FEI CEO Cites Top 10 Challenges of 2007 (Final 2006 Post)

Colleen Cunningham, CEO of Financial Executives International, announced her top ten challenges in financial reporting for 2007 recently. Her list includes Internal Controls (surprise, surprise; she is hoping for better SEC guidance), Uncertain Tax Positions (expecting significant impact from FASB Interpretation 48), XBRL (she expects more adoptions), Fair Value (FASB Statement 157 and implementing unobservable inputs with the market participants approach), Servicing Assets and Liabilities (based on new FASB Statement 156), Complexity in Financial Reporting (restatements may be in part a result of complexity and FASB Chairman Herz has some sympathy on this issue), Derivatives (like internal controls and complexity, an almost-timeless issue), Pensions (the implementation of FASB Statement 158), Earnings per Share (FASB and IASB are not on the same page here), and Business Combinations (IASB and FASB appear to be working toward a draft with a fair value orientation).

The list provided by Ms. Cunningham appears reasonable and will provide plenty of headaches for auditors and accountants during the year to come.

It Came Upon the Midnight Clear

"Peace on the earth, good will to men* from heaven's all-gracious King."

* Luke's gospel (2:14) actually records "peace among men with whom He is pleased"

Bush Turns Tax Extender Legislation into Law

As expected, President Bush signed the so-called "tax extender" bill. With estimated tax revenue losses of $40 billion; the legislation extends a variety of educational, research and other deductions and credits, including the provision extending deductibility of the taxpayer's choice of sales or income taxes. The legislation also prevents a 5% cut to doctors of Medicare payments and allows additional oil drilling in the Gulf of Mexico.

Slowdown coming

First of all, thanks again for the response to the "Twelve Blogs of Christmas". Readership appears to up significantly and several bloggers have linked to the "Twelve Blogs" series.

In a somewhat untimely note, a variety of reasons will produce a slowdown in posting over the next several weeks. Expect one (at most two) more posts the rest of this week; one or two (plus an off-topic Christmas post) next week; one, two or at most three the first week of January and two to three (perhaps four) the second and third week of January. Hopefully, by the week of January 22, Tick Marks will be back to a normal posting schedule of 3-6 posts per week.

One final announcement: sometime during the first half of 2007, it is quite possible that I will start a second, more self-expressive (self-indugent?) blog. The second blog would primarily be about politics, sports, family and perhaps music and religion. If the second blog occurs, I will mention it in Tick Marks but would not provide a permanent link. An example of this type of blog is Joe Says So on Blogspot by Joe Kristan of Roth CPA Updates fame.

IRS Tips and Updates for Charitable Donations

Keep the following in mind to avoid the agony of an unsuccessful donation deduction:

Clothing, furniture, electronic gadgets and other household items generally must be in at least good condition to qualify for deduction starting on August 17.

Cash donations after August 17 must include bank record or written communication with date, amount and name of charity. Checks and bank statements may qualify if the information above is provided.

Autos, boats and similar property donations are limited to gross proceeds on sale if amount claimed exceeds $500.

Additional IRS tips:

Taxpayers may donate up to $10,000, tax-free, to most qualifying charities from their IRAs. Make sure NOT to claim a deduction on the donation.

Donations are deductible in year made (donation made on credit card on December 22, 2006 is 2006 donation even if credit card payment is made on January 4, 2007).

Make SURE that you donate to a qualifying charity. Foreign-based charities generally do not qualify; donations to private foundations and certain tax-exempt organizations may not qualify. Most smaller houses of worship DO qualify, even though not listed in IRS Publication 78.

At present, taxpayers must itemize to deduct charitable donations. This means that donations cannot be taken if 1040-A or 1040-EZ is used; likewise, there has to be enough in itemized deductions (including interest, taxes and sometimes casualty/theft, medical and miscellaneous) to cover the standard deduction--certain taxpayers with adjusted gross income over $100,000 may also have to worry about a partial "recapture" of itemized deductions. An approach which works in some cases: Make a "double donation" at the end of one year to cover two years (example: a late December 2006 "double donation" to cover 2006 AND 2007).

