Bramwell’s Lunch Beat: BDO Sees Boost in New SEC Clients Thanks to UHY Dealby
Salix fit for bids as accounting issue is resolved
Salix Pharmaceuticals Ltd. on Wednesday restated its financial results for 2013 and most of last year, putting behind it an accounting problem that kept potential acquirers at bay last year, wrote Tara Lachapelle of Bloomberg. Salix had been in deal discussions with Allergan Inc. and then with Actavis PLC, according to people familiar with the matter. Both potential buyers later put talks on hold, with Allergan backing away in part because due diligence had revealed issues with inventory accounting. Actavis is now in the process of acquiring Allergan. After conducting a review of how inventory of top drugs built up with wholesalers, Salix will lower its reported revenue for 2013 and the first three quarters of 2014 by $20.7 million, and reduce net income over the same period by $11.9 million, the company said in a statement.
Auditor changes roundup: Q4 2014
Of the Big Four and major national accounting firms, BDO USA LLP had the best quarter in terms of new US Securities and Exchange Commission (SEC) client wins, wrote John Pakaluk in a blog for research firm Audit Analytics. Due largely to its acquisition of the Texas practice of UHY, which closed last December, BDO gained 20 new clients and had a net increase of 18 over the last three months of 2014. This caps off what looks to be another year of growth for BDO, with a net gain of 37 clients for the year following a net increase of 57 in 2013. BDO not only had the largest net increase in new SEC clients, but it also gained the most in audit fees. Baker Tilly Virchow Krause LLP also had a great quarter, with 15 net new SEC clients, for a net increase of about $3 million in audit fees. The Chicago-based firm recently acquired ParenteBeard, which certainly contributed to its strong client growth.
Auditor of REITs in Schorsch’s American Realty Capital resigns
In another blow for Nicholas Schorsch, who just stepped aside from day-to-day management of independent broker-dealer giant RCS Capital, accounting firm Grant Thornton resigned as the auditor of REITs managed by Schorsch's American Realty Capital, according to SEC filings, wrote Lee Conrad, Andrew Welsch, and Suleman Din of Financial Planning. The filings did not give a reason for the professional parting, but said “there were no disagreements between the companies on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.” It also specified that “there were no ‘reportable events’ as that term is defined” by federal regulations. Schorsch's financial empire encountered severe turbulence starting last October when it came to light that a $23 million accounting error from earlier in the year at his flagship REIT was intentionally uncorrected.
Rand Paul finds Democratic partner for offshore tax holiday
Senators Rand Paul (R-KY) and Barbara Boxer (D-CA) are proposing a tax incentive for US companies to bring home their offshore cash stockpiles and pledging to use that revenue to fund highways, wrote Richard Rubin of Bloomberg. The bipartisan proposal would let companies repatriate money parked overseas at a 6.5 percent tax rate, a steep discount compared with existing law. Under current law, US companies must pay the full 35 percent tax rate when they bring home profits from overseas, after receiving credits for foreign taxes they have paid. Because they can delay that tax until they repatriate, the tax code gives them an incentive to book profits overseas and leave them there. Senate Finance Committee Chairman Orrin Hatch (R-UT) criticized the proposal, saying it wouldn’t actually yield more money for the government and thus is “bad policy.”
GOP senator targets IRS bonuses
Sen. Pat Roberts (R-KS) introduced a new measure on Thursday that would bar federal employees late on their taxes from getting a bonus, wrote Bernie Becker of The Hill. The measure comes after the Treasury inspector general found last year that the IRS had given more than $1 million in bonuses to agency staffers with tax debts over a two-year span, and almost $3 million in awards to staffers with conduct issues. “When these public employees serve at the IRS, their lack of willingness to pay their tax obligations calls into question the integrity of the agency. It’s really unconscionable that there are tax delinquents working as tax collectors,” Roberts said. IRS Commissioner John Koskinen said last year that he wanted to work with the agency's union to ensure that employees with conduct issues don't get bonuses.
