Revenue recognition accounting changes could have long tentacles
Sweeping revisions to revenue recognition rules set to take effect in 2018 are already wreaking havoc in corporate finance departments, wrote Emily Chasan of CFO Journal. Corporate controllers and their financial staffs are re-evaluating everything from contracts to commission structures in anticipation of new rules that will change how companies report their top-line numbers. âRevenue touches everything,â Stephen Rivera, senior director of financial compliance and procedures at Johnson & Johnson Inc., said during a Financial Executives International conference in New York on Monday. âIt's like an octopus. It has tentacles all over the income statement.â Internal-control systems around financial reporting that companies use to prevent material misstatements and fraud are also likely to change.
SEC expands its efforts in high-tech financial reporting
In another CFO Journal article, Emily Chasan wrote that the US Securities and Exchange Commission (SEC) has either proposed or passed seven new rules over the past 12 months requiring companies to embed data tags to specific content within financial reports. The tags, written in XBRL, are designed to make financial reports easier to compare across companies. For example, the SEC proposed in April that there be tags linked to pay-versus-performance disclosures. In July, it proposed companies add XBRL tags to executive compensation changes in clawback rules designed to let companies reclaim erroneous pay from executives after financial errors. But companies and investors say it is still challenging to use the data. âCompanies still view it as a compliance exercise,â said Mohini Singh, director of financial reporting policy at the CFA Institute.
Ernst & Young loses trial for not vetting Madoff-tied audits
Ernst & Young LLP's failure to vet financial audits backed by con man Bernie Madoff's accountant may cost the consulting firm $25 million based on the verdict in the first trial of an auditor over losses tied to the biggest Ponzi scheme in US history, wrote Sophia Pearson and Elizabeth Amon of Bloomberg. FutureSelect Portfolio Management Inc., which sued Ernst & Young in 2010 over faulty audits of a Madoff-linked feeder fund, is entitled to recoup a portion of the $112 million it lost in its investment in the fund, jurors in Seattle state court ruled on Nov. 13. The jury found Ernst & Young liable for half of the $20.3 million in damages it awarded. With interest added, the firm is on the hook for about $25 million, a FutureSelect lawyer said. A spokeswoman for Ernst & Young said the firm is pleased the jury rejected the âvast majorityâ of FutureSelect's claims, and it is considering whether to appeal.
Facebook, Google quizzed by EU lawmakers on Dutch Sandwich deals
Google Inc. and Facebook Inc. were among US companies facing questions on Monday from European Union (EU) lawmakers about their tax-reducing techniques, a month after regional antitrust regulators ordered Starbucks Corp. and a Fiat Chrysler Automobiles NV unit to repay millions of euros in back taxes, wrote Stephanie Bodoni of Bloomberg. The queries about the âDutch Sandwichâ and the âDouble Irishâ â tax arrangements that allow companies to declare income in lower-tax areas â came as the European Commission weighs its next decisions on fiscal pacts Amazon.com Inc. arranged with Luxembourg and Apple Inc. with Ireland. Eleven companies, including Amazon, faced questioning from the parliament's special tax committee in Brussels. âWe make use of tax incentives and tax structures that are well-known, widely accessible, and are employed by virtually all multinational companies,â said Google's Nicklas Lundblad.
- To find a CFO, many firms turn to their own board members (CFO Journal)
- Clinton Foundation amends four years worth of tax returns (Washington Post)
- Bush and Trump have the best tax plans (CNBC)
- Clinton hits Sanders on middle-class tax hikes (Politico)
- Marco Rubio's gas tax cut would give state and local governments flexibility, and political fights (TaxVox)
- Pfizer's creative merger plan revives concerns about tax-avoiding âinversions' (Los Angeles Times)
- Deutsche Bank broker freed in $7 billion tax fraud case spoiled by juror's lies (USA Today)
- RTPA: A hidden tax on small businesses (The Hill)
- The tax law professor who challenged Hillary Clinton (Newsweek)
- People are leaving fake price tags in IKEA to call out tax avoidance (Mashable)
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.