A congressional conference committee working on financial regulatory reform backed a House provision to give a permanent exemption for small companies from complying with Sarbanes-Oxley Section 404(b). The SEC and GAO were ordered to study the compliance costs for companies with public floats ranging from $75 million to $250 million.

Auditors and investors lost the battle to get small public companies to comply with Section 404(b) of the Sarbanes-Oxley Act of 2002. The decision by lawmakers gives a permanent exemption to public companies with public floats of less than $75 million from complying with Section 404(b).

To better understand permanent exemption from SOX Section 404(b), please contact of REDW’s Audit and Consulting team.

WG&L Accounting & Compliance Alert Network states while most of the financial reform legislation coming out of Washington is aimed at the financial services sector, the chief of the SEC, George Canellos, wants corporate controllers and CFOs to use caution in everything they do, from applying GAAP to talking to the Street. In an era of reform, the caution is more necessary than ever.

Canellos said the SEC is sensitive to the challenges that corporate controllers and CFOs have to face. Citing the pending insider trading case against the hedge fund, Galleon Group, Canellos advised financial professionals to be “very cautious in dealing with analysts and institutional investors.”

Canellos discussed some trends he has seen over the last few years, since the scandals caused by Enron in 2001 and Worldcom in 2002 and the subsequent enactment of the Sarbanes-Oxley Act of 2002.

For assistance in understanding trends discussed by George Canellos, please contact of REDW’s Audit and Consulting team.

The Financial Accounting Standards Board (FASB) is expected in coming weeks to propose that banks rely more on market values of assets rather than original costs minus their own estimates of change, the Wall Street Journal reports. Banks often see market values as fickle, but the market was clearly not sufficiently factored into accounting before the recent financial crisis, the Journal says.

Away from Wall Street, we may be disproportionately affected by any changes because, as the article notes, smaller banks hold larger percentages of assets at original costs.

The need to improve mark-to-market requirements is among recent criticisms of FASB and its role in the financial crisis.

Mark-to-market rules or market valuation issues have also played a part in the downfalls of several New Mexico-based institutions, including Thornburg Mortgage Home Loans and Charter Bank.

Asset valuation can obviously be an extremely complex process. We can help. Please contact our team today with any questions.

The move to International Financial Reporting Standards (IFRS) will necessitate significant changes in how financial professionals approach their work, according to renowned panelists at a recent industry forum.

One panelist compared Financial Accounting Standards Board Statement No. 133 – an 800-page guide on "Accounting for Derivate Instruments and Hedging Activities" – and the U.S. Constitution as examples of rules-based vs. principles-based approaches. IFRS represents a more principles-based approach to reporting.

Though IFRS could reduce the number of rules financial professionals must be familiar with, the new standards will also create a greater responsibility and require new ways of analyzing choices, the panelists noted.

The shift could place a greater emphasis on experience in the industry. To learn more about what these changes could mean to your company or organization, please call our experienced Audit Services team today.

WebCPA reports that the Financial Accounting Standards Board and the International Accounting Standards Board have agreed in broad terms on the definition of "fair value." Fair value will likely be defined as exit price and will be generally considered to be market-based according to reasonable pricing assumptions. The boards defined conditions under which an initial valuation might no longer hold and laid out scenarios under which markets might be considered "orderly." The full set of tentative decisions can be read here.

Fair Value is one of the biggest concerns the boards face as they race to "converge," or integrate, U.S. GAAP with International Financial Reporting Standards (IFRS) by June 2011.

Valuation of assets has always been a complex endeavor, but with the rapidly changing regulatory environment, we suggest being in regular contact with your financial professionals. If you have any questions about assets you're carrying or planning to acquire, please contact us today.