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Guidance to Improve Financial Reporting of Going Concern Uncertainties

August 28th, 2014

The Financial Accounting Standards Board issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.

The update is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. It provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes.

The amendments apply to all companies and nonprofit organizations and are effective in the annual period ending after Dec. 15, 2016, with early application permitted.

CAMICO Tip of the Month: Helping Clients with Legal Services

August 28th, 2014

Some clients will ask their CPA to assist them with the preparation of documents pertaining to the formation or liquidation of corporations, partnerships, estates, trusts or other entities that require organizational documents. At other times clients will ask for help with documents pertaining to mergers, acquisitions, dissolutions, employment, severance, compensation or stock option plans.

Accounting and law professionals have long debated how much assistance a CPA should provide a client in this area. The pertinent laws differ by state and are constantly changing. From a risk management perspective, CPAs who help clients with legal forms and documents can inadvertently expand their liability exposures when they should be trying to limit exposures. Further, the CPA helping a client with activity outside the typical CPA functions may hamper an effective legal defense. On top of that concern is the issue of not being qualified or trained to spot potential legal problems.

CPAs should consult an attorney when a tax issue involves legal principles that extend beyond tax law, or when any other type of issue or engagement involves legal principles that need to be interpreted for clients. Avoid yielding to pressure from clients who are looking to cut legal expenses. The fee received by the CPA for some services is just not worth the exposure to potential litigation.

For more information about CPA firm insurance issues, call CAMICO at (800) 652-1772 or go online.

Professional Issues Updates: Free, Local CPE

August 28th, 2014

Join us for an overview on topics impacting the CPA profession and CPAs in your local community. CPA professionals, including CalCPA leadership, will discuss the latest tax issues, legislative and political activities, risk and liability trends impacting CPAs, as well as the Affordable Healthcare Act and the new provisions going into effect. Full breakfast will be included. Attendees will earn 3 hours of free CPE. This event is FREE for members and guests. Invite your colleagues to use discount code “PIUGuest” at checkout.

Learn more and register today.

Report on the IRS External Leads Program

August 28th, 2014

Participation in the IRS External Leads Program is growing, resulting in the receipt of a significantly larger volume of leads about questionable tax refunds, but the IRS is not always verifying the leads timely, according to a new report by the Treasury Inspector General for Tax Administration (TIGTA).

The program has grown from 10 partner financial institutions returning $233 million in 2010 to 258 partner financial institutions and partner organizations returning more than $576 million in 2013. TIGTA recommended that the IRS establish more consistent time frames to verify leads; communicate these verification time frames to external partners; develop a process to ensure that leads are verified timely; consolidate the current lead inventory tracking systems into a single tracking system; and ensure that key information is captured as to how each lead is resolved.

IFRS 15 Won’t Appear on the CPA Exam Before 2016

August 28th, 2014

The International Accounting Standards Board issued IFRS 15, Revenue from Contracts with Customers, on May 28. IFRS 15 is effective for annual reporting periods beginning on or after Jan. 1, 2017, and earlier application is permitted. Under the CPA Exam Policy on New Pronouncements, IFRS 15 would become eligible for testing Jan. 1, 2015, in the Financial Accounting and Reporting section of the Uniform CPA Exam. However, given the scope and significance of IFRS 15, the AICPA Board of Examiners has decided that the standard will not be tested in the FAR section of the exam prior to Jan. 1, 2016. The AICPA will re-evaluate its decision during the second quarter of 2015 to determine whether an additional deferral of IFRS 15 is necessary.

Upcoming Foundation Events: Tons of New Events to Choose From

August 28th, 2014

Standard Setters Seek Input, Issue Paper

August 19th, 2014

The Public Company Accounting Oversight Board issued for public comment a staff consultation paper on standard-setting activities related to auditing accounting estimates and fair value measurements.

The paper was prepared by the Office of the Chief Auditor as part of its outreach efforts to seek input related to the potential need for changes to the PCAOB standards in this area and a possible approach for a new auditing standard. PCAOB inspection staff have continued to identify numerous audit deficiencies across various types of estimates and across various sizes of audit firms. The paper further describes the inspection staff’s preliminary views on a potential approach to changing the PCAOB’s existing standards and seeking views and other information on that approach.

Form 3840: The New Form for California Like-Kind Exchanges

August 19th, 2014

For taxable years beginning on or after Jan.1, 2014, California requires taxpayers who exchange real or tangible personal property located in California for like-kind property located outside of California, and that meet all of the requirements of IRC Sec. 1031, to file an annual information return with the FTB. The FTB is in the process of finalizing Form 3840, California Like Kind Exchanges, to help taxpayers keep track of their California source deferred gains from like-kind exchanges involving like-kind property located outside of California and meet this new reporting requirement.

A public draft of the Form 3840 will be posted on FTB’s website in September to allow for public comment.

FREE Webcast: Understanding The U.S. Export Tax Incentive

August 19th, 2014

Are you ready to fully leverage the tax benefits of the Interest Charge—Domestic International Sales Corporation (IC-DISC)? This Aug. 27 webcast will review and explain the key strategic steps for implementing an IC-DISC structure, including the formation requirements, the different IC-DISC arrangements available, calculating commissions and factoring expenses.

The IC-DISC was designed to provide a U.S. tax incentive to stimulate U.S. export activities. The tax savings are achieved from a reduced 20 percent U.S. capital gains tax rate on at least half of the income derived from qualifying products, in lieu of the normal federal tax rate.

Insurance Coverage Every CPA Firm Should Consider

August 19th, 2014

Did you know your firm can face unexpected risk exposures stemming from gaps in insurance coverage? It’s crucial to ensure that the right insurance options are in place to help protect your practice.

  • Business Owners Package: Provides protection against lawsuits and unexpected losses such as theft and fire; and,
  • Workers’ Compensation: Protects your employees and safeguards your practice.

These are two insurance policies every CPA firm should consider. Learn more by contacting CAMICO’s Jack Witherspoon via email,  visiting CAMICO online or calling (800) 652-1772, ext. 6847.


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