Bramwell’s Lunch Beat: FASB Proposes Update to Nonprofit Financial Reporting Rules
Foreign takeovers see US losing tax revenue
Months after the Obama administration cracked down on mergers that helped US companies skirt domestic taxes, a wave of foreign takeovers is steering more tax revenue away from Uncle Sam, wrote Liz Hoffman and John D. McKinnon of the Wall Street Journal. Tax inversion deals – when US companies acquire foreign rivals and redomicile in low-tax countries, reducing the taxes paid back home – sparked an outcry from lawmakers and others that prompted the US Treasury Department in September 2014 to make such tie-ups more difficult and less lucrative. But the policy doesn’t cover US companies being purchased by foreign entities. Once a cross-border takeover is complete, companies can apply their new, lower tax rates to the overseas income and use internal loans and other strategies to further reduce US taxes.
FASB to propose new not-for-profit reporting requirements
The Financial Accounting Standards Board (FASB) expects to issue for public comment in mid-April an Accounting Standards Update aimed at enhancing the usefulness of the financial statements of not-for-profit organizations, wrote Ken Tysiac of the Journal of Accountancy. The proposal would reduce the number of net asset classes presented from three to two. The new classification would convey net assets with donor-imposed restrictions and without donor-imposed restrictions. The update would also propose changes to the required information about an organization’s liquidity, financial performance, and cash flows. “I think the benefits justify the costs,” FASB member Tom Linsmeier said during a meeting on Wednesday. “I think that we’re providing an opportunity for the not-for-profit community to tell their story far better.”
Knowledge of auditor’s bias may be a dangerous thing
University of Pittsburgh researchers found in a paper published in The Accounting Review, the journal of the American Accounting Association, that an accounting firm reviewer’s awareness of bias may cause them to rely more on the audit preparer’s judgments than they would without such awareness, wrote Matthew Heller of CFO. By failing to correct for a preparer’s bias, a reviewer won’t simply adopt a preparer’s recommendation, study co-author Vicky Hoffman said. But the failure to correct may “significantly impede a reviewer’s own good judgment.” The study’s findings were derived from an online experiment involving 119 audit managers and senior managers from two Big Four accounting firms who had an average of 9.37 years of experience.
Former IRS Commissioner Mark Everson to run for president. Yes, of the United States
On Thursday, Mark Everson, who served as IRS commissioner during the George W. Bush administration, announced that he is running for president in 2016. And yes, he’s serious, wrote Forbes contributor Tony Nitti. “I know what you’re thinking. Doesn’t the IRS have a bit of a public perception issue right now?” Nitti wrote. “Won’t Everson’s running for president with ‘IRS Commissioner, 2003-2007’ on his resume be about as well received as Adrian Peterson applying to become a Big Brother? The answers are yes and yes, but that’s not stopping Everson.” According to Everson’s website, he favors a tax plan authored by Columbia professor Michael Graetz, which would put in place a destination-based value-added tax (VAT) that will apply to goods and services. The plan, Everson said, will remove 150 million Americans from the income tax rolls, freeing them from having to file an income tax return and deal with the IRS. “A VAT? Well, that won’t make his former co-workers too happy, now will it?” Nitti wrote.
House Republican to Obama: Don’t act on taxes
A House tax writer is joining the GOP chorus seeking to warn President Obama away from making unilateral changes to the tax code, wrote Bernie Becker of The Hill. Rep. Vern Buchanan (R-FL), a member of the House Ways and Means Committee, registered his “strongest possible objection” on Thursday to the president in a letter. Senate Democrats have been pushing Obama to take executive actions on taxes, to roll back tax-avoidance strategies and incentives used by corporations and the wealthy. Administration officials haven’t ruled out the idea, though Josh Earnest, the White House press secretary, has said that there's no “imminent announcement” about such a plan.
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