Good morning, counterati. It’s Monday again, here is some news for you to start your week.
‘Tis the season to get tax advice from TikTok. p.s. It’s they’re, buddy.
Accountants are too stupid to know about this because after all the schooling they just STOP learning! pic.twitter.com/BuMGHJuKx9
— Jessica Smith, EA 💪🏼, not a CPA (@Taxsavvyjessica) February 9, 2025
Something to chew on as both sides argue about fraud and waste:
My dad was an auditor with The Indiana Department of Revenue. He worked in the Muncie office for a couple of years and then out of the Fort Wayne office for 20 years.
He mostly audited businesses mostly.
He told me many times that most people want to pay their taxes and most…
And on the topic of fraud and waste, I suppose, Tesla’s VP of Finance rejects the assertion that Tesla is committing fraud just because tax rules are easily bested by giant corporations that can afford an army of professionals to best them.
Former Secretary of Labor and Berkeley professor Robert Reich tweeted on February 7:
Tesla earned $2.3 billion in the United States in 2024.
You’d think it paid a lot in taxes, right?
Well it paid precisely $0 in federal income taxes last year.
You want waste and fraud? Look at what some big corporations and the rich are getting away with.
Professor, Respectfully, Tesla’s income taxes are not an example of fraud. Tesla complies with all tax regulations in all of the regions of the world in which we operate. Details about 2024 Income Taxes were disclosed to last month in our 10-K. Notably – we outline our net operating loss carry-forwards, which result from the fact that Tesla has been unprofitable for the significant majority of its 20+ year history. This has been a very, very difficult business to build. Looking at any one recent year in isolation, therefore, will not provide the full picture.
ZDNet brings you 5 ways AI can help with your taxes – and 10 major mistakes to avoid:
In a recent test of ChatGPT’s Deep Research feature, the AI was asked to identify 20 jobs that OpenAI’s new o3 model was likely to replace. As ZDNET’s Sabrina Ortiz reported, “Right in time with tax return season, leading the table was the role of ‘tax preparer’ with a probability of 98% replacement, which ChatGPT deemed as ‘near-certain automation.'”
There is no doubt that retail tax preparation services are using some level of AI to reduce their workload, but while tax preparers may well be replaced by a machine, I’m not convinced that will lead to accurate or reliable tax returns — certainly not yet.
According to an August 2024 report by Boston-based investment banking firm Capstone Partners, there were 70 merger-and-acquisition deals in the accounting services industry through the first half of last year. Activity in the sector peaked post-pandemic in 2023 with 160 deals.
Those numbers will be fun to revisit in a couple years when mid-tier accounting starts to look like grocery store aisles:
What do you do to increase accountant retention at your office?
I believe deep, meaningful connections drive better business outcomes. To strengthen these connections, we have intentionally created team pods that foster relationships from the staff level to partners. Our Los Angeles leadership team recognizes the importance of engagement and has proactively connected with all team members – not just their designated coaches – regardless of project assignments.
Additionally, we established an advisory council composed of professionals from various service lines and experience levels. This group meets to discuss challenges employees face and provides insights and actionable solutions.
One key initiative they introduced was speed networking sessions to enhance cross-service-line connections through specialized discussion topics. They also proposed a reward system for employees who facilitate introductions between colleagues and clients, which not only drives cross-sales but also demonstrates our deep understanding of clients’ businesses and how we can better support their needs.
Elsewhere in LABJ, this guy explains why there’s a dearth of accounting graduates:
Younger people are not drawn to the long hours, lower wages and rigid deadlines of the accounting profession. The repetitive and often tedious tasks involved in preparing a tax return are not enticing for new talent, and we need to make efforts to develop, train and retain the next generation of accountants.
OK but how if none of the things you mention are going to change?
KPMG Canada had multiple deficiencies in five out of 10 audits inspected by the Public Company Accounting Oversight Board in the United States. In a highly detailed inspection report, consisting of 21 pages, the US audit watchdog also flagged 10 instances across three audit engagements in which the firm’s independence may have been impaired.
And independence took a few hits as well:
KPMG Canada self-identified 32 instances across 14 issuers in which the firm or its personnel appeared to have impaired the firm’s independence. In ten audits reviewed and in two other audits, the PCAOB further identified 10 instances across three issuers of potential non-compliance:
“Of these instances, nine related to investments in audit clients and one related to an other financial relationship with an audit client. Four of these financial relationships were instances where a partner in the firm’s chain of command had a financial relationship with an audit client, and three of these financial relationships were instances where a partner in the same office as the engagement partner for an issuer had a financial relationship with that issuer. Three of these instances related to a member of an engagement team.”
