BNA Expands Portfolios to Accounting & Auditing

BNA, which has been publishing portfolios on tax issues for many years, just announced a project where would publish a series on Accounting Policy and Practice for the use of accounting, legal and financial professionals. The series will be designed to "provide guidance in a post-Sarbanes-Oxley environment"; more specifically, a breakdown of accounting rules, summary of available options and justifications for approach chosen on such issues as revenue recognition, assessing audit committee effectiveness on SOX and handling auditor ligitation liability issues. In addition to the company's signiture portfolios, the service will provide biweekly topical material and special reports.

Many tax professionals swear by BNA; it will be interesting to see if the accounting portfolios achieve a similar level of popularity. Another question, will Lexis-Nexis, which recently announced a partnership with BNA on distribution of tax materials, have a similar arrangement with these new accounting materials?

Go Home, Accounting Firms

While demand for professional accountants and financial planners increase, the Northeast finds an acute shortfall of qualified talent. One approach to solving the shortfall--hire stay-at-home moms and retired accountants as part-time employees. Not only do women and retirees have the skills and work ethic required for the job, but the marketplace has tended to overlook part-time professional employees. The employees, on the other hand, appreciate the work schedule flexibility, the reasonably good pay and the chance to reuse their skills.

I have some bias on this issue, as my wife worked part-time when I was teaching in Alabama 10 years ago. Hopefully, more firms will consider part-time employment for professional as well as non-professional employees.

AGA Generally Endorses Proposes Changes in GAGAS

The Financial Management Standards Board arm of the Association of Governmental Accountants (AGA) has issued comment on proposed changes to Generally Accepted Governmental Accounting Standards. Although there are places where the FMSB feels that clarification is needed, the FMSB generally is positive toward the changes. Particularly positive comments were made in regard to the "Citing Compliance," and the proposed adaption of ASB 103 regarding weaknesses and deficiencies in internal controls. Nonaudit services, peer review and performance audit/risk assessment material, though still generally commended, received more guarded praise.

A Disturbing Possibility

The Senate Subcommittee on Small Business and Enterpeneurship unanimously approved two proposals would make it easier for large businesses to get Small Business Administration monies. One proposal would allow large companies to acquire small companies participating in the Small Business Innovation Research Program while the other would redefine "small" businesses to have up to 1,500 employees. Each proposal was resoundingly (over 90%) opposed by those participating in a public comment process last year. Previously, SBA monies have been found to be received by such "small" companies as AT&T, Lockheed Martin and Microsoft.

It must be emphasized that this is only a Senate Committee vote, though the fact that the vote was unanimous leaves little excuse opportunities for either Democrats or Republicans on the committee. The possibility that a 1,400 employee business could get SBA funding is yet another reason that government is a shaky reed to count on if you are looking for fairness, another reason to wonder why so many believe that big government will solve America's ills and a reason to call forth the Porkbusters.

IRS Issues Regulations on Tangible Assets--What to Capitalize

(Post #500) The Treasury Department and Internal Revenue Service issued proposed regulations designed to clarify the treatment of costs associated with the production, purchase or sale of tangible long-lived assets. The regulations, heavily based on case law, address such issues as whether to capitalize or to expense expenditures made subsequent to initial purchase. Additionally, estimated life of assets and actions prolonging estimated life were addressed. Not addressed was a de minimis provision for small tools; the IRS specifically asked for comments on this issue. The written comment period for the proposed regulations runs through November 20 with a public hearing scheduled for December 19. Up soon--costs to capitalize for computer software and acquisitions made through issuing stock.

Hopefully, the final regulations will address the de minimis issue in a reasonable manner. It is not clear whether the estimated life determinations will apply primarily to MACRS lives or to ADS/AMT lives.

AICPA Lauds Best of Accounting Bureaucrats

The American Institute of Certified Public Accountants tapped three accountants from the public sector as its Outstanding CPAs in government. Honorees included Jeffrey Steinhoff of the GAO (Managing Director of Financial Management and Assurance) who played a leading role in the Chief Financial Officers Act of 1990 and as been part of activities saving $36 billion over the last five years; Craig Watanabe, administrator of Hawaii's Captive Insurance program, which has more than tripled in size during the last 20 years and Carla Sledge, chief financial officer of Wayne County (think Detroit), MI who was able to reduce county spending by $50 million without raising property taxes or reducing services to the citizenry. The awards were recently made at the AICPA National Governmental Accounting and Auditing Update Conference in Washington, DC.

