Editorial Staff

Publisher/Editor-in-Chief
Colleen Katz

Managing Editor
Elizabeth Uva

Senior Editors
Katharine W. Coveleski
Laura Fischer
Peter D. Fleming
Michael Hayes
Robert Tie
Stanley Zarowin

Senior Assistant Editor
Sarah Cobb

Assistant Editor
Vincent Nolan

Contributing Editors
Anita Dennis, Lesli S. Laffie
Joan Mancuso, Barbara J. Shildneck

Production Director
Peter M. Tuohy 

Art Director
Jeryl A. Costello

Production Manager
Gene Cioffi

Senior Manager—
Production Services—
Publishing Technology
Robert DiCorcia

Production Editor
D. Hillel Lofaso

Senior Production Associates
Valrie Mason, Ingrid Medina

Art Assistant
Patricia L. Arrington

Associate Publisher
Thomas R. Greve

Advertising Team Manager
Karin DeMarco

Advertising Representatives
Gwenn M. Paness
Joseph Torres 

Advertising Coordinator
John Weinberg

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e-mail: joaed@aicpa.org

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Highlights

INSTITUTE, OTHERS ISSUE ANTIFRAUD GUIDE FOR BUSINESS
The AICPA joined six other professional associations in offering boards of directors, audit committees and corporate managers practical advice on preventing and detecting malfeasance ranging from unproductive behavior and minor theft to misappropriation of assets and falsified financial statements. This effort coincides with the ASB’s recent issuance of SAS no. 99, Consideration of Fraud in a Financial Statement Audit (see “Auditors’ Responsibility for Fraud Detection” and Official Releases, page 105), which is the cornerstone of the Institute’s comprehensive antifraud and corporate responsibility program. A new Antifraud Resource Center (http://antifraud.aicpa.org/) on the AICPA Web site contains tools, information and support to help practitioners spot and thwart fraud.

The seven associations presented their recommendations in a document titled Management Antifraud Programs and Controls (http://antifraud.aicpa.org/Resources/Auditors
/Understanding+Programs+and+Controls/Exhibit+to
+SAS+No.+99+Management+Antifraud+Programs+
and+Controls.htm) that the AICPA appended to SAS no. 99 as an exhibit. In their view businesses that implement three key practices will improve their ability to conserve revenue, enhance their market value, avert civil lawsuits and maintain a positive corporate image.

Create a culture of honesty and high ethics. As role models for other employees’ behavior, directors and officers have a unique capability to promote policies that represent all stakeholders’ interests. The recommendations therefore focus on how senior managers can fulfill this responsibility. One way, for example, is to clearly communicate to employees management’s desire to achieve its strategic goals, but not at the expense of truthful financial reporting.

Evaluate antifraud processes and controls. Employees seldom engage in fraudulent financial reporting or misappropriate assets without thinking they can commit and conceal such fraud or their part in it. Organizations therefore should identify and measure fraud risks, take steps to mitigate them and implement and monitor effective internal controls that discourage and detect wrongdoing.

Develop an appropriate oversight process. While management and internal auditors play important roles in fraud prevention and detection, the recommendations stress the audit committee’s role in the company’s antifraud activity. For example, it should evaluate management’s identification of fraud risks, implementation of antifraud measures and approach to fraud prevention and detection. The audit committee also should ensure senior management establishes antifraud measures to protect investors, employees and other stakeholders and it should help the board of directors meet its responsibility to oversee the company’s financial reporting procedures and internal control system.

Working with the Institute to develop the recommendations were the Association of Certified Fraud Examiners, Financial Executives International, the Information Systems Audit and Control Association, the Institute of Internal Auditors, the Institute of Management Accountants and the Society for Human Resource Management. The American Accounting Association, the Defense Industry Initiative on Business Ethics and Conduct and the National Association of Corporate Directors also participated in the effort.

FASAB ISSUES ED ON INTRADEPARTMENT COSTS
The Federal Accounting Standards Advisory Board issued a proposed interpretation of Statement of Federal Financial Accounting Standards no. 4 on managerial cost accounting standards and concepts (www.fasab.gov/pdf/aiic.pdf). According to the draft, which addresses accounting for imputed intradepartmental costs, paragraph 110 of SFFAS no. 4 does not limit the recognition of such costs, which should be accounted for according to the statement’s full-cost provisions. Comments are due January 8.

Editorial Advisers

Kenneth D. Askelson, James Bean, Phyllis Bernstein, John C. Boma, Jacob R. Brandzel, Steven J. Brown, Jolene C. Brucks, Thomas F. Burrage, Linda Burt, J. Gregory Bushong, R. Patrick Cargill, Benson J. Chapman, Rosemarie T. Dunn, Thomas Emmerling, Elizabeth Fender, Robert J. Freeman, John S. Gibbons, Alan Glazer, Randi K. Grant, Patrick T. Hanratty, DeAnn Hill, James E. Hunton, Frank J. Kopczynski, Jeffrey B. Kraut, Dennis B. Kremer, William F. Laurie, Alan Levin, John Lewison, Joseph P. Liotta, Mano Mahadeva, Benjamin F. Mathews, David McIntee, Anita Meola, Debra Mitchell, Roger Molvar, Brenda Morris, Craig Murray, Lyne P. Noella, Edward T. Odmark, Stanley Person, Mary P. Ricciardello, Mark L. Richardson, Marshall B. Romney, Peggy Scott, Carolyn Sechler, Gary Shamis, Ivan J. Sotomayor, Alan Steiger, Paul C. Sullivan, Gary R. Trugman, Robert Willens, Mark A. Yahoudy