October 6, 2022

Accounting News Roundup: FASB’s Molotov Cocktail; Big Tax Brother; RIP, Michael Oxley | 01.04.16

FASB Proposes to Curb What Companies Must Disclose [NYT]
Gretchen Morgenson jumps on the proposal to redefine materiality as "a strictly legal concept," writing that the FASB "has lobbed a miniature Molotov cocktail into the usually staid world of audit standards" which is a fun mental image.  

If the I.R.S. Is Watching You, You’ll Pay Up [NYT]
Cheating on your taxes is not that easy, or common, when the appropriate amounts are automatically withheld by your employer. The IRS estimates that underreporting of wages by employers is as low as 1%. When there is no outside reporting, that number jumps to 56%. In other words, if people feel like they're being watched, they're more likely to cheat on their taxes. Similarly, just like grade school kids taking a test, putting "No cheating" at the top isn't nearly as effective as a teacher walking around the classroom eyeing students.

Appeals to conscience and civic duty or a reminder of the public good that taxes makes possible are not nearly as effective as the threat of detection and punishment in reducing evasion.

There's something about the idea that you're being watched that deters some people from bad behavior. That causes some people to crow about privacy, but they're "protecting the cheaters" according to David Weisbach, a law professor at the University of Chicago.

Michael G. Oxley, Co-Author of Anti-Fraud Legislation, Dies at 71 [AP]
Former Ohio Congressman Michael Oxley served as an FBI agent before being elected to the Ohio House of Representatives in 1977. He won a special election in 1981 that sent him to Washington. Of course, many of you might just owe your gainful employment to Mr. Oxley, who helped investigate Enron's failure and write the Sarbanes-Oxley Act that was passed in 2002.

In other news:

Image: Wikipedia

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