Practice Management

In an effort to increase diversity in the financial services industry, the House Financial Services Committee has passed H. Con. Res.140, the Financial Services Diversity Initiative. The bill, sponsored by Rep. Gregory W. Meeks, D-N.Y., specifically will: * Encourage financial institutions to promote workforce diversity, including partnering with organizations that focus on developing opportunities for minorities and women; placing youth in internships, summer jobs and full-time positions within the industry; and partnering with inner-city high schools and girls' high schools to establish financial literacy programs and provide mentoring. * Encourage financial institutions and federal and state financial institutions' agencies to attract and retain a diverse workforce by recruiting at women's colleges and colleges that serve minority groups; sponsoring and recruiting at job fairs in urban communities; and placing employment ads in media outlets oriented to people of color; and, * Require that active measures should be taken by employers and educational institutions to increase the demographic diversity of the financial services industry. Meeks cited a Government Accountability Office report on diversity within the financial services industry that said that "representation for minorities in the financial services industry still lagged behind reasonable numbers on all levels and for women in upper management levels exclusively."

Regional CPA and business advisory firm Weiser LLP has merged in the Clark, N.J.-based practice of Cohen Friedman Dorman Leen & Co., effective immediately. Terms were not disclosed. The union will add six partners, including CFDL managing partner Howard Dorman, to Weiser. The firm has relocated from its Clark facility to Weiser's offices in Edison. Going forward, the firm will operate under the Weiser brand. The 30-plus year-old CFDL specializes in such areas as audit, tax, elder care planning, benefit plans, insurance review, and IT consulting and implementation. Weiser is ranked No. 20 on Accounting Today's 2007 Top 100 Firms roster with revenues of $110 million.

The Supreme Court has agreed to decide whether an exception in the Internal Revenue Code allows a trustee to deduct the full amount of fees paid to an investment advisor. The case of Knight v. Commissioner of Internal Revenue, U.S., No. 06-1286, centers on trustee Michael J. Knight, who paid an investment advisor to manage the assets of a trust. When the trust filed its tax return, Knight sought to deduct the full amount of the fees under 26 U.S.C. Section 67(e)(1). However, the IRS said the fees are subject to the 2 percent rule. The U.S. Tax Court agreed with the IRS, as did the U.S. Court of Appeals for the Second Circuit, which ruled against Knight in October. But Knight argued the fees fall under an exception to the general rule because they were paid in connection with the administration of the trust, and because they would not have been paid unless the assets were held in trust. In May, both the New York Bankers Association and the American Bankers Association May 22 filed a brief in support of the trustee, urging the U.S. Supreme Court to hear the case.

Last year, I wrote a column entitled, “Do You Have a Chief Knowledge Officer?” (webcpa.com/article.cfm?articleid=14079) aimed at encouraging smaller accounting firms to think about applying knowledge management concepts in their firm operations. One example I gave was an accounting firm that had different individuals responsible for certain subject matter and practice areas so they could inform other firm members by e-mail alerts of important developments.

Financial services conglomerate Wells Fargo & Co. acquired the Twin Cities employee benefits operations of regonal CPA and business advisory firm Virchow Krause & Co. Terms were not disclosed.

Struggles at its subprime lending unit have resulted in tax-prep giant H&R Block Inc. posting a fourth-quarter loss of $85.5 million and a full-year loss of $433.6 million for the period ended April 30. The company said its latest quarter included roughly $677 million in losses from discontinued operations - the majority of that stemming from its Option One mortgage subsidiary.

Ousted Fannie Mae chief executive Franklin Raines is charging regulators with withholding documents that show a deliberate attempt to drive down the stock price of the mortgage securities concern. In a filing with the U.S. District Court here, Raines, 58, who was shown the door after the company was forced into a $6.3 billion restatement, said that Fannie Mae's overseer, the Office of Federal Housing Enterprise Oversight, "continues to guard jealously against the disclosure of information." Raines wants OFHEO to hand over documents related to a 2004 report published by the Department of Housing and Urban showing that the "officers of the agency had engaged in serious misconduct by deliberately attempting to manipulate and depress Fannie Mae's stock price." To date, the government has filed more than 100 charges against Raines, former Fannie Mae chief financial officer Timothy Howard and the company's former controller, Leanne Spencer, seeking fines and the return of millions in bonus money. Following a two-year dispute over deferred compensation after his dismissal, Raines had been awarded $2.6 million under a deal disclosed in an SEC filing.

“Thought leadership, it’s a marketing term,” was the comment.

The Internal Revenue Service recommends that employers, payers and their agents begin using a new, improved version of the agent-appointment form immediately, to avoid delays in having the IRS approve the agent appointments. All versions prior to the May 2007 form are now obsolete. Form 2678, Employer/Payer Appointment of Agent, authorizes an agent to file tax returns and deposit and pay employment or other withholding taxes on an employer or payer's behalf. However, the employer retains responsibility for filing Form 940, Employer's Annual Federal Unemployment Tax Return, and depositing and paying FUTA tax. The IRS recently redesigned Form 2678 to make it clearer and more user-friendly. The redesign resulted from an initiative led by the IRS Office of Taxpayer Burden Reduction. The IRS will return any obsolete versions of Forms 2678 that are filed and ask senders to submit the May 2007 revision instead. When the IRS approves Form 2678, both the employer or payer and the agent are liable for the employer's employment tax.

Rep. Charles Rangel, D-N.Y., chairman of the House Ways & Means Committee, said House lawmakers might consider legislation that would raise taxes on the income of private equity and hedge fund managers. Under the current tax laws, private-equity companies can go public by paying a partnership tax rate of 15 percent versus the corporate tax rate of 35 percent. Rangel's proposal follows a Senate measure introduced last week requiring private-equity partnerships that go public after June 14 to pay corporate taxes.