September 27, 2022

Accounting News Roundup: ObamaCare Taxes Are Sequester-proof, Phantom Factories, and Numerology on the 1040 | 03.06.13

Sequester won’t interrupt collection of taxes from 'ObamaCare' [The Hill]
The Affordable Care Act (ACA), enacted in 2010 and derided by Republicans as “ObamaCare,” contains the broadest set of tax changes enacted in some two decades — more than 40 alterations in all, including penalties on people who choose not to purchase insurance. But while IRS and Treasury officials have warned of reduced services as employees are furloughed under the sequester, neither agency has expressed any concern that the automatic spending cuts would delay the rollout of the healthcare overhaul.

India Says Cadbury Used Phantom Factory to Avoid Taxes [WSJ]
India has accused Cadbury PLC of dodging about $46 million in taxes by pretending to produce candy at a factory that didn't exist. A 103-page report by the country's tax authorities, which was reviewed by The Wall Street Journal, accuses Cadbury's Indian unit of manipulating invoices and other documents to get a tax exemption available to companies that began production in new plants in the northern Indian state of Himachal Pradesh by March 31, 2010. The Directorate General of Central Excise Intelligence, which conducted the investigation, concluded that the Mondelez International Inc. unit's plant couldn't have existed by the deadline because the company hadn't received the necessary approvals from government agencies. Company statements indicate that Cadbury likely generated at least $700 million in sales from India last year.

New challenge to VIEs [CAB]
This seems appropriate: "I have learned from some investors that there has been a major challenge against the VIE structure of a U.S. listed Chinese company. The challenge relates to whether the VIE can be consolidated into the financial statements. The SEC has been aggressively examining VIE arrangements, but I have been unable to learn whether this challenge is a result of an SEC investigation, or who the company or auditor are."

More Trouble for the Big Four in China: Pushing Prudent Analysis or Propaganda? [CPE via Paul Gillis]
The charges against the Big Four all boil down to allegations they were either negligent in fulfilling their statutory duties, or in cahoots with bad guys scheming to defraud US investors. The implication is that their willy-nilly pursuit of fees led the Big Four to cut corners, surrender objectivity, and allow their judgment to become corrupted. Similar doubts can be raised about the quality, credibility and soundness of the judgments the accountants provide in assessing China’s private equity industry. Even as the PE market began to slide into serious trouble last year, the accountants kept talking up the industry. In particular, it’s worth reading the two big and well-publicized reports on China private equity produced by Ernst & Young  and PWC. Both can be downloaded by clicking here. E&Y Report. PWC Report. Both of these documents were published in late December 2012. All IPO activity for Chinese companies had come to an abrupt halt months earlier, and along with this, China’s PE firms basically went into hibernation, closing off almost all new investment in China. The situation has, if anything, worsened so far in 2013. And yet, to read these reports, you’d probably conclude everything was overall pretty rosy.

IRS doesn’t buy this numerology stuff [Tax Update]
Once in a while you prepare a return that happens to foot to a round number somewhere.  It looks funny, but it will happen occasionally just by chance.  But when they are all round, apparently the tax people might notice.

Men's Wearhouse Names Jon W. Kimmins as Chief Financial Officer [MW]
He likes the way this looks.

PwC Appoints Rick Moyer as Managing Partner of the Jacksonville Office [PwC]
No previous KPMG experience was necessary.

Forget raising tax money to pay for roads. Washington State lawmaker says bicycles are bad for the environment [DMWT]
Ladies and Gentlemen, Ed Orcutt: "Riding nonmotorized two-wheelers causes cyclists to have 'an increased heart rate and respiration,' according to Orcutt. And because of that exertion, 'You would be giving off more CO2 if you are riding a bike than driving in a car.' "

How your bad diet may weigh on your job review [MW]
Your company already knows whether you’ve been taking your meds, getting your teeth cleaned and going for regular medical checkups. Now some employers or their insurance companies are tracking what staffers eat, where they shop and how much weight they’re putting on — and taking action to keep them in line.

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