What we also discovered in putting the list together was that in some instances, it became impossible to separate the captain from the team. This year’s D100 is a case in point: Our editors and board of advisors were nearly unanimous in our selection of President Barack Obama as this year’s most powerful corporate governance influence. And yet, to do justice to the seismic shift his policies have brought about in the boardroom, we also had to recognize the many other  “New Voices” in the Administration who are now leading the greatest financial reform of American business since the 1930s.

So, we ask that in the pages ahead you pay more attention to who counts, and less to how we count, in arriving at our final selection of individuals and institutions that have met the requirement to be “most influential.” We think you’ll agree it’s an intricate and impressive mosaic where the whole equals much more than the sum of its parts, which may or may not be greater than 100.

Regulators & Rulemakers

Team Obama
It is often written that reasonable people may disagree, and with Americans and their Presidents, it is practically a way of life. But even an unreasonable person could only conclude that this President and his Administration are having a profound and lasting influence over the boardroom. President Barack Obama has demonstrated an enormous capacity for calm in uncertain times. His relative youth leads to frequent comparisons to John F. Kennedy and his communications skills to those of Ronald Reagan. But it is his aggressive response to the unparalleled economic challenges that greeted him at the dawn of his young presidency that harkens back to an earlier figure of towering influence,  Franklin D. Roosevelt.

FDR’s massive social and financial reform programs—the creation of Social Security as part of the New Deal, the establishment of the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Company (FDIC)—helped restore confidence in the nation’s banking system coming out of the Great Depression. One could plausibly take major portions of FDR’s New Deal and substitute his name with President Obama’s.  The implementation of the $787-billion American Economic Recovery Act one month after Obama took office, coupled with his handling of the Troubled Asset Relief Program (TARP), which sought to strengthen the financial sector by buying up the assets and equity from troubled banks, has clearly helped the nation avoid further financial disaster and put the economy on the path to recovery.

And finally, turning again to the FDR playbook, Obama assembled a team of wise men and women, formidable economic and business minds, whose decisions are having a lasting effect on the role of the corporate director. Preeminent among them was the choice of Rahm Emanuel as chief of staff. Described as a veritable “influence machine,” within the Administration and Congress, the former Congressman from Obama’s home state of Illinois is known as a hard-charging, brutally candid, sometimes combative, acutely intelligent man who can get things done and knows the ways of the Capitol and the boardroom.

The Enforcers
Perhaps second only to Obama in terms of her influence on boards and corporate governance, career regulator Mary Schapiro heads up the 75-year-old SEC. Before the crisis, the agency’s very existence was in question: “Obsolete,” “out of touch,” and “behind the times” were just some of the many terms uttered by detractors. The Commission, under former chairman Christopher Cox, was pilloried for missing the Madoff scandal.

As former SEC chairman and Directorship 100 Hall of Famer, Arthur Levitt described her: “She has the skills, the intellect, and the character to be a superb SEC chair.” But Schapiro will face a new kind of challenge in the role, not just that of proving her own qualifications, but also instituting a significant remodeling of the SEC itself, as she works to bring it into the new regulatory era.

Moving swiftly to address regulatory concerns in the wake of the financial crisis, the SEC has rolled out a series of proposals that could embody the biggest change to the rules of the game for directors in some time. Schapiro, who is no stranger to the boardroom, having served on the boards of Duke Energy and Kraft Foods, has overseen proposed rule changes on proxy access, broker voting, say on pay, and new requirements for disclosure on executive compensation and director qualifications. It’s now up to her and fellow commissioners Kathleen Casey, Elisse Walter, Luis Aguilar, and Troy Paredes to determine the final regulations that emerge from the proposals.

Other key players Schapiro has brought into the SEC include Senior Advisor Kayla Gillan, Chief Accountant James Kroeker, and Director of Enforcement Robert Khuzami. Gillan was a founding board member of the Public Company Accounting Oversight Board (PCAOB) and former general counsel to CalPERS. Kroeker joined the SEC as deputy chief accountant in 2007 from Deloitte and Touche where he had been a partner in the firm’s national accounting services group. Kroeker recently said that the proposed road map for the convergence of International Financial Reporting Standards,pushed to the back burner amid the larger issues of market reform, would be restored as another top priority. Khuzami is a former federal prosecutor, has pledged to improve the SEC’s enforcement performance by creating specialized units to provide “structure and resources for staff to ‘get smart’ about certain products, markets, regulatory regimes, practices and transactions.”

TARP Overseers
Another example of Obama’s preference for brains over politics was his reappointment of Sheila Bair to chair the FDIC. Another fiscally conservative Republican, on Bair’s watch alone this year, 94 banks have failed, creating a new challenge:  how to replenish the fund. Bair has also been an integral part of the team overseeing TARP. Neil Barofsky is a former New York assistant attorney general confirmed by the Senate in December as special inspector general. Dubbed the “TARP Cop,” his job is to figure out how and where the $700-billion TARP funds are spent, reporting directly to the President and providing updates to the Congressional Oversight Panel chaired by bankruptcy expert and Harvard Law School professor, Elizabeth Warren. COP’s first report, released in February, casti-  gated then-Treasury Secretary Henry Paulson for his performance and lack of transparency, reporting that the Treasury Department  had overpaid by $78 billion for the assets it bought from banks.

Interestingly, while Obama sponsored and was a strong proponent of  “say on pay” legislation while a senator, since appointing Kenneth Feinberg special master of compensation, he has appeared unwilling to make the issue a top priority. Feinberg, who has immersed himself in some of the country’s most troublesome and high-profile cases, is considered a superb choice, both in terms of skill and temperament, by Capitol Hill insiders. His most noteworthy case was the 33 months of pro-bono work he did following the 2001 terrorist attacks to determine how much each victim would receive from the federal government’s September 11th Victim Compensation Fund.

Feinberg may in fact be perfectly suited for a job that most compensation specialists see as thankless, and possibly as a “no win” situation. As the Obama Administration’s comp expert, Feinberg was called on to monitor the compensation of executives in what were once some of America’s most prestigious corporations, now TARP recipients, including American International Group (AIG), Bank of America, Citibank, Chrysler, GMAC, and General Motors.

Fed to the Rescue
To prevent American capitalism from spiraling deeper into the abyss, nine months after President Obama made his first Cabinet announcement, he re-nominated Ben Bernanke as Federal Reserve chairman. The former Princeton economics professor was selected by Bush in 2005 to succeed Alan Greenspan. In 2008 after the market crashed, Bernanke invoked emergency powers, slashed interest rates, and spent trillions of dollars to right the financial system. Just last month, he declared the recession “likely over.” Though he seldom gives interviews, Bernanke is never far from the public eye and has been a stalwart in the transition between presidential administrations and in the effort to stem the economic slide.

