New Fences. The PCAOB is proposing that audit firms not be allowed to sell tax shelters to the top executives of their audit clients. Wash Post. The proposed rules would not impose a blanket ban on tax advice, a step that some consumer advocates had advanced two years ago. Auditors still would be able to perform routine tax work, including preparing tax returns for companies. They would also be

Sales Returns. The WSJ published an interesting article about retailers tracking individual's behavior patterns in the returns area. The companies want to cut down on abuse of their liberal returns policies.
According to retail consulting firm KingRogers International, in 2003, the return rate for specialty retailers was 10.6 percent of total sales, higher than the industry average of 8.58

Where Have All the Chief Financial Officers Gone? The New York Times has this article about CFOs who changed jobs to get away from the pressure of being a CFO."Every C.F.O. has been pushed at times to take something that is clearly black and white and color it a shade of gray," Mr. Goldman, 46, said. "But when the chief executive is shot at, he uses the chief financial officer as a human shield.

Due Diligence

Due Diligence. The city of Cincinnati learned a painful lesson about the improtance of due diligence. City mishandled aspects of failed theater project.City officials also apparently did not know that when Pettus-Brown provided financial statements showing assets of '1.6 million,' the assets were listed in yen - not dollars. The amount in dollars would have been about $14,000.

Embezzlement

Embezzlement. The Philly paper reports the story of an accountant whose gambling addiction led him to embezzle $7 million from his employer.Prosecutors said Szagola began stealing in 1996 by drafting company checks in pencil, then erasing the vendor names and substituting his own after the checks had already been reviewed and signed by company executives. Szagola cashed more than 200

Sampling

Sampling. Studies show that auditors often make inappropriate conclusions from sample evidence because they fail to take into consideration sampling risk in their measures. The Economist looks at the statistics behind a recently published study that attempted to measure Iraqi deaths from the war. One of the controversial points is the wide confidence interval that results from the researchers'

Internal Controls

Internal Controls. The WSJ recently published an article about companies' frantic efforts to get their controls sufficiently in-line to prevent receiving a failing grade from their external auditors. Some initial evidence of stock market reaction to announcements of material weaknesses is provided.Click here and go to 2nd article to read the whole thing. Drawing on a sample of 100 companies that

KPMG to Pay $10 Million

KPMG to Pay $10 Million to Settle Charges Over Gemstar Audits

Regulators said that from September 1999 through March 2002, KPMG and its auditors should have known that Gemstar was improperly booking $152 million in licensing revenue and $60 million in ad revenue. Gemstar, which publishes TV Guide magazine, also sells ads on an 'interactive program guide' that allows TV viewers to navigate and

Confirmation Letters. Part of a standard audit is to have the client's banks send letters directly to the auditor confirming the existence and amounts of client's bank accounts. I haven't followed the Parmalat scandal so this is likely old news but this article states that auditors of Parmalat were fooled by a phony bank confirmation letter. The author of the article questions "Is it too much to