Back in July several federal agencies including the Department of Labor (DOL), the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corp. jointly filed a proposed revision of Form 5500. Since then, the American Institute of CPAs (AICPA) has expressed concerns that some, not all, of the proposed changes could result in inconsistencies and confusion.
According to the DOL, the Form 5500 Series was developed as a way for employers to document employee benefit plan reports in compliance with requirements set forth by the Employee Retirement Income Security Act (ERISA).
The revisions suggested by the federal agencies were intended to:
- Enhance the reports submitted by employers.
- Upgrade financial data regarding benefit plans.
- Align annual reporting requirements with DOL-issued requirements.
- Enable to reports and returns to be more data mine accessible.
While the AICPA ultimately supports the move toward revision, the association sent comment letters to the DOL on November 22 outlining its chief concerns. For instance, the proposal:
- Asks plan sponsors to provide more information to ensure proper preparation of Form 5500, which could prove both costly and time-consuming, yet does not offer reasons for the request.
- Requires independent plan qualified public accountants (IQPAs) to expend further time laboring over new information needed to be recorded in supplemental schedules and the drafting of audit-related disclosures in Schedule H.
- Issues additional fees of plan sponsorship in order to comply with new requirements. As a result, sponsors looking to cut costs may transfer these fees onto plan participants.
- Mandates more work at more cost, which may provoke plan sponsors to reconsider sponsorships or limit benefits.
In terms of reaching an acceptable solution, the AICPA is encouraging federal agencies to hold public hearings to give both the agencies and the stakeholders the space to compromise conflicting viewpoints before the proposal is officially finalized.
While it may seem hard to believe, nearly 2 million people who didn’t file their taxes for tax years 2012 and 2013 owed about $7.4 billion to the IRS as of May 2016.
Fortunately for taxpayers, the IRS plants to change how it deals with people who don’t file their tax returns. Accounting Today described a new report on the IRS’s strategy to deal with people who don’t comply with the tax laws.
The Treasury Inspector General for Tax Administration (TIGTA) issued the report. It states that the IRS has a strategy in place to deal with taxpayers who meet the income threshold to file a tax return, but have not done so. Typically, the IRS sends more than 640,000 notices a year to nonfilers with expired tax extensions.
Regrettably, most of the people who did not file their taxes in 2012 and 2013 will probably never be forced to do so. The lack of notification traced back to a programming error on the IRS’s part. The process of notification runs on a standalone process each year.
The IRS identified nonfilers with high incomes as a “high compliance risk” and made them a high-priority. In fact, they are among the top eight areas in the annual work plan of the IRS.
Despite having changed its procedures for nonfilers in February 2014, as of July 2016, the IRS had not yet implemented any of its proposed initiatives.
The TIGA recommends that the IRS change its IT tools, procedures, and controls to ensure that it identifies more nonfilers. The IRS agreed with these recommendations and plans to implement them.
One of the ways it will do so is by expanding its review of inventory volume and identifying document fluctuations in these counts for each tax year. By doing so, the IRS expects to catch anomalies and address them.
As if going through the trauma of a major hurricane is not enough, having to file taxes on time can be a serious problem for people who suffered major losses. Realizing this, the IRS extended the tax deadlines for victims of Hurricane Matthew.
Victims in parts of Florida, Georgia, South Carolina, and most of North Carolina will have until March 15 to file certain business and individual tax returns and payments. Eligible filers include those living in any area that FEMA designated as qualifying for either public or individual assistance. The IRS provides details on the disaster relief page on its website.
The hurricane affected the October 17 extension deadline, and the IRS is postponing various payment deadlines and tax filings that occurred starting on October 4. The IRS extended the new deadline to March 15, 2017.
This extension includes the January 17, 2017 deadline for making estimated payments. Individual filers can extend income tax returns from 2015 that were granted an extension through October 17. However tax payments originally due on April 18 are not exempt.
Extensions for businesses include:
- October 31 and January 31 deadlines for quarterly excise tax and quarterly payroll returns
- The special March 1 deadline for farmers and fisherman who did not make quarterly estimated tax payments
In addition, the IRS is waiving penalties for late payment of federal and excise tax and payroll deposits that were due between October 4 and October 19 if the payments were made by October 19.
The extension deadline applies to taxpayers who live outside of a disaster area, but whose records are located within the affected area. Such individuals should call the IRS at (866) 562-5227.
In a new setback for the IRS, Accounting Today reported the agency’s October announcement that it will indefinitely postpone its vaunted security upgrade to its e-Services for tax professionals.
Ironically, the IRS notified tax professionals in September that they were required to re-register with a new Security Access authentication process by October 24. Since the IRS has suffered from major security breaches recently, the proposed security upgrade would have greatly reduced the likelihood of identity theft.
Security problems from recent years have included its Get Transcript services and the IP PIN services that provide a personal information number for victims of identify theft.
The situation is critical enough that the IRS warned tax professionals in August to monitor their Preparer Tax Identification Number (PTIN) for signs of suspicious activity. The new authentication process would have provided additional security in the verification process for identifying tax professionals.
Since last year, the IRS has been working on a Security Summit Initiative to address tax fraud and identify theft issues. The agency has been partnering with tax preparer organizations, major tax prep chains, and tax software providers as part of the Initiative.
Fortunately, the IRS is taking steps to educate tax professionals on identify theft scams that target them. The agency set up a page entitled “Protect Your Clients, Protect Yourself” on its website. This page includes security alerts and educational videos along with a link to a publication on “Safeguarding Taxpayer Data.” Accountants and other tax professionals can also view an on demand webinar entitled “Protect your Clients, Protect Yourself from Data Theft.”
