Accounting & Auditing

Two professors from the University of Michigan Business School and another at NYU notes that a “disproportionately large number” of companies just meet (or beat) earnings forecasts, and examines the managerial incentives that could that explain the phenomenon.

In case you missed the announcement right before Christmas, FASB finally issued its new accounting standards requiring greater disclosure about pension and other post-retirement benefits plans. As expected, companies must now provide a breakdown of plan assets by category, such as equity, debt and real estate. A “target allocation” percentage is also required for those […]

As most companies are aware, the new auditor independence rules adopted in January list nine non-audit services that are “outside the scope of practice of auditors.” That means they’re banned, courtesy of Sarbanes-Oxley Section 201. The services include: Bookkeeping or other services related to client’s accounting records or financial statements; Financial information systems design and […]

Last week, A group of Canadian-chartered accountants voted to adopt new auditor independence requirements that would hold auditors to higher professional and ethical standards. The new standard incorporates SOX requirements, as well as features of a similar standard issued by the International Federation of Accountants in 2001. Smith “This is a world-class standard,” said Canadian […]

A new GAO study states that mandatory audit firm rotation “may not be the most efficient way to strengthen auditor independence and improve audit quality.” The study, which was nearly four months late (it was mandated by SOX and was due back on July 30th), also stated that mandatory auditor rotation may cause a “loss […]

If your company hasn’t paid its “accounting support fee” to the new accounting oversight board, you may want to talk to the accounts payable department. According to PCAOB rules, a public accounting firm cannot sign an unqualified audit opinion with respect to an issuer’s financial statements if the issuer has “an outstanding past-due share of […]

Not long ago, when shareholder value seemed to be exploding in every sector, companies were too busy counting revenue to focus on leaks in the stream. But, as we have all learned too well, success can breed complacency — and bad habits. Many companies, flush with boom times, took their eye off the ball. They […]

On Oct. 7, The Public Company Accounting Oversight Board adopted final rules relating to inspections of registered public accounting firms. Background According to Section 104 of Sarbanes-Oxley, the PCAOB must conduct a continuing program of inspections to assess how public accounting firms are complying with the Act and subsequent rule-making and professional standards. On July […]