November 12, 2018

Accounting News Roundup: Sarbanes-Oxley and Tax Reform Sans Trump | 09.11.17

donald trump big 4 trade war

Mike Pence is hoping he gets to sit down soon. 

Sarbanes-Oxley

Back in July, we noted a hearing on Sarbanes-Oxley where a slew of witnesses, including New York Stock Exchange President Tom Farley, spoke about its “great cost on corporate America” and that its “benefits are not entirely clear.” The requirement that companies comply with SOX 404, the requirement that auditors attest to a company’s assessment of its internal controls, received the brunt of the anti-SOX contingent’s criticism.

Last week, a couple of columns — one from CFO and another at The New York Times — noted the work of Matthew Ege of Texas A&M University, along with Dain Donelson and John McInnis of the University of Texas at Austin. It’s the first research that “provide[s] the first evidence that weak internal controls are associated with a higher risk of unrevealed accounting fraud.” A key finding it the study is noted in both columns; here’s Gretchen Morgenson in the NYT:

Auditors had identified material weaknesses in financial reporting at about 30 percent of the companies that later disclosed accounting problems. Chief executives were named in 111 of the 127 fraud cases, and chief financial officers were identified in 108 of the cases.

Maybe I’m wrong, but that strikes me as a clear benefit thanks to SOX. You can gripe about its cost or certain tedious tests, but the link between lousy controls and the potential for fraud is compelling. And it’d be pretty reckless for anyone to ignore it.

How’s tax reform coming along?

Here’s some nameless guy quoted in The New Yorker:

“The business community has been very aligned privately with leaders on the Republican caucus, both House and Senate,” a Wall Street executive who backed Hillary Clinton but supports certain parts of Trump’s agenda told me. “Everybody believes reform will happen or not happen irrespective of Donald Trump. That’s the big change. I believe we will have tax modification. I believe Trump will have nothing to do with it. It doesn’t matter whether he does or doesn’t.

So in other words, if the business community and Republicans don’t mind if Donald Trump will take credit for tax reform, I guess it’s going okay? Tax reform is a very, very big if. Donald Trump taking credit for it, should it happen, is not.

Elsewhere in tax reform: Would Workers Benefit From A Corporate Tax Cut? Not Much

Previously, on Going Concern…

We announced the release our accounting compensation report.

Over the weekend in Open Items, someone who’s accepted a full-time offer with a Big 4 wonders about a spring internship with a different firm.

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: Shealah Craighead/Wikimedia Commons

Related articles

Accounting News Roundup | 01.21.10

How to find the “best and brightest” [CPA Success]
This may be a better topic for the friendly HR professional but figuring out who these future accounting rock stars are before they show up on their first day is “more art than science”, as Tom Hood notes.
Popular to some old-school thought, GPA does not always indicate who’s going to dominate in the real world and “soft skills” — besides being a terrible term — are in more demand than ever.
Help The The American Red Cross of Greater Chicago Help Haiti [Re: The Auditors]
The American Red Cross of Greater Chicago is having a drive today and since Francine’s friend is the CFO, we’ll be glad pass around the news:

One of my oldest and dearest friends, Guillermo Becerra, is the CFO of the American Red Cross of Greater Chicago. I asked him how I could help him, and the Red Cross, during what must be an incredibly busy time post-Haiti earthquake.


“The Chicagoland community will come together on Thursday, January 21 to give to the American Red Cross as we help the people of Haiti recover from the catastrophic earthquake that devastated their country last week.
The Chicago Helps Haiti media relief drive begins at 5 a.m. and lasts until 11 p.m. Nearly every TV and radio station in our area will be promoting this fundraising effort throughout the day. You can help too, by giving via phone or online, and sharing your thoughts here, on Facebook or Twitter, and by asking others to give.
To give from 5 a.m. to 11 p.m. CALL 1 (877) 565-5000 or visit www.chicagoredcross.org/haiti

Plus, we’re guessing that if you give, your 2009 tax return isn’t much of a concern.
If Your Password Is 123456, Just Make It HackMe [NYT]
The Times is concerned that you have a shitty password which puts you at a huge risk of being hacked by someone sitting in their parents’ basement.

Imperva found that nearly 1 percent of the 32 million people it studied had used “123456” as a password. The second-most-popular password was “12345.” Others in the top 20 included “qwerty,” “abc123” and “princess.”

You know who you are, ye with stupid passwords. Also, don’t even think of changing it to “654321” because that drops in at #19.

Accounting News Roundup: Haiti Relief Passes Senate; Accounting Job Surge? CPAs Basically Control People’s Lives | 01.22.10

Senate votes for faster tax breaks for Haiti gifts [WaPo]
As expected, the U.S. Senate unanimously passed legislation yesterday that allows taxpayers to deduct donations made for Haiti relief efforts. You have until the end of February to donate so that it may be included on your 2009 return.

Maybe it’s bad legislation but we’ve been over that.

CPA Jobs Set for Surge. But When? [CPA Trendlines]
That’s the question, isn’t it? Rick Telberg, who has done a great job of tracking the Bureau of Labor Statistics on accountants, points out that while the latest BLS forecasts a 22% increase (279,400 jobs) by 2018, there’s no indication that it’s happening now:

[M]any tax, accounting and finance professionals are still slogging through the Great Recession. The Association for Financial Professionals, for instance, reported that about one in four respondents say their organizations will contract in 2010. At the same time, a PricewaterhouseCoopers survey of private companies found 43 percent of CEOs and CFOs still budgeting no expansion over the next 12 months to 18 months. The data just seem to reinforce economic uncertainties and a weak outlook.


The BLS is looking past the past the recession for the jump in opportunities but just when the hell will that be? Just because the economy isn’t contracting currently, doesn’t mean it won’t in the future and this “recovery” has been tepid at best.

Theismann to CPAs: You Are the Conscience of America [Web CPA]
Joe Theismann gets it. He knows that without all of you out there in CPA land, your clients don’t stand a chance. They’d be finished. Finished!

“You’re the conscience of America,” Theismann told conference-goers. “You are the survivors in tough times. With accountants, I’m not looking for someone to file taxes and do my financials. I can do that myself online. In your position you can basically control people’s lives.”

So get out there and control somebody’s life. Joe Theismann is expecting it.