Enron Corp. investors who sued the company more than six years ago are learning this week they'll receive an average of $6.79 per share for the common stock they owned.

A court-approved mailing also notifies those who owned preferred stock they'll get $168.50 a share.

The lawsuit, known as the Newby case after shareholder Mark Newby, covers those who invested in Enron stock from Sept. 9, 1997, until Dec. 2, 2001, when the company declared bankruptcy.

The class comprises about 1.5 million buyers of stocks and bonds. They could have purchased common shares as high as $90 when Enron was soaring in August 2000 or as low as $1 right before the bankruptcy.

Enron shareholders learn outcome of suit

The US Supreme Court put new limits on shareholder suits against a company's banks and business partners in a ruling that may thwart efforts to recoup billions of dollars lost in frauds at Enron Corp. and HealthSouth Corp.
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The justices, voting 5 to 3, threw out a lawsuit by Charter Communications Inc. investors against two of its suppliers, Motorola Inc. and Scientific-Atlanta Inc. The court said the shareholders didn't show they relied on the alleged deception by the suppliers in making investment decisions.

The ruling is a triumph for business groups in what they called their highest priority in the court's 2007-08 term. Trade groups representing banks, accounting firms, and law firms took an especially keen interest, saying their members might present tempting targets for shareholder lawyers.

Top court ruling goes against investors

The Global Public Policy Symposium IV was recently held in NY, with representation and discussion among the top international auditing firms.

With the ongoing discussion around more principle-based (IFRS) accounting standards versus the more familiar rules-based (GAAP) standards in the US, many are interested - if not regularly dialed into - the discussion of adoption and the implications of domestic adoption of IFRS.

In the published white paper, "Principles-based Accounting Standards", characteristics of an effective framework are proposed. Of interest will be how well a principles-based framework can hold up in the litigious US, where obscure precedent can often trump reasonable and professional judgment.

Tides of Change - Retooling of Accounting Standards

Auditors and corporate finance departments must be able to use professional judgment without being second-guessed if countries continue to adopt principle-based accounting standards, the chief executives of the top six global accounting networks argued in a white paper on Tuesday.

The paper, presented at a Global Public Policy Symposium in New York, urged regulators and other stakeholders to create a system where reasonable auditor judgments are accepted.

"Investors are best served when financial reports are clear and easy to understand and use," the CEOs of Deloitte Touche Tohmatsu [DLTE.UL], Ernst & Young [ERNY.UL], PricewaterhouseCoopers [PWC.UL], KPMG [KPMG.UL], Grant Thornton, and BDO Seidman wrote.

"In order to deliver on that goal, preparers and auditors must be given the space to exercise professional judgment and to feel confident that their judgment, so long as it is fundamentally sound and documented, will not be subject to second-guessing."

More than 100 countries are currently using, or plan to use International Financial Reporting Standards (IFRS), which are seen as a more principle-based accounting system. In recent months many have called for the United States to set a national plan to move to IFRS from U.S. Generally Accepted Accounting Principles, which are often viewed as more rule-based.

Top audit firms push to use their own judgment

Corporate Governance means more to the communicator than reputation management. When effective corporate governance promotes thriving organisations, market confidence and public trust. Internal communicators have a duty to be aware of the corporate governance responsibilities of their organisation, and to support it and enhance it. But internal communicators lack the language of 21st century business to start the conversation with directors - a knowledge of key corporate governance terms and principles solves this.

A Deloitte study of 800 North American companies published last year found that well-planned and well-executed corporate governance brought about significant business benefits such as: enhanced market confidence and reputation management, reduced risk of loss through fraud, improved acquisition integration, better control over management and information systems, standardisation of processes and controls as well as improved disclosures for stakeholders.

Corporate Governance - are you at risk?

The former chief executive officer of Brocade Communications Systems was sentenced to 21 months and prison and ordered to pay a $15 million fine. He is the first executive to go to trial and be convicted for orchestrating a scheme to illegally backdate stock options.

According to The Wall Street Journal, Reyes broke down crying while speaking to the judge before his sentence was handed down. The sentence no doubt will send shock waves throughout Corporate America. Indeed, at least one dozen other executives have been criminally charged in options cases, according to the Associated Press.

