Magazine article The CPA Journal

Tax & Accounting Update

Magazine article The CPA Journal

Tax & Accounting Update

Article excerpt

Tax & Accounting Update is provided by Thomson Reuters and based on material published on Checkpoint, its online news and research platform. The Update is a quick-reference guide to the most pressing issues coming down the regulatory and administrative pipeline. Visit https://tax.thomsonreuters.com/daily-newsstand/ for further information and daily updates.

Tax News

IRS's use of third-party contractors in audit questioned. Senate Finance Committee Chairman Ornin Hatch (R-UT) sent a letter on May 13 to 1RS Commissioner John Koskinen criticizing the agency's use of a private law from to assist in its audit of Microsoft Corp. Sen. Hatch said this tactic appealed to violate federal law and the express will of Congress; he also criticized the allocation of the IRS' limited resources, noting that despite the fact that the IRS has over 40,000 employees dedicated to enforcement efforts, including more titan 36,000 tasked specifically with exams and collections, the organization has hired private contractors under a $2.2 million contract, and is paying private attorneys over $1,000 an hour to cany out functions that are more properly carried out by IRS officials.

SEC News

Joint announcement clarifies rule exemption for commodities contracts. Tlie SEC and the Commodity Futures Trading Commission (CFTC) jointly issued a statement on May 12 to clarify the requirements some types of commodity contracts must meet to qualify for a regulatory exemption. Release 34-74936 is intended to help some farmers, ranchers, and manufacturers continue using commodity contracts for routine business operations and avoid the reporting requirements Wall Sheet films have to meet for their denvatives trading. The statement, which allows companies to vary the amounts of raw materials they purchase (e g., natural gas, fuel oil) without being subject to the definition of a swap, will become effective once published in the Federal Register.

FASB News

Debate about PCC's future intensifies. Three years after establishing the Private Company Council (PCC), the Financial Accounting Foundation (FAF) has suggested that the group could shift from advocating for accounting changes for private companies to primarily advising FASB. The AICPA and the National Association of State Boards of Accountancy (NASBA) balk at the idea of the PCC scating back, saying the PCC's work has just begun. "The tone of the request suggests to us that FASB's and PCC's work on existing GAAP is largely done. If that tone was FAF's intent, we do not agree," the AICPA wrote on May 11.

Definition of a business, insurance projects up for discussion. FASB discussed two projects at its May 21 meeting: 1) clarifying the definition of a busmess, and 2) making targeted improvements to account for long-duration insurance contracts. The project to define a business is part of FASB's effort to make a clearer distinction between transactions that should be accounted for as acquisitions or disposals of assets versus acquisitions or disposals of businesses. …

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