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. 173, No. 1, January

A Case of "Chutzpah" - Court Limits How Far IRS Must Go for "Last Known Address." (Tax Court Rules on Notices of Deficiency)
The involvement of the Markses in promoting tax shelters made them targets of both a criminal indictment and civil investigations. In 1982, the URS sent them deficiency notices involving $1.4 million in taxes. The IRS sent the notices to four Florida...
Age-Based Pension Plans Approved, Delighting Small Business Owners
Over the past five years, defined-benefit plans--those in which a retiree's benefits are specified--have become less attractive to both employee and employer. The plans have been depressed by federal legislation effectively reducing the size of their...
AICPA Banking Conference: Future of Banking System and Accountants' Role
The sixteenth annual American Institute of CPAs Conference on Banking, held recently in Washington, D.C., looked at mounting problems facing banks and savings and loans and at what accountants and auditors should--and should not--be asked to do to...
AICPA 'Strategic Thrusts for the Future.' (Report on the Accounting Profession's Long-Term Objectives and Plans)
To cope with what the future holds, the American Institute of CPAs engages in a continuing strategic planning process. The AICPA board of directors and governing council have approved the most recent report of the strategic planning committee, Strategic...
An Invitation from the AICPA President: World Congress of Accountants
WORLD CONGRESS OF ACCOUNTANTS Please come to Washington, D.C., next October. Accountants from around the globe will be there, laying the groundwork for the way international business will be conducted in the future. The event -- the XIV...
Auditor Has Duty to Disclose Client's Financial Condition
The Eighth Circuit Court of Appeals ruled an auditor has a duty to demand note holders to disclose the true financial condition of its client. The Farmer's Cooperative of Arkansas and Oklahoma purchased a gasohol plant previously run by the co-op's...
Council Approves Non-CPA Affiliation with AICPA Member Sections
At its fall meeting, the AICPA council voted to allow non-CPAs employed by CPA firms to affiliate with the Institute's voluntary membership sections as "section associates." While associates will not have voting privileges, they will qualify for the...
Finding the Right International Partner for Small Businesses
Continued rapid export growth should be welcome news for small companies in light of lackluster prospects for the domestic economy. Real gross national product grew only 2.5% in 1989 and a miniscule 1% in 1990. Consumer spending, which fuels a large...
How a Workout Specialist Operates
A company on the brink of bankruptcy generally has three options: file for formal reorganization under chapter 11 of the Bankruptcy Act, file for liquidation under chapter 7 or seek an informal reorganization. In many cases, informal reorganization...
How Practice Philosophy Affects a Firm's Finances
Every CPA firm has a practice philosophy, although not all are in writing. Such philosophies embrace firm members' goals, values and beliefs. Each practice's philosphy serves as both map and compass, guiding client engagements, practice development...
How to Develop Consulting Skills
Sheldon Eveloff, CPA, a partner of Goldenberg/Rosenthal, Philadelphia, and former member of the American Institute of CPAs management advisory services executive committee and practice standards and administration committee, explains how CPAs can expand...
International Reciprocity in Accounting: Where in the World Are We Headed?
The 1980s saw a tremedous surge in global trading, which is expected to continue the future at a rapid pace. This dramatic expansion has led to the emergence of many new international accounting problems. This article deals with one such problem--evident...
IRS Deficiency Thrown out Due to "Gross Ineptitude."
The Mathernes filed a joint 1982 federal tax return. The IRS mailed it back to them; no one knows why. The IRS had stamped the return "received March 1984." The IRS kept a copy of the first page only, which showed the filing status and the number...
Merger and Acquisition Regulations Issued
The IRS has released long-awaited proposed regulations under section 367. The proposals deal with outbound transfers of stock or securities to a foreign corporation, inbound reorganizations and liquidations, "foreign-to-foreign" transfers and section...
New Chairman, Gerald A. Polansky, Reaffirms Profession's Commitment to Highest Standards
The Institute's new chairman of the board of directors, Gerald A. Polansky, addressed more than 1,300 members and guests at the AICPA 104th Annual Members Meeting in San Francisco. In hi inaugural speech, Polansky said the AICPA needs to nurture the...
No Deduction for Gift of Newspaper's "Morgue." (Chronicle Publishing Co Cannot Write off Donation of Its Clippings Library)
Chronicle Publishing Company, publisher of the daily newspaper, the San Francisco Chronicle, maintained a morgue (a clippings library) compiled mostly from the paper's issues since 1906. The $10 million cost to create the library was written a an...
Preparing for October's XIV World Congress of Accountants
Bertil Edlund of Sweden, president of the International Federation of Accountants (IFAC), has a ready answer when asked why American CPAs should attend the World Congress of Accountants to be held in Washington, D.C., on October 14-18, 1992: "Because...
Remembering Leonard M. Savoie (1923-1991)
Leonard M. Savoie, executive vice-president of the American Institute of CPAs from 1967 to 1972, died in January 1991. He was a man who carved a unique niche in accounting as a practitioner, a professional and a professor. Savoie was the first...
SEC Market Value Conference: Experts Urge Mark-to-Market
Leaders from business, government, the accounting profession and academia argued the merits of fundamentally revising the traditional American basis of accounting and financial reporting at the Securities and Exchange Commission's groundbreaking Market...
Sparing No Expense
Since 1981, taxpayers have had the opportunity to write off immediately the cost (up to a specified dollar amout) of certain equipment and not depreciate the cost over the equipment's life. Several times since the, however, the provision allowing this...
Special Report: An Inside Look at the 5th Jerusalem Conference on Accountancy
Virtually all the experts at the 5th Jerusalem Conference on Accountancy, held in Jerusalem, Israel, on November 17-20, agreed the forces driving the international harmonization process in the accounting profession are growing stronger. However, opinions...
The New Earned Income Credit
The earned income credit (EIC) is designed to help low income taxpayers, who generally have not used professional tax preparers. For this reason, many tax practitioners are unfamiliar with the credit. However, Congress has amended Internal Revenue...
The Search for Enforceable Tax Practice Standards
Where should CPAs look to find tax practice standards? The search begins with the Internal Revenue Code. It continues with circular 230 and other Treasury and IRS pronouncements, case law, the AICPA Code Professional Conduct, applicable state ethical...
What an Auditor Does When Finding Fraud or Illegal Acts
While most auditors have encountered client errors, discovery of an irregularity or illegal act with a material effect on the financial statements is not an everday occurrence. Discovering an illegal act, particularly when senior management is involved,...