Nathan J. Mueller embezzled $8.5 million in barely four years from financial giant, ING through a series of corporate incompetence, “happy” accidents and missteps inside the company. His case is unique in the amount of money he stole and the length of time it went undetected. The breach of controls at ING was astonishing, but not nearly as incredible as hearing Mueller describe how easy it was in his own words. The Journal of Accountancy provides an in-depth look into the Mueller/ING case and publishes much of Mueller’s own account of the operation. The authors round out the piece…
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Eventually, everyone who works with or around money professionally comes across a particular transaction that just doesn’t look right. Lots of these eyebrow raisers turn out to be false alarms, and some even have odd, albeit legitimate and legal explanations. Still, there are those that defy explanation of any kind. If you’re not in the business of looking for fraud on a daily basis, will you be able to recognize it when it presents itself to you? Statistically speaking, it will…sooner or later. Visit the Journal of Accountancy to test how savvy your fraud sense is. [button color=”blue” link=”http://www.journalofaccountancy.com/Issues/2014/Aug/fraud-IQ-20149743.htm#”…
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The PCAOB recently issued Auditing Standard (AS) No. 18, Related Parties to strengthen auditor performance in the high-risk areas of significant unusual transactions and financial relationships, and transactions with executive officers. The change comes as the result of an internal review where the PCAOB felt the existing protocol did not contain sufficient procedures and was not properly risk-based. Auditors are now required to perform specific procedures to determine the nature of a company’s relationships and transactions with the related parties. How a company identifies these relationships and transactions, including authorization and approval, is now seen as a significant aspect…
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Where the IRS stands on the classification of Bitcoin and the purchases made with it has been ambiguous. There are a lot of questions surrounding the virtual currency, not the least of which is how it factors in tax matters. While Bitcoin operates like real currency in some situations, the fact still stands that it has no legal recognition as currency in any jurisdiction. In spite of this contradiction, the IRS has clearly stated, “In general, the sale or exchange of convertible virtual currency, or the use of convertible virtual currency to pay for goods or services in a real-world…
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In a recent Grant Thornton survey, more than two thirds (69 percent) of internal audit professionals say they’d love to focus on strategic risks, but regulatory compliance duties and the rising costs they incur are getting in the way. An additional 36 percent said these obstacles prevent resources from being allocated to higher-value priorities. Since almost the beginning of the recent financial global crisis, many industries have seen a sharp rise in regulatory control in an attempt to prevent the possibility of a future crisis. Auditors are saying that the regulators are defeating their own purpose by overburdening them and…
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FASB has voted to endorse a GAAP alternative to exempt private company lessees from a requirement to consolidate variable interest entities (VIE) in common control leasing arrangements. Initiated by the Private Company Council (PCC), the exemption would be allowed under specific conditions including: Private company lessee and the lessor entity are under common control Private company holds a leasing arrangement with the lessor entity All activity between entities is substantially related to the leasing activity between the lessor and private company Obligations of the lessor that are being guaranteed or collateralized by the private company could, at the inception of…
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Everyone knows that in a merger or acquisition deal, time is not a friend. The longer transfer negotiations drag on without an agreement, the less likely a deal is going to be signed. This is mostly because over time, both parties are more likely to adopt adversarial positions. When things slow down, firms begin to assume the successor isn’t making the transaction a priority and may not the right candidate for their offer. Do they even have the capacity to handle such a venture? With each contract revision, the involved parties continue to reread the documents, often finding new problems…
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Beginning this year, the PCAOB is making it a priority to examine whether or not firms that offer non-audit service lines are compromising the quality and accuracy of their audit services by doing so. In yet-to-be-scheduled roundtable discussions with audit firm leaders, regulators are expected to delve into the potential implications for such consulting arrangements. According to PCAOB chairman, James Doty, the review will focus on: 1.) how firms avoid having their best talent work in consulting at the expense of audit expertise and competence 2.) the risks associated with non-audit business lines 3.) how non-audit activities affect resource allocation…
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The U.S. Supreme court recently upheld the 40 percent penalty in gross valuation misstatement when the partnerships involved were determined to be shams with no economic substance and as such, the partners’ outside basis in the partnership was zero. The unanimous decision, written by Justice Scalia, resolved a split among the circuit courts as to whether the penalty applied. The Fifth Circuit Court, where the case originated, and the Ninth Circuit held that the penalty did not apply when the transaction had been disregarded on the grounds of economic substance. The ruling also settled a disagreement among the courts as…