24 Blogs of Christmas: Reviewing the first two years

For accounting, in alphabetical order followed by poster's name and year selected:

Accounting Observer, Jack Ciesielski, 2005
Benefits Blog, Janell Griener, 2006
Big 4 Guy, Anonymous, 2006
BSG Trendlines, Rick Telberg, 2005*
CPA Firm Technology Blog, Brian Tankersley, 2005
Found in the Footnotes, Michelle Leder, 2005
Fraud Files, Tracy Coenen, 2006
Journal Entries, Neil McIntyre, 2006

For personal finance, in alphabetical order followed by name (if known) and year

Blueprint for Financial Prosperity, "Jim," 2006
Consumerism Commentary, "Flexo," 2005
Financial Rounds, "Unknown Professor," 2005
Free Money Finance, Anonymous, 2005
Frugal for Life, "Dawn," 2005
Mighty Bargain Hunter, "John," 2006
My Money Forest, "Tim," 2006
pfblogs, Anonymous, 2006

For tax, in alphabetical order followed by name and year selected

Death and Taxes, Joel Schoenmeyer, 2006
Don't Mess with Taxes, Kay Bell, 2006
Gina's Tax Page, Gina Gwozdz, 2006
Mauled Again, James Maule, 2005
Roth CPA Updates, Joe Kristan, 2005
Tax Guru, Kerry Kerstetter, 2006
Tax Prof, Paul Caron, 2005
Taxable Talk, Russ Fox, 2005

Worthy of mention

A number of worthy blogs did not make the Twelve Blogs of Christmas this year; as seen with pfblogs and Tax Guru, at least some will be on the 2007 Twelve Blogs of Christmas. In the accounting area, Corporate Governance could yet come in as a substitute, a la BSG Trendlines in 2005, if Benefits Blog does not resume posting. Additionally, Tech Gap and the new Accounting by a Detoured Economist certainly appear to be worthy of consideration. In personal finance, My Money Blog and Money Blog Network members All Things Financial and Five Cent Nickel are likely to be considered in 2007. Numerous prospects already make for a crowded field for 2007, including Brian Brown, CPA; Intaxicated; Tax and Business Law Commentary and Tax Mama.

Remember that tomorrow and Tuesday will bring a number of worthwhile Carnivals and Festivals, such as the Carnival of Business, Carnival of Fraud, Festival of Frugality, Carnival of Investing, Carnival of Personal Finance and Carnival of Taxes. I will not be in any of these this week with finishing up the Twelve Blogs of Christmas.

Finally, thank you again to all readers and blogs linking to Tick Marks, as blog views reached 15,000 late this past week. With 10,000 views occurring shortly before my birthday in early August, view count must now be over 1000 per month. Thanks again to all.

Finishing Up the Twelve Blogs of Christmas: We Finally Reach the "Tax Guru"

Kerry Kerstetter, an Arkansan sometimes referred to as the "Tax Guru," is the final (though far from the least significant) blog to be included in the Twelve Blogs of Christmas. Kerry (do NOT confuse him with John Kerry) was one of the first accounting/tax bloggers (archives back to 1999) and has had a lot of success with a question and answer format in his blog. He was a mentor for Gina's Tax Page (the previous initiate into the Twelve Blogs) and was seriously considered last year. A defining feature of Tax Guru is creative use of editorial and strip cartoons. I have linked to his December archive above; one of favorite posts this month was a list of 12 tips for business tax planning on the fourth.

Thank Heaven for #11 on the Twelve Blogs of Christmas: The Penultimate 2006 Blog is "Gina's Tax Page"

One of the best new blogs in 2006 was "Gina's Tax Page" by Texan Gina Gwozdz. Gina frequently uses a favorite format of mentor Kerry Kerstetter, the question and answer format based on client queries (alas, without Kerry's cartoons). A good example of a recent post on the importance of filing tax returns is linked in the title above.

Teen Angel

Our English Springer Spaniel, Treasure, is having his 13th birthday today and has enjoyed a 1.5 mile birthday walk already. Although not perfect, he has been a wonderful dog for Pam and I. Don't know how much he has left, but he is the first dog Pam and I have had which made it to 13.

10 means Double Digits into the Twelve Blogs of Christmas: Grab Some Fiery Chili, but "Don't Mess with Taxes"

Journalist Kay Bell has enlivened the tax blogosphere with her new blog, which mixes taxes and personal finance with more than a hint of humor thrown in for good measure. Kay has also brought forth the Carnival of Taxes, making Don't Mess with Taxes the fifth Twelve Blogs of Christmas blog to coordinate a carnival (along with Blueprint for Financial Prosperity, Fraud Files, Mighty Bargain Hunter and My Money Forest. This is not coincidental as carnival hosting was one of this year's criteria. An example of a Don't Mess with Taxes post is cited in the post title above.

SEC Tosses Small Business a Bone on SOX

The Securities and Exchange Commission did not exempt small business owners from internal control provisions of Sarbanes-Oxley. However, the SEC did say that auditors of small companies were only required to audit internal controls which might have a material impact on financials. The measure was designed to prevent overauditing by firms worried about legal liability to third parties and which runs up audit cost.

In the short run, the SEC decision appears to be a reasonable compromise between small firms wanting relief from SOX compliance costs and users of financials wanting high-quality information from smaller businesses. However, a review and some tweaking may be needed in the future.

