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December 6, 2022

Accounting News Roundup: KPMG Chairman: Audit Partner ID Is ‘Misleading’; London’s Other Clients; Something for the Transfer Pricing Folks | 04.23.13

KPMG chairman says campaign against auditor anonymity misleading [Reuters]
Renewed calls by U.S. regulators for those who sign off on audit reports to be publicly named, sparked by an insider trading scandal at KPMG, will do little to restore investor confidence, the audit firm's chairman said on Tuesday. Michael Andrew said the proposal would do little to fix real problems such as determining what types of financial data need to be audited as well as boosting the flow of information between regulators and government agencies. "I don't think it's important. I think it's quite misleading. There are much more fundamental things that need to be done to restore confidence in investors than just having the individual partner designated on the account sign his name," KPMG's global chairman told Reuters.

Regulator urges end to auditor anonymity [FT (Subscription)]
Tucked in this interview with PCAOB Chairman Jim Doty, we find this: "
[A] person close to the situation told the FT [Scott London] had been lead auditor for three more as-yet unnamed companies in California at the time he was fired, two of which were entirely private while the third had publicly traded debt but no listed stock. The same person said routine checks at KPMG in 2012 had revealed a minor breach by Mr London of internal rules governing the timely disclosure of securities trading. However, the firm’s internal controls were not designed to pick up cash payments such as those he allegedly received from Mr Shaw, the person added. Mr London’s lawyer said it was his understanding that Mr London had indeed been lead auditor for three clients in addition to Herbalife and Skechers.  He also confirmed the minor rule breach, saying it related to investments that were not on KPMG's restricted stock list."
 
"Profit Shifters" Face Global Crackdown [CFO]

U.S. multinational companies that routinely allocate their profits to other countries to benefit from low-tax jurisdictions may soon need to change their tactics. The Organisation for Economic Co-operation and Development (OECD) is developing a global tax action plan, scheduled to be released in July, that targets transfer pricing (pricing among entities of a company) aimed at tax avoidance. In February, the Group of 20 nations urged the OECD, comprised of 34 countries including the United States, to develop the plan to help solve some of the tax inequities that exist globally. Sean Foley, principal in charge of KPMG’s global transfer pricing services practice in the United States, says the action plan is very important. “It’s the first time the G20 asked the OECD to give them an action plan. That’s never happened before.”  

Governments should disclose debt guaranties-U.S. accounting board [Reuters]
A state or local government that guarantees debt should list the agreement as a liability on its financial statements if it may have to make a payment for it in the future, the board that sets accounting standards for the U.S. public finance sector said on Monday. States, for example, occasionally guarantee bonds sold by local governments and some local governments back mortgage loans to individuals. Because such credit support could stress the governments' finances if they have to step in and make payments on the debt, those governments should put the agreements in their financial statements, the Governmental Accounting Standards Board said.

High Income Households Would Pay Most—But Not All—of the New Taxes in Obama’s 2014 Budget [TaxVox/TPC]
For the most part, Obama’s tax plan would do exactly what he promised: It would raise taxes by about $1 trillion (at least by his measure) over the next decade. And most, but not quite all, of those new revenues would come from those making $200,000 or more. The president stepped over his no-taxes line-in-the-sand for those making less, but not by much more than the length of his big toe.
 
New FASB rules standardize liquidation reporting [JofA]

Accounting Standards Update (ASU) 2013-07, Presentation of Financial Statements (Topic 205): Liquidation Basis of Accounting, describes how financial statements must be prepared by a company that is converting its assets to cash or other assets, and is settling its obligations with creditors with the intent of ceasing its activities. In these circumstances, financial statements must be prepared using a basis of accounting that helps financial statement users understand how much the organization will have available to distribute to investors after disposing of its assets and settling its obligations. FASB Chairman Leslie Seidman said in a news release that the standard will reduce diversity in practice and addresses the concerns of stakeholders who had asked for guidance from FASB.
 
Deloitte Not Liable For Mortgage Execs' Fraud, 9th Circ. Says [Law360 (Subscription)]
Deloitte & Touche LLP on Monday dodged claims that it allowed insiders at USA Commercial Mortgage Co. to steal from the now-bankrupt mortgage company and defraud investors when the Ninth Circuit affirmed a lower court ruling for the auditing giant.
 
Horse Racing and International Tax [Martin Sullivan/Tax Analysts]
MS: "Here’s what the IRS can do to prevent transfer pricing abuse. Before any multinational sells IP to a subsidiary in a tax haven for what it is telling the IRS is a fair price, it should allow any third party to purchase those rights at that price. If the price is right, they have nothing to lose."
 
Nation Starting To Realize New Era Of American Innovation Never Gonna Happen [The Onion]
“Listen, I’m sure we’re going to come out with better computers and video games and the internet will get a little faster, and that’s fine, but I assume that’ll just about be the extent of it,” said 29-year-old accountant Jessica Bradford, adding that the concept of American entrepreneurs spurring new, flourishing industries based on inventions comparable to the telephone and the computer chip is “pretty much out the window at this point.” “Who’s supposed to be thinking up all these groundbreaking ideas and investing in these emerging markets? Because I’m not doing it, I can tell you that much.”

 

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