Bramwell’s Lunch Beat: PCAOB's Push for Auditor Rotation Fizzles Out
IRS chief, Republicans clash over tea party probe
During his first hearing since assuming the post of IRS commissioner, John Koskinen told the House Ways and Means subcommittee on February 5 that he plans to move the agency beyond the blight of its extra scrutiny of conservative groups to focus on taxpayer services, Obamacare, and implementing a law to clamp down on foreign tax evasion, Lauren French and Rachael Bade of Politico reported.
Koskinen said nobody wants the investigation into the IRS targeting conservative groups completed more than he does, adding, “I’d like to close the 501(c)(4) issue,” according to the article.
But French and Bade wrote that Republicans, including House Ways and Means Chairman Dave Camp (R-MI), are not ready to turn the page.
“Camp accused the agency of secretly working on proposed regulations, put forward by the Treasury and the IRS last November, to clarify what the government considers political activity for 501(c)(4) groups,” the article stated. “The rules are generating massive public interest with more than 21,000 comments – a record, Koskinen said.”
ALSO: Read a Wall Street Journal opinion piece on the hearing, “Obama’s IRS ‘Confusion.”
[Click here to read AccountingWEB’s coverage of the Tea Party scandal.]
PCAOB’s auditor rotation project is essentially dead
Emily Chasan of the Wall Street Journal reported on February 5 that the Public Company Accounting Oversight Board (PCAOB) is no longer pursuing a project to impose auditor term limits on public companies, nearly three years after proposing the idea.
While addressing members of the US Securities and Exchange Commission (SEC) on Wednesday, PCAOB Chairman James Doty said the board does not currently have an active project to move forward on a term limit for auditors, according to the article.
“The watchdog has encountered heavy resistance to the idea of auditor rotation, receiving hundreds of comment letters from corporate board members and companies who argued that auditor rotation would leave companies with inexperienced auditors and harm audit quality,” Chasan wrote. “Research by the PCAOB itself showed that in several industries, companies faced a choice of just one or two big audit firms with expertise in their sector, complicating the feasibility of mandatory rotation.”
US audit watchdog nearing China deal to inspect audit firms
Also during his meeting Wednesday with the SEC, Doty said the United States and China are close to striking a deal that would allow Washington to inspect the audit work of accounting firms in China, Sarah Lynch of Reuters reported.
An SEC administrative law judge recently moved to temporarily suspend the Chinese units of the Big Four accounting firms from practicing in the United States. Lynch wrote that such a deal “would alleviate a long-running dispute between the two global powers regarding oversight of auditors, an issue aggravated by a series of accounting scandals in recent years at US-listed Chinese companies.”
Doty told reporters that the Chinese and the PCAOB are still exchanging draft agreements and have not decided how the inspections would be conducted. According to Lynch, Doty said, “Patience is limited for getting this solved. This is the end of the line.”
How the lease accounting proposal may change
During a speech in Tokyo on February 5, International Accounting Standards Board (IASB) Chairman Hans Hoogervorst acknowledged that the converged leases project poses difficulties for standard-setters and described some possible solutions, Journal of Accountancy Senior Editor Ken Tysiac reported.
“The IASB and FASB [Financial Accounting Standards Board] are involved in new deliberations on their converged leases project after receiving feedback from financial statement preparers that said implementation costs would be high and benefits would be low if a proposal released in May is approved,” the article stated.
Hoogervorst said the two standard-setting organizations take these concerns very seriously.
“As we take our final decision in the next couple of months, you can rest assured that we will do our utmost to keep these costs at a minimum,” Hoogervorst said, according to the article.
Six signs it’s time to find a new accounting firm
When will your business know the time is right to change accounting firms? Glenn Van Etten, one of the founding members and owners of Brighton Cromwell, provided his perspective in a column for Business News Daily.
“It can be difficult to determine if your company is too big or too small for a particular firm,” he wrote. “It took us years to realize we had outgrown our first firm, and by then we had left tens of thousands of dollars on the table that could have been spent reinvesting in the business.”