News Headlines From the Journal of Accountancy

THIS WEEK'S NEWS HEADLINES

May 17, 2013

IRS sends letters to taxpayers as it tries to close out inventory of Form 3520 processing issues
The IRS is attempting to close out its backlog of Form 3520 processing issues, and it has informed the AICPA’s Foreign Trust Task Force that it will be sending letters out over the next few months informing Form 3520 and Form 3520-A filers that their returns have been processed.

May 16, 2013

President names new acting IRS commissioner
Less than 24 hours after the forced resignation of Steven Miller as acting commissioner of the Internal Revenue Service, President Barack Obama named his replacement, Daniel Werfel.

FASB, IASB propose new approach to lease accounting
FASB and the International Accounting Standards Board (IASB) issued a proposed, revised financial reporting standard for leases that represents an important step forward in a challenging convergence project.

IASB chair: Lease changes unpopular, but necessary
The revised lease accounting proposal will no doubt be unpopular with some preparers, International Accounting Standards Board Chairman Hans Hoogervorst said.

IRS gives details of operations on furlough dates
To help taxpayers plan for the upcoming furlough dates on which the IRS will be closed, the IRS issued a news release detailing how the shutdown days, the first of which is May 24, will affect operations.

May 15, 2013

Acting IRS commissioner out in tea party scandal
On the day the Treasury Inspector General for Tax Administration's report on the Internal Revenue Service's tea party scandal was released to the public, President Barack Obama announced that he had asked for and received the resignation of Acting IRS Commissioner Steven Miller.

SOX compliance costs rise for many companies, report finds
More than 10 years after the Sarbanes-Oxley Act of 2002 became law, companies continue to report changes in their compliance activities, according to a new report.

May 14, 2013

Justice Department opens criminal probe of IRS treatment of tea party groups
Attorney General Eric Holder announced that, in the wake of allegations that the IRS has been improperly scrutinizing the tax-exemption requests of tea party and other groups, he has ordered an investigation "to see if any laws were broken." He called the IRS's actions "outrageous and unacceptable."

Internal control refreshed with release of new COSO framework
The framework explicitly describes 17 specific principles across the five components of internal control. COSO updated the original, 1992 framework to reflect changes in the business environment such as technological advancements and globalization.

8 steps to update internal control
A newly updated framework published this week by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides an opportunity for companies to improve their internal control and operations.

Key factors cited as discussion of audit quality indicators nears
The Center for Audit Quality (CAQ) told the PCAOB in a comment letter that two key factors should be encompassed in an effective definition of audit quality.

AACSB approves revised accounting school accreditation standards
The Association to Advance Collegiate Schools of Business (AACSB) revamped the standards it uses to accredit accounting schools. The new changes are set to take effect July 1.

May 13, 2013

Final regulations for Sec. 336(e) elections are issued
The IRS issued final regulations on the rules that apply when an election under Sec. 336(e) is made to treat the sale, exchange, or distribution of at least 80% of the voting power and value of a corporation’s stock (target) as a sale of all its underlying assets.

Schedule M-3 filing requirement reduced for entities below $50 million in assets
The IRS announced changes in the filing requirements for Schedule M-3, Net Income (Loss) Reconciliation, for certain corporations and partnerships.

LAST WEEK'S NEWS HEADLINES

May 10, 2013

AICPA provides guidance on auditing conflict minerals reports
Recently implemented federal rules on disclosure of conflict minerals have mandated new audit requirements for some U.S. issuers.

Resources help auditors resolve issues with regulator-prescribed forms
Independent auditors sometimes find themselves in conflict with regulator-prescribed forms.

ASB exposes clarified auditing standard on internal audit
The Auditing Standards Board (ASB) has exposed a new, clarified standard that applies to use of the work of internal auditors.

Survey: Financial stress taking a toll on Americans
Problems created by financial stress aren’t limited to people’s pocketbooks. A new survey found that money-related stress is also taking a toll on Americans’ waistlines, friendships, and sleep habits.

May 9, 2013

U.S., U.K., and Australia announce cooperative venture against tax evasion
The IRS announced Thursday that it, the Australian Tax Office, and HM Revenue and Customs (the U.K. tax authority) have obtained information about a large number of trusts and companies holding assets on behalf of residents throughout the world and plan to share that information with other countries’ tax authorities.

May 8, 2013

IRS will not seek taxpayer emails without a warrant
The IRS announced a new policy regarding how it will request emails from internet service providers (ISPs).

Survey issued to guide FASB’s future priorities
The Financial Accounting Standards Advisory Council (FASAC), which is FASB’s primary advisory group, issued a survey to gather input from stakeholders on FASB’s future agenda.

