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PCAOB Enters into Enforcement Cooperation Agreement with Chinese Regulators [PCAOB, MOU]
The Public Company Accounting Oversight Board today announced that it has entered into a Memorandum of Understanding (MOU) on Enforcement Cooperation with the China Securities Regulatory Commission (CSRC) and the Ministry of Finance (MOF). The MOU establishes a cooperative framework between the parties for the production and exchange of audit documents relevant to investigations in both countries’ respective jurisdictions. More specifically, it provides a mechanism for the parties to request and receive from each other assistance in obtaining documents and information in furtherance of their investigative duties. "This agreement with China is an important step toward cross-border enforcement cooperation that is necessary to protect the interests of investors in U.S. capital markets,” said PCAOB Chairman James R. Doty. “We look forward to continued progress with our Chinese counterparts to reach an agreement on cross-border inspections of PCAOB-registered firms as well,” he said.
The Corrosive Effect of Apple’s Tax Avoidance [NYT]
Floyd Norris: "The shameful thing about Apple Inc.’s ability to structure its business to avoid United States taxes was not that it did it. In fact, as Apple executives tried to point out at the Senate hearing at which their tax strategies were detailed, they could have chosen to pay much less in American taxes than they did. The shameful thing is that we have a tax system that seems to allow multinational companies to choose what they want to pay. The fact that this costs the government money is important, but that is not the critical element. Revelations about the ability of the rich and well connected to duck taxes can have a corrosive effect on the attitudes of the rest of us. If others who are better off than you can get away with not paying taxes, why shouldn’t you look for a way to cheat on your taxes?"
Let’s get rid of corporate taxes altogether [Wonkblog]
Ezra Klein: "Mitt Romney got roundly mocked for saying, “corporations are people, too,” but he had a point. Talk to tax economists for very long and they’ll make a variant of the same argument. The question in corporate taxation isn’t whether it’s paid by people. Of course it is. It’s how much of it is paid by shareholders, how much of it is paid by workers, how much of it is paid by customers, etc. But there’s a simpler way to tax those people then by taxing corporations and having corporations pass the costs along to them: You could just tax the people directly. Depending on who you want to pay, you could raise payroll taxes, or raise capital gains and dividend taxes, or raise income taxes. The problem is we’d need to increase those taxes by quite a lot: The corporate income tax is expected to bring in more than $370 billion this year."
KPMG can't arbitrate claims by Madoff feeder fund investors – court [TRN&I]
A group of investors who lost $20 million in a fund that funneled money into Bernard Madoff's Ponzi scheme can continue to sue KPMG in court instead of arbitration, a Massachusetts appellate panel has ruled. The plaintiffs, who invested in hedge funds operated by Tremont Capital, had accused KPMG of not adequately performing its auditing functions and failing to notify investors of "red flags" about Madoff's scheme. KPMG had argued the claims by the 27 investors were subject to its arbitration clauses in engagement letters with the two hedge funds, Rye Select Broad Market Prime Fund and the Rye Select Broad Market XL Fund.