CPA Journal, The

A Letter to the U.S. Leadership

In February, Pres Obama unveiled his $3.7 trillion budget for fiscal year 2012. This budget has been characterized by some as "encouraging," because it is projected to trim $1.1 trillion from the country's deficit over the next 10 years. Uncertainty is inherent in the nature of budgets, and differences in the bottom line will depend upon how closely the outcome follows the underlying economic assumptions. Most financial experts agree that Americans can't simply grow their way out, spend their...

A New Strategy for Cultivating Diversity

Three interrelated issues impede the accounting profession's efforts to attract, hire, and keep a substantial number of minority accountants. The first, and most specific, problem is that not enough African Americans and Hispanics are majoring in accounting and going on to become CPAs. The second, broader problem is the lack of financial literacy in the population in general, and more specifically the lack of financial literacy in minority and lower-income neighborhoods. The third problem is ...

Are Auditors of Public Companies Prepared for the Transition to Ifrs?

As of this writing, non-US companies using International Financial Reporting Standards (IFRS) are permitted to list their securities on US stock exchanges without reconciling those statements to US GAAP. In February 2010, the SEC stated that US issuers would not be required to employ IFRS until 2015 at the earliest. The SEC further stated that it would vote in 2011 whether to go forward with a mandate to employ IFRS solely or to allow firms to use either IFRS or US GAAP. A survey was sent to ...

Basis Overstatement Still Does Not Trigger Six-Year Limitations Period

Once again, the Tax Court has dealt with a remarkably vexing issue: whether an overstatement of basis should allow the IRS to extend the statute of limitations for the assessment of tax from three years to six. Intermountain Insurance Service of Vail LLC v. Commissioner (134 TC No. 11 (2010)) adds to an increasing body of case law against the IRS. Tax advisors should expect the IRS to get off the mat and continue to challenge taxpayers. The background and evolution of this issue are fascinati...

Conversion From National to International Financial Reporting Standards

Beginning in 2008, most Israeli public companies were required to adopt International Financial Reporting Standards (IFRS) for financial reporting. Previously, Israel followed its own set of financial reporting standards, Israeli GAAP, which was very rules-based, in comparison to the more principles-based IFRS. Israel is a highly industrialized country with a significant public company presence in the high-tech, biomedical, healthcare, pharmaceutical, and defense technology industries. Public...

Double Tax Treaties

The realities of globalization have brought the subject of international double taxation out of the background and into the limelight. The popularity of multinational companies, the exponential growth in the transfer of resources across boundaries, together with the recent explosion in electronic commerce, have all contributed to an increased awareness by all those concerned with or involved in transborder trade and commerce. The Organization for Economic Co-operation and Development's (OECD)...

E-Discovery Process and Electronically Stored Information (Esi) Strategies

One of the significant impacts of litigation has been the rapidly increasing rules of procedure and evidence related to producing electronically stored information (ESI) on a complete and timely basis. E-discovery is the process of identifying, preserving, collecting, processing, reviewing, analyzing, producing, and presenting ESI that may be relevant to a case. Though e-discovery may seem far removed from the core practice of accounting, it is something that accounting professionals should b...

Estimating the Fair Value of Investments in Entities That Calculate Net Value Per Share

In September 2006, FASB issued Statement of Financial Accounting Standards (SFAS) 157, Fair Value Measurements (now Accounting Standards Codification (ASC) section 820-10, Fair Value Measurements and Disclosures), with the stated objective of simplifying the measurement and disclosure of fair value information. The application of this guidance to investments in certain nonpublic entities, such as alternative investments, proved more difficult than originally envisioned. Individuals and instit...

Inbox: Letters to the Editor

Mary Elizabeth Murphy's Contributions to the Development of International Accounting

During the 1940s, 1950s, and 1960s, the accounting educator Mary Elizabeth Murphy promoted international accounting standards when such an activity was not "cool." Today, the topic of international accounting standards is garnering plenty of attention worldwide. Murphy was ahead of her time in advocating for international accounting standards, and her contributions offer lessons for how CPAs can help achieve the goal of a single set of global standards. During Murphy's career, before internat...

Retiree Benefits Bankruptcy Protection Act Means What It Says: Fairness and Equity

The case of In Re Visteon Corporation (612 F.3d 210 (3d Cir. 2010)) brings to a sudden halt a tendency among bankruptcy and federal district court judges to ignore the Retiree Benefits Bankruptcy Protection Act of 1988 (RBBPA) as inapplicable when the debtor could have terminated the retiree's health and insurance benefits prior to bankruptcy. The case is of considerable importance because it is the first US Court of Appeals case to address the scope of the RBBPA and discuss the true intent o...

Solving New York State's Fiscal Crisis

New York was recently ranked number one in a top 10 list of states expected to see more residents move out of the state than move in this year due to high taxes and a high cost of living, according to a Dec 8, 2010, article in Forbes magazine. When individuals and companies give up on New York, they leave those who remain with a shrinking tax base, an increased tax bill, and, thus, reduced state and local services. This type of flight affects all sectors of the economy and the community at la...

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

On Jul 21, 2010, Pres Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. The legislative scope of this 848-page law is the most ambitious since the Great Depression. It may take years to implement the new regulations of the credit rating agencies, banks, hedge funds, buyout shops, and the $450 trillion derivatives market. Another major element of the legislation is the creation of an independent Consumer Financial Protection Bureau housed in the Federal Reser...

The Increase in Transparency Requirements for Corporate Tax Positions

The US income tax system is based on honesty, self-reporting, and self-assessment. Taxpayers are supposed to submit truthful and accurate returns, and the US government is supposed to efficiently and effectively audit returns for errors and omissions. Although advances in computer technology, information reporting and matching, and electronic filing have increased transparency and efficiency in individual tax compliance, progress on the corporate side has been comparatively slow. The IRS has ...

The Keys to Integrity and a Sense of Well-Being for Accounting Professionals

A focus on professionals survival and their own self-interest can get in the way of a sense of well-being. When this happens, they can feel lost, alone, and, perhaps, more likely to make inappropriate decisions. This article shows how finding, retrieving, and acting with integrity can help find a sense of well-being and help one decides what to do when a difficult situation arises. Integrity requires accountability, an attribute with which all accounting professionals are familiar. Maintainin...

The New Healthcare Tax Credit for Small Employers

On Mar 23, 2010, the Patient Protection and Affordable Care Act (ACA) was signed by Pres Obama. One very important provision of the ACA was a healthcare tax credit specifically designed to encourage small employers to offer and maintain health insurance coverage for their employees. The IRS has made great efforts to inform small tax-exempt organizations and small businesses about this healthcare tax credit, in part by mailing millions of postcards to small employers. In a "qualifying arrangem...

Website of the Month: Federal Reserve

The Web site of the Board of Governors of the Federal Reserve System, at www.federalreserve.gov, provides access to educational and other information developed by the Federal Reserve, as well as other resources related to the central bank of the US. The main and home webpages use a common main menu in the header to organize the primary sections of the Web site: "about the Fed," "news & events," "monetary policy," "banking information & regulation," "payment systems," "economic researc...