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Accounting News Roundup: Tax Code Contributes to Tax Gap; Lots of Audit Failures Down Under; Whistleblowing Pays | 06.29.11

Greece Secures Austerity Vote [WSJ]
Clashes have broken out between dozens of anarchists and police in front of Greece’s parliament Wednesday, just ahead of a vote on a five-year austerity plan the country needs to pass to avoid default. Eyewitnesses said demonstrators smashed marble paving stones in Athens’s central square and threw rocks at police, prompting them to respond by firing tear gas and clearing the area of people in front of Parliament.

Congress Finds Tax Code Complexity Contributes to Tax Gap [AT]
The complexity of the federal Tax Code can engender errors and underpaid taxes, according to a new government study. The study, by the Government Accountability Office, noted that the GAO has documented millions of taxpayer errors in following complex rules for determining taxpayers’ “basis”—generally the taxpayer’s investment in a property—in securities they sold or corporations they own.

Bank of America Agrees to $8.5 Billion Mortgage Settlement [WSJ]
Bank of America Corp. agreed Wednesday to pay $8.5 billion to settle claims by a group of high-profile investors who lost money on mortgage-backed securities purchased before the U.S. housing collapse. The payment will be the largest such settlement by a financial-services company to date, exceeding the total profits of the Charlotte, N.C., bank since the onset of the financial crisis in 2008.

Large Accounting Firms Bungled 17% of Australia Audits, Regulator Says [Bloomberg]
Four large accounting firms in Australia didn’t conduct proper audits in 17 percent of the cases reviewed by the country’s regulator, with smaller firms falling short almost a third of the time. The firms, which aren’t identified in the report, generally didn’t contain sufficient evidence to back the conclusions reached, according to the study, which was conducted between July 1, 2009 and Dec. 31 and was released today by the Australian Securities & Investment Commission.

The PCAOB’s Concept Release: What Might a Truly Useful Auditors’ Report Actually Say? [Re:Balance]
No, coverage of the Casey Anthony trial will not be a part of it.

A UBS Customer Pleads Guilty to Tax Evasion [Reuters]
An 81-year-old disbarred New York maritime lawyer admitted hiding more than $26.4 million at the Swiss bank UBS to avoid paying taxes, and agreed to pay a $9.8 million fine in pleading guilty on Monday. The former lawyer, Kenneth Heller, banked the money with UBS and then moved it to a smaller private Swiss bank, Wegelin, in June 2008 after reading that UBS might identify account holders, federal prosecutors said.

My Auditor, My Whistle-blower [CFO]
The Securities and Exchange Commission’s new whistle-blower rules, issued late last month, received much attention for providing cash rewards to securities-fraud informants. CFOs should be aware of a potential outcome of the rules that was not well publicized: auditors can blow the whistle on their own audit clients and receive a substantial bonus for doing so.

Posted in ANR