Tuesday, April 21, 2009

Madoff Auditor in Legal Limbo

Once the Madoff fraud came to light, you knew he wasn't the only one going down. As an auditor, you have to wonder what if this stuff I'm looking at is just gibberish. Looks like this guy didn't have that thought. Also from WebCPA:

Bernard Madoff’s accountant, David Friehling, is facing an extra month of uncertainty over his legal status after prosecutors filed a continuance with the court.

Friehling was arrested last month and charged with securities fraud, aiding and abetting investment advisor fraud, and filing false audit reports for his role in Madoff’s estimated $65 billion Ponzi scheme (see Madoff’s Auditor Arrested). The continuance, filed last Friday, gives prosecutors another 30 days to indict Friehling, file further charges against him, or negotiate a plea bargain with him and his attorney.

“The government has requested a continuance of 30 days to engage in further discussions with counsel about the disposition of this case,” said the order, according to Reuters.

Friehling, a partner in the now-defunct New City, N.Y., accounting firm Friehling & Horowitz, took over the CPA practice after his father-in-law, Jerome Horowitz, retired. Horowitz was Madoff’s auditor for 30 years and died the same day Madoff pleaded guilty to 11 fraud charges in March.

Friehling, a past president of the Rockland County Chapter of the New York State Society of CPAs, was expelled from membership in the American Institute of CPAs after an ethics investigation, soon after he was arrested. Friehling is also facing civil charges from the Securities and Exchange Commission, which accused him of merely pretending to audit Madoff’s accounts and filing false audit reports.

Friehling was released on a $2.5 million personal recognizance bond that he had to guarantee with four of his real estate properties. He also had to surrender his passport to authorities as a condition of his bond and agree to restrictions on his travel. He faces up to 105 years in prison if convicted.

IFRS To Converge With Islamic Accounting Standards

I didn't know there were Islamic Accounting Standards, which is an interesting notion. This article courtesy of WebCPA:

Even as the Securities and Exchange Commission weighs the comments that were due this week on its proposed roadmap to International Financial Reporting Standards, IFRS could be on a convergence path of its own with Islamic accounting standards.

In addition to converging IFRS with U.S. generally accepted accounting principles, the International Accounting Standards Board is also looking to extend the standards globally, claiming that about 113 different countries have either adopted IFRS or agreed to adopt the standards. Now the IASB is looking to the Middle East to adopt the standards. Board member Robert Garnett spoke at an IFRS breakfast briefing in Dubai about the standards and how they could converge with Islamic accounting standards.

“We have to embrace all financial products so we will need to change our standards,” he said, according to Emirates Business. He said that the IASB would need to meet with the Middle Eastern standard-setter, the Accounting and Auditing Organization for Islamic Financial Institutions, “to have a better understanding of their concerns and how we can accommodate those with a revised IFRS.” He sees only slight differences between the standards now and believes they can be reconciled with the help of professional judgment.

Garnett also chairs the International Financial Reporting Committee and he plans to begin holding talks with the AAOIFI this year to try to work out the differences between IFRS and the Islamic standards.

Monday, April 20, 2009

ICAEW Urges the SEC to set an IFRS timetable

Got a link to this article in today's email. We've been wondering if President Obama might recommend holding off on IFRS due to the cost for companies.

ICAEW: Global Accounting Rules Needed For Financial Crisis

The ICAEW institute has urged the US Securities and Exchange Commission to decide quickly on a timetable for moving to International Financial Reporting Standards in order to limit uncertainty for US companies.

In its submission to the US markets watchdog's consultation on IFRS, Europe’s largest professional accountancy body said the global financial crisis had highlighted the need for global accounting rules.

Nigel Sleigh-Johnson, head of the ICAEW’s financial reporting faculty, said: 'The close scrutiny of accounting for financial instruments
during the financial crisis has made the need for comparable financial reporting even more obvious.'

'We believe strongly that the transition by US companies to IFRS would not only benefit US companies, but the whole world, as it will improve transparency and comparability globally.'
The comments come amid growing opposition to global accounting standards in the US.

Earlier this month, Paul Boyle, chief executive of the UK's chief financial regulator, the Financial Reporting Council, said adoption of international accounting standards for all listed US companies will not be achieved by 2014, potentially threatening global convergence efforts.

The adoption of IFRS in the US will only succeed by educating people who use and prepare company accounts, the ICAEW also said in its submission.

The ICAEW added: 'We know from our 2007 study into IFRS implementation across the EU that companies need a significant amount of time to prepare properly. A 2011 decision with potential mandatory use of IFRS from 2014 might be tight.'