Bramwell’s Lunch Beat: Honesty Is the Best Policy
Roadblocks ahead for tax reform
House Ways and Means Committee Chairman Dave Camp (R-MI) is facing a crucial test in his longstanding quest to overhaul the tax code at the upcoming House GOP retreat, wrote Bernie Becker of The Hill on January 20.
Other tax writers believe Camp is unlikely to delve too deeply into the “nitty-gritty of his tax reform bill” during the retreat scheduled for the end of this month in Cambridge, Maryland, according to the article.
“Instead, the tax chairman will likely look to more broadly reassure Republican lawmakers that have heard much about the popular tax breaks that will be on the chopping block in a reform effort, according to an aide familiar with discussions,” Becker wrote.
Financial planning starts with the truth about your bottom line
In case you missed this early last week, Forbes staff writer Steve Schaefer talked to Connecticut-based financial planner Joel Johnson about why being honest with yourself is the best policy – even if the financial truth hurts.
Schaefer wrote the first thing Johnson does when he meets with a client looking for financial advice is he tries to get a handle on reality with three key questions:
- What are your goals?
- What are your job prospects for the next five to ten years?
- How much debt do you have?
“Don’t be afraid to look at the problems,” Johnson told Schaefer, “because when you’re honest about those, the solutions often present themselves.”
(FYI, a video accompanies the Forbes article mentioned above.)
PCAOB finds issues in majority of BDO audits inspected
Tammy Whitehouse of Compliance Week reported on January 9 that the Public Company Accounting Oversight Board (PCAOB) gave Grant Thornton LLP a failing grade on 65 percent of audits inspected in 2012 – the highest failure rate ever registered in a single inspection report by a major firm.
On January 17, Whitehouse wrote that the PCAOB found problems with eleven of the twenty audit files it inspected, or 55 percent, at BDO USA LLP in 2012, according to the firm’s recently published inspection report, giving BDO the second-highest failure rate among major firms whose reports are available so far.
According to the article, BDO fared better with inspectors in the 2011 cycle, when inspectors found problems with nine of twenty-three audits, or 39 percent. BDO’s report for 2010 inspections showed a failure rate of 26 percent.
“Of the five major firms whose reports for 2012 inspections have already been published, BDO's failure rate of 55 percent falls behind only Grant Thornton's 65 percent rate, but just ahead of EY's 48 percent,” Whitehouse wrote. “Falling in line behind EY is PwC at 39 percent, KPMG at 34 percent, and Deloitte at 25 percent. Inspection reports for 2012 are still outstanding for McGladrey and Crowe Horwath, which turned in the highest rates among major firms in 2011 at 50 percent and 62 percent, respectively.”
Accounting firms need a defensible data breach response plan
In an article he wrote for CPA Practice Advisor on January 20, Alan Heyman, CEO of the SMLR Group Inc., posed a question: “What are you doing in the cybersecurity arena to develop a defensible breach approach to manage and limit your potential exposure?”
“The actions your firm takes because of a breach could be closely examined,” he wrote. “Your firm needs to be prepared for this eventuality. Like disaster recovery plans that are becoming more popular for firms as a result of climate emergencies, Defensible Breach Response Plans and WISP [Written Information Security Program] Plans are necessary for the reality of regulatory and/or litigation scrutiny.”
Eight errors you’re most likely to make on your tax return
Geoff Williams of US News and World Report wrote on January 17: “You're starting to think about your taxes – or maybe you're fully engaged and already working on them. Either way, be careful. Last year, the IRS said it discovered 2.7 million errors made by 22 million taxpayers on their 2011 returns, which was considerably fewer than the 6.6 million errors the year before. It's believed that the rise of tax software preparation programs have something to do with that.”
Still, Williams added, even if you use software or hire a preparer, mistakes can be made. He provided eight of the more common errors, according to tax experts. Did he miss any? Send me an e-mail or tweet @bramweller other common tax-preparation errors, and I might publish some in a future “Bramwell’s Lunch Beat.”
My job: Beth Franklin, Certified Public Accountant
Laura French of the Minneapolis Star Tribune wrote a profile on Beth Franklin of Fox Tax LLC about her career as a CPA. Does the following sentence sound familiar?
“I put in 40 percent of my hours in three months of the year. I worked eighty-five hours a week last tax season.”
Franklin told French that she works four days a week the rest of the year, and “we’re more liberal with time off.” Although she has no plans to leave her dream job, Franklin wants to “keep it exciting and new in the off season,” and she would “love to teach accounting in a fine arts program.”
Startups have some important accounting, tax decisions to make
David J. White, CPA, a senior tax accountant at Carr, Riggs & Ingram LLC in Tallahassee, Florida, wrote a column for the Tallahassee Democrat on why startup business owners should “leverage the expertise of others and discuss accounting and tax questions with a qualified CPA or adviser.”
“You’ve finally found it – you have the right idea, the perfect team, and are one beta test away from seeking investors,” the column stated. “Amid the excitement of having started your own business, you will want to also pay attention to your accounting system and tax responsibilities.”