Bramwell’s Lunch Beat: FASB Contemplates Allowing Early Adoption of Rev Rec Ruleby
ARC REITs sign up KPMG as new auditor
A number of American Realty Capital (ARC) nontraded real estate investment trusts (REITs) and programs have signed up Big Four accounting firm KPMG as their new auditor, wrote Bruce Kelly of Investment News. On Jan. 22, Grant Thornton resigned as the auditor of eight nontraded REITs managed by Nicholas Schorsch’s ARC and a handful of other products. Two other ARC nontraded REITs are in discussions with CohnReznick to replace Grant Thornton. Schorsch’s financial empire was upended last October when it revealed that his flagship REIT, American Realty Capital Properties Inc., had a $23 million accounting error that was intentionally left uncorrected during the first half of 2014.
FASB may offer deferral, early adoption of revenue rule
In addition to considering a deferral of the new revenue recognition standard, the Financial Accounting Standards Board (FASB) might also contemplate whether to allow companies that are ready to follow the new standard to do so as early adopters, wrote Tammy Whitehouse of Compliance Week. Staff outreach to assess readiness for the new revenue recognition standard, which takes effect in 2017, is yielding mixed results, with some companies reporting they are ready to go and others saying they need more time, said FASB spokesman Chris Klimek. The FASB will meet early in the second quarter of 2015 to hear the outcome of staff research and consider options. Klimek also noted that the outreach has included questioning organizations on whether the FASB should allow companies to adopt in 2017 even if the board decides to delay the effective date. The FASB’s revenue recognition standard does not permit entities to adopt the standard before the 2017 effective date.
Obama administration pushes business tax reform in Congress
The Obama administration on Tuesday said it saw room for compromise with Congress on a potential overhaul of the business tax code, but a top Republican lawmaker said the two sides remained at loggerheads over taxes on small companies, wrote Jason Lange of Reuters. Treasury Secretary Jack Lew appeared before the House Ways and Means Committee to explain a White House budget proposal that would raise taxes on the wealthy and create new taxes on international companies to increase spending in areas like highways and education. Much of that agenda has little chance of approval in this Congress, but Lew said “there is plenty of opportunity for bipartisan cooperation” on business tax reform. But Ways and Means Committee Chairman Paul Ryan (R-WI) said the administration's proposals would not do enough to help small companies, particularly those that pay taxes through their owners' individual returns. “It just doesn’t cut it,” he added.
IRS chief: I don’t want to be seen as influencing 2016
IRS Commissioner John Koskinen said on Tuesday that rules from the IRS that would limit nonprofit groups' involvement in politics may not be enforced before the 2016 election, wrote Richard Rubin of Bloomberg. The tax agency's first attempt at those rules – released in November 2013 – flopped amid criticism from groups across the political spectrum, which complained that limits on pre-election ads and voter guides would constrain free speech. The IRS withdrew that plan in May 2014 and hasn't offered a new version. “It's not clear when we're going to be able to get to it,” Koskinen told reporters after testifying at the Senate Finance Committee. “My only focus on 2016 is to make sure that whatever we do, it doesn't look like we're trying to influence the 2016 election.” Koskinen didn't commit to a specific timeline for the rules and he didn't completely rule out the possibility that the IRS would act before 2016.
Attorney general: Final report on IRS probe to come out soon
Attorney General Eric Holder said on Tuesday he expects the US Justice Department to soon release a list of final recommendations stemming from its probe into whether the IRS wrongfully targeted conservative groups, wrote Sarah N. Lynch of Reuters. “I am satisfied with the progress that the criminal division has done; the civil rights division as well,” Holder told reporters at a press conference. “I expect that we will have some final recommendations coming up relatively soon.”
How much of its record settlement will S&P write off at tax time?
Standard & Poor’s (S&P) Ratings Services on Tuesday announced a record $1.5 billion payout to resolve crisis-era lawsuits with the Justice Department, states, and a pension fund over inflated residential mortgage deals. Collectively, the settlement total is 10 times larger than any other previously involving a credit-rating firm, wrote Timothy W. Martin of the Wall Street Journal. But how much of the unprecedented round of settlements could end up being written off? Michelle Surka, a program associate with the nonpartisan consumer advocacy group US Public Interest Research Group, said she thinks she has an answer based on an early analysis: about $290 million. That’s about a $50 million break on state taxes but also the potential to write down $240 million of federal taxes owed in the more than dozen states involved in the settlement, Surka said.
