Pennsylvania CPA Journal

Professional Roundup

The First Word

Federal Tax

Business owners often choose S corporation status to eliminate the double taxation of profits that would occur with a C corporation election. One of the basic eligibility requirements for S corporation status is that only eligible shareholders can be owners. Shareholder eligibility is an area where practitioners must take great care, since an ineligible shareholder will terminate the S corporation election. Shareholder eligibility matters must be considered when dealing with other business as...

Accounting &Amp; Assurance

Evaluating fraud risk factors is probably the most difficult part of assessing overall audit risk, and owes its complexity to the fact that human behavior cannot be predicted with certainty. A recent study by the Association of Certified Fraud Examiners estimated that US organizations lose approximately 5% of annual revenue to fraud. Asset misappropriations were the most common type of fraud, occurring in over 90% of all cases studied. Financial statement fraud was the least common, but it ha...

Liability Lessons

Top ten trouble spots for accountants are presented. These include: 1. bookkeeping services and suggesting procedures for bookkeeping to clients, 2. significant personal contact with a client and the performance of audit functions, 3. no engagement letter, 4. lack of clarity regarding the work to be performed, and 5. tax advice beyond area of expertise. Equally troublesome for many accountants is any combination of personal contact with clients, involvement on client boards or as part owner, ...

State &Amp; Local Tax

FASB Interpretation No. 48 (FIN 48) is an interpretation of FASB Statement No. 109 (FAS 109), Accounting for Income Taxes, so the definition of "income tax" found in FAS 109 applies to FIN 48 as well. In a small, informal survey, various tax professionals were asked whether the Michigan Single Business Tax, the Pennsylvania Capital Stock and Franchise Tax (CSFT), and Philadelphia Business Privilege Tax (BPT), among others, should be deemed "income tax" for FAS 109 and FIN 48. Majorities were ...

Estate &Amp; Personal Financial Planning

If your clients are subject to the Alternative Minimum Tax (AMT), there is now a refundable AMT credit that may be available to minimize their tax hit. Individuals who have unused AMT credits that are more than three years old may be entitled to a reduction in their 2007 income tax, and possibly a greater refund. Exposure to the AMT affects many taxpayers. It is a separately computed federal income tax that eliminates many deductions and credits otherwise available. The AMT affects more peopl...

Business Transformations

The National Starch transaction model received some prominent press coverage recently, because this is the structure being used in the pending News Corp acquisition of Dow Jones & Co. The National Starch structure can be used when a target acquisition has both a minority ownership group of shareholders that exercises control and desires a tax-free treatment of the transaction, and a larger group of shareholders comfortable with a transaction for cash, which is taxable. The structure of a ...

Careers &Amp; Lifestyles

As a candidate in accounting and finance, there are many hurdles to clear if you decide to move on to another opportunity, but if you've networked well and have a resume that stirs some interest, you are ready for the next challenge: the interview. Like public speaking, interviewing for a job can be intimidating. The skill can be acquired, but it requires time and effort to perform well. Analysis of qualifications is done when a company compares your resume to the job specification, and hirin...

Sec/Pcaob Update

Section 404 of the Sarbanes-Oxley was designed to have a long life. Auditing Standard No. 5 (AS 5), a new rule from the PCAOB, may change how Section 404 is perceived by corporate America and acted upon by management and auditing firms. Make no mistake, the spirit of Section 404 is a permanent thing. The law exists to safeguard the investing public by helping to ensure that a public company's internal controls for financial reporting are up to task. The premise behind AS 5, coupled with new S...

Ethics

One of the duties of the PICPA Committee on Professional Ethics is implementation of the Joint Ethics Enforcement Program (JEEP) between the AICPA and PICPA. This process, established in 1978, permits joint enforcement of the Codes of Conduct of the AICPA and state CPA societies with respect to joint members via a single investigation and, if warranted, a single settlement agreement or joint trial board hearing. One part of the JEEP agreement specifies that AICPA will perform all investigatio...

Government/Not-for-Profit

In their role as independent auditors, many CPAs work with the audit committees of commercial entities. When it comes to working with the audit committees of nonprofit entities, many of the practices and principles applicable to for-profits also apply, but certain areas require special attention. The most important aspect of establishing an effective audit committee is getting the right people to serve on it. While there may be CPAs on the board, there may not be enough to staff a three- or f...

Practitioners

The accounting profession is in an active and robust period. New opportunities and new demands are making the profession a hot employment environment. This is good news for graduating accounting majors, but it creates stiff competition for employers trying to attract the most talented new recruits. Here are a few points to consider in any plan to expand your recruiting efforts: 1. Establish a relationship with accounting faculty. 2. Leverage your staff's contacts. 3. Get involved with campus ...

