Internal auditors’ job satisfaction higher with incentive pay, survey finds
Ken Tysiac of the Journal of Accountancywrote on Tuesday that internal auditors who receive incentives based on profits or revenue report higher job satisfaction and loyalty to their organizations without having their objectivity compromised, according to a new survey report from Venkataraman Iyer, PhD, CPA, an accounting professor at the University of North Carolina at Greensboro.
Among the 1,600 internal auditors in North America who were polled as part of the report, Job Satisfaction for Internal Auditors: How to Retain Top Talent, which was published by the Institute of Internal Auditors Research Foundation, about 50 percent of chief audit executives, 56 percent of directors of internal audit, 48 percent of audit managers, and 39 percent of audit staff receive profit- or revenue-based bonuses.
On a scale of 1 to 5, those who receive profit- or revenue-based incentives rated their job satisfaction at 3.94, compared with 3.85 for those who do not receive incentives, Tysiac wrote.
The survey results did not show that auditors’ objectivity is impaired when their incentives are tied to profits. Auditors who receive profit-based compensation actually showed a higher propensity to suggest a write-down and higher estimates of inventory obsolescence in a hypothetical case study presented in the survey. These results ran opposite to the idea that auditors’ judgment may be impaired if they receive profit-based incentives, according to the article.
GASB offers preliminary views on leases, fiduciary responsibilities
While the Financial Accounting Standards Board is working to finalize a standard that would bring leases onto corporate balance sheets, its sister organization, the Governmental Accounting Standards Board (GASB), is asking the public for feedback on new proposals that would improve lease accounting for state and local governments.
The GASB issued a “preliminary views” document on Thursday that includes proposals to improve the accounting and financial reporting for leases for governments from both a lessee and lessor perspective. The board also issued a separate document on the reporting of activities in which a government has a fiduciary responsibility.
The Leases document presents the GASB’s views on the issues associated with accounting for leases, which are based on the principle that all leases are financings of the right to use an underlying asset.
Under the proposal, lessee governments would report the following in their financial statements for all leases except short-term leases (12 months or less):
- An intangible asset that represents the government’s right to use the leased asset.
- A corresponding liability for lease payments.
- Amortization expense related to the lease asset (recognizing the asset amount as an expense over the term of the lease).
- Interest expense related to the lease liability.
Government lessors would report the following in their financial statements for all leases except short-term leases:
- A receivable for the right to receive payments.
- A corresponding deferred inflow of resources to reflect resources related to future periods.
- Lease revenue (and a corresponding reduction in the deferred inflow) systematically over the term of the lease.
- Interest revenue related to the receivable.
“The board has an opportunity to make changes to the current guidance on leases that would result in greater transparency, reduced complexity in application, and more meaningful information for financial statements users,” GASB Chairman David Vaudt said in a written statement.
The GASB issued the Financial Reporting for Fiduciary Responsibilities document on Thursday to obtain comments from stakeholders before developing more detailed proposals for changes to existing financial reporting standards. The goal of the project is to enhance the consistency and comparability of when and how governments report their fiduciary activities in basic financial statements.
In this context, fiduciary responsibility generally relates to a government controlling assets belonging to others in a trustee or custodial capacity.
If approved by the GASB, the final rules would enhance the reporting of fiduciary activities by:
- Defining when a government has a fiduciary responsibility and, therefore, is required to present fiduciary fund financial statements.
- Clarifying financial reporting requirements for fiduciary responsibilities, including a requirement for business-type activities that serve in a fiduciary capacity.
- Introducing the use of a financial statement that reports the inflows and outflows of resources for all fiduciary fund types.
“The changes the board is proposing would give governments and their auditors clearer guidance for determining which activities should be reported in fiduciary funds and in which type of fiduciary fund the activities should be reported,” Vaudt said. “This proposal would provide financial statement users with needed information regarding both general and special-purpose governments, including business-type activities, such as public universities, hospitals, and utilities, which generally have not reported their fiduciary activities in the past.”
The GASB is asking stakeholders to review the leases and fiduciary responsibility proposals and provide comments by March 6, 2015. The board will also host public hearings on both proposals on April 8 in New York City, April 9 in Irving, Texas, and April 10 in Los Angeles.
PCAOB reschedules 2015 budget and strategic plan meeting
The Public Company Accounting Oversight Board (PCAOB) will now decide next week whether to approve its 2015 fiscal-year budget and related strategic plan.
The meeting, which is open to the public, will be held at 3 p.m. Eastern time on Nov. 25 in the PCAOB meeting room, 1666 K St. NW, Washington, DC. The meeting was originally set for Nov. 20, but it was postponed on Wednesday. The PCAOB did not give a reason for the postponement, but feel free to speculate over at Going Concern.
Section 109(b) of the Sarbanes-Oxley Act of 2002 requires the PCAOB to establish a budget for each fiscal year no later than one month prior to the commencement of that fiscal year. The PCAOB fiscal year is the calendar year. If approved by the board, the budget will be submitted to the US Securities and Exchange Commission (SEC) for approval.
The budget will form the foundation for the PCAOB 2015 accounting support fee assessments.
