Bramwell’s Lunch Beat: PCAOB Rule on ID’ing Lead Audit Partner Coming Soon
Treasury prepares options to address tax inversions
Damian Paletta of the Wall Street Journal reported on Monday that US Treasury Department officials are assembling a list of administrative options for Treasury Secretary Jacob Lew to consider for ways to deter or prevent US companies from reorganizing overseas primarily to avoid paying federal taxes, an agency official said Monday.
Lew is expected to select one or more of the options as a way to address so-called tax inversions, which have become increasingly popular for US companies as a means to lower their tax bills by restructuring through transactions overseas.
Paletta wrote that Treasury officials are working through different ideas and the recommendations aren't expected to be made imminently, the official said. Still, the process, and recent comments on the matter by President Obama, appear to increase the likelihood that the administration will take some steps to either prevent companies from such reorganizations or to remove some of the benefits of such moves.
This process likely pushes the timeline for White House action into September, according to the article. Changes could range from concrete rules to proposals that take months to implement. But the interim Treasury process isn't expected to take months, the Treasury official said.
Regulator says rule to identify lead audit partners ready in September
Michael Rapoport of the Wall Street Journal reported last week that a new rule requiring accounting firms to tell investors exactly who is in charge of each company’s audit is expected to be completed next month, according to the chairman of the Public Company Accounting Oversight Board (PCAOB).
The new PCAOB rule is aimed at giving investors more information and making auditors more accountable, Rapoport wrote. It would require accounting firms to disclose the name of their lead “engagement partner” in charge of each audit the firms perform, every year.
PCAOB Chairman James Doty “anticipates that we will move forward with the transparency project to disclose the name of the engagement partner in September,” Colleen Brennan, a PCAOB spokeswoman, said August 13, according to the article.
The rule’s supporters say identifying the lead audit partner will encourage auditors to perform better and help investors assess audit quality and performance, by making it possible to get a sense of an individual partner’s track record, Rapoport wrote.
However, some big accounting firms have opposed disclosing the lead partners’ names, citing potential liability and other concerns.
Tax burden in US not as heavy as it looks, report says
Let’s get back to the topic of inversions for a moment. New York Times DealBook editor-at-large Andrew Ross Sorkin wrote on Monday that an academic paper written by Edward D. Kleinbard, a professor at the Gould School of Law at the University of Southern California and a former chief of staff to the congressional Joint Committee on Taxation, argues that the US tax code is not impeding global competitiveness. In fact, the opposite is true.
In his paper, Kleinbard wrote that despite the claims of corporate apologists, “international business ‘competitiveness’ has nothing to do with the reasons for these deals. Whether one measures effective marginal or overall tax rates, sophisticated US multinational firms are burdened by tax rates that are the envy of their international peers.”
Professor Kleinbard contends that most US multinational companies don’t pay anywhere near the US corporate tax rate of 35 percent. Companies paid, on average, 12.6 percent, according to the US Government Accountability Office, which last measured it in 2010, by deliberately stashing piles of cash abroad.
“Professor Kleinbard argues that lower tax rates are not driving companies to inversions; instead, he contends it is all the money that companies have overseas – some $2 trillion – and don’t want to bring back to the United States despite protestations by many chief executives that they wish they could,” Sorkin wrote.
H&R Block launches small business accounting services
H&R Block Small Business on Monday launched its brand new client accounting services to provide bookkeeping, payroll, tax, and coaching to small businesses, wrote James Dornbrook of the Kansas City Business Journal.
The service will be offered only in the Kansas City area for now and will gradually expand nationwide. All of the services will be provided out of the company's headquarters. Eventually, H&R Block Inc. will add client service representatives throughout its branch network to develop new business, help set up systems for clients, and answer questions.
“We've had a few offices offering similar services in the past, but what we're doing now is bringing it out on a bigger and more modern scale,” said Jeremy Smith, director of H&R Block Small Business, according to the article. “It's easier for the clients to use. It's simpler, more integrated, and enables the clients to do things and us to do things we never could do before. So we're allowing clients to focus on their business and not worry about this back-office bookkeeping stuff.”
The service eliminates paper by having clients drop their documents into a special scanner provided by H&R Block, which automatically loads it onto a cloud-based system that enables H&R Block and the client to view the documents at anytime, Dornbrook wrote. Clients can view their account through special smartphone applications that are part of the service. They can also approve invoices and make payments right from their mobile device.
AICPA membership now exceeds 400,000
The American Institute of CPAs (AICPA) on Tuesday announced that its membership recently surpassed the 400,000 mark.
The AICPA, which is the world’s largest member organization representing the CPA profession, has seen solid growth in recent years, despite a volatile economic climate. Membership has increased nearly 13 percent in the past 10 years and 25 percent since 1994.
“We’ve come a long way since the early days of the 20th century, when the AICPA had just a little more than a thousand members,” AICPA President and CEO Barry Melancon, CPA, CGMA, said in a written statement. “I’m particularly proud of the growth we’ve seen in the past seven years – a challenging period for many professional organizations because of the economic downturn. Hitting the 400,000-member mark is a testament to the multifaceted services offered by the AICPA and its commitment to the public interest, and it’s also a reflection of the high regard in which the CPA credential is held in today’s complex world.”
