Tag: Congress Will Fix This!

You Can Forget That Deal on the Estate Tax

Yes, the brain trust known as the U.S. Senate has managed to prolong the agony on the estate tax. There was a deal on the table as of yesterday but you can forget it! Hard to believe this could happen. Was it a fundamental disagreement on the proposal? Was it because everyone was broken up that Arlen Specter?


No, it’s mostly because some people (the R’s) don’t like that other people (the D’s) are being fraidy cats about not having enough votes:

Senate Minority Whip Jon Kyl (R-Ariz.) said the accord, which was all but forged a week ago, began to dissolve Monday night and broke down Tuesday after talks between leaders in both parties.

After talks with Senate Finance Chairman Max Baucus (D-Mont.) and Senate Minority Leader Mitch McConnell (R-Ky.), they scrapped a plan to move forward with the tax that expired at the end of 2009.

The reasoning, Kyl said, is that Senate Democrats aren’t allowing any legislation to reach the floor that doesn’t have support from the majority of its members.

“We no longer have an agreement because the Democratic side has decided that unless a matter has a guaranteed majority of Democratic votes going in, they’re not going to allow it on the floor, at least not voluntarily,” he said. “So we have to find a way to get a reasonable permanent estate tax reform to the floor where members can vote on it.”

For crissakes. This is this biggest case of “I’m taking my ball and GOING HOME” we’ve seen this week.

Joe Kristan does put the whole thing in perspective however, “Congress has been botching the estate tax for almost ten years now; why should they start getting anything right now?”

Kyl: Senate deal off on estate tax [On the Money/The Hill via TaxProf]
Estate Tax Deal? Not so Fast [Tax Update Blog]

AICPA, Others Ask U.S. Senate to Kindly Keep Their Filthy Mitts Off Accounting Standards

After the wisdom displayed by Senators in the Goldman Sachs hearing a couple weeks ago, it must have become evident to a group of concerned organizations took it upon themselves to voice concern with regard to any elected official that might give consideration to tipping his or her toe into the accounting standard waters.


Enter Son of Ohio, Sherrod Brown (D) who has proposed amendment SA 3853 to the financial regulation reform bill. The amendment would legislate financial reporting standards by forcing companies to “submit reports to the commission under this section record all assets and liabilities of the issuer on the balance sheet of the issuer.”

But don’t worry if you can’t figure out what the value of a liability is because you can just leave it off altogether granted that you don’t mind explaining:

“(i) the nature of the liability and purpose for incurring the liability; (ii) the most likely loss and the maximum loss the issuer may incur from the liability; (iii) whether any other person has recourse against the issuer with respect to the liability and, if so, the conditions under which such recourse may occur; and (iv) whether the issuer has any continuing involvement with an asset financed by the liability or any beneficial interest in the liability.”

While this seems all very well thought out, the CAQ, CFA Institute, AICPA, FEI and a gaggle of others smelled amateur hour and wrote a letter to the old boys in the Senate letting them know, in no uncertain terms, that this pretty much the worst idea they’ve ever heard:

[W]e are concerned with any amendment that would legislate accounting standards, including Brown amendment SA 3853 regarding “Financial Reporting.”
…
The accounting standards underlying such financial statements derive their legitimacy from the confidence that they are established, interpreted and, when necessary, modified based on independent, objective considerations that focus on the needs and demands of investors – the primary users of financial statements.
…
We believe political influences that dictate one particular outcome for an accounting standard without the benefit of a public due process that considers the views of investors and other stakeholders would have adverse impacts on investor confidence and the quality of financial reporting, which are of critical importance to the successful operation of the U.S. capital markets.

So in other words, Sherrod Brown, you can suck it. The FASB might not be hottest piece of ass around but by GOD, it’s what we’ve got. And we’ll be damned if you’re going to propose your hocus pocus American people Main St. financial statement Act.

Accounting Groups Object to Brown Amendment [Web CPA]
Standard_setter_independence_letter_to_Senate

Closely-Held Corporations May Want to Take a Bullet Over the Pending Dividend Tax Hike

As a role model, Andrew Jackson has serious shortcomings, not least his penchant for genocide. But some of his policies are back in vogue, like the casual destruction of the national banking system. Taxpayers may be choosing to be like Andy in another way before the end of t had the bad fortune to get crossways with Charles Dickinson, one of the best pistol shots in Tennessee, when dueling was still fashionable. He met his antagonist across the state line in Kentucky, where duels were legal. Jackson was serious about this one, so he decided to take all the time he needed to do Dickinson in. Given Dickinson’s marksmanship, that meant accepting a bullet. Sure enough, Dickinson’s shot hit home:

The bullet struck him in the chest, where it shattered two ribs and settled in to stay, festering, for the next 39 years. Slowly he lifted his left arm and placed it across his coat front, teeth clenched. “Great God! Have I missed him?” cried Dickinson. Dismayed, he stepped back a pace and was ordered to return to stand on his mark.

