FASAB Amends Standards for Federal Loans and Loan Guarantees In May, the Federal Accounting Standards Advisory Board issued two pronouncements dealing with federal agency loans and loan guarantees. The intention of Statement of Federal Financial Accounting Standards no. 18, Amendments to Accounting Standards for Direct Loans and Loan Guarantees, is
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Audit & assurance
IRS Adds New Third-Party Letters
In the past, the IRS has been accused of using third-party letters to pressure taxpayers into disclosing certain information or into settling disputes. Afraid that friends, family or business associates would be contacted by the IRS, taxpayers often caved in. The IRS Restructuring and Reform Act of 1998 requires that
When to Deduct Annual Expenditures
Many corporate taxpayers incur expenditures that provide a benefit in both the current and the following tax year. For accounting purposes, a company would simply allocate the expenses between the two periods. The tax treatment, however, is less certain. IRC section 162 permits taxpayers to deduct all ordinary and necessary
Installment Sale Reporting for Accrual-Method Taxpayers—Gone But Not Forgotten
To raise the revenue needed to extend the research and development credit and other tax breaks, Congress repealed installment-sale reporting for accrual-method taxpayers in section 536(a) of the Ticket to Work and Work Incentives Improvement Act of 1999. As a result, IRC section 453(a)(2) now says accrual-method taxpayers must include
Line Items
IRC sections 263(a) and 263A generally require taxpayers to capitalize all costs related to the installation or production of an asset. However, newly issued revenue ruling 2000-7 (IRB 2000-9) allows businesses to currently deduct the costs of retiring and removing old assets even though the costs were incurred while installing
Don’t Be Passive
In the 1980s taxpayers often created losses by structuring transactions to generate accelerated depreciation, interest and other deductions, which they used to offset other earned and unearned income. As a result, Congress enacted the IRC section 469 passive activity loss (PAL) rules, specifically designed to limit a taxpayer’s ability to
Standards for Tax Services Proposed
The AICPA tax executive committee recently published exposure drafts of proposed Statements on Standards for Tax Services (SSTSs) and an interpretation of SSTS no. 1, Tax Return Positions. Although the guidelines, issued by the tax executive committee as Statements on Responsibilities in Tax Practice (SRTPs) between 1964 and 1977, have
More Thoughts About Indexing
While the article, “The Quest to Outperform” ( JofA, Jan.99, page 32) made some valid points about indexing, the author puts the cart before the horse. The investment process does not begin by deciding what funds to invest in or whether or not to index. The process begins by identifying
For Tax-Qualified Long-Term-Care Insurance
I read with interest “Buyer Beware” ( JofA, Aug.99, page 27), but I believe the author’s arguments against tax-qualified long-term-care insurance plans are outdated. Based on my experience in the long-term-care industry, I present the following arguments for tax-qualified plans, which were not mentioned in the article: The IRS considers
Let’s Reassess Accounting Standards
There comes a time for any set of rules when a thorough in-depth review is appropriate and necessary. For the accounting profession, globalization provides both the impetus and the opportunity. The profession needs to step back now and take a good, hard look at accounting standards—specifically those issued by FASB.
Analyzing the Difference
When I read “Hiring Generation X” ( JofA, Feb.00, page 55), I wondered whether Gen-X expectations are really that different. Gen-Xers do want more and will apply the leverage afforded them by a very strong economy and favorable demand vs. supply. So do I—just as I did when I got
An Employee’s Viewpoint.
“Staying Off the Cover of Time” ( JofA, Feb.00, page 31) discussed the recent turmoil surrounding pension plan conversions, with particular emphasis on IBM’s recent difficulties. As a multi-degreed IBMer for more than eighteen years, I’d like to offer an employee’s perspective on what happened and what enraged employees to
About Billing Standards and Fees
Our profession needs to establish “ethical billing standards” that in essence would force accounting professionals to charge a statutory fee for providing assurance services. Barring professionals from underbidding jobs would reward those who conform to the standards of the profession. The current competitive bidding process does not take into account
New AICPA Credential Focuses on IT-Savvy CPAs
The AICPA is introducing the certified information technology professional (CITP) designation, which recognizes CPAs who can provide skilled advice on using IT to implement business strategy. The Institute will begin accepting applications for CITP certification July 1, 2000. At its fall meeting, the AICPA governing council approved the designation, which
SECPS to Strengthen Peer Review Process
The SEC practice section peer review process task force has issued a report containing recommendations to strengthen the peer review process to help it keep pace with changes in the accounting profession. Mike Conway, chairman of the SECPS executive committee, which approved the task force’s proposals after they were made
Not All CPAs Cover the Same Territory
After reading “Who Are We as a Profession—and What Must We Become?” ( JofA, Feb.00, page 81) I’m very concerned. At this point, to be a CPA is to be multidisciplined. However no one person can be fully knowledgeable in all aspects of the profession. The point of the article
Independence Standards Course Offered on CD-ROM
The AICPA is introducing Independence, a CD-ROM CPE course that reviews the Institute’s authoritative literature on independence standards, including newly issued SECPS requirements; SEC independence regulations; and Independence Standards Board standards. The six-hour interactive course features testing and review modules, an extensive reference section, a glossary of key terms, links
Early Retirement Benefit Overlooked
“Coping With Retirement” ( JofA, Dec.99, page 67) ignores the most important benefit available to workers who retire before age 59 1/2 with 401(k) plans and IRAs and need additional income to supplement their pensions before Social Security benefits kick in. The article states most arrangements provide a penalty for
On Fraud and CPAs
I enjoyed reading “To Catch a Thief” ( JofA, Mar.00, page 43) because the information is presented in a way that’s particularly accessible to CPAs. Also, the article underscores the gap between the limited work that CPAs can do to find fraud and what people believe they can do. Most
Best Practices for E-Commerce Self-Defense
Attacks on e-commerce Web sites have online merchants in a cold sweat over downtime-induced revenue losses. But Web-savvy CPAs can help clients by offering these e-sabotage prevention tips. Conduct a risk assessment of the enterprise. If possible, do it before implementing technical controls so that weaknesses can be eliminated before
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