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December 3, 2022

ANR: Accounting Pitfalls for U.S. Business in China; FRC Investigating Autonomy; Leave Tax Enforcement Dollars Alone! | 02.11.13

Accounting risk clouds big U.S. business bets in China [Reuters]
Tales of shady business practices abound in China – fake revenues, phony invoices, sham factories – but until recently, the problem seemed confined mostly to Chinese companies. No longer. Concern is growing about risks to U.S.-based multinationals in a country where American audit regulators are locked out by the Chinese government and bribery and fraud are routine. Questions about transparency and integrity weigh heavily on China, the world's second-largest economy, as it assumes greater economic leadership and responsibility. These doubts test its ability to adhere to international standards.

UK accounting body investigates Autonomy [FT]

The Financial Reporting Council, which sets UK standards for accounting and auditing, said on Monday it had decided to investigate after consultation with the Institute of Chartered Accountants in England and Wales, which represents 140,000 chartered accountants. The investigation will cover Autonomy’s accounts from January 1 2009 to June 30 2011, three months before the HP acquisition.
 
Canada Seeks to Unify Professional Accounting Bodies under CPA Designation [AWEB]
Canada's three national accounting bodies have joined together to create a new, national accounting body, the Chartered Professional Accountants of Canada (CPA Canada), which will issue the professional designation: Chartered Professional Accountant, or CPA. The CPA designation is intended to delineate the nation's professional accountants from other accountants and be accepted as an internationally accepted credential. 
 
Are Wages About to Start Rising? [At Work/WSJ]
Computer programmer, accountant, mechanical engineer: If you had kids in college these last few years, you probably encouraged them to enter fields of study that landed them in one of those jobs, which were among the strongest bets in a weak labor market. Yet despite the steady demand for—and low jobless rates among—these professionals during the recession and the first years of recovery, those fields experienced little wage growth between 2007 and 2011, according to data from the Labor Department. That’s finally starting to change. Earnings for those three occupations and a number of others cited in various surveys gauging the “war for talent” started to experience notable growth in 2012, the government data shows. Wages rose 3.4% from 2011 to 2012 for full-time workers in computer and mathematical occupations, 5.1% for accountants and auditors, 7.5% for electrical engineers, and 4.4% for mechanical engineers.
 
The SEC's Revolving Door [POGO]
A revolving door blurs the lines between one of the nation’s most important regulatory agencies and the interests it regulates. Former employees of the Securities and Exchange Commission (SEC) routinely help corporations try to influence SEC rulemaking, counter the agency’s investigations of suspected wrongdoing, soften the blow of SEC enforcement actions, block shareholder proposals, and win exemptions from federal law. POGO’s report examines many manifestations of the revolving door, analyzes how the revolving door can influence the SEC, and explores how to mitigate the most harmful effects.
 
KPMG To Donate 5,000 Books To Children In Need For Each Phil Mickelson And Stacy Lewis Tournament Win In 2013 [KPMG]
Seems like a better idea than relying on Phil to stick chip shots in a football stadium.
 
PCAOB’s Franzel Sees Progress on China Audit Inspections [AT]

The PCAOB has been signing audit firm inspection agreements with other countries, including France and Finland earlier this month, but China has remained a sticking point, particularly when it comes to inspections of Chinese companies that are trading on U.S. markets by doing a reverse merger with a U.S. shell company. “Unfortunately we have seen a lot of fraudulent activities in those companies, and beginning in 2010 and since then, about 67 of those companies have had their auditors actually resign, and 126 of those issuers have either been delisted from the U.S. exchanges, or they’ve gone dark and are no longer tapping into capital,” said [Jeanette] Franzel. “We don’t know how many more are out there and may need to remove themselves from the U.S. markets. Both we and the SEC are trying to negotiate with the Chinese government right now. We’ve been negotiating for quite some time, so there could be some more out there. It is a serious issue for investors who have invested in these companies if we and the SEC do not have oversight, so we continue to work on that.”

Law and Order: Tax Squad [Tax Notes via TaxProf]
[David Cay] Johnston discusses why it is a bad idea to cut dollars from tax enforcement, and he is skeptical that declining numbers of criminal tax prosecutions are the result of increased voluntary compliance.

Paying Them Back [WSJ]
Thanks to medical and technological advances, people are living longer—but more of them are outliving their savings. That is prompting their children to transfer assets to their parents, say private bankers, trust attorneys and accountants. The strategy is counterintuitive, and can invite huge tax bills and other financial hazards. Yet there are many different options available to adult children, ranging from paying bills and giving money directly to making intrafamily loans. There are even innovative "upward" trusts specially designed to transfer assets to the older generation.

Blue Ribbon Bacon Festival In Iowa Sizzles With Pork-Loving Pride [AP]
The smell of bacon was in the air Saturday as thousands converged on Iowa's capital city for an increasingly popular festival celebrating all things connected with the meat. Some people wore Viking hats and others walked around with makeshift snouts for the Blue Ribbon Bacon Festival. The annual event featured more than 10,000 pounds of bacon served in unusual ways, such as chocolate-dipped bacon and bacon-flavored cupcakes and gelato. "I love bacon more than I love my job," said Katie Nordquist, who was dressed in a tuxedo T-shirt that looked like bacon Saturday for her first time at the festival.

 

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