Wednesday, February 27, 2008

Board Proposes New Auditing Standard: Engagement Quality Review

(follow on to yesterday's announcement - with link to the proposed standard pdf)

The Public Company Accounting Oversight Board voted today to propose for public comment a new auditing standard on engagement quality review and a conforming amendment to the Board’s interim quality control requirements. This proposed standard would supersede the Board’s interim quality control standard, SECPS Requirements of Membership § 1000.08(f).

Section 103 of the Sarbanes-Oxley Act of 2002 directs the Board to include in its auditing standards a requirement that each registered public accounting firm "provide a concurring or second partner review and approval of [each] audit report (and other related information), and concurring approval in its issuance." The proposed standard, which would apply to all engagements performed in accordance with the standards of the PCAOB, is risk-based and designed to increase the likelihood that engagement deficiencies will be identified and corrected prior to the issuance of the auditor's report.

PCAOB Release No. 2008-002: Proposed Auditing Standard – Engagement Quality Review and Conforming Amendment to the Board’s Interim Quality Control Standards

Board Proposes New Auditing Standard: Engagement Quality Review

Labels: engagement quality review, pcaob, Section 103

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Tuesday, February 26, 2008

PCAOB - Board Proposes New Auditing Standard: Engagement Quality Review

The Public Company Accounting Oversight Board voted today to propose for public comment a new auditing standard on engagement quality review and a conforming amendment to the Board’s interim quality control requirements. This proposed standard would supersede the Board’s interim quality control standard, SECPS Requirements of Membership § 1000.08(f).

Section 103 of the Sarbanes-Oxley Act of 2002 directs the Board to include in its auditing standards a requirement that each registered public accounting firm "provide a concurring or second partner review and approval of [each] audit report (and other related information), and concurring approval in its issuance." The proposed standard, which would apply to all engagements performed in accordance with the standards of the PCAOB, is risk-based and designed to increase the likelihood that engagement deficiencies will be identified and corrected prior to the issuance of the auditor's report. The proposed standard provides a firmer framework for an engagement quality reviewer to objectively evaluate the significant judgments made by the engagement team and the conclusions reached in forming the overall conclusion on the engagement and in preparing the engagement report.

PCAOB - Board Proposes New Auditing Standard: Engagement Quality Review

Labels: engagement quality review, pcaob, Section 103

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Monday, February 25, 2008

Speech By SEC Commissioner Kathleen L. Casey: Corporate Governance Issues And Trends

Excerpt from comments on Competitiveness

In the last year, three major studies have called into question U.S. competitiveness. Each concludes that America is losing ground to foreign markets. They suggest that these trends may be caused by foreign markets developing and evolving — no more than a natural growth and maturation in markets abroad.

But they also question whether America's regulatory climate dissuades investment in our markets. For example, one of the reports concludes that our competitiveness concerns derive from needed reform in our legal system and regulatory approach.

In response to these reports, some argue that we must act now, or we will forever lose our competitive edge. Others warn that the concern is overblown and that any reforms would be a 'rollback' of investor protections and could be catastrophic for investors' interests.

For my part, I do not believe this is necessarily a binary choice. On the one hand, the sky is not falling — America's capital markets remain rich, deep, vibrant and attractive; and while we may be losing global market share, there are likely many reasons for this trend, not all of our own making.

Speech By SEC Commissioner Kathleen L. Casey: Corporate Governance Issues And Trends

Labels: Commissioner Casey, corporate governance, market competitiveness, sec

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Scrap the monthly bored meeting

Corporate collapse is in the air once again; loss and recrimination stalks the business world as bankers switch from being money marketers to capital conservers.

Just how much risk capital will be lost during this credit squeeze is unknowable, of course, but it’s unlikely that the squeeze on equity is over yet. Unless there is a sudden re-liquification of the banking system, of which there is no sign yet, more equity will be lost in the scramble to recover debt and some companies will go to the wall.

But it’s to be hoped that we don’t emerge from this crisis with a worse corporate governance system than we entered with. It’s already bad enough.

In fact, there is a good case for regulation to now go the other way: many of the extra burdens placed on boards of directors by previous crises are entirely useless, in my view. Counter-productive even.

Scrap the monthly bored meeting

Labels: board of directors, corporate governance, opinion

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Saturday, February 23, 2008

Hospital’s Accounting Is Under Fire by a Union

A union is trying to force nonprofit groups like hospitals to comply with standards of governing similar to those that federal law requires of private companies.

