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Accounting News Roundup: Offshore Cash Stash and New York Times’ Non-GAAP Accounting | 04.26.16

Offshore profits

One of the things that people don't like about the US tax system is that it taxes income earned in foreign markets. It's one of the few countries that does that, so US multinational companies like to park their money offshore to shield it from the IRS. You might think that stashing money abroad would require a feat of bureaucratic strength, but it's actually pretty easy:

All those companies have to do is say the money is “indefinitely reinvested” abroad. Using that phrase allows them to avoid deducting U.S. taxes on those funds from their overall earnings. That can save them billions of dollars, fattening their bottom line.

What counts as reinvestment? “It’s fair to say the bar is very low,” said Michael Minihan, a principal at Dallas-based tax consulting firm Ryan LLC.

It's kinda like coming up with an excuse for not going to someone's dinner party: "Oh, sorry, can't make it. We have plans."

"Oh, really? What plans?"

"Just plans. Plans we've had for awhile."

I'm not really kidding:

Under U.S. accounting rules, companies have to persuade their auditors that they are justified in designating foreign earnings as permanently reinvested. But the evidence doesn’t have to be ironclad. It can include plans for new overseas factories, prospective acquisition sprees, or restrictions in loan agreements that prevent them from transferring money to the U.S.

However, sometimes you just feel like being honest with the person: "You know, last time we came to one of your dinner parties, I had diarrhea for the rest of the weekend, so, no, we won't be coming over."

Again, I'm only slightly exaggerating:

The companies and their auditors also can take into account the “tax consequences” of any decision to bring money back to the U.S. or reinvest overseas, according to an accounting guide published by accounting firm PricewaterhouseCoopers. They can justify parking the money overseas to avoid paying U.S. taxes by arguing that taxes are too high, said Ryan’s Mr. Minihan.

Keeping corporate cash overseas seems way less awkward. Until you're hauled in front of Congress to explain yourself.


I think one of my main deficiencies as a professional is my dislike of meetings. I do anything in my power to avoid them and yet people insist, so I go. It's rare that meetings start and end on time so it's rare that I don't regret them. It just doesn't seem worth it to me when I can be doing other things. Is my presence really necessary? Can't you just email me the highlights? Would you change your mind if I told you I didn't shower this morning?

However, I don't want to be rude because then I'm a just a jerk who doesn't play nice with others. And I'd like to think that I do play nice with others, I just don't want to do it in a group of 4 or more co-workers for a considerable length of time. In any case, I'm sure some of you share my plight so here are 7 ways to stop a meeting from dragging on.

Non-GAAP worries

Yesterday we noted a New York Times article that covered several non-GAAP accounting worries. Later in the day, friend of Going Concern Sam Antar shared some of his own:

And, you guessed it, The New York Times' non-GAAP reporting metric of "adjusted operating profit" excludes many expenses and the numbers improve quite a bit! There's little chance that the accounting department is connected to the newsroom, but it is good to know that not even the NYT can resist shuffling some numbers around. 

Previously, on Going Concern…

Chris Hooper wrote about accounting's boostrapping martyrdom complex. And in Open Items: someone wants to know what you all think of reneging on Big 4 offers.

In other news:

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