Friday, February 27, 2009

IDEA Audit Software: New Version Well-Suited to the Visual Learner

Caseware, producer of IDEA Audit Software, says that their new product includes a visual flowchart of the entire audit. This includes a record of any databases created, deleted or modified plus a record of workflow. Some users may also like other features such as visual script, customize functions, drop and drag document importation, alternating row colors and ability to sort names by ascending, descending and original order.

I have not used audit software, but the IDEA product sounds like it could be a valuable tool for a CPA firm. It will be interesting to see if Caseware brings forth an abridged student edition to use in case-oriented Auditing courses.

How Millionaires View Taxes and Tax Accountants

The mega-personal finance blog Free Money Finance quotes from a new book called The Frugal Millionaire on a survey of attitudes by millionaires towards taxes and tax accountants. Tax advice includes government is a necessary evil; don't fudge on your taxes, don't get fancy with shelters, avoid extensions and any risk of penalties, watch out for alternative minimum tax. Regarding tax preparers, the millionaires recommend seeking a professional's advice to level the playing field with the government and then sticking with the professional's advice.

Sound and pragmatic advice from those with proven ability to handle money. Unless you have a CPA, bar license or EA certificate, you probably should file your own return only if your financial affairs are simple; even then, you might be better off with a tax professional.

Tuesday, February 24, 2009

Obama: Tax Increases as a Part of Raising Revenues to Reduce the Budget Deficit

According to the New York Times, President Obama has an initial plan for reducing the budget deficit caused by the combination of the bank bailout and the stimulus packages. Primarily components include: eliminating capital gains rates on income generated by hedge funds, letting the Bush tax cuts expire for taxpayers with income in excess of $250,000 and fees from a "cap and trade" program for certain pollutants. Additionally, he plans to reduce spending on Iraq, reducing use of private contrators for Federal government projects and cutting certain Medicare subsidies to private insurors if a government alternative is available.

The possibility of any tax increase doubtlessly will provide talking points for Sean Hannity, Rush Limbaugh, etc., but the Obama plan is pretty restrained--IF it works. The hedge fund taxation will probably only draw opposition from the hard right; the Petreus surge means that we finally can talk reasonably about a sizable draw down in Iraq and the Medicare subsidy cut at least arguably avoids duplicated spending. Other issues are murkier--supply-siders can pose legitimate questions as to whether de facto tax increases on those earning over $250,000 will be effective at raising revenue, there is little evidence of sizable revenues being generated by past "cap and trade" programs and cost savings generated by using Federal employees rather than private contracts may be offset by efficiency of the private businesses. A greater concern than any of the last three; however, is whether cost of living raises in federal salaries and Social Security benefits by expected future inflation will torpedo the cost savings and extra tax revenues generated by this plan. If this happens, Obama could be in the same unhappy place where Bill Clinton dwelt in 1994 and 1995.

Thursday, February 19, 2009

Brian Tankersley Featured at TSCPA Nashville Meeting

Fellow blogger Brian Tankersley (CPA Firm Technology Blog--a 2005 "Twelve Blogs of Christmas" awardee--and a member of the Accounting WEB Blogger Crew) gave a very good presentation at the Nashville chapter of the Tennessee Society of CPAs February meeting Tuesday night. Brian, a continuing education speaker for K2 Enterprises, talked about developments in the technology area. Among items discussed were: electronic readers such as the Amazon Kimble (basically the visual equivalent of an audio book), LinkedIN (a social network for working professionals), Twitter resumes (a micro-resume, Twitter is in effect a 21st century telegraph message) and Sales good place to find bargains on electronics. He had a shorter talk during dinner about "Toys and Gadgets," such as mini-"notebooks" (portable computers)
which women could coordinate with their outfits and video glasses which could be used to watch movies during an airline flight.

This is my seocnd opportunity to meet a fellow blogger (Joe Kristan of Roth CPA Updates was my first last summer) and I thoroughly enjoyed both opportunities. Hopefully, I will get to see more accounting bloggers in the future.

Stimulus Bill Breakdown

The Tulsa World newspaper concisely segmented the recently passed stimulus legislation. The breadth of coverage was instructive, with healthcare, education, food, transportation, energy and employment NOT being an exhaustive list. Key tax provisions included an extension of the Hope Credit to $2,500 per year, a new "Making Work Pay" credit with a similar outcome to the Bush rebate last year (except that the MWP credit has an income cap), another one-year patch for the AMT, expansion of the earned income and child care credits, deduction for state and local taxes paid on purchases of cars and small SUVs and trucks (wonder if there is a "buy North American" restriction here), temporary (?) exemption of some unemployment benefits from income tax and tax incentives for energy-efficient and renewable energy purchases (a return to the Carter-era energy credit?).

