Journal of Accountancy

Americans respond to survey on their attitudes on small business.

Respected but Hard Road to the American Dream

Americans voiced their opinions in a survey of attitudes on small businesses and how they affect individuals and the whole country as a whole.

The Commerce Depart

Techno-Boost for International Commerce

The Department of Commerce granted permission to Netscape and Microsoft to export software for international banking transactions that is more secure than previous versions. The government had been concerned that overly powerful encryption software could pose a threat to national security. The newly approved 128-bit encryption software is seen as necessary to keep transactions secure from hackers with sophisticated mainframes. In fact, as part of a contest organized by a data security company, some programmers broke a 56-bit code with an ordinary Pentium personal computer this is like breaking into a bank vault with a hammer. Each bit doubles the encoding power, so the level of complexity between 40 bits the old standard and 128 bits is astronomical.

Supporters of the governments decision see it as a boon to international trade, with bankers worldwide able to transmit financial data securely. Mark Eckman, CPA, chairman of the American Institute of CPAs information technology research subcommittee, also sees the decision as an advance. "However, the real key to acceptance of electronic commerce is not in the technology but, rather, in the mind-set of the users," he said. "When they feel the need to use the technology, they will begin to use the technology. The use of 128-bit keys will help, but it is not a driver to the use of the technology."

FASB and Canadians

FASB, Canadians and IASC Address Segment Reporting

The Financial Accounting Standards Board published Statement no. 131, Disclosures about Segments of an Enterprise and Related Information , which supersedes Statement no. 14, Financial Reporting for Segments of a Business Enterprise . It is part of the FASBs consolidations project, which includes still-unreleased statements on consolidations policy and procedures and unconsolidated entities. Simultaneously, the Accounting Standards Board (AcSB) of the Canadian Institute of Chartered Accountants issued a nearly identical statement. The two boards had been working together on their pronouncements.

The International Accounting Standards Committee voted to issue its own statement, but it is not identical to the FASB/AcSB pronouncements. Rather, it is more like Statement no. 14, according to FASB Project Manager Liz Fender. The IASC statement will be available shortly.

Statement no. 131 requires disclosure about different parts of a business, according to Fender, but does not require changes in the basic income statement or balance sheet. It does change the way public companies will report information about segments in annual financial statements.

Competitive concerns

CPE Direct: Major Benefits for Journal Readers

Now theres another good reason for keeping up with the Journal . American Institute of CPAs members can earn up to 24 continuing education credits per year by reading selected Journal articles, completing four quarterly study guides and passing four quarterly examinations.

An annual subscription costs $159. For information or to order, call 800-862-4272 and select option #1.

The FASB received 220 comment letters during the exposure period. "Mostly, we heard concerns about competitive harm," said Fender. "Companies were concerned that increased disclosure requirements would put them at a disadvantage with suppliers and competitors by making public what a company earned on different products." To address these complaints, the FASB added quantitative thresholds for reporting, similar to the 10% guidelines in Statement no. 14. The exposure draft would have required some companies to disclose up to 25 segments. "We also softened the aggregation criteria, allowing companies to put more segments together than was allowed in the ED," said Fender. However, the board rejected a suggested blanket provision allowing companies to not disclose any information they believed competitively harmful. "It was too hard to allow entities to choose not to disclose certain information without also allowing them to withhold segment information," she said.

The statement is applicable for annual statements for fiscal years beginning after December 15, 1997. Quarterly disclosures, which had been especially requested by analysts, are required after the first annual disclosure. "For a calendar-year company," said Fender, "the first annual disclosure is due on December 31, 1998, and then quarterly for the first quarter of 1999." Early adoption is encouraged. Copies are available from the FASB order department for $11.50 each by calling 203-847-0700, ext. 555.

The GASB has launched a new Web site.

