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News

Accountants  Face New Concerns Says Fraud Expert Cendrowski Corporate Advisors
Although SSARS 10 is designed to help accountants improve their professional review, the recent revision of attestation standards places many practitioners at risk. SSARS 10 requires the accountant to make inquiries regarding fraud, and SSARS 10 also places a responsibility on the accountant to be competent of internal control and fraud deterrence methods.
"Accountants Face New Concerns Says Fraud Expert Cendrowski Corporate Advisors" Business Wire, September 2004.
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Fraud Concerns Becoming Part of Review Engagements
The AICPA recently released SSARS 10, which amends SSARS 1. The new review standard requires specific inquiries regarding fraud in the review engagement and references to fraud in the management representation letter. Under the new review standard, the accountant is placed at greater risk for malpractice, and the accountant must also develop an awareness for fraud deterrence and detection.
"Fraud Concerns Becoming Part of Review Engagements" WebCPA, July 2004.
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Ten Ways to Stop Identity Theft Cold
Identity theft again tops the list of consumer complaints, according to a new report from the Federal Trade Commission. Frank W. Abagnale, a reformed thief, is a respected authority on identity theft and other forms of fraud. His book, "Catch Me If You Can," which details his criminal escapades, is the latest Steven Spielberg movie and stars Leonardo DiCaprio as Abagnale. Frank Abagnale wrote this commentary for Bankrate.com.
"Ten Ways to Stop Identity Theft Cold" MSN Money.

 

Private Companies Seek Greater Assurance
In accordance with the Sarbanes-Oxley act of 2002, The Public Company Accounting Oversight Board (PCAOB) is promulgating new audit standards for public companies that include many additional safeguards, procedures, ethics standards, and more stringent rules on independence. Non-public companies are beginning to seek out audits that conform to many of the new requirements due to the increased level of assurance provided, often in preparation of a public offering. While firms are not yet receiving requests for audits that conform to PCAOB standards, including full-blown internal controls audits, Trent Gazzaway, Grant Thornton's national director of corporate advisory services noted "we are getting a lot of requests from companies that are saying either 'I want to go public' or 'I want to get acquired by a public company and I know I'm going to need to have my controls documented.' In fact, having those controls documented serves in a lot of respects as a reason for someone to pay a premium for the company."

"More Private Companies Seeking PCAOB-Style Audits" Accounting Today: May 17-June 6, 2004 p 3, 32

The Costs of Compliance
Financial Executives International (FEI) conducted a survey to forecast the overall cost of compliance required by Section 404 of the Sarbanes-Oxley Act of 2002. In general, the survey found that the cost of compliance was in direct correspondence with the size of the company however, smaller companies were disproportionately affected by the cost of compliance when total costs are greater than revenue.

Former Computer Associates Executives Guilty of Securities Fraud
Three former executives of Computer Associates pleaded guilty to securities fraud on April 8, 2004. Federal prosecutors investigating the company's accounting practices left little doubt that they were zeroing in on Sanjay Kumar, the company's chairman and chief executive.
Online
4-9-04
The executives told the judge that accounting fraud at the software maker was pervasive as the company struggled to meet Wall Street's earnings projections in the tech boom.
The Wall Street Journal, Friday, April 9, 2004 page A3

SEC Charges 3 Former Executives of Computer Associates with Civil Violations of Securities Laws
On April 8, 2004, the Securities and Exchange Commission filed three related actions against Ira Zar, the former Chief Financial Officer at Computer Associates International, Inc., ("CA"), and David Rivard and David Kaplan, former vice presidents of finance at CA, charging each defendant with committing accounting fraud while at CA.
Online
4-8-2004

Former Goldman Economist Sentenced in Bond-Tip Case
A former economist at Goldman Sachs was sentenced yesterday to nearly three years in prison for relaying an insider bond tip that allowed the firm to make millions of dollars in tainted profits. John Youngdahl, 44, was sentenced to two years and nine months in prison - the lightest term possible under federal guidelines. He pleaded guilty last year to wire fraud, securities fraud and other charges.
Online
4-10-2004

Antitrust Office in Japan Raids Intel Branch
Tokyo, April 8 - The Fair Trade Commission raided the Japanese office of Intel on April 8, 2004 in an investigation into whether the company unfairly kept computer makers from buying rival chips.
New York Times, Friday, April 9, 2004 Page W1

Adelphia Ex-Worker Testifies He Was Told To Falsify Documents
A former employee of Adelphia Communications testified that he was instructed by defendant Michael Mulcahey to create a phony document to make it appear the Regases had taken out a $243 million bank loan to pay for securities. The former employee also said he was instructed to give the document to Adelphia's auditors.
Wall Street Journal, Friday, April 9, 2004 Page C3