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December 5, 2022

Accounting News Roundup: Judge Stalls SEC’s Deloitte Case; Accountant Jobs Up, CPA Jobs Down; Neither Party Likes Cain’s 9-9-9 Tax Plan | 10.10.11

Corporate audit fees up? Beware of trouble ahead [Reuters]
A high or rising audit fee can indicate one of two things, experts say. Either the auditor is charging a risk premium, aiming to cover future legal costs to them of something going awry, or they may just be doing more work on the audit, digging into areas where results are uncertain. The studies’ findings come at a moment when regulators are considering requiring auditors to give out even more information. A proposal under consideration by the U.S. Public Company Accounting Oversight Board might have auditors disclosing more than the current minimal thumbs up or down. seem to be telling a valuable story.

U.S. Corporate Profit Rebound Loses Steam [Bloomberg]
Earnings per share for the Standard & Poor’s 500, excluding financial companies, rose 14 percent in the third quarter, the smallest gain since the end of 2009, analysts’ estimates compiled by Bloomberg show. That compares with 19 percent in the second quarter and 20 percent in the first. Analysts have begun reducing forecasts for the current quarter and beyond. S&P 500 futures rose today, indicating the index will extend last week’s rally.

Judge puts brakes on SEC’s Deloitte case [Reuters]
A federal judge on Friday put the brakes on the government’s attempt to quickly get documents related to possible accounting fraud at Chinese companies listed on U.S. stock exchanges. U.S. Magistrate Judge Deborah Robinson questioned whether she could force a Chinese unit of accounting firm Deloitte & Touche to hand over records to the U.S. Securities and Exchange Commission. In September the SEC asked the court to enforce a subpoena it sent to Deloitte seeking information about its Chinese unit’s audits of Longtop Financial Technologies Ltd, a Chinese company under investigation by the SEC.

Qwikster Is Gonester: Netflix Kills Its DVD-Only Business Before Launch [ATD]
While Netflix had to use some strained logic to explain its decision last month, this one is straightforward: It’s not going to force customers to use two different services to rent DVDs and streaming video, because customers hated that idea.

Surrey accountant completes two-thirds of run across US [BBC]
A Surrey accountant aiming to run 3,080 miles (4,957km) across the US to raise £10,000 for Help for Heroes is about two-thirds of the way into his route. Chris Finill, 52, of Cranleigh, has been running about 40 miles (64km) a day since he left San Francisco with athlete Steve Pope on 17 August. The pair, who plan to get to New York by 6 November for the city’s marathon, have just run through Iowa. They said gravel surfaces made recent runs a “nightmare” in a Twitter post.

Accountants Outpace CPAs in Job Listings [CPA Trendlines]
This doesn’t mean you can stop studying for the CPA.

Consistency in Accounting and Legal Discourses: The Overtime Cases [GOA]
Grumpies: “For several years battles have raged in several courtrooms concerning whether accounting firms have a legal obligation to pay junior accountants overtime. We are sympathetic to the position of the accounting firms, but worry about the soundness of their legal reasoning and conclusions. Do accounting firms have to be consistent in different domains? For example, does the logic in legal briefs and oral arguments have to be congruent with ethical principles and auditing standards?”


Practitioners Raise Concerns About Fingerprinting Proposal at IRS Hearing [JofA]
“We have serious concerns regarding the level of burden that the user fee regulations will place on CPA firms, particularly small and medium-size CPA firms,” AICPA Tax Executive Committee Chair Patricia Thompson, CPA, told the IRS panel. According to IRS estimates, 70% to 80% of those affected by the fees are operating as or employed by small entities. Thompson’s testimony focused on the fingerprinting requirement for nonsigning staff working under the supervision of a CPA, and she said the IRS should consider an alternative that would allow CPA firms to use a consumer reporting agency instead. Under that scenario, the costs per applicant would be significantly below what the IRS is likely to charge, and less burdensome to implement ,Thompson said.

Cain’s ‘9-9-9’ tax reform plan under fire from both left and right [OTM/The Hill]
Cain’s so-called “9-9-9” plan has liberals and tax analysts worried that the plan would not take in enough revenue, and that it would cause lower- and middle-income families to pay more. But conservatives have a different concern – that Cain’s plan to install a 9 percent national sales tax, paired with income and corporate taxes at that same rate, would give Democrats a brand new tax stream to try to squeeze out more revenue.

