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Other Comprehensive Basis of Accounting Fundamentals Webcast | 4142308F

March 24, 2015
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2015 California Financial Literacy Summit

May 19th, 2015

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:

  • An overview of CalCPA’s financial literacy school program, volunteer training and free financial literacy resources and information from the California Jump$tart Coalition and other community organizations;
  • Up to three hours of free CPE for CPAs;
  • Opportunities to network with financial literacy advocates and volunteers; and
  • Free admission, which includes meals, parking and reception.

Register or learn more.

AICPA Proposes Six-point Plan to Improve Audit Performance

May 19th, 2015

The AICPA released a six-point plan to improve audits that outlines enhancements in the following areas:

  • Pre-CPA Licensure: A next version of the Uniform CPA Exam designed to increase assessment of higher-order skills, such as critical thinking and professional skepticism; high school advanced placement accounting course; changes to college-level accounting education; and additional doctoral-level audit professors with practical experience
  • Standards and Ethics: Quality control standards implementation support, auditor’s report revisions, evaluation of clarified standards implementation and ethics code codification
  • CPA Learning and Support: Competency models for audit engagements, including employee benefit plan and governmental audits; competency assessment tools; targeted resources to develop competencies; and certificate programs to demonstrate competence
  • Peer Review: Increased focus on greater risk industries and areas, more significant remediation, root cause analysis, termination from the peer review program after repeat quality issues
  • Practice Monitoring of the Future: Long-term initiative for near real-time, ongoing monitoring of firm quality checks using robust technological platform.
  • Ethics Enforcement and NASBA Collaboration: More aggressive pursuit of reported deficiencies and stronger ties with the National Association of State Boards of Accountancy and state boards of accountancy.

NASBA on the FAF’s Three-year Review of the Private Company Council

May 19th, 2015

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:

  • The PCC advisory role limitation should be avoided.
  • PCC oversight needs a strong FAF trustee champion.
  • NASBA supports the Private Company Decision-making Framework
  • NASBA believes the current structure works well and should not be changed significantly.

Following a Federal Determination for Research Credit Cases

May 19th, 2015

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:

  • Example 1: The taxpayer reported a federal research credit on their California return. The IRS audited the federal return but did not inquire about the federal research credit. Following federal is not appropriate in this scenario. There was no on-point examination of the issue.
  • Example 2: The IRS opened an examination and issued a standard information request for the research credit. No follow-up requests were sent, and no analysis or working papers were found in the IRS audit to indicate there was an examination of the research credit. The IRS did not make any adjustment to the research credit. In this instance, there was no on-point examination of the federal examination of the research credit. Following federal would not be appropriate in this scenario.
  • Example 3: The IRS opened an examination and issued the standard IDR for the research credit. The IRS audit file indicates that they evaluated the response and based on the lack of audit risk withdrew from the issue because of materiality, time and resources. In this scenario, there was an on-point examination of information and determination regarding the eligibility of the credit. Following federal would be appropriate in this example.
  • Example 4: The IRS opens an examination of years X1, X2 and X3, and adjusts the credit in all three years, but the FTB examination was for years X3 and X4. In this scenario, following federal is appropriate if the activities and expenses from the federal audit are the same or, substantially similar to, the activities and expenses claimed in the years under audit. Where the research projects reviewed by the IRS were substantially different from research projects conducted in California, the FTB may need to examine California research project activities even in the same year.

FAF Annual Report: ‘Building a Better GAAP’

May 19th, 2015

The Financial Accounting Foundation issued its 2014 Annual Report, which is themed “Building a Better GAAP” and focuses on the new FAF/FASB/GASB Strategic Plan. The plan serves as a blueprint for how the three groups will work together in the next few years to improve Generally Accepted Accounting Principles.

The report includes listings of all FAF, FASB and GASB advisory groups—including the Private Company Council and the Emerging Issues Task Force—as well as a complete 2014 management’s discussion, analysis and audited financial statements.

