The European Union adopts a provision requiring EU-listed companies, including banks and insurers, to prepare their financial statements, beginning in January 2005, in accordance with international accounting standards ( www.fee.be/european/eunews.htm ). European regulators believe the directive will increase the reliability, transparency and comparability of member states’ consolidated accounts, thus promoting
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TOPICS
Tax
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. To increase efficiency the Financial Accounting Foundation, which oversees and funds the Financial Accounting Standards Board, changes FASB’s voting requirement to
Securities
The SEC proposes amendments to rules governing mutual fund advertisements, which the commission says may give investors the false impression that funds’ occasional high returns typify their overall performance ( www.sec.gov/rules/proposed/33-8101.htm ). The changes would require the ads to disclose that a fund’s past results do not guarantee future returns,
Line Items
Under the act, a victim’s federal income taxes are forgiven for the year of the terrorist attack and for the preceding year. The minimum refund is $10,000—even for victims who owed no taxes. Publication 3920 contains worksheets CPAs can use to help victims and their families determine the amount of
Technology
The AICPA top technologies task force releases its annual ranking of noteworthy issues ( www.aicpa.org/news/2002/p050702.htm ), putting business and financial reporting at the head of its list. Training and technology competency placed second. With information and security controls in third position, the ranking clearly reflects the effects of Enron’s fall
Defining an Involuntary Conversion
TAX CASE The tax law provides relief for taxpayers that reinvest money obtained from an involuntary conversion. Because the nature of involuntary conversions varies in different industries, taxpayers constantly confront new situations. The Tax Court recently considered the question of an involuntary conversion in the timber industry. Willamette Industries is
The Industry Issues Resolution Program
n recent years, the Internal Revenue Service has made a concerted effort to give both business and individual taxpayers options for resolving tax controversies earlier in the return filing and collection process. For business taxpayers, it set up—now on a permanent basis—an industry issue resolution (IIR) program, to settle some
Education Expense Deduction: “Unemployed” Taxpayer May Be “Employed”
TAX BRIEF In today’s economy, thousands of people are unemployed. While looking for work, many have returned to college to improve their skills and to make themselves more competitive in the job market. It’s likely many of these taxpayers are unsure if they can deduct the cost of this education
Banking
Federal Reserve regulators are taking a closer look at the effectiveness of both internal and external risk management audits at a number of banks, says board governor Mark W. Olson. Speaking at the Bank Administration Institute’s April audit, compliance and electronic security conference, Olson questioned—in view of some banks’ recent
IRS Expands Replacement Property in 1031 Exchanges
TAX BRIEF INDIVIDUAL The IRS released revenue procedure 2002-22 in March to address the use of fractional ownership interests as replacement property in IRC section 1031 exchanges. Commonly referred to as “tenancy-in-common” or TIC interests, these fractional interests offer significant advantages to taxpayers completing 1031 exchanges. Under section 1031, a
Financial Reporting
The SEC proposes disclosure requirements pertaining to companies’ adoption of accounting policies that could materially affect their financial statements and to the estimates they make in applying such policies ( www.sec.gov/rules/proposed/33-8098.htm ). The commission recommends the companies explain in their annual reports and in registration and proxy information statements the
Auditing
The AICPA SEC practice section issues guidance titled Assessing the Effect on a Firm’s System of Quality Control Due to a Significant Increase in New Clients and/or Experienced Personnel ( www.aicpa.org/download/secps/020508_practaid.pdf ). Drawing from existing AICPA professional literature, the SECPS created this practice aid to help audit firms identify and
Tax Breaks Leaves States Wanting
TAX MATTERS Source: Tax Analysis, www.tax.org.
FYI
David M. Walker, comptroller general of the United States and head of the GAO, appoints 10 new members to three-year terms ( www.gao.gov/govaud/newmem02.htm ) on the watchdog agency’s advisory council on government auditing standards (the yellow book), replacing those whose terms have expired. The SEC names Lawrence E. Harris its
International
The International Federation of Accountants establishes the International Auditing and Assurance Standards Board ( www.ifac.org/IAASB ) to replace the International Auditing Practices Committee. The new body provides guidance on audit and assurance functions and works to improve uniformity of practice throughout the world. In one of its first actions, the
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. FASB staff members issue implementation guidance ( www.fasb.org/q&a87.pdf ) on FASB statement no. 87, Employers’ Accounting for Pensions. The advisory addresses
Weighing Tax Authorities
TAX CASE With the increased availability of electronic tax research services, CPA tax practitioners have easier access to potential authority to support positions their clients want to take. In addition to revenue rulings, there also are field service announcements (FSAs) and general counsel memorandums (GCMs), among others. After finding one
IRS Recharacterizes Distributions as Wages
TAX CASE To avoid federal employment taxes, S corporations may be tempted to understate the wages and salaries of employee/shareholders. The IRS however, may recharacterize what S corporations classify as nontaxable distributions as wages and salaries subject to employment taxes. For an employee/shareholder who earns wages or salary of $84,900
Good-Bye Government Surplus
TAX MATTERS Source: Tax Foundation, www.taxfoundation.org .
Retirement
The Social Security board of trustees, in its 2002 annual report to Congress ( www.ssa.gov/OACT/TR/TR02/index.html ), says long-range program deficits remain although the short-term outlook has improved. According to the report, tax revenue will fall below program costs in 2017—one year later than the board estimated in 2001. The board
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