GASB Online

The Governmental Accounting Standards Board launched a new Web site. It includes recently posted documents and information, announcements of board meetings and upcoming actions, summaries and the status of all GASB statements and interpretations, the quarterly plan for GASB projects and membership information. It also includes ordering information and prices for GASB documents.

The site was designed by the GASB and its servers are provided by the Rutgers Accounting Web at Rutgers University. It can be accessed at either of two locations: http://www.gasb.org or http://www.rutgers.edu/accounting/raw/gasb.

GASB Issues Two Proposals for Comment

The Governmental Accounting Standards Board distributed for comment proposals on accounting for investments and deferred compensation plans.

For investments, the GASB issued a proposed technical bulletin that would clarify certain provisions of GASB Statement no. 3, Deposits with Financial Institutions, Investments (including Repurchase Agreements) and Reverse Repurchase Agreements . The bulletin would explain how, depending on certain sets of circumstances, deposits and investments with bank holding companies should be classified under the custodial risk categories in GASB Statement no. 3. The proposal, Classification of Deposits and Investments into Custodial Credit Risk Categories for Certain Bank Holding Company Transactions , would be effective for years beginning after December 15, 1997.

For deferred compensation plans, the GASB issued a proposal to rescind its Statement no. 2, Financial Reporting of Deferred Compensation Plans Adopted under the Provisions of Internal Revenue Code Section 457 , and to establish new accounting and reporting standards for the plans of state and local governments and tax-exempt organizations. According to the proposal, if a section 457 deferred compensation plan met current requirements for inclusion in a governments fiduciary funds, it would be reported as an expendable trust fund in that governments financial statements. This proposal would be effective January 1, 1999.

Comments on both proposals were due in August. Copies can be accessed on the GASB Web site at http://www.gasb.org .

IMA professor-in-residence program helps students.

Industry and Academia Build Bridges

Gary A. Luoma, CPA, CFM, CMA, DBA, professor of accounting at the University of South Carolina, Columbia, has just finished his one-year term as the Institute of Management Accountants first professor-in-residence, a position designed to introduce accounting students to career options in management accounting and financial management. "Public accounting firms, especially the large national firms, are usually a big recruiting presence on campuses. But corporate America hires fewer accountants and is thus less visible," Luoma told the Journal . The IMA hopes to educate students, especially as many firms cut back on their entry-level hires, forcing students to consider other options.

"We held some focus groups with students and found that many wanted to be in corporate accounting rather than in public accounting. However, they thought their only route was through a CPA firm," said Luoma. He helped set up academic mentor programs on college campuses, identifying a faculty member at each school who is committed to talking to students about careers in management accounting, financial management and public accounting, too. "We want to find avenues where the IMA, the American Institute of CPAs through its new Center for Excellence in Financial Management and the CPA profession generally can work better with academia." The IMA is aiming to send a representative to all academic conferences, such as those sponsored by the American Accounting Association.

The IMA plans to rotate the job every year; academics will take a leave of absence from their universities to fill the spot. Succeeding Luoma is Keith Russell, CMA, PhD, from Southeast Missouri State University, Cape Girardeau, who has recently served as chairman of the IMAs committee on academic relations.

New guidelines for reciprocity.

New Guidelines for Reciprocity

The World Trade Organization adopted Guidelines for Mutual Recognition Agreements on professional accounting qualifications. The guidelines are intended to make it easier for qualified accountants to practice across international borders by providing a common approach to negotiating reciprocity arrangements.

"The guidelines assure us that we are on the right track in negoitating with other countries to create more opportunities abroad for U.S. CPAs and to make it easier for foreign accountants who meet our standards to practice here," said Harris W. Widmer, chairman of the U.S. International Qualifications Appraisal Board (IQAB). The IQAB is a joint body of the National Association of State Boards of Accountancy and the American Institute of CPAs.

The objective of the guidelines is to ensure the process of negotiating mutual recognition agreements in accounting is open and that qualification standards are applied in a fair, objective and nondiscriminatory manner. They are nonbinding and are intended to be used by members of the WTO on a voluntary basis.

