China auditors barred for six months over blocking SEC probes
Chinese affiliates of the Big Four accounting firms were barred for six months from leading audits of US-listed companies after failing to comply with US Securities and Exchange Commission (SEC) orders for documents at the heart of a series of accounting fraud probes, Bloombergreported on January 23.
“The decision by US Administrative Law Judge Cameron Elliot, if finalized, would force more than 200 Chinese companies traded in the United States to find new auditors, while multinationals with significant operations in China, like General Motors Co., would also have to bring in new firms to check those units,” Alan Katz wrote.
The firms receiving the bans – Deloitte Touche Tohmatsu CPA Ltd., Ernst & Young Hua Ming LLP, KPMG Huazhen, and PricewaterhouseCoopers Zhong Tian CPAs Ltd. – said in a joint statement that they will appeal the decision.
According to Katz, Elliot said in the decision that the auditors’ actions “involved the flouting of the commission’s regulatory authority, which may not be as egregious as, say, accounting fraud, but is still egregious enough that it weighs against leniency.” The judge added that the firms “acted willfully and with a lack of good faith.”
How mentoring helps Cummins tackle the skills gap
In his latest column for Forbes, Jeff Thomson, CMA, president and CEO of the Institute of Management Accountants (IMA), interviewed Ginger White, a Six Sigma Master Black Belt at Cummins, a heavy equipment manufacturer based in Columbus, Indiana.
In the article, Thomson and White discussed how CFOs and managers can find the right entry-level team members and train employees to take on strategic and leadership roles.
“Within Cummins, we actually start mentoring and leadership development at the intern level,” White told Thomson. “When we plan our internships, we assign the students to a couple of finance leaders. These leaders can guide the interns and give them connections that may not be available through the department where they are placed. At the end of the summer, the interns present their work to the finance leaders, which helps them learn presentation skills, learn from other interns, and discover a broader perspective of what it’s like to work at Cummins as an accounting or finance professional.”
Congress whips IRS, you feel pain: Our view
The USA Today Editorial Board chimed in on the paltry $11.3 billion Congress allotted to the IRS in its latest spending bill, the agency's lowest allocation since it received $11.1 billion in 2008.
Despite the IRS having more work, more taxpayers, and a more complex tax code to administer, Congress has carved almost $1 billion out of the agency's budget in the past four years.
“Less money equals fewer experts at the end of the line when you hit a wall halfway through your 1040,” the op-ed stated. “Less money also translates into fewer enforcement personnel and less ability to collect taxes on hundreds of billions of dollars in undeclared income. To reduce the federal deficit, collecting money from tax evaders is a great place to start.
“Instead, Congress would rather use the agency as a whipping boy for lawmakers' own ineptitude. In case there's any doubt why the IRS got about 109 million calls from confused taxpayers last year, consider the nearly 4 million-word tax code that flows from the laws passed by Congress. That's roughly ten times the size of the Bible.”
[Click here to read AccountingWEB’s article on the spending bill.]
Global tax-avoidance rules to be aimed at digital economy
The Organization for Economic Cooperation and Development – supported by thirty-four member countries, including the United States, United Kingdom, Germany, and Japan – is seeking to ensure that multinational companies pay their taxes and will publish a proposal focused on the digital economy in the next two months, Richard Rubin and Jesse Drucker of Bloombergreported on January 23.
This past July, the international economic group proposed developing rules over the next two years to prevent companies from avoiding taxes. Such rules would be offered for adoption by its member countries. The idea was endorsed by the Group of 20 major economies, the article stated.
“The rules would try to keep companies from putting patent rights into mailbox companies or taking interest deductions in one country without reporting taxable profits in another,” Rubin and Drucker wrote. “Another would require companies to disclose to regulators their income in subsidiaries around the world.”
AT&T sees $7.6 billion gain on pension accounting
Anna Prior of the Wall Street Journalreported on January 22 that AT&T Inc. expects to record a fourth-quarter pretax $7.6 billion gain related to actuarial gains and losses on the telecommunications company's pension and postemployment benefit plans.
AT&T, along with approximately thirty other companies, switched to “mark-to-market” pension accounting in the past few years to make it easier for investors to gauge plan performance, the article stated.
“With the switch, pension gains and losses flow into earnings sooner than under the old rules, which are still in effect and allow companies to smooth out the impact over several years,” Prior wrote. “Companies that switch to valuing assets at up-to-date market prices may incur more volatility in their earnings, but it offers a more current picture of a pension plan's health and contribution to the bottom line.”
Satellite TV, cable embroiled in fight over taxes
There’s an ongoing tax controversy brewing in Illinois involving satellite television providers and cable companies, the Chicago Tribunereported on January 23.
Satellite TV is not taxed in Illinois, and the cable TV industry doesn't think that's fair. Cable companies pay franchise fees to municipalities to string or bury their wires across public property and into homes, the article stated.
“Cable companies' efforts in Springfield to push through a satellite TV tax have gained some traction as lawmakers look for new revenue sources in a cash-strapped state,” Ameet Sachdev wrote. “The tax was included in legislation twice in the past two years, but the bills didn't get far.”
Under the proposal, a 5 percent levy would be passed on to satellite TV customers, adding $55 a year to an average user’s bill.