Accounting & Auditing Highlights Week Ending January 19, 2017


Accounting Highlights:   

Whistle-Blowers  

January 16: Orion Energy Systems didn't violate federal law when it removed and reassigned a chief executive officer who alleged he blew the whistle on securities fraud, a federal appeals court ruled. Click here to see the full story (Subscription required). 

IRS Ruling

January 16: The Internal Revenue Service updated its procedures for 2018 on issuance of private letter rulings and similar taxpayer-requested guidance, as well as on technical advice requested by agency personnel. The IRS guidance is effective Jan. 2, when it is scheduled for publication in Internal Revenue Bulletin 2018-1. Click here to see the full story (Subscription required). 

Disclosure

January 16: Warren Buffett, Lloyd Blankfein, Jamie Dimon: plenty of CEOs have gone public about health problems. So it might come as a surprise that top U.S. executives have no legal obligation to disclose much when their doctor spots trouble. Click here to see the full story (Subscription required). 

Repatriation Tax

January 17: Congress told the Treasury Department to look back at what multinational companies may have done to minimize their overseas earnings and profits in anticipation of a new repatriation tax. The new tax law hands Treasury specific authority—and directions—to write retroactive regulations to address moves companies may have made before the law was enacted to avoid the repatriation tax. Click here to see the full story (Subscription required). 

Tax Reform

January 17: Treasury Secretary Steven Mnuchin threatened to target tax audits at residents of states such as California and New York that are seeking ways to restructure their state income taxes to lessen the blow of the new tax law. High-tax states have been looking for ways to creatively get around the tax law that caps at $10,000 the amount of state and local taxes their residents can deduct. Click here to see the full story (Subscription required).

January 18: The lower corporate tax rate under the new tax law spurred some confusion for corporations whose taxable years don't begin on Jan. 1. Tax professionals have been practically unanimous in their expectations for guidance from the Treasury Department on how to interpret and follow the new tax law. But on this issue—application of the new corporate rate to companies with a non-calendar taxable year — the answer lies in Section 15 of the IRC. Click here to see the full story (Subscription required). 

January 19: Banks, insurers, and other companies might get an accounting change that will help them avoid unintended balance sheet effects caused by the new tax law. Accountants say the new law causes an accounting mismatch when banks and others re-measure some balance sheet items to conform to the new, lower tax rate. Click here to see the full story (Subscription required). 

Financial Institutions

January 17: The U.S. tax overhaul cost JPMorgan Chase & Co. $2.4 billion last year. Consider it a down payment on a more profitable future. The bank said that while it took accounting charges in the fourth quarter tied mostly to levies on foreign earnings required under the new law, its effective tax rate will drop this year to 19 percent from 32 percent. Click here to see the full story (Subscription required).

Class Actions

January 17: Goldman Sachs will get another chance to defeat class action certification in a shareholder suit alleging it hid conflicts of interest when creating risky subprime securities before the financial crisis. The U.S. Court of Appeals for the Second Circuit 12 reversed a district court decision certifying a class of investor plaintiffs in the lawsuit. Click here to see the full story (Subscription required).

Fraud

January 17: ABN AMRO Group NV and seven other banks that lent more than $360 million to U.S. cocoa processor Transmar Commodity Group Ltd. sued executives at the company over an alleged fraud. The Transmar executives engaged in a “long-running fraudulent scheme to misrepresent its financial condition and inflate the value of the collateral,” according to the complaint. Click here to see the full story (Subscription required).

Accounting Standards

January 18: An accounting change is about to have a big effect on Warren Buffett's conglomerate because swings in the value of its stock portfolio will soon be included in earnings. The new rules from the FASB requires businesses to report their equity investments at fair value. Any gains or losses for the period will be recognized in net income. Click here to see the full story (Subscription required).  

Securities and Exchange Commission

January 19: SEC Chief Accountant Wesley Bricker said the agency will carefully watch how well companies disclose the impact of accounting rules that are approved but not yet implemented. Bricker also discussed why companies will receive regulatory assistance with the new lease accounting rules and how the agency will monitor the accounting impacts of the new tax reform law in an interview videotaped at the AICPAs’ Conference on Current SEC and PCAOB Developments. Click here to see the full story (Subscription required).

Watch the interview at: https://www.bna.com/chief-accountant-bricker-m73014474028/.  

International Accounting Highlights:

Ireland

January 17: Multinational corporations won't be deterred from locating their intangible assets in Ireland under new rules that limit tax breaks on intellectual property assets, according to Dublin-based tax practitioners. Ireland's Finance Act reintroduced an 80 percent cap on capital allowances for companies making new IP acquisitions on or after Oct. 11, 2017. Click here to see the full story (Subscription required).

Accounting Rules

January 19: Ukrainian banks and financial businesses can get an exemption until March 31 from penalties for violating reporting requirements, imposed in 2016, for balance of payments, international investment positions, open foreign exchange positions, and foreign debt. Click here to see the full story (Subscription required).

Composed and Compiled by Gery Brownholtz, Accounting Editor, Bloomberg BNA

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