Bramwell’s Lunch Beat: GOP Senators Sink Tax Extenders Bill

2013 comment letters trends and analysis – issues breakdown
According to data from Audit Analytics, the US Securities and Exchange Commission (SEC) issued 6,166 comment letters that referred to 10-K and 10-Q filings to companies with market cap of at least $100 million in 2013. That represented a decrease of about 4.5 percent from 2012, when the SEC sent 6,408 letters to similarly sized companies.

The number of companies on the receiving end of those letters was consistent with that trend: 1,552 companies received such letters in 2013 compared to 1,609 in 2012.

In a May 12 blog, Olga Usvyatsky of Audit Analytics looked at the major issues that were subject to SEC review in 2013 for 10-K and 10-Q filings.

“Most of the topics that were common in 2012 pop up again in 2013,” she noted. “Executive compensation topics were slightly more prevalent in 2013 letters (7.9 percent of all 10-K/10Q letters in 2013, compared to 7.65 percent in 2012). On the other hand, the share of letters referring to legal contingencies and critical accounting policies declined significantly (6.44 percent and 7.72 percent, respectively, in 2013, compared to 11.77 percent and 11.33 percent last year).”

In her blog, Usvyatsky also looked at a number of more specific trends that may affect individual industries and/or sectors.

GOP kills Senate tax cut bill
Burgess Everett and Brian Faler of Politico reported that Senate Republicans on Thursday blocked an $84 billion tax cut bill over an amendments dispute. The vote was 53 to 40, with 60 needed to advance the measure.

The legislation, which would have revived more than 50 tax breaks that expired at the end of 2013, failed to clear a procedural hurdle amid widespread objections from Republicans that they had not been allowed to offer amendments, including one targeting an Obamacare medical device tax.

The bill, though, is not completely dead. Some Republicans said they hoped the delay would be brief, though the party’s top tax writer acknowledged the move could kill the legislation until after this year’s midterm elections, Everett and Faler noted. That’s an unfortunate risk, said Senator Orrin Hatch (R-UT), but it’s more important for Republicans to stand up for their rights.

“Don’t we care a little more about freedom and the right to bring up your amendments and the right to be a participant in the process?” asked Hatch, according to the article.

Lawmakers will take the weekend and the first couple of days of next week to see if an amendment deal can be worked out, aides in both parties said.

[Here’s some additional reading from the Wall Street Journal, Bloomberg, Roll Call, and The Hill.]

Wyden: Tax breaks bill could return next week
According to another article from The Hill, Senate Finance Committee Chairman Ron Wyden (D-OR) said he will try to bring the tax extenders bill back to the chamber floor as soon as next week.

Wyden said on Thursday he would quickly consult with Republicans on possible amendments to the legislation, Bernie Becker wrote.

Republicans generally support reviving the tax breaks, but they undercut the measure on Thursday in an intensifying spat with Senate Majority Leader Harry Reid (D-NV) over floor procedure and the blocking of amendments.

Wyden said Reid is open to bringing the tax extenders measure up again swiftly if a deal on amendments can be struck, Becker wrote. The chairman regretted that the legislation got caught up in broader Senate gridlock, adding, “It’s a sad day when you see people who are underwater on their mortgages get punished again, the veterans who find it tougher to get a job.”

But Becker noted that Wyden also didn’t sound any more open to allowing votes on issues such as repealing Obamacare’s medical device tax, which was the main amendment that Republicans were pushing. In a statement, Wyden later said he was “open to narrowly related amendments.”

Senate Banking approves bill to end Fannie Mae, Freddie Mac
Politico reported yesterday that the Senate Banking Committee approved bipartisan legislation that would get rid of mortgage giants Fannie Mae and Freddie Mac and overhaul the housing finance system that provides funding for home loans across the country.

However, Jon Pryor and MJ Lee wrote that there’s little chance Congress will enact legislation this year determining the future of the mortgage finance market, but the Senate bill and a competing proposal in the House represent the first serious attempts to grapple with the issue since Fannie and Freddie were rescued by taxpayers in 2008.

The bill, authored by Chairman Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID), was approved on a 13 to 9 vote and now moves to the full Senate. A floor vote this year, however, appears unlikely after several key Democrats on the panel, such as senators Chuck Schumer (D-NY) and Elizabeth Warren (D-MA), voted against the plan out of concern that it goes too far in throwing out the old system, Pryor and Lee noted.