Beware Calendar Cash: The Feds Look Into Backdating Schemes

Regulators at the SEC have been keeping watch the last several years for the backdating of stock options. Nationwide, more than 140 companies are under investigation by the SEC and the Department of Justice (DOJ) for possible exploitation of employee stock option rules. This article focuses on the general treatment of stock options under federal income tax rules, tax issues involving backdated stock options, and strategies for complying with IRS inquiries during tax examinations. In general, ...

Speeding Toward Convergence: Changes to Come Rapidly for Accounting Profession

The pace of accounting standards convergence is accelerating and is being driven primarily by an investment community that is rapidly embracing International Financial Reporting Standards (IFRS), as promulgated by the International Accounting Standards Board (IASB). At the same time, technological changes are challenging the need for the traditional historical financial reporting model. These changes are all converging, which will have a tremendous impact on the accounting and auditing model....

Are Your Nonprofit Leaders Super? Cpas Can Make Sure Leaders Are Leading

Many CPAs are active in their communities. Many of those happen to volunteer their precious time to nonprofit organizations. The leadership capacity of a nonprofit or exempt organization is extremely important. These organizations often play a critical role in the community, and the organization's leadership capacity will determine whether or not the fundamental purpose of the organization is effectively articulated and will drive the quality of its strategies. The evaluation of nonprofit lea...

Ironing Out Corporate Tax Settlement and Appeal Procedures

Last year, Gov. Edward G. Rendell signed into law Act 119, which reforms and streamlines Pennsylvania's tax administration and appeals process. These changes are the most significant reforms in more than a decade, replacing the current corporate tax settlement process with an assessment and reassessment process, and standardizing the administrative appeals filing procedure. Soon, things will begin to change for the better. Under the old settlement process, the official notification of an addi...

The Last Word

Stay Informed, Avoid Surprises

Participants of the Professional Issues Update were not surprised to find that retaining qualified staff is a top issue for small firms. What did surprise participants is that AICPA's Private Company Practice Section found that 60% of practices have principals between the ages of 55 and 62, and over 80% of these firms do not have documented succession plans. If you are a senior firm member, chances are you are not prepared to retire. A succession planning resource guide is available on PICPA'...

News

Member Activities

Picpa Committee Update: News

Report On the Employee Benefit Plan Committee

Those involved in the employee benefit plan community are facing increasing challenges. Audits of hard-to-value assets, increased scrutiny and regulatory requirements, and the overall quality of employee benefit plan audits are only a few of many challenges. Practitioners that provide employee benefit plan (EBP) services need a forum that covers technical guidance and educational resources, as well as a venue to network with other EBP professionals. PICPA conducted a poll to solicit member in...

Picpa: Accounting Careers: News

Cpa-Passport to Opportunity Creates Awareness and Interest in Our Profession

Fall is usually harvest time but, for CPAs, it is planting season. Every fall, PICPA volunteers plant the seeds of opportunity by reaching out to students and talking about the benefits of majoring in accounting and becoming a CPA. One of PICPA's strongest career awareness programs is CPA -- Passport to Opportunity. This year, more than 60 PICPA members volunteered to participate in nine PICPA Passport to Opportunity programs across the state. Their efforts reached more than 1,400 students fr...

News: Member Spotlight: Picpa

Thurman R. Bullock, Cpa

Thurman A. Bullock, director of internal audit, Philadelphia Gas Works, has excelled at multiple sports from his youth up until his late 1950s. Now, his competitive fire is focused solely on the tennis court. Bullock is an accomplished tennis player in the Philadelphia region. Bullock has continued to hone his skill, and said this past summer he played the best tennis he has ever played in his life. Bullock sees a correlation between CPAs and tennis players. Bullock also uses his CPA expertis...

Picpa: Image Enhancement: News

Benjamin Bankes Goes On Tour

Smokey the Bear, McGruff the Crime Dog, and the Crash Test Dummies are mascots with a cause. The pig-man in the pink seersucker suit is now joining their ranks. Benjamin Bankes, the mascot of the Feed the Pig national financial literacy campaign, has been busy in Pennsylvania this summer, traveling with PICPA members to deliver the financial literacy message that small changes add up. The Ad Council and AICPA developed the Feed the Pig campaign to reignite the savings habit by encouraging wor...

News: Image Enhancement: Picpa

Clarification

Picpa: Chapter Highlights: News

Law, Wine, and a Giant Pig: Not Your Standard Fall in Picpa Chapters

Picpa: Experts In The Field: News

Engaging Pa. House Members On the Cpa Law

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