Blood ran into our hero’s shoes. He raised his pistol and took aim. The hammer stuck at half cock. Coolly he drew it back, aimed again, and fired. Dickinson fell, the bullet having passed clear through him, and died shortly afterward.

Taxpayers owning C corporation stock might also want to take a bullet, figuratively speaking, this year. That’s because the tax rate on dividends will either leap or soar in 2011.

The increase in the dividend rate is a consequence of the scheduled expiration of the 2001 Bush tax cuts after this year. Prior to the Bush administration, dividends were taxed as ordinary income. As dividends are distributions of corporate income already taxed at a corporate rate as high as 35%, that meant a combined rate of 57.75%. The Bush tax cuts tied the dividend rate to the capital gain rate, now 15%.

When the Bush tax cuts expire, the capital gain rate is set to return to 20%. But without Congressional action, dividends will again be taxed as ordinary income. Given the size of the deficit, the poisonous election-year political atmosphere, and that the President promised to hold the dividend rate to 20%, it’s likely that dividends will be taxed as ordinary income in 2011. That would means a 164% increase the top dividend rate.

But wait, there’s more! Starting in 2013, Obamacare will tack another 3.8% to the top rate on investment income, resulting in a top dividend rate of of 43.4%, making the total tax increase over 189%.

This makes it tempting to take the bullet – a big 2010 dividend out of a closely-held C corporation. It will be especially attractive for shareholders who lack the ability to suck out corporate cash using the usual tricks of shareholder bonuses or rent payments.

Yes, it means taking a bullet. Taking dividends out of closely-held corporations breaks the rules of the C corporation tax planning crib book. Taxpayers go to elaborate lengths to avoid taking income before they have to. But a 189% tax increase might be enough to make some taxpayers take the bullet, like Andy, for the greater good.

You Can Blame the Tax Code for Expensive Baseball Tickets

Since it’s opening day for baseball, there are probably a few of you (non-tax accountants) that are at the ballpark enjoying sun, overpriced beers and, if you’re lucky, some complimentary tickets on behalf of your firm.

If you happen to be shelling out your own hard-earned money however, you’re no doubt aware that price of your tickets continue to go up season after season. Throw in $9 beers and Brother Jimmy’s BBQ and you’ll spend a small grip just to enjoy a day of sport and no work.

What’s the cause of the skyrocketing cost of attending a baseball game, you ask? The tax code of course!


That’s according to an op-ed by two professors, Duke law professor Richard Schmalbeck and Rutgers business professor Jay Soled, in today’s Times.

There are many reasons for the price explosion, but a critical factor has been the ability of businesses to write off tickets as entertainment expenses — essentially a huge, and wholly unnecessary, government subsidy.

These deductions have led to higher ticket prices in two ways. On the demand side, they have fueled competition for scarce seats, with business taxpayers bidding in part with dollars they save through the deductions.

On the supply side, the large number of businesses bidding for expensive seats has driven the expansion of luxury skyboxes and a reduction in overall seats in new ballparks.

The authors note that baseball was, until the 1970s, a “populist sport” and fans of all economic classes could attend games for a reasonable cost. Those days are long gone and the professors blame the ability of corporations to deduct business-entertainment expenses as the culprit. They state that you not need look further than the opening of the new Yankee Stadium that has “3,000 fewer seats than its 1923 predecessor but almost three times as many skybox suites.”

The professors advocate a limit on deductions for on luxury tickets to a low fixed amount (e.g. $50). They cite the outright elimination as “unrealistic” but we can’t recall at time when “realistic” and “Congress” collided in a sentence.

We agree with our esteemed colleague at ATL that if you really want to stick it to the companies who take advantage of tax code’s generous provisions, just make skybox tickets non-deductible altogether.

As the authors note, Corporate America has a love affair with sports-related perks and we’d guess that eliminating the deduction would not stop them from buying luxury tickets. The client relation types in your firms know that there is an intangible value to wooing potential clients in some comfortable confines as opposed to cramped seating in the stands with the commoners.

Throw Out Skybox Tax Subsidies [NYT via ATL]

Possible New Tax Forms Under Healthcare Reform

As we plod into the glistening new vistas of Obamacare, what sort of wonderful tax returns await us there?

The biggest change, one that will hit every 1040 from the simple 1040-EZ to the full-blown 1040 starting in 2014, will be the new “personal responsibility payment.” The PRP is the marketer’s name for a fine for not having an approved health insurance plan.


We’ve mentioned some of the weird enforcement problems this will bring – problems addressed in more technical detail here. The PRP can’t possibly work withrting – the individual numbers are just too small, and the IRS can’t audit everyone. If they are ever serious about this, there will have to be a new information reporting form issued by the health insurers, something like the 1098 form. The form will need to have the taxpayer’s social security number, and maybe some new number identifying the taxpayer’s IRS-approved health insurance plan. We’ll call this Form 1098-BCBS.

The 1040s will have a new form, or at least a new schedule – we’ll call it Schedule DRE. Schedule DRE will have a space to put the number from the 1098-BCBS, or lacking that, boxes to check for why you have failed to do your part to support health care in this great nation. If you don’t check the right boxes, there will be further lines to compute your PRP, which can range as high as 2% of your income. The final tax will carry to the taxes summary at the bottom of the second page of the 1040.

In the higher rent district, there will be new forms, or at least worksheets, to compute the two new Medicare taxes that apply starting in 2013. An additional .9% wage tax will apply to wages over $200,000 for single filers, $250,000 for joint returns, and $125,000 on married filing separate returns. While employers of single taxpayers who employ them all year will cover their tax through withholding, single job-switchers and married taxpayers will have to do this weird new computation on their 1040s somewhere. This one isn’t indexed for inflation, so we should all be there in a few years.

The wage tax computations will be childs play compared to the new 3.8% tax on “unearned income” – a phrase reeking of chutzpah, coming as it does from freaking Congress. This tax applies not only to old-fashioned investment income – interest, dividends and capital gains – but to royalties, rents, and to “passive” income from partnerships and S corporations. Auditing this tax may require all 16,000 of the new IRS agents called forth by Obamacare. “Passive” is defined here by the Sec. 469 rules, which were enacted to deal with tax shelter losses. Tax preparers will need to be very careful in distinguishing “passive” from “non-passive” income in many cases where it never used to matter.

IRS agents will have a field day trying to trip up folks who liked the income to be “passive” when it enabled them to use other losses. This will stimulate the economy of high-end tax consultants, who will quickly earn enough to qualify for the tax themselves, where they don’t already.

The unearned income tax tax will apply to the lesser of “unearned income” or the amount adjusted gross income exceeds $200,000 for single filers, $250,000 on joint returns ($125,000 on separate returns). So a new form will have to add up the “unearned” income from Schedule B, Schedule D, Schedule E, and maybe Schedule F, and compute the tax, which will also carry to the nether regions of Schedule 1040, page 2.

There will be plenty of other changes applying to 1040s between now and whenever Obamacare fully kicks in. There is a nice timetable here.

The IRS isn’t waiting to prepare to enforce these new rules. Going Concern has obtained an exclusive early draft of Schedule DRE.

Accounting News Roundup: GOP Says Healthcare Bill Will Expand IRS ‘Tentacles’; Jonathan Weil Counts Some of E&Y’s Bodies; RIP Jerry York | 03.19.10

• GOP targets IRS in latest health battle [The Hill via TaxProf]
The GOP is still fighting the health care bill tooth and nail and this may be the most effective strategy we’ve seen so far. Forget about debating coverage, preexisting conditions, etc. etc. Just name drop the IRS and a large group of people may change their minds about the whole thing.

“This is a vast expanse of power,” said Rep. Charles Boustany Jr. (R-La.) during a Thursday call organized by Republicans on the Ways and Means Committee. He said the IRS provisions in the healthcare bill “dangerously expand, in an ominous way, the tentacles of the IRS and its reach into every American family.”

On the surface this appears to be the typical GOP “the IRS is eeeevilllll” pandering but the real concern should be that the Service already has a lot to do. The Hill reports that if taxpayers are required to purchase health care insurance but fail to do so they could face fines. The IRS would be responsible for administering and collecting these fines.

Add that to this small task, “The IRS retrieved $2.35 trillion in 2009 by processing 236 million tax returns. It also is working to reduce a $345 billion gap in the taxes it collects and should collect.” Not to mention they’re trying to update systems, answer more phone calls, getting into high speed car chases. There’s always a lot going on.

