Tuesday, December 27, 2005

Final Post of 2005

Over the final few days of this year, I plan to compete in a bridge tournament with my wife and in-laws; hopefully, I will reach Life Master before 2005 comes to a close. Barring MAJOR developments; therefore, this will be my last post of 2005.

I thank each of you who read this blog, especially regular readers. A special thanks to those bloggers who have encouraged me by linking to Tick Marks, writing encouraging comments or both. Thanks also for the Carnivals (especially Catnival of Personal Finance) for letting me be a participant on a number of occasions. Singer Paul Davis (Cool Night, Do Right, '65 Love Affair, Sweet Life, etc.) once wrote on the liner notes of an album (I think Ride 'Em Cowboy) "If I am worthy, Lord, let me be heard; if I am heard, Lord, let me be worthy." I am not sure that I am ready for that standard yet; hopefully, I will be there by the end of next year.

Speaking of next year, I hope and intend to improve my writing; upgrade computer skills (including better understanding of hypertext language) and add or reintroduce features to this blog. Among the features I hope to return at some point during the year are the monthly calendars and "Best of Blogs". While I may have reason to use "fisking" at some point[s], I would rather commend what is good than criticize what is gross. I am open to suggestions that may improve Tick Marks as well.

Friday, December 23, 2005

The First Christmas Gift

Christmastime is a complex and even confusing time--exhortations of good cheer mix with stress and frustration, generousity combines with gifts of obligation, desire to be with family and perhaps at worship conflicts with social and professional responsibilities. To help clear the mind, it may help to remember the initial gift of the season--a group of very devout men who traveled from the Tigris/Euphrates region and provided gifts befitting royalty--gold, incense and myrrh--to Jesus's parents. These gifts had several facets: (1) they were voluntary, not compulsive, (2) they were to mark the importance of the event--though not of the Hebrew faith, the traveling men were convinced that this birth was spiritually of massive importance, (3) they were appropriate, both as to content and as to use--some believe that Joseph's escape to Egypt to avoid Herod's subsequent wrath was financed by selling at least part of these gifts.

Review of Recent Tax News

Several stories from Tax Analysts caught my attention recently: in one case, the IRS stated that individual tax collections were down (though taxable income was up) based on 2001 and 2003 tax cuts and that about half a million taxpayers were newly subject to AMT. A second story mentioned that members of Congress had attached a rider to a Defense bill which would prevent the IRS from cutting back telephone service hours. A third article discussed objections by Max Baucus (D-MT), ranking member on the Senate Finance Committee, to motions to proceed with the tax reconciliation legislation recently passed. From WebCPA comes a story from the U.S. Department of Commerce that taxpayers underreported taxable income by close to $1 trillion (about 1/8 of all income was not reported according to the article). All articles can be linked at right.

Twelfth Blog of Christmas

This choice surprisingly was almost as difficult as the final law blog (eighth blog). By this time next month, I might choose BSG CPA Trendlines, Provident 360 Audit or Solo Accountant Reporter, but at this point in time Vanilla Accounting gets the vote. Will Keller seems to write from the perspective of providing an enterpeneur the accounting advice he or she needs to get going. Some of the best recent posts include: "Advice for Selling Your Business" and "Overview of Types of Financing."

Thursday, December 22, 2005

Eleventh Blog of Christmas

Leaving the truly tough decision until tomorrow, I will go with CPA Firm Technology blog by fellow Tennessean Brian Tankersley for the third accounting blog of the series. While the blog has fewer entries per week than I would prefer, the quality of entries is good and Mr. Tankersley writes on material that I am not proficient in. Some of his best recent posts include: "Men's Day Approaching, Podcasts and Other WWW Stuff" and "QB 2006: Setting Up Multiple Users, New SQL DB."

Tuesday, December 20, 2005

Tenth Blog of Christmas

Jack Ciesielski of Baltimore runs AAO, an accounting blog which covers a wider topics of topics (special emphasis on auditing) than Footnoted; nevertheless, both blogs emphasize evaluation of management performance of larger corporations. Also, like Footnoted, AAO has been widely cited as one of accounting's best blogs by publications such as Business Week and Wall Street Journal. Among the better recent posts would be: "Multiple Filing Deadlines: No Way to Reduce Filing Complexity" and "Turley Talks."

