Friday, March 28, 2008

IIA Issues Free Guides to Help Assess IT Risk

The Institute of Internal Auditors recently released its second and third guides to help managers and auditors assess information technology risk. The Guide for IT General Control Deficiency Assessments is designed to help users determine whether deficiencies qualify as significant deficiencies or material weaknesses. The Guide for Business and IT Risk can be used to identify controls which are critical in achieving business goals. A previous guide for methodology was designed to measure the scope of general information technology controls. The guides can be downloaded for free at
  • IIA Guide
  • .

    Wednesday, March 26, 2008

    OMB Revises Executive Comp Limit on Federal Contracts

    The Office of Management and Budget announced that the maximum permissable amount of government contract which can be used for compensation of top [5] executives is $612,196 per executive, up about $14,300 or 2.5% from the prior year. It should be noted that this is the maximum federal contract amount used for compensation, not an actual ceiling on executive comp. The cap number has been in use for over a decade and is accepted by even the Professional Services Council (PSC). Alan Chvotkin, general counsel for PSC, is markedly less enthusiastic about detailed compensation disclosures on companies with over 80% of revenues coming from federal contracts (minimum level of contracts of $5 million).

    The cap on executive compensation from government contracts is probably valid as a means of protecting taxpayers from excessive executive compensation out of taxpayer funds. Congressman Murphy's 2007 Government Contractor Accountability Act (requiring disclosure of executive compensation) is a tougher idea to evalaute; it provides disclosure on top executives but seems inconsistent with privacy laws of the U. S. Constitution.

    Monday, March 24, 2008

    Carnival of Taxes 33 in an Unusual Home

    The Carnival of Taxes, a biweekly phenomenon during tax season, is being hosted at My Wealth Builder as administratrix Kay Bell has subcontracted hosting responsibilities. A baker's dozen of posts, including my "A Surfeit of Stimulus Scams" are included. With tax practitioners trying to survive a March Madness which does not include commercials, cheerleaders and half-court heaves, the majority of posts were from personal finance sources. Don't Mess with Taxes, the typical home for the carnival, will again host the next Carnival (34) with April 7 as the scheduled date.

    AICPA and USA Today Team Up to Stamp out Tax Ignorance

    Other Links of Significance:
  • Related USA Today Story about Tax Refunds

  • Web CPA reference to USA Today column

  • AICPA members are answering tax questions from readers in the Money section of USA Today through April 15. Today, member Ronald Hegt took on a question about determining whether a taxpayer is subject to AGI. A key point made by Mr. Hegt is that the income base for AMT differs significantly from AGI for regular tax purposes.

    Congratulations and thanks to all CPAs participating. Hopefully, the AICPA and USA Today can expand this relationship beyond tax season and address personal finance and financial literacy issues once tax season comes to an end.

    Thursday, March 20, 2008

    Start of the Madness

    The NCAA tourney started today--for me, a good start as Purdue made it past Baylor. Congratulations to nearby Belmont on a truly heroic effort against Duke this evening.48 games in four days may be enough to drive my wife crazy.

    A different and ultimately far more significant madness started over 2000 years ago just east of the Mediterranean Sea. After a meal and quiet time, Jesus and some of his followers were accosted by Judas and Roman soldiers, setting in place events which Christians believe to be the turning point of human history. From the sting of the kiss to the agonizing execution to the mysterious shift of the stone with the Roman seal and the walk by two followers from Jerusalem to their Emmaus home, truly amazing things happened in a very short time.

    Hello--Your Refund May Be Waiting

    The Internal Revenue Service announced that over a billion dollars in unclaimed refunds for the 2004 tax year are about to be forfeited to the U. S. Treasury. The median refund is about $550 with the mean being almost $1,000. Taxpayers have three years to file to claim a refund; additionally, taxpayers eligible for the stimulus refund must also file a 2007 refund. Taxpayers which file the 2004 return but have yet to file 2005 or 2006 returns will have refund checks held until the later returns are filed. Refund checks will be reduced or not issued if the taxpayer is behind on prior taxes, federal student loans or child support. Finally, there are no penalties for filing late if a refund is due the taxpayer.

    It would seem obvious that taxpayers would want their refunds. I guess some may not be aware while others must feel that the cost of interacting with the IRS outweighs the benefit of the refund.