A copy of the guidelines is available on the WTO Web site at http://www.wto.org .

E&Y joins

E&Y Joins Swiss Audit Effort

The Swiss Federal Banking Commission (SFBC), the Independent Committee of Eminent Persons (ICEP) and the Swiss Bankers Association (SBA) announced a claims resolution process (CRP) for dormant accounts in Swiss banks. Such accounts may have belonged to victims of the Holocaust who were unable to claim their money after World War II. (See Attesting to History , JofA, Feb.97) Ernst & Young, through its office in Basle, Switzerland, is handling a key portion of the CRP by administering a list of dormant accounts for the benefit of Holocaust survivors and their heirs. Michael Bradfield, a Washington, D.C., lawyer who is acting as a counsel to the ICEP, told the Journal that this was not a traditional accounting job. However, he said an accounting firm was chosen for this task "because a CPA firm offers a certain credibility." Also, he said, E&Y has worldwide facilities capable of assistant claimants.

Meanwhile, the actual forensic investigators, Arthur Andersen, KPMG and Price Waterhouse, will commit "hundreds" of people to this audit, according to Bradfield. The preparatory phase is over, and the firms are beginning pilot audits that will lead to a final audit program covering all relevant Swiss banks. "Because of all the people involved, we hope to complete our task by the end of 1998," said Bradfield. Although he admitted some think this is "somewhat optimistic," he thinks it is highly realistic because of the forensic resources that will be devoted to the task.

Business/Industry:

BUSINESS/INDUSTRY

IRS Wants Companys Tax Return Software

The Eighth Circuit Court has ordered enforcement of the first Internal Revenue Service summons seeking the software a taxpayer used to prepare its consolidated federal income tax return ( United States v. Norwest Corporation [no. 96-2792, CA8- June 26, 1997]). The IRS believes that the software—particularly its underlying "code"—will provide greater insight into the companys complex computations, such as those used to compute its allocations figures. Norwest, a large bank holding company, licensed Tax Director, a suite of tax preparation programs, from Arthur Andersen & Co.

Responding to the IRS request, Norwest and Andersen went to some lengths to provide the IRS computer with files and software, other than Tax Director, that would allow the IRS to tie the companys tax return to the companys financial data. The IRS was not satisfied and issued a designated summons for preparation programs (a designated summons suspends the statute of limitations). A magistrate ordered enforcement with certain limitations intended to protect Arthur Andersens proprietary interest in Tax Director. With some modifications, the federal district court affirmed the magistrates order.

In their appeal, Norwest and Andersen argued that Tax Director was not the proper subject of a summons because the program was merely a tool, akin to a calculator, that contained no information regarding the taxpayer. Circuit Judge Arlen C. Beam rejected their argument on the basis that the softwares arithmetical processes and ability to organize financial information qualified it as a "record" or "other data" under Internal Revenue Code section 7602. Norwest and Andersen also challenged the summons as failing to meet the relevancy and legitimate purpose standards set forth in United States v. Powell (379 U.S. 48, 1964).

The court found for the IRS saying the software was relevant as "the final step in translating the companys summary book income into the information reported on the returns."

Observation . A number of companies have been put in the uncomfortable position of having the IRS request tax preparation software that their software licenses preclude them from providing. The court said the Copyright Act does not override the IRSs summons authority; however, the court did not address Norwests contractual obligations under the license because Arthur Andersen intervened in the enforcement action. With this success in the Eighth Circuit Court, the IRS is sure to expand its efforts to obtain tax preparation software. Companies should be aware the IRS also wants tax planning software, the relevancy of which may be more difficult to establish.

—Tracy Hollingsworth, Esq., staff director of tax councils at Manufacturers Alliance, Arlington, Virginia .

