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Bramwell’s Lunch Beat: More Shareholder Participation = Fewer Restatements

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Mar 20th 2015
Staff Writer and Editor AccountingWEB
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Boards agree to propose additional changes to revenue standard
The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) voted on Wednesday to propose additional changes to the converged revenue recognition standard to address implementation concerns of financial statement preparers, wrote Ken Tysiac of the Journal of Accountancy. Both boards voted to propose a practical expedient to the transition guidance to allay preparers’ concerns about evaluating contract modifications. Last month, the FASB and the IASB agreed to propose clarifications on the standard’s guidance relating to licenses of intellectual property and identifying performance obligations. The boards’ staffs will draft proposals seeking comment on the potential revisions.

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Study: Shareholder participation improves financial reporting quality
Fewer restrictions on shareholder participation are associated with a relatively low incidence of accounting restatements, according to a research paper that will soon be published in the journal Contemporary Accounting Research. The paper, External Corporate Governance and Misreporting, analyzed external governance provisions, specifically those provisions that limit direct shareholder participation in the governance process. “We discovered that misreporting is more likely for firms characterized by weak external governance than firms where external governance is strong,” said Lihong Liang, an assistant professor of accounting at Syracuse University and one of the paper’s co-authors. “What’s more, our results support the notion that shareholder participation discourages accounting decisions or practices that could result in misreporting.”

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IRS tackles tax identity fraud
The IRS convened a meeting on March 19 with leading tax-preparation firms, payroll and tax-refund processors, and state tax administrators in order to combat the growing threat of tax-refund fraud, wrote Laura Saunders of the Wall Street Journal. IRS Commissioner John Koskinen has raised the possibility of delaying refunds or speeding up W-2 reporting, or both, so that the agency can better fight fraud. Koskinen said the IRS wouldn’t have data about this year’s actual or attempted federal tax-refund theft until after filling season, but he said the agency has been stopping more refunds suspected of being fraudulent than in past years. The IRS lost an estimated $5.8 billion to fraudulent refunds in 2013. Koskinen also announced that the meeting’s participants will set up three working groups to put changes in place by this summer for next year’s filing season.

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GOP chairman pronounces gas tax hike dead
House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) said on Wednesday that Congress does not have the stomach for increasing the federal gas tax to help pay for a new transportation bill, wrote Keith Laing of The Hill. The idea of asking drivers to pay more at the pump than the current 18.4 cents-per-gallon gas tax has been floated by infrastructure advocates as lawmakers scramble to come up with a way to pay for an extension of the transportation funding bill that is currently set to expire in May. Shuster said transportation funding proposals, like “repatriation,” which relies on taxing overseas corporate revenue, are more politically viable, noting that some form of that plan has been introduced by both parties. “There is [no one] willing in this Congress or in the administration to do anything with adjusting user fees or taxes,” he said.

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IRS.gov tops list of most popular US government websites
As one might imagine this time of year, the IRS currently has the most popular US government website, with most people clicking on its page for tax refunds, wrote Nick Gass of Politico. The White House on Thursday unveiled a new public analytics dashboard that displays online traffic stats from government websites in real time. The announcement comes as part of Sunshine Week, an effort to push for more government openness and transparency. The open-source project’s dashboard shows data collected from a Google Analytics account for government agencies called the Digital Analytics Program.

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Ohio officials: Most taxpayers taking new quiz are passing
Nearly 1 million taxpayers in Ohio have taken a new quiz used by the state to catch phony income-tax returns and most have passed it, wrote Ann Sanner of the Associated Press. The quiz to confirm identity initially puzzled some residents. The Ohio Department of Taxation had to tweak some questions as it sought to cut down on those that people couldn't respond to because they were obscure or outside recent memory. The four multiple-choice questions are being used for the first time this year to make sure a tax return submitted in someone's name is genuine and not an attempt by an identity thief to collect a refund check. Tax Commissioner Joe Testa said 98 percent of the nearly 1 million asked to take the quiz have passed. About 160,000 filers who were asked to take the quiz still haven't; he said that is an indication of potential fraud.

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