May 7, 2013

PCAOB reproposes related-parties auditing standard
A reproposed PCAOB auditing standard and amendments are intended to improve auditing of related-party transactions and significant unusual transactions.

PCC makes progress toward 3 key private company exceptions
The Private Company Council (PCC) made progress toward creating its first GAAP exceptions and modifications for private companies.

How audit committees can meet risk management oversight challenges
Overseeing risk management is one of the most challenging responsibilities for audit committees, according to a new report issued by the Center for Audit Quality, the Federation of European Accountants and the Institute of Chartered Accountants in Australia.

May 6, 2013

Final regulations permanently extend period to receive disclosure authorization
The IRS issued final regulations extending from 60 days to 120 days the permitted period for submission of taxpayer authorizations allowing disclosure of returns and return information to third-party designees.

NEWS HEADLINES FOR APRIL 28–MAY 4, 2013

May 3, 2013

Final rules require EIN updates
On Friday, the IRS issued final regulations requiring taxpayers that obtain employer identification numbers (EINs) to update their information with the IRS.

Converged leases project struggles to maintain momentum
Coming up with one financial reporting model for expensing the wide variety of leases that exist today was difficult. So standard setters came up with a dual-recognition approach that may disappoint users who prefer one expense approach.

How can theft prevention, reporting, and return filing be improved?
Changing the April 15 due date, moving taxpayer information to the cloud, and allowing personal identification numbers (PINs) for taxpayers who want them were all on the table at a hearing held by the IRS Oversight Board to explore ways to combat fraud and improve tax administration.

GAO: “Quiet disclosures” of foreign accounts potentially much higher than IRS detected
More than 10,000 taxpayers showed signs of having avoided offshore penalties by making “quiet disclosures” of foreign bank accounts for tax years 2003 through 2008, the U.S. Government Accountability Office (GAO) reported.

May 2, 2013

Goal for PCAOB’s Hanson: Best practices list for auditors
PCAOB member Jay Hanson wants to talk to auditors who produce audits with no deficiencies and find out why.

Beswick: “Change fatigue” a barrier to IFRS in U.S.
A decision by the SEC that would allow or require U.S. public companies to use IFRS for their financial reporting continues to appear unlikely in the short term.

HSA inflation adjustments issued for 2014
These include the annual contribution limitation, the minimum deductible amounts, and maximum out-of-pocket expense amounts for self-only and family coverage.

Tokyo, Hong Kong again top IRS high-cost housing list
The IRS released its annual list of localities having allowable foreign housing exclusion amounts above the $29,280 applicable limit. Tokyo topped the list, with an annual housing cost exclusion limit of $117,100.

PCAOB to meet to consider re-proposing related-parties standard
The PCAOB has scheduled a meeting to consider re-proposing an auditing standard on related parties. Related amendments to be considered include those regarding significant unusual transactions.

May 1, 2013

Data, security top list of tech priorities in AICPA-CPA Canada survey
Data and information security issues are at the forefront of organizational technology priorities, according to more than 2,000 accountants polled in the 2013 North America Top Technology Initiatives survey.

FASB proposal would guard private companies’ proprietary information
FASB has proposed a deferral of the effective date of certain disclosure requirements about investments held by a nonpublic employee benefit plan in the plan sponsor’s own equity securities.

Proposed rules address minimum value of health coverage for premium tax credits
Proposed regulations issued by the Internal Revenue Service address the question of when an employer’s health plan provides "minimum value" for purposes of the health insurance premium tax credit.

April 30, 2013

AICPA makes tax reform recommendations to Ways and Means Committee working groups
In response to concerns that “[t]he proliferation of new income tax provisions since the 1986 tax reform effort has led to complex compliance hurdles for taxpayers, administrative complexity and enforcement challenges for the Internal Revenue Service,” the AICPA submitted recommendations for tax reform to five of the 11 working groups the House Ways and Means Committee has formed.

NEWS HEADLINES FOR APRIL 21–27, 2013

April 26, 2013

Widow avoids jail time and probation in sentencing for offshore account tax evasion
An elderly Palm Beach, Fla., woman who pleaded guilty to tax evasion charges avoided both jail time and probation in federal district court.

IASB proposes interim standard on rate-regulated activities
The interim standard would allow entities to continue using their current accounting policies—with some changes that would increase comparability—while the board considers whether it should create specific guidance for rate-regulated activities.

