Bramwell’s Lunch Beat: Florida Jury Says Deloitte Not Liable in Auditing Caseby
Tesco ends 32-year PwC relationship after accounting scandal
Tesco PLC ended a 32-year relationship with PricewaterhouseCoopers (PwC) LLP by hiring Deloitte LLP as its new auditor, seeking to draw a line under a 263 million-pound ($406 million) accounting scandal, wrote Sam Chambers of Bloomberg. The United Kingdom’s largest supermarket company selected Deloitte following a formal tender process, with the appointment being subject to shareholder approval at next month’s annual general meeting, Tesco said in a statement on Monday. It was mutually agreed that PwC wouldn’t take part in the tender. The 32 years that Tesco has used PwC is among the longest that any company in the UK benchmark FTSE 100 Index has kept the same auditor. The median tenure is 13 years, according to data compiled by Bloomberg.
Jury rules for Deloitte over insurance-company failures
A jury has ruled that Deloitte & Touche LLP isn't liable in Florida’s biggest-ever insurance-company collapse, wrote Michael Rapoport of the Wall Street Journal. The Florida Department of Financial Services didn’t prove its claims that Deloitte was negligent in its audits for three insurance companies that collapsed after a string of hurricanes hit the state in 2004 and 2005, according to the verdict early Friday in Leon County Circuit Court in Tallahassee. Deloitte said it was “gratified” by the verdict and that it is “committed to conducting audits of the highest quality.” The firm has long maintained that the insurance companies’ collapse was caused by the unprecedented string of hurricanes, not any accounting failure. Ashley Carr, a spokeswoman for the Department of Financial Services, said the department believed Deloitte was at fault in the companies’ collapse, but “the jury carefully weighed the evidence and reached an alternative conclusion. Unfortunately, it is the people of Florida who lost today,”
SEC issues guidance on venues for cases
The US Securities and Exchange Commission (SEC) said it would consider bringing cases before its in-house courts when the alleged misconduct was old or if it presented unsettled legal issues, providing guidance for the first time on when it chooses to go that route, wrote Aruna Viswanatha of the Wall Street Journal. The move comes as the agency has faced criticism for its push to bring more cases before administrative law judges, an ability it gained through the 2010 Dodd-Frank financial-overhaul law. Defendants have challenged the SEC’s use of the administrative courts, arguing that the process violates the due-process requirements of the Constitution because defendants aren’t given the right to a jury trial or the same ability to get information. The Wall Street Journal reported last week that the SEC had won 90 percent of cases against defendants before its own judges from October 2010 through March of this year, higher than the 69 percent success rate the agency enjoyed in federal court over the same period.
Free-market group: Get rid of child credit, lower rates instead
A new study from a prominent free-market group suggests getting rid of the Child Tax Credit and instead slashing tax rates, underscoring a growing divide among Republicans on economic policy, wrote Bernie Becker of The Hill. The Mercatus Center study made the case that using the revenue lost to the child credit to lower rates “would benefit all taxpayers, not just parents.” “It would also provide social benefits in terms of increased productivity and economic growth, and this is the most relevant comparison to any social benefits from additional children,” Jeremy Horpedahl, an economics professor at Buena Vista University in Florida, wrote in the paper. The Mercatus Center is part of George Mason University. Horpedahl makes the case that the Child Tax Credit costs some $57 billion a year without focusing mainly on helping lower-income families, unlike the food stamp program or the Earned Income Tax Credit.
IRS criticized for not helping people calculate Obamacare subsidies
The Treasury Inspector General for Tax Administration (TIGTA) is urging the IRS to help people more accurately predict the amount of their Obamacare insurance subsidies after a tax season in which nearly half of Americans had to pay some of the total back, wrote Sarah Ferris of The Hill. In a report released on Friday, TIGTA found that while the IRS did create an online tool that accurately calculates a person's subsidies last year, only the agency’s staff members were allowed to use it. The IRS did not release a public version before filing season. The IRS has since “reevaluated” its decision not to provide a public subsidy calculator, according to the report. The agency told TIGTA that it had previously decided not to finish the public version “because approximately 80 percent of individual taxpayers use tax-preparation software to file their tax return.” But the Treasury inspector general’s office pushed back, arguing that the IRS “has an obligation to provide the same level of assistance to all taxpayers.”
IRS technical guidance roundup (week of May 4)
The IRS issued the following technical guidance last week:
Draft IRS Publication 5165, Guide for Electronically Filing Affordable Care Act (ACA) Information Returns, is now available for health coverage providers and employers that must electronically file 250 or more information returns (Forms 1095-B/C) through the ACA Information Returns program. It provides information on the communication procedures, transmission formats, business rules, and validation procedures for returns transmitted electronically through the ACA Information Reports system.
Revenue Procedure 2015-30 provides the 2016 inflation adjusted deduction limitations for annual contributions made to a health savings account under Section 223. These deduction limitations are updated annually pursuant to Section 223(g) to reflect the cost-of-living adjustments.
Revenue Ruling 2015-09 revokes Revenue Ruling 78-130.
Revenue Ruling 2015-10 provides guidance on the proper federal income tax treatment of a “triple drop and check” transaction.
Revenue Ruling 2015-11 holds that the cost of unrecoverable precious metals used in various manufacturing processes are depreciable under §§ 167 and 168 of the Internal Revenue Code. The costs of any recoverable precious metals are not depreciable.
Notice 2015-38 updates the list of designated private delivery services (PDS) set forth in Notice 2004-83, 2004-2 C.B. 1030, for purposes of the timely mailing treated as timely filing/paying rule of Section 7502 of the Internal Revenue Code, provides rules for determining the postmark date for these services, and provides a new address for submitting documents to the IRS with respect to an application for designation as a designated PDS.
Recent AccountingWEB Articles That You Can’t Afford to Miss:
7 Reasons Your Firm Should Automate Client Messages
Sending tax reminders and special-occasion notes to clients is essential to your relationship, but is often time-consuming. It’s time to get automated.
IRS Penalty Relief Program Available for Small Business Retirement Plans
Under pilot program, late filers would be given until June 2 to file their required annual returns without penalty.
Study: Consumers Would Not Give National Sales Tax a Chilly Reception
In fact, if imposed in the US, consumers may not even pay much attention to such a tax, new academic research found.
What Young Accountants Know That You Don’t
Recent graduates from some of the nation's top accounting programs weigh in on what many firms don't know, but should, about growing a practice.