Accounting News Roundup: KPMG Has a Few UK Problems; Useless Use Taxes; About Those Q1 Expat Numbers… | 05.09.13

Posted on by Caleb Newquist

Fannie Mae to Send $59.4 Billion to U.S. Treasury [WSJ]
Fannie Mae said Thursday it would make a $59.4 billion payment to the U.S. Treasury next month after reporting a $58.7 billion first-quarter profit thanks to a big tax benefit the bailed-out mortgage-finance company booked after determining it would generate profits in the coming years. Fannie recognized $50.6 billion in tax benefits during the first quarter, in addition to pre-tax income of $8.1 billion during the period. That compared to a $2.7 billion gain during the year-earlier period. The tax boost stemmed from reversing write-downs of its deferred-tax assets, which are unused tax credits and deductions that can offset future tax bills but which are worthless if a company isn't expected to turn a profit and have taxable income. The mortgage-finance company began writing down the tax benefits in 2008 as rising mortgage defaults threatened to wipe out thin capital reserves. Some assets had also counted towards the company's capital, further squeezing the company as the financial crisis deepened. Fannie reclaimed the deferred-tax assets during the first quarter because the company concluded it is likely to be profitable for the foreseeable future. The turnaround has been led primarily by the housing market's broad rebound over the past year and a continued decline in the share of homeowners that aren't making their mortgage payments.

KPMG Faces Two Investigations From U.K. Accounting Regulator [Bloomberg]
The U.K.’s accounting watchdog placed KPMG LLP under two separate investigations, examining its audits of a car seller and the conduct of one of its partners. The Financial Reporting Council will investigate whether KPMG “was independent” when it audited the annual accounts of Nottingham, England-based Pendragon Plc (PDG) for 2010 and 2011. The regulator is also probing the conduct of a KPMG partner in relation to a “non-timely disposal of a share-holding in a client entity,” the FRC said in separate statements on its website today. The probes mean the accounting firm could face three FRC inquiries as the regulator decides whether to investigate the audits of HBOS Plc. (LLOY) The FRC is waiting on reports from the U.K. Parliament and financial regulator to consider whether it has a case, spokeswoman Sophie Broom said last month. KPMG was the auditor for HBOS before it was taken over by London-based Lloyds Banking Group Plc in a government-backed deal in 2008. KPMG said it would cooperate with the investigations.

IRS chief: Taxpayers will now start feeling sequester [The Hill]
Steven Miller, the acting commissioner, told a Senate Appropriations subcommittee that taxpayers calling the IRS for advice would soon be affected by the automatic spending cuts, and that the agency’s ability to collect revenues and battle fraud would also be impacted. Sequestration, Miller added, will only exacerbate recent cuts in the IRS budget. IRS and Treasury officials say that rolling back the tax-collecting agency’s budget is short-sighted, because a dollar spent at the IRS produces several times that amount in new revenues. “Without a change in the current budget environment, the American people will see erosion in our ability to serve them, and the federal government will see fewer receipts from our enforcement efforts,” Miller said at the Wednesday hearing.
 
No Use for Useless Stances [Tax Analysts]
Chris Bergin: "[T]here are Republicans in the House – and Speaker John Boehner may be one of them – who will vote against the bill simply because it has the word tax in it or even vaguely looks like a new tax. After all, they took an oath never, ever to increase taxes. Now, I’m down with principled stances. But I am sick of this childish and irresponsible fealty to a stupid and actually dangerous idea. Because I think what the oath really says is, “I vow not to do the job the voters sent me to do because on this issue of taxes I’ve decided not to think." Well, member of Congress, I think if you've taken this oath you’re pretty much useless."
 
Q1 2013 – Highest Quarterly Number of Expatriates Ever (But…) [International Tax Blog via TaxProf]
The person who tracks this stuff must have taken December off.
 
Musicians demand sports star tax breaks [AWEB]
You see what happens?
 
News Corp. Posts $42 Million Charge on Phone-Hacking Scandal [R&CJ]
Altogether, $390 million so far.
 
Six Components of a Great Corporate Culture [HBR]
A solid offering of coffee options is a good start.
 
Turn Bad Stress Into Good [WSJ]
That is, if you're experiencing any stress.
 
Giant Swamp Rats Are Literally Eating Louisiana [Yahoo!]

On the southern edge of Louisiana, there is almost as much water as land. You can't drive to anyone's house, you have to travel by boat, and sometimes there are hours of water between neighbors. It takes a special breed to make a home here, in the swamp, amongst the mosquitos and almost annual hurricanes. But those who do call it home, love it. They see a magical space of strange stillness and subtle rippling greens and grays where time worries no one and the freedom of the water is at your doorstep. But this Huck Finn way of life is being attacked on multiple fronts. Climate change's stronger storms are beating away at the fragile coastline, and the oil and gas industries are scarring the skyline while luring younger generations away from the local farming and fishing way of life. As if that weren't enough, 20-pound, semi-aquatic rodents, called nutria, which are native to Argentina, are taking over the marshes, devouring the native plants that hold the soil in place, and causing massive coastal erosion. Chris Metzier, an independent documentary filmmaker, has spent months in these swamps on the front lines of this battle, filming his upcoming documentary Rodents of Unusual Size.