CORPORATE

LINE ITEMS

Stiff Late Fee

In McMahan v. Commr , no. 96-4083 2d. Cir. May 23, 1997 , a taxpayer hired an attorney to file his tax return. The attorney filed the automatic extension and told the taxpayer a second extension also was timely filed. A month later, the taxpayer discovered the second request had never been filed. The Internal Revenue Service issued a $141,000 penalty against the taxpayer for failure to timely file. The Second Circuit Court held that reliance on an agent to file an extension does not constitute reasonable cause to excuse the failure-to-file penalty.

Excessive Disclosure

A district court in Colorado awarded $325,000 in damages to a woman as a result of unauthorized disclosures by the IRS of her tax return information on radio, on television and in the local paper. The court also held she was entitled to attorneys fees and costs. According to the court, such "reprehensible abuse of authority. . . cannot and will not be tolerated." Carol Ward v. United States , DC Colo., June 2, 1997 .

New Formula for AMT
In technical advice memorandum 9722005 the IRS ruled the wage or salary deduction for alternative minimum tax (AMT) purposes must be reduced by the targeted jobs credit even though the credit is not allowed for AMT purposes. The IRS probably will treat the current work opportunity credit in a similar fashion.

Taxing Pro Pain

A professional football player received a $65,000 injury protection payment from the Pittsburgh Steelers when he was unable to pass a training camp physical. A district court determined the payment was not excludable under section 104(a)(1) as an amount received under workmans compensation. According to the court, the settlement was simply a contract termination severance-type payment. Raymond D. Wallace v. United States , S.D. Ind., May 7, 1997 .

Moving Costs

The Tax Court held that a corporation that assists its relocated employees with the sale of their homes may deduct any costs incurred as ordinary and necessary business expenses. The IRS had unsuccessfully argued the expenditures were capital and nondeductible because the corporation had acquired title to the homes. ( Amdahl Corp . v. Commr , 108 T.C. No. 24, June 17, 1997).

How to Fill Out the Form

Announcement 97-64 (1997-26 IPdB 9), instructs employers how to report employer-provided adoption benefits under Code T of box no. 13 on Form W-2. The amount reported includes adoption benefits paid or reimbursed from an employees pretax contributions to a cafeteria plan, as well as benefits that exceed the $5,000 or $6,000 exclusion. It does not include adoption benefits forfeited from a cafeteria plan.

Losses on Corporate Stock Investments

Losses on stock investments are best classified as ordinary because capital losses can be used only to offset capital gains while ordinary losses can offset any variety of income. However, based on a string of recent court cases, companies may not have the liberty of choosing how stock losses will be classified.

Historically, corporations have been able to attain ordinary loss treatment for stock that was acquired and held for business purposes. Thus, if a corporation acquired stock to ensure a supply source a needed raw material, the so-called Corn Products doctrine ( Corn Products Refining Co. v. Commissioner , 350 US 46, 1955) enabled the corporation to classify the stock as ordinary.

In Arkansas Best v. Commissioner (485 US 212, 1988), however, the U.S. Supreme Court rejected the notion that the Corn Products doctrine created an exception for capital assets acquired for business purposes. Nevertheless, even after Arkansas Best, Circle K v. United States (Court of Federal Claims, 12-86T, 1996) suggested that a "source of supply stock purchase" could qualify as a hedging transaction (the stock would be considered ordinary) if it was an integral part of an inventory purchase system.

However, in the most recent ruling on this issue, Cenex v. Commissioner , the Circle K reasoning is rejected. Why? Cenex stands for the proposition that, except in the case of a securities dealer, corporate stock always is a capital asset and a loss sustained thereon is a capital loss.

Observation: As a result of Cenex, the Arkansas Best decision was reinforced—the Arkansas Best case intended to create a fixed classification for corporate stock.

—Robert Willens, CPA, managing director at Lehman Brothers, New York City .