In August, a federal jury convicted Reyes on all 10 felony counts. Reyes was charged in July 2006 on 12 felony counts of securities fraud and other offenses, although the two mail-fraud charges were subsequently dropped.

First Convicted Backdater Sentenced to Prison

The Financial Accounting Standards Board (FASB) announced the release of its draft Codification, and the start of the one year 'verification' period in which FASB is "encourag[ing]... use [of] the online Codification Research System free of charge to research accounting issues and provide feedback on whether the Codification content accurately reflects existing U.S. generally accepted accounting principles."

The goal of FASB's Codification is to put all Generally Accepted Accounting Principles (GAAP) issued by various organization's over the years (including FASB, the AICPA, and FASB's Emerging Issues Task Force (EITF)) in one place, in a logically flowing topical order, and to enhance the accessibility and search capabilities through an interactive electronic platform.

FASB Codification Released; One Year Verification Phase Begins

In the wake of several high-profile charity scandals and with observers predicting that Congress will pass legislation similar to the Sarbanes-Oxley Act for nonprofit organizations, Independent Sector convened the Panel on the Nonprofit Sector to create a set of guidelines designed to help groups govern themselves.

Those guidelines, which spell out principles of governance, fund-raising, and management that charitable groups should follow, were approved in October. But several key questions remain. Will nonprofit leaders pay attention to them? Do they go far enough? Are the guidelines enough to satisfy those on Capitol Hill who want to pass new legislation to regulate charities?

Can the Nonprofit World Govern Itself?

The Capital Market Authority (CMA) is committed to promoting sound corporate governance practices in Oman, Yahya bin Said Al Jabri, executive president of the CMA said here yesterday.

Recently, the capital market regulator had issued an administrative decision forming corporate governance committee to implement a corporate governance plan in Oman by disseminating information on international standards and practices.

The committee, Al Jabri said, comprises nine members representing the public and private sectors, academic and professional institutions.

The committee is chaired by the director-general of legal affairs, enforcement and corporate governance with the membership of the director of the department of corporate governance of the CMA as well as members representing the Diwan of Royal Court, Central Bank of Oman, Ministry of Commerce and Industry, Oman Chamber of Commerce and Industry, Lawyers' Association, Accountants' Association and the Omani Economic Association.

CMA committed to corporate governance practices: Al Jabri

The Audit Committee Guidance Committee has been set up to develop practical guidance for audit committees.

It will help to strengthen corporate governance practices of listed companies in Singapore, focusing on the practical aspects and considerations of the work of audit committees.

These include the implications of the requirements of the Companies Act and the principles and guidelines of the Code of Corporate Governance. The panel will also identify and describe best practices of effective audit committees.

The committee was set up by the Monetary Authority of Singapore, the Accounting and Corporate Regulatory Authority and the Singapore Exchange.

Panel set up to develop practical guidance for audit committees

Do financial restatements mean anything these days? The Securities and Exchange Commission Advisory Committee on Financial Reporting is looking into the huge increase in financial restatements by public companies since Sarbanes-Oxley was passed in 2002-a review triggered, at least in part, by SarbOx critics who contend that restatements are expensive, time consuming and of questionable value to shareholders, who increasingly ignore them. The first academic study examining how such restatements affect companies' ability to secure bank loans, however, suggests that lenders find the information important. In fact, the authors of the report found that businesses that reported financial gaffes-whether intentional or not-ended up paying substantially higher interest rates on loans. The research also revealed that restatements led to stricter terms for borrowers.

The study, conducted by Professors John Graham of Duke University, Si Li of Wilfred Laurier University and Jiaping Qiu of McMaster University, looked at data from a U.S. Government Accountability Office (GAO) database of 919 restatements announced by 800 public companies between Jan. 1, 1997 and June 30, 2002. The professors then combed through a database maintained by Loan Pricing Corp., which collects information on commercial loans made to both U.S. and foreign corporations.