 

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Accounting News Roundup: Coburn Offers Up Deficit Reduction Plan; RIP Borders; NYSSCPAs Suggests RTRP Exam Include Sample 1040 | 07.19.11

Bank of America Has Record Loss on Bad Home Loans [Bloomberg]
Bank of America Corp. (BAC) posted the biggest quarterly loss in the lender’s history after Chief Executive Officer Brian T. Moynihan booked more costs tied to defective mortgages. The shares rose 1 percent in early trading as the outlook for credit losses improved. The second-quarter loss of $8.83 billion, or 90 cents a share, compared with profit of $3.12 billion, or 27 cents, a year earlier, the Charlotte, North Carolina-based lender said today in a statement. Provisions for future credit losses dropped 60 percent, the bank said, and profit excluding one-s was 33 cents a share, beating the 29-cent average estimate of 21 analysts surveyed by Bloomberg.

Coburn deficit plan offers $9 trillion in savings [WaPo]
Sen. Tom Coburn (R-Okla.) on Monday released a plan that he says would achieve $9 trillion in deficit savings over the next decade through a combination of far-reaching spending cuts, entitlement reform and increased tax revenue. “This plan offers the American people 9 trillion reasons to stop making excuses and start solving the problems in Washington,” Coburn said at a Monday afternoon news conference announcing the 600-plus-page plan. “I have no doubt that both parties will criticize this plan, and I welcome that debate. But it’s not a legitimate criticism until you have a plan of your own.”

News Corp. Said to Consider Naming Chase Carey as CEO, Succeeding Murdoch [Bloomberg]
News Corp. executives who watched Murdoch, 80, rehearse for his appearance had concerns about how he handled questions, according to three people, who weren’t authorized to speak publicly. Murdoch and his son James are scheduled to discuss the company’s role in the alleged phone hacking of murder victims, members of the royal family and others by the News of the World, which was closed on July 10.

Accounting `Red Flags’ Drive Bond Spreads to Record Levels: China Credit [Bloomberg]
Borrowing costs have risen to record levels for Chinese companies marked with “red flags” by ratings firms for unclear financial reporting and high levels of private ownership. The extra yield investors demand to own the bonds of Nine Dragons Paper Holdings Ltd. (2689), LDK Solar Co. and Road King Infrastructure Ltd. (1098) instead of similar-maturity government debt widened to all-time highs after they were named by Fitch Ratings or Moody’s Investors Service for issues such as having changeable profit margins or long-serving independent directors.

Borders Forced to Liquidate, Close All Stores [WSJ]
Borders, which employs about 10,700 people, scrapped a bankruptcy-court auction scheduled for Tuesday amid the dearth of bids. It said it would ask a judge Thursday to approve a sale to liquidators led by Hilco Merchant Resources and Gordon Brothers Group. The company said liquidation of its remaining 399 stores could start as soon as Friday, and it is expected to go out of business for good by the end of September.

Study: Tax Credit Had ‘Fleeting’ Effect on Housing Markets [WSJ]
Critics of last year’s $8,000 tax credits for home purchases routinely argued that the credits were unlikely to do more than offer sellers the chance to boost their sale price by the amount of the tax credit. Those critics won’t be surprised, then, by a new paper that finds—you guessed it—that average listing prices rose by around $8,000 in the month after the signing of the first major tax credit, and that they fell by slightly less than $9,000 two months after the tax credits expired.

Is Green Mountain Coffee Roasters serving double talk to the press? [WCF]
Warning: the bullshit out of GMCR is extremely hot!

Huron Consulting Group Appoints Chief Financial Officer [Huron Consulting]
C. Mark Hussey has quite the alphabet soup on his résumé – CPA, CMA, CFA.

New York CPAs Give IRS a To-Do List for Tax Prep Exam [AT]
“A practical section involving the preparation of a sample return is essential,” wrote Jonathan Horn and Vincent J. Cosenza, the chair and vice chair, respectively, of the NYSSCPA Taxation of Individuals Committee. he exam taker should complete not only a sample Form 1040, they suggested. The exam should also cover, at a minimum, a variety of tax law areas required to properly complete a 1040. The three-to-four hour test should include a combination of multiple-choice questions, short-answer questions, and at least one essay question that that would “test the applicants’ ability to communicate tax concepts to their clients.”