Journal of Accountancy articles from August 1992

Journal of Accountancy archives from August 1992

AICPA Testifies on Draft Investment Advisers Bill
August 1, 1992... The American Institute of CPAs emphasized the need for reform of the Investment Advisers Act of 1940 to focus on activities giving rise to investment adviser fraud and abuse--namely, holding clients' funds or securities for investment purposes...

Coalition urges litigation reform. (Brief Article)
August 1, 1992... A coalition of business and professional organizations supporting litigation reform, including the American Institute of CPAs, is working with members of Congress to develop a litigation reform package capable of winning passage in the House...

Small Business Relies on CPAs, Says PCPS Survey
August 1, 1992... An American Institute of CPAs private companies practice section survey of 2,000 small businesses (with revenues between $500,000 and $25 million) was released in May. Among the findings: 44.1% of the respondents turned to CPAs first for outside...

Small Business Thrives on Hiring Older Workers
August 1, 1992... Small business and older workers have a mutual attraction, according to a 1991 Small Business Administration study. In 1988, companies with fewer than 25 employees hired more than two-thirds of newly hired workers aged 65 and over. In that year...

Small business gains confidence. (Brief Article)
August 1, 1992... According to a National Federation of Independent Business (NFIB) survey of 2,100 small businesses across the nation, the NFIB's small business optimism index reversed a yearlong slide and gained four points to reach 102.2 in the first...

SBA study finds state export programs lacking. (Small Business Administration) (Brief Article)
August 1, 1992... A Small Business Administration study of nine state export promotion programs found these programs tend to measure success by the growth of export sales. Since it is easier to convince existing exporters to increase sales than to convince...

Why is the public so gloomy about the economy? (Illustration)
August 1, 1992... As the chart below shows, the mood of the public usually follows shifts in personal income. According to the highly respected University of Michigan index of consumer expectations, consumers were as depressed in February as they were...

Midsized companies say recovery has begun. (Brief Article)
August 1, 1992... Most executives believe an economic turnaround has begun, according to a mid-May Grant Thornton survey of 250 manufacturing companies with sales ranging from $10 million to $500 million. Of the executives polled, 76% said a recovery from...

Controllers look for lower hiring levels. (Brief Article)
August 1, 1992... An April survey of 3,500 members of the Institute of Management Accountants controllers council found pessimism over future hiring plans for their companies. Only 12% of the controllers polled believed their companies would increase...

Guide on implementing GASB 9. (Governmental Accounting Standards Board) (Brief Article)
August 1, 1992... The Governmental Accounting Standards Board issued an implementation guide for GASB Statement no. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities That Use Proprietary Fund Accounting. The...

New SOP on foreign reinsurance. (Statement of Position no. 92-5) (Brief Article)
August 1, 1992... Accounting for Foreign Property and Liability Reinsurance, Statement of Position no. 92-5, was released in June by the American Institute of CPAs as a supplement to the AICPA Audit and Accounting Guide Audits of Property and Liability...

AICPA issues three audit risk alerts. (Brief Article)
August 1, 1992... The American Institute of CPAs issued three new audit risk alerts designed to reflect concerns brought on by the unstable economic conditions of the last two years. * Employee Benefit Plans Industry Developments--1992 (product no....

Survey finds widespread understaffing. (Illustration)
August 1, 1992... A survey of 427 North American companies found 40% do not have enough staff to meet their current needs and requirements for the year ahead. Of the understaffed companies, 80% do not have the budgets to expand the work force and another 15%...

Pennsylvania CPAs Find Baby Boomers Worried over Finances
August 1, 1992... The Pennsylvania Institute of CPAs (PICPA) surveyed 500 members with clients who are either in the baby-boom age bracket or employed by companies owned or managed by baby boomers. It found that generation, which accounts for 31% of the U.S....

AICPA issues ED for statement on PFP responsibilities. (personal financial planning) (Brief Article)
August 1, 1992... The American Institute of CPAs issued an exposure draft of the first Statement of Responsibilities in Personal Financial Planning Practice, Basic Personal Financial Engagement Functions and Responsibilities. The ED provides guidance for CPAs...

AICPA offers PFP guide collection. (personal financial planning) (Brief Article)
August 1, 1992... The AICPA personal financial planning division is offering a collection of financial planning guides to CPAs interested in enriching their PFP skills. The guides, originally contained only in the division's PFP manual, are available...

Managing the Malpractice Maze.
August 1, 1992... "The AICPA management of an accounting practice committee issued Managing the Malpractice Maze, a guide to help practitioners cope with the explosion in malpractice litigation. The book, by Mark F. Murray, JD, alerts CPAs to the full...