The SarBox: The bill for restatements can be costly

Lord & Benoit, a SOX research and consulting firm, recently gathered empirical cost data to answer a crucial question that government officials, legislators, and business executives have been asking since June of 2007: "what exactly is the cost for a smaller public company to comply with Sarbanes-Oxley Section 404(a) and Section 404(b) regulations using the latest guidance issued by the SEC and PCAOB?" The data reveal that for non-accelerated filers, the total average first-year cost for management assessment and additional audit fees is $78,474, which is 13.8% less than the $91,000 cost the SEC initially predicted.

The new Lord & Benoit Report, entitled "The Sarbanes-Oxley Investment: A Section 404 Cost Study for Smaller Public Companies," is based on a cross-section of 29 smaller public companies in the semiconductor, manufacturing, distribution, banking and finance, real estate, food and beverage, transportation, mining, software, energy, services, and biotech industries. The Report is also based on an Audit Analytics study of actual audit fees reported by nearly 5,500 public companies.

First-of-Its-Kind Report Quantifies Actual Cost of Sarbanes-Oxley Section 404 Compliance for Smaller Public Companies

Warren Buffett's entry into the muni bond insurance market could represent perfect timing, both financially and politically. Investors can only hope he'll seek to do good while doing well. Specifically, he can help put an end to an egregious double standard. While Congress has been busy crafting still more regulations on private business, Members have ignored SEC warnings about the lack of transparency in government finance.

Unlike publicly traded corporations, state, county and city bond issuers don't have to provide timely, robust disclosure or follow standard accounting practices. Yet the same Washington pols who cheerfully ratcheted up the pressure on companies via Sarbanes-Oxley apparently have no time to address shady accounting in the public sector. The recent history of government frauds from San Diego to Syracuse suggests they should make time.

Speak Up, Mr. Buffett

Can you say "Sarbanes-Oxley" in Italian? According to some experts, it sounds like "law 262," though this is not an exact translation.

Passed in 2005, two years after the massive accounting scandal at Italian dairy group Parmalat, 262 requires a manager at listed companies in the country to sign off all financial communications and certify reporting practices. With a two-year grace period now over, 262 will affect the latest batch of corporate results. In most cases, the sign-off responsibility falls to CFOs, arguably increasing their authority and influence. Yet while many Italian finance chiefs do not sit on their companies' boards, the new law makes them as liable to shareholders and creditors as board directors are, explains Giovanni Pedersoli, a partner in Linklaters' Milan office. That may not be such a welcome development.

Thus far, Italy's CFOs have not all resigned to open pizzerias, quips Bruno Cova at law firm Paul Hastings. But like the Sarbanes-Oxley Act, the issue is causing a stir and generating plenty of debate.

Should finance chiefs be so worried? The law is yet to be tested and Cova points out that there is "no specific law 262 penalty."

Companies are struggling to find qualified internal audit talent, as audit departments cope with greater responsibilities while needing additional -- and different -- resources.

Corporate management is asking internal audit to find new ways to help achieve strategic objectives. They expect internal audit to extend its role beyond internal controls assessment, and use its quantitative skills and risk knowledge to help improve risk management and processes, and reduce complexity and costs.

To meet these responsibilities, internal audit departments generally require greater, specialized resources -- and that poses a challenge in the current business environment.

Euronet Worldwide Audit Committee Chair Jeannine Strandjord, who spoke at last week's KPMG Audit Committee Institute (ACI) roundtable in Kansas City, said the demand for talented internal audit professionals has increased appreciably.

"They [companies] are spending a lot more time finding qualified internal auditors," she said.

KPMG: Internal Audit Talent Shortage Challenges Companies, Audit Committees

Four members of Financial Executives International (FEI), an association of senior financial executives, are among panelists appearing on the SEC's IFRS roundtables. FEI members participating on today's panel are Gregg L. Nelson, VP, Accounting Policy and Financial Reporting at IBM Corporation and Matthew Hilzinger, SVP and Corporate Controller, Exelon Corporation. The December 17 panel includes FEI members Mick Homan, Comptroller, Corporate Accounting, Procter & Gamble Corporation, and Margaret (Peggy) Smyth, VP and Controller, United Technologies Corporation.