Monday, December 19, 2005

Ninth Blog of Christmas

New Yorker Michelle Leder is in charge of this accounting blog, which primarily combs financial statements of larger corporations for unusual and, in many cases, disturbing tidbits--most notably, excessive management or director compensation. Footnoted has been cited by Business Week and the Wall Street Journal for its quality. Among the better recent posts were "What's a Life Worth" and "Oops, They Did It Again."

Sunday, December 18, 2005

Eighth blog of Christmas

The final tax blog was almost certainly the toughest call; I easily could have gone with Death and Taxes, Tax Guru or perhaps one of the other blogs listed in the tax section. Law Professor James Maule, however, consistently comes up with creative insights, and even when I disagree I have to acknowledge that the point of view is reasonable. Some of his best recent posts include: "How Much Tax Revenue is Required?" (required reading for anyone with even mildly libertarian tendencies) and "In Congress, It's Already Holiday Tax Gift Time."

Friday, December 16, 2005

Seventh blog of Christmas

Among the "must see" blogs in the tax area is TaxProf, operated by Paul Caron, who is a law professor at the University of Cincinnati. Somewhat like this blog, Dr. Caron does more linking than original content, though he is more likely to expound on a linked article than I am. Dr. Caron has been well-respected, in addition to almost all tax bloggers, he is often linked by Glenn Reynolds at Instapundit. His blog also provides excellent links to law faculty in the tax area. Some of the better recent posts include "Tax Policy Releases Revenue and Distributional Impacts of Current Tax Law" and "Tax Terrorists."

Thursday, December 15, 2005

Sixth Blog of Christmas

The second tax practitioner blog is operated by Californian Russ Fox. For the most part, the blog gives general tax advice with some commentary of tax-oriented news. Mr. Fox probably is most famous for his series of tax advice on poker winnings this past September. Among his best recent posts are "No Records, But a Big Heart (And a Wonderfully-Written Decision)" and "The Deduction from Hell (Corporate Taxes)."

Do Investors Know What They Are Doing?

A Securities Investor Protection Trust quiz about investor "survival" skills indicated mixed results. Only about one fifth of investors engaged regularly in reading prospectuses, checking the disciplinary record of brokers and having a financial plan with men doing marginally better than women. One good point: almost three-quarters of those surveyed had a reasonable understanding of the value of diversification.

"Sin Taxes" Snag Katrina Relief

Legislation expected to be considered in the Senate today to provide tax incentives to rebuild the Gulf Coast after the hurricanes of last summer has been stalled over a dispute as to whether casinos, liquor stores and massage parlors should be eligible for the tax breaks. The Senate voted to remove the tax preferences but Ways and Means chair William Thomas (R-CA) has threatened to send the legislation to conference committee if the incentives are gutted. Senator Trent Lott (R-MS) says that a compromise is being considered where the casinos would be omitted but noncasino portions of a casino (as well as hotels, restaurants and theaters) could qualify.

I hope Senator Lott's compromise is success. While no big fan of tax incentives for casinos (and even less of one for massage parlors), this is no time for Congress to moralize while Gulf Coast residents are trying to rebuild their lives.

Democrat Tax Writers Propose Tax Reform Plan

House Ways and Means Committee member Rahm Emanuel (D-IL) has endorsed the Fair Flat Tax Act written by Ron Wyden (D-OR). The Wyden bill proposes three tax rates (15%, 25%, 35%) combined with (presently unspecified) reductions in tax incentives. The bill also proposes condensing education incentives into a single credit, child-related tax breaks into a family credit and combining various IRA accounts into a single pension provision. Rep. Emanuel says that the bill would put earned income back on the same footing as investment income (capital gains,etc.) but acknowledges that the Democratic leadership has yet to endorse the bill.

The Democrats need to pay a lot more attention to Rep. Emanuel. He is making reasonable and constructive alternatives to present Republican legislation, something that the present Democratic party MUST do a better job of on a large number of issues if they truly hope to return to power.

Wednesday, December 14, 2005

Fifth Blog of Christmas

I switch gears today from personal finance to tax-oriented blogs. Among CPA practitioners, it is likely that no one has a larger audience than Joe Kristan of Roth CPA Updates. Roth combines tax advice, insight on the ways of Iowans and the occasional political zinger, usually directed at bloated government and Mr. Kristan is no stranger to Carnival of the Capitalists and Carnival of Personal Finance. Some of best recent posts include "Got Gains? Let Your Losers Go" and "Giving Big? Don't Dawdle."