EC poll found doubt over deadline for single market. (Brief Article)
August 1, 1992... A survey of 1,483 executives in seven European Community countries conducted by the Harris Research Centre in London found 51% of those surveyed expected E C customs and border controls to continue beyond the single market's January 1, 1993,...

IASC Issues Five New Comparability Project Exposure Drafts
August 1, 1992... The International Accounting Standards Committee (IASC) published five exposure drafts as part of its comparability and improvements project. The project's purpose is to develop revised international accounting standards (IAS) that permit fewer...

Staff performance evaluation checklist. (from AICPAs 'Management of an Accounting Practice Handbook')
August 1, 1992... CPA firms function most effectively when partners periodically measure the abilities, potential and limitations of staff and communicate these assessments to the employees. A continuing relationship should be established between each staff...

Estimated tax changes face hurdles, tax division issues guide. (Brief Article)
August 1, 1992... The House Ways and Means Committee and the Senate Finance Committee failed to include a provision to revise estimated tax rules in legislation granting additional emergency unemployment benefits. While the measure was dropped from the...

IRS Gets New, More Flexible Guidelines on Offers in Compromise
August 1, 1992... Internal Revenue Code section 7122 gives the Internal Revenue Service the authority to settle a criminal or civil case with a taxpayer through offers-in-compromise procedures. The authority extends only to tax liabilities that have been assessed...

What the Quill Decision Means for Business Owners
August 1, 1992... CPAs should make certain their clients or companies doing business out-of-state are fully aware of the ramifications of the U.S. Supreme Court's recent Quill decision. Direct marketers, such as L.L. Bean and Lands' End, breathed a sigh of relief...

Settlements at audit stage increase. (Brief Article)
August 1, 1992... In 1990, only 29% of tax cases at the audit level were wholly or partly settled. In 1991, the settlement rate rose to 42% and in 1992 (through the spring), 52%. The dollar amount the IRS received on settled cases also increased from 5% of the...

A more forthcoming IRS? (Brief Article)
August 1, 1992... The IRS made a policy change--a change many IRS employees are not happy with. The change is intended to be formalized in the Internal Revenue Manual, but for now it is an internal memo to field examiners. Under the new rule, which is...

Back-Pay Award for (Pre-1991 Title VII) Discrimination Is Taxable
August 1, 1992... Under Internal Revenue Code section 104(a)(2), damages received on account of personal injuries are excludable from income. There was conflict in the federal courts of appeal as to whether a back-pay award to settle a claim of employment...

Transfer of Home Ineffective for Estate Tax Purposes
August 1, 1992... Lydia Maxwell sold her home to her son in 1984 for $270,000. The son and his wife gave back a $250,000 mortgage, on which the son made yearly payments of 9% interest but no payments of principal. Maxwell forgave the remaining $20,000 of the...

QTIP Deduction Allowed despite Accumulation Clause in Trust
August 1, 1992... George and Lavedna Ellingson set up an irrevocable trust governing the disposition and management of their property during their lives and after their deaths. They also were the initial trustees of the trust. On George's death, the trust...

Prenuptial agreement can't waive qualified-plan spousal annuity. (Brief Article)
August 1, 1992... Hurwitz, a participant in a qualified plan, died while still married to his third wife. The couple had signed a prenuptial agreement in which each spouse waived all fights to the other's property. Generally, qualified retirement plans...

Fringe benefits in an S corporation. (Brief Article)
August 1, 1992... Fringe benefits payments by an S corporation to a 2% shareholder (including health insurance, life insurance, company cars and so forth) are included in the shareholder's gross income. A 2% shareholder is any person who owns a minimum of 2%...

Defining "Activity" for Passive Losses
August 1, 1992... In May 1989, the Internal Revenue Service issued a complex set of temporary regulations defining "activity" for passive loss purposes. The temporary regulations used a building-block approach, starting with an "undertaking" and then combining...

Du Pont and Seagram Make Merger History
August 1, 1992... 8 J.E. Seagram Corp. is involved in a dispute with the IRS that has reached the Tax Court. The resolution will have widespread ramifications regarding the tax consequences of mergers and other stock-for-stock transactions. At issue is E.I....

Foreign Tax Reform Bill
August 1, 1992... A bill to improve the application of U.S. tax laws to American businesses operating abroad was introduced in May by House Ways and Means Committee Chairman Dan Rostenkowski (D-IIi.) and Willis Gradison (R-Ohio), a committee member. The...

Redemptions versus Cross-Purchase Agreements
August 1, 1992... The death of one of the owners of a closely held corporation can cause special problems for the owner's estate, especially those dealing with the value of the corporation's stock. One way to avoid many of these problems is through the use of a...

