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. 178, No. 6, December

Alabama Supreme Court Rules on Privity
In a reversal of a previous precedent, the Alabama Supreme Court ruled that it no longer will apply a strict privity standard in interpreting accountants' liability to third parties. Rather, it will look to the more liberal interpretation set forth...
Answering Tough Questions
An awkward or confrontational question from a client can put the practitioner on the spot. Carl J. Lacher, CPA, managing partner, Lacher, McDonald & Co., CPAs, Seminole, Florida, shares his firm's list of dos and don'ts for potentially sticky situations....
Asset Impairment Disclosures: Will Accounting for Asset Impairment Lead to Performance Impairment?
Current reporting practices for unrealized asset impairments are inconsistent. To address this problem, in December 1990 the Financial Accounting Standards Board issued a discussion memorandum, followed in November 1993 by an exposure draft, Accounting...
AWSCPA Will Promote Equity within Accounting, Says President
"Many people in public accounting do not think women CPAs are as serious about their careers as men are," said Lois Brunst May, president of the American Woman's Society of CPAs (AWSCPA) for 1994-95. "They believe although the women are as highly qualified...
Caveat Appraiser: Computer Software Is Great for Running the Numbers, but a Business Appraiser's Own Judgment Is Crucial to a Successful Effort
Computer software is great for running the numbers, but a business appraiser's own judgment is crucial to a successful effort. Business valuation is among the hottest new services being offered by CPAs to clients buying or selling a company, going...
Determining What Constitutes "All Risks and Rewards" and "No Significant Unresolved Contingencies" in a Sale of Mortgage Servicing Rights; Buyouts of Compensatory Stock Options
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)...
Developing a Request for Proposal
Seeking an outside consultant is a complex process. A good request for proposal (RFP) and an organized selection process can help you find the best expertise. Here are questions to consider and sugqestions to follow: Step 1. * Decide what you...
Disaggregated Information: Time to Reconsider
Requiring more stringent disclosures may be a step toward harmonization of accounting standards. Globalization of enterprises, mergers, acquisitions and deregulation all have brought about changes in the way business is conducted and in the ways...
Expert Witnesses - in Jeopardy? Experts Aren't Always Protected from Lawsuits, So It Pays to Be Informed
Experts aren't always protected from lawsuits, so it pays to be informed. Litigation services have become one of the faster growing practice areas for CPAs. Many practitioners previously dedicated to accounting and auditing have entered this area...
FASB Issues ED on Repurchase-Related Offsetting
The Financial Accounting Standards Board published an exposure draft of its proposed interpretation, Offsetting of Amounts Related to Certain Repurchase and Reverse Repurchase Agreements. The ED interprets Accounting Principles Board Opinion no....
FASB Proposes Delay in Effective Date of Interpretation 40
In an exposure draft of an amendment to Interpretation no. 40, Applicability of Generally Accepted Accounting Principles to Mutual Life Insurance and Other Enterprises, the Financial Accounting Standards Board proposed to defer Interpretation No. 40's...
Financial Top Brass Leading Reengineering Efforts, Survey Finds
Business process reengineering will make an important contribution to improving an organization's effectiveness and efficiency, said 62% of controllers responding to a survey by the Institute of Management Accountants. Top financial officers were playing...
House Banking Committee Evaluates Potential Risks of Structured Notes
Henry B. Gonzalez (D-Tex.), chairman of the House Committee on Banking, Finance and Urban Affairs, asked regulators to estimate insured depository institutions' losses due to structured notes and to provide overviews of their transactions. Structured...
Interest Rates on Overpayments
Subject to certain limitations, the government must pay interest on overpayments when it sends taxpayers refund checks. Conversely, taxpayers owe the government interest if they underpay their taxes. This sounds reasonable, but there is a catch....
IRS Cracks Down on Filing Fraud
In an effort to curb the number of fraudulent income tax returns filed through its electronic filing system, the Internal Revenue Service released revenue procedure 94-63, which requires electronic filers to submit fingerprints, enabling the IRS to...
New NASBA Chairman Seeks Better Communication
The National Association of State Boards of Accountancy elected Welling W. Fruehauf, chief executive officer of Fruehauf & Co. P.C., of Monroeville, Pennsylvania its 1994-95 chairman. What does Fruehauf regard as the most important issues facing...
Ohio Trial Court Rules for Accounting Firm
In a case involving the embezzlement of approximately $300,000 of funds, an Ohio trial court ruled an accounting firm that performed review services was not responsible for detecting the embezzlement. The matter began when a bookkeeper working for...
Plugging in Computer Peripherals: With a SCSI, Many Devices Can Be Run off the Computer without a Hitch
Here's a typical historical log of an accountant determined to stay at the leading edge of technology: 1990: The accountant upgrades to a 386 personal computer (PC), which operates as a stand-alone. The only peripheral is a printer and the setup...
POB Advisory Panel Recommends Ways to Bolster Independent Audits
An advisory panel appointed by the Public Oversight Board (POB) of the SEC practice section of the American Institute of CPAs division for CPA firms published a report recommending ways to enhance the integrity and objectivity of independent auditors....
Recent Tax Treaty Developments
The U.S. Treasury Department recently completed negotiations on a number of tax treaties and protocols to treaties. The agreements currently are awaiting ratification, which includes U.S. Senate approval. Following is a brief discussion of significant...
Relation-Back Doctrine Ok'd for Certain Noncharitable Gifts
Albert Metzger gave a power of attorney to his son John, authorizing him to make gifts of Albert's property to various heirs. John drafted two $10,000 checks on Albert's account, one each payable to John and his wife Shirley. The checks were drafted...
SEC Chairman Promises More Investor Protection
Arthur Levitt, Jr., chairman of the Securities and Exchange Commission, told financial officers attending the Financial Executives Institute's 63rd annual conference in Washington, D.C., that the success of American markets--with over $1 trillion in...
The Case for Non-CPA Ownership: A Roundup of Practitioners' Opinions on Why Change Is Needed
How can CPAs keep pace in a rapidly changing business environment? For many, the answer lies in expanding the array of services that firms offer. "If you look at the Jenkins and Elliott committees and the thrusts they're taking (see THE JENKINS AND...
Valuing Gifts of Closely Held Stocks
As with any other gifts, when corporate stock is given as a gift, the stock must be valued (and any applicable gift taxes paid). Therefore, the issue of the stock's value is a critical one. And when the gift involves stock in a closely held corporation--which...

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