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. 184, No. 1, July

A Prescription for Change
Many people have predicted that small CPA firms will not be able to survive into the next century because of competitive and cost pressures. David Schlotzhauer, a partner of the six-person, Kansas-based Mills & Schlotzhauer firm, has spoken to...
Beresford Looks Forward
Old habits die hard. Dennis Beresford retired on June 30 as chairman of the Financial Accounting Standards Board after 10 productive years. He might be expected to look back on his administration, but he is still thinking about the future: Where is...
Charge It!
For some people, credit cards are like alcohol: They can lead to serious addiction, often leaving users deeply in debt. But used correctly by businesses, corporate purchase cards can save money, improve control and streamline a company's purchasing...
FASB to Address Pooling of Interests
The United States stands alone as perhaps the last country in the world to still permit pooling-of-interests accounting. Other countries either do not allow it at all or allow it only under certain narrow circumstances. "We're out of step with the...
Father's Gift of Stock Occurred Earlier Than He Thought
Claude Autin was a successful marine industry executive who sought to establish his only child Bobby in the business. In an effort to launch his son's career, Autin formed a separate company, Louisiana International Marine Inc. (LIM). Because Bobby...
First: Know Your Market
If you haven't learned how to identify customers' information needs, you're not ready to provide new assurance services. Why? Because those assurance services that meet customers' needs will sell; those that do not will fail. Traditional audit services...
GASB Gets Two New Members
The Financial Accounting Foundation named two new members to serve on the Governmental Accounting Standards Board. Cynthia B. Green, Ph.D., vice-president for state studies of New York's Citizens Budget Commission, and Edward J. Mazur, CPA, vice-president...
Guarding Computer Data
How safe are your computer files or documents? Do you protect them from prying eyes or, worse, from hackers who try to steal or destroy the data? Considering the priceless nature of your information, safeguarding data should be high on your priority...
IASC Says It's on Time
The International Accounting Standards Committee said it will meet a March 1998 deadline to complete a core set of international accounting standards (IASs). Sir Bryan Carsberg, IASC secretary-general, said there were a few instances in 1996 when...
If You Build It, Will They Come?
You've decided it's time your firm had a Web site. You want to describe your services on your site, but you know no one is going to visit just to read an online brochure, You have to provide material that is both useful and entertaining. The Journal...
Ineligible MSAs
Before 1997, individuals could deduct the cost of health insurance only if they itemized and their total medical expenses exceeded 7 1/2% of adjusted gross income. In addition, self-employed individuals were allowed to deduct only 30% of the cost...
Keeping in Step with the Competition
How can CPAs help their companies gain a marketing advantage? One CPA uses his technology expertise to bring his employer into the age of electronic commerce, giving it a distinct edge among retailers in the highly competitive fashion industry. His...
Marketing Clinic
Accounting firms across the nation are developing new marketing strategies to differentiate their firms from the rest. For example, most CPA firms are racing to set up their own Web sites to market their services online. However, one marketing tool...
New Model for Schools
The Governmental Accounting Standards Board issued for exposure a new reporting model for public colleges and universities. The basic financial statements would require an entitywide perspective, a fund-based perspective and a management's discussion...
New White House Proposals on Simplification and Taxpayer Rights
The Treasury Department announced the Clinton Administration's package of tax simplification and taxpayer rights initiatives. The package includes proposals on global interest netting and alternative minimum tax relief of small companies. Treasury...
Overpayments, Underpayments and Interest Netting
Since 1986, the Internal Revenue Service has provided separate tax rates for overpayments and underpayments -- with higher rates for underpayments. To reduce interest expenses, most companies want over-and underpayments "netted" when they overlap...
Public Hearing on SSARS No. 1
The controversial issue of so-called plain-paper financial statements -- "plain" because CPAs do not have to put their names on them -- is being reconsidered at a public hearing. The American Institute of CPAs accounting and review services committee...
Selecting an Investment Adviser
Helping a client select an investment adviser is something CPA/financial planners are frequently called on to do. But what questions should the CPA and the client ask each prospective adviser to establish his or her credentials? Here is a checklist...
Sherlock Holmes, CPA
Accountants work as auditors, tax advisers, controllers and government officials. Some also work as novelists. Three recent mystery novels highlight the exciting, dangerous world of accounting -- and educate the reader, too. Murder in Tahoe (Casino...
Small Business Tax Solutions
Q To ensure that a corporate merger will be treated as a tax-free reorganization by the Internal Revenue Service, how should the continuity of interest requirement be measured under the new regulations that have been proposed by the Treasury Department?...
Sole Owner Can't Use Fifth Amendment to Prevent IRS Request for Documents
Mr. Maxey was the sole owner of Maxey & Co. P.C., a tax preparation business. He had organized the business as a corporation and was the sole shareholder. In 1996, the IRS served a summons on Maxey -- as the company's sole agent and owner -- to...
Survey Reveals Worry, Confusion - and Opportunities
In January 1997, 1,000 people, aged 30 to 59, were interviewed by phone on a variety of financial planning concerns. Some of the results presented here are compared with earlier surveys. Barton Francis, CPA, PFS, a partner of Ernst & Young and...
The Down Side of Downsizing
Many corporations have adopted the practice of hiring temporary employees, leasing employees or using independent contractors to increase profits. Such a practice has well -- documented tax and nontax advantages. On the tax side, employers are not...
The ISB: A New Board to Monitor Auditor Independence
The Securities and Exchange Commission and the American Institute of CPAs jointly announced the formation within the AICPA of a new, private-sector body that will create, codify, amend and preserve independence standards for auditors of public companies....
Understanding Risk in Mutual Fund Selection
Mutual fund investors still get only half the story. The focus -- in both the financial press and in advertisements -- is on investment return, often precisely quantified by historical returns over several time intervals, with any mention of the fund's...
Victory for CPAs in Litigation Services
In a case that spawned more than 11 years of litigation, a California appellate court has again reversed and remanded back to the trial court the Mattco Forge v. Ernst & Young case. This case began in September 1985 when Mattco sued General Electric,...
Watch out for Abusive Trusts
The Internal Revenue Service issued a warning for taxpayers using trusts to illegally avoid individual or corporate income taxes. In information release 97-19, IRS Chief Compliance Officer James Donelson said the IRS receives more than 3 million trust...
What Happened to Limited Partnerships?
In the 1980s, limited partnerships (LPs) were touted as the investment vehicles of the future. Investors heard sales pitches for oil and gas, real estates, cattle feeding, master recording disks, equipment and aircraft leasing and cable television....
Writing in Plain English
If you are like most CPAs, you do not consider yourself a natural writer. In fact, you may have chosen accounting as a profession in the fervent hope that you would never have to write again. However, clients need written explanations of the numbers...
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