INDIVIDUAL

Tax-Deferred 401 k Distributions

In private letter ruling 9721036, a taxpayer over age 59 ¹ / ₂ qualified for an in-service distribution of cash and employer stock from a qualified 401(k) plan. The taxpayer sought to roll over the cash into an individual retirement account and keep the employer stock. The Internal Revenue Service ruled the rollover did not affect the status of the distribution as a qualified lump-sum distribution. Thus, the taxpayer was not currently taxed on the net unrealized appreciation of the employer stock.

Take, for example, a taxpayer who participates in the company 401(k) plan. The plan invests in several assets, including $20,000 in the employer corporation stock, which the taxpayers company pays for. While in the 401(k) pension trust, the value of the employers securities skyrockets to $100,000. How will the taxpayer be taxed if he or she takes the employer stock out of the plan?

Under Internal Revenue Code section 402(e)(4)(B), if the taxpayer receives the employer stock as part of a lump-sum distribution, then he or she will be taxed currently only on the stocks cost of $20,000 and the net unrealized appreciation of $80,000 can be tax deferred. In order for the distribution to be a lump-sum distribution, the taxpayer must receive the entire account balance within one year after (a) reaching age 59 ¹ / ₂ , (b) death, (c) separation from service or (d) becoming permanently disabled (if self-employed).

Observation: Assume six months later the taxpayer sells the stock for $115,000. The taxpayer must report a long-term capital gain of $80,000 (the net unrealized appreciation) and a short-term capital gain of $15,000. If the stock is held for more than a year before it is sold, the entire gain of $95,000 would be long term.

If the taxpayer had wanted to, he or she could have elected to be taxed on the entire $100,000 in the year of the lump-sum distribution.

—Michael Lynch, CPA, Esq., associate professor of accounting at Bryant College, Smithfield, Rhode Island .

Edmund Jenkins

Financial Reporting Reformer to Head FASB

The Financial Accounting Foundation chose Edmund L. Jenkins as the fourth chairman of the Financial Accounting Standards Board. His five-year term began July 1.

Jenkins is well known to the financial accounting community as chairman of the American Institute of CPAs special committee on financial reporting (the Jenkins committee), which released its 1994 report, Improving Business Reporting—A Customer Focus . He recently retired as managing partner of Arthur Andersen Worldwides professional standards group. He also had been managing partner of Andersens accounting and audit practice, with responsibility for the firms practice before the Securities and Exchange Commission. Jenkins is not entirely new to the FASB, having served as a charter member of the emerging issues task force from 1984 to 1991 and as a member of the FASBs advisory council from 1991 to 1995.

His work is cut out for him
Jenkins is enthusiastic about the special committees work. I believe the recommendations deserve full due process consideration by the FASB, the SEC and other standard setters, he told the Journal . "Over time I expect the board to consider the recommendations, including placing some nonfinancial information within the FASBs scope of operations." However, Jenkins does not plan to move the recommendations to the top of the FASBs agenda. "Well consider the report in relation to other FASB priorities."

In fact, the board has a full agenda as it is. Jenkins started work in the middle of a drawn-out discussion on derivatives. "In terms of strong interest on the part of the boards constituencies, derivatives probably heads the list of key issues. Id like to meet the deadline for completion, but if the project is not ready to be finalized, I am not willing to shortcut the process just to follow the schedule."

Also a high priority is international comparability of standards, according to Jenkins. The FASBs objective to support the development of high-quality international standards is crucial.

"Im very enthusiastic about the opportunity to lead the FASB at this important time."

Confidence within the community
Jenkins immediate predecessor, Dennis Beresford, praised the FAFs decision. "Hes an outstanding individual—I think hell be a popular choice in many different camps. My advice has always been, Dont follow my advice or anyone elses; be your own person. Im sure he will be. Im proud to be succeeded by someone of his stature." David B. Kaplan, incoming chairman of the AICPA accounting standards executive committee, said, He is very well respected by the standard-setting community. I certainly look forward to working with him closely.

