Staff Writer and Editor AccountingWEB
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lunch beat

Bramwell's Lunch Beat: Federal Exchange’s Internal Controls Were Flawed

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Aug 10th 2015
Staff Writer and Editor AccountingWEB
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Audit of health exchanges finds fault with controls
Some consumers who got health coverage or subsidies through HealthCare.gov might not have been eligible to receive them last year because of deficiencies in the federal exchange's internal controls, the US Health and Human Services' Office of Inspector General concluded in a report to be released on Monday, wrote Stephanie Armour of the Wall Street Journal. It also found problems resolving inconsistencies between some applicants' information and federal data. The report, based on audits and a review of two different samples of 45 applicants, doesn't necessarily mean the exchange improperly enrolled applicants or incorrectly calculated subsidies, according to the study. But the report notes that without properly verifying eligibility and resolving inconsistencies, the federal exchange couldn't ensure that applicants met requirements for subsidies or that subsidies were the right amount.

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Finance chiefs getting shot at CEO role
Kimberly S. Johnson of the CFO Journal wrote that it may finally be getting easier for CFOs to ascend the corporate ladder. The common thinking is that the jump from CFO to CEO is difficult, as chief executives require operational and people skills that aren't common among those from technical, accounting-driven backgrounds. Of sitting CEOs on the global Forbes 500, only 18 percent were CFOs immediately preceding their chief executive appointment, according to Korn/Ferry International data. Nearly a quarter of sitting CEOs in the Forbes 500 have senior-level finance experience, holding roles such as treasurer, controller, and vice president of finance at some point. For those seeking to move up, doing so within the same company is often easier, said Peter Crist, chairman of executive recruitment firm Crist/Kolder.

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8 sentenced in tax fraud scheme
Ben Wright of the Columbus Ledger-Enquirer wrote that a federal judge on Aug. 7 handed down sentences ranging from probation to more than 13 years in prison for six Phenix City, Alabama, and two Columbus, Alabama-area residents in a stolen identity refund fraud scheme that used identities of Fort Benning soldiers and employees at various state agencies to file fraudulent tax returns. Sentences were issued for Tracy Mitchell, Talarius Paige, Latasha Mitchell, Dameisha Mitchell, Sharonda Johnson, and Cynthia Johnson, all of Phenix City. Mequetta Snell-Quick of Columbus and Patrice Taylor of Midland, Alabama, also were sentenced in the scheme that spanned over three years. Keisha Lanier, who is scheduled for sentencing on Aug. 24, and Tracy Mitchell were identified as leaders of the scheme in which more than 9,000 returns claiming $24 million in fraudulent claims were filed. The IRS paid out almost $10 million in fraudulent refunds.

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Seattle City Council advances gun violence tax
The Seattle City Council is expected to cast a final vote Monday on legislation that adds new taxes and regulations on firearms and ammunition sold in the city, wrote Jessica Chasmar of the Washington Times. The legislation, which was passed unanimously by the council's Education and Governance Committee on Aug. 5, would implement a $25 tax on firearms and a $0.05 per-round tax on ammunition, and would force gun owners to report a lost or stolen firearm within 24 hours. Supporters believe the tax will deter criminals from buying a gun, and tax revenue would go toward violence prevention. But opponents say the measure would only hurt law-abiding and lower-income individuals.

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PwC says Noble Group's accounting practices comply with rules
PricewaterhouseCoopers (PwC) said on Monday that Noble Group acted within relevant rules in valuing contracts, and did not identify any major shortcomings in the accounting methods of Asia's biggest commodities trader, wrote Anshuman Daga and Rujun Shen of Reuters. Singapore-listed Noble, whose shares have taken a pounding and bonds have weakened after it was first accused in February of poor accounting practices by blogger Iceberg Research, had hired PwC to review its accounting methods to help draw a line under the matter. Even though Noble had flatly rejected the claims, the accounting dispute had put pressure on Noble's investment-grade credit rating. In the 37-page report, PwC recommended that Noble strengthen the role of compliance or internal audit in order to improve the way it values some of its commodity contracts.

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US regulators said to step up scrutiny of fund liquidity
The US Securities and Exchange Commission and the Federal Reserve are stepping up inquiries into whether funds that buy debt are prepared for an exodus of investors as the central bank moves closer to raising interest rates for the first time in nine years, wrote Nabila Ahmed, Tracy Alloway, and Sridhar Natarajan of Bloomberg. The two financial regulators have been asking money managers about their ability to meet daily redemption requests from investors. The increased scrutiny comes during a seventh year of suppressed interest rates that have pushed investors into higher-yielding assets, such as corporate debt and emerging-market bonds. The worry now is that funds that invest in the most difficult-to-sell securities may struggle if the bond rally ends and investors seek to withdraw their money all at once. Regulators are particularly concerned about debt markets where trades take longer to complete.

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