When then President-elect Obama named his economics team, it included players who, like Bernanke, were already steeped in the crisis details, demonstrated a studied understanding of Depression-era economics, or some combination of both. Enter Treasury Secretary Timothy Geithner and Chief White House Economic Advisor Lawrence H. Summers. Geithner, who is currently pushing legislation to provide more systematic regulation of financial institutions, including new limits on executive compensation, recently told one interviewer that he is optimistic major reforms will be passed.

Prior to his appointment replacing Henry Paulson, Geithner was president of the Federal Reserve Bank of New York and part of the team central to the critical negotiations that resulted in Bear Stearns being tucked into JPMorgan Chase, Merrill Lynch going to Bank of America, Lehman Bros. disappearing, and Citigroup and other struggling banks getting a lifeline.

Summers, the former Harvard University economist who became its president following his tenure as Treasury Secretary to President Clinton, is director of the Cabinet’s National Economic Council. The group was established in 1993 to coordinate and ensure that the President’s economic policy agenda is carried out.

Rounding out the team, Paul Volcker, the former Fed chief under Clinton, was selected to chair the president’s economic recovery advisory board. And Christina Romer, a former UC Berkeley economist, who administration sources suggest is well- regarded by both parties, chairs the Council of Economic Advisers. Her appointment was seen as a further triumph of brain over politics in Obama’s approach to talent recruitment.

The results of this sometimes-contentious public dialogue have far-reaching implications for corporate directors and the rest of the American business community. At the most basic level, the pronouncement issued by FASB last spring gives enhanced guidance to companies and their external auditors regarding the application of fair value, with a specific emphasis on the use of judgment. Beyond this concrete change, the fair-value debate has also created fresh questions and new public scrutiny around the role of FASB as an independent standard setter.

On the Mark?
The term “fair value” accounting, also known as “mark-to-market,” refers to the practice of using available market information to estimate the price an asset would be worth if it were sold or the cost to settle a liability. The basic principle of using market information to value at least some assets dates back over thirty years. During the last 15 years, FASB has adopted standards that have expanded and refined the application of fair-value accounting, because it has been widely viewed as an important driver of increased transparency. Put simply, applying market information to value assets and liabilities gives investors relevant information about the economic realities of the companies in which they choose to invest.

Blackstone Group Chairman Stephen Schwarzman vigorously campaigned against fair value, calling it “pro-cyclical.”

Investor demand for increased transparency has only grown over the years. The savings and loan failures of the 1980s spurred the wider application of fair-value rules. With the passage of the Sarbanes-Oxley Act of 2002, the audit committees of corporate boards were given a more prominent role in the hiring of external auditors and greater oversight of the audit process, including the application of fair-value accounting. As fair value was increasingly viewed as an important tool for improving investor access to valuable information, there was a perceived lack of a single, consistent definition for the term, or clear guidance for its application. In order to address those concerns, in 2006 FASB promulgated FAS 157. This action by FASB did not “create” fair-value accounting or somehow tighten standards; rather, FAS 157 simply established a uniform definition of what “fair value” means and provided a consistent framework for its continued application.

The introduction of FAS 157 was hardly noticed by those outside the accounting profession. In 2006, when the standard was issued, the capital markets were strong and asset holders were apparently satisfied with the prospect of marking the value of assets to the pricing information provided by markets prevailing at that time. For calendar year-end companies, the new standard would apply to financial statements for the period beginning Jan. 1, 2008, and in 2006 there was no reason to assume that 2008 would pose a problem with respect to market values. But the world was about to change.

The Fair-Value Spiral
By late 2007 and into 2008, the global credit crisis began to take hold. Asset-backed securities, particularly those tied to sub-prime mortgages, began to collapse in value as the housing market softened. Securities that had been considered relatively safe investments were suddenly revealed as highly risky. As the markets for these assets seized up, financial institutions were forced to take substantial write-downs. The write-downs reflected losses in the underlying value of assets that then led to the collapse in the market valuation of these firms, raising concerns about their ability to meet their regulatory capital requirements.
In the face of the growing crisis, the financial industry and others began seeking emergency remedies. Among the various options, attention quickly zeroed in on fair-value accounting. One of the dilemmas critics of the accounting model raised was, what happened when the market became illiquid and pricing information scarce?

In April 2008, Steve Forbes, who would become a leading fair-value opponent, published an opinion piece urging the Bush administration to temporarily suspend mark-to-market accounting. Blackstone Group Chairman Stephen Schwarzman vigorously campaigned against fair value, calling it “pro-cyclical.” Former Federal Deposit Insurance Corporation chairman William Isaac, along with former House Speaker Newt Gingrich, joined this chorus of voices calling for changes to, or suspension of, fair value. Trade associations including the American Bankers Association (ABA), the Independent Community Bankers Association (ICBA), and others stepped into the fray, arguing that fair value is not the most relevant measurement for financial instruments.

On the other side of the issue, proponents of fair value accounting, including the Council of Institutional Investors (CII), the Consumer Federation of America, and the Chartered Financial Analysts (CFA) Institute, as well as the Center for Audit Quality, issued a series of open letters and public statements arguing that fair-value accounting was not the cause of the credit crisis, nor would its suspension resolve it. Rather, these groups argued that fair-value accounting provides investors with critical transparency into the economic realities of public companies. They argued further that undue outside pressure should not be allowed to compromise the independent standard setting process.

The fair-value debate continued to intensify over the fall and into the winter of 2008-2009 as the financial crisis deepened. When Congress approved the Emergency Economic Stabilization Act, creating the Troubled Asset Relief Program (TARP) to protect the solvency of 19 of the nation’s largest financial institutions, it directed the Securities and Exchange Commission to study the issue.

In December, the SEC issued its report, which concluded that fair-value accounting had not caused the credit crisis and argued against suspending or substantially changing the standards. Rather, the report indicated that bank failures in the United States appeared to be the result of growing probable credit losses, asset quality concerns, and, in certain cases, eroding lender and investor confidence. While the SEC was clear in its judgment, the debate continued.

To help restore confidence in reporting and in the markets, the Financial Accounting Standards Board (FASB) is rushing out an unusually heavy dose of disclosure requirements. In a flurry of last-minute standard-setting activity, some new requirements were issued or have been proposed, with the expectation that the changes would be applied to calendar- year 2008 financial statements; a second round of disclosure requirements is likely to be issued and implemented this year.

