A bill before the Connecticut State Senate would give its state comptroller the legal authority to establish generally accepted accounting principles for the state's financials, thereby sidestepping the Governmental Accounting Standards Board - the standard-setter for governments and municipalities.Proponents said that GASB's accounting rules make it hard to achieve a balanced budget, which Connecticut requires.

Pension fund disclosures will soon look more like those of other post-employment benefits under a new statement issued by the Governmental Accounting Standards Board.Statement 50, Pension Disclosures, amends Statement 25, on reporting on defined-benefit pension plans, and Statement 27, on accounting for pensions by governmental employers. The amendments make disclosures under those two statements consistent with the requirements of Statements 43, on reporting OPEB, and 45, on reporting on OPEB by governmental employers.

Think you've come up with a perfect tax strategy for your high-end clients? Before you go ahead with it, you might want to check if it's been patented. You're liable to be sued for patent infringement if someone else thought of it first.It all started in 1998, when a federal appeals court ruled that business methods could be patented. Since then, more than 60 tax-strategy patents have been granted, and 86 more are pending. And the first infringement suit has been filed over the SOGRAT patent.

One way to judge which are the most significant provisions in the Small Business and Work Opportunity Tax Act of 2007 - signed by President Bush on May 25, 2007, as part of a larger bill focused on war funding - is to look at which provisions are projected to cost the most or to raise the most revenue.The tax breaks included in this legislation are fully paid for with revenue increases. The main premise behind the legislation is that small business should receive some tax breaks to help offset the cost of being required to pay workers more due to the minimum wage increase. It would be a rare small business that finds that the cost of increasing the minimum wage for its workers is fully offset by the tax breaks included in the legislation.

Two auditing standards boards and an association of accounting academics are moving forward with a research project that could lead to significant changes in the content and phrasing of audit reports, perhaps even in the procedure of the audit itself.Concerned that investors and others may be misinterpreting the typical three-paragraph audit report, the boards are seeking a better understanding of what people think they're reading. In many cases, according to the American Institute of CPAs' director of auditing and attestation, Chuck Landes, some readers of audit reports are apparently seeing things that aren't there.

Connecticut Governor Jodi Rell vetoed a bill passed by the state legislature that would have allowed Connecticut to set its own accounting standards to balance the budget.

Here’s something that may be of interest to you.As you know, there are all sorts of lists out there ranging from Accounting Today’s most influential people in accounting to Practical Accountant’s regional survey of accounting firms to CPA Wealth Provider’s financial planning annual awards of excellence.

A Greenville, S.C. federal judge has permanently barred Robert Barnwell Clarkson and his "Patriot Network" from promoting tax fraud schemes, the Justice Department announced. The court found that Clarkson falsely instructed Patriot Network members that they need not file federal income tax returns, and helped members obstruct Internal Revenue Service efforts to collect taxes. In seeking the permanent injunction, the Justice Department submitted Clarkson's Untaxing Packet, which he sold for $300. The packet contained form letters that he falsely claimed would exempt purchases from federal tax laws. Papers filed in the case showed that Clarkson boasted that he "untaxed" more than 8,000 people over 30 years. The court detailed Clarkson's efforts at interfering with tax collection, including his instruction to transfer property to nominees and to sue IRS agents who attempt to collect taxes. Clarkson, a disbarred attorney from Anderson, S.C., has twice been convicted of federal tax-related crimes. The court ordered Clarkson to give copies of the injunction to people who bought his products and to post the injunction on the Patriot Network Web site.

The Internal Revenue Service has redesigned Form 8857, Request for Innocent Spouse Relief, to help reduce follow up questions and taxpayer burden. The form will ask more questions initially, but collecting critical information early in the process will allow faster processing of the request. The IRS says that the new design will eliminate an estimated 30,000 follow-up letters annually, resulting in a reduced burden and quicker answer for taxpayers and less cost for the government. When a taxpayer files a joint return, both spouses are jointly and individually responsible for the tax. If one taxpayer believes that only his or her spouse or former spouse should be responsible for the tax, the taxpayer can request innocent spouse relief. The redesigned form will be easier to understand and to complete and will help educate taxpayers about the process. Previously, the questionnaire was separate from the form.

