AccountingWEB Weekly News Wrap-Up - Issue 139
1. Significant Andersen Developments This Week
2. AICPA Road Show Intended to Rally Membership
3. Federal Workers Owe Billions in Back Taxes
4. Feds Order Credit Card Company Cooperation to Curb Tax Evasion
5. SEC Chairman Opposes Radical Audit Reforms
6. SEC Sues Former Waste Management Officers for Fraud
7. CFOs Embrace Strategic Risk Management For Growth
8. Unions Push Audit Reforms at More Companies
9. State Societies Break Off Contract Talks with CPA2Biz
10.More Companies Are Monitoring International Accounting Standards Activities
The fallout from Enron is affecting accounting firms and corporate America in many different ways. AccountingWEB wants to know how it is affecting you and your practice. Through a nationwide survey that will be launched next week, your input can provide keen insight as to what is really happening "in the trenches" and can shed some light on techniques that some organizations are using to combat client, staff, and prospect questions.
Please look for the "Impact of Enron" survey next week, developed by AccountingWEB in cooperation with Sommella Market Strategies. Your opinion counts, and your input is appreciated!
1. Significant Andersen Developments This Week
A number of significant developments have emerged in the continuing Andersen story this week. Among the top headlines:
For a complete perspective of the entire Andersen story since the Enron saga broke, go to:
Leaders of the American Institute of CPAs have been traveling the country recently to inform constituents on current audit reform initiatives and to outline the position of the AICPA on behalf of the membership. Find out details of what the AICPA is fighting for in the area of audit reform.
Many companies are finding that their old spreadsheet-based budgeting and planning systems are inadequate for handling the complexities of today's business environment. Find out how you can help your clients meet today's challenges with a new generation of performance management applications that integrate budgeting, planning, financial consolidation, management reporting, and analysis.
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The IRS has compiled statistics indicating that Federal employees owe more than $2.5 billion in back taxes. Of the 8.7 million federal workers and retirees, 381,500 were behind on their taxes, or 2.8% of the total. Find out how this compares with a national average of the American workforce and which branches of the government are the worst offenders.
The Internal Revenue Service has teamed up with the heavy hand of the judicial system to order Visa International, MasterCard, and American Express to turn over private records on hundreds of thousands of offshore accounts in hopes of finding possible tax evaders and bringing them to justice.
Speaking as the final witness before the Senate Banking Committee, Harvey L. Pitt, chairman of the Securities and Exchange Commission, argued against proposed legislation that would introduce radical reforms for accounting firms, but supported reforms of companies, credit agencies, and accounting standard-setters.
The Securities and Exchange Commission has filed suit against the founder and five other former top officers of Waste Management Inc. for massive fraud. The complaint charges the defendants with inflating profits to meet earnings targets.
A survey released this week shows CFOs turning more and more frequently to strategic risk management systems to help maintain earnings stability and secure a competitive advantage in the uncertain economic market. Find out specifically how a strategic perspective on risk management will help your organization.
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Johnson & Johnson and Bristol-Myers Squibb Company agreed to stop hiring the same accounting firm for auditing and consulting after prodding from unions led by the United Brotherhood of Carpenters. The unions are trying to achieve the same result at Avon Products and as many as 27 other companies. Ann Yerger, research director at the Council of Institutional Investors, said the union campaign is "one of the most powerful proxy initiatives ever."
Contract talks have broken off between the various state CPA societies and CPA2Biz, the official marketing and distribution arm of the American Institute of CPAs. The state societies were trying to negotiate a contract through Shared Services LLC, a joint venture between AICPA and the State Society Network, to design, develop and deploy a national membership database and provide other administrative support.
With all the talk of audit reform, globalization, and criticism of the U.S. financial reporting system, an increasing number of companies are assigning staff to closely monitor developments of the International Accounting Standards Board. Once considered "that governing body that has nothing to do with us," U.S. companies are now paying attention.
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 on our Q&A Forum. Post your own questions and see if you can lend a hand to others looking for help.
1. Self-Employed Health Insurance - COBRA: Is a COBRA policy taken by an ex-employee considered a qualified Self Employed Health Insurance policy subject to the 60% deduction for an ex-employee who starts his own consulting business as a sole proprietor or Sub-S corporation?
2. Taxability of Sale of Estate Real Property: A parcel of real property that was included in the estate of a person who died 14 years ago will be sold for $140,000 in the tax year of 2002. The exclusion was $500,000 in 1988 and the total estate including the $140,000 did not exceed $500,000, so an estate form was not filed nor was any estate tax paid, because no tax was due. Does the IRS set a time limit for closing an estate, and likewise would the $140,000 be taxable? If the real property is transferred according to the will before the sale, would the person who inherited the real property owe any taxes on the sale of the property for $140,000?
3. Demutualization and Tax Treatment: Regarding the recent demutualization of Blue Cross/Blue Shield to Anthem insurance stock, there appears to be no rationale behind a zero basis attribution of stock received or surrendered for cash, yet this seems to be the approach most often used with a long term capital gain recognized to the full extent of the proceeds received by the form mutual policyholder. Does anyone have any comments or references regarding the correct treatment?