Additionally, the SEC’s rule on the PCAOB budget requires the PCAOB to maintain a strategic plan. If the budget and strategic plan are approved by the board, the strategic plan will guide the PCAOB’s use of resources funded by the 2015 budget.
The meeting will be webcast via a link on the PCAOB website and available via podcast later in the day.
Durbin: Online sale tax ‘up to the House’
Bernie Becker of The Hillreported that Senate Majority Whip Dick Durbin (D-IL) said on Thursday that the House would determine whether online sales tax legislation would proceed this year, all but ensuring that the measure wouldn’t become law in 2014.
“At this point, it’s up to the House,” Durbin, a backer of the Marketplace Fairness Act, told reporters, according to the article.
House Speaker John Boehner (R-OH) already vowed this month to block the online bill from consideration in the House, crippling supporters' chances of finally getting the measure to President Obama’s desk. Under current law, states aren’t allowed to collect sales taxes from businesses that don’t have a physical presence within their borders.
Backers of the measure have been seeking to pair the Marketplace Fairness Act with a less controversial bill that would extend a moratorium on taxes on Internet access, Becker wrote. That law, known as the Internet Tax Freedom Act, expires on Dec. 11.
Durbin said on Thursday that it made little sense for the Senate to try to force the House’s hand by bringing the online sales tax bill back to the floor, after it overwhelmingly passed the Senate in May 2013. “The Speaker, as a member of the party of business, should listen to business,” he added.
Jason Chaffetz promises less personal Oversight
Compared with his predecessor – the colorful and controversial Rep. Darrell Issa (R-CA) – Rep. Jason Chaffetz (R-UT) is promising not to let things get too personal as the new chairman of the House Oversight and Government Reform Committee, Lauren French and John Bresnahan of Politicowrote on Thursday.
Chaffetz said in an interview on Wednesday that he would focus on how to fix the Secret Service, embassy security, and mundane tasks like US Postal Service reform. Issa, instead, tried to dig up dirt on Benghazi, the administration’s treatment of conservative groups by the IRS, and Attorney General Eric Holder. A series of blunders, misstatements, and overreaches damaged his credibility, and he is exiting the post because of term limits for Republican chairmen, French and Bresnahan wrote.
“These tend to be somewhat emotional issues, but you can’t let it get personal. I think that if you proactively reach your hand out and form these [bipartisan] relationships, you can still look them in the eye … even though you vehemently disagree,” Chaffetz said, according to the article.
TIGTA: IRS has insufficient controls over the outside employment of its employees
According to a new report released by the Treasury Inspector General for Tax Administration (TIGTA) on Thursday, the IRS has insufficient controls over the outside employment or business activities of its employees.
IRS records showed that in 2011, nearly 3,000 of the more than 6,000 active, full-time IRS employees who held jobs or participated in business activities outside the IRS did not have approval for outside employment, or the activities were not documented on the tax agency’s Outside Employment System as required, the report stated.
IRS Human Capital Office management was generally not aware of the number of employees with unapproved outside employment because responsibility has not been assigned for overseeing the overall outside employment process.
In addition, the IRS stated that it does not have authorization to use taxpayer information, such as a W-2 form, to identify employees with unapproved outside income because the tax code does not clearly provide that tax data can be used for this purpose.
“Our report found that it will be difficult for the IRS to monitor outside employment because 93 percent of the existing records in the database used to compile outside employment requests are out of date,” Treasury Inspector General J. Russell George said in a written statement. “Moreover, approval of outside employment requests is not always documented on the database or in official personnel folders, in part because of confusing and incomplete guidance.”
TIGTA recommended that the IRS human capital officer update outside employment guidance, appoint management responsibility for overseeing the outside employment process, evaluate whether legislation would be needed to authorize the IRS to perform analyses of employee income information to identify employees with unapproved outside employment, and perform a one-time cleanup of the outside employment database.
In their response, IRS management agreed with three of TIGTA’s recommendations; however, they did not agree that income information should be used to detect IRS employees engaging in potential conflicts of interest.
Survey: CFOs say raise and promotion requests have gone up
According to the results of a new survey from staffing firm Accountemps, the percentage of employees who have asked for raises and promotions this year has increased from two years ago.
The survey, which was developed by Accountemps and conducted by an independent research firm, is based on interviews with more than 2,100 CFOs from a stratified random sample of companies in more than 20 of the largest US metropolitan areas.
According to the CFOs who responded to the survey, 43 percent noted an increase in employee requests for raises and promotions compared to two years ago. Forty-four percent said the number of requests have stayed about the same, while 11 percent said those requests have decreased.
“Employers must be proactive and closely scrutinize compensation levels to stay competitive and keep good staff,” Bill Driscoll, a district president with Accountemps, said in a written statement. “Resources, such as the 2015 Salary Guide from Robert Half, can help managers benchmark salaries and better understand the complexities of today's hiring environment.”
Driscoll noted there's more to retention than just offering salary increases. “It's better to be prepared than surprised by an employee's request for a raise or promotion,” he said. “Now's the time to proactively connect with key team members to identify advancement opportunities and discuss viable career paths.”
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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.