The Center for Audit Quality, a group affiliated with the American Institute of CPAs, will host a panel discussion featuring former Sen. Paul Sarbanes and former Rep. Michael Oxley to mark the fifth anniversary of signing Sarbanes-Oxley into law. Scheduled for July 30 at the National Press Club, additional speakers include SEC Chair Christopher Cox, former SEC Chairs William Donaldson and Harvey Pitt, Mark Olson, Chairman of the Public Company Accounting Oversight Board and former PCAOB Chairman William McDonough. For further information, call (202) 609-8291 or e-mail info@thecaq.org.

iLumen, Inc. a provider of financial information monitoring and benchmarking services, has launched Portfolio Connection -- a service for CPA firms and financial institutions who specialize in privately held clients. Portfolio Connection enables users to connect their entire portfolio to the iLumen Financial Information Network -- an online confidential information network for private companies, industry peers, advisors and institutions. "Now they've got a view of their entire business portfolio in one unified central database," said Bob Woosley, chief executive of iLumen. "To bring it all up into an information service that connects to the national network confidentially, so they can now gain a new perspective on their private-business clients by correlating their clients to their industry, credit profile and other third party financial content." Portfolio Connection is currently used by banks and CPA firms to bulk load annual financial data from their existing systems into a single repository. It also allows financial advisors to aggregate and benchmark their own portfolio, correlate it to iLumen's industry benchmarking on a national basis and combine that information with relevant third party services, such as industry content providers and credit information services.

The Securities and Exchange Commission has reappointed Daniel Goelzer to a second five-year term at the Public Company Accounting Oversight Board. Prior to joining the PCAOB in 2002, Goelzer spent seven years as general counsel at the SEC. He is also a CPA and was an auditor at Touche Ross, the predecessor firm to Deloitte & Touche. SEC chairman Christopher Cox said that Goelzer "brings broad perspective to the board through his substantial experience as a regulator and practitioner. We are fortunate that he is willing to serve the nation, investors, and our markets in this capacity."

I have always found regional accounting firms fascinating. Just take three recent developments regarding the regional firm of Virchow, Krause & Company. One was that Wells Fargo Insurance Services of Minnesota, a subsidiary of Wells Fargo & Company, acquired Virchow, Krause & Company's Twin Cities employee benefits operations, including the head of the employee benefits practice in Minneapolis and his team. It is a good example of how regional firms view these very specialized practice areas. The acquire them and spin them off reminding me of many businesses that view the acquisition and the selling of a portion of their business as a regular means for increasing profitability.

The Public Company Accounting Oversight Board has faulted eight audits performed by global audit firm Grant Thornton, citing departures from generally accepted accounting principals as well as problems with evaluating financing costs and rental income. During the eight-month process, the PCAOB said it conducted the inspection at the firm's national office in Chicago as well as 13 of its field offices. As with all PCAOB inspection reports, the audit clients remained anonymous. However, in a letter to PCAOB director of inspections, George Diacont, Grant Thornton took umbrage to the board's use of descriptions such as "failed to identify" and "failed to perform" appearing in the reports. It also stated that it has enhanced its training programs and developed additional guidance to address problems in previous inspection reports. Meanwhile, a Grant Thornton spokesperson said, "While we disagree with the some of the terminology used by the PCAOB and disagree with some of the conclusions that were reached, we support the PCAOB's mission to better protect investors through the reports. We think it is an excellent time for the PCAOB to develop recommendations culled from three years of major accounting firm inspections to establish the most effective approaches to auditing, with the investor being the ultimate beneficiary." Earlier this year the audit overseer released its inspection reports on Big Four firms Ernst & Young and Deloitte, both of whom were cited for audit deficiencies in eight of their clients' audits. The report can be viewed at: http://www.pcaobus.org/Inspections/Public_Reports/index.aspx.

The IRS has publicized a new draft version of Form 1118, "Foreign Tax Credit - Corporations," used by U.S. corporations to compute the foreign tax credit for taxes paid or accrued to foreign countries or U.S. possessions. "They adjusted the form to accommodate changes made by the 2004 American Jobs Creation Act," said Selva Ozelli, a New York-based CPA and international tax attorney. Under the act, the number of separate foreign income categories has been reduced from eight to two, and U.S. source income is re-characterized as foreign source income in cases where a taxpayer's foreign tax credit limitation has been reduced in an earlier year due to an overall domestic loss. "The most important change is that they've added a column to help taxpayers determine U.S. income that could be recharacterized due to recapture of overall domestic losses," said Ozelli. "This column will also help them in tracking their balances of overall domestic losses," she said.

The nation's technology companies continue to struggle with the challenges of accounting for stock options, in particular, the guidelines of Financial Accounting Statement 123(R), Share-Based Payment, according to a survey conducted by Grant Thornton of tech company executives. Some 85 percent of those participating in the GT poll said that the overall process of option valuation is significantly more complex than it was before Statement 123(R), while 76 percent indicated that they are outsourcing option valuation as a result of the accounting rule. Roughly 60 percent of those surveyed said their company's compensation committee have become more involved in designing comp programs as a result of 123(R). Grant Thornton surveyed more than 100 technology company executives in the poll.

Two interesting pieces of information have popped up by two highly reputable sources, one dealing with tips on choosing a financial planner and the other showing survey results of the five most frequent mistakes made when selecting such an advisor.

