In 2007, I represented Grant Thornton in its challenge of a deepening insolvency claim in Minnesota. The decision by the Minnesota Court of Appeals in the case—Julia A. Christians, Trustee for the Bankruptcy Estate of Technimar Industries Inc. v. Grant Thornton LLP—could provide useful lessons for accounting firms. Technimar planned
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Audit & assurance
Highlights
FASB issued Statement no. 141(R), Business Combinations , and Statement no. 160, Noncontrolling Interests in Consolidated Financial Statements . Effective for fiscal years beginning after Dec. 15, 2008, the standards are intended to improve, simplify and internationally converge accounting for business combinations and the reporting of noncontrolling interests
Deepening Insolvency: An Emerging Threat?
EXECUTIVE SUMMARY Deepening insolvency is a relatively new and developing legal theory. Courts have disagreed about whether deepening insolvency is a stand-alone tort claim or simply a basis for seeking damages related to fraud, professional malpractice or another claim. If an auditor is alleged to have “missed” an
High Court Bars Secondary Liability in Securities Case
The U.S. Supreme Court ruled in a major securities fraud case that secondary parties—essentially aiders and abettors—can’t be held liable when the companies they work with mislead investors. Stoneridge Investment Partners LLC v. Scientific-Atlanta Inc., et al., docket no. 06-43, threatened to expand the reach of investor lawsuits beyond parties
Auditing
For news from the AICPA and state societies, visit www.cpa2biz.com, which also offers online CPE, AICPA professional literature, practice management aids and links to state society Web sites. The letter is co-signed by CAQ Governing Board Chairman James S. Turley, chairman and CEO of Ernst & Young LLP, and
Highlights
FASB tentatively approved a one-year delay in the effective date for FIN 48, Accounting for Uncertainty in Income Taxes, for private enterprises, including not-for-profit organizations. Acting on a request from the Private Company Financial Reporting Committee for a deferral, the FASB board is seeking public comment on a
The Intersection of FIN 48 and Tax Opinions
FASB’s Interpretation no. 48, Accounting for Uncertainty in Income Taxes, has changed how enterprises recognize and measure tax benefits associated with tax positions and disclose in their financial statements uncertainties related to income tax positions. Most enterprises have found they must take a variety of steps to
CBT Too Easy? Think Again
The concerns about how easy the new CPA exam is, expressed in the letter “ CBT: Too Easy? ” ( JofA , Sept.05, page 12), are valid but unnecessary. I took the last paper and pencil exam in November 2003. The exam was very difficult, and I was able to
Risk Assessment Standards in Action
Eight standards rolled out in 2006 by the Auditing Standards Board are sparking a cultural shift for auditors. The standards—Statement on Auditing Standards nos. 104–111—are designed to enhance auditors’ responses to audit risk and materiality and encourage them to focus on areas with the greatest risk of
Auditing
For news from the AICPA and state societies, visit www.cpa2biz.com, which also offers online CPE, AICPA professional literature, practice management aids and links to state society Web sites. The findings were based on inspections conducted between 2004 and 2006. The PCAOB released a report on the deficiencies to help
Opportunity Detected
EXECUTIVE SUMMARY The crux of the SEC’s interpretive guidance for management is a top-down, risk-based approach that puts risk first and foremost. Four key areas of opportunity can be used to reduce an organization’s overall SOX 404 compliance effort— risk assessment, entity-level controls, control selection and testing
Expanded Hours for A&A Hotline
The Accounting and Auditing Hotline is now open Monday through Friday, 9 a.m. to 6 p.m. ET. The hotline team offers free technical assistance with issues related to accounting principles and financial reporting, auditing, attestation, and compilation and review standards. Members with questions can call 888-777-7077 and choose Option no.
A Man of Principles
Your interview with Robert Pozen (“Seeking Clarity,” Oct. 07, page 30) was intriguing. My first question is: Who on the JofA staff interviewed him, and why was the byline not disclosed? The most insightful question was, “How can more principles-based standards work in the U.S….?” His answer was, “No one
Highlights
The Center for Audit Quality issued a set of white papers to address issues practitioners may encounter as a result of the “liquidity crisis” spurred by deterioration in the markets for subprime mortgages and related securities. The CAQ Professional Practice Executive Committee said firms would benefit from the
Audit All the Time
According to the Ernst & Young Global Internal Audit Survey , 44% of companies’ internal auditors have implemented a continuous auditing program to: Follow up on implemented recommendations Identify control deficiencies Monitor risks Identify potential fraud Why aren’t the other 56% of respondents using continuous auditing? The top
Navigating the Crossroads of Control and Independence
EXECUTIVE SUMMARY Statement on Auditing Standards no. 112, Communicating Internal Control Related Matters Identified in an Audit , introduced terms, definitions and guidance for identifying and evaluating control deficiencies and communicating significant deficiencies and material weaknesses. It requires an auditor to communicate in writing to a client’s
Speaking in the Public Interest
Randy G. Fletchall still remembers what attracted him to the CPA profession more than three decades ago—its focus on quietly and diligently serving clients, helping them solve challenging issues, and “getting it right,” while benefiting the public interest. “We’re not the kind of people who seek attention,” Ernst & Young’s
Banking
For news from the AICPA and state societies, visit www.cpa2biz.com, which also offers online CPE, AICPA professional literature, practice management aids and links to state society Web sites. Loan-loss provisions totaled $11.4 billion in the quarter, a 75.3% increase from the year-ago period. The value of loans and leases
Highlights
Japan and the International Accounting Standards Board (IASB) agreed to accelerate convergence between Japanese GAAP and International Financial Reporting Standards (IFRS). The two boards will seek to eliminate by 2008 major differences between Japanese GAAP and IFRS, with the remaining differences being removed on or before June 30,
Fashioning a Fraud
EXECUTIVE SUMMARY Businesses must clearly define the roles and responsibilities of employees who sign expense reports and those who process the reports. That should eliminate confusion about whether a manager’s signature means that the individual is authorizing the expenses as reasonable business expenses or signifies that the
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