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. 172, No. 1, July

Building a Consulting Practice; CPAs Can Improve Their Clients' Businesses and Their Own Firms by Offering Business Advice
For many small to midsized firms, it is no longer enough to provide only traditional services. In today's competitive marketplace, more is required. Individual practitioners and small to midsize firms that have not already done so must develop new...
Can a CPA Sell Computer Products and Still Give Unbiased Advice? A Growing Number of Consultants Seek Ways to Maintain Professional Standards
During the past decade, CPA firms increasingly have expanded into the computer consulting field. Over the years, many formed close relationships with some hardware and software vendors to develop the expertise to install specialized products. In time,...
Changes to Stock Option Plans and Allocating Basis to Assets and Liabilities Acquired in a Leveraged Buyout
This month's column discusses consensuses reached by the FASB Emerging Issues Task Force EITF or task force) concerning accounting for changes to fixed employee stock option plans resulting from an eqity restructuring, and concerning allocating basis...
Effective Interviewing Skills for Auditors
EFFECTIVE INTERVIEWING SKILLS FOR AUDITORS Auditors spend considerable time interviewing client personnel. Yet most auditors have received little formal training in how to conduct an effective audit interview. This month, Thomas R. Craig, PhD, CPA,...
Ernst & Young Not Liable in ZZZZ Best Case
A California appellate court ruled Ernst & Young was not liable to Union Bank of California, which allegedly relied on Ernst's review report in extending $7 million to ZZZZ Best Co. Z Best, a California company, failed in 1986 after authorities...
How to Make a Success of Software Consulting; Accounting Program Installations Open Doors to New Business
Accounting software installation can be a highly profitable venture for CPA firms-generating not only revenue in its own right but opening the door to new accounting clients. However, many CPA firms that have expanded into this new field over the last...
IRS Agreement on Transfer Pricing Now Possible
In March, the IRS issued revenue procedure 91-22, providing guidance on securing an "advance pricing agreement" (APA). An APA is an agreement between the taxpayer and the government designed to obtain IRS approval of a taxpayer's proposed methodology...
Lifting the Cloud on Home Office Deductions; a Recent Tax Court Decision Means More Taxpayers Can Deduct Home Office Expenses - Maybe
The tax laws concerning home office deductions have changed significantly over the last two decades. During this time, the Tax Court has failed to provide a consistent interpretation of the law; in particular, the court has grappled with the principal-place-of-business...
Powers of Attorney: Taxation with Representation
One of the major roles CPAs play is taxpayer representative before the Internal Revenue Service. A taxpayer that disagrees with the IRS examiner's findings can appeal and may have a CPA (or a lawyer or enrolled agent) represent him or her in these...
Professional Liability Insurance: Go Bare or Not?
James H. Thompson, CPA, PhD, professor of accounting, Meinders School of Business, Oklahoma City University, Oklahoma City, 73106, and Laurie J. Henry, CPA, instructor, School of Accountancy, University of Mississippi, University, 38677, reveal what...
Protecting Personal Assets; It's Vital to Safeguard Personal Property before Problems Occur
Professionals who practice in partnerships face special risks because they can face liability for potential claims against their partners. In larger practices, a professional may be vulnerable to claims against his or her personal assets resulting...
Remodeling the House of GAAP; Proposed Changes in the GAAP Hierarchy May Be the Most Extensive Ever
Some have likened the hierarchy of generally accepted accounting principles to a house, with different floors corresponding to the different levels of authority of the various standards. (See JofA, June 84, page 122.) The "house of GAAP" rests on a...
Rostenkowski to Introduce Tax Simplification Bill
7 Addressing the American Institute of CPAs spring tax division meeting, House Ways and Means Committee Chairman Dan Rostenkowski D-Ill.) said he plans to introduce a tax simplification bill. "I will do everything I can to see that the bill moves...
S Corporation and Partnership Fringe Benefits
In revenue ruling 91-26, the Internal Revenue Service changed the way to report medical insurance premiums paid by a partnership on behalf of a partner or paid by an S corporation on behalf of a morethan-2% shareholder (IRB no. 1991-15, 3/26/91). ...
Special Needs Trusts: Financial and Estate Planning for the Disabled; How to Structure an Estate Plan That Won't Jeopardize a Disabled Child's Eligibility for Public Assistance
Many clients have disabled children who receive Social Security supplemental security income benefits SSI). Parents of disabled children receiving benefits face an almost insurmountable dilemma when doing financial and estate planning for the child....
Traps to Avoid in Product Costing
In today's hotly competitive business environment, accurate product costing has become critically important to a business's survival. John A. Lessner is a senior manager in Ernst & Ernst's cost and finance consulting practice in Minneapolis. This...
U.S. Supreme Court Upholds Punitive Damage Award
The U. S. Supreme Court, in Haslip v. Pacific Mutual Life Insurance Co. (553 S.2d 537), upheld a $840,000 punitive damages award against Pacific Mutual. In the case (discussed in the JofA Feb.91 Legal Scene), an agent for Pacific misappropriated...
William Patton: In Remembrance
Wilham Andrew Paton, a founder of the American Accounting Association who was voted Accounting Educator of the Century by the American Institute of CPAs in 1987, died in Ann Arbor, Michigan, in April at the age of 101. Paton began teaching in 1915...