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Bramwell’s Lunch Beat: CFOs of Acquired Companies Rarely Keep Their Jobs

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Jun 10th 2015
Staff Writer and Editor AccountingWEB
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Checking your vendors’ cybersecurity practices
A weak link in many financial advisors’ cybersecurity plans is the outside companies that help run their businesses, such as payroll companies and computer-repair firms, wrote Jennifer Cummings of Reuters. Advisors want to focus on delivering great service to customers, so vendors' cybersecurity practices are often not top of mind, said John Brady, head of information security at the Financial Industry Regulatory Authority, at a recent conference. “In a lot of cases, they're trusting their vendors to look out for their best interests,” Brady said. A US Securities and Exchange Commission examination of 57 broker-dealers and 49 registered investment advisors revealed that most had experienced cyberattacks directly or through their vendors, according to a February report.

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Merger boom spawns a CFO surplus
Kimberly S. Johnson of the Wall Street Journal’s CFO Journal wrote that many finance chiefs hope to spend the rest of their careers in a comfortable corner office. But the current boom in mergers and acquisitions (M&A) has cut some of those corner-office stints uncomfortably short. Already this year, the value of M&A deals in the United States has set a 20-year high of $821.2 billion, according to Dealogic. There have been 4,373 such deals so far, compared with 4,627 in all of 2014. But takeovers don’t bode well for the acquired company’s CFO. Since 2011, just five finance chiefs at acquired companies have snagged the CFO job at the new corporate parent, according to executive recruiter Korn/Ferry International. A much larger share – about a third – landed at another company within 90 days of a deal closing. Another third have retired or haven’t found a new post, the firm says. And 28 percent remained at the postmerger company in a divisional role.

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House GOP proposes $838 million cut to IRS
House Republicans are proposing to cut $838 million from the IRS for fiscal 2016, which begins on Oct. 1, wrote Rebecca Shabad of The Hill. The reduction would be more than double the amount Congress cut from the agency’s budget for 2015, which was $350 million. For next year, the IRS would receive $10.1 billion, which is below the agency’s sequester limit and below the level Congress enacted 12 years ago. The amount would allow the IRS to perform its core duties, the House Appropriations Committee said. The details were outlined on Wednesday in the House Financial Services and General Government subcommittee spending bill, which also contains $75 million more than current levels to improve the rate the IRS answers phone calls from taxpayers. The legislation includes provisions to “stop the IRS from further implementing the individual mandate under Obamacare,” a bill summary said.

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Paul Ryan still sees chance for common ground on international taxes
During an interview on Bloomberg Television on Tuesday, House Ways and Means Committee Chairman Paul Ryan (R-WI) said he still has hope for reaching a limited deal on US tax policy this year, wrote Richard Rubin and Billy House of Bloomberg. “The question is: Can we take a couple of steps in the right direction, particularly with international tax laws and international tax rules?” Ryan said. “Ours are really anti-competitive. Can we do some things to fix that so we can make American businesses more competitive?” In focusing on international taxation, Ryan didn’t mention the US corporate tax rate cut that he supports, though he didn’t explicitly jettison that idea either. Ryan didn’t endorse a particular approach to international taxes during the interview. He said he wanted to reduce the incentive for US companies to engage in inversions or be susceptible to takeovers by foreign competitors.

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House votes for permanent ban on Internet access taxes
The House of Representatives voted on Tuesday to permanently bar states from taxing Internet access and replace a 17-year-old temporary ban that had been extended multiple times and was due to expire on Oct. 1, wrote David Lawder of Reuters. The bipartisan measure, passed by voice vote, also bans discriminatory taxes on e-commerce. A similar bill introduced in the Senate has 49 co-sponsors, including 11 Democrats, likely enough to secure passage. But the House bill, called the Permanent Internet Tax Freedom Act, fails to address thorny questions over state sales taxes on goods and services sold via the Internet. Currently, 45 states have imposed sales taxes on online purchases, but only some states require e-tailers to actually collect these revenues from customers. A House Judiciary Committee aide said lawmakers were working on a proposal to address the sales tax issue but declined to provide further details.

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A Mixed Bag Regarding the IRS and Identity Theft
Two days after the IRS’s data security breach made headlines, a watchdog report last week said the agency has improved its detection of ID theft tax return fraud.

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GASB Issues New Standards on Retiree Benefits Reporting
Board members also approved a standard establishing requirements for pensions and pension plans that aren’t covered under current GASB rules.

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