Analyzing Auditor Changes
Lack of Disclosure Hinders Accountablility to Investors

By Mark Grothe and Thomas R. Weirich

DECEMBER 2007 - In 2006, 1,322 U.S. public companies changed their independent auditor. Investors were left to guess the reasons behind about three-fourths of those changes. The authors believe there is a simple fix for this problem: The SEC should require companies to provide a reason for all auditor changes. Auditor changes often are linked to financial restatements and discoveries of weak accounting controls. For the announcement of an auditor change to have any predictive power for investors, more disclosure must be required from corporate filings.

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Publisher's Column

IRS Changes Position on Advance Trade Discounts

Volume-related vendor allowances are routinely treated as reductions in the purchase price of the related inventory under Treasury Regulations section 1.471-3(b). But when allowances are received in advance, the IRS has been reluctant to allow amounts for purchase volume rebates, slotting fees, and cooperative advertising to be deferred in inventory. Full Story

110 Years of a Common Purpose

If it is proposed to inculcate some truth or to foster some feeling by the encouragement of a great example, they form a society.” Those words were written in 1835 by Alexis de Tocqueville, the French political thinker and historian who wrote Democracy in America. He thought that association, the coming together of people for a common purpose, would bind Americans to an idea or notion larger than selfish desires.
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Sarbanes-Oxley’s Wake-Up Call to the Construction Industry?

Let’s say you are the CFO of a Fortune 500 company who has the responsibility of overseeing the construction of the company’s $750 million headquarters in Manhattan. Scheduled to open well beyond its original completion date, the seemingly generous construction budget is already facing a $200 million cost overrun with six months to go until completion. Full Story

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