CFA) and Washington Mutual Bank, the guys you call WaMu. Moreover, the survey reflects the fact that most Americans fail to understand that one’s credit score shows only how they use credit and does not include factors such as income and age. Those that have obtained their scores are generally the most knowledgeable, says the survey. But if you have clients who have low credit scores, what can you advise them about raising such scores? Here are some ways they can do it:

Education consultancy Professional Education Services has created an affiliate program for CPAs and certified financial planners to give them access to its college-funding software.

The National Football League is asking for an exception to new Form 990 rules that require tax-exempt organizations to disclose the names and salaries of any executives who earn more than $150,000 per year.

The American Institute of CPAs and Texas Tech University's Division of Personal Financial Planning have teamed up to offer a new educational program for gaining the AICPA's Personal Financial Specialist credential.

The Financial Accounting Standards Board has certainly been hearing an earful in recent days from a variety of organizations warning that the amendments it is proposing to two of its accounting statements could lead to a spate of lawsuits.

Several organizations are criticizing a proposed standard on accounting for loss contingencies, saying it could lead to possible abuses, including a flurry of spurious lawsuits.

I am never ceased to be amazed at the misinterpretations of what a certain financial planner does or how the planner acts in conjunction with the client. Let me explain. For one, there is the definition of commission-based and fee-based. Actually, there are three aspects here. A fee-only planner is one who is paid based on a set hourly rate, a project rate, an annual retainer, a percentage of assts under management, or some combination. The planner does not receive any compensation contingent on the sale or purchase or a financial product. A commission-based planner may include brokers who receive compensation based upon commissions paid by the client or by the mutual fund company or insurance company, or other product provider, each time the client is sold a security. A fee-based compensation is not to be confused with fee-only. This indicates that compensation occurs by way of both fees and/or commissions. Now as to those artful terms of advisor, planner, et al, consider this. The term investment advisor describes a rather wide range of people who are in the business of giving advice about securities and they may use a variety of titles such as investment manager, investment counsel, asset manager, wealth manager, or portfolio manager. An investment advisor then provides ongoing management of investments based on the client’s objectives. The terms broker and broker-dealer refer to firms who are in the business of buying and selling securities on behalf of customers. Individual salespeople employed by brokerage firms are usually called stockbrokers and are officially referred to as registered representatives of the brokerage firm. They may also use other titles such as financial consultant, financial advisor, and investment consultant. A financial planner, unlike an investment advisor and broker, is not a legally defined term and it usually refers to providers who develop, and may also implement, comprehensive financial plans for clients based on their long-term goals, or who may prepare plans to address specific issues their clients may face such as retirement income planning, funding of educational expenses, and the like. When you talk about a comprehensive financial plan, you can turn to the National Association of Personal Financial Advisors who defines comprehensive financial planning advice as the coordinated consideration of each of the following areas for a client: income tax, cash flow, retirement planning, estate planning, investments, risk management, and any special needs planning.

The Financial Accounting Standards Board has issued a revised exposure draft of a proposed standard on earnings per share, along with a staff position on endowments for nonprofit organizations.

The Securities and Exchange Commission has issued a warning about the use of 401(k) debit cards that allow employees at some companies to borrow money from their retirement plans.

The Internal Revenue Service has issued a guide sheet for organizations that maintain donor-advised funds to help safeguard against abuses.

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The Securities and Exchange Commission held a roundtable discussion on the performance of International Financial Reporting Standards and U.S. generally accepted accounting principles during the subprime crisis.

Retirement management may be a classic win-win scenario.A fast-growing segment of the population urgently needs sound retirement advice and related services, while the accountants who provide them can derive considerable economic (and emotional) rewards for doing so.

As the life settlement industry grows at an accelerating pace, an increasing number of life insurance producers are opting to transact directly with life settlement providers -- companies that actively purchase life insurance policies in the secondary market.While executing life settlement transactions through a specialized life settlement broker is beneficial for life insurance producers who do not have the know-how, resources or desire to transact directly with life settlement providers, producers who do elect to work directly with life settlement providers may benefit from the significant opportunity to execute more efficient transactions, while raising the level of the total policy sale consideration for their clients.

CFP BOARD DELAYS NEW STANDARDS

In a time of volatile energy prices and economic uncertainty, the Governmental Accounting Standards Board has issued a standard that should allow state and local governments to more easily use derivative financial instruments to hedge against changes in prices and interest rates.

“Women, Money and Power” is a new study released by Allianz Life Insurance Company of North America that says more than half of all women want to learn about retirement planning and try level-saving and investing, although many are not sure where to begin. Allianz examined two key questions: what women want to learn about finances and how they want to learn it. It found that while the Internet is the most consulted resource, it is the least trusted. Apparently, human contact remains the most meaningful and effective source of information. The study identified the financial planning topics women want to learn about most. The top five subjects include: · Planning for retirement/maintaining lifestyle in retirement · How to start saving or investing on very little income · Basics of buying smart (savvy shopping, buying vs. leasing, etc) · How to buy/select the right insurance products (life, long-term care) · Definition of basic financial terms (IRAs, annuities, mutual funds) According to Allianz, single women with children were overwhelmingly interested in planning for retirement, with 68 percent saying it was a topic of interest. In addition, 47 percent of that group was interested in how to buy or select the right insurance products, and 49 percent wanted to learn the definitions of basic financial terms. Single women were particularly interested in educating themselves. Forty-five percent of single women with children and 55 percent of single women without children expressed interest in learning about financial planning. Divorced women were also above the group average, at 42 percent. “This intense interest by women, especially single women with children, demonstrates that all women are thinking about finances for themselves and their families, and are ready to take control, with a little bit of help,” says Sherri DuMond, vice president of Marketing Solutions for Allianz. Difficulty in understanding financial information is a critical barrier for many women, the Allianz study finds. When asked about their financial planning concerns, women responded: · Information is overwhelming/too much/hard to sort through · Information is complicated or hard to understand · Materials are really boring and dry · Don’t understand terminology/materials seem foreign Despite their reservations, more than one in three respondents, some 35 percent, said they were very or quite a bit interested in learning about financial planning, retirement planning, and investment decisions. Tom Burns, senior vice president and chief distribution officer, says, “I’m excited about this opportunity to really take a look at what women need from a financial services company. This study represents a clear opportunity for Allianz and the financial services industry as a whole to break the cycle of women’s hesitance to be involved in financial planning.”

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.