Congratulations to all winners on their accomplishments. Oh, that we can find more Steinhoffs and Sledges to keep government spending under control!

"Double Your Pleasure, Double Your (Carnival) Fun

For the second time in three weeks (and probably the last time for awhile) posts from the past week made two separate carnivals: the "Party Hardy" post was included in the Carnival of Investing
(http://www.bargaineering.com/articles/carnival-of-investing-36.html)
and the "More Insurance" post in the Carnival of Personal Finance (in Dr. Zeuss form, see link above).

Other posts from the Carnival of Personal Finance include "Free to Be Stupid" from Roth CPA Updates, "Precious Little Time to Get Your Prius," from Don't Mess with Taxes, "The Best Money Moves You Can Make" from Free Money Finance and "Future Spending, Two Big Items" from Consumerism Commentary. At the Carnival of Investing, check out "Diversification: How I'm Learning the Hard Way" at My Money Path and "Real Estate Taxation" by CPA Brian Brown.

Straightening Up the Blogroll

I have reluctantly removed three blogs from the blogroll at right. Fredrick Mischler, Solo Accounting Reporter and Vanilla Accounting were all good blogs and I would be willing to reinstall any of them, but none of the three have any posts shown since April. Additionally, I considered dropping Start Making Sense as overly political, but Mr. Shivaro did have some thought-stimulating posts about the estate tax and the blogroll probably needs his left-leaning blog for ideological balance. Finally, the link to the Carnival of Taxes, which was not functioning, has been removed; in its place, I have linked to Don't Mess with Taxes, the blog which hosts the Carnival of Taxes.

On a more positive note, Rick Telberg at BSG Trendlines has a good piece on auditing challenges for state and local governments (see link above) and Tracy Coenen has good info on how to spot a fraud perpetrator at
http://www.sequence-inc.com/fraudfiles/2006/08/17/finding-a-thief-personal-red-flags-of-fraud/.

Could You Have More Insurance than You Think?

Reporter Ellen Simon stated that she had been fighting cancer for over one year when she found that her insuror, United Healthcare, provided specialized cancer benefits through a program named Cancer Resources. She was not alone; one-time HHS staffer (under President Clinton) Karen Pollitz had a similar experience and Colleen Wilbur of the American Cancer Society was also unaware of the UnitedHealthCare benefit. Simon pointed out examples from other insurors as well: Aetna covers certain highly specialized cancer treatments even if they are performed at an out-0f-network provider and Wellpoint offers the assistance of a coverage guidance specialist once cancer has been diagnosed. To access the cancer benefit as a UnitedHealthCare member, as well as other benefits which might apply for such conditions as congenital heart disease, pregnancy and kidney illnesses, go to "myUHC.com" (UnitedHealthCare homepage), go to "My Coverage and Costs," then to "Special Services." UnitedHealthCare covers as many as 48 million people according to its 2005 annual report.

In time of family health crisis, it is very difficult to keep a calm head. Nevertheless, taking the time to check with your insuror when an unpleasant diagnosis has been made may save a lot of money and aggravation later.

The "Party Hardy" Trap of Early Retirement

A well-publicized article about lesser spending in later years of retirement and the potential for reducing the nest egg needed for retirement as a result has been overstated, according to Jonathan Clements of the Wall Street Journal. The 2005 Journal of Financial Planning article by Ty Bernicke suggests that spending on retirement is not as great as claimed because of lesser spending in the post-75 years when retirees generally have poorer health and are unable to travel and spend as much as before. While agreeing that there may be a degree of truth to Bernicke's claims, Clements points out that reduced income levels and added medical costs also contribute to reduced discretionary spending and that Mr. Bernicke overly relied on US Census income quintiles without adjusting for the fact that the quintiles reflected differing income levels at different ages. A sobering final fact: for retirees over 75, the average wealth other than homeownership is under $20,000.