[Indiana Society of CPAs CEO Courtney] Kincaid says the program will address the talent pipeline and workforce development issues for the region’s CPA profession and expose Indianapolis-area students from various backgrounds to the profession.
The Indiana CPA Society has worked to address the issue for several years, and Kincaid highlighted their Accounting Careers Awareness Program (ACAP). She says the program targets high school and college students with an in-depth week-long focus on the profession.
U.S.-China audit talks seen making only modest progress [Reuters]
U.S. and Chinese securities regulators may soon strike a deal that would allow the Americans some access to Chinese auditors, but it is likely to be more superficial than Washington wants. A string of accounting scandals at U.S.-listed Chinese companies has increased pressure on regulators in both nations to toughen oversight of Chinese auditors. But a full-fledged agreement that allows the U.S. auditor watchdog, the Public Company Accounting Oversight Board (PCAOB), to review the work and papers of China-based auditors through formal inspections would be difficult to achie strong>Obama to Push for Wider Deal With G.O.P. on Deficit Cuts [NYT]
Heading into a crucial negotiating session on a budget deal on Thursday, President Obama has raised his sights and wants to strike a far-reaching agreement on cutting the federal deficit as Speaker John A. Boehner has signaled new willingness to bargain on revenues.
New Accounting Rule Would Favor Hedgers [CFOJ]
The proposed rule, International Financial Reporting Standard 9, greatly expands the kinds of transactions that qualify for hedge accounting under the current rule, International Accounting Standard 39, and the SEC is debating when, and under what conditions, U.S. companies would have to report their results in IFRS instead of U.S. GAAP. Hedge accounting is one area where the two regimes currently stand far apart.
Glass Lewis Faults RIM Governance Stance [Bloomberg]
Research In Motion Ltd. (RIMM)’s decision to study the overhaul of its management structure to avoid a shareholder vote next week indicates it’s avoiding a commitment to appoint an independent chair, Glass Lewis & Co. said. “The appointment of independent board leadership does not require further study, but rather concrete action,” Dimitri Zagoroff and Marian Macindoe, analysts with the San Francisco- based proxy adviser firm, wrote in a report. Glass Lewis advises investors that manage more than $15 trillion on proxy voting.
In Minnesota shutdown, workers who calculate the cost are laid off [WaPo]
Now more than six days old, the shutdown has continued to shutter parks and toll booths and to leave thousands of government workers at home. The state’s Democratic governor and Republican lawmakers continued to wrangle, without resolution, over a $5 billion budget gap Wednesday. The talks were continuing without clarity on the shutdown’s cost. The staff members who would calculate those figures are “currently laid off,” said John Pollard, a spokesman for Minnesota Management and Budget.
Another Reason to Insist on the Ring [Tax Update]
Cohabitation has its tax consequences.
House, Senate Tax Panels to Hear Ideas for Tax Overhaul at Joint Session [WSJ]
House and Senate tax-writing committees will hold a rare joint hearing to examine potential ideas for a tax overhaul. It’s reportedly the first joint hearing by the two panels on a tax issue since 1940, according to a press release issued late Wednesday. The hearing next Wednesday in the Capitol Visitor Center could signal a greater degree of cooperation over tax changes in the future, as the panels gear up for what could be an intensive effort to overhaul the federal tax code.
IASB’s New Pension Accounting Will Mean Big Changes [Institutional Investor]
A bunch of foreign corporations likely are starting to reevaluate their pension plans’ asset allocations, thanks to the International Accounting Standards Board. In June the IASB, whose accounting rules are used by about 120 countries that include all European Union members, published its amendments to IAS 19 Employee Benefits, which cover how defined benefit plan sponsors handle pensions in their financial statements.
Madam admits tax fraud in Denver brothel case [9News]
The madam of a high-end prostitution business that allegedly catered to some of Denver’s most famous and successful residents admits she’s guilty of owing the IRS tens of thousands of dollars in unpaid taxes and of tax evasion. Brenda Stewart, owner of Denver Sugar/Players changed her plea in federal court Wednesday afternoon from not guilty to guilty to one count of tax evasion. The government moved to dismiss the other 69 counts against her.
