Corporate Governance Best Practices 10 Years After SOX

BY KEN TYSIAC

Journal of Accountancy

You could hardly go to a Washington hearing related to an accounting or auditing issue this spring without someone singing the praises of the Sarbanes-Oxley Act of 2002 (SOX). At a House subcommittee meeting on accounting and auditing oversight, House Financial Services Committee Chairman Spencer Bachus, R-Ala., said SOX has been successful in preventing some of the challenges it was created to address. At the PCAOB hearings on auditor independence, objectivity, and professional skepticism, experts including audit committee members, audit firm chairmen, and educators talked about the positive effects SOX has had in strengthening business oversight.

"There are a whole host of reforms that Sarbanes-Oxley has put into play that I think have definitely improved audit quality," Center for Audit Quality Executive Director Cindy Fornelli said in a telephone interview.

Read more

Is a Reverse Mortgage Right for You?

BY NICHOLAS C. LYNCH, PH.D. AND CHARLES R. PRYOR, PH.D.
Journal of Accountancy

The recent recession left no age group untouched, but baby boomers were hit especially hard. High unemployment and an uncertain stock market have caused older Americans to realize that their retirement funds might not support their desired lifestyle. Many seniors are facing foreclosure, while others are unable to meet their basic needs, such as paying medical, energy, and other daily living expenses. A reverse mortgage can enable homeowners who are at least 62 years old and have sufficient equity in their homes to receive enough cash to live more comfortably throughout retirement.

A reverse mortgage is a loan against home equity that requires no repayment until the home is sold or the last surviving borrower dies or no longer occupies it as a principal residence. Read more

Penn State Hammered by NCAA - NYT

By PETE THAMEL

INDIANAPOLIS — The N.C.A.A. announced significant penalties against Penn State and its football program Monday, including a $60 million fine and a four-year postseason ban, in the wake of the child sexual abuse scandal involving the former assistant coach Jerry Sandusky.
The N.C.A.A. stopped short of shutting down Penn State’s program, but officials insisted that the breadth and significance of the penalties were nearly as debilitating. It is expected to be almost a decade before Penn State will be in a position to attempt to regain its place as one of the sport’s elite programs.

The punishment also included the loss of 10 scholarships per year for the next four years, with a limit of 65 total scholarship players on the roster, as opposed to the typical 85, by the 2014 season. The university must also vacate all of its victories from 1998 to 2011, meaning that Joe Paterno is no longer the major-college career leader in football wins. Read more

Spanish Bond Yields Soar - NYT

MADRID — Spain’s borrowing costs rose to record levels for a third consecutive trading day on Monday on concerns that a deepening recession and the financing problems of its regions would force the government to seek a full-fledged bailout.
Market regulators in Spain and Italy announced bans on stock short-selling, as Spanish turmoil and fresh concerns about Greece’s status in the euro zone sent European stocks down broadly and sharply.

The yield, or interest rate, on 10-year Spanish government bonds was at 7.4 percent in late afternoon trading on Monday, having breached 7 percent last Thursday — a level that many analysts fear could eventually shut Spain out of public markets and force it to seek a Greek-style bailout. Read More

Courts Extend Legal Protection to Small Firms Whose Accounts Were Hacked

By JOE PALAZZOLO

Small-business owners whose bank accounts have been plundered by cyberthieves until recently had no one to blame but themselves. 

But two recent court rulings are giving those business owners new hope that banks which don't cater to their specific security needs may be held liable for funds stolen by hackers who increasingly have focused on attacking small businesses.

Banks typically are responsible for losses when personal accounts are hacked. But state laws uniformly place the burden on commercial clients to show that banks didn't do enough to protect their money. Read more

The Latest News on Tax Fairness - WSJ

By ARI FLEISCHER

If fairness in paying taxes means the amount you pay is based on the amount you make, then the only group in America paying at least a "fair share" is the top 20%—people who make more than $74,000. For everyone else, the tax code is a bargain.

You wouldn't know this from President Obama's rhetoric, but our tax system, according to a recent report by the Congressional Budget Office (CBO), is incredibly progressive. Consider: The top 1% of income earners pay an average federal tax rate of 28.9%. (See the nearby table.) The average federal tax rate on the top 20% is 23.2%. The 20% of taxpayers earning between $50,100 and $73,999 pay an average 15.1%, and so on down the line. The CBO report includes payroll as well as income taxes paid. Read more

Hunting for higher bank yields? Read on...

By RUTH SIMON

Where's the yield?

That is the question frustrated savers are asking these days, as interest rates hit record lows with depressing regularity.

People who need a pool of cash for emergencies or looming expenses usually look to keep it in banks or credit unions, where deposits are protected by the Federal Deposit Insurance Corp. or the National Credit Union Administration. Yet the yields on certificates of deposit, savings accounts and money-market accounts, on average, are the lowest they have been in at least 50 years, according to research firm Market Rates Insight. Read More

WSJ says 2013 will be a very tough year

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By ARTHUR B. LAFFER AND FORD M. SCUDDER

The United States faces an economic collapse thanks to massive tax increases on Jan. 1, and continued deficit spending for years on end.