In particular, the union, the 1.9-million-member Service Employees International, argues that a Boston hospital, Beth Israel Deaconess Medical Center, violated those standards by including its losses from bad debts in its tally of the charity care it provides.

In a letter to Beth Israel Deaconess directors who also sit on the boards of for-profit companies, the union contends that the standards they apply to governing those companies require them to make the hospital restate the value it placed on the charitable care it provided in 2005 and 2006.

Hospital’s Accounting Is Under Fire by a Union

Labels: accountancy, non-profit

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Small companies also can benefit from Sarbanes-Oxley

If you listened carefully, you could almost hear the collective sigh of relief from 5,000 smaller public companies when Securities and Exchange Commission (SEC) Chairman Christopher Cox proposed yet another extension to the Sarbanes-Oxley (SOX) deadline for an external audit of Internal Control over Financial Reporting (ICFR).

The SEC previously appeared to be steadfast in upholding the set deadline for non-accelerated filers, or public companies with less than $75 million in public float, even though the business community continued to complain that SOX was too costly. The SEC is expected to vote on Cox’s proposal early this year and decide if that sigh of relief was premature.

Small companies also can benefit from Sarbanes-Oxley

Labels: 404 delay, SEC (Securities and Exchange Commission), small business

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Tuesday, February 19, 2008

Overseas whistleblowers protected by Sarbanes-Oxley?

Overseas employees of US-listed companies that uncover fraud that took place in the US can be protected under the US corporate governance legislation, according to a ruling made in New York.

Judge Victor Marrero of the US District Court, found that Rosemary O’Mahoney, a Accenture employee based in Paris who claimed that the consultancy had carried out tax fraud, is entitled to protection under the Sarbanes-Oxley Act.

The judgement is at odds with previous cases at federal level, where courts have ruled that employees based outside the US are not entitled to protection as this would represent a unintended application of US law abroad.

Overseas whistleblowers protected by Sarbanes-Oxley?

Labels: abroad, protection, whistleblower

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Whistle-blower site taken offline

Wikileaks.org, as it is known, was cut off from the internet following a California court ruling, the site says.

The case was brought by a Swiss bank after "several hundred" documents were posted about its offshore activities.

Other versions of the pages, hosted in countries such as Belgium and India, can still be accessed.
However, the main site was taken offline after the court ordered that Dynadot, which controls the site's domain name, should remove all traces of wikileaks from its servers.

The court also ordered that Dynadot should "prevent the domain name from resolving to the wikileaks.org website or any other website or server other than a blank park page, until further order of this Court."

Whistle-blower site taken offline

Labels: whistleblower, wikileaks.org

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Sunday, February 10, 2008

Corporate governance key to instituting stock market

Corporate governance is an essential condition to the establishment of a stock market, attracting major investment and developing national reserves which will lead to combating unemployment and reducing poverty, said Dr. Yahya al-Mutawakel, the Minister of Industry and Trade, during the launch of a corporate governance conference held last Wednesday. The conference was organized by the Yemeni Businessmen’s Club and the Center for International Private Enterprise (CIPE) in cooperation with the Global Corporate Governance Forum and Hawkamah, the Institute for Corporate Governance.

Good governance involves improving the performance of governmental authorities, private sector and non-governmental organizations (NGOs) in order to improve the income levels of the country’s citizens, al-Mutawakel said.
The role of the private sector is fundamental in achieving socio-economic development. Thus, the Ministry of Industry and Trade established 232 companies with a capital of $60 billion during 2007 and 184 companies with capital of $10 billion in 2006, al-Mutawakel said.

Corporate governance key to instituting stock market

Labels: CIPE, corporate governance, Yemen

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Friday, February 08, 2008

Accountant shortage gets acute

Have a little pity on your company’s accounting department – or at least their managers.
A report released at the end of January confirmed that local companies are suffering the same shortage of accounting and finance professionals that national surveys have shown during the last several years.

SALO, a local supplier of temporary accounting and employee search services, commissioned the survey of local accounting and finance managers and delivered the bad news: Despite a general slowdown in local business growth, 37 percent of respondents predicted they won’t be able to meet their finance and accounting staff needs this year.

That gap between workers and jobs has been growing since early in this decade.
A major cause is the big workload expansion facing most accounting departments as their companies struggle to keep up with new reporting and compliance requirements imposed in the wake of Enron and other corporate scandals.

Accountant shortage gets acute

Labels: shortage, staffing

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Does Mass. Law Force Sarbox on Non-Profits?

A Massachusetts healthcare workers union is asking board members of Beth Israel Deaconess Medical Center to apply Sarbanes-Oxley Act disclosure rules to the non-profit hospital's audits.

