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. 185, No. 6, June

A Common Peer Review Problem
Confirmation of accounts receivable has been a nearly sacrosanct auditing procedure for over 50 years. Before most of today's practicing CPAs were even born, the AICPA issued Statement on Auditing Procedure no. 1, Extensions of Auditing Procedure, requiring...
Aftertax Mutual Fund Returns
When clients ask for investment recommendations that will provide them with growth, many CPAs? turn to historical mutual fund data for the answer. A common--and perhaps misguided--practice is to begin the research by reviewing a fund's historic returns...
"Alternative" Structures and Government Accountants
As CPAs choose different forms in which to practice public accounting--such as selling their firms to publicly held companies--the AICPA is taking steps to make sure the Code of Professional Conduct keeps up with these new developments. The professional...
Corporate Spin-Offs: A Well Planned Prescription for Ailing Companies
In the corporate world, trigger is not always better. Corporate spin-offs have become a popular way for companies to release shareholder value and achieve other business purposes. A spin-off involves the pro rata distribution of a controlled corporation's...
Court Rules on Importance of GAAP and GAAS
In National Medical Transportation Network v. Deloitte & Touche, the California Court of Appeals, Fourth Appellate District, held that judges must instruct juries that professional standards promulgated by the AICPA authorize auditors to withdraw...
Government Issues First Consolidated Financial Report - Results Are Poor
The federal government for the first time was subjected to the same fiscal discipline it imposes on private-sector businesses and state and local governments--and the results were not good. The Treasury Department and Office of Management and...
How to Contract with the U.S. Government
Each year, the federal government contracts with thousands of CPAs to perform financial audits, assist in internal control review work, provide financial management services and develop performance measurement techniques, among other assignments. These...
Improper Rollovers
The Tax Court ruled for the first time that cash distributions from IRAs and Keogh retirement plans must be rolled over as cash (not property) to another IRA within 60 days or the rollover will be taxed. If the cash is used to purchase stock or other...
Leading the Class into the 21st Century
The door in Maryland Hall reads room 200, but students might think they've walked into Multimedia Computer Techniques rather than Introductory Accounting I or II. From the moment you step into Professor Barry Rice's classroom at Loyola College in...
Long-Term Success in the Short-Term Employment Market
Imagine this scenario: A large corporation is undergoing a merger. It needs seasoned finance and accounting staff who have hands-on experience coping with all the quirks of acquisitions. However, the expanded company isn't in a position to hire new staff...
Model Company Goes Online
FauxCom, Inc., established in 1994, has proved itself a remarkably long-lived company considering it never existed. The AICPA special committee on financial reporting (the Jenkins committee) "founded" it to illustrate some of the issues in its comprehensive...
New ED on Government Reporting
In an attempt to fill a void in international standards for public-sector entities, IFAC's public sector committee (PSC) issued for exposure Guideline for Governmental Financial Reporting. The draft describes the most common forms of government accounting...
Piecemeal Approach to Pensions
For two years, AcSEC and the FASB have been discussing changes in benefit plans accounting without getting to the point of issuing an exposure draft. But AcSEC was determined to release a proposed SOP even if it constituted only one small part of...
Refunds for Harbor Maintenance Taxes
On March 31, 1998, the U.S. Supreme Court unanimously struck down the harbor maintenance tax (HMT) as an unconstitutional tax on exports (U.S. v. United States Shoe Corp.). Exporters, importers and domestic shippers pay the HMT based on the value...
Selecting a Professional Employer Organization
A professional employer organization (PEO) can help a business attract and retain a productive workforce, manage employer risks and relieve owners and key staff of time-consuming administrative and regulatory compliance burdens (see "On the Wave of...
Seven Steps to Success
DeAnn Hill's four-person firm is located in a Kansas town of 5,000 people--Baxter Springs--which is the hi biggest city in a county with only two CPAs. Hill's clients, mostly closely held family corporations or mom-and-pop sole proprietorships, represent...
SOP for Insurance Auditors
In the past few years, the insurance industry has had to weather allegations of questionable sales practices and misleading policyholder illustrations. To promote higher standards of ethical behavior, the American Council of Life Insurers (ACLI),...
Take My Manual Audit, Please
When auditors tackle an engagement in which most, if not all, of a client's data are in electronic format, they generally audit around the computer that is, they print out the pertinent information and then scrutinize the printed page. Such a manual...
The Pros and Cons of IT Outsourcing
As companies rely more on information technology (IT) to conduct business for example, accessing large market research databases to find new customers and using the Internet as a storefront IT development and maintenance costs have exploded. It is...
The Tax Matters Partner: Special Rules for Partnership Audits
For income tax purposes, partnerships are not taxable entities. Rather, they are treated as conduits, in which the items of partnership income, deduction and credit are allocated among the partners for inclusion in their respective income tax returns....
The Value of an IRS General Counsel Memorandum
CPAs researching tax issues frequently find the IRC and related regulations ambiguous. If they are unable to find court cases that address the issue at hand, they may need to turn to private letter rulings or to IRS general counsel memoranda (GCMs),...
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