Keynesians worry about spending cuts and to some extent the expiration of the temporary 2% payroll tax cut. But the looming expiration of the Bush tax rate cuts along with new levies enacted as part of ObamaCare pose the greatest threat.

The breadth of what will hit the country is extraordinary. The top federal rate on personal income will increase to 39.6% from 35%, with an additional 0.9% increase in the payroll tax for Medicare. The highest federal rate on dividends will increase to 43.4% from 15%, and the tax rate on capital gains will increase to 23.8% from 15%. Read More

A CPA's Insights into the Fed's Finances

What’s at Stake? A CPA’s Insights into the Federal Government’s Finances offers guidance for policy makers and the public on how the US government’s financial statements can be used for greater understanding of the nation’s fiscal health.  Gregory Anton, CPA, CGMA, AICPA Chairman of the Board of Directors, offers a non-partisan and clear analysis into why the financial statements provide a different perspective compared to the annual budget.  With this video, the Institute seeks to raise awareness of this distinction, call attention to how and why the financial sustainability of our country is at stake.  The CPA profession calls on both policymakers and the public to engage in a national dialogue to improve our country’s fiscal health.


See the video here

Capitol Hill Standoff Threatens Bush Tax Cuts

It’s only been a year since Congressional Republicans, bent on cutting spending, manufactured a financial crisis by threatening not to raise the debt ceiling. Now, apparently thinking the public has forgotten that debacle, they’re furious that Democrats have figured out a way to turn the tables. Read More

About Your Money: Big Changes Ahead?

There will be some significant potential consequences on the horizon if Congress allows certain existing tax laws to expire on January 1, 2013. With only a few months left to plan, it’s time for CPAs to be aggressive in educating clients about the decisions they may face.
Several tax changes are now set to occur at the beginning of 2013 if Congress does not act. Among them: Read More

WSJ:China's Economic Growth Slows

BEIJING—China's economic growth decelerated to its slowest pace since the global financial crisis, damping hopes that the world's second largest economy will provide much support for the faltering global outlook and prompting expectations that Beijing will make fresh moves to stimulate growth. Read More

Real Estate Bust is History, WSJ Says

Nearly seven years after the housing bubble burst, most indexes of house prices are bending up. "We finally saw some rising home prices," S&P's David Blitzer said a few weeks ago as he reported the first monthly increase in the slow-moving S&P/Case-Shiller house-price data after seven months of declines. Read More

AICPA Survey: Finances Causing Rifts for American Couples

New York (May 4, 2012) — Financial matters are the most common source of discord among American couples, prompting an average of three arguments per month, according to a national telephone survey conducted for the American Institute of CPAs (AICPA) by Harris Interactive. Read More

Global Economic Forecast is Pessimistic

New York (July 10, 2012) – The world’s CEOs, CFOs and senior management accountants have an increasingly negative outlook for the global economy over the next 12 months, according to the CGMA Global Economic Forecast released today by the American Institute of CPAs - Read More

News of Note - Supreme Court Decision On Obamacare

Supreme Court Decision – the New York Times Opinion
The Times called the decision confusing in an OpEd contributed by Richard Epstein, who said “It is not good for the court or the country that the chief justice’s position in such an important case is confused at its core.” Read more

Supreme Court Decision – the Wall Street Journal Opinion
“It's also hard not to notice that people now extolling Justice Roberts for rescuing the court's integrity are largely the same ones who have been impugning it,” the Journal said. Read more

Supreme Court Decision – the Journal of Accountancy
“Roberts concluded that the individual mandate must be construed as imposing a tax on those who do not have health insurance, if such a construction is reasonable, because "every reasonable construction must be resorted to, in order to save a statute from unconstitutionality," Hooper v. California, 155 U.S. 648 (1895).” Read more

So You Think You Have Problems?

The Tax 'Miseducation' of Lauryn Hill
Singer and actress Lauryn Hill, who captured five Grammy awards for her critically acclaimed 1998 album The Miseducation of Lauryn Hill, has been charged with failing to pay taxes on income totaling $1.8 million. Read more

IRS Prescribes Rules for Health Care FSAs
A new IRS ruling (Notice 2012-40) provides guidance on a pending limit for flexible spending accounts (FSAs). Read more

Is Your Business Headed in the Right Direction? Are You Sure?

If you're like most business owners, your days are filled by efforts to make your company successful. Those tasks might be focused on making a great product, generating sales, or building customer relationships. And you might be great at those things. But how great are you at making money? And how well are you managing your resources? Click here to read more.

Questions? Contact us at Neikirk, Mahoney & Smith CPAs.