For the most part, the areas targeted by the FASB for more robust disclosures are those where the related risks are neither visible nor well understood by investors, analysts, and regulators. Many of these areas—off-balance sheet entities, derivatives, and retirement plan assets—figured prominently in the news headlines as the aftershock from the large losses reported by major financial institutions reverberated through the world’s economy.

Investors want credible financial reporting, and companies want to provide meaningful data in the notes to the financial statements. Many will find the new FASB disclosure requirements both timely and helpful. But even a cursory review of the extent of the changes made last year and contemplated for this year can’t help but raise a few questions.

The most critical questions are:

• Are the expanded disclosures sufficient to restore confidence in financial reporting and address the deficiencies revealed by the financial crisis of 2008?
• Are all of the additional disclosure costs justified?
• Is the guidance sufficiently specific and standardized so that companies can follow it and investors can locate it easily?

What can be done to ensure meaningful disclosures in the future?

While a complete set of answers is elusive, a few observations seem painfully clear. First, there is little doubt that investors were caught by surprise by unforeseen risks; some major corporations were taken by surprise, too, and didn’t fully understand the extent of the risks they were taking. Second, although these are unusual times and it is understandable that new standards are being rushed out, our instincts tell us a more systematic and comprehensive approach to disclosures would be preferred in the future.

Could the financial reporting community work together to accomplish that goal? Based on our analysis of the disadvantages of piecemeal disclosures, the short answer is “Yes. We can and we should.”

There are three key drawbacks to today’s piecemeal approach to disclosure requirements:

1. Disclosures are no substitute for sound accounting. No matter how extensive, voluminous, and well-intentioned, disclosures are no substitute for good accounting principles. Increasingly, to provide flexibility in scheduling projects, the FASB appears to be using added disclosure requirements as bridges to better accounting that have not yet been agreed upon with the International Accounting Standards Board (IASB). In effect, the establishment of disclosure requirements on an ad hoc, project- by-project basis becomes a temporary measure when time is too tight to promulgate significant accounting changes and allow companies sufficient time to transition to sounder practices. This approach is sub-optimal because the disclosures become a compromise solution and the series of short-term fixes adds up to more changes than necessary.

2. No sunset process. If disclosure requirements must be established on a piecemeal basis, this process would best be accompanied by a sunset process for reevaluating disclosure requirements periodically, and removing the ones that may have been rendered unnecessary by subsequent changes in accounting requirements of related standards. Currently, the FASB does not have a process of this nature. While a full review of all disclosures could be a daunting task, there is a common theme underlying many of the disclosure requirements added in 2008 (i.e., the need for improved transparency of risks and uncertainties). Perhaps this aspect of disclosures could be singled out for special review, similar to the way the board reviewed all references to fair-value measures in connection with the issuance of FASB Statement No. 157. The goal would be to simplify the literature and combine individual requirements into general requirements wherever possible.

3. No 21st Century Disclosure Initiative. Without a periodic review of the FASB’s disclosure requirements, the United States may fall behind other countries in the move toward interactive data as described in the Securities and Exchange Commission staff report, “Toward Greater Transparency.” Prepared as part of the SEC’s 21st Century Disclosure Initiative, the report describes survey results that show many readers already find U.S. disclosure documents too long and wordy; they prefer to get their information another way, such as through a broker or financial analyst.

A more systematic and comprehensive approach to disclosures should, at a minimum, encompass the following steps:

-  Establish objectives and the purpose of disclosure. Who is the target user of the disclosures? Existing disclosure requirements seem inconsistent. Some appear to be providing context for understanding financial statements. Others appear to be patches for underlying bad accounting that the FASB hasn’t been able to fix yet. Still others appear to have become the primary source of information about a particular set of transactions.

Similar inconsistency exists with respect to the target audience. Some disclosures appear to be oriented to a reasonably educated reader, while others are more detailed and appear to be oriented to a professional securities analyst. The right audience is the reasonably educated reader of general- purpose financial statements; the additional detail that securities analysts want should be provided in statistical supplements.

-  Integrate related disclosures rather than having them appear in separate notes to the financial statements. Because disclosure requirements are established on a piecemeal basis, standard-by-standard, companies often provide each set of disclosures in a separate note to the financial statements. The FASB should seek to identify relationships among disclosures and encourage companies to integrate disclosures for related transactions, even if the requirements arose in different standards.

-  Streamline existing disclosure requirements, eliminating redundancies and excessive detail. Disclosure requirements are established on a piecemeal basis, so redundancies arise. A comprehensive approach would identify and eliminate redundancies. The level of detail among disclosure requirements also varies significantly. A comprehensive approach would identify areas of excessive (or missing) detail and conform all to a more consistent approach.

-  Consider disclosure requirements for both GAAP (generally accepted accounting practices) and IFRS (international financial reporting standards), with an objective of conforming them. The FASB and IASB have established disclosures on a standard- by-standard basis. A comprehensive review could identify strengths and weaknesses of each set of disclosure requirements and choose the better of the two.

-  Consider current GAAP and SEC requirements with an objective of conforming them and eliminating redundancies. The SEC’s disclosure requirements for Management’s Discussion and Analysis (MD&A) go beyond GAAP in some respects and duplicate GAAP in others. Some registrants duplicate large blocks of text in both MD&A and the notes to financial statements. Redundancies exist between the notes and the Business and Contingencies sections of registration statements.

Given the integration of U.S. GAAP into the SEC’s interactive data rules and the lessons learned from the current financial and economic crisis, the FASB should add a comprehensive disclosure initiative to its agenda and make it a priority.

Ben Neuhausen is national director of accounting at BDO Seidman LLP. Contact him at: bneuhausen@bdo.com.

The financial-services industry wants to delay an accounting rule that would force banks and others to bring some of their off-balance-sheet vehicles back into their books next year, which could force some companies to raise additional capital, reports The Wall Street Journal.

The Chamber of Commerce, the Mortgage Bankers Association, and the American Council of Life Insurers and others sent a letter on June 1 to Treasury Secretary Timothy Geithner, regarding the off-balance-sheet accounting-rule change. He believes it should be adopted “cautiously and seek to minimize any chilling effect on our frozen credit markets.”

The letter was signed by 16 industry associations, many a part of the group “Fair Value Coalition.” Some accounting experts are not surprised by the proposed delay. “Here we go again. They will get out their checkbooks and go to the Hill,” says Lynn Turner, the Securities and Exchange Commission’s former chief accountant.

The rule “includes securitization vehicles that played a large role in the bubble and allowed banks to operate with low levels of capital even though they had exposure to these assets that weren’t on the balance sheet,” says accounting analyst Robert Willens.