GOP warns IRS: Botched tax season is on you
Becker also wrote for The Hill on Thursday that Senate Republicans have a message for Koskinen: It’s on you if this tax season is miserable for taxpayers. The IRS chief has warned taxpayers for weeks that services and protections will be scaled back this filing season, which came just weeks after Congress slashed the agency’s budget by $346 million. But in a letter to Koskinen, Republicans on the Senate Finance Committee wrote that the IRS can surely find savings to make life easier for taxpayers – by no longer giving bonuses to staffers with tax debts, spending less money on union activities, and stopping work on new regulations governing political nonprofits. “We will work to give your agency the tools it needs and reform our country’s tax code to make it simpler, fairer, and more competitive,” the letter stated. “In return, we hope you will work to better streamline your agency and avoid injudicious wastes of taxpayer dollars. We look forward to working with you in this endeavor.”
No case for killing the medical device tax
The New York Times Editorial Board on Friday called efforts by lawmakers on both sides of the aisle to repeal a tax on medical devices, which is part of the Affordable Care Act, a “terrible idea” and added that President Obama should veto any bill that eliminates the tax. “The health reform law imposes a modest 2.3 percent tax on sales of medical devices, to be paid by the manufacturers or importers,” the editorial stated. “It applies to such products as X-ray machines, MRI scanners, pacemakers, and artificial hip and knee joints but not to eyeglasses, contact lenses, and hearing aids. The $29 billion to be raised from the device industry is less than the amounts to be raised from insurers and drug companies, all of which will benefit from increased business under the act and should pay their fair shares of the cost. If the lost revenues from a repeal of the device tax are offset by reduced spending on other healthcare programs, as they might well be, many patients could suffer medical or financial harm.”
Kasich plans tax cuts, more aid to poor in upcoming budget
Ohioans will see a half-billion-dollar tax cut proposed when Gov. John Kasich unveils his two-year state budget proposal on Monday, wrote Randy Ludlow of the Columbus Dispatch. The Republican governor rolled out the first piece of his plan on Thursday: eliminating state income taxes for 1 million small businesses, spurring them to reinvest and possibly create jobs, while also reducing income taxes for 3 million low-income and middle-class families. While most of Kasich’s plan remains under wraps, it is expected to be touted as “tax reform” that raises some taxes while lowering the income tax in order to get to the net $500 million decrease. The income tax already has been chopped by about $3 billion since Kasich has been in office.
IRS program helped low-income taxpayers secure $5.2 million in tax refunds
The IRS’s Low Income Taxpayer Clinic (LITC) Program issued its annual program report on Thursday, which describes how LITCs have assisted thousands of low-income taxpayers nationwide with free or low-cost representation, education, and advocacy services. LITCs provide free or low-cost assistance to low-income individuals who have tax disputes with the IRS, such as an audit, appeals hearing, collection matter, or litigation, and also conduct education and outreach to taxpayers who speak English as a second language. During 2013, LITCs represented 20,972 taxpayers in disputes with the IRS and provided consultation and advice to an additional 25,179 taxpayers, according to the report. LITCs helped taxpayers secure more than $5.2 million in tax refunds and eliminate over $51.2 million in tax liabilities, penalties, and interest. LITCs also conducted 3,640 educational activities attended by 129,584 people.
British banks may seek outside checks on published capital ratios
Banks in Britain may end up hiring auditors to endorse the capital ratios they publish to increase investor confidence, the Institute of Chartered Accountants in England and Wales (ICAEW) said on Thursday, wrote Huw Jones of Reuters. The ICAEW said it was working with the Bank of England's supervisory arm, the Prudential Regulation Authority, on whether confidence in capital ratios, a core benchmark of health, would be increased if they were formally audited. Such a step would go further than new global rules published this week from the Basel Committee of banking supervisors that set out stricter requirements on how lenders must publicly disclose their capital ratios from the end of 2016. The Basel rules require a senior manager at the bank to attest in writing that the disclosures have been compiled with board-approved internal controls.
FAF releases updated print edition of FASB Accounting Standards Codification
The Financial Accounting Foundation (FAF) on Thursday released an updated print edition of the Financial Accounting Standards Board’s FASB Accounting Standards Codification, which is recognized as the single, authoritative source of US GAAP for public and private companies and not-for-profit organizations. The new four-volume bound edition contains all of the content of the online FASB Codification as of Oct. 31, 2014. The annual bound edition of the FASB Codification is intended to be used as a reference tool in conjunction with the always-current online codification available at https://asc.fasb.org/. This edition includes an alphabetical listing of all the topics referenced in the FASB Codification – with their related starting page numbers – at the beginning of each volume, for more effective use. The annual print edition of the FASB Codification can be ordered online at the FASB Store at the cost of $215.