Keeping CalCPA Members Connected and Informed
At its May meeting, the CBA approved regulation to adjust the fees for a CPA license and renewal of a license. The adjustment returns the fee back to the $200 level of 2011-12 after a planned period of lowered fees. For Uniform CPA Exam and application fees, the CBA decided not to return to the higher fee levels and instead keep them at $50. The new fee structure will take effect July 1, 2016.
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The State Controller and the FTB Chair have directed the FTB to review and adjust interested calculations related to two IRS rulings: Rev. Rul. 99-40, 1999-2 CB 441; and Rev. Proc. 94-60, 1994-2 CB 774. These pertain to corporate netting, and hence are not applicable to a large number of taxpayers. However, the FTB has created a web page that provides information about which taxpayers may be impacted by the adjustments, and included example of the calculations involved.
The FTB is promoting the Board of Equalization’s (BOE) Publication 542, News for Tax Practitioners, What You Need to Know about California Sales and Use Tax. This new BOE newsletter includes information on tax rate changes, new sales tax laws, lumber fees, use tax information, the California Film and Television Tax Credit Program, and much more.
The California Board of Accountancy unanimously issued a finding that the National Association of State Boards of Accountancy’s Guiding Principles of Enforcement meets the CBA’s enforcement practices.
NASBA developed these Enforcement Guidelines to serve as a national model to which it believes all state boards of accountancy should aspire. These principles provide guidance to states in various areas of enforcement including timeframes, resources, case management, disciplinary guidelines and internet disclosure.
The CBA will now compare how other states’ enforcement programs perform relative to the NASBA Enforcement Guidelines. This ensures that those out-of-state licensees practicing in California under the practice privilege program are being properly monitored by their licensing jurisdiction, thereby protecting California’s consumers of accounting services. The CBA anticipates that this comparison will take place throughout the remainder of 2015.
Members benefit from CalCPA’s group purchasing power. CalCPA Affinity Programs are selected specifically for CPAs, offering prices, products and services that are not available elsewhere in the marketplace.
CalCPA has recently added a new affinity partner for you to take advantage of: Credible, a student loan refinancing platform.
Learn more about this program and the rest of CalCPA’s affinity partners.
Investment fraud in large dollar amounts is not unusual and tends to affect engagements in financial statement services, tax advice and investment advice. Due diligence and skepticism are paramount in addressing and avoiding liability. Obtain background, credit and reference checks for the client before accepting significant engagements, paying attention to the level of client integrity and competency.
Due diligence is also essential with respect to any specific investments made on the client’s behalf. If not performing the due diligence work necessary with respect to investments, the CPA needs to make sure that someone does take responsibility for performing the work.
The longer a CPA has been associated with a client before fraud is uncovered, the more risk exposure to the CPA. After a certain length of time, the CPA becomes a trusted financial adviser with fiduciary responsibilities to monitor the client’s financial resources. Pay close attention to older clients—if there is a perception that the CPA did not appropriately advise or warn older clients, a jury will be more inclined to punish the CPA.
For more information about CPA firm insurance issues, call (800) 652–1772 or go online.
The U.S. Labor Department’s Employee Benefits Security Administration (ESBA) has published its study on the quality of benefit plan audits performed by certified public accountants. The report, Assessing the Quality of Employee Benefit Plan Audits, reveals serious issues with the system.
More than 7,300 licensed CPAs nationwide audit more than 81,000 employee benefit plans. EBSA’s review found that 61 percent of audits fully complied with professional auditing standards or had only minor deficiencies under professional standards. The remaining 39 percent of the audits contained major deficiencies, however, which put $653 billion and 22.5 million plan participants and beneficiaries at risk. These figures reflect increases in the amount of plan assets and number of plan participants at risk compared with prior EBSA studies.
The Public Company Accounting Oversight Board issued for public comment a staff consultation paper that seeks input on potential changes to standards for the auditor’s use of the work of specialists, specifically the objectivity and oversight of specialists and the use of their work in audits.
The Auditor’s Use of the Work of Specialists, discusses the increase in the use and importance of specialists in recent years due, in part, to the increasing complexity of business transactions reported in a company’s financial statements.
The paper raises questions about whether PCAOB standards adequately address the auditor’s use of the work of specialists, and whether more rigorous standards and specific procedures are needed in this regard to help the auditor respond to the risks of material misstatement in financial statements. The staff is seeking input on possible alternatives to address the issues discussed in the paper.
By electing water’s-edge, a taxpayer elects into a system of taxation, which represents a peculiar blend of federal and state taxation concepts. California Revenue and Taxation Code Sec. 25110(a) provides the tests to determine if a particular corporation, or part thereof, is included in the water’s-edge combined report. The water’s-edge rules do not supersede:
R&TC Sec. 25113 governs the manner of making a water’s-edge election as provided under R&TC Sec. 25110. A corporation electing water’s-edge must do each of the following:
This CalCPA-sponsored event—featuring keynote speaker John Chiang, California treasurer and former state controller—will take you through a professional “knife’s edge” journey. Questions the event will address include how you:
Learn more and register.
California educators, nonprofit representatives, legislators, small-business owners, parents, CPAs and other financial professionals will come together July 30 to discuss how to improve financial literacy in California. The summit will feature:
Register or learn more.
The AICPA released a six-point plan to improve audits that outlines enhancements in the following areas:
The National Association of State Boards of Accountancy commented on the Financial Accounting Foundation’s three-year review of the Private Company Council with the following:
It’s not always clear as to how to apply the FTB’s federal determination for research credit cases, especially if there was no review of the research credit at the federal level. The following examples illustrate situations where the FTB would not automatically follow federal actions for research credit cases or would need to inquire further into the credit computation:
California CPA Digital Version
Fast Tax Facts 2016
2016 Tax Season Toolkit
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IRS Releases 2017 Standard Mileage Rates
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