Bramwell’s Lunch Beat: CAQ Ready to Pilot Test Set of Audit Quality Indicators
Google braced for French tax demand
Tim Bradshaw of the Financial Times wrote today that Google is facing a tax demand from the French government that could reach into hundreds of millions of euros.
A regulatory filing confirmed reports earlier this year that French tax authorities objected to Google’s European tax structure, which sees the search and online advertising company recognize revenues through an Irish subsidiary.
“In March 2014, we received a tax assessment from the French tax authorities,” Google said, according to the article. “We believe an adequate provision has been made and it is more likely than not that our tax position will be sustained. However, it is reasonably possible that resolution with the French tax authorities could result in an adjustment to our tax position.”
Bradshaw noted that French magazine Le Point reported in February that the sum, relating to an investigation which began in 2011, could total between €500m and €1bn. Google declined to comment on the figures.
Google has argued that its tax affairs are fully compliant with European law and often cites consultants’ reports that argue Internet companies contribute billions of euros to local economies.
Center for Audit Quality leads first effort in US to pilot test audit quality indicators
The Center for Audit Quality (CAQ) yesterday released a report, CAQ Approach to Audit Quality Indicators, which details the public policy organization’s approach to communicate a set of potential audit quality indicators (AQIs) that will be pilot tested by CAQ member firms with select audit committees.
According to the report, the CAQ believes a set of potential AQIs “could provide additional perspective on the key elements of a firm’s system of quality control as it applies to a particular audit, and could be useful to further an audit committee’s understanding of matters that may contribute to the performance of a quality audit.”
“We recognize that regulators, including the PCAOB, also are conducting important work in the area of audit quality indicators. We hope that the CAQ Approach to Audit Quality Indicators, and the subsequent pilot testing, will be valuable to their efforts,” CAQ Executive Director Cindy Fornelli said in a release.
The CAQ’s approach to AQIs is based on a twofold focus: communications of AQIs that are directed at audit committees; and communication of AQIs that are focused largely on engagement-specific indicators.
The approach also includes a set of potential AQIs that, taken as a whole, could aid audit committees in their oversight of the audit. This set of AQIs encompasses the following four key elements of audit quality:
- Firm leadership and tone at the top
- Engagement team knowledge, experience, and workload
- Auditor reporting
The CAQ will soon begin a profession-wide effort with its member firms to perform pilot testing with engagement teams and their related independent audit committees. The pilot testing will run through the completion of the 2014 audit cycle.
CAQ plans to test list of audit quality indicators
The Public Company Accounting Oversight Board (PCAOB) is encouraged by the CAQ’s effort, according to an article by Tammy Whitehouse of Compliance Week.
“It is important that the profession make all attempts possible to pursue meaningful measures to improve audit quality,” said Greg Jonas, director of the PCAOB’s office of research and analysis, according to the article.
Jonas is leading a PCAOB project that is trying to identify AQIs as a way of determining how best to measure and manage audit quality, Whitehouse noted.
Click here to read a speech Jonas made during the AICPA National Conference on SEC and PCAOB Developments last December, which updated attendees on the status of the PCAOB’s AQI project.
House panel to act on expired tax breaks
According to lobbyists, House Ways and Means Committee Chairman Dave Camp (R-MI) is expected to move to permanently extend several expired tax breaks next Tuesday, Bernie Becker of The Hill reported today.
Camp said last month that he would seek to keep some of the so-called “tax extenders,” the dozens of tax incentives that regularly expire, for good. Other extenders would be kept out of the tax code.
More than 50 tax breaks in all expired at the end of 2013, including the popular credit for research and development and incentives for alternative energy, Becker noted. Camp extended more than a half dozen of the temporary incentives in his broad tax reform draft in February, including the research credit and a deduction for small business expensing known as Section 179.
Those preferences are expected to be the focus of a Tuesday mark-up at Ways and Means, though lobbyists don’t expect an incentive that allows owners to more quickly write off the cost of thoroughbred horses to make the cut, according to the article.
Issa questions role of Holder’s DOJ in targeting of Tea Party groups
Becker and Cristina Marcos of The Hill reported yesterday that House Oversight and Government Reform Committee Chairman Darrell Issa (R-CA) and 16 other GOP lawmakers are alleging that the US Justice Department had shown interest in prosecuting tax-exempt groups that were dishonest about their political activity.
The Republicans said they want Justice to explain its role in the examination of tax-exempt groups, and have requested to interview Richard Pilger, a Justice Department official, about an e-mail conversation he had with former IRS official Lois Lerner about potential prosecutions.
That conversation, prompted by a suggestion from Senator Sheldon Whitehouse (D-RI), happened just two days before Lerner, the former head of the IRS Exempt Organizations division, acknowledged and apologized for the IRS’s scrutiny of Tea Party groups.
Citing newly released e-mails, Issa and the other GOP lawmakers are investigating whether more senior officials at the Justice Department wanted Pilger to discuss the matter with Lerner. Pilger told Lerner on May 8, 2013, that “I have been asked to run something by you,” Becker and Marcos wrote.
“The department's use of alleged false statement on the tax-exempt application is an unfortunate instance of prosecutorial 'gotcha,' targeting these victims for supposed 'lies' about activities that they are legally allowed to do,” Issa and other Republicans on the Oversight Committee wrote to Attorney General Eric Holder, according to the article.
Deloitte hires accountant after noticing popular tweets of audit calculations
From The Onion last month. Enjoy. Have a good Friday.
- After lifetime ban on PwC auditors, India regulator is definitely done with Satyam (Going Concern)
- In Bitcoin we don’t trust (CFO)
- Accounting rules unravel the mysteries of Britain’s economy (Financial Times)
- Illinois graduated income tax vote next week (Chicago Tribune)
- We’re using Enron laws to prosecute a fisherman? (Bloomberg View)
- Football dad beats IRS in Tax Court (Forbes)
- The IRS and the tax system: Integrity and fairness for whom? (Forbes)
- DIY becomes preferred tax method (USA Today)
- A tax break for getting an MBA? (MarketWatch)
- Backwards budgeting for the IRS (Bloomberg Businessweek)
- Dave Camp’s tax reform could kill community foundations (TaxVox)
- Doctors are target of an income tax fraud scheme; the rest of us need to watch out for a new e-file phishing attempt (Don’t Mess With Taxes)