US PENSIONERS are about to be clobbered with the effects of FRS17 accounting rules, the FT says, as ...
US PENSIONERS are about to be clobbered with the effects of FRS17 accounting rules, the FT says, as US pension funds adopt UK accounting practices ahead of the adoption of International Accounting Standards Board rules.
The FT quotes Robert Herz, head of the US Financial Accounting Standards Board as saying he wants to adopt FRS17 to halt the current practice of padding out pension funds with gains that occurred in the past – a tactic widely employed in the US today to cover any potential fund deficits caused by falling stock markets.
The chances of adopting FRS17 are high, the FT adds, because of the rush to improve accounting standards in the US after scandals such as Enron and Worldcom exposed huge weaknesses in existing rules and practice.
AND AS IF on cue, The Daily Telegraph, today writes that US lorry rental company U-Haul is suing its auditor PricewaterhouseCoopers for $2.6bn in damages for "negligent, fraudulent and tortious conduct".
The suit alleges that PwC mis-accounted a particular holding over a seven-year period, something that led the market to take a dim view of shares in Amerco, U-Haul's parent.
Amerco says the accounting failure forced it to seek $850m in new financing to cover losses associated with the mistake – PwC says the losses are down to poor management of the company.
ANOTHER US company, Xerox, has said it will take a $183m first quarter charge because a court found it underpaid pensions to former employees.
"An Illinois court ruled in September that the methodology used to calculate interest rates in Xerox' Retirement Income Guarantee pension plan was incorrect. Up to 25,000 employees are affected, and Xerox has been ordered to pay almost $300m in compensation," the Telegraph writes.
The Telegraph notes that Xerox chief executive Anne Mulcahy recently saw her salary increase by 48% to $5.25m.
DEREK HIGGS may be willing to drop one of the proposals contained in his review published earlier this year, The Times says.
The proposal to ban company chairman from serving on nomination committees received some of the heaviest criticism once the review was published, but now, The Times says, Higgs himself admits he almost left the proposal out of the review.
It could be that other proposals are dropped too once the Financial Reporting Council meets to discuss the plans before they are adopted into the Combined Code governing the way companies are allowed to be run.
AMERICAN STYLE "plea-bargaining" could be coming to a Serious Fraud Office investigation near you soon if its new boss Robert Wardle has his way, reports The Scotsman.
Such a system would enable faster turnaround in cases where the Office faces long and costly cases, although lawyers might take issue with Wardle's other goal: he wants to end defendants' right to trial by jury in long and complex fraud cases.
CREDIT SUISSE, Switzerland's second biggest bank, is not selling its investment banking business Credit Suisse First Boston, according to comments from its chairman Walter Kielholz, the FT reports.
CSFB has been racked by expensive acquisitions, banking scandals in the US, and the appointment of John Mack who is cutting costs at CSFB through shedding jobs.
Still, the rumours persist, the paper says, because CS' performance last year was the worst in 147 years, and because the capital base of its insurance arm Winterthur has been eroded by falling stock markets.
THERE WILL BE no escape route available for City bankers being paid in gold bars, fine wine and Persian carpets, according to moves by the Inland Revenue to close off tax avoidance schemes, the Telegraph reports.
According to the Revenue, up to £1bn in missing tax payments, chiefly related to National Insurance, is still missing, and it is now targeting up to 10,000 financial services firms in order to claw back the money through court cases.
The Revenue is also targeting sole traders, such as taxi drivers and window cleaners, who have in recent years declared earnings below the threshold at accounts must be filed, the Telegraph adds.
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