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Friday Footnotes: A World Without Accountants; GAO Finds a Big Mistake; ‘Fazbie’ | 8.5.22

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If the world had no accountants [The Indicator from Planet Money] As the unsung heroes of the financial world, CPAs (Certified Public Accountants) are responsible for a wide range of important tasks, from balancing the books to investigating fraud. So what happens when there’s not enough of them?

Meet the accountants who may become the new power brokers of taxes. [New York Times] Nearly 50 years ago, the Securities and Exchange Commission gave responsibility for writing and updating its “generally accepted accounting principles,” which determine how quarterly and annual profits are calculated, to the Financial Accounting Standards Board, a private organization funded by corporations and overseen by a nonprofit group, the Financial Accounting Foundation.

U.S. needs full access to Chinese company audit papers to resolve accounting dispute -watchdog [Reuters] The U.S. public company accounting regulator will not accept any restrictions on its access to the audit papers of Chinese companies listed in New York, its chair said on Monday, confirming a Reuters story published last week. Washington and Beijing are in talks to settle a long-running dispute over the auditing compliance of U.S.-listed Chinese companies. China authorities have long been reluctant to let overseas regulators inspect local accounting firms, citing national security concerns.

Deloitte fined in Kenya for negligence that led to bond investors losing $40.3 million in collapsed bank [Business Insider Africa] Business Insider Africa understands that this is the first of many likely penalties for Deloitte due to negligence which led to bond investors losing $40.3 million (Sh4.8 billion) following the collapse of Chase Bank Kenya Limited.

Crypto Head of PwC Leaves to Start $75M Fund in Dubai [The Crypto Times] Henri Arslanian will remain a senior advisor at PwC. His new firm Nine Blocks Capital Management, has already been granted provisional regulatory approval from Dubai’s Virtual Assets Regulatory Authority (VARA).

dOnt GEt a RaISe YoU’LL pAy 30% tAx!!!! Also don’t ever donate at the register, that’s just a scam so grocery stores can write off donations 🤡

Whoops! Department of Education makes $300 billion accounting mistake on student loans [Washington Examiner] A new report from the Government Accountability Office details a breathtaking discrepancy between what the federal government claimed the student loan program would generate, and what it actually costs taxpayers. As GAO explains: “Although the Department of Education originally estimated federal Direct Loans made in the last 25 years would generate billions in income for the federal government, its current estimates show these loans will cost the government billions.” That’s right, instead of “making” $114 billion for taxpayers as the Department of Education originally claimed, the federal student loan program actually costs taxpayers $10 billion annually, costing $197 billion since 1997 — a $311 billion discrepancy.

Plante Moran names 29 new partners [] Plante Moran, a Southfield, MI-headquartered accounting and consulting firm, has promoted 29 people to partner.

How the 15% US Minimum Corporate Tax Would Work [Washington Post] The tax, climate and energy proposal by Senate Democrats includes a 15% minimum tax on the domestic profits of large American companies. This roundabout method to collect more money from corporations, known as a minimum book tax, is critical to the deal, since it provides more than 40% of the new revenue to fund the energy investments and deficit reduction that Democrats are hoping to tout in the midterm elections this November.

Georgia says an ‘unborn child’ can be claimed as a dependent on state taxes [CNN] Georgians can now claim an “unborn child” as a dependent on their state taxes, the state’s Department of Revenue announced this week. Residents filing their 2022 tax returns who had fetuses with detectable heartbeats at six weeks of pregnancy can claim a dependent personal exemption in the amount of $3,000, the department said on Monday.

The revolution will not be televised, it will be in Reddit text posts:

The I.R.S. says new funding won’t mean more audits for middle-income Americans. [New York Times] Charles P. Rettig, the Internal Revenue Service commissioner, told Congress on Thursday that the tax collection agency would not increase audits of households earning less than $400,000 if it was given the additional $80 billion that lawmakers were considering in a proposed climate and tax legislation package. “These resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans,” Mr. Retting wrote in a letter to lawmakers. “As we have been planning, our investment of these enforcement resources is designed around Treasury’s directive that audit rates will not rise relative to recent years for households making under $400,000.”

What’s Driving the US-China Spat Over Audits and Delisting [Washington Post] About 200 Chinese companies whose shares trade in the US, including Inc. and Baidu Inc., face delisting because American regulators aren’t able to verify their financial audits. While China and the US continue to negotiate access to audits, there are signs that Chinese companies are preparing for the eventuality of expulsion from the New York Stock Exchange and the Nasdaq. Already, Alibaba Group Holding Ltd. said it will seek a primary listing in Hong Kong, a move that could be the precursor to its eventual departure.

Who Killed ‘Batgirl?’ Probably The Accountants [Forbes] Observers have pointed out that Batgirl, with a $75 million budget that ballooned to $90 million due to COVID-related overages, falls into a no-man’s land where it’s too expensive to go straight to streaming and not quite expensive enough to land as a box office blockbuster. Rather than spend the $150 million or so necessary to shine it up, or take a loss by putting it directly on the HBO MAX service that, according to other reports, is heading for its own rocky shoals, executives probably figured that snuffing it out under the purchase accounting allowance was the least bad option.

Car crashes into Land O’Lakes accounting firm [WFLA] Officials said the driver meant to go in reverse, but ended up driving forward instead. There were no injuries.

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