Friday, August 31, 2007

Blogging for Business

Congratulations to Jack Ciesielski (Analyst's Accounting Observer), Michelle Golden (Golden Practices), Gina Gwozdz (Gina's Tax Articles), Eva Lang (BV Girl), Greg Price (From Greg's Head) and Reed Tinsley (healthcare)--all cited in a recent Accounting Today article ("Blogging for Dollars") about using blogs to attract attention to your business.

NOTE: I am listing three new blogs--In the news, etc. section is the Ministry Blog--the blog is based from Stanfield and O'Dell CPA firm and does cover not-for-profit accounting and tax issues but seems to be predominantly Christian theology. In the Accounting section is the Accounting Onion by former faculty Tom Selling--not the accounting humor blog one might expect, but a VERY good financial accounting and auditing blog. Good Loans is a new blog from a lender's perspective by Linda Keith.--some good tax insights.

Thursday, August 30, 2007

Survey: Six of 11 Accounting Students Cheat

A survey by David Morris of North Georgia College and Claire Killian of Wisconsin--River Falls found that 54% of 294 accounting students surveyed acknowledged cheating. The survey was given to business students at seven colleges and universities in three Southern states; it found that 52% of 569 business students (including the accounting students) had cheated. Equally instructive were the definitions of cheating: some believed that it was not cheating for a student who was given the exam a day later to receive test questions from students who had already received the exam and others believed that it was okay for a third student to be credited as participating on a paper actually written by two other students.

Students have been given a number of legal rights in recent years to receive protection from the abuses of a small number of faculty. These rights, nevertheless, are a compounding factor in deterring cheating. Additionally, from my faculty experience, students can be quite creative. As a teacher, I attempt to use some safeguards, such as double versions of tests and rarely using prior exams, but honesty requires me to say that at least a few students probably still successfully cheat in my classes--and the problem is likely to become worse as more courses are taught online. This is a BIG problem for CPA firms and other employers--it is almost impossible to be certain that a given job applicant really earned that 3.2 (or whatever) GPA.

Tuesday, August 28, 2007

The Guiliani Tax Strategy

Leading Republican 2008 Presidential candidate Rudy Guiliani set forth some of his tax code priorities--these include elimination of the inheritance tax, extending indefinitely the tax cuts of the first G. W. Bush term and making the child tax credit permanent. Additionally, Guiliani favors indexing for the alternative minimum tax and claims to have cut taxes more than 20 times as mayor--a claim which critics consider overstated.

The extension of the Bush cuts and attack on the death tax will at least placate economic conservatives who may have wondered how moderate would be. Personally, I would have preferred elimination of the AMT and on the inheritance tax I would prefer an increase in the unified credit (or equivalent) to an indexed $2-2.5 million without completely abolishing the tax.

Switching ISPs

We are switching Internet Service providers to improve surfing speed. Until this is finished, posting will be light. Thank you for your understanding.

Wednesday, August 22, 2007

SEC Considers Sweeping Changes in Rule-Making

  • SEC Proposal

  • The Securities and Exchange Commission has issued a call for comments on numerous changes to present financial reporting. Among issues considered: principles-based standards, use of exceptions and "bright line" provisions in standards, cost-benefit analysis of current financial standards and the impact of international accounting standards on the usefulness of present American GAAP.

    The SEC has taken on an ambitious project; I wish them well. One question: how will the upcoming implementation of XBRL affect the issues which the SEC is considering?

    Monday, August 20, 2007

    Pope to Tax Cheats: God is NOT on Your Side

    Pope Benedict XVI is likely to soon issue a pronouncement (encyclical) condemning tax evasion and use of tax havens. The Pope's emphasis is on greed and social justice; he believes that use of tax havens deprives societies of needed tax revenues and encourages unjust accumulation of wealth. The upcoming encyclical is in part driven by problems encountered by Italian tax collectors; Italian prime minister Prodi has stated that churches have too often been silent on tax evasion.

    Two points: [1] the content of the encyclical is not surprising--after all, one of the Ten Commandments is "do not bear false witness," [2] with all the commentary by Congress, bloggers and the tax media about the U.S. tax gap, tax compliance in the United States is surprisingly favorable compared to virtually any other country.

    Thursday, August 16, 2007

    Accounting Tech Blogfest

    Brian Tankersley of CPA Firm Technology Blog (see specific link in title, general link at right) is creating an "Accounting Blog Festival" related to accounting technology issues in the next month or so (probably more like a late summer's "Twelve Blogs of Christmas." than a weekly Carnival--but I'm not sure) For those who post in the tech area, Brian has provided a valuable blog for several years; you may want to contact him at if you have posts of a tech nature.

    Treasury Inspector General Faults IRS on Savings and Security

    The Inspector General for Tax Administration of the U.S. Treasury has criticized the Internal Revenue Service on grounds of overstating savings related to taxpayer service projects and for shortcomings in security. The efficiency savings on service activities were found to be unsupported, thus producing the possibility that funding cuts in service activities may actually reduce service to taxpayers as opposed to being covered by better efficiency. On the security front, the IRS was blamed for poor encryption, sloppiness in password selection and not safeguarding laptops.

    The recent turnover in top IRS positions probably is not helpful in many of the problems cited by the Inspector General. New director Linda Stiff will have to make a real effort to improve security and may need to work on the bureau's culture. Meanwhile, Taxpayer Advocate Nina Olson also has a challenging situation in trying to protect services provided to taxpayers.