The financial-services industry wants to delay an accounting rule that would force banks and others to bring some of their off-balance-sheet vehicles back into their books next year, which could force some companies to raise additional capital, reports The Wall Street Journal.

The Chamber of Commerce, the Mortgage Bankers Association, and the American Council of Life Insurers and others sent a letter on June 1 to Treasury Secretary Timothy Geithner, regarding the off-balance-sheet accounting-rule change. He believes it should be adopted “cautiously and seek to minimize any chilling effect on our frozen credit markets.”

The letter was signed by 16 industry associations, many a part of the group “Fair Value Coalition.” Some accounting experts are not surprised by the proposed delay. “Here we go again. They will get out their checkbooks and go to the Hill,” says Lynn Turner, the Securities and Exchange Commission’s former chief accountant.

The rule “includes securitization vehicles that played a large role in the bubble and allowed banks to operate with low levels of capital even though they had exposure to these assets that weren’t on the balance sheet,” says accounting analyst Robert Willens.

“Offshore accounts harbor billions of dollars, and people should take notice that the secrecy surrounding these deals is rapidly fading.”

IRS Commissioner Doug Shulman, 2008

Even individuals and businesses which do not intentionally use foreign bank accounts to maintain assets secretly should take note of increasingly stringent disclosure requirements in the United States for such accounts and should be mindful that the civil and criminal penalties associated with noncompliance have increased in both likelihood and magnitude. A perfect storm of recent factors – increased cooperation from foreign banks known for secrecy and aggressive legislation strengthening the Internal Revenue Service arsenal – has elevated foreign bank accounts into a topic that cannot be ignored.

Taxpayers with foreign bank accounts aggregating more than $10,000 at any time during the year must disclose the existence of such accounts on Form TDF 90-22.1 (Report of Foreign Bank and Financial Accounts or “FBAR”). While the FBAR originated in 1970 from the Bank Secrecy Act, significant revisions to the form and associated penalties for noncompliance have garnered attention. In addition, the FBAR is not filed with a tax return. Instead, the FBAR must be filed by June 30 (no extensions are available) each year. The general purpose of the FBAR is to provide disclosure of financial or other interests (e.g., signatory authority) in financial accounts located in foreign jurisdictions.

First, recent revisions have expanded the FBAR in terms of coverage. Previously, the FBAR was required to be filed by any United States person. The term “United States person” encompassed a citizen or resident of the United States, a domestic partnership, a domestic corporation, or a domestic estate or trust. Now, with the recent revision, “United States person” includes “a person in and doing business in the United States.” Hence, a foreign person in and conducting business in the United States may now be required to file an FBAR. The definition of “financial account” has also been broadened to include mutual funds, deficit card and prepaid credit accounts in addition to any bank, securities, securities derivatives or other financial instruments accounts.

The expansion in FBAR coverage permeates the area of pass-through entities as well. In general, a United States person (as defined more broadly above) must file an FBAR if owning more than 50% of the total value of the shares of stock in a foreign corporation with a financial account abroad. This applies to a partnership or S corporation but, in addition, any partner or shareholder directly or indirectly owning more than 50% of the foreign corporation will be required to file an FBAR individually. To illustrate, consider a domestic partnership that owns 60% of a United Kingdom limited company. If a domestic partner owns a 90% interest in the partnership, both the partnership and the partner must file an FBAR separately. Hence, taxpayers should closely scrutinize their interests in partnerships and S corporations to gauge their reporting obligations.

Second, penalties associated with the FBAR have increased in recent years. In general, absent a willful violation, the maximum penalty is $10,000. By contrast, civil penalties for willful violations have increased to the greater of $100,000 or 50% of (1) the amount of the transaction for a violation involving a transaction or (2) the underlying account’s balance at the time of violation. Criminal violations of FBAR requirements may result in a $250,000 fine and five years of imprisonment. Additionally, if the FBAR violation is in tandem with another violation of law, the fine is potentially $500,000 and 10 years’ imprisonment. These penalties can be illustrated as follows:

For a limited time, taxpayers may avoid potential criminal prosecution by participating in a voluntary disclosure program reporting offshore bank accounts and assets. The six-month program was initiated on March 23, 2009. Taxpayers that participate in this program will be subject to pay back taxes and interest for the previous six years and a special 20% penalty in addition to other penalties that may apply. (For a further description of this program, please visit http://www.eisnerllp.com/Nep/News.aspx?id=4021.) Taxpayers should also take note of the recent cooperation stemming from foreign jurisdictions known for protecting accountholder identities and the Internal Revenue Service. For example, the Internal Revenue Service recently successfully uncovered the identities of individuals with bank accounts in Switzerland. In general, there is an overall movement toward transparency of foreign bank accounts.

As demonstrated above, the requirements for foreign account reporting have become complex and an increasingly aggressive Internal Revenue Service has taxpayers with foreign accounts within its sights. Taxpayers with foreign bank accounts should be aware of the general trends mentioned above to avoid damaging consequences such as civil and/or criminal penalties for noncompliance. The risks associated with noncompliance far outweigh the inconvenience of reporting these accounts.

If you wish to discuss this topic, please contact Jon Zefi at jzefi@eisnerllp.com or Aninda Dhar at adhar@eisnerllp.com.

Any tax advice in this communication is not intended or written by Eisner LLP to be used, and cannot be used, by a client or any other person or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer, or (ii) promoting, marketing, or recommending to another party any matters addressed herein. With this alert, Eisner LLP is not rendering any specific advice to the reader.

“Offshore accounts harbor billions of dollars, and people should take notice that the secrecy surrounding these deals is rapidly fading.”

IRS Commissioner Doug Shulman, 2008

Even individuals and businesses which do not intentionally use foreign bank accounts to maintain assets secretly should take note of increasingly stringent disclosure requirements in the United States for such accounts and should be mindful that the civil and criminal penalties associated with noncompliance have increased in both likelihood and magnitude. A perfect storm of recent factors – increased cooperation from foreign banks known for secrecy and aggressive legislation strengthening the Internal Revenue Service arsenal – has elevated foreign bank accounts into a topic that cannot be ignored.

Taxpayers with foreign bank accounts aggregating more than $10,000 at any time during the year must disclose the existence of such accounts on Form TDF 90-22.1 (Report of Foreign Bank and Financial Accounts or “FBAR”). While the FBAR originated in 1970 from the Bank Secrecy Act, significant revisions to the form and associated penalties for noncompliance have garnered attention. In addition, the FBAR is not filed with a tax return. Instead, the FBAR must be filed by June 30 (no extensions are available) each year. The general purpose of the FBAR is to provide disclosure of financial or other interests (e.g., signatory authority) in financial accounts located in foreign jurisdictions.