Congrats to Renewal Contest Winners

May 4th, 2015

Thanks to all those who renewed their membership prior to May 1 and qualified for our contest. Our winners are:

  • Dan Bastian (Caliber Audit & Attest, LLP), who won a free registration to our Emerging Leaders Certificate Program.
  • Anne Tran, who won a Free VPE 24.

If you haven’t, you can do so online—and still earn four hours of free ethics education.

CAMICO Tip of the Month: Jury Standards vs. Professional Standards

May 4th, 2015

Juries (members of the public) assess situations and create jury or claims standards. Jurors rarely care as much about CPA professional standards as they do about CPAs “getting it right,” which often means protecting the public interest; uncovering fraud regardless of the services being rendered; advising and informing clients of all significant matters (especially risk and how to avoid it); and documenting all significant communications, decisions and observations.

The expectation that CPAs will uncover fraud can be difficult to meet, but CPAs can address the issue by advising and informing clients about fraud exposures, as well as by offering to help clients address their exposures. CPAs also should document the advice and warnings provided to the client in case a dispute arises. Also, while CPAs are not required to verify certain types of information in engagements—such as tax return preparation or compilation of financial statements—if something looks irregular, it should be investigated, documented and communicated to the client.

For more information about CPA firm insurance issues, call 1 (800) 652–1772 or go online.

White Paper on Implementing GASB 68 Now Available

May 4th, 2015

The Governmental Accounting Standards Board (GASB) issued its Statement No. 68, Accounting and Financial Reporting for Pensions—An Amendment of GASB Statement No. 27, with new pension reporting requirements for employers. GASB also issued Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date—An Amendment of GASB Statement No. 68, to clarify the transition year provisions of GASB 68. Statements issued by the GASB collectively establish the foundation of generally accepted accounting principles. Local governments follow these accounting principles when preparing their financial statements to receive “clean,” unmodified audit opinions from their external auditors.

This white paper has been prepared by the California Committee on Municipal Accounting—a joint committee composed of representative from the League of California Cities and the CalCPA Government Accounting and Auditing Committee—to assist California local governments and their auditors with the implementation of the new pension statement. For most local governments with July 1–June 30 fiscal years, implementation will be required in the June 30 financial statements. Specific focus and sample disclosures are provided for local governments participating in the California Public Employees’ Retirement System. However, concepts set forth in this white paper are also applicable to other retirement systems.

Closing a California Business Entity?

May 4th, 2015

Here are the steps to dissolve, surrender or cancel a business entity:

  • File delinquent tax returns.
  • File the final/current year tax return. On this tax return’s first page, write “FINAL” at the top of the page and check the box labeled, “Final Return.” (Exception for a nonprofit tax-exempt church or tax-exempt corporation: These organizations do not have to file a final tax return if its 3-year gross receipts average is under $25,000. A final tax return must be filed if the gross exceeds this average, if the organization is a private foundation, or if the organization has non-member or unrelated business income.
  • Pay all tax balances, including any penalties, fees and interest.
  • Do not conduct or transact business in California after the final taxable year.
  • File the appropriate dissolution, surrender or cancellation form(s) with the Secretary of State (SOS) within 1 year of filing your final business’ income tax return. The correct forms are available online or contact the SOS at (916) 657-5448.
  • If the business entity is suspended or forfeited, it must revive before it can file dissolution, surrender or cancellation forms with the SOS. A suspended entity continues to accrue the $800 minimum tax indefinitely while the business is suspended.

Learn more.

Special Penalty Relief Available for Certain Small Retirement Plan Returns

May 4th, 2015

The IRS is reminding small businesses that have failed to timely file certain required retirement plan returns that they have until Tuesday, June 2, to take advantage of a special penalty relief program, which is designed to help small businesses with retirement plans that may have been unaware of the reporting requirements that apply to these plans. Normally, the plan administrators and sponsors of these plans who fail to file required annual returns can face stiff penalties—up to $15,000 per return. By filing late returns by June 2, eligible filers can avoid these penalties. About 6,000 delinquent returns have been filed under this program so far.

This program is generally open to certain small business (owner-spouse) plans and plans of business partnerships (together, “one-participant plans”) and certain foreign plans. Those who have already been assessed a penalty for late filings are not eligible for this program.