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. 177, No. 1, January

AICPA Issues Report on Information Needs of Investors and Creditors
The American Institute of CPAs special committee on financial reporting released its report titled The Information Needs of Investors and Creditors. It reflects the initial findings of the commitee's study of the information needs of the users of financial...
AICPA Testifies on IRS Nonfiler Program
Deborah Walker, vice-chairperson of the American Institute of CPAs tax executive committee, told the House Subcommittee on Oversight the Institute strongly supports the Internal Revenue Service nonfiler program. Walker said the AICPA condemned nonfiling...
Alphabet Soup: Financial Planning Designations and What They Mean
In these days of wary consumers, clients usually shop around for personal financial planning services. As a result, CPAs must recognize they are competing with other qualified planners. Comprehensive financial planning has many aspects, including investment...
Charitable Lead Trust Can't Deduct Prepaid Amounts
The older members of the Crown family created a nongrantor charitable lead trust (under IRC section 2522(c)(2)(B)) in 1983. They funded the trust with $15 million, which was invested in securities the income from which would be used to make the trust's...
Computer Backups Checklist
Accidents happen. so do hurricanes, earthquakes, floods, fires and even acts of sabotage. Any one of these events can wipe out a business's computer information system. While there are expensive wasy to safeguard data, none is cheaper or easier than...
FASB 109 Implications of the 1993 Tax Act
FASB 109 IMPLICATIONS OF THE 1993 TAX ACT 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...
FASB to Address Accounting for Mortgage Servicing Rights
Responding to industry calls to reduce inconsistencies in accounting regulations for mortgage serving rights, the Financial Accounting Standards Board added to its technical agenda a limited-scope project to amend Statement no. 65, Accounting for Certain...
Grantor's Power to Change Trustee Did Not Bring Trust Assets into Gross Estate
Helen Wall created three irrevocable inter vivos trusts for the benefit of family members. All three trusts had the same trustee, the First Wisconsin Trust Co. Wall retained the right to remove the corporate trustee and substitute another one. She...
Hedge Accounting: Is Deferral the Only Option?
A lack of guidance has resulted in disputes among companies, auditors and regulators. Although hedging activities have increased virtually exponentially over the past decade, many of the basic accounting problems associated with them remain unresolved....
Hiring at Accounting Firms Jumps as Graduate Totals Climb Slowly
After two years of decline, public accounting firms recruited 22,520 new accounting graduates in 1992, 9% more than in 1991. Also, for the first time since the 1987-88 academic year the proportion of female accounting graduates (52%) was greater than...
How Companies View Health Care Reform Proposals
A Hewitt Associates survey of 370 employers found business owners and managers were divided on some aspects of health care reform proposals. A majority (54%) would be likely to keep their own health care plans rather than join regional alliances...
How to Prepare Loan Proposals for Not-for-Profit Clients
CPAs can provide the critical help such organizations need to increase the chances their requests for funds will be approved. The steps not-for-profit organizations take to obtain bank loans are similar to those taken by any organization. But there...
How Will President Clinton's Health Care Reform Plan Affect Employers and CPA Firms?
How will President Clinton's health care reform plan affect employers and CPA firms? Maribess L. Miller, CPA, partner, Coopers, & Lybrand, Dallas. For health care organizations, which include hospitals, physicians and providers of home care,...
Human Resources Employment Law: Keeping out of Harm's Way
Although the relationship between employers and employees continues to grow more complex and litigious, CPAs who are responsible for managing their companies' human resources function frequently lack the training needed to address the problem. This...
Interest-Free Payments
For those incorrigibles who pay their taxes late, the Internal Revenue Service issued updated guidance on how to do so properly. The Omnibus Budget Reconciliation Act of 1993 established two new top marginal rates for individuals--36% and 39.6%--that...
Investor Views of Audit Assurance: Recent Evidence of the Expectation Gap
Investors and financial statement users long have agreed on the usefulness of the audit in financial reporting. Over time, however, auditors have been expected to provide assurance in varying degrees and for different purposes. Differences in perception--especially...
IRS Hedging Rules: It's All in the Timing
The recently adopted Internal Revenue Service rules on hedging transactions certainly are welcome but, on examination, seem to do little more than capitulate to the decision on hedging rendered by the Tax Court in FNMA v. Commissioner on June 17, 1993....
IRS Scrutinizes Food Service Industry: Are Employees Reporting Tips?
Properly reporting tip income has presented difficulties for the food service industry and the Internal Revenue Service for many years. The problems are attributable to a number of factors, including widespread misunderstanding of what actually is...
NASBA Annual Meeting: Regulators Take Proactive Stand
"If state boards are to continue to be important in the regulatory fabric, we must seek to intercede at unprecedented new levels in determining entry into the profession and performance of our licensees," said Nathan T. Garrett, outgoing president...
Perception vs. Reality
The following is adapted from a speech by Philip B. Chenok, president of the American Institute of CPAs, before the Los Angeles Rotary Club on October 15,1993. Financial reporting in the United States is a model for the world. The overwhelming majority...
Specialized Small Business Investment Companies
One of the enterprise and empowerment zone provisions of the Revenue Reconciliation Act of 1993 allows some taxpayers to defer gains on certain stock sales that they otherwise would be required to recognize. ELIGIBLE TAXPAYERS This new provision...
Stock Compensation: AICPA Opposes Standard-Setting Legislation
American Institute of CPAs President Philip B. Chenok, in a letter to Senator Christopher Dodd (D-Conn.), urged Congress to reject legislation that would mandate financial accounting standards for stock options that are granted to employees Dodd...
Stock Compensation: FASB Testimony Responds to Critics
The Financial Accounting Standards Board, in hearings before the Senate Banking, Housing and Urban Affairs Subcommittee on Securities, answered critics of its exposure draft on accounting for employee stock options. (For a critical look at the proposal,...
The 10 Biggest Mistakes CPA Firms Make
THE 10 BIGGEST MISTAKES CPA FIRMS MAKE Although all poorly managed CPA finns may not be alike, they usually make one of several common practice management errors. Marc L. Rosenberg, CPA, national director of management consulting at Practice...
The Importance of Partnership Agreements
Every successful CPA firm should have policies for addressing major practice issues. The preparation and periodic review of a CPA firm's partnership agreement is critical to practice success. A properly drafted and comprehensive agreement that is...
Valuing Pension Benefits in Divorce: Look before You Leap
To become competent pension valuators, CPAs must do much more than master the tedious actuarial calculations. Many practitioners who read "Evaluating Pensions Benefits in Divorce" (by Ralph A. Pope, JofA, Aug.93, page 62) may have concluded that...
Working with Other Advisers to Provide PFP Services
Working closely with other advisers can mean better recommendations for clients. The delivery of personal financial planning services involves developing recommendations and strategies to help clients achieve financial goals in diverse disciplines,...
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