LAWS AND LAWSUITS
Following the legal challenges that had derailed its testing and continuing education regime for tax preparers, the Internal Revenue Service announced a voluntary tax preparer education program that it aims to have in place to help taxpayers during the 2015 filing season.
Of course, whether it gets a chance to will depend on the success of a federal lawsuit filed by the American Institute of CPAs challenging the legality of the IRS's plans. Calling the program an "end-run" around the rulings that killed its earlier mandatory testing and education programs, the institute questioned the service's authority to establish the voluntary program, and says it did not comply with rule-making procedures established by law.
The IRS came in for a hard time as Commissioner John Koskinen admitted in a particularly contentious June congressional hearing that the service could not produce a number of e-mails from former official Lois Lerner regarding the targeting of conservative groups. In July, it emerged that the Justice Department was investigating the missing e-mails.
July saw a flurry of tax-related legislative activity, including the introduction and/or passage in one house of Congress or the other of bills that would variously introduce online sales taxes, ban Internet access taxes, slice the IRS's budget, make the charitable contributions deduction permanent, boost bonus depreciation, prevent companies that change their tax headquarters from getting federal contracts, and much more. As of press time, none of them had gone anywhere.
In mid-July, the Securities andExchange Commission began sending letters to public companies that had failed to file their financials with all the necessary data using the Extensible Business Reporting Language technology. The SEC began requiring the largest public companies to file their financial statements using XBRL in 2009 and phased in the requirements for smaller issuers over the next two years. XBRL technology uses a data-tagging format that is supposed to make it easier for investors and analysts to compare financial information across companies and industries. However, problems with the technology and the inconsistency of the tags used by companies have limited XBRL's usefulness to many investors.
The Financial Accounting Standards Board voted in mid-July to finalize an accounting and financial reporting standard aimed at increasing transparency and consistency of financial reporting about consolidation. The Accounting Standards Update would affect all public and private companies that apply "variable interest entity" guidance, along with limited partnerships and similar legal organizations such as limited liability corporations, and applies to both public and private companies. The update is intended to reduce the complexity of the guidance as it applies to limited partnerships and similar legal organizations, simplify the consolidation guidance to focus more on principal risk, and remove the indefinite deferral available to certain investment funds.
Separately, FASB proposed a pair of ASUs aimed at simplifying the process of inventory measurement and eliminating the requirements for extraordinary items.The proposals are part of FASB's simplification initiatives, whose goal is to reduce cost and complexity in financial reporting while improving or maintaining the usefulness of the information reported to investors. One of the proposed updates addresses concerns about the complexity of the current guidance on measuring inventory, while the other seeks to reduce cost and complexity by eliminating the concept of extraordinary items.
In late June, the Public CompanyAccounting Oversight Board released staff guidance to help auditors of brokers and dealers registered with the Securities and Exchange Commission to plan and perform audits in accordance with PCAOB standards as mandated by the Dodd-Frank Act and Securities and Exchange Commission rules. Last July, the SEC amended Exchange Act Rule 17a-5 to require, among other things, that audits of broker-dealers be conducted in accordance with PCAOB standards. The SEC amendments and PCAOB standards are effective for fiscal years ending on or after June 1, 2014. Prior to the effective date, those broker-dealer audits were performed under generally accepted auditing standards. The publication is available on the PCAOB's Web site.
The American Institute of CPAs' Auditing Standards Board has issued two new auditing interpretations in response to the Governmental Accounting Standards Board's new pension reporting standards. The Auditing Standards Board's new auditing interpretations pertain to the following sections of SAS No. 122, Statements on Auditing Standards: Clarification and Recodification, as amended: Section 500, Audit Evidence; and Section 805, Special Considerations - Audits of Single Financial Statements and Specific Elements, Accounts, or Items of a Financial Statement.
MORE TAX EXCITEMENT
Foreign financial institutions began facing tax withholding penalties on July 1 if they did not begin to make efforts to comply with the Foreign Account Tax Compliance Act. FATCA was introducted as part of the HIRE Act of 2010, and requires foreign financial institutions to report on the holdings of U.S. citizens to the Internal Revenue Service, or else face stiff penalties of up to a 30 percent withholding tax on payments of U.S. source income.
When it wasn't busy looking through its e-mail, the IRS actually got a little work done. It clarified some of the rules regarding IRA rollovers, in Reg- 209459-78; outlined plans to fight fraud next January by limiting the number of refunds electronically deposited into a single financial account; and announced that unused Individual Taxpayer Identification Numbers will expire if they are not used on a federal income tax return for five consecutive years. (See page 16)
National Taxpayer Advocate Nina Olson released her mid-year report to Congress, in which she urged the Internal Revenue Service to issue refunds to victims of tax preparer fraud and expand the IRS's recently announced voluntary tax preparer education program to include competency testing. Olson also encouraged the IRS to place greater emphasis on its recently adopted Taxpayer Bill of Rights and continue to make improvements in the exempt organizations area. In addition, "the IRS ran a generally successful filing season (although taxpayer services were sub-optimal largely due to staffing limitations), instituted a more equitable approach to its Offshore Voluntary Disclosure initiative, and introduced a voluntary system for educating unenrolled return preparers," Olson wrote in a preface to the report.
IN OTHER NEWS
The American Institute of CPAshas created a new Web site to highlight how CPAs engage in lifelong learning and measure competency. The site, FutureofLearning.AICPA.org, contains the findings of the AICPA Task Force on the Future of Learning, a working group of thought leaders who examined the latest innovations in professional development and education. Visitors to the site are asked to comment on the task force's recommendations, share them through social media and other means, and join idea exchange groups on the future of learning. The goal is to identify the most promising learning advancements that will strengthen career development and skill mastery for current and future CPAs.
Separately, the institute launched a newsletter on the topic of diversity and inclusion.
The Indiana CPA Society establisheda CPA Center of Excellence to better prepare CPAs in the state and beyond for the challenges of the future.
A number of accounting-related associations, societies and other membership groups named new boards and volunteer leadership for the coming year. Among them:
- The Association for Accounting Marketing announced its board of directors and president, Kerry Sullivan-Lechner of Anderson ZurMuehlen, for 2014-2015.
- The Institute of Internal Auditors elected its 2014-2015 global board of directors; PwC partner Anton van Wyk will serve as chairman.
- Financial Executives International elected a new slate of executive officers and members of the board of directors for 2014-2015; Mitch Danaher, deputy controller of General Electric Company, will serve as national board chair.
- The Georgia Society of CPAs elected Terry Parker, a partner at Clifton, Lipford, Hardison & Parker LLC, to serve as 2014-2015 chair.
- The New York State Society of CPAs elected Joseph Falbo, a partner at Tronconi Segarra & Associates LLP, as president-elect.
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