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With the number of retirements in the accounting profession expected to soar over the next decade, many foresee a wave of CPA firm sales happening at the same time. Anticipating the trend, the Journal of Accountancy has offered up its method of valuing a CPA firm, but the method and results differ depending on whether an external transaction or internal transfer is involved. Of particular concern is the sale or transfer of the retiring CPA’s ownership interest. You can get the full breakdown on both approaches regarding each scenario here. [button color=”blue” link=”http://www.journalofaccountancy.com/Issues/2013/Nov/20138232.htm” font=”arial” textcolor=”000″ align=”left”]View Full Article[/button]
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Because of increased IRS audit procedures, multi-national corporations face great risk when it comes to transfer pricing from both a compliance and tax planning perspective. The familiar multi-nationals like Amazon or Microsoft have made headlines regarding transfer pricing disputes and adjustments that run into the billions. In an excellent article by the Journal of Accountancy, small, closely-held companies are not immune to such risks, especially when they venture into overseas expansion. Here, you’ll find a great overview of transfer pricing issues from a financial reporting and tax perspective. [button link=”http://www.journalofaccountancy.com/issues/2013/oct/20137721″ color=”silver”] View Full Article[/button]
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The Tax Court recently denied an IRS motion for summary judgment in an estate and gift tax case where an elderly mother made gifts to her daughters, while requiring them to pay all tax liabilities due if she happened to die within three years of making the gifts. In the calculation for gift tax purposes, the mother reduced the value of the gifts by the estimated tax liability. This reduction was denied by the IRS. For the full details on this fascinating case, visit the Journal of Accountancy website. “The Tax Court also rejected the argument that under the estate-depletion…
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Private Companies and Nonpublic Not-for-Profits are Exempted from a Particular Fair Value Disclosure as a Result of Recent FASB Amendment The Financial Accounting Standards Board responded quickly to concerns voiced in December to issue an amendment clarifying that private companies and nonpublic not-for-profits are exempted from a particular fair value disclosure. Ken Tysiac at The Journal of Accountancy reports the news:
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Want to Develop and Publish a Mobile App? Demand is Real and Growing. A Compelling Idea, Solid Plan, and Choice of App Marketplace are Key. Jeffrey Drew at The Journal of Accountancy reports that with the digital delivery of products and services emerging as a top technology trend, CPAs are beginning to explore the development of mobile apps. What they have found so far is that the path to the Apple App Store can be riddled with pitfalls. Find out how you can create and distribute a mobile app that boosts your business or career.
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The IRS Has a Nationwide Organization of Approximately 2,000 Taxpayer Advocates to Help U.S. Individual and Business Taxpayers Resolve Problems. Here’s How It Can Help Advisors and Your Clients. Nina E. Olson is the IRS’s National Taxpayer Advocate. Since 2001, she has led the Taxpayer Advocate Service (TAS), a nationwide organization of approximately 2,000 taxpayer advocates who help U.S. individual and business taxpayers resolve problems and work with the IRS to correct systemic and procedural problems. In this capacity, she reports to Congress annually on the most serious problems taxpayers face in dealing with the IRS and proposes solutions.…
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Details Found in IRS Explanation Issued Wednesday; $20,000 Figure Based on a Family of Four. In a final regulation issued Wednesday, January 30, 2013, the Internal Revenue Service (IRS) assumed that under Obamacare the cheapest health insurance plan available in 2016 for a family will cost $20,000 for the year. Under Obamacare, Americans will be required to buy health insurance or pay a penalty to the IRS. The news was reported by Huffington Post, CNS News, Catholic News, Investment Watch, Economonitor, Naked Capitalism, Investor Village, and more. The Journal of Accountancy offered detailed analysis of the new regulations, and NPR weighed in…
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The United States District Court for the District of Columbia on Friday struck down the IRS’s registered tax return preparer program and enjoined it from enforcing the regulations Alistair M. Nevius at the Journal of Accountancy reports that a federal district court has struck down the Internal Revenue Service’s registered tax return preparer program as exceeding the IRS’ statutory authority. The court granted summary judgment to three tax return preparers who had sued, claiming they would lose revenue and perhaps be forced out of business by the rules. The court enjoined the IRS from enforcing the regulations:
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IFRS Foundation Trustee: Don’t Wave White Flag on Cooperation Global accounting standard setters acknowledge that completion of the convergence projects is unlikely to happen in the near term, but progress can still be made to closely align International Financial Reporting Standards and U.S. GAAP, the Journal of Accountancy reports. Here’s more:
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A Dozen Categories. Some Categories Alone Encompassing Up to 20 New Taxes. Here’s the Detail. The American Taxpayer Relief Act, passed by Congress on Jan. 1, permanently extends a large number of tax items from the 2001 and 2003 tax acts and extends many expired tax provisions. Here is a comprehensive look at the many changes contained in the bill, as well as other new taxes that took effect Jan. 1. Paul Bonner and Alistair M. Nevius at the Journal of Accountancy report. A full summary of just the main categories is here:
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Keys to Exit Excellence: Act Now, Begin the Grooming Process, Proactively Identify Potential Acquirers, and Create Value in Your Practice Donald J. Korn writes in The Journal of Accountancy that it’s critical to be proactive in building an exit plan. Here he talks to a number of experts on the topic—including NACVA member Marty Abo, who recently was featured in Smart CEO Magazine—and collects tips on best practices: