• Accounting News Roundup: No Low Tax Rates for You, Accounting Firms | 09.13.17

    By | September 13, 2017

    Critical audit matters

    A BDO survey of corporate board directors found that 48% of them “do not feel the discussion of CAMs is an improvement to the transparency and usefulness of the auditor’s report for investors.” This shouldn’t be surprising since 1) A lot of board members don’t care much about auditing and 2) Even quite a few audit committee members don’t care much about auditing.

    Interestingly, 50% of those directors surveyed are concerned that “the discussion of CAMs in sensitive areas could make their job as a board member more difficult.”

    But isn’t being a board director supposed to be difficult? I like how BDO designed a survey question to feel out the delicate sensibilities of corporate board directors, as if their comfort is the primary concern here. I’d think that if anyone out there were to be groomed for handling a metric asston of extra work, it’d be corporate board members. Pile it on, I say.

    How’s tax reform coming along?

    Bad news, accounting firm partners:

    Some services companies such as accounting firms won’t get the benefit of lower tax rates Republicans are planning for other businesses, Treasury Secretary Steven Mnuchin said Tuesday.

    Republicans want to cut the 35% corporate tax rate. They also want to lower rates on so-called pass-through businesses, which pay business taxes through the individual tax returns of their owners at individual tax rates, which currently reach as high as 39.6%.

    Some of you might be thinking, “No, he doesn’t mean…”

    Yes. Yes, he does:

    “If you’re an accountant firm and that’s clearly income, you’ll be taxed an income rate, you won’t be taxed a pass-through rate,” Mr. Mnuchin said. “If you’re a business that’s creating manufacturing jobs, you’re going to get the benefit of that rate because that’s going to be passed through to help create jobs and better wages.”

    It’ll be interesting to see if accountants remain gung-ho about tax reform if they’re get excluded from all the fun.

    Accountants behaving badly

    Some people just can’t help themselves:

    An accountant and disbarred San Diego attorney who once claimed to lead one of the nation’s most prestigious estate and tax planning law firms has pleaded guilty to hiding $1.5 million in assets from creditors in his bankruptcy case and evading $6 million in taxes.

    J. Douglass Jennings Jr., who sometimes went by “Uncle Doug,” pleaded guilty in San Diego federal court on Monday to bankruptcy fraud and tax evasion, the U.S. Attorney’s Office said.

    Uncle Doug tried to hide a $1 million real estate interest, a 53-foot yacht named “Sea Eagle” worth $150k, and antique silver worth $165k. Uncle Doug’s wife, Peggy (Aunt Peggy, I presume) also forged a bunch of loan documents in her mother’s name. They’re both in their 70s, so I imagine them to be fun grandparents.

    Previously, on Going Concern…

    I mentioned a story about a CPA who got caught in the act of (allegedly) ripping off a client. In Open Items, someone asked about interning at a small firm after accepting an offer from PwC.

    More from Going Concern

    Don’t forget to check out our new career page, Gigs. Skim it for jobs and sign up to receive the latest info on opportunities in select cities like New York and Los Angeles.

    Speaking of L.A., we’re surveying accountants who live and work there. If that’s you, help us out.

    Finally, we released our inaugural accounting compensation report last week.

    In other news:

    Get the Accounting News Roundup in your inbox every weekday by signing up here.

    See something we missed? Have a comment or complaint? Email us at [email protected].

    Image: The White House/Public Domain

    • Big4Veteran

      “This shouldn’t be surprising since 1) A lot of board members don’t care much about auditing and 2) Even quite a few audit committee members don’t care much about auditing.”

      They care about auditing quite a bit, as long as there are no issues and they don’t have to put any effort into understanding what auditing is. Board members and top management love to brag about having audited financial statements with with a “clean” opinion.

      “Interestingly, 50% of those directors surveyed are concerned that “the discussion of CAMs in sensitive areas could make their job as a board member more difficult.””

      That’s what this is really about. Most board members are just washed up corporate execs who are looking to supplement their retirement with six figure board fees while only having to “work” for half a dozen days a year.

      “But isn’t being a board director supposed to be difficult?”

      No, Colin, it isn’t. Corporate America is a giant circle jerk between the board of directors and top management. Half of their time is spent figuring out how to give each other pay raises, and new and creative forms of equity compensation. The other half is figuring out how to deceive investors in order to keep the stock price (public companies) or valuation (private companies) up.

      • Caleb Newquist

        I appreciate you supplementing my cynicism.

        • Big4Veteran

          You’re welcome.

    • Big4Veteran

      “It’ll be interesting to see if accountants remain gung-ho about tax reform if they’re get excluded from all the fun.”

      It won’t matter. There won’t be any accountants anymore because the new tax returns will be the size of a postcard.

      Just kidding. There isn’t going to be any tax reform. The Republicans couldn’t hit water if they fell out a boat.

      P.S. Please stop calling it “tax reform”, Colin. This is really just a giant tax cut for rich people and corporations.

    • SouthernCPA

      I would think anyone that has a business that would be taxed as a personal services corp, wouldn’t get the benefits of tax reform.