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Accounting News Roundup: PwC’s Dodgey Arrangement with FHFA; Ann Romney’s Passive Passion; Higher Ed Tax Credits | 07.27.12

Saying ‘You’re Fired’ Is the Only Answer Here [Bloomberg]
Jonathan Weil: "Freddie Mac, the housing financier with a $2.1 trillion balance sheet that was seized by regulators in 2008, remains under the control of its conservator, the Federal Housing Finance Agency. Yet its shares and bonds are still publicly traded. And it continues to file reports with the Securities and Exchange Commission, which means it must follow the SEC’s rules. Some of those regulations seem to have been ignored when the FHFA hired Freddie Mac’s auditor, PricewaterhouseCoopers LLP, in May to provide advice on managing the company. The firm’s work includes consulting services that are barred under the SEC’s auditor-independence rules, as far as I can tell. The agency and the accounting firm say they are following the rules. Their explanations aren’t convincing."

Romneys Have Tax Deduction With Olympic Hopes On Rafalca [Bloomberg]
Rafalca, a 15-year-old mare competing in dressage at the Olympics opening today in London, will be trying to add to the U.S. medal count and Republican presidential candidate Mitt Romney’s bottom line. Romney’s wife, Ann, who calls horses her “passion in life,” has an investment in them, including Rafalca, valued at as much as $500,000. The couple’s tax returns classify Ann Romney’s pastime as a business that lost $77,731 in 2010, rather than a hobby, and as a passive investment instead of one they actively manage. Each of those decisions has tax consequences.
Has Sarbanes-Oxley Done Its Job? [CFO]
Although the panelists were not sure whether further changes to audit processes are necessary, they said they would be more definitive on whether to support the PCAOB’s recent proposal for mandatory rotation of a company’s auditor if they had a better idea of the costs involved. Columbia University Law School professor John Coffee testified that he needs a “thorough cost-benefit study in order to support the proposal.” He further noted that if the PCAOB went forward with the idea without such an analysis, the oversight board would be subject to judicial review.
Do Higher Education Tax Credits Make Sense? [TaxVox]
The current programs and options are too complicated and families regularly select the wrong tax credit or program or fail to apply at all. The other problem is timing: A student may not see see the benefit of the tax break for  up to 18 months after she must pay her tuition.  While Dynarski thinks the solution is to simplify the credits and change the timing of delivery, I agree with Hodge that we would  be better served by eliminating the tax credits. We could use some of the savings to protect the recent expansion of  Pell grants. While we’re at it, we should simplify the Pell application process too.  
Accountant wins appeal against conviction for airport bomb Tweet after judge realises it was a JOKE [DM]
I wouldn't take this as a green light to start putting words like "I’m blowing the airport sky high!" in your tweets.
Zookeepers Want Orangutan To Quit Smoking [AP]
Indonesian zookeepers have moved an orangutan out of visitors' sight so she'll no longer smoke lit cigarettes people regularly throw into her cage. […] The 15-year-old Tori has been smoking for a decade. She mimics humans by holding cigarettes casually between her fingers while visitors watch and photograph her puffing away and flicking ashes on the ground.


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