Debt Talk Mired, Leader for G.O.P. Proposes Option [NYT]
From the White House and Congress to financial centers, pessimism spread on Tuesday about the prospects of a debt-limit deal between President Obama and Republicans, prompting the Senate Republican leader to propose a “last-choice option” that piqued the administration’s interest but angered conservatives in his own party. The leader, Senator Mitch McConnell of Kentucky, said a bipartisan budget-cutting deal is probably out of reach, making it unlikely that Republicans would approve an increase in the government’s debt limit by Aug. 2. To prevent default, he proposed that Congress in effect empower Mr. Obama to raise the government’s borrowing limit without its prior approval of offsetting cuts in spending.
News Corp pays 20% tax in US [FT]
News Corp’s political influence, which has ruptured dramatically in the UK in the past week, has not come as a result of its contributions to government coffers. Its latest 10-K statement showed that although the corporate tax rate in the US is 35 per cent, News Corp’s effective tax rate last year was 20 per cent. The company earned $2.5bn in profits and still managed to receive a tax benefit.
Senate Bill Seeks to Raise Revenue by Closing Tax Havens [NYT]
A bill introduced by Carl Levin of Michigan and Kent Conrad of North Dakota would tighten rules that allow hedge funds and corporations in the United States to skirt federal taxes by opening shell companies overseas. The measure would also change the I.R.S. regulations that allow traders of credit-default swaps to avoid paying federal taxes on many transactions that begin in the United States. And to help tax collectors track down hidden assets overseas, the proposal would empower the Treasury Department to ban any foreign bank that refused to cooperate with the I.R.S. By closing the loopholes, the plan could bring the Treasury as much as $100 billion a year, according to various estimates cited by Mr. Levin.
CFOs Having Second Thoughts on Capital Investments [CFOJ]
More than 40% of the 78 CFOs polled in the last two weeks of May said they would rather keep their cash and stay liquid than invest it. Respondents projected that capital spending would increase by 10.7% over the next year, less than the 11.8% forecast they gave in the previous quarter.
China frauds: In (partial) defense of the auditors [Bronte Capital]
I’m guessing audit firms will gladly take a partial defense from someone who isn’t a law firm that represents them.
PwC Will Answer For Centro But Judge Slams Directors First [Forbes]
PwC’s latest problems are down under.
FASB Tackling Private Company Accounting [CFOJ]
The Financial Accounting Standards Board took a step forward in developing modified GAAP for private companies on Monday, a move a main advocate of the standards found encouraging. The accounting standard setter announced that it had completed an initial assessment of the differences in the way private company financial statements are used by lenders, investors and others. In its announcement, FASB said that it would continue working towards creating a framework for private-company GAAP, and is seeking additional input on the issue.
Watchdog Proposes Dodd-Frank Standards for Broker-Dealer Audits [Bloomberg]
Accounting firms would have to consider how much risk their clients take when auditing brokerage firms under rules proposed by the industry’s new watchdog. The proposal from the Public Company Accounting Oversight Board comes a month after the nonprofit corporation established an inspection program for auditors of broker-dealers under terms of the 2010 Dodd-Frank financial reform act. “It would require auditors to use judgment to identify and focus on matters that are most important to the customer- protection objectives,” said PCAOB Chairman James R. Doty, in a statement.
Rush to Defend Tax Rule on Inventory and Profits [NYT]
One of the biggest revenue-raisers proposed by President Obama in negotiations with Congress is what he describes as an arcane change in the tax treatment of business inventories — things like steel, groceries and oil. But however complex the details, the effect of the change would be substantial, and in pushing for it Mr. Obama has kicked a hornet’s nest. Lobbyists from companies of all sizes are swarming around Congress to kill the proposal, which would prohibit the use of an accounting technique known as last in, first out, or LIFO. The technique is used to determine the cost of goods sold, and therefore the income earned, by a company.