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Accounting News Roundup | 12.31.12

Happy New Year, capital market servants! We're continuing the vacation-esque publishing schedule through tomorrow and we'll be back with you full-time on Wednesday. In the meantime, if you've been called to conduct a last-minute inventory or you have clients knocking on your door, demanding to know if this fiscal cliff is the end of the world as we know it, let us know.

Cliff's Edge Draws Close [WSJ]
Talks between Senate Minority Leader Mitch McConnell (R., Ky.) and Vice President Joe Biden continued through the night and into Monday morning, as Washington tried to do what it has promised for months: engineer an alternative to the so-called fiscal cliff. A White House official said Monday morning the talks made "progress overnight." A spokesman for Mr. McConnell said Monday the two men "will continue to work toward a solution." According to a McConnell aide, the senator's last two conversations with Mr. Biden were at 12:45 a.m. and 6:30 a.m. On taxes, one of the thorniest issues on the table, the two sides appeared to be converging. President Barack Obama has called for raising individual income-tax rates on family income above $250,000. In the latest round of Senate talks, Republicans proposed a $550,000 threshold, which Democrats moved to $450,000, according to Sen. Dick Durbin (D., Ill.). On the estate tax, Democrats are no longer insisting on an increased rate and instead have agreed to put the matter to a separate vote, which suggests current rates will likely continue. That's a concession to the GOP and a number of farm-state Democrats in the Senate. Absent action, rates on estates will jump and the threshold at which they would hit is set to fall.

Obama: "Fiscal cliff" will be solved "One way or another" [CBS]
"Number one, we're going to see an agreement in the next 48 hours, in which case, middle-class taxes will not go up. If that doesn't happen, then Democrats in the Senate will put a bill on the floor of the Senate, and Republicans will have to decide if they're going to block it, which will mean that middle class taxes do go up. I don't think they would want to do that politically, but they may end up doing it." If all else fails, said Mr. Obama, "then we'll come back with a new Congress on January 4 and the first bill that will be introduced on the floor will be to cut taxes on middle class families." 

A Showdown Long Foreseen [NYT]

From the first fight over a short-term spending agreement to keep the government open in early 2011 to the later tangle over the debt ceiling to the failure of last year’s special budget committee and the resulting automatic spending cuts that now loom along with tax increases, the so-called fiscal cliff was built, slab by partisan slab, to where it now threatens the nation’s finances. “Something has gone terribly wrong,” said Senator Joe Manchin III, Democrat of West Virginia, “when the biggest threat to our American economy is the American Congress.”
The Departed [Slate]
From Dave Weigel: "Three soon-to-be-former congressmen talk about how bad things have gotten."

Experts Back Deutsche Whistleblowers [FT]
Accounting experts say Deutsche Bank appears to have improperly accounted for billions of dollars of credit derivatives trades by failing to value adequately the risk that its trading counterparties could walk away.

Duff & Phelps to Be Sold for $665.5 Million [DealBook]
Duff & Phelps, which provides valuation and merger advice to other companies, is finding itself on the other side of the table. The firm announced Sunday that it had reached a $665.5 million deal to be acquired by a consortium that includes the Carlyle Group. The offering price of $15.55 a share in cash is a 19.2 percent premium to Duff & Phelps’s closing price on Friday. The consortium purchasing the firm also includes Stone Point Capital, Pictet & Cie and the Edmond de Rothschild Group. No single member of the consortium will own more than 35 percent of the company, Duff & Phelps said in its statement.

French Council Strikes Down 75% Tax Rate [NYT]
France’s Constitutional Council on Saturday struck down the Socialist government’s plan to impose a 75 percent marginal income tax rate on the wealthy, a measure that figured prominently among the campaign promises of President François Hollande and that had become a divisive emblem of his approach to cutting the budget deficit.

FAF wants U.S. represented in IASB standards advisory group [JofA]
The Financial Accounting Foundation trustees are advocating for broad membership, including a possible U.S. role, in a forum of national and regional standard setters that is being formed to advise the International Accounting Standards Board. In a letter dated Dec. 27, Financial Accounting Foundation (FAF) Chairman Jeffrey Diermeier encouraged the IFRS Foundation not to make a written commitment to IFRS a prerequisite for participation in the Accounting Standards Advisory Forum (ASAF), which will provide technical advice and feedback to the International Accounting Standards Board (IASB).

2012 Likely to be First Year Without AMT Patch [TF]
When Americans go to file this year's taxes, many will get a big surprise, as 2012 is shaping up to be the first year in the modern history of the AMT without a patch – and if that happens, millions of Americans who had never had to worry about the AMT before will suddenly find themselves on the hook for thousands of dollars.
Expert: Champagne cork can put an eye out [UPI]

he pressure inside a champagne bottle can launch a cork at 50 miles per hour as it leaves the bottle, fast enough to shatter glass, U.S. eye experts say. Dr. Monica L. Monica, an ophthalmologist and spokeswoman for the American Academy of Ophthalmology, said the speed at which a cork can be unleashed is fast enough to permanently damage vision, including rupture of the eye wall, acute glaucoma, retinal detachment, ocular bleeding, dislocation of the lens and damage to the eye's bone structure.


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