Bramwell's Lunch Beat: PCAOB Seeks Comment on Audit Quality Indicatorsby
PCAOB seeks public comment on audit quality indicators
The Public Company Accounting Oversight Board (PCAOB) on Tuesday issued a concept release seeking comment on the content and possible uses of audit quality indicators, measures that may provide new insights into audit quality. The concept release seeks comment on 28 potential audit quality indicators, covering three broad categories:
- Audit professionals: Measures dealing with the availability, competence, and focus of those performing the audit.
- Audit process: Measures concerning an audit firm's tone at the top and leadership, incentives, independence, investment in infrastructure needed to support quality auditing, and monitoring and remediation activities.
- Audit results: Measures relating to financial statements (such as the number and impact of restatements, and measures of financial reporting quality), internal control over financial reporting, going concern reporting, communications between auditors and audit committees, and enforcement and litigation.
In addition to seeking comments on the content of the audit quality indicators, the PCAOB is asking for views on how they may be best used to promote audit quality. This fall, the PCAOB will convene a public roundtable to discuss views on the release and related comments. The board requests comments on the concept release by Sept. 28.
SEC proposes executive-pay clawbacks when companies restate
US companies forced to correct accounting failures would have to reclaim a portion of bonuses awarded to corporate bosses under a rule proposed on Wednesday by the US Securities and Exchange Commission (SEC), wrote David Michaels of Bloomberg. The measure, passed on a 3-2 vote, would expand the circumstances under which executives could be punished if their firms restate past earnings. Companies would have to claw back stock or cash bonuses based on erroneous results even if it wasn't intentional. The change would build on rules â approved more than a decade ago in response to fraud at Enron Corp. and WorldCom Inc. â that permitted clawbacks only when it could be shown that books were cooked intentionally. âExecutive officers should not be permitted to retain incentive-based compensation that they should not have received in the first instance,â SEC Chair Mary Jo White said. Companies restated financial results 831 times in 2014, according to an April report by Audit Analytics.
Small businesses threatened with $36,500 IRS fines for helping employees with health costs
Small businesses that reimburse employees for the cost of premiums for individual health insurance policies or pay their health costs directly will be fined up to $36,500 a year per employee under a new IRS regulation that went into effect on Wednesday, wrote Forbes contributor Grace-Marie Turner. According to the notice, an employer arrangement that reimburses or pays for employee individual health premiums is considered to be a group health plan that is subject to the $100 per-employee, per-day penalty. The penalty applies whether the reimbursement is considered a before-tax or after-tax contribution. The new IRS penalty is more than 18 times greater than the $2,000 employer-mandate penalty under the Affordable Care Act for not providing qualifying health insurance for employees. And employers with fewer than 50 workers are not exempt, as they are from the employer-mandate penalty.
Citing âmisconduct,' accounting journal retracts 25 articles by once-renowned scholar
One of the nation's premier academic journals of accounting has retracted 25 articles co-authored by a once-renowned professor who specialized in corporate ethics but was later accused of âfabricatingâ data, wrote Fred Barbash of the Washington Post. The American Accounting Association, which publishes the Accounting Review, issued the retractions last week based on a âpattern of misconductâ by James E. Hunton, who resigned from his position at Bentley University in Waltham, Massachusetts. Hunton left Bentley University as the school was investigating reports that led it to conclude that he âfabricatedâ data in at least two â and perhaps many more â academic papers. The school advised all publications for which Hunton had written to review his work that involved research data. Most of the retracted Accounting Review articles, published between 1996 and 2013, concerned corporate auditing practices.
IRS lawyer now heads Clinton email production
A year ago, Catherine Duval was embroiled in the scandal over former IRS official Lois Lerner's lost emails. Now the top government attorney is heading up another document project in the crosshairs of Congress: the State Department's release of Hillary Clinton's emails and Libya documents to the House Select Committee on Benghazi, wrote Rachael Bade of Politico. But GOP investigators are raising red flags, accusing her and the State Department of stonewalling Congress by narrowly interpreting document requests and failing to disclose important information. âThe person in charge of document production at two different places on two different scandals has not been completely straightforward with us,â said Rep. Jim Jordan (R-OH), a top IRS and Benghazi investigator. âShe was at the IRS when there was a preservation order and subpoena â and documents were destroyed. She is now at the State Department, where we were supposed to get [certain] information, and we know that some of the emails were not given.â
Inventor's spat with California tax board faces review
California tax authorities persuaded the US Supreme Court on Tuesday to determine whether they must pay up after defrauding an inventor, wrote Barbara Leonard of the Courthouse News Service. The dispute stems from an investigation that the California Franchise Tax Board launched into Gilbert Hyatt after one of its auditors read a newspaper article in 1993 that described the fortune Hyatt was making from a computer-chip patent he owns. A review of Hyatt's tax returns showed that he had reported just 3.5 percent of his taxable income for 1991. In addition to finding that Hyatt owed California $1.8 million in taxes for that year, plus a $1.4 million penalty and $1.2 million in interest, the board found that Hyatt owed $6 million for 1992 because he did not move to Nevada until April that year. The inventor sued over that $10.5 million assessment. Ordered to pay Hyatt $139 million for his tort claims and $250 million in punitive damages, the tax board told the Nevada Supreme Court that it should have been granted immunity.