LET THE MERGERS BEGIN
It may well be the starting gun for the usual fourth quarter frenzy of accounting firm M&A: Top 100 Firms Baker Tilly Virchow Krause and ParenteBeard have agreed to merge.
The American Institute of CPAs released plans for the next version of the Uniform CPA Examination, and asked for feedback.
The Private Company Council voted in mid-September to finalize an alternative that would exempt private companies from separately recognizing and measuring non-competition agreements and customer-related intangible assets that are not capable of being sold or licensed independently in a business combination. The alternative will be sent to the Financial Accounting Standards Board, which will discuss it. At the same mid-September meeting, the PCC discussed potential ways to improve the accounting for stock-based compensation for private companies. FASB will consider adding a project to its agenda to address the accounting of stock-based compensation for public and private companies
FASB issued a new accounting standards update to provide guidance on disclosing uncertainties about a business' ability to continue as a going concern.
The Public Company Accounting Oversight Board released a new staff alert warning auditors about deficiencies that have been seen in audits of revenue figures. The Staff Audit Practice Alert highlights the requirements for auditing revenue under PCAOB standards, in light of what the staff says are significant audit deficiencies in this area that have been frequently observed during inspections. PCAOB inspection reports have consistently identified revenue as one of the most common areas for audit deficiencies. The alert discusses areas such as testing the recognition of revenue from contractual arrangements, evaluating the presentation of revenue, such as gross versus net revenue, testing whether revenue was recognized in the correct period, and evaluating whether the financial statements include the required disclosures regarding revenue.
The American Institute of CPAs re-organized some of the content of its auditing and attestation standards. Noting that because engagements performed under the existing Section 501 of its attestation standards, An Examination of an Entity's Internal Control Over Financial Reporting That Is Integrated With an Audit of Its Financial Statements, as well as the related attestation interpretation No. 1, Reporting Under Section 112 of the Federal Deposit Insurance Corporation Improvement Act (AICPA, Professional Standards, AT Secs. 501 and 9501), are always integrated with an audit of financial statements, the institute's Auditing Standards Board has concluded that it would be appropriate to move the content of the extant AT Section 501 from the attestation standards into generally accepted auditing standards.
THE IRS AND THE ACA
In late August, the Internal Revenue Service released a set of long-delayed draft instructions for the forms that companies need to file to comply with the employer mandate in the Affordable Care Act. Draft instructions are now available for Form 1095-A, Health Insurance Marketplace Statement, Forms 1094-B and 1095-B, Transmittal of Health Coverage Information Returns and Health Coverage, and Forms 1094-C and 1095-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns and Employer-Provided Health Insurance Offer and Coverage. The IRS also released a request for comments on the drafts.
After seeing the draft forms, H&R Block president and CEO Bill Cobb announced in a conference call with analysts that he is expecting problems next tax season due to the Affordable Care Act, and noted that Block is updating its systems to handle the ACA, pointing out that the IRS's draft forms are complex and time-consuming, and many taxpayers who used to be able to file simple tax forms such as the 1040EZ no longer will be able to do so.
Not long after, IRS Commissioner John Koskinen told a congressional subcommittee about the IRS's progress on the Affordable Care Act and the impact that tax subsidies will have next tax season.
The courts, meanwhile, were gearing up to rehear a case that had blocked the tax subsidies at the heart of the health care reform act. Arguments are scheduled for December 17.
The Internal Revenue Service intendsto process complaints against tax preparers in a more timely manner.
IN OTHER NEWS
A pair of CPAs filed a class-action com-plaint against the Internal Revenue Service challenging IRS regulations requiring tax practitioners to annually register and pay a fee to the agency to obtain and maintain a Preparer Tax Identification Number. The class action involves more than 700,000 individual practitioners who are forced to pay for a PTIN every year. Filed in early September, the lawsuit seeks an injunction barring collection of the fee and recovery of the more than $150 million in fees the IRS has collected since 2010.
Congress allowed the IRS to require tax practitioners who prepare tax returns for compensation to place a PTIN on the returns to help the IRS identify the preparer, and a court upheld the requirement. The plaintiff CPAs argue that the IRS lacks the statutory authority, however, to charge fees to obtain or renew a PTIN and that the IRS cannot use fees it has collected for unrelated activities. The IRS uses only a small portion of the fees collected to pay the vendor who manages the online PTIN registration process, and uses the bulk of the fees for other IRS activities.
The Center for Audit Quality created an online document, the Professional Judgement Resource, to help auditors with the decision-making process so they can form auditing and accounting judgments with the appropriate professional skepticism. It provides an example of a decision-making process grounded in five essential actions that include identifying and defining the issue, and reviewing and completing the documentation and rationale for the conclusion. In addition, the resource identifies several common judgment tendencies and traps that can potentially lead to bias and weaken professional skepticism.
The Indiana CPA Society became the first state CPA society to prepare and release an integrated report, incorporating all aspects of business performance in a concise format that aims, among other things, to enhance accountability and stewardship.
Global tax firm WTAS has changed its name to Andersen Tax, reviving the brand of the Big Five firm that collapsed over a decade ago in the wake of the Enron and WorldCom scandals. The new Andersen Tax was founded in 2002 by a large group of former Andersen partners, and is also looking to expand in Europe, where another firm had a name similar to WTAS. The firm has no audit practice.
Whopper-slinger Burger King found itself the center of the ongoing campaign against corporate inversions when it agreed to acquire Canadian coffee-and-donut pusher Tim Hortons, with the expectation that it will move its headquarters up north. The Canadian corporate tax rate is typically 26.5 percent, compared with 40 percent in the U.S., according to Big Four firm KPMG - but then Burger King's effective tax rate 2013 was only 27.5 percent. Various people complained about the move, and legislation was introduced to punish corporate inverters.
An investment vehicle with an interest in digital currencies like Bitcoin has established a new professional association that aims to foster best-in-class practices for accountants, lawyers and financial professionals in the digital currency economy through training, certification and support.
The Digital Currency Council is offering training and certification program through a Web site, with a curriculum tailored to accountants and other professionals that includes topics such as the characteristics of each major digital currency type; understanding how to exchange, "mine," sell and invest in Bitcoin; secure storage options; various regulations for digital currencies and their implications; international regulations in various geographic markets; Bitcoin investment strategies, including trading signals; and the leading platforms for Bitcoin utilization and investment.
CORRECTIONS
In our "Wealth Magnets: The 2014 Top Firms by AUM" special report (August 2014), we listed ShankerValleau twice; their correct AUM is $195 million. In our Top 100 Most Influential People report (September 2014), meanwhile, we misspelled Taylor Macdonald's name. Our apologies for the errors.
