Audit & Accounting

The $11,000 gift tax annual exclusion ($12,000 for gifts made in 2006) is available only for gifts of present interests. A gift to a trust for the benefit of a particular beneficiary is usually a gift of a present interest only if the trustee is required to distribute all of the income of the trust no less frequently than annually. If a trust does not have income because its assets are invested in non-income paying property (e.g., unproductive real estate or artwork), a gift to that trust will be treated as a gift of a future interest.However, the exclusion is allowed for a gift in trust to a minor, if the trust property and the income from that property may be (but don't have to be) spent by or for the minor before he reaches age 21, and to the extent not so spent will pass to the minor when he becomes 21.

Roughly two thirds of companies in the S&P 500 have exceeded analysts' estimates on earnings per share dating back to the first quarter of 2004 -- a signal that companies have become more conservative on their earnings guidance.

William J. McDonough, who in two years as chair of the Public Company Accounting Oversight Board helped guide the audit overseer from shaky beginnings to a powerful regulatory entity with eight offices and over 400 employees, will step down from his post effective Nov. 30."I have a wide range of interests in corporate governance, finance and international affairs, and will explore one or a variety of activities in those fields," McDonough, 71, said.

A backlash is beginning to be felt throughout the auditing profession in Europe over proposed changes to accountancy rules covering combinations and mergers.Several non-governmental organizations, such as the European Federation of Accountants (FEE), the European Financial Advisory Group (EFRAG) - which represents a broader range of interest groups - and the Union of Industrial and Employers' Confederations of Europe (UNICE), are skeptical of what the International Accounting Standards Board has put forth in its proposal.

Complying with the federal tax code costs American taxpayers at least $100 billion annually, and lost economic efficiency associated with the tax system may top half a trillion dollars, auditors for the Government Accountability Office told Congress.In a report likely to add fuel to the campaign for an easy-to-administer national consumption tax, the GAO said that the lowest available estimates of the cost of complying with federal income, payroll and excise taxes is $107 billion - a whopping 1 percent of the nation's total gross domestic product. Other studies suggest that compliance costs may be 50 percent higher than these estimates.

The Governmental Accounting Standards Board has proposed a new standard that would clarify accounting for sales and pledges of receivables and future revenues, including those arising from tobacco settlement agreements.The proposal addresses whether certain transactions should be regarded as collateralized borrowing, or as a sale.

The workload for financial advisors in Seattle and Austin lessened somewhat over the last few years, as big employers such as Microsoft and Dell curtailed their use of stock options.Across the nation, an increasing number of companies have moved toward alternative forms of employee incentive compensation in response to the sweeping changes in accounting rules regarding options expensing dictated by the Financial Accounting Standards Board.

Since Section 404 of the Sarbanes-Oxley Act went into effect, both external and internal auditors have been unsure exactly how to treat "the work of others," not to mention "each other."The Securities and Exchange Commission and the Public Company Accounting Oversight Board have made it clear that public auditors need to scrutinize companies more carefully, including their internal controls over financial reporting, but at a PCAOB roundtable discussion in April, auditors and corporate financial officers complained of the increased cost of these intensified audits.

Weak financial management at the Securities and Exchange Commission has led to budget overruns of nearly $50 million in two years, according to a report issued by the Government Accountability Office.

Clerks at the nation's bankruptcy courts processed a record 205,129 personal bankruptcy filings last week, and a private consulting firm estimates that a backlog of unprocessed filings could push the total to 300,000.