Tuesday, December 13, 2005

Fourth Blog of Christmas

The fourth in the series of blog reviews is of Frugal for Life. While other personal finance blogs look at investing, economics or even charitable giving, Dawn keeps her focus on frugality. Although her blog is relatively new, she has already hosted several Carnivals of Personal Finance. Among her best recent posts were "Repairing Your Credit" and "Are You Slave or Master?"

While going through Frugal for Life, I noticed that one of the posts was about a new Carnival of Frugality. Personal finance bloggers may want to take a look-see.

New Auditing Blog

Found out about Provident360 and his audit blog from a [rare] comment. The author (Tyrone) has two other blogs in process (both heavily Biblical in nature) and 3-4 others ready to start. His blog shows early promise; if he continues to post regularly I probably will add it to my links. In the meantime, you can link the post headline to check out the blog.

Monday, December 12, 2005

Christmas-tide Carnivals

After a hiatus far longer than planned, my "ISO 22222" post from last week made the Carnival of Personal Finance #26. I will try to get info on the Carnival of Capitalists later.

Third Blog of Christmas

The third stop on our Yuletide blog tour is Free Money Finance. Again operaated by a unknown author (perhaps from Alaska?), FMF is one of the most influential personal finance blogs and a multiple host of the Carnival of Personal Finance. Some of the best recent posts include: "The Proper Perspective," "Give Smart," and "25 Extreme Energy-Saving Tips, Part 4."

Saturday, December 10, 2005

Second blog of Christmas

Continuing this series, the next blog is Financial Rounds. The author, an anonymous married man and father who teaches finance somewhere on the Atlantic Coast, combines academic and personal finance insights and almost every week gives his picks of the best postings in the Carnival of Capitalists and Carnival of Personal Finance. Two of his best recent topical posts were "Slogging toward the End of the Semester" and "More Interviewing Advice" (his "Chronciles of Narnia" post, while off-topic, was a good and thorough review of the new Disney movie).

Friday, December 09, 2005

"First Blog of Christmas"

In the first of a series based on the familiar Christmastime song, Consumerism Commentary is the first blog. Author Flexo is the initiator of the Carnival of Personal Finance. Some of his best recent postings are "Backfired Bankruptcy Bill" and "The Most Indebted Generation."

Apprentice Also-Ran Better for Having Tried but Lost

David Karandish, a Washington University (MO) graduate and already successful enterpeneur, was fired from Martha Stewart's Apprentice. His interview had a number of interesting insights, including the value of networking and the expansion of connectivity between people, even throughout the globe. He keeps a blog and says that blogs are a way of defining yourself.

Fair Tax Carnival

For those who read this and favor consumption-based taxes (especially those with tax or personal finance orientations), I thought you would enjoy a link to this new carnival scheduled for each Friday. As is often the case, I initially found out about this through www.instapundit.com.

Thursday, December 08, 2005

ISO 22222: Guidance for Personal Financial Planners

The International Standards approved ISO 22222 as a satisfactory standard of personal financial planning for about 150 member countries. At the moment, the standards is voluntary both for member countries and for personal financial planners but the standard can be incorporated into binding contracts and is available for passing as legislation. ISO Committee members indicated that they would be open to revision if stakeholders found the standard unsatisfactory.

At the very minimum, personal financial planners, CPA firms and academics teaching personal finance courses will want to read and reference the standard. Time will tell whether this standard has the impact of the 9000-series quality standards. Some information is available at the ISO site linked above. Elements included are compentencies, ethical standards and experience expectations.

I acknowledge with thanks WebCPA (http://www.webcpa.com/article.cfm?articleid=16532) for the article on this action.

HoR votes for $56 billion in Tax Cuts

Following a script written weeks ago, the House of Representatives passed (234-197) a $56.1 billion bill extend a number of business tax breaks set to expire and, more controversially, extend reduced capital gain and dividend rates. The Conference Committee faces an uphill battle, last month's Senate, though of similar size, left out the dividend and capital gain material and instead included a short-term solution to "AMT creep" and certain incentives for rebuilding the Gulf Coast after hurricane season.