What to Do If the IRS Audits Your Pension Plan
August 1, 1992... Many small and medium-sized pension plans are now more vulnerable than ever to an Internal Revenue Service attack if they are not administered by competent professionals. CPAs should advise their companies and clients that many more plans will...

Locating a 401(k) Provider: What to Do When a Client Asks for Help
August 1, 1992... When a client asks for advice on establishing a 401(k) pension plan, many CPAs are not on comfortable ground. While they may have a general knowledge of pension plans, they probably lack the in-depth know-how to offer specific advice. In fact,...

Independent Contractors: Bill May Solve the Problem
August 1, 1992... Possible relief is on the horizon for many small and medium-sized businesses that employ workers they classify as independent contractors. These employers have been walking a legal tightrope for years because the guidelines for distinguishing...

Accounting Software Now Available for the Nonaccountant
August 1, 1992... The emergence of the powerful personal computer is changing the way small business owners do their accounting. As paper-based bookkeeping starts to pass into history, the flickering glow of a computer screen is becoming as common in the back...

Where Small Business Can Find Export Help
August 1, 1992... CPAs with small business clients or companies interested in exporting should advise them to contact the nearest Small Business Administration office. The 107 SBA field offices across the country provide counseling and financial assistance to...

Understanding Social Security Retirement Benefits
August 1, 1992... Older clients often rely on CPAs for information and advice on the computation, reduction and taxation of Social Security retirement benefits. Because Social Security benefits are an important aspect of retirement planning, CPAs need to know how...

The Consumer's Perspective on the Insurance Crisis
August 1, 1992... Fears of another savings and loan crisis and a shortage of objective advice have left consumers confused, nervous and distrustful of the insurance industry. In 1991, state regulators seized six major insurance companies: Executive Life,...

Winning an Engagement: A Step-by-Step Approach
August 1, 1992... The message is clear. Accounting firms that hope to be successful in today's competitive markets must train employees to sell the accounting services they offer and sell them aggressively. Many in the accounting profession perceive selling as...

Auditing Postretirement Benefits: How to Deal with FASB 106
August 1, 1992... Much has been written about the financial statement impact of Financial Accounting Standards Board Statement no. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions (see "The New FASB 106: How to Account for Postretirement...

Sex Discrimination and CPA Firms
August 1, 1992... President Bush late last year signed the Civil Rights Act of 1991, which amends Title VII of the Civil Rights Act of 1964. Precisely what this act achieves will not be clear until it is interpreted in the courts. However, we do know the law...

Takeover Expenses: National Starch and the IRS Add New Wrinkles
August 1, 1992... In the 1980s, the business world witnessed a proliferation of mergers and acquisitions. Of transactions valued at $1 million or more, over 31,000 M&As involving U.S. companies occurred during the last decade, with a total value exceeding...

AICPA names Needles Outstanding Accounting Educator. (Belverd E. Needles, Jr.) (Brief Article)
August 1, 1992... The AICPA presented its Outstanding Accounting Educator Award for 1992 to Belverd E. Needles, Jr., CPA, PhD. Needles is the Arthur Andersen & Co. Alumni Distinguished Professor of Accountancy at DePaul University, Chicago, Illinois. ...

AICPA Benevolent Fund: A Way for Members to Help the Profession's Neediest
August 1, 1992... The AICPA Benevolent Fund, Inc., is one of the Institute's oldest and most worthy, but least publicized, member services. Leonard I. Green, the AICPA director of financial management and staff aide to the Benevolent Fund, says it was established...

AICPA staff moving to Jersey City offices. (Brief Article)
August 1, 1992... Throughout July and August, most of the AICPA divisions located in New York City, including the Journal of Accountancy, will move to Jersey City, New Jersey. The executive offices and select member services will remain at their present...

Accounting for Real Estate Syndication Income and Foreclosed Assets
August 1, 1992... 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 statements of position (SOPs) as sources of established GAAP This...

Black Days for Accounting Firms
August 1, 1992... Philip R. Lochner, Jr., a former Securities and Exchange commissioner, addresses the question of accountants' liability, as most recently defined by the decision to award Standard Chartered Bank $338 million. The following article is reprinted...

A Strategy for Improving the Quality of a CPA's Life
August 1, 1992... EDITOR Judith R. Trepeck, CPA Rehmann, Robson & Co. 30800 Northwestern Highway, Suite 220 Farmington Hills, Michigan 48334 CONTRIBUTING EDITORS Jerrell A. Atkinson, CPA Atkinson & Co., Ltd. Albuquerque, New Mexico...