Accounting News


Monday, January 30, 2012
FASB and IASB Look at Classifications

As part of the proposed Accounting Standards Update published in 2010, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are reviewing the classification models used by the two standard setting bodies.The classification standards had taken a back seat to revenue recognition issues. The issue of classifying financial instruments has been more difficult than anticipated.

There is pressure on the talks by the Securities and Exchange Commission (SEC) and the European Commission to come to an agreement. The SEC is considering approving the IASB standards for financial reporting. Currently they only allow FASB rules (commonly referred to as GAAP, generally accepted accounting principles).

Progress between the two bodies continues but it is still not clear if a comprehensive agreement is possible in the near term.

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Accounting News


Wednesday, January 25, 2012
Are Frequent Flier Miles Taxable

There has always been a question of whether frequent flier miles are taxable income. They can be worth a significant amount of money when the employee is a frequent traveler. The answer came in 2002 when the IRS issued a ruling that "numerous technical and administrative issues" made it too difficult to track. As a result they were not considered taxable income.

Citibank had a promotion last year giving frequent flier miles for customers opening new accounts. Now these customers are getting 1099s for the miles. They have valued them at 2.5 cents per mile. Many of these customer received 25,000 miles or $645 in income. For the basic tax bracket at 28% that is additional taxes of $180.60.

I am sure that none of the people who opened the accounts expected to be taxed on the promotion. The IRS has said that the 2002 still stands. If that is true then Citibank is at the least confusing all of their customers and surely causing some of them to overpay their taxes by $180.60.

Before you file your taxes make sure you talk with a qualified tax accountant.They keep abreast of all the changing tax laws so you can go out and enjoy all of those frequent flier miles.

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Accounting News


Wednesday, January 18, 2012
Big Four Revenues Grow in 2011

The big four (Deloitte, Ernst & Young, KPMG, PricewaterhouseCoopers) reported robust growth in 2011. The rates of growth of the four were between 7.6 percent and 10.1 percent. The firms saw growth in several areas with Asian advisory services growing at an impressive 17. 4 percent. The growth follows modest growth in 2010 and a decline in 2009.

Another factor that helped out all four firms was a declining dollar. While growth in local currency was lower when reported in dollars they got a currency boost. However the growth was world wide with even Europe posting increases despite their recession.

The title of largest accounting firm went back to PricewaterhouseCoopers with revenues of $29.2 billion in 2011. After spending only one year with the title Deloitte moved back to second with revenues of $28.2 billion.  In third was Ernst & Young with $22.9 billion. The fourth of the big four remains KPMG but the decreased the gap with the strongest revenue growth of the four. Their 2011 revenues were $22.7 billion.

While these firms do a great job for large companies needing audits they are unlikely to be the best bet for small and medium sized companies. They are better served by a local accountant. They have the attention and capacity to help companies grow smartly. And of course they can handle any tax filing.

If you would like more details on the revenue of the big four you can download the report from big4.com.

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Accounting News


Tuesday, January 17, 2012
IRS Offers More Buyouts

The IRS is offering employee buyouts. This is a limited program of up to only 400 employees. They must take retirement before April. The maximum buyout is $25,000. In an agency of 100,000 people this will have a negligible impact on their headcount.

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Accounting News


Thursday, January 12, 2012
Mandatory Audit Firm Rotation

The International Standards for the Professional Practice of Internal Auditing proposed that audit firms be rotated every few years. The goal is to increase the independence and objectivity of the audit firm. If a firm is working to maintain the relationship and be awarded the work the following year they need to keep the audited firm happy. In a worst case scenario could mean intentionally overlooking problems with the financials.

The Institute of Internal Auditors (IIA) does not believe that there are any problems with keeping the same auditory over many years. They consider the relationship between the company and its auditor to be very important. If the auditor is changed too often this relationship will never be very strong. It will also increase the cost of an audit because there will need to be time for the auditor to learn about the company. The IIA suggest only requiring a company to change auditors if there are indicators of audit failure.

It is easy to appreciate the concerns of the IIA. There is little doubt that the cost of an new auditor is higher. But in the end an audit is performed to ensure that public financial data is accurate. The conflict of interest between staying on as auditor and maintaining independence override the costs. They are worried about all the business they will lose but not considering all the business that is now available for bid.

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Accounting News


Wednesday, January 11, 2012
Health Benefits for W-2s

The Patient Protection and Affordable Care Act (PPACA) requires health benefits to be reported on W-2s beginning 2012 tax year. So there is no change for the 2011 W-2s going out but now is the time to begin collecting the data. The company must report the employer-sponsored health coverage even though they are not currently subject to tax. There is an exception for companies with less than 250 W-2s in the prior year.

The burden will be the greatest for companies that self-insure. The easiest solution is to use the COBRA premium charged to terminated employees. Costs for dental, vision and long-term health insurance can not be included.

As the cost of health insurance rises it is important to share with employees the true value of their benefits package. The threat is that new tax laws will be passed that will include health benefits as taxable income.

If you need a good payroll service to help you with this years W-2s the the Accounting Aisle can help.

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Accounting News


Tuesday, January 10, 2012
e-File Open for Business Returns

The IRS has announced that the Modernized e-File is open to take business returns as of Monday, 1/9/12. The system is scheduled to accept individual tax returns on 1/17/12. For up to the minute status of the system visit the Modernized e-File Status Page.

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Accounting News


Thursday, January 5, 2012
Tax Deadline Set

To start the new year the IRS has set the tax deadlines for filing 2011 taxes. April 15th falls on a Sunday this year. And the 16th is Emancipation day in the District of Columbia. Since all District of Columbia holidays affect tax deadlines the official date is now Tuesday the 17th of April. This applies to all paper and e-file returns.

The second date announced is the first date to file e-file returns is January 17th.

After your tax forms have arrived we are here to help you find the best tax accountant.

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Accounting News


Sunday, January 1, 2012
Happy New Year

A happy and prosperous new year from the Accounting Aisle.

If 2012 is the year you are looking to improve your bottom line then our expert business accountants are here to help. We can help you with everything from filing taxes to cost accounting that identifies your best (and worst) services.