Technology will be even more critical to the success of small businesses in 10 years, according to a study sponsored by business and financial management software provider Intuit. The second installment of the "Intuit Future of Small Business Report," authored by the Institute for the Future, a Palo Alto, Calif.-based think tank, focused on how technology will propel and transform small businesses by identifying three trends: small business management will increasingly be "on my time" and "on my terms" for owners; the evolution of the Web will fuel small-business formation, operations and innovation; and the small-business marketing approach will shift from "push" to "pull," with emphasis on providing customers and prospects with the information they need, when they need it. The first installment, released in January, explored the changing face of entrepreneurship, the rise of personal businesses and the emergence of entrepreneurship education. Small businesses are defined by Intuit as those with fewer than 500 employees, according to Steven Aldrich, vice president of strategy and innovation for Intuit's small business division. "There were a few surprises in terms of how fast these technology changes are impacting small business," Aldrich said. "First the rapid lowering of cost in technology, in general, and the ease of use that increasing in that technology is spurring lots of adoption, much more quickly than we had seen in the past. The second one [is] the rapid change of consumers' use of the Internet is confusing small businesses to an extent that I had not expected. They are not sure how to keep up with the way their customers are using the Internet." Being digitally connected will allow small business owners to run their firms on their own terms, and, according to the report, intelligent devices -- equipped with computing, storage and sensing abilities -- will be used more to improve the delivery of goods and services, while freeing business owners from mundane tasks. More business owners will use mobile devices and an emergence of analytic tools will increase productivity and ease management burdens, the report predicted. The high cost and complexity of technology will decrease, leading to an expansion of new business applications. The report found that small business relationships will become more virtual, and social networking will become commonplace, allowing business owners to connect with customers, partners and suppliers globally. The report also stresses that a small business' online presence is the most important factor in gaining new customers. In the last five years, according to Aldrich, consumers' use of searching the Yellow Pages for goods and services has decreased by 50 percent; instead, they are going online first to conduct research. The third installment, to be released later this year, will examine how small businesses will affect society and the economy through 2017.

Securities and Exchange Commission Chairman Christopher Cox has established an advisory committee to help make financial reporting more "user-friendly." The SEC Advisory Committee on Improvements to Financial Reporting will examine the U.S. financial reporting system in an effort to reduce complexity, make financial reports clearer to investors reduce costs for preparers and determine how to better capitalize on the use of technology. "Our current system of financial reporting has become unnecessarily complex for investors, companies, and the markets generally," Cox said. "The time is ripe to review how that system can be made less complex and more useful to investors." Robert C. Pozen, chairman of MFS Investment Management in Boston and former vice chairman of Fidelity Investments, was appointed the committee chair. Cox said he expects between 13 and 17 additional members with varied backgrounds to be named to the advisory committee within the next few weeks.Some of the areas the committee will focus on include: * The current approach to setting financial accounting and reporting standards; * The current process of regulating compliance by registrants and financial professionals with accounting and reporting standards; and * The current systems for delivering financial information to investors and accessing that information. Both the Financial Accounting Standards Board and Financial Executives International lauded the development. "This advisory committee represents an important step toward addressing the institutional, structural, cultural, and behavioral issues that create complexity, reduce transparency, and impede usefulness of reported information to investors," said FASB chairman Robert Herz. Meanwhile the 15,000-member FEI said that it "applauds the SEC's announcement today regarding the formation of an SEC Advisory Committee on Improvements to Financial Reporting. We reiterate our belief that the current complexity in accounting and reporting harms the ability of users of financial statements to understand the information provided and impairs the ability of preparers to explain their financial results in a meaningful way."

The Internal Revenue Service ruled that a partial termination of a qualified plan occurred where 23 percent of a plan's participants were no longer active due to the closing of one of the employer's four locations. Therefore, all plan participants were fully vested. Under Code Section 411(d)(3), a plan is required to provide that, upon its partial termination, the rights of all affected employees to benefits up to the date of the termination must be non-forfeitable. Under the regs, the IRS uses a facts and circumstances test to determine whether a partial termination has occurred. The IRS ruled that if the turnover rate is 20 percent or more, there is a presumption that a partial termination of the plan has occurred. The IRS determined the turnover rate by dividing the number of participating employees who had an employer-initiated severance from employment during the applicable period - in this case, the plan year - by the sum of all of the participating employees at the start of the applicable period and the employees who became participants during the applicable period. The 20 percent threshold merely creates a presumption, according to the IRS. Facts and circumstances indicating that the turnover rate for an applicable period is routine, and not the result of a shutdown as in this instance, favor a finding that there is no partial termination. The IRS also noted that a partial termination of a qualified plan can also occur for reasons other than turnover. For instance, a partial termination can occur due to plan amendments that adversely affect the rights of employees to vest in benefits under the plan, plan amendments that exclude a group of employees who have previously been covered by the plan, or the reduction or cessation of future benefit accruals resulting in a potential reversion to the employer.