Bramwell’s Lunch Beat: High IT Costs Are a Major Worry for Financial Executivesby
Small firms slower to adopt new internal-control guidelines
Small public companies in the United States are taking more time to adopt the latest corporate safeguards against fraud and reporting errors, wrote Kimberly S. Johnson of the Wall Street Journal’s CFO Journal. Just two-fifths of the companies use updated internal-control guidelines that public companies rely on to design and test these systems, according to data from research firm Audit Analytics. Among the largest public companies, by contrast, 84 percent use the guidelines, which were released by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) two years ago. Small companies typically don’t have the resources to implement sweeping audit-related changes unless there is a deadline looming or penalty involved. “Without a deadline, it’s going to slide down the list,” said David Garrison, CFO of Tecogen Inc.
Tech costs beat regulation, cyber as worries for financial services executives
Rising costs for IT infrastructure pose greater concerns for financial services firms than regulation or cyberattacks, according to a new survey, wrote Carolyn Cohn of Reuters. IT costs came second only to macroeconomic concerns, such as the impact of quantitative easing, according to the survey by global risk advisor Willis of senior executives at 150 banks, insurers, reinsurers, asset managers, hedge funds, and financial technology companies worldwide. Banks and insurers have been seen as slow in responding to new technology, leaving the door open for newcomers to steal market share. Regulation was the third-highest worry, with the increasingly heavy rulebook prompting people to leave the sector or move to more lightly regulated firms. The fourth-highest concern was that widespread use of technology was creating new risks, such as cybercrime.
White House threatens veto of bill to repeal medical device tax
President Obama’s advisors will tell him to veto a bill sponsored by Rep. Erik Paulsen (R-MN) that repeals a sales tax on medical devices, wrote Jim Spencer of the Minneapolis Star Tribune. The White House made the announcement late Monday afternoon. It reaffirms a stance Obama took earlier when the device industry lobbied extensively to kill the levy. Despite the veto threat, the House is expected to pass the Paulsen bill this week or next and send it to the Senate, where it has strong bipartisan support. The 2.3 percent tax on device sales helps pay for the Affordable Care Act. Paulsen’s bill threatens that effort by cutting off a $24.5 billion revenue stream over 10 years, the White House said. The bill provides no way to replace the lost revenue. In a statement on Monday, Paulsen said: “There is a reason why both Republicans and Democrats are in favor of repealing the medical device tax – it’s bad policy that’s harming innovation and killing jobs, especially for our nation’s small businesses.”
Online sales tax debate reignited in the House
GOP lawmakers reignited the online sales tax debate on Monday, rolling out a new bill that they said could assuage previous Republican concerns about the issue, wrote Bernie Becker of The Hill. The bill, from House Oversight and Government Reform Committee Chairman Jason Chaffetz (R-UT) and a group of 15 other House members, would give states greater latitude to charge sales taxes on online purchases from out-of-state customers. But supporters say it also improves upon previous online sales tax legislation, called the Marketplace Fairness Act, that made it through the Senate last Congress before stalling in the House. Chaffetz and co-sponsor Rep. Steve Womack (R-AR) both stressed that their bill would finally bring parity to the issue of taxing online sales. The US Supreme Court has said that states can only collect sales taxes from companies that have a physical location within their borders. Retail groups have long said that online stores that aren’t forced to charge sales taxes get an unfair government subsidy.
States lure tourists, then tax them
Elaine S. Povich of Stateline, the news service of the Pew Charitable Trusts, wrote that states are beckoning tourists with elegant and evocative advertisements featuring sun-splashed seas and fragrant forests. At the same time, the states are taking money from them in traveler taxes. State lawmakers and governors often view high taxes on services, such as rental cars, hotel rooms, and restaurant meals, as a painless way to let visitors foot some of the bill for state and local services. Some members of the tourist promotion industry also view the traveler taxes as a good thing because the proceeds frequently are directed to advertising to lure more visitors. But travel industry analysts point out that big clients, such as groups holding conventions, try to steer clear of cities and states with high levies on meals, lodging, and transportation because they see the taxes as unfair. And local residents don’t escape some of the pain, as they pay the traveler taxes when they go out for dinner or book a getaway hotel room.
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