And in case Rep. Boustany needs caught up, the Service is already auditing more people and trying to collect every dime nickel penny it can.

• Lehman’s Auditor Goes Blind From the Cooking [Bloomberg]
Jonathan Weil is not buying what Ernst & Young is selling. He reports that E&Y spokesman Charlie Perkins denied that the firm had “mischaracertized [the Bankruptcy Examiner’s] findings,” and characterized it this way, “[B]y E&Y’s twisted logic, it would be possible for a company to lie in its financial statements about its off-balance-sheet liabilities, and still manage to account correctly for them in the same financial statements. Imagine that.”

Weil takes off the gloves and digs up some old bodies, namely: partners recently sentenced to prison time for tax shelters; Bally’s (including vice chair Randy Fletchall); HealthSouth; Cendant (man, he’s going way back). Weil then thinks out loud, “With that kind of track record, it’s a wonder anyone would accept anything this firm says at face value again.”

• Jerry York, Iconic CFO, Dies at 71 [CFO]
Served as CFO for IBM, Chrysler. Adviser to Kirk Kerkorian and board member at Apple.

These Are the Real Scams: The Dirty Dozen Tax Policy Scams

The IRS just came out with its annual “Dirty Dozen” list of tax scams. It is a useful rundown of current ways for taxpayers to create enormous trouble for themselves. While useful, it’s incomplete. It only looks at scams used by taxpayers. Hence, the Dirty Dozen Tax Policy Scams — in reverse order Letterman-style.

12. State non-conformity to federal rules – The federal tax law is complicated enough. When you have to start over in order to compute your state taxes, that’s a recipe for stupid. When you have to file in multiple states, it’s just crazy. California, the nation’s leader in bad ideas, has led the way ttp://www.rothcpa.com/archives/005787.php”>the bandwagon is getting crowded.


11. Asinine feel-good tax breaks – These are stupid tax rules passed to show us just how caring our legislators are. The bill allowing 2009 deductions for 2010 Haiti relief donations is a classic of the genre – it will cause countless people to double up on the charitable deductions, cause state tax return errors, and might well screw up return processing, all without actually helping Haiti.

10. Heads they win, tails you lose provisions – Sometimes the tax laws are designed to screw you. Gamblers are popular screw-ees. The federal tax law taxes gambling winnings above the line, but allows deductions only “below the line,” as itemized deductions, and then only to the extent of winning. If you don’t itemize, you lose. If you don’t have meticulous records, you lose on audit. And in some states, you just plain lose – you are taxed on winning bets, and losses are ignored.

9. Bait and switch tax treats – The alternative minimum tax has made this popular. They enact a politically popular tax break – say, home equity loan deductions – and they disallow it for AMT. So it’s there, but it’s useless.

8. Using the tax law to micromanage your life – Soda taxes. Insulation tax credits. Tax breaks for riding bikes to work. Will anybody ride a bike to work in Des Moines in February because of a $25 tax break? The tax law is full of… this sort of thing.

7. Issuing assessments based on pretend numbers – This has become popular among the states, and at least one academic thinks it should become a national policy.

6. Economic Development Credits – Where the state economic development geniuses take your money to lure and subsidize your competitors. It’s like taking your wife’s purse to the bar to finance your pick-up efforts – the girls aren’t impressed.

5. Film tax credits – If there is a stupider approach to economic development than throwing money at Hollywood, at least this side of North Korea, it must be bipartisan.

4. Sitting on your tax refunds – The states have spent so much of your money that they don’t want to pay what they owe you. When they pay their public employees before they pay what they owe you, it shows where you rank.

3. AGI-based deduction and credit phaseouts – Almost every moronic new piddly tax break goes away as adjusted gross income goes up, whimsically embedding marginal rate spikes all over the tax code.

2. Shooting Jaywalkers – Sometimes the tax law has horrible penalties for trivial, but politically convenient, violations. The 50% of your bank balance FBAR penalty, the $10,000 automatic penalty for late international form reporting, and the insane Section 409A penalties for deferred compensation foot-faults are the kind of penalties that are almost perfectly designed to hammer honesty and reward sneakiness.

1. Expiring provisions – This cynical game enacts popular provisions (see AMT patch and research credit) one year at a time, so that the budgeters don’t have to count the real 5-year cost. The congresscritters, of course, have no intention of letting these things expire, and they often enact foolish permanent tax changes to fund another temporary extension.

