Bramwell's Lunch Beat: Wal-Mart Controls, Marvell’s Tone, Tax Fraud Billby
Wal-Mart finds âmaterial weakness' in controls over accounting of leases
Wal-Mart Stores Inc. said it found a âmaterial weaknessâ in its controls over accounting for leases, which allowed for misapplication of accounting standards related to sale-leaseback transactions, wrote Sruthi Ramakrishnan and Nathan Layne of Reuters. In a quarterly regulatory filing on Sept. 9, the company said it did not have sufficient controls in place to âproperly identify and account for leases that were subject to the sale-leaseback accounting guidance.â It said the problems included accounting treatment for leased assets âwhich should have resulted in the company being deemed the owner of the leased assets.â The company said it was revising its existing controls and procedures to properly apply sale-leaseback accounting, and the remediation is expected to be completed in the year ending January.
Marvell's accounting problems may start at the very top
Marvell Technology's mention of senior management's âtone,â in its disclosure of an internal accounting probe, suggests investors may have a lot more to worry about than a simple revenue recognition mistake and weak demand, wrote Tomi Kilgore of MarketWatch. The Bermuda-based company said in a regulatory filing that the investigation would focus on a percentage of revenue that was improperly recognized during its second quarter. The filing said the percentage was a result of weaker-than-expected demand in hard-disk-drive markets. But the real issue for investors could be, according to the regulatory filing, âwhether senior management's operating style during the period resulted in an open flow of information and communication to set an appropriate tone for an effective control environment.â This suggests that the people responsible are at the top of the chain of command.
Senate panel to consider tax fraud bill
The Senate Finance Committee will consider a bipartisan measure this week aimed at curbing tax refund fraud, wrote Bernie Becker of The Hill. The bill the committee will take up on Wednesday, from Senate Finance Committee Chairman Orrin Hatch (R-UT) and Sen. Ron Wyden (D-OR), would make more than a dozen changes aimed at beefing up tax fraud efforts. Hatch and Wyden's bill would strengthen IRS requirements to inform taxpayers if their identity has been stolen, allow the agency to require at least truncated Social Security numbers on tax forms, and increase criminal penalties for fraudulently stealing an identity. In all, the bill would raise around $286 million over a decade. The measure serves to give the IRS more power to fight tax fraud, even as Republicans on Capitol Hill still believe that the agency targeted conservatives for their political beliefs and have worked to slash its budget.
Dems urge more action on inversions
Bernie Becker also wrote for The Hill that Democratic lawmakers urged the Obama administration to take a more aggressive stance toward offshore tax deals known as inversions. Seven congressional Democrats â Reps. Rosa DeLauro (CT), Lloyd Doggett (TX), and Sandy Levin (MI), as well as Sens. Dick Durbin (IL), Jack Reed (RI), Sheldon Whitehouse (RI), and Elizabeth Warren (MA) â called on Treasury Secretary Jack Lew to take executive action against a technique known as earnings stripping that makes the offshore deals more attractive. They also suggested that the administration essentially shame companies by publicly listing those that have reincorporated abroad to slash their tax bills and to close loopholes that still allow inverted companies to get federal contracts. âWhile we recognize that Congress can, and should, do more to strengthen our laws, we encourage you to take these executive actions to curb the manipulation of our laws and regulations and prevent the further erosion of our tax base,â they wrote.
- A rare peek inside the books of Chicago accounting firms (Crain's Chicago Business)
- Accounting challenges loom for smaller banks (SNL Financial)
- IASB formalizes revenue recognition deferral (Financial Director)
- Wegelin banker facing US tax charge wins bail ruling (Bloomberg)
- Trump calls CEO pay a âjoke' but vows to slash corporate taxes (Bloomberg)
- Bush tax plan leaves some of the biggest breaks untouched (Bloomberg)
- Jeb Bush tax plan could disrupt real estate and small business (Forbes)
- Despite populist rhetoric, tax proposals from some GOP presidential candidates favor rich (Associated Press)
- Don't bother fixing the tax code unless you fix the IRS too (Tax Analysts)
- Let's get high for the children (Tax Analysts)
- Tax subsidies for childcare expenses target middle-income families, missing many poor parents (TaxVox)
- Why California's alcohol taxes are so low (Sacramento Bee)