Financial reporting

Large companies in the United States are getting better at managing potentially critical business risks, according to a new study.

Although there are reams of literature and generally accepted guidelines stating that people typically spend 75 percent to 80 percent of their pre-retirement income during retirement, some advisors have found that's not necessarily the case.In fact, some say the spending levels are about the same.

By now, your clients should have heard the term "REIT," or real estate investment trust, in the investment world, but they may be wondering what one is and how it works.First, they should know that REITs are not new. They've been around for more than 45 years. However, it has only been since the 1990s that REITs have gained popularity.

IRS RULES ON PARTIAL TERMINATIONThe Internal Revenue Service ruled that a partial termination of a qualified plan occurred where 23 percent of a plan's participants were no longer active due to the closing of one of the employer's four locations. Therefore, all plan participants were fully vested.

The Financial Accounting Standards Board said it is looking for suggestions on whether it should pursue a project on accounting for insurance contracts, and whether it should team up with the International Accounting Standards Board, which has been working on a similar project.

Connecticut Governor Jodi Rell vetoed a bill that would have allowed Connecticut to set its own accounting standards."I have serious concerns about the potential fiscal impact this bill may have," said Rell. "The plain language of this bill would allow the comptroller to issue financial statements in whatever standards she prescribed."

It may seem belated, but the Governmental Accounting Standards Board has just recently gotten around to defining such fundamental accounting concepts as "asset" and "liability."It has also defined a pair of distinct financial statement elements that are new to accounting and whose definitions should clarify certain questions that have confounded governmental accountants and auditors for years.

The Certified Financial Planner Board of Standards has now bolstered its ethical standards for financial planners who can use its CFP certification designation. The intent is to get the American consumer to the point of trusting that their financial planners who have this particular mark will be placing the clients’ interests well ahead of their own. According to Karen Schaeffer, who chairs the CFP’s Board of Directors, the demand for financial planning is high and growing. “Each day millions of Americans must make important financial decisions, from Baby Boomers on the verge of retirement to the younger generations looking for ways to build their nest eggs.” She adds, “As company-sponsored pensions are being replaced by self-administered 401(k)s and IRAs, and as more responsibility for medical coverage shifts to individuals, Americans today are often required to make a broader range of fiduciary decisions than the decisions their parents made, and more people are finding professional financial planning assistance a necessity.” Interestingly-enough, in a recent survey commissioned by the CFP Board, 97 percent of the more than 1,100 participants identified trustworthiness a the most important factor they considered when looking for a professional financial advisor. That’s pretty much where that code of ethics and practice standards come in, and it also helps to explain the CFP Board’s dedication (and rightly so) in making ethical financial planning available to the public. By the way, some recent updates to these ethical standards, which take effect in July of next year, significantly strengthens the ethical requirements for the more than 55,000 CFP professionals. The CFP people even help the consumer by listing a series of questions that a consumer might want to consider when retaining a financial planner, such as: What experience do you have? What services do you offer? What is your approach to financial planning? Will you be the only person working with me? How will I pay for your services? How much do you typically charge? Could someone besides me benefit from your recommendations? Have you ever been publicly disciplined for any unlawful or unethical actions? Can I have it in writing? I love that last one! According to Schaeffer, “Integrity, competence, and the desire to create trusting relationships with consumers are the cornerstones of CPR certification.” The CFP people deserve a big ovation. They certainly are following through on that.

A Securities and Exchange Commission advisory committee began meeting to consider ways to make financial reporting more understandable and relevant to investors.

General Electric vice president and comptroller Phillip Ameen has joined the advisory board of BNA Tax and Accounting's Accounting Policy & Practice Series.

Grant Thornton CEO Edward E. Nusbaum has worked with the firm for 28 years, but since he took over the helm, the Chicago-based firm has more than doubled its revenue in the last four years, reaching $940 million in 2006.

