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Accounting News Roundup: Auditors’ Clients and Nonaudit Fees; KPMG Gets American Airlines’ Rose; Nonequity Partnerships | 03.04.14

Posted on by Caleb Newquist

Auditors Draw Some Clients Closer [CFOJ]
Emily Chasan reports that nonaudit fees are creeping higher again: "At least 300 companies in the U.S. and Europe paid their auditors as much for add-on services as they did for audit work, according to public filings from the past two years reviewed separately by data provider Audit Analytics and stock-research firm Exane BNP Paribas SA." 

American Airlines picks KPMG over Ernst & Young as auditor [DMN, 8-K]
Sorry to bring it up EY. The breakup is probably still fresh: "On February 28, 2014, AAG advised E&Y of its determination and that it would be terminating its engagement with E&Y effective as of the date of E&Y’s completion of audit services for the fiscal year ended December 31, 2013 and the filing of the 2013 Annual Report on Form 10-K of AAG. Also promptly after the Audit Committee made its determination, AAG engaged KPMG as its new independent registered public accounting firm to perform audit services beginning with the fiscal year ending December 31, 2014."

The pros and cons of nonequity partnerships [JofA]
Career paths, recruiting, retention, getting out/in and compensation are all addressed.

25 Interesting Features of Camp’s New Tax Reform Plan [Tax Analysts]
Martin Sullivan does a pret-tay, pret-tay, pret-tay good job summarizing the 979-page bill. Including: "Lawyers, doctors, and CPAs take a hit. Big and midsize professional firms would face a major tax increase because they would no longer be allowed to use the cash method of accounting."

SolarCity to Restate Results to 2012 on Accounting Error [Bloomberg]
This sounds like a big Excel error. SolarCity's cost of sales will increase from $16 million to $20 million for the 9 months ended September 30 and $20 million to $23 million for 2012 after messing up how a formula "allocat[es] overhead expenses between operating lease assets and the cost of solar-energy system sales."   

Accounting Complexity: What if “Truth in Labeling” were an Accounting Principle? [Accounting Onion]
Tom Selling addresses the FASB's latest quixotic quest.

Apple's Finance Chief to Depart [WSJ]
Don't rush to polish your CV. Luca Maestri is taking over. 

Posted in ANR

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GOP Balks at Taxes to Finance Jobs Plan [WSJ]
Mr. Obama proposed limiting itemized deductions for families with taxable income of $250,000 or more a year, ending tax breaks for oil companies and corporate jet owners, and cutting out a tax break for investment-fund managers. The White House says the tax changes would take effect in 2013 and estimates they would raise $467 billion in additional revenue over 10 years. Republicans in Congress, who had been striking a more conciliatory tone about backing at least parts of the proposal the president unveiled last Thursday, disputed the White House contenould cause no additional job losses for the struggling economy.

How to Raise Revenue Without Violating the Tax Pledge [Economix/NYT]
With Republican control of the House of Representatives and enough Republicans in the Senate to filibuster to death any measure deemed by Mr. Norquist to violate the sacred pledge, spending cuts appear to be the only permissible means of reducing the deficit. There are, however, ways of cutting spending by raising revenue. While this sounds like magic, it is done all the time.

Payroll-Tax Cut Is the Working Part of Jobs Plan [Bloomberg]
In contemplating another stimulus package, we should restrict ourselves to interventions that carry the biggest benefit relative to cost. That’s why the president is right to emphasize payroll tax cuts, which get money into the hands of ordinary Americans, and have little potential for public waste. They also create stronger incentives for people to work and for companies to hire. The downside is that lower payroll taxes hurt our long-term fiscal situation, but there is an easy remedy for that. We can create a quid pro quo in which lower payroll taxes are paid for with an offsetting increase in the age at which people can start drawing Social Security. If the age increase occurs many years from now, the reduction in the payroll tax can be budget neutral and wouldn’t hurt the current economy.

Ernst & Young Acquires TPC Tax Risk Practice [AT]
Ernst & Young has acquired the Tax Risk & Process Reengineering Practice of True Partners Consulting, a firm based in Chicago. E&Y also acquired the intellectual property related to the practice as part of the deal. Financial terms of the transaction were not disclosed. The acquisition will enable E&Y to expand its team and capabilities for helping corporate tax clients, especially in the Midwest, deal with globalization, regulation and other challenges.

Mandatory Auditor Rotation — The Financial Times Stumbles Onto the Carousel [Re:Balance]
Round and round it goes.


NYSE Euronext Bulks Up In Market for Receivables [WSJ]
NYSE Euronext plans to boost its role in helping companies secure short-term funding, hiring a longtime GE Capital executive as part of an initiative that includes buying a stake in an electronic market for corporate receivables. The parent of the Big Board aims to use its investment in the New Orleans-based Receivables Exchange as another venue for public companies to borrow money, complementing the long-term funding provided via stock-market listings at a time when businesses face financing difficulties.

H&R Block won’t offer refund-backed loans in 2012 [AP]
Wah, wah, waaahhh.

Obama May Limit Tax Breaks on Muni Bonds [Bloomberg]
The president’s $447 billion job-creation plan would pare the tax break for municipal-bond interest to 28 percent for couples earning more than $250,000 a year. Such tax-exempt interest is currently worth 35 percent for earners in the top tax bracket because that’s the amount they would otherwise have to pay on their income. Any move to limit the tax advantage for municipal securities would face resistance from local-government officials because the break bolsters demand for their debt, driving down the interest rates they pay when borrowing for public works. Investors in the $2.9 trillion market for municipal bonds are willing to accept lower returns because the income isn’t taxed.