Here are “Bramwell’s Lunch Beat” menu items for December 5.
Fifth Third settles SEC charges over financial crisis accounting
The US Securities and Exchange Commission (SEC) levied heavy penalties against Fifth Third Bancorp on December 4 because the regional banking organization improperly accounted for commercial real estate loans during the 2008 financial crisis, reducing its reported loss, Reutersreported.
Fifth Third will pay $6.5 million to settle the SEC’s charges, plus former CFO Daniel Poston agreed to pay a $100,000 penalty and was suspended from practicing as an accountant for any publicly traded company.
Rather than classify these real estate loans as “held for sale” and value the loans at fair value, as required under US accounting rules, Fifth Third classified the loans as “held for investment,” which allowed the bank to report a $128 million pretax loss for the third quarter of 2008 – less than half of the $297 million loss Fifth Third should have reported.
Twitter uses its own accounting, and analysts go along
Michael Rapoport of the Wall Street Journalwrote on December 3 that like many Internet companies, Twitter uses its own blend of customized performance measures, which removes costs like depreciation and stock payments, to turn losses under US accounting standards into gains.
However, these accounting practices don’t concern analysts, Rapoport reported. Of the twelve analysts from major firms who cover Twitter, eleven pretty much ignored the social media site’s losses under traditional measurements. Those eleven only focus on nonstandard metrics, he said.
“Regulators allow companies to tout their customized measures as long as the companies make clear disclosures about them, and show how they are reconciled to results reached under Generally Accepted Accounting Principles, or GAAP,” Rapoport wrote.
House bill seeks to increase gas tax by 15 cents per gallon
As a way to close the gap in transportation funding next year, an Oregon congressman introduced a House bill on December 4 that would raise the federal gas tax by 15 cents per gallon.
Under the proposal from Democrat Earl Blumenauer, the national gas tax would increase to 33.4 cents per gallon and 42.8 cents per gallon for diesel, the Washington Postreported. The federal gas tax has not been increased since 1993.
The congressman said the hike in the gas tax would help fix the nation’s “decaying infrastructure system – roads, bridges, and transit.”
Companies boost US payrolls by most in a year
Good news on the job front: The ADP Research Institute announced on December 4 that 215,000 jobs were added in November, which exceeded the most optimistic forecast in a Bloomberg survey and followed a revised 184,000 gain in October that was larger than initially estimated, Bloombergreported.
The Bloomberg survey of forty economists estimated that the number of jobs added for November would be between 125,000 and 210,000, after a previously reported increase of 130,000 in October.
Nine year-end moves to cut your 2013 taxes
Forbes contributor Richard Eisenberg provided these nine year-end tax-saving tips that you may want to suggest to your clients.
About Jason Bramwell
Jason Bramwell is a staff writer and editor for AccountingWEB. He has nearly 20 years of experience in print and online media as a journalist and editor.