Journal of Accountancy articles from May 2007

Journal of Accountancy archives from May 2007

Dirty little secrets of 401(k) plan fees.
May 1, 2007... In September 2006, eight Fortune 500 companies were named in class action lawsuits alleging they failed to monitor and disclose 401(k) fees under so-called revenue-sharing arrangements. To protect your company or client, watch for these red...

Perfect storm prompts changes in pension accounting: postretirement obligations move to financial statements while FASB considers more comprehensive changes to underlying measurements.
May 1, 2007... EXECUTIVE SUMMARY * FASB has issued Statement no. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, to reform accounting for pension and other postretirement benefit plans. The new statement requires...

Taking stock of ESPPs: despite being commonly offered by corporations, employee stock purchase plans haven't caught on among most workers. Here's how to dispel some of the mystery surrounding them.(employee stock purchase plans)
May 1, 2007... EXECUTIVE SUMMARY * Employees of corporations with an employee stock purchase plan (ESPP) often fail to participate fully in the plan because they don't understand why it can be a good deal. * Many plans offer a purchase discount of as...

Time to rethink your 401(k) plan? Pension Protection Act allows employers to redesign retirement plans.
May 1, 2007... EXECUTIVE SUMMARY * The PPA has made it easier for plan sponsors to automatically enroll employees in a retirement plan by eliminating the worry over state withholding laws. It delineates a new safe harbor automatic enrollment provision...

Get ready for Vista: upgrade is powerful but will take time to master.(Product/service evaluation)
May 1, 2007... Get ready, accountants! Like it or not, your basic Microsoft computer tools--from the operating system to all the workaday applications--will soon be history. Replacing them will be the recently introduced Vista operating system and Office...

What is your fraud IQ? Think you can spot corruption in any of its many forms? Take this (deceptively) simple test to find out just how much you know.
May 1, 2007... 1. Which of the following assets are most often pilfered? a. Cash b. Accounts receivable c. Inventory d. Intellectual property 2. Which of the following techniques are used to detect cash frauds? a. Bank...

Intangible value: delineating between shades of gray: how do you quantify things you can't feel, see or weigh?
May 1, 2007... EXECUTIVE SUMMARY * Intangible assets are a big part of contemporary business, and many executives think innovation and related intangible assets now represent the principal basis for growth. CPA/ABVs and CFOs need to be able to value...

Avoiding FASB 123(R) pitfalls: NOL companies' choice of when to recognize tax benefits under FASB 123(R) can affect their bottom line.(net operating losses)
May 1, 2007... EXECUTIVE SUMMARY * FASB Statement no. 123(R), Share-Based Payment, poses a potential dilemma for companies with net operating losses (NOLs) that award nonqualified stock options (NQSOs) as compensation. If a company's allowable tax...

Extraordinary items share exclusive company: only unusual and infrequent events pass muster under FASB 145.
May 1, 2007... EXECUTIVE SUMMARY * Material gains and losses are classified as "extraordinary" on the income statement when they are both "unusual" and "infrequent? Extraordinary items are reported at the bottom of the income statement, net of their tax...

Whistleblowers wanted.
May 1, 2007... The government has decided that whistleblowers are its friends, and it is increasingly making efforts to nourish and protect them. This is evidenced by a provision of the Tax Relief and Health Care Act of 2006 that increased potential rewards...

Incentives for businesses in distressed communities: credits and deductions for investing in disadvantaged areas.(from The Tax Adviser)
May 1, 2007... Since the mid-1990s, Congress has tried to help businesses operating in certain low-income and economically disadvantaged areas. This has taken the form of tax credits and deductions for businesses that locate in, and hire residents from, those...

Horse sense applied to startup.
May 1, 2007... In its first ruling of 2007, the Tax Court concluded that a woman could deduct expenses of for-profit horse boarding and training that later grew into a business. Had the IRS prevailed, taxpayers who engaged in a for-profit activity with the...

IRS, B&D tool up for trial.
May 1, 2007... By reversing a district court's grant of summary judgment that originally favored the taxpayer (see "Tax Matters," JofA, March 05, page 88), the Fourth Circuit Court of Appeals opened the door for further interpretation of the "sham...

In the line of duty.
May 1, 2007... The Second Circuit Court of Appeals ruled against a military veteran's income-exclusion claim, affirming the Tax Court's distinction of taxable disability benefits versus exempt benefits paid for a service-connected injury William D....

35% flat tax hits non-CPAs.(non-certified public accountants)(Rainbow Tax Service v. Commissioner)
May 1, 2007... AC corporation that provides accounting services doesn't have to be owned by or employ CPAs to be taxed at the flat 35% personal-services corporation rate of section 11(b)(2), according to a recent Tax Court ruling. In Rainbow Tax Service, Inc....

More Than a Numbers Game: A Brief History of Accounting.(Brief article)(Book review)
May 1, 2007... * More Than a Numbers Game: A Brief History of Accounting by Thomas A. King John Wiley & Sons Inc., 2006, 242 pp. Thomas A. King's light-handed romp through the annals of accounting history brings together the facts, the data, the...

Effective Websites for CPAs: Grow Your Practice and Profits.(Book review)
May 1, 2007... * Effective Websites for CPAs: Grow Your Practice and Profits by Kristi Stangeland, CPA RJ Thompson Publishing, 2006, 177 pp. Shortening the client development cycle is one of the most compelling reasons for a CPA firm to develop a Web site...

Optimizing Company Cash: A Guide for Financial Professionals.(Brief article)(Book review)
May 1, 2007... * Optimizing Company Cash: A Guide for Financial Professionals by Michele Allman-Ward and A. Peter Allman-Ward AICPA, 2007, 271 pp. Cash flows, liquidity, the banking system and other touchstones of business finance are laid out in this...

The last word.(accountants' work-life balance)
May 1, 2007... We call it the mobile practice. My firm is based in Denver, but my wife, Judy, and I, along with our dog, Annie, live and travel in our motor home to our nonprofit audit clients across Colorado and New Mexico most of the year, then retreat to...