Wednesday, December 07, 2005

SEC Head Cox: Accounting Rule Complexity Hides Fraud

SEC Chairman Christopher Cox argued today that the complexity of accounting and auditing standards contributed to the fraud problems earlier in the decade. Cox argued that compliance with highly technical standards was used against investors instead of being used to protect investors and indicated that the PCAOB, SEC and FASB were looking at ways to streamline rules. One concern expressed was to reduce the number of sources of accounting standards. In a semi-related development, Cox also showed discomfort with the dominance of "Big Four" firms in public company audits and stated a desire to make it easier for non-Big Four firms to audit publicly-traded firms.

Cox could not have given small CPA firms and those favoring "Big GAAP, Small GAAP" a larger Christmas present. Reduction of complexity is certainly a desirable goal (see the Internal Revenue Code), but some researchers will be concerned that greater numbers of public company audits by mid-to-large firms as opposed to the Big Four may dilute audit quality. Time alone will tell whether these fears have merit.

Update: The Accounting Observer (http://www.accountingobserver.com/blog/2005/12/the-complexity-conundrum/) has some useful additional comments.

Monday, December 05, 2005

Colors of the Season: Green Hedges and Red Tape?

The growth of hedge funds have attracted the interest of government regulators. Although new proposed Fed chairman Bernanke gives them his blessing, many in bureaucratic circles see hedge funds as wild, risky and ripe for government intervention. Hedge Fund managers must be registered with the SEC next February and well-known politicans such as Paul Sarbanes and Elliott Spitzer favor greater regulations. The authors feel that this would be a tragedy: in their view, hedge funds have been a catalyst for market globalization and have served a valuable role in cleaning up market failures. A further complaint is that hedge fund regulation would primarily serve to drive the funds out of the US.

By its nature, hedge funds are no more suited to complex regulation than a 19th century cowboy is to a desk job in a large city. At the same time, clear disclosures of the nature and risk of hedge funds must be provided to prospective investors.

Friday, December 02, 2005

Get Ye to a CPA (or EA or Tax Attorney or Tax Service)

Most people do not start thinking about contacting their tax preparer until late January at the earliest, but this often is a good time to have a pre-season meeting. First of all, there may be financial decisions with consequences that need to be made before December 31, such as: does it make sense to double up on mortgage payments, property taxes or charitable contributions to qualify for itemized deductions or should I give cash or the family pool table to the church's new recreation center. Secondly, if you have significant non-wage income, it may be important to make an estimated tax payment by January 17. Third, tax experts generally have more time to listen now if you have concerns about an unusual transaction. Fourth, they may be able to give you ideas on how to organize your records to help save their time and your money later (billing rates for professional tax preparation aren't cheap). Finally, they may point out new deduction or credit opportunities based on developments during the year; two examples might include moving expense deduction if you relocated to another city or credits available if your daughter is finishing her first semester at Central Tech University (a hypothetical institute of higher learning).

IU Researcher: Internal Control Pays

Assistant Professor Leslie Hodder of IU-Bloomington, along with co-researchers Messod Beneish and Mary Billings, have recently published results indicating a drop of 1.5-2% (closer to 3% without a Big Four auditor) if a company discloses internal control weaknesses in compliance with Sarbanes-Oxley requirements. She attributes the drop to either greater perceived risk or costs needed to correct the problem. A point of emphasis is that the drop occurs even if the financials receive an unqualified opinion.

In the ongoing debate over whether costs of Sarbanes-Oxley exceed benefit, this research clearly will buttress those supports the SEC, PCAOB and others which favor the new regulations.

(Wheeler and) Dealer's Choice

Supermerger experts such as Pete Correll, John Eyler, Bruce Hammonds and James Kilts received packages approaching and, in some cases exceeding, $100 million. The question becomes, good value for the money or extravagance for the sake of extravagance? Many, including a former director of Gillette, see the megapayments as obscene; others consider this a cost of getting a merger done.

Much of what was included in this article probably was familiar to www.footnoted.org readers. Certainly, at this level of dollars, shareholders, employees and others deserve a board of directors which is heavily scrutinizing any deals made to assure that the deal is in the best interest of shareholders and other stakeholders and not just the executive team.

My blog is worth $7,903.56.
How much is your blog worth?