Homan, Nelson and Smyth are members of FEI's Committee on Corporate Reporting (CCR). CCR provided a comment letter to the SEC on November 15, in response to SEC's Concept Release on whether to permit or require U.S. companies to file their financial statements with the SEC in IFRS.

CCR's comment letter supported permitting U.S. companies the option of voluntary adoption of IFRS. If the SEC were to decide to make IFRS mandatory, CCR said in its November 15 letter that mandatory adoption by all companies could come ‘no sooner than 2012.'

"CCR strongly supports providing a choice in the near term to U.S. issuers to prepare financial statements in accordance with IFRS as published by the International Accounting Standards Board," said the CCR letter, signed by CCR Chair Arnold C. Hanish, EVP and Chief Accounting Officer, Eli Lilly and Co.

However, CCR's letter added, "It is important to acknowledge that the prospect of allowing U.S. companies to file on the basis of IFRS has very different implications for the broad array of U.S. companies that form the membership of FEI."

FEI Members on Panels; FEI Committee on Corporate Reporting Comments on Concept Release

After a year of listening to lawmakers hound him for another delay of the date when small companies must comply with the internal-control provision of the Sarbanes-Oxley Act, Securities and Exchange Commission Chairman Christopher Cox says he plans to supply such a reprieve.

He intends to ask his fellow commissioners to put off for one year the moment when companies with a market capitalization below $75 million must start complying with the Section 404, he told Rep. Nydia Velazquez, who has been requesting such a decision.

Out of the four-member commission, Cox has at least the support of one fellow Republican, Kathleen Casey, who earlier this week called for a 404 delay. The SEC is short one commissioner following Roel Campos' departure in the fall.

Without an affirmative vote, smaller publicly traded companies are slated to submit their 404 management reports on 10-Ks filed on or after December 15, with auditor-attestation reports to be filed a year from now.

One-year Delay on 404 in the Works

According to written testimony prepared for a hearing of the House Small Business Committee taking place right now, SEC Chairman Christopher Cox will tell the committee: "I intend to propose to the Commission that we authorize a further one-year delay in implementation for small businesses" in the requirement that small bus provide their first external auditor's report on internal control, currently due effective year-end 2008, "in order to base our decision on final implementation of section 404(b) on the best available cost data."

Cox restricted his call for a further delay for small co's only to Section 404(b) of Sarbanes-Oxley - the section which requires an external auditor's report on internal control.

His written testimony did not suggest any 11^th hour deferral of the effective date for Section 404(a) of Sarbanes-Oxley, which requires management to report on internal control. Under the current SEC rules, small co's (specifically, "non-accelerated filers,' generally, companies with less than $75 million market cap) must begin filing their first Section 404(a) management reports on internal control effective this year-end.

Large co's (accelerated filers) have been providing both the management report and external auditor's report under Sarbanes-Oxley for three years now.

SEC's Cox Tells House Small Bus Committee He Wants to Delay Sarbox External Audit Requirement for Small Co's by Additional Year

Aberdeen Group, a Harte-Hanks company (NYSE: HHS), today announced a new research report on "Security Governance and Risk Management" which reveals that Best-in-Class organizations are more effective than their counterparts at allocating their IT resources and activities based on business objectives and acceptable levels of risk. By developing superior capabilities in the area of security governance and risk management, Best-in-Class organizations have demonstrated their ability to improve security, sustain compliance, improve leverage from existing IT resources, make faster decisions, optimize business processes, and improve visibility across organizational and geographical silos.

The benchmark report shows that Best-in-Class organizations improved their speed of decision making regarding security governance and risk management by 28% over the past year, more than two times the year-over-year improvement by the Industry Average. In addition, over the past year the Best-in-Class were four times better than the Industry Average at reducing the number of organizational and geographical silos for security governance, risk management, and compliance information and analysis.

Security Governance and Risk Management

In response to a series of corporate scandals, Congressman Michael Oxley and Senator Paul Sarbanes sponsored the Sarbanes-Oxley (SOX) Act of 2002. Conceived as an investor protection law, this wide-ranging legislation impacted U.S. public companies in many ways. Supporters of these reforms applaud SOX as necessary and useful, while critics have consistently voiced concerns over cost and resource requirements of compliance. It's time to take another look.

