• A Bipartisan Plan for Tax Fairness [WSJ]
Senator Ron Wyden (D-OR) and Judd Gregg (R-NH) co-wrote an op-ed to introduce their bill for tax reform: The Bipartisan Tax Fairness and Simplification Act of 2010.
The magic word! Bipartisanship! No one will argue against this bill with the magic word in there. Well, we’ll see. In the meantime they plugged all the things voters like to hear:
• Most taxpayers will be able to use a one-page 1040.
• In some cases the IRS will prepare the return for you; all the taxpayer will have to do is sign date and return.
• Reduce the six tax brackets to three: 15%, 25%, and 35%.
• Tripling the standard deduction.
• The first 35% of long-term capital gains income would be tax exempt.
• Flat corporate tax rate of 24%.
Sounds simpler, anyway.
• PCAOB Offers Guidance on AS7 Documentation [Compliance Week]
Don’t worry auditors, this is just a little guidance on Auditing Standard 7: Engagement Quality Review that was requested by the SEC. All it says is that if your engagement happens to be royally f—ed up (i.e. “significant engagement deficiency is identified”) then you have to include enough documentation so that some strange auditor, with some experience, can understand why your engagement is such a mess. Nothing extra but don’t leave out the gory details.
• Steve King To Conservatives: ‘Implode’ IRS Offices [Talking Points Memo]
Congressman Steve King (R-IA) is the winner of open-mouth-insert-foot (Joe Biden is awfully quiet these days) this week after saying that he “emphasized” with Joe Stack and that he encouraged listeners at the Conservative Political Action Conference to “implode” other IRS offices.
This may be blown out of proportion since no one typically gets hurt in an implosion but we don’t think the likes of Glenn Beck should be allowed near explosives of any kind.
In a move that probably just adds one more annoying hoop to jump through for auditors, audit engagements will now go through quality review with adoption of AS No. 7, Engagement Quality Review (EQR).
According to the press release, “The EQR standard provides a framework for the engagement quality reviewer to objectively evaluate the significant judgments made and related conclusions reached by the engagement team in forming an overall conclusion about the engagement.”
We’re hoping the engagement quality reviewers will be given free range to document their “overall conclusions” as they wish. Some that we would suggest: “You call yourselves auditors?“, “I’m recommending that the PCAOB inspect this engagement” or “What in God’s holy name are you blathering about?“. It would be a shame for the firms to institute a check-the-box method that would compromise artistic integrity.
In other PCAOB news, the Board is asking for comments on its Concept Release “to consider the effects of a potential requirement for the engagement partner to sign the audit report.” We speculated last week that signatures in blood or dog excrement might be appropriate in many cases but if you’ve got other ideas, you’ve got 45 days to give them better suggestions.
Press Release [PCAOBUS.org]