PCAOB gives Grant Thornton record failure rate
Tammy Whitehouse of Compliance Week reported last week 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.
“The PCAOB found fault with twenty-two of the thirty-four Grant Thornton audits scrutinized, a notable jump from the fifteen of thirty-five audits, or 43 percent, with problems in 2011,” the article stated. “In the four years that the PCAOB has provided data in its report on how many audits it inspects, only Crowe Horwath has registered a failure rate above 60 percent, hitting 62 percent in 2011 and 2010.”
In a letter included in the PCAOB inspection report, Grant Thornton CEO Stephen Chipman and Trent Gazzaway, national managing partner of audit services, noted the report addresses 2011 financial statements that were audited in 2012 and inspected in 2013. The firm revised its audit methodology and training around internal control in summer 2012 based on concerns raised by the PCAOB about the quality of internal control auditing across the profession.
Criminal charges not expected in IRS probe
The FBI does not plan to file criminal charges in the IRS targeting scandal involving conservative groups, law-enforcement officials told the Wall Street Journal on January 13.
“The officials said investigators didn’t find the kind of political bias or ‘enemy hunting’ that would amount to a violation of criminal law,” wrote Devlin Barrett. “Instead, what emerged during the probe was evidence of a mismanaged bureaucracy enforcing rules about tax-exemption applications it didn’t understand, according to the law-enforcement officials.”
While it is increasingly unlikely any criminal charges will result from the investigation, officials said that could change if unexpected evidence is discovered that alters their thinking.
Last May, the IRS admitted it had improperly scrutinized the federal tax-exempt status of certain conservative groups, including the Tea Party, during the 2012 election.
Conservatives are right: Media under-covered the IRS “scandal”
Another January 13 article pertaining to the IRS scandal was written by Matt Gertz, deputy research director for Media Matters for America, who concluded that the national media’s coverage of the scandal has dissolved in recent months.
“Conservatives are misusing a deceptive study to claim that the ‘liberal media’ is giving the recent bridge scandal involving New Jersey Gov. Chris Christie’s administration more coverage than they gave allegations that the IRS inappropriately targeted conservative groups,” Gertz wrote. “In their attempt to use the Christie story for political gain, conservatives accidentally point to a real media failure: after heavily covering the initial IRS allegations, the press has largely ignored subsequent revelations undermining the ‘scandal.’”
Stop whining, Christie conservatives! Obama scandals got lots of ink
On the flipside, Los Angeles Times political columnist Robin Abcarian wrote on January 13 the notion that the unfolding New Jersey bridge scandal has received more press coverage than the Obama administration’s Benghazi and IRS scandals “is a silly attempt at misdirection by whiny conservatives.”
“Monday, a laughable headline over a column in the New York Post declared: ‘Why Bridgegate made headlines, but Obama’s IRS scandal didn’t.’ Is this sloppy language or sloppy thinking?” she wrote.
“As it happens, the IRS story got plenty of headlines. Every news outlet in the country in every medium – newspaper, television, radio, Internet – covered it. In fact, I tried to count the Post’s own headlines on IRS ‘scandal’ stories, but gave up because there were too many,” Abcarian continued. “Perhaps that Post headline writer meant to say the IRS ‘scandal’ has not gotten traction. The reason it did not get traction with voters is because the partisans who pushed it overreached.”
[Click here to read AccountingWEB’s coverage of the IRS scandal.]
Surprise! Audits dig deeper
Emily Chasan of the Wall Street Journal wrote on January 13: “This year, financial executives say their external auditors are requesting far more documents and details than usual on everything from pension assets to management reviews. As companies rush to close their books on 2013, they say these new and unanticipated demands are adding time, cost, and confusion to the audit process.”
What is the reason for this surge in more rigorous audits? The Public Company Accounting Oversight Board (PCAOB) last October warned it had found “high levels of deficiencies” in audits of internal controls.
“Now, auditors are asking for more documentation, going line-by-line through budgets, sitting in on meetings to observe internal controls in action, and meeting with company accountants to understand their thinking when they signed a specific document,” the article stated.
[Click here for AccountingWEB’s article on the PCAOB alert on internal control audit deficiencies.]
Taxes on severance pay? US Supreme Court to hear case
In oral arguments on January 14 before the US Supreme Court, the Obama administration will ask justices to overturn an appeals court ruling in favor of issuing a tax refund to Quality Stores Inc., a rural retailer that declared bankruptcy in 2001, Reuters reported on Monday.
The article stated that while the tax refund in this case is small – about $1 million – the Obama administration believes the IRS could owe more than $1 billion in thousands of tax refund claims to individuals and businesses if the appeals court ruling is upheld.
In the case before the Supreme Court, the IRS and Quality Stores are arguing over seemingly contradictory language in the tax code related to severance pay and Federal Insurance Contributions Act (FICA) taxes.
“At issue is whether severance payments to workers who were involuntarily terminated are taxable under [FICA], which helps pay for Social Security retirement pensions and Medicare health insurance for the aged,” Patrick Temple-West wrote.
Hatch calls for case-by-case scrutiny of expired breaks: Taxes
“Bramwell’s Lunch Beat” hasn’t featured an article on the expired tax breaks since last Thursday. Let’s rectify that.
In a January 13 Bloomberg article, Marc Heller and Aaron E. Lorenzo reported Senator Orrin Hatch of Utah, the top Republican on the Senate Finance Committee, said as part of examining the so-called tax extenders that expired at the end of the year, the goal should be to let some go by the wayside rather than simply revive them all retroactively.
In another sign that swift action isn’t likely on the tax extenders, House Ways and Means Committee Chairman Dave Camp (R-MI) told reporters last week his focus remains on promoting a comprehensive revision of the US tax code. The article stated scrutinizing the extenders would be part of that, with no separate action on them by the panel while Camp’s push for the revision remains on the table.