    Wednesday, August 15, 2007

    A Mid-Year Survey of Tech Issues

    Computer Sciences Corporation (CSC)and Financial Executives International (FEI) conducted their ninth annual survey of technology issues. Data quality/information integrity leads the list with 58% very concerned while recent first choice data security fell back slightly at 46% very concerned. Profitability analysis, performance management and planning/forecasting are additional areas that survey respondents mentioned as areas needing improvement. Although a small increase in IT spending was projected for the year ahead, slightly more than half the respondents felt that financial pressures, such as meeting earnings targets, was constraining their ability to accomplish important IT improvements.

    No major surprises in topics listed as important and the respondent's comments about spending constraints simply points out the age-old economic question--in times of scarcity; where is the biggest bang for the buck? IT has a good case, but I am sure that other business functions can also make legitimate cases for discretionary spending.

    Monday, August 13, 2007

    House Puts Brakes on Tax Prep by Federal Farm Lending Bureau

    The AICPA commended the House of Representatives for removing a provision in the Farm Bill Extension Act of 2007 which would allow the Farm Credit Service, a government-financed entity, from providing supplementary financial services such as small business accounting and tax preparation to a sizable number of non-farm borrowers. Barry Melancon, AICPA President, said that the FCS, with its cost advantages (such as no federal tax liability) could have put small CPA firms in rural areas at a major and unjustified disadvantage. Melancon now switches attention to the Senate, promising to watch the Senate finance committee very closely.

    One presumes that Senate Finance chair Max Baucus (D-MT) and minority leader Charles Grassley (R-IA), being from farm states, would be loath to reinstitute the FCS provision. At the same time, the discomfort of farm state CPAs over the original provision probably was justified; though I am skeptical whether the quality of work by FCS employees would have matched that of rural CPAs.

    Friday, August 10, 2007

    "Feed the Pig" and "Financial Peace": A Comparison

  • Financial Peace Website

  • As I have indicated in several previous posts, my wife and I are attending Dave Ramsey's Financial Peace program this summer. The American Institute of CPAs also has launched a personal finance program called "360 Degrees of Financial Literacy" to demonstrate the ability of many CPAs to assist clients with financial planning. One of the creative brainstorms of the AICPA program is Benjamin Bankes, host of the "Feed the Pig" program (many savings banks for children have been in the shape of a pig). In looking at this week's Feed the Pig advice, Benjamin (the pig) had several things that are included in Financial Peace and several others that are not specifically mentioned in Financial Peace but ideas that Mr. Ramsey probably would agree with. Pig advice which are part of Financial Peace include: make a budget, take advantage of your employer's 401K (especially if the employer matches), use savings cards (or coupons) at the store (one of the Financial Peace slogans is "Never Pay Retail") and save the amount of raises and live on your previous salary. Not mentioned in Financial Peace, but ideas Mr. Ramsey probably would like from Benjamin the pig: make a large meal on the weekend and eat leftovers all week, bring your lunch and your coffee from home, watch DVDs at home rather than go to movies and stop smoking. By the way, my guess is that most if not all of Benjamin's "Tips for Painless Savings" have appears on several of the personal finance blogs linked at right.

    Both "Feed the Pig" and Financial Peace have useful advice for those trying to manage their money better. The advice is only as valuable as one's willingness to apply it, however.

    Thursday, August 09, 2007

    GAO Casts a Dubious Eye at Federal Accounting Progress

    The General Accountability Office recently referred to continuing weaknesses in government agency financial systems as a "formiddable challenge." Most federal agencies had not reached compliance with the Federal Financial Management Improvement Act (FFMIA) of 1996, over a decade ago. Six particularly common shortcomings included nonintegrated systems, lack of appropriate reconciliations, lack of accurate and timely reporting, noncompliance with the U.S. Standard General Ledger, weak security and failure to comply with federal accounting standards. GAO did praise agencies for developing remediation plans and OMB efforts to improve system implementation but criticized the Department of Defense for particularly poor modernization of its financial system.

    The GAO report raises several questions: could inadequate accounting systems impact the battle in Iraq and the welfare of soldiers in the field; can the U.S. Government REALLY take on any new programs when they struggle to account for present activities and are the goals of the FFMIA realistic. It would be interesting to see whether federal financial reporting has reached the caliber of state governments yet.

    Tuesday, August 07, 2007

    House Passes $16 Billion in Alternative Fuel Incentives

    The House of Representatives challenged President Bush by passing a $16 billion bill which provides incentives for alternate fuels (such as a $4,000 tax credit for plug-in hybrid cars). A major part of paying for the bill is the disallowance of a manufacturing tax deduction for oil companies on domestic production. Speaker Nancy Pelosi (D-CA) claims that the deduction does not pass muster with the World Trade Organization, but the Bush administration claims that the elimination of the deduction will lead to less petroleum production and higher taxes. The Senate bill includes no similar provisions--it is unclear how the House provision will hold up in conference.

    Certainly, going after Big Oil cannot hurt Congressional approval ratings. The big question--what will be the impact on overall energy production if this provision passes?

    Thursday, August 02, 2007

    OMB Nomination in Limbo

    The nomination of former Congressman Jim Nussle to head the Office of Management and Budget is at risk. A primary reason is a dispute on discretionary spending: President Bush wants to limit this spending to $933 billion while Democratic leaders want up to $955 billion. Speaker of the House Nancy Pelosi (D-CA) has threatened to shortchange some Bush initiatives if the overall discretionary spending is too low with border security and implementation of certain veteran health care reforms potentially cut.

    The pattern of an ex-member of Congress no longer being a sure thing at confirmation hearings has been in place since John Ashcroft, so nothing really unusual here. What IS unnerving in the era of "Porkbusters" is the level of discretionary (unrestricted) domestic spending: nearly $1 TRILLION? This is 10 TIMES the total federal budget of only about 40 years ago, including the early part of the Vietnam war. Also, keep in mind that this does NOT include Social Security, food stamps or other entitlement spending.

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