The 1199 SEIU United Healthcare Workers East sent letters to six of Beth Israel's 18 board members, who also serve as executives or sit on boards of public companies, citing state law as a precedent for the request. The SEIU acknowledges that under federal law non-profit organizations are not required to adhere to Sarbox provisions. However, the union says that under Massachusetts law, non-profit directors must use their expert knowledge and experience in their role as non-profit fiduciaries. As a result, argue union officials, any director who applies Sarbox standards to their public company duties are required to do the same at a non-profit.

Does Mass. Law Force Sarbox on Non-Profits?

Labels: compliance, non profit, sarbanes oxley

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Wednesday, February 06, 2008

SOX Life Blog: Risk-Based SOX Implementation - Deloitte Gets Succinct on Sarbox

For so many companies, internal discussions have largely gotten past SOX compliance to a point of business as usual.

What I do appreciate however, is that good, clear guidance continues to be developed. For those many professionals that have moved onto new challenges, the issue now becomes one of implementing the familiar COSO framework in a new organization.

Deloitte continues to put forth webcasts and whitepapers, the most recent to hit my inbox being "Sarbanes-Oxley Section 404 for Non-Accelerated Filers: Applying a Top-Down, Risk-Based Approach", a white paper just released in January.

Risk-Based SOX Implementation - Deloitte Gets Succinct on SOX

Labels: Deloitte, guidance, implementation, sas109, SOX Life Blog

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Tuesday, February 05, 2008

SEC Begins Small Business Costs and Benefits Study of Sarbanes-Oxley Act Section 404

The Securities and Exchange Commission today announced that its professional staff has commenced a cost-benefit study of an upcoming auditor attestation requirement for smaller companies under Section 404(b) of the Sarbanes-Oxley Act of 2002.

The study will collect and analyze extensive "real world" cost and benefit data from a broad array of companies currently complying with Section 404 under newly-issued guidance for companies and auditors. The new guidance for management and the new auditing standard were intended to reduce the compliance costs of Section 404 while strengthening its focus on material controls. In addition to assessing the Section 404 cost reductions resulting from the Commission's recent actions, the final report also will inform any decision to improve the efficiency and effectiveness of Section 404 implementation.

SEC Begins Small Business Costs and Benefits Study of Sarbanes-Oxley Act Section 404

Labels: 404, cost and benefits, sec

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Demand For Accountants On The Rise

Conventional wisdom said demand for accountants and auditors would have tapered off by now.
Well, conventional wisdom was wrong.

Staffing agencies such as Robert Half International, which specializes in pairing employers with accountants, say demand for talented, skilled professionals in the Tampa Bay area and around the country continues to rise, and salaries are growing.

The Wall Street Journal reports the Big Four accounting firms - PricewaterhouseCoopers, Deloitte & Touche, Ernst & Young and KPMG - will hire as many or more interns in 2008 as they did in 2007, bucking the downsizing trend at other major employers.

Meanwhile, enrollment in the University of South Florida accounting program grows each year. And the industry is evolving rapidly, attracting new interest as it branches into such fields as information technology and forensics.

It wasn't supposed to be this way.

Demand For Accountants On The Rise

Labels: accountancy employment trend, Big Four

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Commentary: Postal Service readies for Sarbanes-Oxley Act

The 2006 Postal Accountability and Enhancement Act includes a mandate that the U.S. Postal Service comply with Securities and Exchange Commission rules that implement the Sarbanes-Oxley Act (SOX) by fiscal 2010. The act requires corporations to report on the effectiveness of their internal controls, with the goal being to ensure the accuracy of financial reporting.

The Postal Service is the first federal agency mandated to comply with the act and thus faces unique challenges. With those challenges come exciting opportunities. Sarbanes-Oxley Act compliance includes both business and information technology components, each with its own requirements. Given the reliance on information technology to move the mail and report financial transactions, the Postal Service IT infrastructure and the management thereof play a significant role in ensuring the integrity and reliability of the organization’s financial reporting and in supporting Sarbanes-Oxley Act compliance.

When passage of the Postal Act was announced, the IT organization immediately went into action, proactively using the Sarbanes-Oxley Act as a trigger to advance improvements throughout IT. The newly established IT SOX team began developing key controls and related tools in preparation for required documentation, assessment and reporting. Coordination with the finance organization was also conducted to perform comprehensive risk assessments and to ensure project alignment.