April 25, 2013

Europe takes step toward mandatory audit firm rotation
The European Parliament’s Legal Affairs Committee approved a draft law that would impose mandatory audit firm rotation every 14 years on public-interest entities, although the term could be extended to 25 years if certain safeguards are put in place.

April 24, 2013

New PCAOB policy describes rewards for extraordinary cooperation
Registered public accounting firms and auditors whose cooperation with PCAOB investigations is deemed “extraordinary” may be rewarded with reduced penalties in disciplinary proceedings.

Baker Tilly to merge with New York firm Holtz Rubenstein Reminick
Baker Tilly Virchow Krause LLP, one of the 20 largest U.S. accounting firms, is merging with Holtz Rubenstein Reminick LLP in a deal that will give Chicago-based Baker Tilly a significant foothold in New York City.

April 23, 2013

Golden to succeed Seidman as FASB chairman
FASB member Russell Golden will succeed Leslie Seidman as the board’s chairman on July 1 after Seidman’s term is completed.

New FASB chairman Golden describes priorities
International convergence projects and accounting for private companies are among the top items on Russell Golden’s agenda as he prepares to take over as FASB’s chairman on July 1 following the end of Leslie Seidman’s term.

April 22, 2013

New FASB rules standardize liquidation reporting
FASB released a new standard that guides organizations in the decision of when and how to use the liquidation basis of accounting for their financial statements.

GASB provides guidance for nonexchange guarantees
A new standard approved by GASB provides guidance for state and local governments for their financial reporting on nonexchange financial guarantees they have offered.

NEWS HEADLINES FOR APRIL 14–20, 2013

April 19, 2013

IRS decides to shut down completely on furlough dates
Instead of spreading furloughs out among its workforce, the IRS has decided to shut down completely on five dates during the summer in response the federal sequester spending cuts.

April 17, 2013

Boston-area residents get more time to file returns and pay tax
In response to Monday’s bombings at the Boston Marathon, the IRS announced that it is extending the time for filing certain individual tax returns that were due April 15 and paying any tax due until July 15.

Basis reporting for debt instruments and options is phased-in
The IRS is implementing the reporting requirements for debt instruments and transfer reporting in phases, to give brokers ample time to develop and implement reporting systems.

User-friendly AICPA ethics code on horizon
Ethical decisions often need to be reached quickly, but the AICPA’s Code of Professional Conduct (ethics code) is not structured for quick and easy navigation. A proposed reformatted ethics code is meant to change that.

April 16, 2013

Witnesses tell Senate Finance Committee ways to improve tax system
At a Senate Finance Committee hearing on Tuesday, witnesses gave the Senators numerous ideas for fighting tax identity theft and refund fraud, better tax administration, and tax reform.

Integrated reporting takes a big step with international framework draft
Integrated corporate reporting took a significant step forward with the release of a consultation framework draft by the International Integrated Reporting Council.

April 15, 2013

New FASB proposal would increase private companies’ options
FASB and the Private Company Council (PCC) on Monday released a proposal that would allow private companies to use in their financial reporting only the GAAP exceptions or modifications that they wish to use.

NEWS HEADLINES FOR APRIL 7–13, 2013

April 12, 2013

A look at the estate tax provisions in the president’s FY 2014 budget proposal
The biggest would revert the estate, gift, and GST tax regimes to how they were in 2009, but other proposals would affect valuation, intentionally defective grantor trusts, grantor retained annuity trusts, and even the duration of the GST exclusion.

Auditors of fair value now eligible for ABV credential
Auditors of fair value for financial reporting are eligible for the AICPA Accredited in Business Valuation (ABV) credential as a result of a recent revision.

April 11, 2013

Significant decline in IRS staff leads to fewer audits
Syracuse University's Transactional Records Access Clearinghouse recently gained access to IRS monthly planning reports and after analyzing the data has concluded that the IRS will devote 18% less effort to audits of large businesses in 2013.

April 10, 2013

President proposes many tax changes in 2014 budget
President Barack Obama's proposed FY 2014 budget contains a long list of proposed tax changes, aimed at achieving $580 billion in new revenue.

New SEC rules aim to prevent identity theft
The SEC voted unanimously to adopt rules jointly with the Commodity Futures Trading Commission that are designed to prevent identity theft.

FASB lease proposal moves forward despite dissenting views
By a narrow margin, FASB decided to issue a re-proposal in its project on financial reporting for leases.

April 8, 2013

Survey shows how Americans plan to use tax refunds this year
Forget about impulse buys or impromptu holidays. These days, taxpayers expect to use the money for the basics: savings, day-to-day expenses, and paying down debt.

