Journal of Accountancy

A monthly publication of the American Institute of Certified Public Accountants focusing on the latest news and developments related to the field of accounting, and written for CPAs and other accounting professionals.

Articles from Vol. 177, No. 3, March

A CPA in the Driver's Seat
Frederick J. Schwab, CPA, president and chief executive officer of Porsche Cars North America, Inc., in Reno, Nevada, shares his experience as a CPA in the auto industry. Journal: The German parent company of Porsche Cars North America was rounded...
Alternative Strategies for Litigation Battles
A full jury trial may not always be the best way to resolve disputes. Kay O. Wilburn, JD, adjunct professor, and Lowell S. Broom, CPA, DBA, associate professor of accounting, University of Alabama at Birmingham, describe CPAs' options. The potential...
Auto Rental Wisdom
When you rent a car, following these do's and don'ts can save some money and possibly a lot of aggravation. * Phone ahead to confirm the reservation for the car you want. Double check to be sure you will get a free upgrade if the car you've reserved...
Client Can Recover Purely Economic Damages in Negligence Case
An Illinois appellate court ruled a client could recover purely economic damages in a negligence case against an accounting firm without bringing a breach of contract action against it. The client alleged the firm had failed to perform accounting...
Court Limits Accountant's Duty to Third-Party Lender
The Missouri Court of Appeals ruled there must be evidence an accountant knew that financial statements he was to prepare for a client were to be given to a particular lender in order for the lender to sustain a negligence action against the accountant....
CPA 2000: What's Ahead for Accounting Software
If you think the computer revolutionized the accounting profession in the past decade, hang on to your trusty columnar pads--you ain't seen nothing yet. Until now, most CPAs used computers simply to automate the tasks they have been doing since...
Deducting Auto Expenses
Taxpayers who use their Cars for business are entitled to tax deductions for auto use, subject to certain rules and limits. Self-employed taxpayers and employees who either don't get reimbursed or are reimbursed under an employer's plan that doesn't...
Don't Overstay Your Welcome!
Internal Revenue Code section 162(a)(2) allows deductions for all ordinary and necessary travel expenses paid or incurred while taxpayers are "temporarily" away from home pursuing a trade or business. On the other hand, travel expenses for indefinite...
FASB 109 Implications for Foreign Financial Statements
Statement on Auditing Standards no. 69, The Meaning of "Present Fairly in Conformity With Generally Accepted Accounting Principles" in the Independent Auditor's Report, identifies Financial Accounting Standards Board emerging issues task force (EITF)...
FSC Provisions: Licensing Computer Software
In technical advice memorandum 9344002, the IRS concluded that a company that licensed computer software for reproduction outside the United States did not qualify for foreign sales corporation (FSC) benefits because it failed to meet several key tests....
Gadgets and Gizmos
Not too long ago, a car "loaded with options" had a radio, a heater and whitewall tires. Today, the list of options is much longer and certainly more expensive. Here is a clutch of options--some for convenience and others for safety. All are available...
GASB Proposal on Accounting for Grants
A Governmental Accounting Standards Board exposure draft would change accounting requirements for grants and other forms of financial assistance, including pass-through grants, food stamps and on-behalf payments. "Governments have done a masterful...
GM's General Auditor Looks Back
Eugene H. Flegm, CPA, is general auditor of General Motors. After 28 years at GM, including more than a decade as assistant comptroller overseeing financial accounting, he plans to retire this year. Below, he reflects on the changes he's seen. Journal:...
How CPAs Use Their Automobiles
CPAs are putting technology into high gear. A Journal of Accountancy survey found that 39% of respondents relied on cellular phones to stay in touch with their offices and clients and 37% packed their laptop computers when traveling on business....
Incorporated CPA Firms
Marvin L. Stone, CPA, 1967-68 president(*) of the American Institute of CPAs, says incorporation is needed to protect innocent partners' personal assets when their associates incur legal judgments. The imposition of enormous judgments against CPAs...
NAFTA Opens New Markets for CPAs
The North American Free Trade Agreement (NAFTA) will generate billions of dollars in additional trade, investment and economic growth in Canada, Mexico and the United States over the next decade. Clients and employers will rely heavily on CPAs' advice...
Option Options
Corporations always are looking for better ways to compensate executives and officers they wish to retain. Stock options have grown in popularity, especially since the Omnibus Budget Reconciliation Act of 1993 increased the top marginal tax rates,...
Private Letter Rulings: When/how/if
Taxpayers--generally through their CPAs--often apply for Internal Revenue Service private letter rulings to ensure proposed transactions will have the intended tax consequences. Such rulings may enable taxpayers to restructure proposed transactions...
Qs and as about the Special Committee on Financial Reporting
These are answers to frequently asked questions about the American Institute of CPAs special committee on financial reporting and its work. Q: Does the special committee's work invade the Financial Accounting Standards Board's turf? A: No....
Reinventing the IRS
Patricia B. Bissell, CPA, sole practitioner, Potomac, Maryland. One thing is definite: The Internal Revenue Service needs to upgrade its computer system, taking advantage of the technology that's now available. Such a move would streamline its operation...
Schuetze Wary over CPA Independence on Stock Option Proposal
Walter Schuetze, chief accountant of the Securities and Exchange Commission, said it was "very troubling" that "CPAs may have become cheerleaders for their clients" on a number of accounting issues, especially the Financial Accounting Standards Board's...
S & L Bailout Nears Completion as Industry Finances Improve
CPAs with clients or companies using thrift institutions as depositories can continue to rest easy. Office of Thrift Supervision third-quarter 1993 call report data for the nation's 1,788 savings and loans showed an increase of 7.2% in equity capital...
The Lowdown on Leasing
Leasing is in. With auto lease rates at about the lowest they have ever been, people who never dreamed of doing so are leasing, rather than buying, cars in unprecedented numbers. What makes leasing so hot now is that auto dealers and manufacturers,...
The Three Cs
Adequate auto insurance is a vital part of the financial planning process for both individuals and businesses. CPAs shopping for personal or business auto insurance for themselves, their clients or their employers should consider the three Cs of insurance--coverage,...