Round Nine and Time for Taxes to Take the Stage in the Twelve Blogs of Christmas: "Death and Taxes" is Inevitably Good Material

One of the best sources for information about estate and gift taxes, especially recent updates and what to do/what not to do in this area of taxation, is Joel Scheonmeyer's Death and Taxes weblog. Joel's blog was crowded out by other strong tax blogs in 2005, but has been worthy throughout. A sample post is linked in the title above.

Eight is NOT Enough for the Twelve Blogs of Christmas: pfblogs Wraps Up the Best in Personal Finance Blogs

The final personal finance blog to be listed in the Twelve Blogs of Christmas is pfblogs, an aggregator of personal finance blogging. Posts range from well-known blogs such as Consumerism Commentary or Free Money Finance to occasional personal finance blogs such as Tick Marks to brand new bloggers (you never know who the next superstar personal finance blogger will be). A companion site, pfblogs Speaks (http://blog.pfblogs.org/) updates readers on new developments on the blog.

Next up, the tax blogs. Nominees are: Brian Brown, Death and Taxes, Don't Mess with Taxes, Gina's Tax Page, Intaxicated, Tax and Business Law Commentary, Tax Guru and Tax Mama. Eight worthy blogs--four will have to wait.

7-up in the Twelve Blogs of Christmas: Exploring "My Money Forest"

Leaving the "Money Blog Network" today to pick up My Money Forest, coordinator of the Carnival of Business. The anonymous host, a college guy (I think, has a lady fiancee who is in the U. S. Army) is not a CFP but is passionate about fiscal self-control. A sample MMF post is linked in the title above.

MarketWatch Top Ten Tax Tips

MarketWatch cites Tax Mama, Twelve Blogs of Christmas nominee, who encourages readers with the following ten ideas for controlling taxes: [1] If 60+, start withdrawing from IRA accounts while tax cost is lowest, [2] fully use any flexible health savings account balances, [3] consider whether you have made excess contributions to a retirement plan, [4] review your risk for AMT with your tax professional, [5] avoid buying new mutual funds, which often pay a whole year of dividends in December, [6] consider gifting stocks with large gains to relatives with capital loss carryovers, [7] start a tax file for the family--in some cases, for each family member, [8] find key receipts from the past year, [9] check your withholding status and [10] check your benefits status, especially during open enrollment seasons.

Not all of the above ideas will apply to all readers, but some will apply to most readers and all are reasonable where applicable.

Halfway through the Twelve Blogs of Christmas: This Time of Year, You NEED a "Mighty Bargain Hunter"

One of the many great personal finance sites is Mighty Bargain Hunter; its subtitle is telling: finance, savings, spending and bargains. MBH made the Twelve Blogs of Christmas in part because of its role in starting the Carnival of Debt Reduction; additionally, MBH is now the fourth member of the Money Blog Network to appear in the Twelve Blogs of Christmas. John had an interesting article (see link in the title above) which pointed out that while collecting state quarters might be fun and even educational, the quantity of state quarters meant that only quarters in near-perfect conditions would be valued at anything more than a quarter anytime in the foreseeable future.

Getting Personal in the Twelve Blogs of Christmas: Build on a "Blueprint for Financial Prosperity"

NOTE: Theatrically-astute readers are probably aware that the headline on the fourth blog had an error--Neil's blog should have been Act I, Scene IV with today's blog Act II, Scene I.

As the Twelve Blogs of Christmas moves to personal finance blogs, Blueprint for Financial Propersity stands out against many other well-done personal finance blogs. Jim posts virtually every day (and as much as two or three times a day), is a member of the Money Blog Network along with 2005 honorees Consumerism Commentary and Free Money Finance and, on top of all this, is the coordinator and frequent host of the Festival of Frugality. A recent example of a "Blueprint" post is linked in the title to this post above.

Congress Talks Taxes 'Til the Break of Dawn

In an unusual ending note to the 109th Congress, the lame-duck Republican majority passed a sweeping round of tax incentive extensions. The bill included popular extensions of tax deductions for K-12 teachers paying for school supplies out of their own pocket, sales tax deductibility in states without income taxes (very biased cheer since I live in TN) plus incentives for energy, higher education (more biased cheers as an Austin Peay faculty member) and research. Additionally, the bill was loaded down with additional provisions to expand oil drilling, defer a reduction in Medicare payments to doctors, increased federal aid to ailing coal miners and trade benefits to a variety of smaller countries, leading David Obey (D-WI) to lambaste the legislation as the ultimate symbol of a "do-nothing" session.

While I am glad that the extenders were passed, it sounds like the House acted without a lot of thought or discretion on some of the other items. Expect more and probably better coverage of this legislation from other bloggers early next week.

