A STRONG START
Late it may have been, but tax season got off to a roaring start after January 31, with tax filings outpacing the same period from the year before. The Internal Revenue Service reported receiving 39.2 million returns by February 14. By the same time, the IRS had issued almost 31.3 million refunds, up 15.5 percent from the previous year.
Of course, cramming all that activity into a short period can be difficult, and by President's Day Weekend, the IRS was urging taxpayers not to call it with tax questions, but to seek them online due to long waiting times. The ubiquitous new commissioner, John Koskinen, even recorded a YouTube video suggesting IRS.gov as the best choice for information, and touting the many self-help tools the service provides.
And in the midst of all that bustle, the IRS received a serious setback on another front, as the D.C. Circuit Court of Appeals ruled against its appeal of last year's Loving decision, agreeing with the earlier court that the service did not have the legal authority to impose a nationwide licensing regime on tax return preparers. The court rejected the IRS's claim that it could derive the authority from an obscure 1884 statute. At press time, the IRS had not yet decided whether to appeal the ruling, and was studying its options, but in an interview with Accounting Today, Commissioner Koskinen indicated that an appeal was unlikely, given the legal hurdles required to get the Supreme Court interested in the case. It's a question that concerns more and more people: The IRS Return Preparer Office had reported just a few weeks earlier that the number of professional tax return preparers holding PTINs was just over 743,000 -- 50,000 more than the last tally, in October of 2013.
And in case any Golden State preparers got any ideas, Califoria authorities quickly made it clear that that state's tax preparer regulations are still definitely in effect.
Busy, busy, busy: The IRS and the Treasury issued final regulations regarding the employer mandate provisions of the Affordable Care Act, and included an extra extension for some businesses: Those that employ between 50 and 99 full-time workers have until 2016 to comply with the employer mandate to provide health insurance. Those that claim the exemption for 2015 will need to certify under penalty of perjury that they did not reduce their workforce to fewer than 100 employees in order to qualify. Large employers with 100 or more full-time employees were also given additional time. The proposed regulations had originally required that they offer coverage to 95 percent of their full-time employees starting in 2015. That requirement has now been reduced to 70 percent in 2015 and 95 percent beginning in 2016. However, there is no delay in the individual mandate that requires health insurance coverage for nearly all Americans this year.
The Financial Accounting Standards Board voted in late January to re-organize its future agenda to focus more closely on the issues most important to FASB stakeholders, as it anticipates completion of its remaining four convergence projects for harmonizing U.S. GAAP with International Financial Reporting Standards. In re-organizing its agenda, the board was guided by the results of a survey that was completed last year by more than 100 members of various FASB advisory groups and other stakeholders.
The Financial Accounting Foundation said that it will contribute up to $3 million to the International Financial Reporting Standards Foundation to help complete some of their joint accounting standards convergence projects. The Financial Accounting Standards Board, which the FAF oversees, and the International Accounting Standards Board, which the IFRS Foundation oversees, have yet to issue long-awaited converged standards for revenue recognition, leasing, financial instruments and insurance contracts.
The FAF Board of Trustees made the decision to help provide the non-recurring funding in consultation with senior officials of the Securities and Exchange Commission. The contribution, to be made in up to three payments of $1 million during 2014, is intended to support the IASB during the period that it is completing work on the four joint accounting standards projects it is undertaking with FASB. The contribution to the IFRS Foundation will come from the FAF's reserve fund. The FAF trustees made one previous contribution of $500,000 to the IFRS Foundation in 2011. In addition to the cash contribution, FASB over the past dozen years has dedicated much of its technical staff's time to the convergence projects.
The Public Company Accounting Oversight Board anticipates signing a deal by the end of the year to inspect auditing firms located in China, a long-sought goal, according to Chairman James Doty. In an open meeting with Securities and Exchange Commission officials to approve the PCAOB's $258.4 million budget request for 2014, he provided an update to SEC Chair Mary Jo White and the other commissioners on the board's activities and plans, including overseas inspections, and suggested that he was "optimistic" about begin able to sign an agreement to inspect the audit work of PCAOB-registered firms based in China.
This came just after a U.S. administrative law judge barred the Chinese affiliates of the four largest accounting firms from leading audits for U.S.-listed companies for six months. The judge said that the firms had failed to comply with SEC orders for documents regarding a series of accounting fraud probes. The firms appealed.