First, recent revisions have expanded the FBAR in terms of coverage. Previously, the FBAR was required to be filed by any United States person. The term “United States person” encompassed a citizen or resident of the United States, a domestic partnership, a domestic corporation, or a domestic estate or trust. Now, with the recent revision, “United States person” includes “a person in and doing business in the United States.” Hence, a foreign person in and conducting business in the United States may now be required to file an FBAR. The definition of “financial account” has also been broadened to include mutual funds, deficit card and prepaid credit accounts in addition to any bank, securities, securities derivatives or other financial instruments accounts.

The expansion in FBAR coverage permeates the area of pass-through entities as well. In general, a United States person (as defined more broadly above) must file an FBAR if owning more than 50% of the total value of the shares of stock in a foreign corporation with a financial account abroad. This applies to a partnership or S corporation but, in addition, any partner or shareholder directly or indirectly owning more than 50% of the foreign corporation will be required to file an FBAR individually. To illustrate, consider a domestic partnership that owns 60% of a United Kingdom limited company. If a domestic partner owns a 90% interest in the partnership, both the partnership and the partner must file an FBAR separately. Hence, taxpayers should closely scrutinize their interests in partnerships and S corporations to gauge their reporting obligations.

Second, penalties associated with the FBAR have increased in recent years. In general, absent a willful violation, the maximum penalty is $10,000. By contrast, civil penalties for willful violations have increased to the greater of $100,000 or 50% of (1) the amount of the transaction for a violation involving a transaction or (2) the underlying account’s balance at the time of violation. Criminal violations of FBAR requirements may result in a $250,000 fine and five years of imprisonment. Additionally, if the FBAR violation is in tandem with another violation of law, the fine is potentially $500,000 and 10 years’ imprisonment. These penalties can be illustrated as follows:

For a limited time, taxpayers may avoid potential criminal prosecution by participating in a voluntary disclosure program reporting offshore bank accounts and assets. The six-month program was initiated on March 23, 2009. Taxpayers that participate in this program will be subject to pay back taxes and interest for the previous six years and a special 20% penalty in addition to other penalties that may apply. (For a further description of this program, please visit http://www.eisnerllp.com/Nep/News.aspx?id=4021.) Taxpayers should also take note of the recent cooperation stemming from foreign jurisdictions known for protecting accountholder identities and the Internal Revenue Service. For example, the Internal Revenue Service recently successfully uncovered the identities of individuals with bank accounts in Switzerland. In general, there is an overall movement toward transparency of foreign bank accounts.

As demonstrated above, the requirements for foreign account reporting have become complex and an increasingly aggressive Internal Revenue Service has taxpayers with foreign accounts within its sights. Taxpayers with foreign bank accounts should be aware of the general trends mentioned above to avoid damaging consequences such as civil and/or criminal penalties for noncompliance. The risks associated with noncompliance far outweigh the inconvenience of reporting these accounts.

If you wish to discuss this topic, please contact Jon Zefi at jzefi@eisnerllp.com or Aninda Dhar at adhar@eisnerllp.com.

Any tax advice in this communication is not intended or written by Eisner LLP to be used, and cannot be used, by a client or any other person or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer, or (ii) promoting, marketing, or recommending to another party any matters addressed herein. With this alert, Eisner LLP is not rendering any specific advice to the reader.

In an interview with CBS’s Face the Nation program yesterday, Geithner cited instances at AIG, Fannie Mae, and Freddie Mac in which board and management changes came about after substantial financial infusions. “If in the future, banks need exceptional assistance in order to get through this, then we will make sure that assistance comes,” said Geithner. “…Where that requires a change in management and the board, then we will do that.”

Geithner also addressed the ever-controversial subject of executive pay, claiming that the presidential administration would not allow assisted banks to sidestep the rules as they relate to compensation. “Our obligation is to apply the laws that Congress just passed,” said Geithner. “We want the American taxpayer’s assistance going to generate greater lending, not providing excess compensation.”

A Washington Post articleclaiming that the administration’s bailout initiatives are beingdesigned to allow firms receiving government funds avoid restrictionsimposed by Congress was deemed false.

Obama senior adviser David Axelrod told Fox News Sundaythat the president does not want the prospect of compensation limits tokeep them from joining in the Treasury’s financial rescue package. Somefinancial firms have cited a fear that this could hinder their abilityto cleanse toxic assets from banks’ books and jump-start lending as whythey are hesitant to join in.

Geithner added yesterday that the government would removemanagement of big banks that require “exceptional assistance,” as itdid with GM’s CEO and chairman Rick Wagoner on March 29.

Another topic of discussion was the recent decision by the Financial Accounting Standards Board to allow companies to use “significant” judgment in assessing the value of toxic securities. The accounting change, which allows companies to avoid selling bad assets that would otherwise have to be written down, was approved at an April 2 FASB meeting.

“We will do what’s necessary to make sure our banking system emerges out of this stronger,” said Geithner.

FASB, in conjunction with the Public Company Accounting Oversight Board (PCAOB), looks to establish a firm set of guidelines for valuing the lagging assets whose fair value-determined worth many have blamed for the current economic malaise.

Said a PCAOB spokesperson, “[We] will evaluate the FASB’s accounting guidance to determine whether any conforming amendments to the auditing standards will be necessary, or whether other guidance would be helpful.”

FASB is considering a proposal that would determine the time frame by which a company is required to report a writedown on weakened assets. Under the proposal, financial firms could separate credit and non-credit losses, taking a smaller loss on their income statement.

Such a proposal could be difficult, says Jim Pitrat of accounting firm SingerLewak, “due to complexities in the securities, including visibility into underlying assets.”

“The SEC did its study and obviously we agree with their main conclusion that fair value should not be suspended or significantly revised,” said Herz.

Indeed, the report on stabilizing the financial system that the Group of 30, which Volcker chairs, issued yesterday, seems likely to reopen what has been a furious debate between banks and investors on the value of market-to-market accounting in a time of extreme illiquidity. And it does so just as the debate seemed to be have been resolved in favor of investors.

Over the past year, bankers and investor groups have hotly contested the validity of the new fair-value accounting regime ushered in by Financial Accounting Standard No. 157, which spelled out how companies should measure the fair value of illiquid assets and liabilities as well as liquid ones.

Speaking at a press conference in New York on Thursday that introduced a report on financial reform issued by the Group of 30, an international body of prominent finance officials and economists, Volcker questioned, however, “whether a naive, across-the-board application of mark-to-market accounting [is] suitable for regulated institutions.”

