More than three-quarters of board members at public companies polled by BDO USA expect tax reform to be achieved before the end of President Trump’s term in office, but only 22 percent anticipate it will happen before the end of this year.

Of those 78 percent who predict tax reform, an overwhelming 94 percent majority anticipate it will have a favorable impact on their business, with 20 percent expecting the impact will be “highly favorable.”

When asked to choose the most important goal for tax reform legislation, the largest proportions of board members picked reduction of the current corporate tax rate (45 percent) and simplification of the tax code (37 percent). Fewer board members favored the need for tax incentives to repatriate foreign earnings (12 percent) or lower the capital gains tax rate (5 percent).

When BDO asked board directors about the Public Company Accounting Oversight Board’s new standard changing the format of audit reports to include disclosure and discussion of critical audit matters, only 36 percent of those polled believe the changes will benefit investors, while 50 percent were concerned it would make their job more difficult. Nearly half (48 percent) of the corporate board members polled don’t believe the discussion of critical audit matters is an improvement to the transparency and usefulness of the auditor’s report for investors.

Eighty-two percent of the directors surveyed said their board or audit committee is actively working with management to implement the revenue recognition, lease accounting and credit loss accounting standards going into effect over the next few years. Nearly as high a proportion of board members (74 percent) indicated they are talking with management about the need to communicate with shareholders, regulators and other stakeholders about the potential impact of the accounting changes to avoid unpleasant surprises when they show up on corporate financial statements.

Board directors were also split when BDO asked them about President Trump’s decision to withdraw the U.S. from the Paris Climate Accord, with a slight 54 percent majority saying they were against the decision. A similar 54 percent of the respondents believe disclosures of sustainability matters are important to inform investors. That represents a sharp reversal from the poll a year ago when only 24 percent had that position.

Despite stories about companies failing to act when whistleblowers express concerns via internal compliance programs, an overwhelming 93 percent majority of board members polled said they receive regular reports from management, or an internal compliance executive, on whistleblower complaints and how they’re being addressed. Nearly as high a percentage (92 percent) said they ask management what they’re doing to communicate with employees across the organization about the importance of adhering to ethical standards.

“The 2017 BDO Board Survey shows corporate directors are eagerly awaiting the tax reform promised by President Trump, but they seem resigned to the fact that it may not happen in 2017,” said Amy Rojik, a partner in BDO USA’s Corporate Governance Practice, in a statement. “They also have a high degree of confidence in their internal compliance programs, despite some widely publicized examples of businesses failing to respond to whistleblowers. Directors are also focusing more fully on engaging with management in addressing major accounting changes that will be implemented over the next several years and are much more favorable towards disclosures of sustainability matters than they were a year ago.”

Tax reform priorities of corporate board members

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access

Michael Cohn

Michael Cohn

Michael Cohn, editor-in-chief of AccountingToday.com, has been covering business and technology for a variety of publications since 1985.