Financial reporting

The head of the body that oversees both the Financial Accounting Standards Board and the Governmental Accounting Standards Board has petitioned Connecticut Governor Jodi Rell to veto a measure that would allow the state comptroller to set accounting standards and bypass GASB. Robert J. DeSantis, president and chief executive of the Financial Accounting Foundation, wrote to Rell requesting that she veto the legislation, which has already passed in both the Connecticut House and Senate. The legislation "threatens the integrity and objectivity of the independent standard-setting process and is a step backwards for public trust, government accountability, financial transparency and the state's investors," DeSantis wrote. Barry Melancon, president and chief executive of the American Institute of CPAs, also sent Rell correspondence urging a veto.

The Center for Audit Quality, a affiliated group of the American Institute of CPAs, has signed on to the Aspen Principles, a set of guidelines focused on business practices, investment practices and the long-term competitiveness of U.S. business. Prompted by concerns about the short-term pressures on publicly traded companies and rising public sentiment against excessive executive compensation, the signing of the four-page document by 12 members of The Aspen Institute Corporate Values Strategy Group is the culmination of a two-year process. The Aspen Institute Business and Society Program spearheaded the lengthy initiative in collaboration with the Council of Institutional Investors and the Business Roundtable. Key provisions of the Aspen Principles call for: * Companies to stop providing quarterly earnings guidance to analysts and to not respond to analyst estimates. * Corporate boards to communicate with "long-term- oriented investors" on senior executive compensation. * Requiring senior executives to hold stock they are given for at least some period beyond their tenure with the company, thus tying them to the long-term growth of the company. * Banning senior executives from hedging the risk of long-term-oriented stock option compensation. * Providing for "clawbacks," which involve recouping senior executive compensation awarded based on the achievement of performance targets subsequently slashed or wiped out by corporate financial restatements. Other organizations that have signed the Aspen Principles include the AFL-CIO, PepsiCo, Pfizer and Xerox. Separately, the CAQ said that it would host a panel discussion and luncheon July 30 at the National Press Club in Washington to mark the fifth anniversary of the passage of Sarbanes-Oxley.

When it comes to retirement planning, there are a number of different choices. Two of the most commonly used are tax-deferred retirement plans - such as IRAs or 401(k)s - and cash-value life insurance.

TREASURY ISSUES ROTH 401(K) RULES

Valuation for financial reporting has long befuddled accounting professionals. Differences among industrial sectors often lead to inconsistencies, and recent new requirements for fair-value reporting have made the process even more confusing.

Do consumers really understand what a fiduciary standards means in the financial services industry? And, perhaps more importantly, do they even care? A new survey from the National Association of Personal Financial Advisors (NAPFA) was unveiled recently at its annual convention in Chicago and it certainly answers those two questions.

Yep, it's that time of the year again! CPA Wealth Provider is calling for nominations for its Fifth Annual Financial Planning Awards in any of the following categories: CPA/Financial Planning Firms, Broker/Dealers, and Financial Planning Software Vendors.Winners are those firms or companies that have taken the lead through innovation, efficiency, initiative, or growth in the financial planning area.

A bill that is now before the Connecticut State Senate would give its state comptroller the legal authority to establish GAAP for the state’s financials, thereby sidestepping the Governmental Accounting Standards Board — the standard-setter for governments and municipalities.

The fact that there has been no Baby Boomer "bust" has been due in large part to the skill of retirement planners, accountants and their clients.The bust was supposed to occur as Boomers began reaching retirement age without having saved enough to retire. This, coupled with the dismantling of the retirement and pension programs at a host of corporations nationwide, could have created the most poverty-stricken generation of retirees since the Great Depression.

The Certified Financial Planner Board of Standards said that after more than 20 years in Denver, the organization plans to relocate its headquarters to Washington, D.C. CFP Board chair Karen Schaeffer said, "The financial planning profession and the people it serves are being significantly impacted by public policy developments and trends in the financial sector that can best be monitored, influenced and managed from our nation's capital."The board expects to complete the move over the next few months.

Although couples generally agree on which retirement products they own, they often differ on their plans and expectations for retirement, according to research conducted by Fidelity Investments.Fidelity polled couples born between 1937 and 1964. When asked which income sources they would rely on most in retirement, most couples agreed that workplace savings plans, pensions and Social Security would top the list, but only 39 percent agreed upon which potential sources would be their primary source of income.

Moving forward with plans to converge U.S. generally accepted accounting principles with international financial reporting standards, the Financial Accounting Standards Board expects to crank out a host of related proposals in the second half of 2007.Even as the Securities and Exchange Commission proceeds to explore the possibility of allowing foreign companies to use financial reports prepared under IFRS to list on U.S. capital markets, FASB and the International Accounting Standards Board are working together to produce standards that are identical or very similar.

Bankrate, which is a leading Internet consumer banking marketplace, has released an interview with Christopher Cox, chairman of the SEC that was conducted as part of Bankrate.com’s Financial Literacy Program. Bankrate does a real service to the community with this interview and I commend them because it helps to put into focus what is actually going on with seniors and also how they can be protected from scams. Moreover, it comes from the person who should know, and does.Cox has first hand knowledge of what’s involved and he relates a tale about his own parents. “Before my mother died a few years ago, she was pestered by a seemingly endless barrage of annuity schemes and unsuitable mortgage offers. Despite the fact that she was suffering from throat cancer and could barely speak, she received unsolicited sales pitches over the phone and even in person. Even though my father was suffering from Alzheimer’s disease, the brokers would prey upon him, as well.”

The Financial Accounting Standards Board has released its most recent annual report, showing strong financials and continuing to focus on a trio of ongoing initiatives.FASB is funded through accounting support fees provided for under the Sarbanes-Oxley

Although the recent Council Meeting was run procedurally exactly as many Council meetings I have attended, I did notice some very importanct differences.

I get many e-mails from readers asking whether I have a financial planner and if so, who? I get some e-mails even from financial planners simply looking for business.So, the answer is yes, I do have a financial planner because I don’t believe in doing it myself--sort of akin to the lawyer who represents himself has a fool for a client or the neurosurgeon who decides to operate on herself. Nope, I may know a lot but I still don’t know what a tried and tested financial planner knows.

Financial services provider the Bisys Group will pay $25 million in restitution to settle federal charges that it violated financial reporting rules to artificially inflate earnings by $180 million over three years.

National Taxpayer Advocate Nina E. Olson announced that the Internal Revenue Service has awarded almost $8 million in matching grants to Low-Income Taxpayer Clinics for the 2007 grant cycle.

Baby Boomers - those Americans who were born between 1946 and 1964 - total about 79 million people.This segment of the population may soon find that they will be spending more annually in their retirement years than they did while working. Over the past century, life expectancy has increased over 56 percent, and this trend is expected to continue, so Baby Boomers will face the financial challenge of the cost of living for many years in retirement, as well as the associated costs of aging.

COURT NIXES SEC RULE GOVERNING FINANCIAL PLANNINGA federal appeals court ruled that the Securities and Exchange Commission overstepped its authority in updating rules governing brokers who offer financial advice.