The change could help the stock prices of banks and insurers, but won’t necessarily eliminate their need to raise more capital.

Criticism of Financial Accounting Standard 157, which describes how such instruments must be accounted for at fair value, the FASB has proposed that preparers of financial statements can take into account expected cash flows when testing such securities for impairment whether they are classified as available for sale or as held to maturity, according to FW.

Under the new proposal, assets trading at low prices need not be treated as permanently impaired so losses on them can be included on comprehensive income rather than earnings.

“Regaining investor confidence during this global credit crisis requires both immediate action and a plan for long-term improvement in the accounting for financial instruments,” said FASB Chairman Robert Herz in a statement announcing the change posted to the board’s website. “By issuing these proposed [staff positions], the FASB is taking immediate steps to reduce complexity and make the accounting for these instruments easier to understand.”

The proposed change in impairment testing would not affect banks’ balance sheets, changes to net income are included in “tier one” capital. The new rule may influence regulators’ views of what they considered adequate.

The Financial Accounting Standards Board’s decision to indefinitely postpone a proposed revision to its well-known complex accounting rules for derivatives is welcomed news for companies that use the instruments to hedge risk, according to FinancialWeek.

The FASB originally intended to simplify the rules, known as FAS 133, and eliminate differences that exist between them and their counterpart under International Financial Reporting Standards, IAS 139.

The decision means that companies will be able to continue to use “short-cut” methods to account for plain-vanilla interest-rate swaps, according to FW. Companies will also be able to separate the risks they’re hedging with a given instrument into expected changes in overall fair value or cash flows, interest-rate risk, credit risk, or a combination of those options.

FAS 133R would have required companies to buy another hedge to offset the hedge they were seeking to terminate.

The FASB is expected to revisit these issues once the Securities and Exchange Commission meets to decide whether U.S. companies can report their results in either U.S. GAAP or IFRS.

Until then, FAS 133R has been put to the side to be worried about at a later date.

Despite the G20 group of nations’ request to expedite changes, the accounting standard-setters said they will continue their projects as planned. The International Accounting Standards Board (IASB) and the Financial Accounting Services Board (FASB) are in no rush to fast-track initiatives to please the G20.

Sir David Tweedie, chairman of the IASB and his U.S. counterpart, Robert Herz, chairman of FASB, each addressed the G20’s requests to expedite changes. Tweedie noted that both the IASB and FASB will amend standards on consolidation of assets later next year, according to FW.

“These are very complicated projects,” said Tweedie. “If you rush them you make mistakes.”

Patricia Donoghue, a FASB project manager working on amending the standards for off-balance-sheet vehicles, told another panel at the conference that FASB is working as fast as it can on the assignment. “We think it’s possible to make progress by then,” said Donoghue. “What we don’t know is what interference we’ll have from other parties,” that could delay issuance of the amendments. Donoghue did not identify “other parties.”

Both the IASB and FASB defended the recent work of their boards on valuing assets in fractured markets. “I’m not sure there’s more to be done on illiquid markets,” Herz said. Herz eluded that what corporate managers and the G20 countries really want is a cookbook on fair-value accounting.

“We’re not going to give them a cookbook,” Herz told FW.

How is FASB funded and where does it derive its authority from?

Our funding changed under Sarbanes-Oxley. Previously, we received voluntary contributions from large auditing firms through the American Institute of Certified Public Accountants and from companies. SOX put an end to that because there were concerns about conflicts of interest. We are now funded through an accounting support fee that mutual funds and public companies pay. That’s worked very well because it is a secure source of funding; it’s something we can depend on.

FASB sets standards for public, private, and nonprofit entities. For public companies, it’s really a delegated responsibility from the SEC. SOX provided that the SEC should designate a standard-setting body, and in turn, it formally assigned FASB to that role for public companies.

What was the impetus for a move toward a global accounting standard?

Before joining FASB, I was on the International Accounting Standards Board (IASB). In 2002, we met with our friends in the IASB in Norwalk, Conn., where FASB is headquartered, and put together the Norwalk Agreement, which was a framework to work together to develop global accounting standards. Most of our major projects since then have been accomplished together with a mixed staff. We’re looking to produce common standards and to work together to identify common high-quality solutions.

How has it progressed and what is the outlook for IFRS?

Last year, the SEC lifted the requirement for reconciliation to generally accepted accounting principles (GAAP) for foreign filers that use IFRS. That was step one. We look at this as a road map. At some point if there’s enough progress, the next set of issues is whether to allow U.S. companies to use IFRS and switch from GAAP.

The next step was for the SEC to put out a proposal on that, which it did in late August. That proposal, now in a comment period, would allow a limited group of major U.S. companies to begin voluntarily using IFRS as early as 2009, with a decision in 2011 whether to require the use of IFRS for all filers in 2014, 2015, or not until 2016.

To what extent is it a choice to move to a ‘principles-based’ from a ‘rules-based’ approach?

Our GAAP is much older and more mature and has much more detail and guidance. But there is a misunderstanding on this. Our system has principles, too, and not surprisingly, IFRS has some rules. There’s no doubt our accounting system has been influenced by our regulatory and legal systems, but IFRS reflects a need to have much broader application across the world. But it is not purely one or the other. There’s always been a sentiment in our country that every question should get an answer. We’re trying to move away from that.

What will be some of the biggest changes with the adoption of IFRS?

You have to train people differently…try to understand the principles and get the facts and apply judgment. It also requires changes by the regulators. It might be staggered, like [SOX Section] 404—big companies first. There is an issue of what to do with private companies. Should private companies move to IFRS and, if so, when? Should there be some kind of slimmeddown version of IFRS? It’s about two things: coming to a single set of standards, but also achieving a higher quality so there is improvement. Both sides need to adopt the advice that used to be given to the father of the bride—you’re gaining a sonin- law, not losing a daughter.

What could keep it from happening?

There are a variety of potential hurdles. Clearly, there are all the philosophical questions, which we have been talking about. Secondly, there is the question of IASB’s financing—to address that, they’ve been trying to put in place a fee structure that would provide some funding. Another challenge would concern the overall timeliness of our decisions and execution with respect to issues that we believe require prompt attention. We sometimes have moved quickly on issues, which may not always be possible on an international basis, so that will need to be addressed. All these matters are not only doable in principle, but frankly, we are satisfied that as we speak there’s progress being made on all these fronts.

There’s also constituent politics that needs to be dealt with, and while we believe that this is the right way to go to achieve high-quality standards across the globe—transparency for cross-border capital flows—there is a disproportionate cost depending on company size. The major international companies and auditors support it, and investors support it, as long as FASB is involved and remains independent, but some smaller companies say there might be little gain for the pain. That’s part of the issue.