You might be surprised what qualifies as an unforeseen circumstance for the partial exclusion of gain on the sale of a personal residence. Under this special rule, taxpayers are allowed to exclude gain up to a reduced maximum exclusion amount under Section 121(c) if the sale is due to a change in place of employment, health, or unforeseen circumstances even though it was used for less than two of the five preceding years as the personal residence.

Cougar Mountain Software released Version 12 of its CMS Professional Accounting, Fund and Point of Sale products.

My friends at the Aurora Financial Group, especially Roccy DeFrancesco, clued me in on what they consider the seven deadly sins of many financial advisors. They say they have seen over the past 40 years a weakness in the advice that any advisors have given. And, here they are: Sin 1: Failing to look at the biggest asset: the house. Most of the financial advisors, Aurora says, are comfortable talking about all the rest of the clients’ assets and investments but when it comes to their mortgage, they note that their eyes glaze over. Sin 2: Failing to advise clients that they could better protect the equity in their house from litigation, natural disaster, downsizing of employment, or down turns in property values. Sin 3: Exposing themselves to possible litigation for not advising clients of all the best investments in terms of their risk tolerance and particular needs. Sin 4: Specializing in areas such as business insurance, college planning, retirement planning, health plans, business continuation, et al, without looking at the big picture for the client that requires a global review of the client’s situation. Aurora says it is vital that advisors surround themselves with people and companies that they can trust so that they can address the bigger picture for all of their clients. Sin 5: Not keeping up with and understanding all the concepts that could be a benefit to the client. Surely, the biggest concern that most clients have is adequate planning for retirement so that there are enough funds for a successful plan, but how many people have adequately planned? Clearly, not enough. Sin 6: Chasing the whale but overlooking the mainstream clients. As Aurora likes to put it, you are more likely to build a successful business on the principles of working with the masses than trying to close the china egg, which may never happen. Sin 7: Not earning the hearts of the clients to the point of getting referrals to be a simple and automatic process. Aurora points out that clients have more choices and have better business acumen that they had in the past. So, they are looking for the value added of working with someone. Keep in mind that people today are able to access more current information by use of search engines and the Internet. Accordingly, financial advisors really need to work hard and to focus on that value added concept.

Financial business intelligence software developer Razorsight said it plans to provide spend-analytics software for Kintera's Fundware line of nonprofit and government accounting software.

Following on the heels of his former boss, Internal Revenue Service Acting Commissioner Kevin M. Brown plans to leave the IRS in mid-September to become chief operating officer of the American Red Cross.

Put a dozen managers and executives from financial planning firms in the same room, and before too long the conversation is likely to turn to the business issue that concerns them all: profitability. Whether they represent a one-person shop or are part of a large corporate structure, planners are almost universally challenged to serve the needs of their clients at a profit.To achieve that profitability, you must first address two other challenges - those presented by staffing and compensation. Getting the right people in place, giving them the tools to excel, and rewarding them for performance are all critical steps in achieving profitable growth.

PRUDENTIAL FINANCIAL TO SHUTTER STOCK RESEARCH UNITLife insurance and money management conglomerate Prudential Financial Inc. said that it would shut down its institutional stock research and trading business - Prudential Equity Group - after 26 years of operation. Prudential will close its offices and trading operations in nine U.S. cities, as well as in London, Zurich, Paris and Tokyo. Some 400 employees will be terminated.

The new discussion draft Form 990, dubbed "the biggest thing the Exempt Organizations Division at the IRS has done in the last quarter century," by division director Lois Lerner, could be both a boon and a burden for preparers.The Internal Revenue Service hopes that the form, already released for comment, will be ready for use for tax year 2008.

At the request of Connecticut State Comptroller Nancy S. Wyman, the state's General Assembly has voted to allow the comptroller to set generally accepted accounting principles for the state, starting in 2009.Wyman, however, said that she has no intention of modifying GAAP, as set by the Governmental Accounting Standards Board, for external reporting.