Highlights:

• Has the impact of SOX been predictable? Or have there been surprises? (5:48)
• Do Section 404 provisions focus too narrowly on short-term results? (16:23)
• How would you assess the impact of SOX on the marketplace? (25:09)
• Is there a measurable performance strategy available to companies that will enable them to refocus their long-term thinking to achieve predictable benefits from SOX? (38:30)

The Unexpected Benefits of SOX: A Conversation with Michael Oxley

The Public Company Accounting Oversight Board today published a Staff Audit Practice Alert on the audit of fair value measurements in financial statements. The alert provides auditors with additional information related to auditing fair value measurements and disclosures, as well as the use of specialists in this area.

"We were motivated to develop and issue this alert by the auditing challenges presented by the subprime credit situation and its effects on the markets and fair value measurements, and certain issues that might arise in the transition to Statement of Financial Accounting Standards No. 157, "Fair Value Measurements," said Marty Baumann, Director of the PCAOB Office of Research and Analysis.

Today's release, Matters Related to Auditing Fair Value Measurements of Financial Instruments and the Use of Specialists, highlights certain matters in four areas:

• Auditing fair value measurements;

• Classification of fair value measurements within the fair value hierarchy established by SFAS 157;

• The use of specialists in fair value measurements; and

• The use of pricing services in fair value measurements.

"This alert does not create any new auditing requirements," said Tom Ray, PCAOB Chief Auditor and Director of Professional Standards. "Rather, we issued the alert because we believe it will be helpful to auditors as they gear up to complete their year-end auditing work by reminding them of certain aspects of the auditing and related accounting standards that are particularly relevant at this moment."

PCAOB Issues Staff Audit Practice Alert on Fair Value

Since early 2005 OCEG?s Framework version 1.0 (?Red Book?) has served as a leading model for integrated governance, risk management, compliance and ethics management (GRC). It?s time to expand and revise this model.

Join an unparalleled group of individuals with expertise in GRC issues from a wide range of global perspectives - legal, compliance, internal control, risk, and ethics - to participate in the Steering Committee for the OCEG Foundation 2.0 Task Force (the ?Red Book Task Force?). To learn more about this process click here.

To join this committee or nominate someone else, please click here.

OCEG to Revise and Expand Framework ? Join the Process!

Robert Herz, Financial Accounting Standards Board (FASB) chairman's, wishful thinking is to see the day when FASB will become part of the International Accounting Standards Board (IASB).

Speaking at the IFAC World Accountancy Forum during World Accountancy Week, he said it would be a single organisation, called the International Accounting Standards Board, but it would have an office in the US ‘maybe in Norwalk, Connecticut' where FASB is based.

He also envisioned the organisation to have branches in other countries such as China and said FASB had not only been discussing accounting convergence with the IASB, but had also had separate bilateral meetings with regulators in China, Japan and other countries.

FASB sees its future as part of IASB

Companies Act 2006, which comes into force in October 2009, is reminiscent of the 2002 Sarbanes-Oxley Act in the US. Sarbanes-Oxley has impinged mightily on the working lives of British IT professionals working for companies listed in the US, so the kinds of implications it bears are nothing new. But the Companies Act betokens more of the same, and for a wider group.

The new rules take into scope modern electronic communications, which were not widespread in 1985 - the year of the last iteration of the act. Company directors will need to ensure that the right IT systems are in place to store and retrieve documents and data. They will also need to make sure that electronic communication with shareholders, via websites or other means, is robust and secure.

Companies Act 2006 will bring IT closer to business

As the subprime mortgage meltdown grows, some experts are starting to see the resulting fallout rivaling corporate scandals of earlier this decade, like Enron, that prompted the passage of the Sarbanes-Oxley Act.

Even former Securities and Exchange Commission Chairman Arthur Levitt expects to see more massive writedowns on the way. He believes banks aren't being candid about the full extent of their subprime mortgage holdings. Last week, he told Bloomberg News that he thinks the Financial Accounting Standards Board should force the banks to close a loophole that lets them keep the structured investment vehicles holding subprime debt off their balance sheets.

Subprime Mess Could Be Bigger Than Enron