Saving for retirement is very tricky--personal desires, needs of children (if applicable) and significant tax payments somewhat limit the amount that most people save and it is not automatic that those in their 50s will be able to catch up. Expect reverse mortgages, part-time employment by people in their 60s and 70s and other means to become increasingly popular as many Americans find retirement more expensive and less "playful" than they expected.

BNA, LexisNexis Join Forces on Internet

Tax publisher BNA has agreed to provide 400 of its portfolios to the LexisNexis (Internet) Tax Center. LexisNexis Vice President Charles Ter Bush announced that the agreementwould complement LexisNexis coverage over a broad range of practice issues and allow a single source for broad research questions.

I have not used BNA in about 15 years, but at the time their portfolios were considered a superior source for specific tax topics and a valuable source for industry-specific tax questions. LexisNexis should clearly add value to their subscribers with this agreement.

Black Balloons VERY Optional

Today is my 50th (sesquinal?) birthday. At a half-century, I cannot predict whether I will see this Christmas--or, on the other hand, be alive, mall-walking and voting in the 2036 Presidential election.

Sunder Takes the Reigns at AAA

Frank Professor Shyam Sunder of Yale University has been installed as the new president of the American Accounting Association. Dr. Sunder had previously taught at Cargenie Mellon, Chicago and Minnesota and has long been known in academic circles as an expert in experimental economics research. In his inaugurial address as president, Dr. Sunder celebrated accounting research as a way to understand business past and present and to project what may be in the future.

I met Dr. Sunder very briefly at a conference 15 or 18 years ago and he struck not only as a knowledgable researcher but as a kind and decent man as well. Best wishes to him and the AAA during the upcoming academic year!

Are Audit Reports Useful? Get $10K (or more) to Find Out!

The American Institute of Certified Public Accountants (AICPA), American Accounting Association (AAA) and International Accounting and Assurance Standards Board (IAASB) have announced a joint project to see what users think of the present standard auditors' report. The AICPA is considering whether modifications should be made in the standard report while the IAASB has already done some research. AICPA Board Chairman Douglas Prawitt indicates that anecdotal evidence leads to suspicion that the present report is not satisfactorily understandable to external users but more rigorous analysis is needed before necessary changes can be identified and made. The AAA plan is to have at leastone researcher study auditor reports from a U.S. perspective while one or more studies the impact of these reports from an international perspective. Proposals are to be submitted by October 2 of this year with a finished product by the start of 2008. The paper is to be practitioner-oriented rather than academic-oriented and each project approved will receive a $10,000-$20,000 grant.

Although university accounting majors, present CPA exam candidates and audit staff in CPA firms would understandably be uncomfortable with learning a new standard audit report, lack of understandably by users is a very good reason to review and reconsider the audit report. Best wishes to all entrants (perhaps including doctoral candidates taking this as a way to find a dissertation topic).

Very Absent-minded? Second VA computer is Determined to be MIA

For the second time in three months, a computer containing personal information covering tens of thousands of veterans has disappeared. The missing computer is from the Reston, Virginia Veterans Administration office and as many as 31,000 veterans in the Pittsburgh area plus another 5,000 Philadelphia vets and 2,000 veterans who are now deceased may be affected. Nonencrypted information included in the missing computer include names, addresses, Social Security numbers, birthdates and military service histories. Joe Davis, a VFW spokesman, called on the Federal Government to provide free credit monitoring to those affected to reduce the risk of identity theft.

Though not as broad as the May disappearance, this computer loss might be more damaging; police appear to think that theft of the computer was involved. While the first loss went to the dangers of using laptops (vs. desktops), this disappearance may bring up the issue as to whether private subcontractors are providing enough information security.

Carnivals and Digits

For a change, I submitted to two carnivals this week and both decided to publish. The Carnival of Taxes (link posted above) took "Botched Computer Program for Fraud Lets Over $200 Million Get Away" from July while the Festival of Frugality (http://www.bargaineering.com/articles/34th-festival-of-frugality.html) included "Dairy Queen Coupons and False Frugality" from last Tuesday.

Additionally, I am thrilled to announce that the 10,000th view of Tick Marks occurred sometime yesterday afternoon or early evening. (the 10,000th external view will be a while yet). Thanks to all who have read this blog and to those who link here!