The AICPA provides continuing education, a rigorous framework of ethical standards, technical guidance on accounting and audit matters, advocacy on issues important to the profession and the public interest, and a host of other key professional resources for members.
“While membership growth is an important measure of the AICPA’s health and strength, it’s only part of the equation,” Melancon said. “We have a steadfast commitment to member engagement and satisfaction, too.”
The AICPA plans to honor its 400,000th member – Jennifer Highsmith, a 27-year-old senior audit associate in the Jacksonville, Florida, office of Johnson Lambert LLP, a top regional public accounting firm – in October.
“I joined for multiple reasons,” Highsmith said. “The AICPA is a great profession-wide organization to be part of, with a lot of volunteer opportunities. Once you have your license and a job as a CPA, it’s kind of the cherry on top.”
She decided to pursue accounting because of her aptitude with numbers and because her mother – who did some accounting work before going into teaching – convinced her it would be a rewarding career.
Highsmith will receive a certificate noting her status as the 400,000th member and has been invited to the AICPA’s Fall Council meeting in Boston for recognition.
AICPA Accounting Competition challenges undergraduates to help guide businesses as management accountants
The AICPA also announced on Tuesday that the enrollment period for its 2014 Accounting Competition is now open, with a total of $40,000 in awards at stake.
The fifth annual competition, which concludes on December 22, challenges teams of undergraduates to play the role of management accountants and combine their accounting and financial expertise with strategic insight to help guide business decisions.
The business in question is a fictional company called Humble Pies Inc., run by two best friends from Charlotte, North Carolina. As demand for the company’s pies has increases over the years and expanded to a national market, the co-owners hired a new controller, a CPA with her Chartered Global Management Accountant (CGMA) designation, to help them continue to grow. Over the course of three increasingly challenging tasks, the competition tests a team’s ability to assist the controller and ensure that Humble Pies remains profitable and competitive.
The pace of business is now faster than ever, and therefore, the competition is deadline-driven. Teams have until 11:59 a.m. Eastern time on September 29 to submit their entries.
“Management accountants help businesses make decisions that position them for success by staying ahead of trends and leveraging innovation. Their expertise is in steering organizations of all sizes, and this year’s competition allows students to gain exposure to the critical role CPAs play in business,” Joanne Fiore, AICPA vice president of professional media, pathways, and inclusion, said in a written statement. “Companies of all sizes increasingly rely on management accountants for strategic business development. The competition challenges students to analyze business opportunities from a financial, strategic, and risk perspective, and help drive value.”
The top three teams in the competition will each receive $10,000, as well as a trip package to Washington, DC, with their advisor, to present their case to an executive panel of judges. There, they will compete to earn money for their schools, with the first-place team taking home $5,000, second place earning $3,000, and the third-place team netting $2,000.
“This is a competition that will grow your career. It is a great way to learn more about accounting, learn how to work with other people, and actually present your ideas,” said Donald Strite, a 2012 competition finalist.
The 2014 AICPA Accounting Competition is open to currently enrolled undergraduate students at two-year and four-year colleges, community colleges, and universities in the United States, the District of Columbia, Puerto Rico, Guam, Northern Mariana Islands, American Samoa, and/or the U.S. Virgin Islands. Students compete in teams of three or four, with at least two of the team members being declared accounting-related majors, one of whom will serve as team captain. The one or two remaining members may come from any discipline. Each team may also elect to have an advisor who can be either a full-time faculty member or graduate student at a two-year or four-year degree institution, or a local CPA who is a member of the AICPA.
First-round submissions will be evaluated to determine the 15 semifinalists who will then compete for the three final spots.
All awards are fully funded by the AICPA Foundation.
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- New Deloitte CEO calls KC home (Kansas City Business Journal)
- PwC didn’t want to say mean things about its client (Bloomberg View)
- Fabrinet postpones financial reports pending accounting investigation (Wall Street Journal)
- Why an LPA? (Dinesen Tax Times)
- The SEC is really teed off about insider trading on golf courses (Fortune)
- Oil industry’s taxes create odd wedge for Alaskan voters (New York Times)
- Alaskans can craft a better oil tax deal than SB 21 (Alaska Dispatch)
- A devastating tax (Boston Herald)
- In a stew over inversions (Washington Post)
- A progressive way to end corporate inversions (Huffington Post)
- Cutting taxes is patriotic (US News and World Report)
- The OID fraud and criminal gullibility (Forbes)
- Oklahoma moves towards the gold standard (Forbes)
- Economic impacts of inequality (Forbes)
- A simple model for business planning (Forbes)
- IRS, Justice Department seek civil injunction in tax evasion case (Due Diligence)
- India quietly readies for FATCA (Due Diligence)
- American Tax Relief slammed by FTC (Due Diligence)
- New York state tax credits yield ‘Dora and Friends,’ other post-production gains (Variety)
- Detroit witness defends tax estimates behind debt plan (Bloomberg)
- New jobs reports shows Brownback’s tax-cut promises still failing (Kansas City Star)