The American Institute of CPAs was very busy: First, its Auditing Standards Board proposed changes in subject-matter specific attestation standards. The exposure draft, Proposed Statement on Standards for Attestation Engagements Subject-Matter Specific Attestation Standards: Clarification and Recodification, is the second that the Auditing Standards Board has issued as part of its Attest Clarity Project, and would restructure the content of AT Section 301, Financial Forecasts and Projections; AT Section 401, Reporting on Pro Forma Financial Information; and AT Section 601, Compliance Attestation. The AICPA is asking for feedback by May 27.
The ASB also released a standard on using the work of internal auditors. Statement on Auditing Standards No. 128 addresses the external auditor's responsibilities if using the work of internal auditors, including the use of the work of the internal audit function in obtaining audit evidence and using internal auditors to provide direct assistance under the direction, supervision and review of the external auditor. Separately, the ASB also proposed amendments to its clarified auditing standards on letters to underwriters and certain other requesting parties. The proposed amendments are intended to address implementation issues in areas such as comfort letters for clients. Comments are requested by April 15.
And the institute joined the Chartered Institute of Management Accountants to propose a framework with the goal of bringing consistency to management accounting practice across the world. The organizations developed the draft framework, "Global Management Accounting Principles: Driving better business through improved performance," to help chief financial and executive officers and boards of directors benchmark and improve their management accounting processes as the discipline takes on more importance. The proposed framework includes guidance on how to identify financial and non-financial information suitable for analysis; model scenarios to prioritize opportunities; and how to communicate with clarity to guide better decisions. It stresses the importance of integrated thinking and evidence-based decision making. The feedback period ends May 10.
The Governmental Accounting Standards Board released an implementation guide for its new standards for accounting and financial reporting for pensions. The Guide to Implementation of GASB Statement 68 on Accounting and Financial Reporting for Pensions is designed to help preparers and auditors of state and local government financial statements as they implement the new pension standards, which are effective for periods beginning after June 15, 2014. Prepared by the GASB staff and cleared for issuance by the board, the implementation guide addresses key questions about putting the new standards into practice. Topics addressed include the scope and applicability of GASB Statement No. 68, considerations regarding the identification of special funding situations, measurement of defined-benefit pension liabilities of employers and non-employer contributing entities, pension expense and deferred inflows and outflows of resources related to pensions, note disclosures and required supplementary information, unique issues related to cost-sharing employers and certain non-employer contributing entities, and the transition to the new standards.
IN OTHER NEWS
BDO USA topped the charts in terms of new SEC audit engagement clients in 2013, according to our latest rankings -- it brought in 65 new clients both organically and through mergers, and netted 57 for the year.
Big Four firm KPMG agreed to pay $8.2 million to settle SEC charges that the firm violated rules requiring auditors to remain independent from the public companies they're auditing to ensure they maintain their objectivity and impartiality. An SEC investigation found that KPMG broke the rules by providing prohibited non-audit services such as bookkeeping and expert services to affiliates of companies whose books they were auditing. Some KPMG personnel also owned stock in companies or affiliates of companies that were KPMG audit clients, further violating auditor independence rules. KPMG neither admitted nor denied the charges, but said that it had made changes to provide more auditor independence in the years since the events at issue in the charges, which spanned 2007 to 2011.
More than half of U.S. organizations that experienced fraud in the past two years reported an increase in the number of occurrences, according to a PricewaterhouseCoopers survey, which also found a rise in accounting fraud, bribery and corruption.
President Obama introduced a new retirement savings vehicle called a "MyRA" in his State of the Union address in late January. The MyRA aims to provide a new simple, safe and affordable "starter" retirement savings account that will be offered through employers to help Americans begin to save for retirement.
One of Intuit's main ambassadors to the accounting profession, Jill Ward, announced that she will be leaving the accounting and business software company this month. She had been with Intuit for 12 years, most recently as chief of its Accountant & Advisor Group, helping build and maintain the company's relationships with ProAdvisors and the profession as a whole. She will be succeeded by Jim McGinnis, who joined Intuit in 2010 as vice president of marketing for the Accounting Professionals Division.
Both FASB and its counterpart, the Governmental Accounting Standards Board, announced quarterly e-newsletters to keep stakeholders and others informed about their current projects and activities.
In "The many faces of payroll" (February, page 10), we misspelled Elkton, Md.-based CPA Christine Trumbull's name in some places. Our apologies for the errors.
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
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access