Obama clearly is counting on increased spending by lower-income Americans to pull the U. S. out of recession; and to be fair, there are numerous economists who would agree that propensity to spend is higher for low-income households, thus possibly triggering spending the U. S. out of recession. Thus recovery through the plan is possible; however, as I stated Tuesday, inflation is almost certain (watch out if you are on fixed income).

Tuesday, February 17, 2009

Here Comes the Stimulus Bill--Ready or Not

President Obama returns to the site of his Presidental nomination acceptance speech to sign the 2009 American Recovery and Reinvestment Act which passed Congress last week. Slightly over one-third of the nearly $800 Billion dollar package involved tax cuts and incentives including new Making Work Pay and American Opportunity Tax Credits (MWP is refundable). Additionally, the refundable Earned Income and Child credits have been temporarily increased and payments of $250 to disabled Americans, retirees and Social Security recipients (presumably not two $250 payments to retirees who receive Social Security).

I have little doubt that the bank bailout bill of the Bush administration plus the Obama stimulus will eventually give the economy a "tummyache" in the form of 6-10% annual inflation (probably about two years from now), though I cannot predict whether the Jerry Ford era "Whip Inflation Now" buttons will make a comeback. Will the American Recovery and Restoration Act get the economy back on track in the meantime? Time will tell.

Big Day Ahead

First of all, I encourage you to look at Kay Bell's Carnival of Taxes (I believe that this is #48) at Don't Mess with Taxes. Kay is publishing this twice a month during tax season. Additionally, many of you know that I get excited when a page view milestone approaches and 50,000 views is in sight. As always, thanks for reading and to those bloggers who link to Tick Marks. Finally, I plan to see fellow blogger Brian Tankersley (CPA Firm Technology Blog) today at a Tennessee Society of CPAs meeting where Brian will be the speaker.

Monday, February 09, 2009

Limits on Lobbying for Overseas Tax Breaks

Senators Carl Levin (D-MI) and Bryan Dorgan (D-ND) have criticized the 2004 tax break for repatriating overseas earnings and even called for restricting supporters from lobbying for the bill. Levin said that claims that the break encourages companies to reinvest in the US are belied by evidence that many companies taking the incentive actually cut US employment. Dorgan agreed, calling the 2004 law a reward for outsourcing US jobs. A Congressional study showed that 10 of the top 12 companies cut jobs even before the recent recesssion.

Two separate opinions: the call to curb lobbying for the bill smacks of restricting free speech and is not good; the call to eliminate the repatriation incentive smacks of reducing corporate welfare and I agree with Levin and Dorgan on that issue.

Wednesday, February 04, 2009

COSO Updates Monitoring Facet of Internal Control

The Committee of Sponsoring Organizations, founded out of the Treadway Commission and best known for its Framework for Internal Control (hereafter COSO Framework), worked together with Grant Thornton to produce the monograph "Guidance on Monitoring Internal Control Systems." This guidance concentrates on monitoring, one of the five elements of the COSO Framework. It states that many companies have effective monitoring but fail to fully use the information developed by the monitoring system while other companies still do not have an effective monitoring system. In either case, improved monitoring procedures can improve internal control, sometimes without additional cost. A free download is available at

Congratulations to both COSO and Grant Thornton on this new resource. Hopefully, many businesses and organizations will use this material and improve the monitoring facet of internal control.

Monday, February 02, 2009

Carnival of Taxes 47 and farewell for now to the Wandering Tax Pro

My "Making Sausage" post from last week made the 47th Carnival of Taxes. Ms. Kay Bell is presently posting this carnival every other week on Don't Mess with Taxes.

Also want to wish Robert Flach well as the "Wandering Tax Pro" goes on a 2.5 month hiatus to prepare tax returns to pay his family's living expenses. Robert is one of the most active tax bloggers during the remaining 80% of the year.

Oops, I Did It Again (Britney reference nonwithstanding, post is worksafe)

Selections for the U. S. Cabinet have another round of awkward moments with taxes as Health and Human Services appointee Thomas Daschle disclosed back taxes exceeding $100,000 because of car services received without inclusion in gross income and poorly documented charitable donations. Daschle apologized for errors on prior tax returns.

I am somewhat more willing to let the Daschle errors slide (vs. say Geithner or Charles Rangel for that matter) since he will not be going into a position involving major tax policy decisions. Additionally, his understanding of the U. S. Government is matched by very few. Nevertheless, the Daschle acknowledgement AT MINIMUM indicates two problems: [1] the Internal Revenue is once again proven to be way too confusing, [2]the Obama vetting team needs to be doing a more complete job.

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