Robert L. Israeloff, past AICPA board chairman, worked with Jenkins as a member of the special committee. "Jenkins is low key but in control of the situation, strong willed but a consensus builder. He listens to everyone and doesnt take sides until hes heard all the facts. Its an effective style."

118 News, notes and items of interest.

Short takes, notes and items of interest

Way to Go!
Lyne Manescalchi, director of marketing for Boulay, Heutmaker, Zibell & Co. in Minneapolis, was named the CPA Marketing Reports 1997 Accounting Marketer of the Year. Manescalchi received the award at the Association for Accounting Marketing conference in New Orleans. The award is the only national honor for marketing excellence within the accounting profession.

You Can Practice Here
The Alabama State Board of Public Accountancy adopted a substantial equivalency rule, effective June 18, 1997. According to the rule, any applicant with a valid unrevoked license to practice as a CPA from any jurisdiction and who is in compliance with the current Uniform Accountancy Acts CPA registration requirements is qualified to practice in Alabama. Alabama and Texas are the first two states to pass such a rule.

Ready for 2000?
The Securities and Exchange Commission issued a report on the readiness of the SEC, the U.S. securities industry and public companies in addressing the Year 2000 computer problem. The report said most members of the securities industry are involved in the assessment and remediation phases of the effort to address the problem but some companies had only recently become aware of the problem. The report is available on the SEC Web site at http://www.sec.gov .

Governmental Queries
The Federal Accounting Standards Advisory Board issued two exposure drafts for public comment. Accounting for Internal Use Software provides recommended standards for general property, plant and equipment software used to operate an entitys programs. The second ED, Governmentwide Supplementary Stewardship Reporting Standards , solicits comments on proposed standards amending Statement of Recommended Accounting Standards no. 8, Supplementary Stewardship Reporting . Comments on both proposals are due by mid-September. For more information, contact the FASAB at 202-512-7350.

America Loves Mutual Funds
The Investment Company Institute reported investments in mutual funds continue to rise. In May 1997, the net assets of all mutual funds totaled $3.905 trillion, up from $3.174 trillion a year earlier.

CPAs Wrest Money From the Government
Congressman Bobby L. Rush (D-Ill.) chaired the Illinois earned income credit program, sponsored by the Illinois CPA Societys CPAs for the Public Interest. CPAs helped more than 4,300 low-income taxpayers prepare federal and state returns; the program resulted in $3.3 million in refunds.

The "Golden Door" Opens Wide
Multilingual CPAs may find themselves with a big advantage. The most recent Census Bureau statistics show more than 9% of U.S. residents are foreign born and more than 25% of them came to the United States after 1990.

CICAs New Leadership
The Canadian Institute of Chartered Accountants announced a change in leadership at its recent annual meeting: Donald H. Penny, FCA, managing partner of Meyers Norris Penny & Co., is the groups chairman. Michael H. Rayner, FCA, remains as president.

The International Environment
The International Federation of Accountants is seeking comments on a proposed international auditing practice statement. The Consideration of Environmental Matters in the Audit of Financial Statements examines issues such as considering relevant environmental laws and regulations, having sufficient knowledge of the environmental matters and using the work of environmental experts. Comments on the exposure draft are due by September 30. A copy is available on the IFAC home page at http://www.ifac.org or by calling 212-302-5952.

Gone But Not Forgotten
Two FASB retirees were honored recently. Dennis Beresford, immediate past FASB chairman, received the California Society of CPAs National Lifetime Service Award. The award goes to a Californian who has made an extraordinary contribution to the accounting profession on a national level. Also, JT Ball, recently retired assistant director of research and technical activities, was surprised with $20,000 in pledges from current and former FASB fellows to establish a scholarship. The JT Ball/FASB Fellows Endowed Scholarship Fund is being established at the School of Accountancy at the University of South Florida, Tampa.

