Amid ongoing turbulence in the equity and debt markets, Paul F. Roye, director of the SEC’s investment management division, warns investment companies—also known as mutual funds—against laying off essential compliance personnel to cut costs. U.S. mutual funds’ combined assets climbed 3.1% to $6.6 trillion at the beginning of October, says
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TOPICS / TAX
International tax
Fraud
The SEC is investigating more Fortune 500 companies for financial fraud than ever before and the market impact of failed corporations is growing, said Charles Niemeier, chief accountant of the commission’s division of enforcement, at the annual AICPA conference on current SEC developments. Until recently, the SEC rarely investigated large
Tax
The U.S. Senate signs into law an extension through November 1, 2003, of the Internet Tax Freedom Act’s moratorium on state or local taxation of electronic commerce. The temporary ban does not affect Internet taxes in place before October 1, 1998. ( http://thomas.loc.gov/cgi-bin/bdquery/z?d107:h.r.01552: )
Government Accounting
The Federal Accounting Standards Advisory Board (FASAB) issues three pronouncements that amend Statement of Federal Financial Accounting Standards (SFFAS) no. 7, Accounting for Revenue and Other Financing Sources. The changes relate to the elimination of certain tax revenue transaction disclosures by the IRS, the Customs Service and others (SFFAS no.
Pro Bono
The AICPA creates a nationwide network of CPA volunteers to provide pro bono financial counseling to survivors of the September 11 attacks and their families. Members of the public can request assistance by contacting the AICPA at 877-CPA-4all or www.CPA4all.org . CPAs interested in contributing their services should either call
Professional Issues
The statement on responsibilities task force of the AICPA consulting service executive committee’s litigation and dispute resolution subcommittee issues Proposed Statement on Responsibilities for Litigation Services no. 1. The exposure draft lists the responsibilities of a practitioner in a litigation service consulting engagement. It also analyzes the scope of such
Banking
The Office of the Comptroller of the Currency (OCC) reports that U.S. commercial banks boosted their derivatives holdings to $51.3 trillion in the third quarter of 2001—an increase of $3.5 trillion over the previous three months. This continued an upward trend that began after the third quarter of 2000. The
Employee Benefits
The Pension Benefit Guaranty Corporation (PBGC) raises to $3,579.55 per month (or $42,954.60 per year) the maximum amount it guarantees for retirees in underfunded single-employer, defined-benefit plans terminating in 2002—5.5% higher than in 2001. The Employee Retirement Income Security Act of 1974 requires the PBGC to adjust this amount annually
Financial Reporting
In speeches and advisory announcements, the SEC’s chairman, Harvey L. Pitt, and chief accountant, Robert K. Herdman, lay out the commission’s plans for enhancing the accuracy and completeness of corporate financial disclosures, simplifying the standard-setting process, modernizing the financial reporting model and responding more swiftly to registrants’ requests for proactive
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. Both the Institute and the Big Five issue statements describing their latest initiatives to improve the quality of financial reporting and
FYI
International corporate and securities legal expert Alan L. Beller becomes director of the SEC’s division of corporation finance, where he will lead efforts to enhance corporate disclosure and improve the efficiency of the registration process for securities issuers. He also will serve as senior counselor to the commission, a newly
International
The board of the International Federation of Accountants (IFAC) approves changes to independence rules in the group’s code of ethics. The revised provisions lay out a conceptual framework that addresses factors threatening auditor independence as well as steps auditors can take to preserve their integrity. The new rules apply to
Accounting
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. FASB issues Statement no. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which replaces no. 121—an earlier pronouncement
Securities
To help airlines and insurers quickly raise essential capital in the wake of the September 11 terrorist attacks, the SEC simplifies its securities registration process and sets up special telephone (202-942-2816) and e-mail ( cfhotline@sec.gov ) response systems to answer registrants’ financing and disclosure questions. ( www.sec.gov/news/press/2001-107.txt ) The SEC
Privacy
Federal Trade Commission Chairman Timothy J. Muris pledges to substantially boost resources for protecting consumer privacy in all commercial venues, including the Internet. The FTC’s enforcement plan calls for a national “do-not-call” list of telemarketing prospects, improved handling of consumers’ privacy-related complaints, enforcement of current limitations on telemarketers’ sales practices
Technology
A new survey by Financial Executives International and the Computer Sciences Corporation says that, as a result of the economic slowdown, companies are reevaluating and scaling back their e-commerce technology projects, outsourcing more information technology services and spending less on discretionary IT projects. ( www.fei.org/download/2001-FEI-CSC-Survey.pdf )
Government Accounting
The U.S. Department of Health and Human Services (HHS) plans to consolidate the 53 different accounting systems it uses to track the nearly one billion Medicare claims it pays each year. HHS says that by 2010 the project will have reduced costs by approximately $1.2 billion. ( www.hhs.gov/news/press/2001pres/20010927.html )
Employee Benefits
Phased-in retirement plans—in which, for example, employees receive a portion of their pension benefits while earning a salary—are attracting attention as skilled labor shortages persist and many older employees work past normal retirement age to supplement their inadequate savings. A new report from the Employee Benefit Research Institute says educational
Financial Reporting
Two advisories from FASB will help entities implement new rules. One defines the “reporting unit” of an enterprise as a key element in testing for goodwill impairment resulting from an acquisition. A second release clarifies certain provisions for making the transition to two new standards—FASB Statement nos. 141, Business Combinations,
Smart Stops on the Web
Business Resources sites.krislyn.com This home page is full of links to “strictly business sites” such as online associations and e-zines. Users can find industry-specific information on accounting, economics and investments, to name a few. The business plans section of the site offers a link to a bookstore where business people
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