    Monday, March 17, 2008

    A Surfeit of Stimulus Scams

    The economic stimulus program (hereafter known as the tax rebates) have brought forth a number of con artists trying to get their hands on the rebate checks. Among the scams are phony IRS e-mails with purported links to tax law changes which actually install malware on the user's computer; proposals of advance payment checks; phone calls from phony IRS employees; requests for financial information from charities (supposedly from the IRS Director of Exempt Organizations) and phony audit e-mails asking for personal and financial information. The IRS indicated that it does not require use of direct deposit and does not ask for personal or financial information by telephone.

    Tax scamsters seem to get more brazen with each passing year. Contact an IRS office or your tax professional if you have any unusual correspondence which appears to be from the IRS.

    Monday, March 10, 2008

    More Monday Mementos

    (1) The 32nd Carnival of Taxes is in Don't Mess with Taxes (link above) and my 401[k] post from last week is included.

    (2) College basketball is looking promising for March Madness--my present school (Austin Peay) won its conference tourney (OVC) and qualified for the NCAA tournament. Purdue, which I grew up near and picked up a master's degree from, finished second in the Big Ten and is sure to get an at-large bid. My undergraduate school, Ole Miss, is virtually assured of an NIT bid and might upgrade to the "Big Dance" with a good SEC tourney--a quarterfinal win over Kentucky puts them in the conversation and an appearance in the championship game would almost surely put them in. Only Missouri, my doctoral school, is in trouble--the Tigers need at least a first-round win over Nebraska (my wife's favorite) to even get to the new CIT.

    (3) Our fourteen-year-old English Springer Spaniel, Treasure, has shown surprising fortitude in 2008. Though he is deaf, almost blind and has a weak back leg, he still can go for short strolls and enjoy the yard. His time is certainly short, but already has exceeded my expectations yet again.

    WEDNESDAY UPDATE: Treasure's walking became somewhat weaker yesterday--but the big story this past week which I inexcusably overlooked was a 6" snow (a BIG deal in TN)Friday night and Saturday morn. The snow crews pleasantly surprised me; nice job, fellows.

    McCain: Extend the 2001/2003 Tax Cuts and Retrain the Unemployed

    Republican presidential nominee-in-waiting John Mc Cain called corporate tax cuts, an end to the alternative minimum tax and extension of the "Bush" tax cuts beyond the present 2010 sunset. McCain also said that expanded job training programs were needed, particularly in the hard-hit industrial Midwest, to keep the present credit crunch and job cuts from becoming a recession. McCain acknowledged that his strengths lie in military and foreign affairs, but claimed some competence in economic issues.

    I can easily agree with McCain on the end of the AMT and extension of the "Bush" tax cuts beyond 2010; the corporate tax cutting is less clear; the question becomes whether these tax benefits will trickle into job recovery quickly enough. Obviously I am biased regarding education for displaced employees, but a key becomes HOW the aid is set up and used.

    Wednesday, March 05, 2008

    A Dollar for Your Thoughts: IRS OKs $1 Dollar Returns for Certain Taxpayers

    The Internal Revenue Service recently announced that $1 tax returns for retirees with Social Security or similar benefits will be accepted so long as taxpayers comply with IRS Notice 2008-28 and have no other sources of gross income. The scenario came about through the combination of a $300 benefit for Social Security recipients; a requirement of $3,000 in qualifying income (which includes Social Security and related retirement income) and the fact that Social Security is not taxable income if other sources of AGI are less than about $25,000. Taxpayers must be careful to note that this ruling does NOT absolve taxpayers of reporting actual AGI from other sources.

    The headline on this article may confuse some readers; at first, it looked like a many taxpayers and not just Social Security (or like) taxpayers were eligible. Guess this is a solution of convenience.

    Monday, March 03, 2008

    Employer 401[k]s Not Immune from Legal Action

    A unanimous recent Supreme Court decision allows individual investors in 401[k] deferred compensation plans standing to sue for losses. The specific case involved a investor which asked pension administrators to move funds to less risky investments. He estimated losses at $150,000 when they failed to do so. The Bush administration favored the right to sue while business groups felt that standing to sue was inappropriate.

    Probably the right call by the Supremes; certainly, this decision puts more responsibility on pension plan administrators to be responsive to the desires of investors. A safe alternative for employers: allow employee investors a choice of mutual fund investments.

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