There has been some controversy around fair-value accounting, in light of the financial meltdown. Give us your take on this situation.

It may feel like a new issue—certainly the credit crisis has placed a new light on the subject—but investors and companies should recognize that we have always had to mark down assets in down markets. The problem we have now is a market problem. We have many financial assets with little or no liquidity, and this is caused or exacerbated by the lack of transparency or infrastructure. I have a lot of sympathy for the very significant challenges in valuing assets in such conditions, but most investors have told us they support the use of fair value and appreciate the new disclosures relating to Level I, II, and III assets. Do markets overreact? Yes, absolutely. Yet it turned out, so far with hindsight, that the market has been a good predictor of problems. But the pending government “bailout” program to buy illiquid assets may change the whole dynamic, hopefully for the better.

What does the future hold for you and how have you viewed your time at the helm of FASB?

My term is five years. You can only do two terms. I’m going into my seventh year, so I will have served my full term in 2012. I would hope that my legacy is that I scored on three fronts: improvement, simplification, and convergence, and the trick is to try to do all three simultaneously.

I would hope that we have improved standards and that we have, or are now moving toward, simplification and convergence. The mission’s a great mission. It’s important to capital markets and to the economy. I would also add on a personal note that I meet all sorts of interesting people all over the world. It’s very satisfying.

Roger Ailes, Fox News

Sharon Allen, Deloitte & Touche

Herbert M. Allison Jr., Director

Gavin Anderson, GMI

Philip A. Armstrong, GCGF

Norman R. Augustine, Director

Stephen Bainbridge, UCLA

Maria Bartiromo, CNBC

David Batchelder, Relational Investors

Lucian A. Bebchuk, Harvard Law

Irv Becker, Hay Group

Beverly Behan, Hay Group

Richard Bennett, The Corporate Library

Robert S. Bennett, Skadden Arps

Dennis R. Beresford, U. of Georgia

Ethan Berman, RiskMetrics Group

Ben Bernanke, The Federal Reserve

John Biggs, Director

Leon Black, Apollo

Lloyd C. Blankfein, Goldman Sachs

Richard Blumenthal, State of Conn.

Magnus Bocker, Nasdaq OMX

John C. Bogle, Hall of Fame

Richard Breeden, Breeden Partners

Catherine L. Bromilow, PwC

Beth A. Brooke, E&Y

Warren Buffett, Berkshire Hathaway

Peter Butler, Governance for Owners

Marshall Carter, NYSE Euronext

Martha Carter, RiskMetrics Group

John J. Castellani, Business Roundtable

William B. Chandler III, Chancery Court

Ram Charan, Charan Associates

Peter Clapman, Governance for Owners

John C. Coffee, Columbia Law School

Frederic W. Cook, Frederic W. Cook & Co.

J. Michael Cook, Director

Christopher Cox, SEC

Jim Cramer, TheStreet.com

Andrew Cuomo, State of New York

Kenneth Daly, NACD

Julie Hembrock Daum, Spencer Stuart

George L. Davis, Egon Zehnder Intl.

Stephen M. Davis, Millstein Center

James L. Dimon, JPMorgan

Samuel A. DiPiazza, Jr., PwC

Christopher Dodd, U.S. Senate

Amy Domini, Domini Social Investments

William H. Donaldson, Hall of Fame

Thomas J. Donohue, Chamber of Commerce

Ed Durkin, United Brotherhood of Carpenters

Theodore L. Dysart, Heidrick & Struggles

Jay Eisenhofer, Grant & Eisenhofer

Charles Elson, U. of Delaware

John Engler, NAM

Richard Ferlauto, AFSCME

Timothy Flynn, KPMG

Margaret “Peggy” Foran, Sara Lee

Cynthia M. Fornelli, CAQ

Barney Frank, U.S. Congress

William F. Galvin, State of Mass.

William W. George, Harvard Business School

Kayla Gillan, RiskMetrics Group

Robert J. Giuffra, Jr., Sullivan & Cromwell

Scott Goebel, Fidelity

Holly Gregory, Weil, Gotshal & Manges

Robert Greifeld, Nasdaq OMX

Joseph Grundfest, Stanford Law School

Steven Hall, Steven Hall & Partners

Robert Hallagan, Korn/Ferry Intl.

Laurence P. Hazell, Standard & Poor’s

Edward Herlihy, Wachtell Lipton

Robert Herz, FASB

John A. Hill, Putnam

Paul Hodgson, The Corporate Library

Christopher Hohn, TCI

Michele J. Hooper, Director

Anthony J. Horan, JP Morgan

Carl Icahn, Icahn Investments

Ray R. Irani, Occidental Petroleum

Edward Kangas, Director

Adam Kanzer, Domini Social Investments

Henry Keizer, KPMG

Donald Keough, Director

Joe Kernen, CNBC

Richard Ketchum, FINRA

Charles King, Korn/Ferry Intl.

Catherine Kinney, NYSE Euronext

Jannice L. Koors, Pearl Meyer & Partners

Richard H. Koppes, Jones Day

Henry Kravis, KKR

Frederick J. Krebs, ACC

John A. Krol, Director

Robert Kueppers, Deloitte & Touche

Arthur Levitt, Hall of Fame

Martin Lipton, Wachtell Lipton

Jay W. Lorsch, Harvard Business School

Joann Lublin, Wall Street Journal

Steve Mader, Korn/Ferry Intl.

Ken Marzion, CalPERS

Mary Pat McCarthy, KPMG

Bill McCollum, State of Florida

Robert McCormick, Glass Lewis

Blythe J. McGarvie, Director

William McGuinness, Fried Frank

Patrick McGurn, RiskMetrics Group

W. James McNerney, Jr. Boeing

James P. Melican, PGI

Pearl Meyer, Steven Hall & Partners

Bill Miller, Legg Mason

Ira Millstein, Hall of Fame

Nell Minow, The Corporate Library

Robert A.G. Monks, author, Corpocracy

Peter Montagnon, ABI

Gretchen Morgenson, New York Times

Anne Mulcahy, Xerox

Anne Mule, Sunoco

Rupert Murdoch, News Corp.

