The Latest

In a vote that may have a wide-ranging effect on the accounting profession, House lawmakers voted 220-175 to overhaul patent rules and place a ban on tax-planning-method patents.HR 1908, the Patent Reform Act of 2007, primarily contains provisions that would make it harder to get patents and harder for companies to be sued for patent infringement. However, it also contains a provision that would protect accounting firms from lawsuits over tax-planning methods.

The deadline for compliance with final Section 409A regulations, scheduled for Dec. 31, 2007, should be extended for a year, according to 92 of the largest law firms in the nation.The new regulations, finalized in April, require deferred-compensation plans to be amended to comply with the Internal Revenue Code.

The last few months have seen the problems in sub-prime lending start to have a national and even international impact on the credit and stock markets.The combination of expanded sub-prime lending programs with mortgage rates that adjust upward after two to five years, reduced or eliminated down-payment requirements, and a housing market that has seen real estate prices actually decline in many markets, has left many marginal borrowers unable to pay higher monthly mortgage payments, unable to refinance to more traditional mortgages, and unable to sell homes at a price sufficient to cover the mortgage obligation.

Leave it to the guys from Harvard, eh? Right now, when everybody and his cat are trying to figure out what’s happening in the stock market, three entrepreneurs out of Cambridge, Mass. are gathering the best financial minds in the business to figure it all out for you. It’s called Fantasy Investing and it can be found at www.updown.com. This is a Web site launched by these Harvard Business School students. Each partner, it is said, has a significant start-up experience, and shares a common vision to revolutionize the investing world. In effect, The UpDown is a community for stock investors.

The Internal Revenue Service has seen a 60 percent increase so far this year in electronic filing of tax returns by small businesses and large corporations.

Tennessee accounting firms Petty & Landis and Lattimore Black Morgan & Cain have merged their practices, giving Nashville-based LBMC a physical presence in the Chattanooga market.

A study of financial restatements by public companies found variations in the amount of time it takes to issue revised financials after companies first identify a problem.

Small businesses accounted for the bulk of new jobs in September, adding 53,000 of the 58,000 new jobs in non-farm private employment, according to a report by payroll-processing giant ADP.

The International Auditing and Assurance Standards Board issued new requirements for auditing group financial statements.

Outsourcing should join the list of taboo topics that shouldn’t be discussed on a first date, along with money and politics. Just saying the word invokes snarls on the faces of anti-outsourcing business people and professionals across the nation, mostly due to the widespread negative perceptions associated with poorly paid, undereducated overseas support staff “stealing” jobs and potentially confidential information from Americans. Some tax software vendors, including Intuit and ATX/Kleinrock, faced harsh criticism when they chose to send tech support to other countries and have since reversed their decisions. But not everyone is against the idea. The owner of a small CPA firm in Ft. Lauderdale, Fla., started outsourcing six years ago and currently utilizes people in India, Pakistan and China. Cost savings alone are incredible—he pays them $3 to $10 per hour compared to $35 to $75 that their U.S. counterparts receive. But that’s common knowledge and also part of the controversy. What’s more amazing is the quality and speed of the work they do for him. In one occasion, he estimates that a chartered accountant (not an unskilled laborer) prepared one of his most complex tax returns overnight for one of his largest 1040 clients on April 8 with 80 percent fewer errors than anticipated. (For more on his story, see “Secrets of Outsourcing.”) Can every firm have as positive an experience as he did? Probably not. Some businesses have attempted it and failed, but likely did not follow the same steps as he did in order to succeed. He was smart about testing the waters—sending out the same tax return to three different firms to see which one would do the best job and checking on security measures the companies have in place such as using “dumb” terminals that don’t contain disk drives so information cannot be downloaded and saved locally. And firms that are considering outsourcing must first decide which tasks make sense to outsource and which jobs to keep close to home. But if the possibility exists to utilize resources in other countries—where, by the way, they can complete tasks in the middle of the night because of the time difference—and if doing so ultimately can help time-strapped practitioners serve their clients faster, does it really hurt that much to try it with a few small projects? It may be a worthwhile experiment. Just don’t discuss it over dinner.