Incorrect expert advice about estate return filing deadline does not excuse penalty
The Ninth Circuit Court of Appeals held that an executor whose accountant gave him mistaken advice about the extended due date for filing an estate tax return was liable for a large late-filing penalty, despite his reliance on the accountant's mistake.

Senate confirms ex-prosecutor White as SEC chairman
Former U.S. Attorney Mary Jo White was confirmed as chairman of the SEC by the Senate. White’s history as a prosecutor who won convictions in terrorism and organized crime cases may bolster the SEC’s reputation for enforcement.

NEWS HEADLINES FOR MARCH 31–APRIL 6, 2013

April 4, 2013

Iowa’s auditor of state, David Vaudt, named GASB chairman
GASB named Iowa Auditor of State David Vaudt as its next chairman. Vaudt will serve a seven-year term beginning July 1 and will replace Robert Attmore, who is retiring.

IRS announces pre-approval program for Sec. 403(b) plans
Rev. Proc. 2013-22 permits eligible employers to get IRS approval of their Sec. 403(b) plans. The rules are similar to those that apply to 401k plans.

Proposal seeks proper ingredients in federal financial reporting
The Federal Accounting Standards Advisory Board has proposed standards that would create criteria for which organizations should be included in the federal government’s financial reports.

April 2, 2013

SEC describes how social media can be used to distribute company info
Distributing company information on social media is OK for U.S. public companies, as long as investors are informed of the channels to be used for dissemination, according to a new SEC report.

New FASB discontinued operations proposal aims for relevance
Investors told FASB that current GAAP calls too often for disposals of assets to be presented as discontinued operations.

Appeals court reverses $2.6 million penalty against tax shelter promoter
A federal appeals court has ruled that a lower court erred when it admitted evidence of a taxpayer's failure to file tax returns and pay him income tax in his trial for promoting an abusive tax shelter.

April 1, 2013

IRS’s identity theft liaison pilot program with law enforcement expands to 50 states
The IRS announced the expansion of its Law Enforcement Assistance Program on identity theft to 50 states and the District of Columbia.

NEWS HEADLINES FOR MARCH 24–30, 2013

March 28, 2013

Appeals court denies IRS request for stay in return preparer regulation case
As part of its appeal of the case that struck down its authority to regulate tax return preparers, the IRS in February filed a motion to stay the lower court's injunction, pending the outcome of the appeal.

FASB provides more time to compare credit loss proposals
FASB extended the comment period of its expected credit loss proposal in its financial instruments project by one month to May 31.

IRS extends suspension of examinations of tangible property capitalization issues
In the wake of the temporary regulations on treatment of costs incurred to maintain, replace, or improve tangible property, the Internal Revenue Service instructed its examiners to stop current exam activity on the issue of whether such costs have to be capitalized for years before 2012.

March 26, 2013

Identity theft, phishing top IRS’s “Dirty Dozen” tax scams
The IRS issued its annual list of top tax scams that taxpayers and practitioners should watch out for. Identity theft tax fraud and phishing schemes once again topped the list, and in the wake of Hurricanes Sandy and Isaac, disaster-related scams were a new entry on the list.

PCAOB attempting to make auditing standards easier to navigate
A PCAOB proposal calls for a comprehensive reorganization that would make auditing standards easier to access and navigate. The proposed reorganization would place the PCAOB’s auditing standards into a topical, numbered system designed to follow the flow of an audit.

“Sovereign citizens” promoter faces up to 164 years in prison
A proponent of the “sovereign citizens” movement and self-proclaimed president of the “Republic for the United States” has been convicted of conspiracy to defraud the United States through a series of seminars in which attendees were taught to pay their federal income taxes by filing fictitious bonds.

March 25, 2013

FASB gives more detail on expected credit loss proposal
FASB posted on its website a 16-page document that describes some of the technical aspects of its expected credit loss proposal in its financial instruments project. The project has posed significant challenges as FASB and the International Accounting Standards Board have pursued differing proposals.

IASB proposes simplified accounting for certain defined benefit contributions
The International Accounting Standards Board published a proposal designed to simplify certain elements of accounting for contributions to defined benefit plans.

Technical practice aids address questions on audits of group financial statements
Nonauthoritative guidance arising from implementation issues is provided in 16 additional Technical Questions and Answers (TPAs) included as paragraphs .24 to .39 of TIS Section 8800, “Audits of Group Financial Statements and Work of Others.”

Auditors required to modify New York City form
To comply with new generally accepted auditing standards, auditors who provide an opinion on operating income and expenses for New York City Tax Commission certiorari filings are required to modify an accountant’s certification form.