EU widens multinationals tax-sweetener investigation to Belgium
A high-profile European Union (EU) investigation into alleged tax sweeteners for multinationals spread to a fourth country on Tuesday, in a sign of the growing momentum behind the bloc’s clampdown on corporate tax avoidance, wrote Tom Fairless of the Wall Street Journal. EU regulators said on Tuesday they had opened a formal probe into whether Belgium gives an unfair tax break to multinational groups that isn’t available to other companies. The concerns center on a provision in Belgian law that allows companies to deduct so-called excess profits from their tax bills – profits that allegedly result from the advantage of being part of a multinational group. The provision typically offers tax discounts of more than 50 percent and as much as 90 percent for some multinational groups, apparently those “that move a substantial part of their businesses to Belgium,” said Margrethe Vestager, the EU’s antitrust czar.
More than $380,000 in accounting scholarships now available from AICPA
The American Institute of CPAs (AICPA) announced on Tuesday that the AICPA Legacy Scholarship application is now available on ThisWayToCPA.com for the 2015-16 academic year. The new application process is more streamlined and convenient, allowing students to fill out a single application for all four AICPA Legacy Scholarship awards. Those awards are: AICPA/Accountemps Student Scholarship, AICPA Foundation Two-Year Transfer Scholarship, AICPA John L. Carey Scholarship, and AICPA Scholarship for Minority Accounting Students. The AICPA Legacy Scholars Program will provide more than 100 scholarships for the 2015-16 academic year, totaling more than $380,000, to deserving undergraduate and graduate accounting students from across the nation. The application deadline is April 1.
At 92, Silver Spring accountant decided it was finally time to retire
Washington Post columnist John Kelly wrote a nice piece on Sidney Weiss of Silver Spring, Maryland, a CPA for nearly seven decades who is finally retiring at age 92. During his career, Weiss did the taxes for Ritz Camera stores, some lawyers at Arnold and Porter, a Catholic priest who set up a foundation to direct all his income to the church, and for a famous Washington strip club. He also used to do the taxes of current IRS Commissioner John Koskinen. The two had lunch together recently. “He has protection all the time,” Weiss said. “He doesn’t just sit down to lunch. He’s got six people around him to make sure no one attacks him.”
Rosneft accounting change on ruble slump may boost dividend
OAO Rosneft’s change in the way it accounts for foreign-currency risk may boost the dividend of Russia’s largest oil producer, in which BP PLC has a stake, analysts at UFS Finance Investment Co. and UralSib Financial Corp. said, wrote Stephen Bierman, Dina Khrennikova, and Nidaa Bakhsh of Bloomberg. The move will allow Rosneft to increase net income by reducing foreign-exchange losses on dollar debt in the company’s ruble-based financial reports, Ilya Balakirev, chief analyst at Moscow-based UFS, told Bloomberg. BP acquired almost 20 percent of Rosneft in 2013 as part of its sale of the Russian TNK-BP venture. Rosneft will pay out a dividend this year, BP CEO Bob Dudley, who is also on Rosneft’s board of directors, said in London on Tuesday.
Tesco clears payouts for former boss Clarke and ex-CFO
British retailer Tesco has cleared payouts for former chief executive Phil Clarke and ex-finance chief Laurie McIlwee after its legal team advised there was no basis for continuing to withhold the payments, wrote Neil Maidment and James Davey of Reuters. Tesco said on Tuesday it had agreed to pay Clarke almost 1.22 million pounds ($1.83 million) and McIlwee 970,880 pounds under their separation agreements. Clarke's 40-year Tesco career, three and a half as CEO, ended when he was fired last July. McIlwee, CFO from 2009, resigned in April of last year. The payments had been suspended due to an investigation into Tesco's accounting practices in the wake of the supermarket's 263-million-pound profit overstatement.