Alan Murray, Wall Street Journal

Jim Naughton, Corporate Governance Blog

Thomas Neff, Spencer Stuart

Duncan Niederauer, NYSE Euronext

Joseph Nocera, New York Times

Floyd Norris, New York Times

Mark Olson, PCAOB

James Owens, Caterpillar

Michael Oxley, Hall of Fame

William Patterson, CtW

Henry M. Paulson, Jr. U.S. Treasury

Harry Pearce, Director

Harvey L. Pitt, Kalorama Partners

Becky Quick, CNBC

Carl Quintanilla, CNBC

David Rubenstein, Carlyle Group

Paul Sarbanes, Hall of Fame

Charles E. Schumer, U.S. Senate

Stephen A. Schwarzman, Blackstone

Mary Shapiro, FINRA

Damon Silvers, AFL-CIO

David W. Smith, SCSGP

Michael Smith, AIG

Jeffrey A. Sonnenfeld, Yale School of Management

Larry W. Sonsini, Wilson Sonsini

Andrew Ross Sorkin, New York Times

Myron T. Steele, Delaware Supreme Court

Leo E. Strine, Chancery Court

David N. Swinford, Pearl Meyer & Partners

John Thain, Merrill Lynch

Andrew Tuch, Corporate Governance Blog

James S. Turley, E&Y

E. Norman Veasey, Weil Gotshal & Manges

Stephen Wagner, Deloitte & Touche

Carol Ward, Kraft Foods

Henry Waxman, U.S. Congress

Ralph Whitworth, Relational Investors

John Wilcox, TIAA-CREF

Note: More than 100 individuals are named because some listings contain more than one person at the same company or in the same industry.

For the complete 2008 Directorship 100 article, click HERE.

The Committee to Improve Financial Reporting, created by the Securities and Exchange Commission to explore ways to improve the accounting system is expect to recommend a freeze on new accounting standards that require fair-value accounting when it issues its final report on Friday, according to a report by Financial Week.

The draft final report said the mixed-attribute model—in which some assets and liabilities are measured using fair value, while others are measured using historical cost—is complex and sometimes confusing. The principle, which requires companies to mark assets to market prices has been controvercial. Some argue that it has hastened financial problems on Wall Street by requiring firms to drastically mark down assets when there is virtually no market to use to set a price.

Also controversial is the committee’s recommendation that companies will no longer have to restate financial reports so long as the accounting errors are not material. Groups including the AFL-CIO and the Consumer Federation of America voiced concerns that this move would allow companies to obscure or ignore past errors.

Among other recommendations, according to Financial Week, eliminating industry-specific accounting guidance, as well as mandating the inclusion of an executive summary in corporate annual statements.

The committee has one final vote on recommendations this Thursday, after which it will release its final report.

Analysis of annual reports filed with the SEC in the first quarter of 2008 by more than 600 companies whose revenues exceed $2 billion shows that more than 28 percent of them did not fully meet the disclosure requirements of FIN 48, according to a comprehensive report prepared by the tax reserve advisory firm founded by former IRS Chief Counsel Stuart E. Seigel.

“The level of noncompliance with FIN 48 disclosure mandates is relatively high and much remains to be done to bring compliance to more acceptable levels,” Seigel says.

“The Seigel Tax Reserve Report” covers initial filings through the period March 31, 2008. J. Brad McGee, president of Seigel & Associates, says the firm intends to track and publish results on a quarterly basis.

The greatest area of noncompliance was the “12-month look-forward rule,” where one of every eight companies provided no disclosure, McGee says. This disclosure requires that tax positions that have a reasonable possibility of significant variation over the next 12 months be reported.

“The generally poor performance in this area of disclosure creates the greatest concern,” McGee adds.

As a result of the adoption of FIN 48, 280 of the reporting companies increased their tax reserves – the amount set aside by companies pending post-filing tax adjustments – by a total of $8.1 billion, and 151 decreased their tax reserves by an aggregate of $6.8 billion.

The net increase in total tax reserves due to FIN 48 adoption was $1.4 billion, the report says. For the year 2007, 321 companies increased their tax reserves by a total of $14.8 billion, and 221 decreased their tax reserves by total of $12.9 billion. The overall net increase for the reporting companies in total tax reserves for the year 2007 was $1.9 billion.

The analysis covers only first quarter 2008 filings. Seigel & Associates estimates that about 70 percent of companies use the calendar year for financial reporting purposes and, therefore, filed their statements in the first quarter. Another 300 or so of these larger public companies will file during the remaining quarters of 2008.

In conducting its analysis, the firm created a qualitative measure of FIN 48 compliance, the “Seigel Index,” derived from a company-by-company assessment of whether the minimum disclosure requirements were met – and the degree of compliance with those mandates. To attain a score of 100 (denoting satisfactory compliance), a company had to report correctly basic information in six different areas.

Among the findings:

• The aggregate Seigel Index for the companies covered in the report is 91.3
• Smaller revenue companies – those in the $2 to $5 billion range – had the lowest score of about 90.
• Seven industries fail to earn an index of at least 90.
• Industries ranking worst in FIN 48 compliance are airlines, electronic instruments and controls, natural gas utilities, insurance, energy companies and regional banks. Industries with the highest overall compliance levels
• Seigel Index scores above 100 – include commodities, major drugs, consumer financial services, conglomerates, non-cyclical consumer products, investment services, capital goods, money center banks, computers and chemical manufacturing.

FIN 48 mandates a consistent standard for determining tax reserves and requires that these reserves and additional supporting information be disclosed in financial statements. The first disclosures were made earlier this year.

]]> http://www.directorship.com/many-companies-botch-tax-disclosure/feed/ 0 http://www.directorship.com/bernanke-paulson-support-ifrs/ http://www.directorship.com/bernanke-paulson-support-ifrs/#comments Thu, 01 Jan 1970 00:00:00 +0000 Joseph McCafferty http://www.directorship.com/?p=3130 The Securities and Exchange Commission plans to adopt both American and international accounting standards. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke defended the SEC’s decision, saying that converging the accounting methods would help allow foreign companies to do business in the United States, according to CFO.

The integration is being pushed by SEC Chairman Christopher Cox. Massachusetts Congressman Michael Capuano, a member of the House Financial Services Committee, believes that the timing of the integration is poor. Capuano is particularly concerned that the transition of accounting standards is occurring at a time when the financial markets are fickle.

Paulson emphasized the need to help foreign companies conduct business in the U.S. Paulson told CFO, “There are different accounting regimes with different standards and different requirements. That doesn’t make them worse than ours. We’ve had plenty of issues with our accounting regime.” Paulson disagrees with Capuano, saying that convergence should also be thought of as outsourcing American standards.

Bernanke stressed that the Financial Accounting Standards Board and the International Accounting Standards Board have made efforts to allow foreign companies to operate in the U.S. without having to meld together two separate accounting methods. “I don’t think it causes any major problems with our accounting system or regulatory system,” Bernanke told CFO.

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