Companies perform better with small, regular M&As, study finds

Companies that regularly acquire or merge with other companies on a relatively small scale tend to outperform those that undertake large acquisitions or focus on organic growth, a study by McKinsey & Co. concluded. Looking at shareholder returns at 1,000 companies over 10 years, McKinsey found that companies with regular M&A programs representing 19% or more of their market capitalization performed better than those with large deals or no M&A activity. The Wall Street Journal/CFO Journal (tiered subscription model) (1/23)

Stakes are high as World Economic Forum meeting begins

Bankers, officials and other interested parties from around the world are converging on Davos, Switzerland, for the World Economic Forum's annual meeting. With Europe's sovereign-debt crisis ongoing, the stakes are high. "We're fighting the last war. The sovereign-debt crisis is undermining the global banking system," said Tobias Levkovich, chief U.S. equity strategist at Citigroup. "We need to take the dire scenario off the table and get a credible path to a resolution." CNBC (1/23), Financial Times (tiered subscription model)(1/23), BBC (1/23)

Now is a great time to start

As the old saying says, the only things about life that are certain are death and taxes and it might behoove us to pass over the former and focus on the latter of life's certainties...taxes.
April 15 is a little more than 3 months away but now is the best time of the year to put your taxpayer hat on and meet with your accounting firm so you can beat the April rush, especially if you're counting on a refund!
Neikirk, Mahoney & Company can help your individual tax filings and with your corporate returns as well, whether you're a large firm or a small mom & pop.
The professionals at Neikirk, Mahoney & Company are ready to help you with your 2011 Returns and our consulting service can help make 2012 taxes the least painful possible.
Just give us a call at 502-896-2999 or send us a note at http://neikirk.net/contact.php.  

Comment period on private company reporting draws to a close

BY KEN TYSIAC

JANUARY 12, 2012

A comment period on private company financial statements that already has produced more than 6,500 letters has left the Financial Accounting Foundation (FAF) trustees with a lot to consider, FAF President and CEO Terri Polley said Thursday.
Speaking at a North Carolina Association of CPAs meeting that was simulcast on the Web, Polley said the input has been helpful. The deadline is Saturday for comment letters on a FAF proposal that has been strongly contested by the AICPA because it would continue to give FASB the final decision on any modifications to U.S. GAAP for private companies.
FAF’s Oct. 4 proposal called for the creation of a Private Company Standards Improvement Council (PCSIC) to recommend changes to U.S. GAAP for private companies. Those recommendations would be subject to FASB approval.
Polley said the FAF trustees believe it’s important to have a single GAAP and keep standard setting under one organization. The AICPA believes an independent board under FAF’s supervision is the best mechanism for accommodating the needs of private companies that struggle with certain complexities and costs of U.S. GAAP that many deem unnecessary for nonpublic entities.
“I would definitely envision that there will be some changes from what the trustees have proposed,” Polley said in an interview after Thursday’s speech. “How substantive they will be, that remains to be seen, and (the trustees) are the ones that are going to have to make that decision.” - see the rest of this article in the Journal of Accountancy

Will this be The Winter of Our Discontent?

     With apologies to Shakespeare this is a little preview of some of the emerging economic concerns that will start to focus the mind before the winter months give way. Much of what we will be dealing with in the months to come will be extensions of what we have been wrestling with for the past three years but there are some new issues that are rearing their ugly heads and that will complicate the
strategies that have been in place thus far.
     The three to focus on for the moment are inflation threats, the impact of long term unemployment and the impact of a new Congress with more deficit hawks than before. Up to this point the strategy from Congress, the Executive branch and the Federal Reserve has been basically in sync and focused on economic pump priming. There has been no real concern over inflation as deflation had seemed more
imminent only a few months ago. The issue of employment has been front and center for the entire recession although there has clearly been a limit as to  what could practically be done. The deficit hand wringing was universal but very few in Congress had anything approaching a mandate to do something about all this.
     Now there is some evidence developing that will force a new look at the inflation threat in the future. Reports from the regional Fed banks in Philadelphia and New York show that manufacturers are universally reporting an expectation of higher priced inputs and when that hits the economy there will be increased price pressure.
    The employment situation is vexing and there is about to be a real crisis for
those who have been without jobs for the longest period of time. Getting this group back into the work force will be a major undertaking. The deficit hawks will be put to the test but there has already been a rejection of the budget for next year.

Congress Messing With Mortgage Market...Again

Washington lawmakers, who began 2011 with sweeping plans to shrink the U.S. government’s role in mortgage finance, are heading into 2012 after enacting policies that expand it.

An 11th-hour payroll tax cut extension signed into law last week will for the first time divert funds directly from Fannie Mae (FNMA) and Freddie Mac, the two mortgage-finance companies under U.S. conservatorship, to pay for general government expenses.

That move came after two others that also could increase government involvement: Lawmakers allowed a tax break on private mortgage insurance to expire and raised loan limits for mortgages insured by theFederal Housing Administration. Advocates of private mortgage finance say they are concerned that using fees from Fannie Mae and Freddie Mac is setting a precedent that will keep the government in the mortgage business for a decade or more.

“The goal was, at the beginning of the year, how do we wind these down?” said Edward Pinto, a resident fellow at the American Enterprise Institute, a Washington-based research organization that favors limited government. “And at the end of the year we have further entrenched them and made it more difficult to wind them down, which is classic Washington.”

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac (FMCC), today directed the companies to increase fees on new mortgages by an average of 10 basis points, or .1 percentage point, effective April 1, to comply with the law.

Washington Messing With Mortgage Market Again!

Phew! It’s Done. Now What?

    As expected Congress finally passed the much debated bill that extended the tax breaks for another two years, extended unemployment benefits for another 13 months and added some additional tax breaks and considerations for business. The deal cut between President Obama and Senate Republicans some weeks ago was pretty much a done deal but there was an opportunity for the opponents to register their displeasure before the deal went down. Now that the politicians have finished with this the focus now shifts to what this really means for the growth of the economy in 2011 and beyond.
     An assessment of this law will preoccupy analysts and voters for the next few years as there will be two issues to consider. The first is whether the extension of breaks and benefits will really do much for the economy. Even if the answer to this question is positive, there will be a second set of concerns over whether the $1 trillion effort is worth it given what this will do to make the deficit that much worse. Those who fought the measure were pretty diverse in terms of their opposition  and most of the debate was less about really defeating the bill and more about staking out some future political positions. The economic critique was a little more pointed.

Analysis: There was no significant economic objection to the notion that this law would benefit the economy in the short term. How could it not? If the tax breaks had not been extended, the average tax payer would have been out between $1,500 and $3,000 dollars next year and that is not an inconsequential sum of money. A loss of unemployment benefits would have stripped some two million people of their assistance and that is cash no longer in private hands. Granted, the money would not have simply vanished and it would have been spent by the government in some way but when the economy is still faltering it is usually a better idea to get the private sector moving.
    The economists made their case on the basis of what is better in the long run and there were two schools of thought. To those who put deficit control at the top of the list, the whole notion of offering tax breaks and extending unemployment to a record number of months is folly and just puts off the inevitable day of reckoning. The assertion is that contending with the deficit is never going to be pleasant or popular and putting it off just ensures that it will be a bigger problem later.
     The other position is that dangling these tax cuts as political fuel every couple of years creates chaos in the business community. The executive and the strategist need to know what to expect in the years to come and it matters what the tax bill will be. The same is true for the individual. It serves little purpose to bring an issue this important back every couple of years. If the tax cut is a good idea it should be made permanent and it is isn’t, it should have been allowed to expire. - Courtesy Kentucky Society of CPA's.