Accounting News Roundup: Much Ado About the Debt Ceiling; The Amazon Tax Problem Heats Up in California; Accounting Professors Storm Denver | 08.01.11

Posted on by Adrienne Gonzalez

Gone Fishing [Going Concern]
After two years of being chained to my desk and staring at my laptop, I’m taking a few days off (seven to be precise) starting Monday. I know, I know. Unacceptable. But after some arm twisting, TPTB figure that some vacation would give me a chance to relax and it offers them some reprieve from my kvetching about EVERYTHING. Plus when the country defaults on Tuesday I thought it might be safer to be in a Paris bistro while the rest of you fight over scraps in the streets.

Debt-Limit Deal to Get Congress Vote Today [Bloomberg]
Congressional leaders, leaving no extra time before a default threatened for tomorrow, are racing to push through a compromise sealed with President Barack Obama last night to raise the U.S. debt limit by at least $2.1 trillion and slash government spending by $2.4 trillion or more.

California use-tax program hits small businesses [SF Chronicle]
Many Californians ignore the “use tax” – the equivalent of sales tax but remitted by state residents for products bought from out-of-state retailers that did not collect sales tax. The state estimates that $1.1 billion in use tax goes uncollected every year. Cash-strapped California is eager to corral that big chunk of change, most notably through the “Amazon tax” bill that took effect in late June. The new law requires Amazon and other online sellers to collect sales tax, but is being fiercely fought by the e-commerce giant and its brethren.

HSBC to Cut 30,000 Jobs [DealBook]
HSBC, the biggest European bank, said on Monday that it was cutting 30,000 jobs as part of a wide-ranging cost cutting program to improve profitability. The job cuts, which would represent about 10 percent of HSBC’s work force, are part of a strategy to reduce expenses by $2.5 billion to $3.5 billion over the next two years.

Debt Ceiling, Spending Cuts to Rise But No Word on Higher Taxes [taxgirl via Forbes]
The agreement also allows for President Obama to raise the debt ceiling immediately up to $400 billion, heading off the “certain” Armageddon that pundits have been warning about (insert a lot of coughing here). An additional $500 billion in debt ceiling headroom has also been authorized although, as part of the deal, Congress specifically reserves the right to vote against that at a later date so that they can dutifully wag their fingers at the President. And the President has reserved the right to veto that vote so that he can wag a finger at Congress (you can pick the finger). Future increases have also been authorized, with limitations.

2011 AAA Annual Meeting [The Summa]
More than 3,000 accounting professors will be packing up this week, and heading for Denver. The American Accounting Association (AAA), the professional association for accounting professors, is holding its annual meeting, August 6-10.

XBRL: What’s It Good For? [CFO]
On July 12, XBRL US, a nonprofit consortium for XBRL (extensible business reporting language) standards, announced a contest with a $20,000 grand prize to be awarded to whoever submits the “most inventive and useful application leveraging XBRL-formatted data from the U.S. Securities and Exchange Commission (SEC) EDGAR database” for business benefit.

Companies Altering Compensation Plans Over Say-on-Pay [Compliance Week]
Many companies are making changes to their compensation plans, especially those that garnered lukewarm support or lower from shareholders and those that saw proxy advisory firms recommend that shareholders vote against their plans.

Accountants Moving From Hourly Rates To Fixed Fees [PR]
Over half of local accounting practitioners surveyed cite fixed fees as their primary means of pricing services, more than double hourly rate pricing.

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Accounting News Roundup: JP Morgan’s Accounting Hocus Pocus; Breaking the Buffett Rule; IRS Poking Around Google’s Offshore Profits | 10.13.11

Buffett’s Son Defends Occupy Wall Street [Bloomberg]
“I think it takes that to make things happen sometimes,” Howard Buffett, 56, said of the demonstrations in an interview yesterday in Des Moines, Iowa. Over the past 15 years, “we saw large corporations really screw people.”

Oversight board proposes plan to make accountants more accountable [WaPo]
Auditors are supposed shareholders, but from Enron and WorldCom to the Wall Street meltdown of 2008, they have often been criticized for not barking. They are hired and paid by the companies they audit, and policymakers have struggled for decades to strengthen incentives for them to stand up to corporate management when appropriate.

With Just Three 9s, Cain Refigured Math for Taxes [NYT]
Mr. Cain, a former pizza chain chief executive, wanted a proposal to jolt the economy and give his candidacy some definition. “I said, ‘The first fundamental, guys, is we have to throw out the tax code,’ ” Mr. Cain said Wednesday in an interview. “How do we come up with a bolder plan?” he pressed two of his close advisers. From that exchange emerged the plan that Mr. Cain calls 9-9-9: a flat 9 percent individual income tax rate, a 9 percent corporate tax rate and a 9 percent national sales tax. He has uttered the triple digits repeatedly, metronome-like, in speeches and debates, until they have acquired the catchy power of a brand.

JPMorgan Earnings Fall Less Than Expected on Accounting Change [Bloomberg]
JPMorgan would have reported a loss for its investment bank without the debt-valuation adjustment, which added 29 cents a share, under U.S. accounting rules allowed when the market value of a company’s liabilities declines. Chief Executive Officer Jamie Dimon, 55, said in the statement that the gain “does not relate to the underlying operations of the company,” which suffered from a 13 percent decline in investment-banking revenue from the prior quarter.

