February 2001 - Journal of Accountancy

t is important for CPAs to understand what motivates people to commit fraud so they can better assess risk and assist employers or clients in implementing appropriate preventive and detective measures. One element common to most occupational fraud offenders, from the CEO to the rank-and-file employee, is that almost none

he AICPA issued an exposure draft of a statement of position that would change how investors account in GAAP financial statements for certain interests in unconsolidated investments. AcSEC issued the ED, Accounting for Investors’ Interests in Unconsolidated Real Estate Investments, in November 2000. The proposed SOP focuses on who should

igning a joint return can be a bit like walking into a minefield. For example, a taxpayer, James, left preparation of their joint 2000 federal income tax return to his wife, Joanne. Unknown to him, Joanne had won $200,000 in a state lottery in May 2000, put the money in

EXECUTIVE SUMMARY IN LIGHT OF FAST-MOVING CHANGES in society and business, the profession has responded by shifting from “firm-based” independence rules toward an approach that is “engagement team based.” THAT APPROACH IS INCLUDED in the SEC’s recently adopted rule 2-01 revisions. An exposure draft from the International Federation of Accountants

EXECUTIVE SUMMARY THE DECISION TO BUY OR LEASE A BUSINESS AUTO is complex, complicated by both tax and cash flow considerations. Making the right choice is easier if a CPA uses discounted cash flow analysis to compare the available options. CAR BUYERS CAN RESEARCH THE MANY FINANCING options on the

uditors perform analytical procedures in planning the nature, timing and extent of testing. Significant fluctuations between the current year’s unaudited data and expected results signal an increased risk of material error and help auditors focus their planned tests on high-risk areas. This study examined auditors’ decisions to revise preliminary audit

esearch has explored the ways in which auditors perform internal control reviews and the skills necessary for expert performance. The auditor’s “knowledge structure”—the way accounting and auditing knowledge is organized in the auditor’s mind—is thought to affect performance through its role in recall. Is it easier, for example, to recall

Exhibit 7: Rules of Thumb—When to Do What When to Buy When to Lease Purchaser pays cash rather than financing. Lessee wants lower monthly payments. Purchaser plans to hold auto for more than four years. Lessee plans frequent trade-ins. Auto weighs more than 6,000 lbs. Auto weighs less than 6,000

Exhibit 6: Spreadsheet Sensitivity Analysis

Exhibit 5: Purchasing is Preferable

Exhibit 4: Lease or Buy–Input Range Instructions: You may find information about leasing or purchasing an auto from one of these sites. www.carpoint.msn.com www.autogiant.com www.carsdirect.com www.driveoff.com www.leaseguide.com www.carinfo.com www.leasespy.com Advertisement Input variables   General information:   Employee or self-employed (1 or 2) Monthly payments in year 1 Marginal tax rate

Exhibit 3: Depreciation and Lease Limits IRC section 280F Depreciation Limits for 2000 Year 1 Limit $3,060.00 Year 2 Limit $4,900.00 Year 3 Limit $2,950.00 Year 4 Limit $1,775.00 Year 5 Limit $1,775.00 Year 6 Limit $1,775.00 Dollar amounts for autos (partial table) with lease term beginning in calendar year

Exhibit 2: Lease vs. Loan Illustration

Exhibit 1: Sample Vehicle Illustration

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   BY THE NUMBERS Companies Focus on Derivatives Compliance FASB Statement no.133, Accounting for Derivative Instruments and Hedging Activities, issued in June 1998, requires that companies report their derivatives holdings at fair value and disclose the purpose and effectiveness of their hedging strategy. For most, the standard took effect January

EXECUTIVE SUMMARY NEW SEC REGULATION FD CAN HAVE a significant impact on the way information about public companies is disseminated. The rule intends to abolish selective disclosure practices and level the playing field for investors. Since regulation FD increases public companies’ financial communication responsibilities, CPAs will be affected by it.

EXECUTIVE SUMMARY INCREASED ACTIVITY IN ESTATE and succession planning and mergers or acquisitions involving small to midsize businesses has fueled demand for business valuation (BV) services. BV malpractice claims arise most often from a tax planning or consulting engagement that—at the client’s request—morphs into a BV in mid-transaction. THE PREDOMINANT