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lunch beat

Bramwell's Lunch Beat: Average Auditor Tenure Spans More Than 10 Years

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Aug 11th 2015
Staff Writer and Editor AccountingWEB
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Most companies have same auditor for over a decade
Companies in the Russell 3000 are keeping the same auditor for an average of 16 years, with the median at 11 years, according to a study by data and research provider Audit Analytics, wrote Maxwell Murphy of CFO Journal. Auditor tenure issues have gained little traction in the United States. Proponents of limiting tenure say entrenched auditors lack the independence necessary for an uncompromised review of financial results. In 2013, the European Union passed a measure that forces companies to rotate auditors every 10 years. Companies can extend this deadline for another decade if they put their auditing contract up for bid and for up to 14 years if they get a second accounting firm to sign off on the books. Procter & Gamble Co. tops the Russell 3000 for auditor tenure. The company has an audit relationship with Deloitte & Touche LLP or a predecessor firm spanning 125 years.

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Corporate finance department budgets shrink
Vipal Monga of CFO Journal wrote that companies are continuing to shrink their finance budgets as they take advantage of new technologies to reduce costs. Corporate finance budgets are poised to shrink 0.1 percent this year, following a 0.8 percent increase in 2014, according to The Hackett Group. Over the past few years, companies such as Verizon Communications Inc. and GameStop Corp. have used technology to automate routine accounting and bookkeeping tasks. That has allowed those companies to lower costs and become more efficient. Hackett surveyed executives at roughly 170 global companies with at least $1 billion in revenue. Many already consolidated their finance operations across business units and moved even more operations to those centers. Executives also cut jobs in accounting and bookkeeping, and shifted to hiring people with higher-level backgrounds in data analysis and technology.

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CFO pay rising on bigger bonuses
Finance chiefs are raking in more money, thanks to bigger bonuses and larger stock grants, wrote Kimberly S. Johnson of CFO Journal. The median pay of CFOs in the S&P 500 rose nearly 7 percent last year, according to pension and benefits consultant Mercer. Higher short-term compensation, particularly bonuses, pushed overall compensation higher. Those bigger paychecks point to the added responsibility and influence finance chiefs have within an organization. Mercer analyzed CFO compensation packages at 159 companies in the S&P 500, breaking out details for the top 100 companies, where there was a sizable gap in long-term incentive pay. S&P 100 companies offered CFOs a median $4.1 million in long-term bonus opportunities, compared to $1.5 million for CFOs at the other 400 companies. The median short-term incentive for CFOs at S&P 100 companies was $1.3 million.

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Hillary Clinton proposes debt-free tuition at public colleges
Hillary Clinton is proposing an expansive program aimed at enabling students to attend public colleges and universities without taking on loans for tuition, wrote Laura Meckler and Josh Mitchell of the Wall Street Journal. Under the plan – dubbed the “New College Compact” and estimated to cost $350 billion over 10 years – states would have to increase their own spending on higher education, and universities would be required to control spending, though the Democratic presidential front-runner hasn't yet worked out details. Families still would be required to contribute, but students wouldn't have to take out loans to attend public schools. The Clinton campaign said it would pay for the proposal by limiting deductions for upper-income tax filers, which President Obama has repeatedly proposed without success.

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Senate Democrats urge Obama to rework financial advisor rule
Eight Democratic members of the Senate Finance Committee are raising concerns over President Obama's proposed regulations on financial advisors, saying they could hurt low- and middle-income Americans' access to financial advice, wrote Kevin Cirilli of The Hill. In a letter sent on Aug. 7 to US Labor Department Secretary Thomas Perez, the lawmakers – Sens. Ron Wyden (D-OR), Debbie Stabenow (D-MI), Robert Menendez (D-NJ), Tom Carper (D-DE), Ben Cardin (D-MD), Michael Bennett (D-CO), Bob Casey Jr. (D-PA), and Mark Warner (D-VA) – urged him to make changes to the regulatory proposal. “We … believe that it is important that any guidance enhance and not diminish savings opportunities for small businesses and moderate-income families,” the lawmakers wrote. The administration is pushing new requirements for financial advisors to disclose how they receive payments from financial institutions off selling investment advice to consumers.

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Seattle opts to add tax on gun, ammunition sales
The Seattle City Council voted unanimously on Monday to establish a tax on gun and ammunition sales in the city, and to require gun owners to report lost and stolen firearms to police, wrote Daniel Beekman of the Seattle Times. Council President Tim Burgess has said the tax of $25 per gun and 2 or 5 cents per round of ammunition is expected to raise hundreds of thousands of dollars annually that will be set aside for gun-violence-prevention research and programs. Representatives of gun-rights groups have said the tax, which will be assessed from gun sellers, is illegal because a state law prohibits cities from regulating firearms. The tax is scheduled to take effect on Jan. 1, 2016, but there may be a delay because the city likely will be sued by gun-rights groups. The reporting requirement for lost and stolen firearms will take effect 30 days after the mayor signs it into law.

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