The bill is backed by the White House, and committee leaders as well as Obama administration officials said they will continue to press for a Senate vote, but the housing debate is likely now delayed until the next Congress.

PCAOB releases staff guidance on economic analysis in PCAOB standard setting
The Public Company Accounting Oversight Board (PCAOB) on Thursday publicly released its Staff Guidance on Economic Analysis in PCAOB Standard Setting.

The guidance, which was prepared by PCAOB staff economists and the Office of the General Counsel, includes four main elements of economic analysis for setting auditing and related professional practice standards:

  • Describing the need for a rule.
  • Developing a baseline for measuring the effects of a rule.
  • Considering reasonable alternatives to the rule.
  • Analyzing the economic impacts of the rule (and alternatives to the rule), including the benefits and cost.

“The guidance builds on the PCAOB’s existing rulemaking process by establishing an analytical framework for staff to evaluate the economic implications of standard-setting projects that are presented for board consideration,” PCAOB Chairman James Doty said in a release. “The guidance should give those who are interested in the PCAOB’s standard setting a better understanding of the analysis that staff plan to conduct to ensure effective and efficient rulemaking. The guidance helps us pursue investor protection with appropriate consideration of regulatory burden.”

Chief Accountant Beswick to leave SEC
Paul Beswick, the SEC’s chief accountant since 2012, announced on Thursday that he is returning to the private sector.

“I have truly been fortunate to serve as chief accountant under two chairs and alongside the talented and highly dedicated staff in the Office of the Chief Accountant,” Beswick said in a release. “Throughout my service at the commission, the staff of the Office of the Chief Accountant has faced many challenges and opportunities. I have been continually impressed with how they rise to the occasion in the interest of investors and the US capital markets. I will miss the many relationships I have developed throughout the commission during my service.”

He will remain for a transitional period to help ensure continuity in the agency’s Office of the Chief Accountant, the release stated. It did not say what Beswick’s future plans are.

Beswick joined the SEC staff in September 2007 as senior advisor to the chief accountant and later was named deputy chief accountant of the Office of the Chief Accountant’s accounting group.

Among his many notable accomplishments, Beswick advised the SEC on the accounting and professional practice implications of numerous agency rulemakings and initiatives, including those required by the Dodd-Frank Act and the Jumpstart Our Business Startups (JOBS) Act.

GW’s Institute for Corporate Responsibility and Center for Audit Quality announce Initiative on Rethinking Financial Disclosure
The George Washington University School of Business and the Center for Audit Quality (CAQ) are responding to SEC Chair Mary Jo White’s challenge to streamline Form 10-K disclosure requirements by starting the Initiative on Rethinking Financial Disclosure.

According to a CAQ release, multiple teams of graduate students at the George Washington University School of Business will study the issues driving concerns over effective corporate disclosure. The students will then make specific recommendations to reduce unnecessary or redundant reporting requirements while maintaining the integrity and value of the information for investors.

Faculty from the university’s Institute for Corporate Responsibility and School of Business, a 12-person advisory committee that will include CAQ Executive Director Cindy Fornelli, and others will provide guidance to the student teams throughout a series of interactive sessions. Each student team will review several Form 10-K reports from randomly selected Fortune 500 companies to help inform their recommendations. The final projects will be presented for judging this September, then the most effective recommendations will be compiled into a report that will be submitted to the SEC in October.

Quick Links:

  • Alleged “touch it for a buck” creeper CPA got his license revoked for felony creepiness (Going Concern)
  • Accounting across borders (Journal of Accountancy)
  • Companies too bullish about pension gains, study finds (CFO)
  • Should you pay your employees to quit? (CFO)
  • Mastering the soft skills (CFO)
  • Going concern looks out one year, starting in 2016 (Compliance Week)
  • Court denies motion to halt current conflict minerals disclosures (Compliance Week)
  • Income tax yo-yo hits US states (Wall Street Journal)
  • Are multinationals getting tired of waiting for corporate tax reform? (TaxVox)
  • Congress’s shot at real-world corporate tax reform (The News Journal)
  • Walgreen shareholder opposes potential deal to reincorporate abroad (New York Times)
  • A warning about the IRS that we should heed (Tax Analysts)
  • Repealing the property tax is an asinine idea (Tax Analysts)
  • NC debates tax on e-cigarettes (Charlotte Observer)

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