SEC bars firm from auditing US-traded companies based in China
The US Securities and Exchange Commission (SEC) on Tuesday barred Rochester, New York-based accounting firm EFP Rotenberg LLP from auditing any US-traded companies based in China, alleging that the firm mishandled the audit of a Chinese travel company, wrote Michael Rapoport of the Wall Street Journal.
In an administrative proceeding, the SEC said EFP Rotenberg didn’t adequately plan its audit of China’s Universal Travel Group and didn’t obtain enough evidence or show enough professional skepticism when it gave the company’s financial statements a clean bill of health.
Rapoport noted that the accounting firm also made no attempt to communicate with the audit firm it replaced before accepting Universal Travel as a client, the SEC said, even though the prior firm had raised questions about the company that it disclosed when it resigned as auditor.
EFP Rotenberg was fined $50,000 and barred from auditing any company that files with the SEC and has headquarters, principal offices, or at least 20 percent of it business in China, the SEC said.
The SEC also barred Nicholas R. Bottini, an EFP Rotenberg partner who was in charge of Universal Travel's audit, from auditing US-traded public companies for at least two years and fined him $25,000, according to the article.
Annuities in US retirement plans get government boost
Richard Rubin and Zachary Tracer of Bloombergreported on Tuesday that under new rules from the US Treasury Department, retirees with 401(k) plans and individual retirement accounts will have more flexibility to purchase annuities that don’t start paying out until age 80 or 85.
The rules announced yesterday provide a new way for retirees to limit the drawdowns of their account balances that are now required starting after age 70 1/2. Instead, under the rules, they could use as much as 25 percent of their account balances up to $125,000 to purchase deferred annuities.
“As boomers approach retirement and life expectancies increase, longevity income annuities can be an important option to help Americans plan for retirement and ensure they have a regular stream of income for as long as they live,” Mark Iwry, deputy assistant Treasury secretary for retirement policy, said in a statement.
The Treasury Department’s final rules give the government’s blessing to the concept of longevity insurance, which hasn’t taken hold in the market, in part because of the required distribution rules and because of relatively high fees that deter potential purchasers, Rubin and Tracer wrote.
People retiring with lump sums from defined-contribution plans have also been reluctant to lock up substantial portions of their nest eggs in annuities.
[Click here to download the final Treasury rules on longevity annuities.]
IRS Commissioner John Koskinen, on hot seat, has history of bureaucratic rescue jobs
Alan Rappeport of the New York Timeswrote a profile on IRS chief John Koskinen, who said in the article that sometimes on airplanes, strangers shy away when he explains what he does for work.
Hired to rehabilitate an agency that went awry targeting political groups, Koskinen’s style – quick-witted to the point of being flip and sometimes impolitic – has left some wondering if he is the right person to restore the IRS’s battered credibility.
“He was two years into retirement in May 2013, filling his days with tennis, theater, and grandchildren, when he received a series of urgent telephone calls. The White House and Treasury Department wanted to know if the then 73-year-old with a history as a Washington fixer would be willing to come back to work for one last rescue mission. The IRS was in trouble, and they wanted him to run it,” Rappeport wrote.
“After a moment of contemplation, Mr. Koskinen, who as a child dreamed of being president, agreed. The decision sent him into the center of the worst firestorm in the agency’s recent history and made him Washington’s most prominent punching bag.
“‘I think I need counseling,’ Mr. Koskinen said, sitting at the head of the long wooden conference table in his beige and brown third-floor office at the IRS headquarters. ‘I’m a recidivist, going from one kind of crisis to another.’”
Judge sets hearing on group’s push to investigate lost IRS emails
John D. McKinnon of the Wall Street Journalreported on Tuesday that US District Judge Reggie Walton has scheduled a hearing for Tuesday on a grass-roots conservative group's request to investigate missing emails at the IRS, as part of the group's lawsuit against the agency.
The judge ordered the hearing after conservative group True the Vote filed a motion seeking to speed up discovery and “preserve and prevent further destruction” of documents and electronic data. Among other things, the group wants a forensic expert to figure out how the emails were lost and examine whether any of the missing data can be recovered, McKinnon wrote.
True the Vote says the IRS was obligated to maintain emails under federal records laws as well as agency rules. It also asserts the IRS was required to preserve the data because lawmakers were looking into the agency's treatment of conservative groups.
After True the Vote sent a letter accusing the government of “bad faith” in the email loss, an IRS lawyer categorized the allegations as “unwarranted attacks on the government and its counsel” in a letter dated June 18, according to the article.
Rauner used strategy now under IRS scrutiny to slash income taxes
Jeff Coen and Bob Secter of the Chicago Tribunewrote on Tuesday that IRS data show Bruce Rauner to be one of the 11,000 richest tax filers in the nation, but most of the millions he made in recent years was taxed at 15 percent – less than half the top federal rate for the wealthy, a review of tax documents released by the GOP candidate for Illinois governor shows.
One reason behind that sharp discount is that Rauner took advantage of a strategy that yielded big tax savings on his share of investment fees paid to his private equity firm, GTCR, Coen and Secter wrote. That strategy is allowed under tax rules but has come under IRS scrutiny.
In ways both big and small, the Republican businessman's financial profile is one driven by tax-reducing strategies often out of reach for those of more modest means.
For example, Rauner's campaign is built around his resounding success at the helm of GTCR, through which he earned millions of dollars a year. But a major portion of that money was reported to the IRS as capital gains taxed at a preferential 15 percent, including money from so-called management fee waivers used by many private equity firms to reduce tax bills for key partners, according to the article.
Also, for three years, Rauner reported little regular business income, the tax category that includes partnership earnings and is subject to a top tax rate of 35 percent. Instead he claimed losses of $3.1 million in 2011 and $12.7 million the year before.
Prosecutors drop charges against man who drove onto White House grounds
Matthew Goldstein – an IT specialist for the IRS who was arrested for driving his gray Honda Civic onto the White House grounds in May, briefly setting off a security incident – was scheduled to appear in DC Superior Court on Wednesday for a hearing, but prosecutors on June 20 dismissed the misdemeanor unlawful entry charge, wrote Keith L. Alexander of the Washington Post.
On May 6, Goldstein, 55, followed the presidential motorcade carrying President Obama’s daughters into the secure perimeter of the compound, the Secret Service said. Goldstein’s vehicle was able to get through two rows of metal security posts and within five feet of the Obama girls’ motorcade. The White House was placed on security lockdown for more than an hour after the incident.
Goldstein’s attorney, Thomas Hartnett, said his client made a mistake and was not familiar with the roads around the White House. Hartnett said he was “very happy” prosecutors dismissed the case, according to the article. US Attorney spokesman Bill Miller said his office dropped the charges “after further investigation and a review of the evidence.”
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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.