Corporate audit fees up? Beware of trouble ahead [Reuters]
A high or rising audit fee can indicate one of two things, experts say. Either the auditor is charging a risk premium, aiming to cover future legal costs to them of something going awry, or they may just be doing more work on the audit, digging into areas where results are uncertain. The studies’ findings come at a moment when regulators are considering requiring auditors to give out even more information. A proposal under consideration by the U.S. Public Company Accounting Oversight Board might have auditors disclosing more than the current minimal thumbs up or down. Meantime, their fees seem to be telling a valuable story.

U.S. Corporate Profit Rebound Loses Steam [Bloomberg]
Earnings per share for the Standard & Poor’s 500, excluding financial companies, rose 14 percent in the third quarter, the smallest gain since the end of 2009, analysts’ estimates compiled by Bloomberg show. That compares with 19 percent in the second quarter and 20 percent in the first. Analysts have begun reducing forecasts for the current quarter and beyond. S&P 500 futures rose today, indicating the index will extend last week’s rally.

Judge puts brakes on SEC’s Deloitte case [Reuters]
A federal judge on Friday put the brakes on the government’s attempt to quickly get documents related to possible accounting fraud at Chinese companies listed on U.S. stock exchanges. U.S. Magistrate Judge Deborah Robinson questioned whether she could force a Chinese unit of accounting firm Deloitte & Touche to hand over records to the U.S. Securities and Exchange Commission. In September the SEC asked the court to enforce a subpoena it sent to Deloitte seeking information about its Chinese unit’s audits of Longtop Financial Technologies Ltd, a Chinese company under investigation by the SEC.

Qwikster Is Gonester: Netflix Kills Its DVD-Only Business Before Launch [ATD]
While Netflix had to use some strained logic to explain its decision last month, this one is straightforward: It’s not going to force customers to use two different services to rent DVDs and streaming video, because customers hated that idea.

Surrey accountant completes two-thirds of run across US [BBC]
A Surrey accountant aiming to run 3,080 miles (4,957km) across the US to raise £10,000 for Help for Heroes is about two-thirds of the way into his route. Chris Finill, 52, of Cranleigh, has been running about 40 miles (64km) a day since he left San Francisco with athlete Steve Pope on 17 August. The pair, who plan to get to New York by 6 November for the city’s marathon, have just run through Iowa. They said gravel surfaces made recent runs a “nightmare” in a Twitter post.

Accountants Outpace CPAs in Job Listings [CPA Trendlines]
This doesn’t mean you can stop studying for the CPA.

Consistency in Accounting and Legal Discourses: The Overtime Cases [GOA]
Grumpies: “For several years battles have raged in several courtrooms concerning whether accounting firms have a legal obligation to pay junior accountants overtime. We are sympathetic to the position of the accounting firms, but worry about the soundness of their legal reasoning and conclusions. Do accounting firms have to be consistent in different domains? For example, does the logic in legal briefs and oral arguments have to be congruent with ethical principles and auditing standards?”


Practitioners Raise Concerns About Fingerprinting Proposal at IRS Hearing [JofA]
“We have serious concerns regarding the level of burden that the user fee regulations will place on CPA firms, particularly small and medium-size CPA firms,” AICPA Tax Executive Committee Chair Patricia Thompson, CPA, told the IRS panel. According to IRS estimates, 70% to 80% of those affected by the fees are operating as or employed by small entities. Thompson’s testimony focused on the fingerprinting requirement for nonsigning staff working under the supervision of a CPA, and she said the IRS should consider an alternative that would allow CPA firms to use a consumer reporting agency instead. Under that scenario, the costs per applicant would be significantly below what the IRS is likely to charge, and less burdensome to implement ,Thompson said.

Cain’s ‘9-9-9’ tax reform plan under fire from both left and right [OTM/The Hill]
Cain’s so-called “9-9-9” plan has liberals and tax analysts worried that the plan would not take in enough revenue, and that it would cause lower- and middle-income families to pay more. But conservatives have a different concern – that Cain’s plan to install a 9 percent national sales tax, paired with income and corporate taxes at that same rate, would give Democrats a brand new tax stream to try to squeeze out more revenue.

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