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Bramwell’s Lunch Beat: New EU Audit Rules Could Be a ‘Challenge’ for US Banks

May 14th 2014
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Overseas-tax change may be best to fund highways, Foxx says
Laura Litvan of Bloomberg Businessweekreported yesterday that a one-time tax change related to US companies’ overseas earnings is the most feasible way to provide the additional funding needed to rebuild aging highways and mass transit systems, US Transportation Secretary Anthony Foxx said.

Other ideas being considered are falling flat and time is running out to replenish the Highway Trust Fund this year, Foxx said at a Bloomberg Government event in Washington yesterday. Proposals to increase the 18.4-cent-per-gallon gas tax or other fees on drivers can’t clear Congress anytime soon, he added.

“Right now our proposal is the best way to thread the needle and get something done,” Foxx said, according to the article.

President Obama proposed a four-year, $302 billion bill that would raise $150 billion through taxes on overseas earnings and by closing loopholes that would normally let companies defer those obligations. Gas and diesel-fuel taxes haven’t kept pace with new projects and the Highway Trust Fund may not be able to meet its financial obligations as early as July, according to the US Transportation Department.

Litvan noted that also on Tuesday, a bill was unveiled by Senate Environment and Public Works Committee Chairman Barbara Boxer and other members that would provide the same amount of money each year as in the current two-year, $105 billion legislation expiring in September, plus inflation.

EU audit rules may trip up US banks, insurers
In April, European Union (EU) lawmakers voted to require EU companies to change their outside auditors every 10 years, and to limit the nonaudit services auditors can provide their EU audit clients.

But as Michael Rapoport of the Wall Street Journalwrote yesterday, those changes also will apply to many European subsidiaries of US multinationals, auditing experts say – especially financial services companies, a sector where EU authorities are particularly concerned about audits in the wake of the financial crisis.

The new audit rules could leave companies like JP Morgan Chase & Co. and American International Group Inc. with a tough decision: Should they have only their European units change auditors, which could lead to a confusing patchwork of different firms auditing different parts of the company? Or should they switch the entire company's auditor, which would be simpler but potentially more disruptive, placing an American company under European rules harsher than those in effect in the United States?

“It's going to be a real challenge,” said Jeremy Jennings, Ernst & Young's regulatory and public-policy leader in Europe, the Middle East, India, and Africa, according to the article.

White House stops short of veto threat on tax extenders bill
The Obama administration wants the Senate’s $85 billion tax extenders bill amended so that it does not add to the deficit, but stopped short of issuing a veto threat Tuesday, Steven T. Dennis of Roll Call’s POTUS Operandi blog reported.

“The administration supports the extension of many of the tax provisions in the Senate bill, such as those that support America’s small businesses, help unemployed veterans find jobs, and promote clean energy production and research and development (R&D),” said Bobby Whithorne, a spokesman for the White House, according to the article. “The president in his budget has put forward a way to pay for these tax provisions so they don’t add to the deficit and hopes that as legislation moves forward, Congress will offset their cost by closing tax loopholes.”

Dennis noted that Whithorne’s statement does not include a threat to veto the bill – either over the deficit or the lack of an unemployment extension, which is another priority for the White House.

By a vote of 96 to 3, the Democrat-controlled Senate took its first step in reviving a package of expired tax breaks by advancing a bill on Tuesday that would extend the provisions for two years.

The White House early last week did threaten to veto a House bill, which was approved by lawmakers last Friday, that would permanently extend the R&D credit – and add $156 million to the deficit – because the tax break would be revived without cost offsets.

Republicans push to kill O-care tax
Senate GOP leaders on Tuesday called for a vote to kill Obamacare’s tax on medical devices as part of the Senate’s tax extenders package, Bernie Becker of The Hillreported.

Republicans stopped short of saying they would oppose the tax package without the medical device vote.

“Most of our members voted to get on the bill. So the bill does enjoy support,” Minority Leader Mitch McConnell (R-KY) told reporters hours after the Senate voted 96 to 3 to start consideration of the measure, according to the article.

Still, McConnell noted that House Democrats have gotten far more amendment votes in recent months than Senate Republicans.

“It is always our hope to have amendments, and as to what we’ll do in the future? I can’t tell you right now,” McConnell said, according to the article. “But our hope is to have amendments and in particular the medical device tax repealed.”

Small Business Advisory Committee discusses FASB’s role in social accounting
Denise Lugo, staff correspondent for Bloomberg BNA, reported yesterday that the Financial Accounting Standards Board (FASB) Small Business Advisory Committee recently discussed what role the FASB should play – if any – in social accounting or sustainability.

During the committee’s May 7 meeting, Dan Noll, director of accounting standards at the American Institute of CPAs (AICPA), said he didn’t think FASB’s involvement would be necessary in this area; however, he did point to disclosure of nonfinancial information as a potential topic for the board to consider.

“FASB might have a role in that regard when talking about key performance indicators; key drivers of the business, where maybe there should be some type of standardization,” Noll said, according to the article. “There could be roles for the FASB, not necessarily on the broad topic of sustainability.”

Committee member Richard Forrester said sustainability is not an area where FASB needs to pursue in developing US Generally Accepted Accounting Principles (GAAP).

“We’ve got enough fish to fry. We don’t need that fish,” he said, according to the article.

Mayors back bill to expand California’s film tax credit
The leaders of Los Angeles, Sacramento, Long Beach, San Francisco, Fresno, San Diego, Bakersfield, Santa Ana, Oakland, and San Jose on Tuesday signed a letter supporting Assembly Bill 1839, which would expand and improve California's film and TV tax credit program, Richard Verrier of the Los Angeles Timesreported.

The bill would significantly expand funding and allow more projects to qualify so that California can better compete with film incentives offered by rival states and countries that have grabbed a large share of Hollywood's business, Verrier wrote.

In 2012, only one big budget feature film was shot entirely in California, and in 2013, just 39 out of 137 one-hour television series were filmed here, the mayors noted in their letter.

“Extending California’s film and television production tax credit program is a smart, prudent investment in California’s future and economic competitiveness,” the mayors wrote, according to the article. “The program is one of California’s most efficient and proven economic development tools, generating 51,000 jobs and providing $4.5 billion in direct spending since its inception in 2009.”

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