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The profession’s image remains bright among business decision makers, executives and investors who gave CPAs favorable ratings of 97%, 95% and 89%, respectively, in a recent survey. Significantly, among business decision makers and executives, CPAs ranked several points higher than physicians, insurance agents, bankers, chief management consultants and stock research analysts (www.aicpa.org/download/news/2005_0522a.pdf). Overwhelming majorities of business decision makers (80%) and executives (70%) said CPAs and the profession had done what was necessary to prevent recurrences of the accounting scandals. A smaller majority (52%) of investors agreed, but very many (71%) said they weren’t familiar with the Sarbanes-Oxley Act. All three groups said CPAs help fight or prevent fraud (85%, 75% and 78%, respectively). In addition, survey participants rated CPAs higher than in 2003 on reliability, integrity, ethics and commitment to the profession’s rules. Penn, Schoen & Berland Associates conducted the survey, in March 2005, of more than 500 decision makers and executives and an equal number of investors.

The Government Accountability Office issued guidance (www.gao.gov/govaud/ybcpe2005.pdf) to auditors and audit organizations for implementing the continuing professional education (CPE) requirements prescribed by the 2003 revision (www.gao.gov/govaud/ybk01.htm) of Government Auditing Standards (GAS), also known as the yellow book. The guidance expands and modernizes the types of programs and the list of subjects that could satisfy CPE requirements under GAS. Its provisions are effective for CPE measurement periods that began on or after June 30, 2005.

The Financial Accounting Standards Board (FASB) issued Statement no. 154, Accounting Changes and Error Corrections, a replacement of APB Opinion no. 20 and FASB Statement no. 3 (www.fasb.org/pdf/fas154.pdf). It applies to all voluntary changes in accounting principle and to changes required by an accounting pronouncement if the pronouncement does not include specific transition provisions, and it changes the requirements for accounting for and reporting them. Unless it is impractical, the statement requires retrospective application of the changes to prior periods’ financial statements. The guidance is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. Earlier application is permitted for such changes and corrections made in fiscal years that started after June 1, 2005.

The Public Company Accounting Oversight Board (PCAOB) issued guidance in the form of questions and answers (Qs & As) for auditors (www.pcaobus.org/standards/staff_questions_and_answers/index.asp). They concern attest engagements relating to information that companies furnish under the SEC’s XBRL Voluntary Financial Reporting Program on the EDGAR system (www.sec.gov/spotlight/xbrl.htm). The Qs & As provide independent auditors with performance and reporting guidance when the auditor is engaged to report on whether a company’s voluntarily filed XBRL data accurately reflect the corresponding information in its official EDGAR filings.

The AICPA Auditing Standards Board (ASB) laid the groundwork for this guidance with its AT 101 Interpretation, Attest Engagements on Financial Information Included in XBRL Instance Documents, issued in September 2003. The AICPA XBRL Assurance Task Force soon will issue an illustrative examination program for practitioners.

The SEC program does not require public companies to obtain an auditor’s attestation regarding the XBRL data. But if a public company voluntarily chooses to obtain such an attestation, it should consult the PCAOB’s Qs & As for practical guidance.

The Auditing Standards Board (ASB) has exposed (www.aicpa.org/members/div/auditstd/) several risk assessment standards that it originally exposed in 2002 and an amendment to Statement on Auditing Standard (SAS) no. 1, Due Professional Care in the Performance of Work (AU sec. 230). If approved, the proposed SASs would establish standards and provide guidance on the auditor’s assessment of the risks of material misstatements in a financial statement audit, on the design and performance of audit procedures whose nature, timing and extent respond to the assessed risks and on planning and supervision, audit evidence and audit risk and materiality. Comments are due August 15, 2005.

The Treasury Department and IRS issued Notice 2005-42, which allows employers to modify flexible spending arrangements (FSAs) to extend the deadline for reimbursement of health and dependent care expenses up to 2.5 months after the end of the plan year (www.treas.gov/press/releases/reports/n0542.pdf). Previously, employees forfeited any FSA funds they did not use by the end of the year.

The Governmental Accounting Standards Board (GASB) added a volume to its User Guide series for nonaccountants. What Else You Should Know about a Government’s Finances: A Guide to Notes to the Financial Statements and Supporting Information explains how to assess a state or local government’s financial health and is available from GASB at www.gasb.org/pub or at 800-748-0659.

The International Accounting Standards Board (IASB) issued a single-volume edition of its official pronouncements made through January 1, 2005 (www.iasb.org/uploaded_files/documents/). International Financial Reporting Standards (IFRSs) Bound Volume 2005 provides the complete consolidated text of the latest version of IFRSs (including international accounting standards and interpretations) and the supporting documents—bases for conclusions, implementation guidance and illustrative examples. Also included are editorial corrections made to the 2004 edition. The new volume can be ordered on the Web at www.iasb.org or by e-mail at publications@iasb.org.

The Federal Trade Commission (FTC) issued as final a rule that, as of June 1, 2005, requires businesses and individuals to judiciously dispose of sensitive information from consumer reports (www.ftc.gov/opa/2005/06/disposal.htm; www.ftc.gov/os/2004/11/041118disposalfrn.pdf). The standard, known as the Disposal Rule, is part of the Fair and Accurate Credit Transactions Act of 2003. Members in public practice and industry should inform their clients and employers of the rule’s provisions, which permit affected organizations and individuals to identify disposal measures that correspond to the sensitivity of the information, the costs and benefits of various disposal methods and changes in related technology. Financial institutions subject to the Disposal Rule and the Gramm-Leach-Bliley Safeguards Rule, which requires institutions to protect sensitive customer information, should add related practices to the information security program the Safeguards Rule requires them to establish (www.ftc.gov/privacy/privacyinitiatives/safeguards.html).

SEC Chairman William H. Donaldson resigned on June 30, 2005, more than two years after President George W. Bush appointed him to the post. At press time, the president had nominated Rep. Christopher Cox (R-Calif.) as Donaldson’s successor, subject to confirmation by the Senate.

The AICPA governing council approved a resolution to return the PCPS acronym to the full title it had replaced: Private Company Practice Section (www.aicpa.org/pcps). Council also affirmed the section’s principle mission of helping practicing CPAs and their firms succeed.

The AICPA is accepting nominations until August 31, 2005, for distinguished public service awards to individual CPAs and firms. Institute members, state societies and associations of firms are eligible to submit nominations. Information is available from Jay Rothberg (212-596-6005; jrothberg@aicpa.org); an overview, guidelines and nomination forms can be downloaded at www.aicpa.org/members/nominationforms.htm.

The JofA won a Trade Association Business Publication International (TABPI) 2005 Tabby Award for its Fraud Beat column, which earned honorable mention among nearly 700 editorial and design entries from around the world.