CPAs score high on Worth’s annual ranking of the nation’s top financial advisers ( www.aicpa.org/news/2002/p071002.htm ). Of the 250 preeminent professionals that are listed in the magazine’s July/August issue, 59 (24%) are CPAs and 46 (18%) are CPA/PFS practitioners. The secretary of the Treasury, the director of the Office of
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Tax
International
The International Accounting Standards Board (IASB) publishes an exposure draft ( www.iasb.org.uk/cmt/0001.asp?n=67&s=1011265 ) intended to improve two international accounting standards related to accounting for financial instruments: IAS 32, Financial Instruments: Disclosure and Presentation and IAS 39, Financial Instruments: Recognition and Measurement. Although the IASB’s goal ultimately is to develop a
Accounting
For news from the AICPA and state societies, visit www.cpa2biz.com , which also offers online CPE, AICPA professional literature, practice management aids and links to state society Web sites. AcSEC exposes a draft statement of position, Accounting for Derivative Instruments and Hedging Activities by Not-for-Profit Health Care Organizations, and Clarification
Line Items
The Long Arm of the Law In United States v. Craft (S.Ct., 4/17/2002), 89 AFTR2d 2002-2005, a taxpayer owed the government nearly $500,000 in back taxes. To protect its claim, the IRS attached a federal tax lien under IRC section 6321 to “all property and rights to property, whether real
Clarifying Unrelated Business Income
TAX CASE Although tax-exempt organizations are exempt from federal taxation on their principal activity, they must pay tax on any unrelated business income. Numerous court cases have considered what constitutes unrelated business income. Recently the Eighth Circuit Court of Appeals clarified the taxation of royalty income. The Arkansas State Police
Fraud
A GAO report ( www.gao.gov/new.items/d02676t.pdf ) on the use of purchase cards at the Education, Navy, Agriculture, Interior and Transportation departments reveals internal control weaknesses permitted thousands of unauthorized or questionable transactions between 1998 and 2001, involving potentially millions of dollars in waste and abuse. The watchdog agency discovered failures
Some Severance Not Subject to Employment Taxes
TAX CASE Over the past decade, many businesses have had to downsize their workforce to stay competitive. Severance payments to workers generally are considered wages subject to withholding for Income taxes under IRC sections 3401 and 3402. Federal Insurance Contributions Act (FICA) under IRC section 3121. Federal Unemployment Tax Act
New Break for Teachers
Teachers and professional educators get a tax break for 2002 and 2003 that should ease the pain of many out-of-pocket classroom expenses. The Job Creation and Worker Assistance Act of 2002, section 406, allows teachers and other education professionals to deduct up to $250 of unreimbursed classroom expenses. The deduction
Education
The AICPA and NASBA sign an agreement with Prometric, a designer of technology-based testing services, under which CPA candidates will be able to take a computerized uniform examination at more than 300 locations in early 2004 ( www.aicpa.org/news/2002/p052802.htm ). The electronic test will differ from its paper predecessor not only
Corporate Governance
The Business Roundtable, a trade group representing 150 of the nation’s largest companies, issues Principles of Corporate Governance ( www.brtable.org/pdf/704.pdf ). The publication provides a set of best practices for senior management, the board of directors and others in the corporate hierarchy to ensure companies comply with applicable regulations and
Government Accounting
GASB issues Statement no. 39, Determining Whether Certain Organizations Are Component Units ( www.gasb.org/news/nr052802.html ). Under it state and local governments with certain fundraising organizations, such as not-for-profit foundations that have a relationship with public universities and/or school districts, must include in their financial statements separate presentations of those subordinate
It’s Costly to Comply
TAX MATTERS Source: Tax Foundation, www.taxfoundation.org.
Professional Issues
The AICPA professional ethics executive committee issues an exposure draft ( www.aicpa.org/members/div/ethics/ed020617.htm ) with revisions of five independence interpretations and/ or rulings. The proposed changes relate to trustee or executor relationships with clients, former practitioners and firm independence, relationships with entities included in government financial statements, auditors of insurance companies
When the SEC Knocks….
EXECUTIVE SUMMARY WITH INCREASING NUMBERS OF CPAs OFFERING investment services, more are registering with the SEC as investment advisers and facing field examinations from the SEC Office of Compliance Inspections and Examinations (OCIE). These investigations determine whether the adviser is complying with the Investment Advisers Act of 1940, protect
Tax Notes
The IRS is performing better than it did in 1999, according to an independent review George Washington University and the magazine Government Executive conducted ( www.irs.gov/pub/irs-news/ir-02-62.pdf ). Contributing significantly to the service’s overall grade of B minus (up from C) was its information technology division, which improved its rating to
Employee Benefits
The Department of Labor made final a rule ( www.dol.gov/pwba/regs/fedreg/final/2002008499.htm ) giving employee benefit plan administrators the option of using e-mail, the Internet and other computer-based systems for making, to participants and beneficiaries, disclosures required by the Employee Retirement Income Security Act of 1974 (ERISA). Under the provision, which takes
Financial Reporting
The SEC proposes rules requiring CEOs and CFOs of publicly traded companies to certify their organizations’ quarterly and annual reports are accurate, timely and contain all the information a “reasonable” investor would consider “significant” ( www.sec.gov/news/press/2002-88.htm ). The rules also would cut to two business days—from the current five to
Auditing
The auditing standards board issues SAS no. 97, Amendment to Statement on Auditing Standards (SAS) no. 50, Reports on the Application of Accounting Principles. The new statement (see Official Releases, page 90), which is effective for written reports issued or oral advice provided on or after June 30, amends SAS
Determining the Form of Doing Business in Canada
August 2002 > From The Tax Adviser Unexpected problems for companies operating as LLCs. From The Tax Adviser: Determining the Form of Doing Business in Canada ith its undervalued currency, stable economy and easy access, Canada appears to be the perfect place in which to start a
FYI
The Financial Accounting Standards Advisory Board issues Implementation Guide to the Statement of Financing in Statement of Federal Financial Accounting Standards No. 7, Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting ( www.fasab.gov/pdf/ig7sof.pdf ). It illustrates concepts underlying the statement of financing, in
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