Sadly, there’s one key difference between tax policy scams and the Dirty Dozen Tax Scams. You can go to jail if you use a Dirty Dozen Tax Scam, but if you use a dirty dozen tax policy scam, you just stay in Congress forever and ever, amen.

Tax Changes for Haiti Donations Is Bad Legislation. So What?

charlie rangel.jpgNot surprisingly, the House passed H.R. 4462 earlier today in order to accelerate charitable donations made for the relief efforts in Haiti. The bill was sponsored by Charlie Rangel (D-NY) and Dave Camp (R-MI).
We pointed out the thoughts of Howard Gleckman over at Tax Vox this morning and our contributor, Joe Kristan chimed in agreement earlier over at Tax Update Blog:

When something bad happens, politicians reflexively reach for the tax code. They should put it down and back away slowly…As bad as Haiti is, it’s not the first disaster ever, and one more change to the tax law isn’t going to solve that sad country’s problems. Of course, the proposed changes are more about politicians making a show of concern than actually accomplishing anything.

While our sentiments are with these two tax gurus, let’s not forget that every single member of the House of Representatives is up for re-election in less than 10 months. No one was going to vote against this bill. The Senate will pass it and the POTUS will sign it.
Noting that the bill is bad policy misses the point. We’ve all gotten used to Congress making the tax law progressively worse, so is it really necessary to mention that two-thirds of taxpayers don’t itemize deductions and thus, won’t see any benefit at all on their 2009 tax returns?
Those two-thirds of taxpayers don’t think about the standard deduction when they donate money to anything. It’s not about solving the problems of the mind job of the IRC, it’s about encouraging people to do what they can to help.
Save the bitching about Congress for [insert anything else].
Haiti Tax Relief [TaxProf Blog]
hr-4462.pdf

Section 409A: Worst Tax Enactment of the Decade

Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for thumbs down col.gifEditor’s note: Welcome to GC’s first edition of “Taxes: Because We’re the Little People” by Joe Kristan. Joe Kristan is a tax shareholder for Roth & Company, a Des Moines, Iowa CPA firm, where he works with closely-held businesses and their owners. Prior to helping start Roth & Company, he worked for two of what are now the Final Four CPA firms. He writes the Tax Update Blog and is available for seminars, first communions, Bar Mitzvahs, etc.
Sure, those Northwest pilots who missed Minnesota were off the mark. So was Arthur when he signed off on the Enron audit. But as badly as they missed the target, they look like Annie Oakley compared to Congress in its response to Enron.
Congress takes aim at the national firms whose audits failed to spot the looting at places like Enron. The result? SarBox, the greatest gravy train for the Final Four firms since the invention of the senior accountant.


The Congressional response on the tax side took a different approach. Rather than reward the guilty, they chose to beat the innocent. Hence Section 409A.
The Enron scandal featured elaborate deferred compensation plans to provide executives a gilded liferaft when the ship sinks. Congress responds with a code section affecting schoolteachers. They showed Ken Lay what for by designing a tax on folks on money they may never see because of somebody else’s foot fault.
Sec. 409A clobbers its victims two ways:
• It taxes employees on their deferred comp balances when the plan is out of compliance, even if the employee doesn’t get the money, ever.
• It hits them again with a 20% excise tax.
Worse, the code section imposing these penalties is so complicated that it took 3 years to complete the regulations that run to 200 pages, and are so complicated and intrusive that accidental noncompliance must be rampant.
This all makes Sec. 409A my choice as the worst tax enactment of the decade. But tastes differ. Let us know your nominee for the worst tax provision enacted from 2000 through 2009 in the comments and if we get some good submissions, we’ll put it to a vote.

Preliminary Analytics | 12.14.09

Thumbnail image for name-change.jpg• H.R. 4173, Summary of Accounting and Audit Related Provisions – Lots to digest here but it’s all important, including a possible GASP name change for the PCAOB. [FEI Financial Reporting Blog]
• Invitation to a Conversation: If the Auditors Were Missing from the Financial Crisis — Let’s Ask Why – Jim Peterson doesn’t mince words: “The simple if depressing reason is that their core product has long since been judged irrelevant. The standard auditor’s report is an anachronism — having lost any value it may once have had, except for legally-required compliance.” [Re: Balance/Jim Peterson]
• Accenture Makes Right Decision, Drops Tiger Sponsorship – The awkward inappropriateness of the whole situation is now hitting T. Dubs in the wallet, as Accenture jumps into the “your services are no longer needed” camp. He won’t starve. [The Big Four Blog]
• Open Letter to the Securities and Exchange Commission (Part 5): Issuer Retaliation Complaint Against Overstock.com – Patrick Byrne’s attempt to develop his own Richard Nixon-esque enemies list has been met with fierce resistance. [Sam Antar/White Collar Fraud]
• CPA firms face pricing pinch – “After years of gains since the government started keeping track in December 2003, overall prices for CPA firm services plummeted with the onset of recession in December 2007.” [CPA Trendlines]
• Citigroup to Repay $20 Billion of Government Bailout – $25 bil to go. Get on it. [Bloomberg]