Structural Fiscal and Tax Issues Must Wait Until After Midterms

With the conglameration tax bill (estate tax cut, minimum wage raise, tax incentive extension) bill floundering, important issues such as tax simplification, tax reform and deficit reduction have been put on the back burner until after the election. John Breaux, chairman of the President's Tax Reform committee last year, thanked the Senate Finance Committee for providing a hearing but criticized Congress as a whole for hiding from the issue. Former Treasury Department offical and tax policy expert Eugene Steuerle, who asserted that the potential political gain from tax reform often is perceived, especially in tight elections, is not worth the risk. Meanwhile, GAO Comptroller David Walker weighed in on deficit issues, claiming that the ability to fund needed programs in the future may be at risk. Indiana University's William Kulsrud sought to combine the structural changes, arguing for a two-pronged attack on tax complexity and the deficit.

It is hardly unusual to hear people in the news cite government timidity. At the same time, it IS an appropriate time to face tough issues such as tax reform, Social Security reform, etc.--and doing this immediately after an election minimizes accountability. Perhaps this makes sense from a Congressperson's self-interest, but it also reduces the likelihood of quality structural improvement.

UPDATE: Kerry Kerstetter at http://www.taxguru.net/2006/08/major-tax-issues-on-hold-until-after.html.

A Tip for Restaurant Owners and Servers...

The IRS will start a new, voluntary, tip reporting program next year called the Attributed Tip Income Program or ATIP. ATIP will estimate tips based on a percentage of gross receipts and standard restaurant practices. Announced benefits for employers include safe harbor from tip audits and simplified joining and reporting procedures. For employees, ATIP offers protection from tip audits, simplified election and better access to loans. Procedures include: election through Form 8027, at least 20% of receipts that show a charged tip, at least 75% employee participation rate and a attributed tip of 2% less than the "charged tip"; presumably an average of the charged tip percentage (tip/check balance) developed by Form 8027 records. The 2% difference presumes that customers leaving cash tips tip at a lower percentage than customers leaving credit card tips.

I have never worked in the restaurant industry, but my wife did when she was a teenager. Several issues come to mind: how to handle a store like a Crackel Barrel, where a large proportion of sales revenue is not food and beverage-related; how to handle a restaurant with large numbers of immigrant employees who may be distrustful of this type of program being two. Nevertheless, a program to consider if you know someone who is a restaurant owner or employee.

Dairy Queen Coupons and False Frugality

I noticed a set of Dairy Queen coupons in a newspaper pile today; the deals looked good, the treats and meats looked REALLY good and I'm sure that they would have tasted good. Unfortunately, as a somewhat obese virtually 50-year-old; the saturated fat and sugar content of the food advertised probably is the last thing I need (though far from the last thing I want).

The coupons got me thinking about how easy it is to buy things that we do not need because they are attractive or they make us comfortable or they appeal to our vanity. I read a sign in a gift shop once (legitimate question--why was I in a gift shop?) saying that to sell something to woman, make it sound like a bargain and to sell something to a man, make it sound like it will reduce his taxes. I'm not sure that gender specification is needful here, but the underlying concept is true; much of money management deals with distinguishing between needs and wants and using self-control (oh, how I hate to have to use self-control) in regard to the wants--even if the wants are on "special".

Accountants Near the Middle in Prestige

A recent Harris Poll found that firefighters, doctors and nurses were considered to be high-prestige jobs while stockbrokers and real estate agents were near the bottom of the list. At an in-between point, just below entertainers, just above journalists and tied with bankers, were accountants. A more comprehensive breakdown showed 17% of poll respondents thought that accounting had great prestige, 30% gave it a considerable rating, 40% said accounting was somewhat prestigous and 11% attached little or no prestige to accounting. By comparision, firefighters had a 63% very great rating, scientists 54% (perhaps accountants need a TV show equivalent to CBS' Numbers), clergy 40% and business executives 11%.

I guess that the flippant comment here would be something along the line of how many meals has prestige ever placed on a table. More significantly, I suppose, the medium-low prestige rating may reduce the number of teenagers considering accounting as a career choice.

UPDATE: See Kerry Kerstetter's take at http://www.taxguru.net/2006/07/occupational-prestige.html.