Financial Accounting Blog

Wednesday, December 15, 2004

New Fences. The PCAOB is proposing that audit firms not be allowed to sell tax shelters to the top executives of their audit clients. Wash Post.
The proposed rules would not impose a blanket ban on tax advice, a step that some consumer advocates had advanced two years ago. Auditors still would be able to perform routine tax work, including preparing tax returns for companies. They would also be permitted to prepare tax returns for some employees of client companies but barred from providing personal tax consulting to executives responsible for the companies' financial statements.

Thursday, December 02, 2004

Sales Returns. The WSJ published an interesting article about retailers tracking individual's behavior patterns in the returns area. The companies want to cut down on abuse of their liberal returns policies.
According to retail consulting firm KingRogers International, in 2003, the return rate for specialty retailers was 10.6 percent of total sales, higher than the industry average of 8.58 percent. About 9 percent of all returns are estimated to be fraudulent.

Return Exchange's Verify-1 system works like this: When a customer wants to return an item, the sales clerk asks for his or her driver's license or other form of state-issued identification, and swipes it into a machine much like those used to make credit card or ATM purchases. The shopper's name, address and birthdate is logged into a database. The program records details about the transaction, such as the store number, the amount of the return, the date, time and item description.

All that information is stored on the Return Exchange's server in Santa Ana. Most transactions end there. But if a customer's "return behavior" seems out of the ordinary, the transaction is rejected and the consumer is given a receipt that instructs him or her to call the company's toll-free number for a copy of a report detailing their return activity.