Commentary: Postal Service readies for Sarbanes-Oxley Act

Labels: 2006 Postal Accountability and Enhancement Act, 2010, sarbanes oxley, sox

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WorldCom Whistle-blower Cynthia Cooper

Think of her as the mother of 404.Not that that's a goal she ever imagined or one she has embraced. But the odyssey that began when Cynthia Cooper, the then–vice president of internal audit at WorldCom, decided to investigate anomalies in the company's accounting entries ended by inspiring critical — and heavily criticized — legislation: the U.S. Senate responded to revelations about massive accounting fraud at the telecom giant by adding Section 404, on the assessment of internal controls, to the Sarbanes-Oxley Act. For public companies, the rest is history. For executives, Cooper's experiences challenging then-CEO Bernie Ebbers and then-CFO Scott Sullivan, brought to life in her new book, Extraordinary Circumstances (John Wiley & Sons, February), offer lessons that are as fresh today as when the scandal first broke.

WorldCom Whistle-blower Cynthia Cooper

Labels: Cynthia Cooper, whistleblower, WorldCom

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Wednesday, January 23, 2008

Accounting Firms Scramble To Find Experienced CPAs

Public-accounting firms are ramping up efforts to hire and retain senior-level talent as new auditing and accounting rules continue to fuel clients' need for their services. As demand grows, poaching among firms has intensified, and pay and perks are on the rise.

"People keep one-upping each other, going to experienced people with bigger salaries and other perks," says Lorraine Hack, executive director of the financial officer practice at Russell Reynolds Inc., a New York executive-recruiting firm. "Companies are bending over backwards not just to hire new people but to try and keep the ones they have, offering them flextime schedules and other benefits."

"We beg, we borrow, we steal, we grovel, we scour the world" to find accountants with five-plus years of experience in public accounting, says Mark Friedman, New York-based managing director and head of U.S. experienced recruitment at PricewaterhouseCoopers. Hiring across the board at the firm is running nearly 30% above the levels of last year, he says.

Accounting Firms Scramble To Find Experienced CPAs

Labels: auditors, Big Four

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Citigroup Trial May Double Enron Creditors' Payout

Enron Corp. creditors could see their original payout more than quadruple to as much as $31 billion after a trial against Citigroup Inc.

Enron Creditors Recovery Corp., the entity winding up the defunct energy trader's affairs, distributed $13.3 billion, or 36 cents on the dollar, since a bankruptcy plan was approved in 2004. That includes most of $1.73 billion in out-of-court settlements with 10 of the 11 banks creditors accused of aiding the fraud that wiped out the company. They argue that Citigroup, the only lender that hasn't settled, should pay the rest of the claims, about $18 billion. The amount is more than six times the $2.8 billion reserve for Enron, WorldCom Inc. and initial public offering-related litigation that Citigroup disclosed in a Nov. 5 regulatory filing.

Citigroup Trial May Double Enron Creditors' Payout

Labels: enron, shareholder lawsuit

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Tuesday, January 22, 2008

Board's Give Or Get More Expensive Now

More than half of nonprofits now require board members to make an annual contribution, with a major share of large ones setting a minimum of $5,000.

That finding, in the new edition of National Board Governance Survey for Not-for-Profit Organizations conducted by the accounting firm Grant Thornton LLP, comes against a backdrop of more and more nonprofits reshaping board of directors practices and policies to fit the Sarbanes-Oxley Act. Just as more public companies expect their directors own stock, nonprofits expect an investment as well.

While it excludes nonprofits, Sarbanes-Oxley in 2002 established new or enhanced standards for all U.S. public company boards, management, and public accounting firms. It does not apply to privately held companies. The Act deals with everything, from responsibilities to criminal penalties, and requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the new law.

Board's Give Or Get More Expensive Now

Labels: governance, non profit

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Friday, January 18, 2008

‘SEBI to deal with specific provisions on corporate governance for listed cos’

The new company law is likely to stipulate that specific provisions on corporate governance for listed companies, including the number of independent directors on the board, will be outlined by the Securities and Exchange Board of India.

This would help curb the possible overlaps between SEBI and the Ministry of Corporate Affairs (MCA), an official source said.

“SEBI will have the liberty to prescribe higher standards of corporate governance for listed companies,” he said.

Certain provisions of the new law, to be placed in Parliament soon, had seen the Finance Ministry and the Comptroller and Auditor -General (C&AG) expressing concern. The Ministry was of the view that the law should make only enabling provisions and prescribe a minimum threshold limit, official sources said.

‘SEBI to deal with specific provisions on corporate governance for listed cos’

Labels: corporate governance, India, MCA, SEBI

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