CPA Journal, The

After a recent NYSSCPA Breakfast Briefing on non-CPA firm ownership, one of the student members in attendance approached the author and introduced himself. His name was Michael. He was polished, articulate, and presented himself as an intelligent young man -- she was impressed. If Michael in any way represents what you can expect from your future CPAs, the profession should be in good hands. As she continued to establish a dialogue with their managing partners, it became clear that the accoun...

A Tax Quality Control Template for Avoiding Risk

Any firm's tax duties, no matter the size of the firm or the personnel involved, contain the possibility of risk exposure. Surprisingly, the highest number of recent malpractice claims has involved tax engagements. Thus, establishing a system of quality control for tax services is critical. The creation and implementation of policies promoting tax quality control are not intended to be an end-all for every tax issue that might arise, but they can and should be viewed as resource guides for us...

Accounting Education in the Second Life World

In December 2008, thanks to the support of the Ernst &Young Foundation, the department of accounting at North Carolina State University (NC State) started exploring the benefits of using Second Life as a tool to enhance the educational experiences of accounting students. This article discusses what the authors perceive to be the potential benefits of using Second Life for educational purposes, how they incorporated Second Life into the Masters of Accounting (MAC) program at NC State, and ...

Acquiring, Starting, or Buying Into a Cpa Firm

One adage, attributed to Chinese philosopher Lao Tzu, notes that "a journey of a thousand miles begins with a single step." But CPAs who want to own their own CPA firm might have questions about the appropriate first step to take: 1. should they buy an existing accounting practice, 2. start their own firm, or 3. hope that their employers will give them the opportunity to purchase an equity interest in their current CPA firm. CPAs who start or buy a practice have an "opportunity cost" on top o...

An Update On New Tax Law Changes

Tax planning was daunting in 2011, as the federal legislative landscape was fraught with uncertainty and eleventh-hour political compromises. Although no major tax reform legislation was enacted during the past year, there was a plethora of important tax law changes that will affect tax returns to be filed for 2011, as well as tax planning strategies for 2012. Last-minute congressional negotiations ensured the continuation of the 2% payroll tax cut for at least the first two months of 2012. O...

Concerns About the Pcaob's Release On Possible Revisions to the Auditor's Report

In its Jun 21, 2011, "Concept Release on Possible Revisions to PCAOB Standards Related to Reports on Audited Financial Statements" (Release 2011-003), the Public Company Accounting Oversight Board (PCAOB) sought public comments on potential changes to the auditor's reporting model. The concept release suggests four possible alternatives as improvements for changing the auditor's reporting model ostensibly to increase the transparency and relevance of auditors' reports to financial statement u...

Correction

Cpas' and Cfos' Perceptions Regarding Principles-Based Versus Rules-Based Accounting Standards

As of today, non-US companies using International Financial Reporting Standards (IFRS) are permitted to list their securities on US stock exchanges without reconciling those statements to US GAAP. The fact that this rule has not been extended to US issuers is somewhat controversial, especially given that IFRS are considered by many to be more "principles based" in contrast to the more "rules-based" US GAAP. While there is a widespread belief that principles-based standards, subject to certain...

Foreign Currency Forward Contracts and Cash Flow Hedging

The global economy and financial markets have been evolving rapidly over the past few decades, and the pressures on companies to do business internationally have risen significantly. Businesses operating internationally have experienced severe currency volatility in recent years. Current foreign exchange (FX) risk management practices, such as currency cash flow hedging using forward exchange contracts, can be helpful to international businesses. Recently proposed changes by US and internatio...

Inbox: Letters to the Editor

Maximizing the Value of a Risk-Based Audit Plan

If there is anything that the business world has learned from the economic events of the last few years, it is that effective risk management is critical. Around the world, substantial investments are being devoted to strengthening risk management programs. Yet, failures continue to occur, whether they appear in the form of regulatory missteps, lost profitability, or the hacking of sensitive information. Millions of customers are affected, and billions of dollars are lost. The focus of an int...

New Ethics Guidance for Cpas in Public Practice and Business

The AICPA's Professional Ethics Executive Committee recently amended parts of the Code of Professional Conduct, which went into effect on Nov 30, 2011. It also issued an exposure draft on Sep 23, 2011, that focused on departures from established accounting principles and requests for records by clients and will become effective on Apr 30, 2012. The new or revised ethics interpretations and rulings (EIR) will affect accountants in both public and private practice. The new EIRs should help CPAs...

Recognizing the Value of Management Accounting

In an interview, Jeffrey C. Thomson, CMA, president and CEO, Institute of Management Accountants (IMA), talked about the IMA and CMA credential and the organization's plans for growth. Management accountants are an important part of the accountants' value chain. They're involved in some of the more forward-looking, value-creating activities, like financial planning and analysis, risk management, strategic costing, and other forms of decision analytics. The IMA is going on its 93rd year as a m...

Restructuring the Accounting Rules for Restructuring Charges?

Given that International Financial Reporting Standards (IFRS) are being accepted in more countries around the world and the convergence of IFRS and US Generally Accepted Accounting Principles (GAAP) continues to move forward, the eventual adoption of IFRS in the US seems more likely with each day. Despite the increasing similarities between the two sets of standards, substantive differences remain. It is important to understand the key differences and how the adoption of IFRS may affect the f...

Tax Fairness

In an election year, more than any other time, candidates for political office play on the electorate's sense of fairness to persuade voters of policy changes they advocate. But everyone seems to have a different definition of "fair" when it comes to tax reform. Tax fairness is shaping up to be a major issue in the 2012 elections. Billionaire investor Warren Buffett advocated raising taxes on the rich and argued that the rich should not pay a smaller proportion of their earnings than many mem...

The Case Against Non-Cpa Ownership

The author is a CPA -- certified public accountant -- and proud of it. He worked hard to become a CPA and establish a reputation as a CPA, and he has devoted much time and effort to develop and enhance the image of a CPA as the person who is the preeminent business and personal advisor to small, closely held companies and individuals. Over the years, the nature of the profession has changed, largely through the efforts of Barry Melancon and the AICPA. The AICPA helped promote the concept of n...

The Iasb's Convergence Program, the Prospects for Global Standards, and the Challenges for Emerging Economies

An edited transcript of Hans Hoogervorst's speech at an Ernst & Young seminar regarding International Financial Reporting Standards (IFRS) in Moscow, Russia, on Jan 23, 2012 is presented. As the sixth largest economy in the world and a member of the so-called BRIC (Brazil, Russia, India, and China) economies currently driving global growth, it is only logical that Russia would like to be home to a major financial center. This is not yet fully the case. One of the most important building b...

Using Fairness Opinions to Manage Risk in Middle-Market Transactions

Since the 2008 financial meltdown and the earlier enactment of the Sarbanes-Oxley Act of 2002 (SOX), there has been an ever-increasing outcry from the public for greater corporate transparency, accountability, and fairness. But this heightened awareness and perceived lack of trust in the markets has created a dangerous environment for boards of directors; they must now demonstrate that they acted prudently and fairly, and considered shareholders' opposing interests, whatever their stock, when...

Website of the Month: Ifrs.Org

The combined International Financial Reporting Standards (IFRS) Foundation and International Accounting Standards Board (IASB) Web site at www.ifrs.org has grown significantly over the past few years to become a well-organized site that provides numerous useful resources. Many of the materials are free of charge or require only a free subscription to access. The homepage was recently redesigned to promote current content updates and improve site navigation. The IFRS section of the Web site pr...