Audit, Compliance and Risk Blog

On May 22, 2013, the Financial Accounting Foundation (FAF) issued a post-implementation review (PIR) report on the accounting rule that the Financial Accounting Standards Board (FASB) prescribes for business combination accounting—specifically, FASB Statement No. 141 (Revised 2007), Business Combinations, now codified into FASB Codification Topic 805. In general, the report found that Statement 141(R) improved rules for the purchase method of accounting for business combinations but that problems remain, particularly in relation to fair value measurements. The PIR report also acknowledges unexpected compliance costs for companies that have applied the requirements in Statement 141(R).

As you look around your office, are there any summer interns working away?  And if so, are they being paid for their efforts, are they receiving academic credits, or are they working to build their resumes, portfolios and connections?

Traditionally, industrial facilities have used fossil fuels such as coal, oil, and natural gas as their main source of energy. Over the years, however, facilities have sought to replace some or all of their fossil fuel with less expensive and more efficient alternative fuels from secondary materials. The Environmental Protection Agency (EPA) has regulated the combustion of such wastes under the Resource Conservation and Recovery Act (RCRA). Under RCRA, some of these secondary materials are classified as ''hazardous wastes,'' while others are referred to as ''non-hazardous secondary materials.'' Facilities that combust ''solid waste'' as defined by EPA under RCRA must be regulated by emission standards issued by EPA under section 129 of the Clean Air Act (CAA).

Persons over 40 years old form a protected class under the Age Discrimination in Employment Act (ADEA) of 1967. Although separate from Title VII of the Civil Rights Act of 1964, ADEA provides protections similar to those preventing discrimination based on sex, race and religion. It applies to each employer “engaged in commerce who has twenty or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year.” It is administered by the Equal Employment Opportunity Commission (EEOC), which promulgates regulations and guidelines similar to those for Title VII and the Americans with Disabilities Act.

Organizations with a well-established ISO 14001 Environmental Management System (EMS) are discovering a new advantage as the issue of “social responsibility” becomes more widespread throughout business communities. EMS managers are finding that techniques and methodology from their EMS can be used to identify and prioritize social responsibility issues and efficiently integrate them into their organization. Furthermore, managers building an EMS system are able to develop it in concert with social responsibility initiatives.

On May 28 Walmart bundled guilty pleas in a number of pending federal cases alleging environmental compliance violations at some of the company’s 4600+ stores in the U.S.  These arose because Walmart had not implemented a corporate hazardous waste management program until January 2006, leaving locations to manage—or mismanage—such wastes.

In 1990, the Americans with Disabilities Act (ADA) was enacted to protect the employment rights and opportunities of people with disabilities, and ensure their access to public services and accommodation. In September 2008, the ADA Amendments Act of 2008 repudiated several U.S. Supreme Court decisions interpreting ADA narrowly, and provided additional clarifications intended to ensure the broad availability of ADA’s protections. The U.S. Equal Employment Opportunities Commission (EEOC) develops and applies employer standards, facilitates lawsuits by aggrieved employees, and can enforce ADA directly by filing its own lawsuits.

Ensure Your Facility Meets Final EPA New Source Performance Standards for CISWI Units

On February 7, the Environmental Protection Agency (EPA) issued a final rule (78 FR 9112) amending the new source performance standards for commercial and industrial solid waste incineration units. This action sets forth the agency’s final decision on a number of issues for which it granted reconsideration of the final rule titled “Standards of Performance for New Stationary Sources and Emissions Guidelines for Existing Sources: Commercial and Industrial Solid Waste Incineration Units” (CISWI rule) that was issued in March 2011. The final rule establishes effective dates for the standards and makes various technical corrections to clarify definitions, references, applicability, and compliance issues.

The latest regulator to establish a formal policy offering companies incentives to self-police is the Public Company Accounting Oversight Board (PCAOB), which regulates the accountants that audit the books for public companies and broker-dealers and help prepare their periodic reports.  On April 24, PCAOB issued its “Policy Statement on Extraordinary Cooperation in Connection with Board Investigations.”  This Policy Statement formalizes guidance to auditors, explaining how PCAOB’s inspection and enforcement personnel view regulated entities’ willingness to go beyond mere compliance, by taking steps such as:

The accounting standard-setter for companies in the United States, the Financial Accounting Standards Board (FASB) is celebrating its 40th anniversary this year—and for all 40 years of the FASB’s existence, I have been practicing as a certified public accountant (CPA), both in public and industry accounting. I currently author this blog and work on a consulting basis with companies to help them understand the accounting rules as well as the way in which they are developed and issued by the FASB and other standard-setters. From this perspective, I will provide a mix of historical facts and some of my own personal views on the development of U.S. accounting rules.