In the most sweeping change to pension law since the Employee Retirement Income Security Act of 1974, Congress passed and President George W. Bush signed the Pension Protection Act of 2006 in August. Key provisions include the following:

Increased funding requirements for single- and multi-employer defined benefit plans. The rules go into effect January 1, 2008, and plans must be 100% funded within seven years. However, employers who sponsor “at risk” plans must make accelerated contributions; commercial airlines have 10 years to meet the requirements.

Stronger support for hybrid “cash balance” plans. The law provides companies with protection against age discrimination lawsuits when they convert from straight defined benefit plans to hybrids that combine elements of defined benefit and defined contribution plans.

Incentives to save for retirement. Employers now can automatically enroll employees in 401(k) plans, although the employees retain the right to opt out. Taxpayers can have the IRS direct-deposit their refunds into an IRA. Temporary incentives created under the Economic Growth and Tax Relief Reconciliation Act of 2001 are now permanent.

Tighter rules for charitable donations. For a taxpayer to claim a deduction, items such as used clothing and household goods donated to charity must be in “good condition.” For cash, checks or other monetary gifts, the donor must produce a bank record or receipt showing the charity name and the amount and date of the contribution.

A summary of the key provisions of the act can be found on the AICPA Employee Benefit Plan Audit Quality Center Web site at www.aicpa.org/EBPAQC .

President Bush also signed legislation exempting the income of nonresident retired firm partners from state taxation. The law, which the AICPA supported, is retroactive to 1996, when earlier legislation granted exempt status to nonresident retired firm employees. “The new law promotes equity by ensuring that states’ tax rules are uniform for both firms’ retired employees and partners,” said AICPA Vice-President of Taxation Thomas P. Ochsenschlager.

The International Accounting Education Standards Board, an independent body within the International Federation of Accountants (IFAC), issued an exposure draft of International Education Practice Statement 2.1, Information Technology for Professional Accountants ( www.ifac.org/Guidance/EXD-Details.php?EDID=0056 ). Intended to help IFAC member bodies prepare accountants to use information technology effectively, the guidance describes the knowledge and skills they need. Comments on the proposal are due November 15, 2006.

The Governmental Accounting Standards Board proposed a Concepts Statement, Elements of Financial Statements, that would define the seven elements of historically based financial statements of state and local governments ( www.gasb.org/exp/ed_elements_financial_statements.pdf ). For statements of financial position, these elements include assets, liabilities, deferred outflows of resources, deferred inflows of resources and net assets; for resource flows statements, they include outflows of resources and inflows of resources. Comments are due November 17, 2006.

The AICPA submitted comments to the Public Company Accounting Oversight Board (PCAOB) on its Proposed Rules on Periodic Reporting by Registered Public Accounting Firms ( www.pcaobus.org/rules/ ) and Proposed Rules on Succeeding to the Registration Status of a Predecessor Firm ( www.pcaobus.org/rules/ ). The AICPA generally agreed with the proposals; it recognized the PCAOB’s need for annual updates of firms’ registration statements to help plan firm inspections and supported the proposal that firms should promptly notify the board of significant, nonroutine events affecting them. But the AICPA said certain rules would impose a greater compliance burden on firms than the board may have intended, and it requested more flexibility in some reporting requirements. For more information on the PCAOB proposals and related resources, visit the AICPA Center for Public Company Audit Firms at www.aicpa.org/CPCAF .

An AICPA Tax Section task force submitted comments to the Treasury Department on its 2005–2006 Priority Guidance Plan, which proposed the issuance of guidance on whether negative additional section 263A costs are taken into account under regulations section 1.263A-1(d)(4). In its comments, the task force said that the regulation already authorizes such costs, and that if the government does not agree, current regulations should be changed to explicitly allow these costs ( http://tax.aicpa.org/resources/tax+accounting/ ). The task force also said recently issued Technical Advice Memorandum 200607021 ( www.irs.gov/pub/irs-wd/0607021.pdf ) creates significant administrative burdens by requiring taxpayers to maintain separate inventory allocation methodologies for financial accounting for section 471 costs and section 263A costs.

