At many firms, the model employee comes in early, leaves late, and never takes the maximum allotted sick and vacation time. Unfortunately, some of those who seem dedicated to their desk are thieves; they can’t leave, because then someone will find out about their sham bank accounts, vendor kickbacks, or phantom expense reports. Research of […]
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Posted inInternal Controls
Materiality Threshold Drops To “Zero” For Restatements
Auditors, analysts, and managers long assumed that there was a threshold of materiality, below which errors and omissions did not have to be restated. Usually, this was held to be 5 percent, although some users of financial statements preferred a lower cutoff. No longer. Taube “The tripping point for what constitutes a material event is […]
Posted inFrom the Archive
Small Hiccups Can Impact Section 16 Reporting Compliance
Last week, Compliance Week reported that a sample of 2000 proxies showed that 47 percent of companies disclosed in their proxies that at least one director of officer filed a late “insider trade” under Section 16(a) of the Securities Exchange Act of 1934. Promulgated by Section 403 of The Sarbanes-Oxley Act, the rules require that […]
Posted inFrom the Archive
Class Actions Are Better Researched; Plaintiffs Changing
In 2004, the number of private securities class action cases filed in federal court increased to 203 from the 176 filed in 2003, according to a recent study by PricewaterhouseCoopers. Although the number is up slightly, it is down significantly from the peak of 245 cases filed in 1998, the year that the Securities Litigation […]
Posted inBoards & Shareholders
Directors And Officers Insurance Market Faces Turmoil
The WorldCom settlement, investigations of AIG and Marsh & McLennan, and general anxiety about the state of corporate governance is drawing attention to the market for directors and officers insurance. “The quantity of cases remains high and the complexities of litigation are overwhelming,” says Loretta Worters of the Insurance Industry Institute. “D&O losses increased by […]
Posted inRegulatory Enforcement
Class Actions Are Better Researched; Plaintiffs Changing
In 2004, the number of private securities class action cases filed in federal court increased to 203 from the 176 filed in 2003, according to a recent study by PricewaterhouseCoopers. Although the number is up slightly, it is down significantly from the peak of 245 cases filed in 1998, the year that the Securities Litigation […]
Posted inAccounting & Auditing
How Much Testing Is Enough? Cos. Struggle With Sampling
Section 404 of The Sarbanes-Oxley Act of 2002 requires that companies document and test their internal control over financial reporting. And, of course, the standard that auditors use to gauge the success of those efforts is known as Audit Standard Number 2, issued by the Public Company Accounting Oversight Board in June 2004. But the […]
Posted inInternal Controls
Even Banks Are Finding SOX 404 Control Testing Difficult
In 1991, Congress passed the Federal Deposit Insurance Corporation Improvement Act, also known as FDICIA, to strengthen banking practices after a string of problems in the 1980s. Lawmakers included tough new supervisory standards, raised bank capital requirements, and gave examiners new powers to resuscitate troubled institutions. Section 36 of the FDICIA calls for tests, documentation, […]
Posted inAccounting & Auditing
Vendors Weigh Costs, Benefits Of SAS 70 Type II Audits
That companies outsource myriad business functions is no surprise these days. What is a surprise, however, is the lengths to which public companies must go to ensure that those vendors’ internal controls don’t become their undoing. That’s because, no matter what service is outsourced—like payroll, for example—responsibility for financial controls stays in place. But the […]
Posted inAccounting & Auditing
Vendors Weigh Costs, Benefits Of SAS 70 Type II Audits
That companies outsource myriad business functions is no surprise these days. What is a surprise, however, is the lengths to which public companies must go to ensure that those vendors’ internal controls don’t become their undoing. That’s because, no matter what service is outsourced—like payroll, for example—responsibility for financial controls stays in place. But the […]