Update: I underestimated the reaction time of Joe Kristan and Roth CPA Updates, one of no less than four posts on the legislation can be found at http://www.rothcpa.com/archives/002321.php#002321.

Act Four of the Twelve Blogs of Christmas: Northern Exposure for Neil McIntyre

The first known non-US blog to be included in Twelve Blogs of Christmas is Journal Entries by Neil McIntyre of Toronto. Neil was one of several new bloggers included in a Golden Practices article and has been one of the most frequent commenters on Tick Marks. The link above shows some of Neil's favorite posts.

Next up in Twelve Blogs of Christmas: four personal finance blogs. Candidates include: All Things Financial, Blueprint for Financial Propersity, Don't Mess with Taxes, Five Cent Nickel, Mighty Bargain Hunter, My Money Forest and pfblogs. I can't go wrong with any of them.

Third Verse of Twelve Blogs of Christmas: You Can Run, But You Can't Hide from Fraud Files

One of many exciting new blogs in 2006 was Fraud Files, Tracy Coenen's effort to expose fraud (especially financial fraud). Tracy posts frequently and has a solid accounting and auditing background. For three months, she has organized the Carnival of Fraud; an example is found at http://www.sequence-inc.com/fraudfiles/2006/12/06/13th-carnival-of-fraud/.

Belated Thank-You to "Don't Mess with Taxes"

My "E-filing" post from Saturday was included in yesterday's Carnival of Taxes along with many other good posts. The Carnival goes to a twice-monthly schedule with the next edition on December 18. By the way, although my participation in Carnivals have diminished with an intense schedule, good material continues to be posted in the Carnivals of Business, Fraud, Investing, Personal Finance and many others. Check the links at right to see top-quality personal finance (and other topic) insights.

SEC OKs PCAOB Budget

Within a week of receiving the PCOAB budget, the Securities and Exchange Commission approved $136.4 million in funding for the commission. The majority of the funds will be used to hire auditors to inspect CPA firms. Most of the funding will come from assessments of major CPA firms with about $10 million to come from a draw-down in a working capital reserve fund.

There is clear discontent in some quarters from CPAs about PCOAB and Sarbanes-Oxley in general; however, barring unexpected courtroom results, the PCOAB will be around and significant at LEAST for the time being.

Round Two of Twelve Blogs of Christmas: Big 4 Guy Fairly Presents Audit Knowledge

Second up in the Twelve Blogs of Christmas is the anonymous Big 4 Guy, a very consistent poster on auditing and information technology topics. Although occasionally technical for non-auditors, Big 4 Guy provides precise and comprehensive analysis of audit techniques in today's Sarbanes-Oxley-influenced audit environment. A well-done explanation of roll forward testing and its relationship to tests of internal controls is linked above.

Introducing the 2006 Twelve Blogs of Christmas: Benefits Blog Starts for Accounting

The first of the Twelve Blogs of Christmas and the first of four accounting blogs is Benefits Blog by Janell Griener. Ms. Griener is knowledgable about both accounting (especially pension) and tax issues and I had a little trouble deciding whether to include her in accounting or tax. Her recent lapse in posting is uncharacteristic; hopefully, she will be back to posting soon. One of the best features of Benefits Blog is the extensive blogroll at the end. A recent post about ERISA is linked above and is indicative of her posts.

Backtracking with BSG CPA Trendlines: A Substitute Member ot the 2005 Twelve Blogs of Christmas

Over the weekend, I decided that since Vanilla Accounting was dormant and presumed dead I would replace it with another accounting blog which was in existence by the end of 2005. Two blogs were considered (the other will be in the 2006 Twelve Blogs of Christmas) and the choice was BSG CPA Trendlines. Rick Telberg posts regularly and provides high quality insight into the effective management of an accounting practice. His article, "Blog, blog, blog" was included in the AICPA website "CPA2BIZ." A recent example of Trendlines is linked in the title above.

E-filing Not Cost-Free for Businesses

The Tax Executives Institute and KPMG recently released a study indicating that first-year e-filing was neither a seamless nor a costless adjustment. Of 101 executives surveyed, seven-eights incurred additional time or capital expenditures, with 40% of the 101 calling the increase substantial. Slightly over half of those surveyed had the return accepted on the first try. Most respondents were appreciative of the first-year transition rules, with seven of twelve calling for first-year transition rules to be extended for 2006. One in eight of the respondents did see a silver lining in improved filing procedures. Finally, the respondents feared significant problems with the upcoming e-filing season with many indicating the smaller firms now required to file ($10 million floor year upcoming vs. $50 million year concluded) may lack the staffing and technology of firms which e-filed this year.

There are times when one has to appreciate NOT being a partner in a CPA firm. Mandatory e-filing for tax returns definitely is one such time.