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On June 2, 2014

New accounting rules on revenue recognition

Thursday, 29th May 2014

INDUSTRY

From 2017 investors will be able to compare more easily how much companies from all parts of the world earn, under the first common global revenue rule. The FASB and IASB have published a joint standard on how companies report revenue from contracts with customers. The amount of revenue recognised should not change, but when a company is allowed to recognise it will be. FASB Chairman Michael Golden called it “a milestone” in financial reporting, and the Center for Audit Quality’s Cindy Fornelli said it was a “welcome development”. PwC’s Dusty Stallings commented that the new standard “will result in changes for most every company”, though the telecoms, construction, real estate and software industries are the most likely to be affected; McGladrey partner Brian Marshall said such firms will likely relish the change, due to it being less restrictive than the standard it replaces.
Accounting Today CPA Practice Advisor Journal of Accountancy Reuters Boston Globe

GASB approves new post-employment benefit proposals
The Government Accounting Standards Board (GASB) has approved new proposals that will require greater transparency in state and local government reporting on post-employment benefits. The proposals require governments to assign a liability for them on the face of a financial statement. The drafts of the provision will be made available by the GASB in mid-June.
Journal of Accountancy

SOX compliance proving a major challenge
A new survey from Protiviti has found that companies are facing huge challenges in their efforts to fully comply with the Sarbanes-Oxley Act. Over 600 audit executives were questioned, and 48% reported they had yet to apply the new COSO Framework to their key internal controls. Furthermore, 47% said that the PCAOB’s inspection reports of external auditors, which found deficiencies in audits of internal controls, were a key driver of changes to their compliance programs.
MarketWatch

TAX

Ways and Means to approve depreciation incentive
The House Ways and Means Committee is likely to approve a proposal later today, H.R. 4718, to indefinitely extend a tax incentive dating back to the end of George W. Bush’s presidency. The $287bn bonus depreciation tax cut allows companies to deduct an additional 50% of the cost of investments in the first year, on top of the regular depreciation schedule. The Congressional Research Service has found that it would cut the effective tax rate on tractor purchases from 27% to 15%. Matthew Shapiro, an economics professor at the University of Michigan, described it as a “useful policy for short-run stimulus”, though others see it as quite limited and unlikely in itself to lead to increased demand for a service.
BusinessWeek

California mulls film, corporate tax bills
The California State Assembly has approved new legislation that will extend big budget features and most one-hour TV shows’ eligiblity for tax incentives. The state’s current program provides $100m a year for tax credits, well short of the provisions offered by states such as New York. The new proposals would raise the current $75m cap, while expanding it to include premium cable, network and Internet dramas. The legislation now heads to the state Senate, which yesterday rejected a bill that would tie the corporate tax rate to executive compensation, reducing it for companies where CEO pay is less than 100 times that of the median worker.
Variety ABC News

D.C. Council passes raft of new tax provisions
The D.C. Council has approved a tax package providing District residents with their first major tax cuts since 1999. To be phased in over five years, it includes the creation of a 6.5% tax rate for middle-income residents making between $40,000 and $60,000 annually, and an increase of the city’s estate tax from $1m to $5.25m. However, under a budget proposal that won initial approval yesterday, health clubs would be among the businesses required to start collecting a 5.75% sales tax from January 1st – a measure that proved extremely unpopular when first floated four years ago.
Washington Times Washington Post

“Millionaire’s Tax” question moves closer to Illinois ballot
Illinois’ Senate Executive Committee has approved a measure on a non-binding resolution to put the “millionaire’s tax” on the November ballot. HB3816 would ask voters if the state constitution should be amended to add a 3% levy to annual incomes of more than $1m, in order to generate money for education programs.
Fox2Now


FIRMS

AAM honours marketing efforts
The Association for Accounting Marketing handed out over 40 awards for marketing achievement to accounting firms at a ceremony last week. Among the winners were Berdon (branding), Rehman (recruitment) and WithumSmith+Brown (multimedia).
Accounting Today

BDO Seidman ties up with Unanet
The BDO Seidman Alliance has inked a deal with software firm Unanet to use its Professional Services Automation package, enabling all BDO members to make use of its Project Management, Project Accounting and Invoicing and Revenue Recognition capabilities.
Digital Journal

H&R Block CEO sees pay drop in 2013
William Cobb, CEO of Kansas City-based H&R Block, is revealed to have taken a 37.52% pay cut last year, taking his overall compensation from $11,952,965 to $7,467,976.
Kansas City Business Journal

ECONOMY

U.S. retail sales up slightly
National chain store sales edged up 0.7% in the first three weeks of May from the comparable period in April, according to the latest Johnson Redbook Sales Index. Seasonally-adjusted sales increased 3.8% year-on-year. The International Council of Shopping Centers, meanwhile, reports that sales fell 1.2% in the week ending May 24th; chief economist Michael Niemira said the decline was due, in part, “the increased number of Americans traveling this past holiday weekend”.
Wall Street Journal Wall Street Journal

CORPORATE

Prosecutors seek stay in Cohen case
Federal prosecutors have written to the judge overseeing the SEC’s action against Steven A. Cohen, requesting an extension of a stay pending the outcome of a separate appeal involving two former hedge fund managers. Mr Cohen’s former hedge fund, SAC Capital, has pleaded guilty to insider trading.
New York Times

INTERNATIONAL

US offshore profits based in just 12 haven countries
U.S. corporations have informed the IRS that 54% of their offshore profits are earned in 12 tax haven countries – and that when combined only account for 4% of economic output among all the countries in which American firms do business. However, doubt has been cast on these claims, with Citizens for Tax Justice (CTJ) claiming that subsidiary profits in Bermuda of $94bn in 2010 far outweigh the country’s $6bn GDP that year. CTJ also suggests that U.S. companies in Ireland earned profits that amounted to 42% of Irish national GDP.
Accounting Today International Business Times

OTHER

Woo Hah! Busta owes IRS a check
Rapper Busta Rhymes reportedly owes the IRS over $780,000 in back taxes, failing to make payments of $611,000 in 2008 and $178,000 in 2012.
Complex

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