Cutting Out SarbOx for Small Business? Here’s a Better Idea: Take the PCAOB…Please

pcaob.jpgHR 3817: Investor Protection Act of 2009. We’re going to stop worrying about HR 1207 since “auditing the Fed” was always a fundamentally moronic idea (even when I cheered it in lieu of ending the Fed outright) and worse, just here, since no one even knows what it means anymore) is on the chopping block now, and for some reason a ballet dancer with a serious grudge against the world is going after it. Fine, he’s just a little later than some of us.


HuffPo reports:

The White House is quietly working to undercut a key post-Enron reform, significantly weakening protection for everyday investors and threatening the administration’s image as a champion for financial regulatory reform.

I’m not sure whose image they are referring to but it certainly cannot be this administration’s (and I say that in the most politically asexual way possible). The only part that bothers me about this is the “quietly”, don’t make it so sinister, please.
HuffPo continues:

White House Chief of Staff Rahm Emanuel has been telling Democratic members of the House Financial Services Committee that he supports amending the Investor Protection Act of 2009 — a bill designed to beef up protection for investors — in order to exempt small businesses from a requirement in the Sarbanes-Oxley Act that mandates audits of internal controls. The Sarbanes-Oxley Act was enacted in 2002 in the wake of accounting scandals at Enron and Worldcom that rocked investors and damaged confidence in the markets.

Accounting Onion explains the effectiveness of Sarbanes Oxley in a little more detail than we care to, and if it doesn’t feel like you’re chasing your tail yet, wait, we’re not done.
Former SEC Chairman Arthur Levitt made it sound as though investors’ balls — and our only hope of getting out of this mess — were instantly twisted at the news.
Call me absolutely out of my fucking mind but this sounds like a small business bailout to me, at least indirectly. Save small business the costs (and benefits) of extensive audits and allow them to pocket the difference?
Good. While we’re at it, fire the PCAOB to save more money.
The PCAOB seems to think that we’ve got an audit problem. I contend here that the problem is with the auditors, and how many of them are being asked to go in there head down and pretend they don’t see a thing? I talk to them all the time. Does the PCAOB? I tell all of them to take notes when they ask me what to do. You PCAOB people should really see some of this, you’d be absolutely appalled.
Skeptical CPA argues that this was bullshit all along and I agree. He shares a moment at a Houston Financial Reporting Symposium. The PCAOB’s own Charles Niemeier (CN) is kind enough to explain his agency’s uselessness:

Someone asked, “Are PCAOB CPAs competent”? CN fumfered that one. Someone else noted most PCAOB CPAs were “former” Big 87654 partners. CN has no problem with that, since only those with large client audit experience could inspect the Big 87654’s work. Hey, CN, I’ve got some oceanfront property in Arizona to sell you. CN explained Sarbox was passed to prevent fraud. I ask, has Sarbox improved bank accounting? Some CPAs do what I call “disclosure” audits, i.e., they never dig into “non-accounting” data to ascertain the correctness of a client’s accounting records. For instance, looking at industrial engineering reports which might underlie a manufacturing company’s inventory costs. The Big 87654 is full of CPAs who do not understand cost accounting. CN reminded us the “PCAOB can’t reveal its findings”. I ask why not. Who or what is the PCAOB protecting?

I agree, they don’t know cost accounting. Do you know how many of them fail BEC every CPA exam testing window? It gets tiring.
The point is, I’m not sure this is worth bemoaning. Or maybe it’s just not worth caring anymore, they’re going to do whatever they want with accounting.
Worse, Citigroup, Bank of America, SunTrust, LandAmerica (the list goes on and on) all of these large, unstable financial firms continue to get unqualified audit opinions while 1,790 of 1,800 CPA firms have these guys breathing down their necks. Well not LandAmerica, they already failed miserably.