Buffett Builds His Tax-the-Rich Case [WSJ]
The biggest mystery is the nearly $23 million gap between Mr. Buffett’s adjusted gross income and his taxable income. Without having his tax return it is impossible to know the reason for the gap for sure, tax experts say. One possibility for the gap is that he made large charitable contributions, itemized deductions that are subtracted from adjusted gross income. Another possible element is interest expense. Mr. Buffett is known for not selling investments but rather borrowing money against them. To the extent that he has investment income, any interest paid on such loans would be deductible.

‘Buffett Rule’ May Be Broken by 25% of Millionaire Taxpayers, Study Finds [Bloomberg]
Preferential treatment of investment income and the reduced impact of payroll taxes on high earners lets about 94,500 millionaires pay taxes at a lower rate than 10.4 million “moderate-income taxpayers,” representing about 10 percent of those making less than $100,000 a year, according to the report by the non-partisan Congressional Research Service dated Oct. 7. The findings put the U.S. tax system in conflict with the so-called Buffett Rule, which says households making more than $1 million annually shouldn’t pay a smaller share of their income in taxes than middle class families, says the report, which analyzed 2006 Internal Revenue Service data.


IRS Auditing How Google Shifted Profits Offshore to Avoid Taxes [BBW]
The agency is bringing more than typical scrutiny to how the company valued software rights and other intellectual property it licensed abroad, said the person, who requested anonymity because the audit isn’t public. The IRS has requested information from Google about its offshore deals after three acquisitions, including its $1.65 billion purchase of YouTube, the person said. The transfer overseas of these kinds of rights rights has enabled Google to attribute earnings to foreign units that pay lower taxes, Bloomberg News reported a year ago.

No. 1 Financial-Strength Ranking Spells Doom [Bloomberg]
Jonathan Weil: “Less than three months ago the European Banking Authority said Dexia SA (DEXB) had passed its so- called stress test with ease. The French-Belgian lender’s July 15 news release carried this headline: “2011 EU-wide Stress Test Results: No Need for Dexia to Raise Additional Capital.” Then last weekend, 86 days after getting its clean bill of health, Dexia took a government bailout to avoid collapsing. Nobody was surprised this happened. Nor should anyone have been.”

Accounting News Roundup: Times Square Gets Back to the Grind After Bomb Scare; Down with the Corporate Income Tax; The Politics of Spending | 05.07.10

Times Square Goes Back to Work After Bomb Scare [FINS]
FINS checked in with several companies who have locations in the Times Square area to see if things are back to normal after last weekend’s failed bombing. Most companies are officially mum on the issue including our favorite TS resident, Ernst & Young, who was quoted as to have, “reached out [to their employees] on an informal basis.”

And by “informal” apparently that means “nothing” in some cases We checked with a couple of our own sources at E&Y and we were told that they had not received any communication at all. If there’s an email floating around out there, let us know but it sounds like any reassurance of safety was passed around on a post-it note.


A.I.G. Said to Dismiss Goldman [NYT]
Back in the game AIG! Thanks for the good times GS, Citigroup and Bank of America will take it from here. All it took was a little money for AIG to realize that they were in an abusive relationship.

Time to Junk the Corporate Tax [WSJ]
Michael Boskin argues for dumping the corporate income tax in an op-ed in yesterday’s Journal, citing several reasons that it sucks big time including double taxation, “Corporate income is taxed a second time at the personal level as dividends or those capital gains attributable to reinvestment of the retained earnings of the corporation. Between the new taxes in the health reform law and the expiration of the Bush tax cuts, these rates are soon set to explode.”

…And that stakeholders ultimately bear this cost, “the corporation is a legal entity; only people pay taxes. In a static economy with no international trade, the tax is likely borne by shareholders. The U.S. economy is neither static nor closed to trade, and taxes tend to be borne by the least mobile factor of production. Capital is much more mobile globally than labor, and the part of the corporate tax that is well above that of our lowest tax competitors will eventually be borne by workers.”

The Political Economy of Consumption: ‘Tis Better To Give, and Give, and Give [Tax Vox]
This sums up why America’s deficit problems and citizens personal debt problems will never be fixed:

Not to stereotype, but nations do have personalities. Italians eat. Russians drink. Americans spend. And when anything—or anyone—gets between us and our consumption, watch out.

Recessions make us grumpy in part because we can’t consume as much as we like. In the depths of the current downturn, the savings rate in the U.S. topped 5 percent. But retail sales have been rising since October, and the savings rate has fallen in half. I suspect Americans won’t really feel better until we drive our savings rate back to zero.

Accordingly, politicians have to pander to masses about “cutting taxes” and “reducing spending” when it’s very simple and popular to the do the former, while in reality it’s very difficult and unpopular to do the latter.

Accounting News Roundup: Diversity Training Myths; Accounting’s Evolution; Highlighting Overload | 03.11.15

Diversity Training Myths Your Company Needs To Drop Now [Fast Co]"Hundreds of workplaces and schools […]