AccountingWEB Weekly News Wrap-Up - Issue 125
1. IRS Increases Standard Deduction, Exemptions, Thresholds
2. POB to Oversee Deloitte Peer Review of Andersen
3. Layoffs and New Services Shake Up Cap Gemini
4. Mayor Giuliani Discloses Pact with Ernst & Young
5. Mellon Bank Tax Return Problem Gets Worse
6. Gallup Poll Ranks Accountants on Honesty and Ethics
7. IRS Announces Change that Favors Small Businesses
8. Andersen CEO Takes Aim at Enron
9. KPMG Humorless Over Disclosure of Company Anthem
10.Tax Tips Ticker - Add Value to Your Web Site
When I started preparing tax returns for a living, exemptions were worth $750, investors got to exclude the first $100 of dividend income, and income averaging was the shrewd tax planning gimmick that lured taxpayers into the offices of accountants.
The rules have all changed, and tax return preparers must unravel a completely new set of issues that continue to confuse the nation's taxpayers. We're off and running for 2002 tax planning with this week's announcement of a new standard deduction amount, new tax tables, and other changes that seep into every area of the tax return forms.
The IRS has released Revenue Procedure 2001-59, which includes the new 2002 tax tables as well as numerous inflation-related changes to tax deductions, credits, and exemptions.
The Public Oversight Board, the group that oversees the peer review process required of all public accounting firms that audit publicly held companies, has decided to take an active role in the expanded peer review that Deloitte & Touche is providing to Andersen.
Cap Gemini is cutting back and growing at the same time. In response to worsening economic conditions, the consultancy company has announced plans to cut 2,500 jobs, bringing the total cuts this year to 5,400. Meanwhile, the firm has also announced plans to launch a spin-off company, which will provide manpower and expertise on a time and materials basis.
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New York's Mayor Rudy Giuliani plans to start his own consulting firm when he leaves office in January. Reports are that the new firm will have an affiliation with Ernst & Young and will receive financial backing from the Big Five firm.
Earlier this year it was disclosed that, in the spring of 2001, employees at Pittsburgh's Mellon Bank tax processing center hid and in some cases destroyed by shredding at least 40,000 federal income tax returns and accompanying payments. Now it appears that the number of mishandled tax returns exceeds 70,000, with an estimated $1.2 million in accompanying payments.
A recent poll jointly conducted by CNN, Gallup Organization, and USA Today ranked various professions according to how members are perceived in terms of conveying honesty and ethics. Find out how accountants ranked in comparison to members of other professions.
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It was only a couple of years ago that the IRS released guidelines requiring many businesses with revenue over $1 million to use the accrual method of accounting instead of the cash method. The IRS has issued new rules that once again change the required revenue level for cash basis reporting.
Testifying at the first Congressional hearing regarding the Enron collapse, Andersen CEO Joe Berardino accused Enron of withholding key financial information during the audits performed by the Big Five firm. Mr. Berardino took some of the blame during the hearing by admitting that Andersen had erred in its treatment of an Enron special-purpose entity.
Some people at KPMG are not amused at the disclosure of the company's anthem on the Internet. A company representative asked to have the KPMG link removed from the offending Web site.
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Visit our Q&A Forum to post your questions and share your ideas with the members of AccountingWEB! Simply click on the "Add Comments" option at the bottom of any question to add your response and comments.
Here is a sample of the questions that have been posted this week. Check out all the questions at our Q&A Forum and see if you can lend a hand.
1. Is there a source for determining what cities have grant money available for small businesses planning to relocate?
2. How can one best structure a lump sum damages settlement that involves a lawyer's contingency payment?
3. What account should be used to book rebates received on the purchase of PC's, cell phones, and so on?
4. An individual tax practice in Denver, CO is contemplating raising prices at least 30% but is worried that the increase will cause many clients to leave. Are there any statistics available that address this issue?