116 Companies track the costs of time-off benefits.

Tracking Time-off Benefits

A survey of 360 companies revealed what employers are doing about managing the costs of employees who aren't on the job— and what employees think about their companies' plans.

AICPA council votes

AICPA Council Authorizes Bylaw, Code Changes and Member Vote on Key Issues

The AICPA council approved a change to the council resolution under Rule 505 Form of Organization and Name of the AICPA Code of Professional Conduct to bring it in line with approved changes in the Uniform Accountancy Act by providing that only a simple majority of a firms owners must be CPAs. (See Council Proceeds With Sweeping Regulation Reform , JofA, Aug.97)

Council approved changes to the implementing resolutions under bylaw section 2.3.3 to provide for uniformity, flexibility and innovation in deriving methods of learning and measurement of the continuing professional education requirement. One of the resolutions states that compliance with CPE requirements can be achieved by any means, "however measured, that would be reasonably expected to maintain professional competencies in the members area of practice or employment." There will be no required annual minimum of CPE, just a total for three years. Members in business and industry will have to earn 120 hours in a three-year period, up from the current 90. These CPE changes will not take effect until January 1, 2001.

Council also agreed to submit to a membership vote for a change in rule 505 concerning sole practitioners use of names of former owners of their firms. A bylaw change, also to be put to membership vote, would exempt members who limit their practices to certain services—consulting, for example—from required membership in an Institute-approved practice-monitoring program. Only firms that perform services within the scope of practice-monitoring standards and that issue reports purporting to be in accordance with AICPA professional standards would have to enroll.

Ballots on the bylaw and code changes went out to AICPA members in late August.

The council also authorized the assurance services executive committee as a senior committee, allowing it to make public statements and publish measurement criteria without clearance with the council or the board of directors. It also established two nonvoting membership categories: "international associate" and "student affiliate." The requirements for the new membership categories, as well as other council actions not requiring member approval, appear in Official Releases.

ISB Update: Independence Board Holds First Meeting

Members of the newly established Independence Standards Board (ISB) met for the first time in the New York City offices of the American Institute of CPAs. The boards chairman, William T. Allen, director of New York Universitys Center for Law and Business, said the new independence oversight body had to establish policies, procedures and due process for its work product. The eight-member board was formed by the Securities and Exchange Commission and the AICPA to create, codify, amend and preserve independence standards for auditors of public companies.

Chairman Allens first order of business was to formally adopt existing SEC rules and interpretations on auditor independence for use as the groundwork for the ISBs own independence guidelines.

The board also discussed the facilities and staff support of the ISB by the AICPA. ISB board member and AICPA President Barry Melancon said the AICPA would house the boards support staff and executive director. The executive director will be responsible for overseeing the staff, proposing research and preparing an annual report.

Although the AICPA will provide the budget for the board, its executive director and staff, it will be considered an independent body. Allen emphasized that the ISB was "not an organ" of the AICPA SEC practice section. The SEC and the AICPA will review the ISBs work after five years to ensure it is serving public interest and protecting investors.

The board is expected to meet again in mid-September for a private meeting to educate its members about the role of independence in auditing public companies financial statements.

New Jersey Public Accountant to Head NASBA

The nominating committee of the National Association of State Boards of Accountancy named Milton Brown as its choice for 1997-98 vice-chairman. If, as expected, he is formally elected at the groups annual meeting this month, Brown—a public accountant—will become NASBAs 1998-99 chairman and its first licensed public accountant (LPA) chief executive. Brown spent 11 years on the New Jersey State Board of Accountancy, including 2 years as its president.

Fighter for reciprocity
The past chairman and current member of NASBAs Uniform Accountancy Act committee, Brown has long promoted the idea of substantial equivalency. Despite NASBAs and the American Institute of CPAs progress in this area, each individual state can set its own licensing laws. "Its terrible that its often easier for an Australian or Canadian accountant to gain reciprocity privileges in the United States than for a U.S. accountant to have reciprocity with the state next door," said Brown. "Its kept the profession from moving forward." He cited the increasingly common engagements over the Internet: " Current regulations are forcing accountants to break state laws when the Internet takes them across state lines."