Publishing Director
Geoffrey L. Pickard

Colleen Katz

Managing Editor
Cheryl Rosen

Senior Editors
Laura Baron
Katharine W. Coveleski
Peter D. Fleming
Michael Hayes
James Quaglietta
Robert Tie

Senior Assistant Editor
Sarah Cobb

Assistant Editor
Vince Nolan

Contributing Editors
Anita Dennis
Lesli S. Laffie
Barbara J. Shildneck
Joseph T. Wells
Stanley Zarowin

Production Director
Peter M. Tuohy

Art Director
Jeryl A. Costello

Production Manager
Gene Cioffi

Production Editor
D. Hillel Lofaso

Senior Production Associates
Valrie Mason, Ingrid Medina

Associate Publisher
Thomas R. Greve

Advertising Team Manager
Karin DeMarco

Advertising Representatives
Collene Ellenberger, Joseph Torres

Advertising Production Manager
John Weinberg

Editorial Offices
e-mail: joaed@aicpa.org

Advertising Office

Classified Ads
Russell Johns Associates, Inc.
e-mail: joa@rja-ads.com

Catherine Allen, Kenneth D. Askelson, James Bean, John C. Boma, Steven J. Brown, Jolene C. Brucks, Thomas F. Burrage, Linda Burt, J. Gregory Bushong, R. Patrick Cargill, Benson J. Chapman, Rosemarie T. Dunn, Thomas Emmerling, Elizabeth Fender, Robert J. Freeman, Kim Gibson, Alan Glazer, Randi K. Grant, Patrick T. Hanratty, DeAnn Hill, James E. Hunton, Sandra Johnigan, Susan S. Jones, G. William Kennedy, Frank J. Kopczynski, Jeffrey B. Kraut, Dennis B. Kremer, Alan Levin, John Lewison, Joseph P. Liotta, Mano Mahadeva, Jane M. Mancino, Benjamin F. Mathews, David McIntee, Anita Meola, Debra Mitchell, Roger H. Molvar, Brenda Morris, Craig Murray, Glenn Newman, Lyne P. Noella, Edward T. Odmark, Mary P. Ricciardello, Mark L. Richardson, Marshall B. Romney, Steven E. Sacks, Peggy Scott, Carolyn Sechler, Gary Shamis, Ivan J. Sotomayor, Alan Steiger, Paul C. Sullivan, Barry S. Sziklay, Gary R. Trugman, Robert Willens, Mark A. Yahoudy, Alan S. Zipp
Accounting: John Althoff, J. Gregory Bushong, Alan Glazer, Russell Golden, Debra Mitchell, Daniel Noll, Edward T. Odmark, Alan Steiger; Auditing: Catherine Allen, Susan S. Jones, Charles E. Landes, Joseph P. Liotta, Douglas Prawitt, Thomas Ratcliffe, Edward T. Odmark, Ivan J. Sotomayor; Business & Industry: Kenneth D. Askelson, Stuart R. Benton, Benson J. Chapman, Jeffrey B. Kraut, Alan Steiger; Business Valuation/Litigation Services: Thomas F. Burrage, Robert Gray, Edward Mendlowitz, Robert F. Reilly, Linda Trugman; Personal Financial Planning: John C. Boma, R. Patrick Cargill, Thomas Emmerling, Patrick T. Hanratty, Peggy Scott, Mark A. Yahoudy; Practice Management: Richard V. Kretz, Bea L. Nahon, William Pirolli, Carolyn Sechler, Gary Shamis; Tax: Steven J. Brown, Benson J. Chapman, DeAnn Hill, Sidney Kess, William Stromsem, Steven Thompson


Implementing a global statutory reporting maturity model

Assess your organization's capabilities and progress toward an ideal state of global statutory reporting. Sponsored by Workiva.


Black CPA Centennial, 1921–2021

With 2021 marking the 100th anniversary of the first Black licensed CPA in the United States, a yearlong campaign kicked off to recognize the nation’s Black CPAs and encourage greater progress in diversity, inclusion, and equity in the CPA profession.