Eclectic background
Brown also has been active in the National Society of Accountants, serving as its president for 1994-95. The NSA membership consists of LPAs, CPAs, enrolled agents and unlicensed accountants. "There isnt as much difference between the NSA and other groups as one might expect," said Brown. "As I see it, all accountants are concerned about whats best for the profession."

AICPA Publications Honored

The Society of National Association Publications gave awards to two American Institute of CPAs publications: the Journal of Accountancy and the CPA Letter. The Journal received the silver award in the category of "magazines, general excellence, ad revenues over $1 million." The Letter received a bronze award in "newsletters, most improved." The latter award is based on the newletters recent redesign and inclusion of member segment supplements.

Brown has his own firm in Clifton, New Jersey.

Bowsher in New Oversight Job

Although Charles A. Bowsher completed his 15-year term as comptroller general of the United States, his oversight work is not done. He just became the newest member of the Public Oversight Board, which oversees the self-regulatory programs of the SEC practice section of the American Institute of CPAs division for CPA firms. He replaces Paul W. McCracken, who has retired. Bowsher also is a trustee of the Financial Accounting Foundation.

The POB, based in Stamford, Connecticut, is an autonomous five-member body that appoints its own members and establishes its own operating procedures.

AICPA Welcomes Entire Online Community

The American Institute of CPAs launched a Web-based forum as part of its Web site, AICPA Online, providing an online conference center to anyone in the world who can access the Internet. For no fee beyond normal access time charges, members and nonmembers can read messages and leave ones of their own. Although the forum serves the same purpose as the CompuServe Accountants Forum (see sidebar), it is not limited to users of a particular online service provider and it has some additional useful features.

CompuServe Redux

Contrary to reports and rumors, the Accountants Forum on CompuServe is not closing down. According to a public message from AICPA Sysop Hal G. Clark thanking all the people who had commented on the discontinuation of Accountants Forum, the AICPA has extended its contract with CompuServe to continue the forum. The CompuServe Forum and AICPA Online Forum are completely separate entities. Messages posted on one do not get transfered to the other.

The Forum on AICPA Online is actually six forums, or areas: general, accounting, auditing, taxation and information technology (more forums are planned). The previously launched assurance services forum has been rolled into the new structure. The six areas are simple to use—they are not very different from the CompuServe Accountants Forum—and extensive directions are posted. First-time users see a registration screen with step-by-step directions. After registering, users can pick a forum and go to an index page. They can click on any of the messages to bring that message onto the screen. Each message offers an opportunity to jump to the next message, the previous message or to reply, as in the CompuServe forum.

Customizing the forum experience

The forums offer many options. For example, they display a brief header, or title, of each message on the opening page. Viewers can elect to see just the opening message of each "thread" or all the responses. (This is comparable to looking at a book index and deciding whether to view just the main entries or all the subentries, too.) In Web-speak, a thread consists of an initial message on a given subject followed by the responses to the first message, the responses to the responses and so on. Users can opt to view messages posted within a certain time period or on a certain subject.

Messages can be customized: Users can create a standard sign-off on all messages posted, so they automatically end with: "Jane Doe, Doe & Roe, CPAs, serving the Midwests tax needs since 1953." The creative can easily add an "emoticon," an icon that clues readers into the tone of the message, such as positive response ("happy face" icon) or query ("question mark" icon).

An enormous time-saver is the notification option: If Mary posts a message and John responds a day later, the forum will automatically send Mary an e-mail notifying her. This spares users from having to log on again and again to see if there are any responses. This feature can be turned on and off with each message. The details of all these features and others appear in the forum instructions.

Web surfers can visit the forums directly at http://www.aicpa.org/forums/index.htm or they can hotlink from the AICPA home page.