While these measures should be helpful, one can only hope that the IRS will quickly introduce enhanced security protocols for handling client data.
Earlier this summer, employees in accounting positions at Wal-Mart began worrying that machines would soon replace them. And after months of waiting, their fears have been realized.
According to the Wall Street Journal, in September Wal-Mart officially announced it plans to eradicate roughly 7,000 accounting jobs across 500 stores over the following months. These money-counting and invoicing positions will now be managed by automated machines or handled by Wal-Mart’s headquarters office in Bentonville, Arkansas.
Wal-Mart originally implemented accounting changes during a trail run period to test the new system’s efficiency, accuracy, and financial benefits. After producing successful results, the retail mogul made the changes a permanent fixture.
So what will happen to the thousands of ousted accountancy workers?
Instead of merely firing accountancy employees, Wal-Mart is offering them the opportunity to travel from back-room positions into customer service jobs on the floor-room.
Although the offer is certainly better than no offer, some employees are less than impressed. Many accounting workers have held their positions for several years and have little interest in becoming customer service representatives. Also, by taking on customer-based jobs, many former accountants are likely to experience pay cuts.
Despite these complaints, Wal-Mart continues defending its actions, claiming that modifications to the accounting process were necessary to reach the larger goal of improving the customer experience. By encouraging more employees to focus on customer interaction, Wal-Mart hopes to enhance the shopping experience attracting more visitors.
This renewed dedication to customer satisfaction has undoubtedly become a trend in the retail industry where companies with physical storefronts continue struggling against online competitors.
Although Wal-Mart closed 269 stores in January 2016, it still maintains nearly 4,600 stores in the United States alone and remains the largest private employer in the country.
In 2015 the American Institute of CPAs (AICPA) reported that although nearly half of all new CPAs entering the field were women, only about 14% of women held partner or principal positions.
So what’s being done to integrate more female CPAs into executive roles?
Ever sine 1989, the AICPA has continued developing its Women’s Initiatives Executive Committee (WIEC) to create workshops, professional networks, webinars, and literary articles to advocate and support women seeking leadership jobs. Yet, in more recent years another group has surfaced to offer women even better chances of landing high-ranking positions: the Accounting MOVE Project.
The theory behind the Accounting MOVE Project is that more women will rise to more prominent titles through executive sponsorship. Basically, executive sponsorship is a type of planned succession wherein executives help groom candidates, particularly women, for future leadership roles when replacements, retirements, and new positions become inevitably necessary.
The Accounting MOVE Project also distributes a survey to top accounting and financial firms throughout the country to assess the condition of women in the accounting field. According to the Accounting & Financial Women’s Alliance (AFWA) the survey focuses on four specific aspects of success: Money, Opportunity, Vital support, and Entrepreneurship.
This year, the Accounting MOVE Project ranked the 10 Best CPA Firms for Women based on three major attributes:
- Steady and quantifiable evidence of leadership progression of women
- Active programs that secure the advancement of women
- Strong incorporation of executive sponsorship initiatives
The results were as follows:
- The Bonadio Group (Pittsford, NY)
- Burr Pilger Mayer (San Francisco, CA)
- Clark Nuber (Bellevue, WA)
- CohnReznick (New York, NY)
- Frazier & Deeter (Atlanta, GA)
- Lurie (Minneapolis, MN)
- MCM CPAs and Advisors (Louisville, KY)
- Moss Adams (Seattle, WA)
- Plante Moran (Southfield, MI)
- Rehmann (Troy, MI)
Institutes of higher learning continue to experience escalating numbers of students enrolling in accounting degree programs. According to the American Institute of Certified Public Accountants (AICPA), during the 2013-2014 academic year, accounting programs throughout the country made room for 19% more master’s degree students and 3% more bachelor’s degree students.
In its report, 2015 Trends: In the Supply of Accounting Graduates and the Demand for Public Accounting Recruits, the AICPA also reported that 91% of firms employing accountants plan on hiring more recent graduates in the coming years. Larger firms with more than 200 CPA workers mirrored this projection.
As the number of accounting graduates and new graduate hires continues to grow exponentially, many accountants just entering into the workplace may wonder: Which firms provide can offer me the best opportunities?
Fortunately, the career information and employer ranking website Vault.com recently released its annual list of the top 50 accounting firms in America. The company’s ranking methodology revolves around survey results from accounting professionals rating their employers in various categories including: prestige, culture, work/life balance, compensation, job satisfaction, business outlook, and formal training.
The following firms ranked highest in the 2017 Vault Accounting 50 list:
- PricewaterhouseCoopers, LLP
- Deloitte, LLP
- Ernst & Young, LLP (EY)
- Grant Thornton, LLP
- KPMG, LLP
- BDO USA, LLP
- Plante Moran
- RSM US, LLP
- Baker Tilly Virchow Krause, LLP
- Dixon Hushes Goodman, LLP
- Moss Adams, LLP
- Friedman, LLP
- CohnReznick, LLP
- Armanino, LLP
- Brown Smith Wallace, LLP
- Eide Bailly, LLP
- Frank Rimerman + Co., LLP
- Elliot Davis Decosimo, LLC
- Sikich, LLP
- Schenck, SC
- Marks Paneth, LLP
- Crowe Horwath, LLP
- CliftonLarsonAllen, LLP
What makes PricewaterhouseCoopers, LLP the best accounting firm? First, the global firm is the biggest, and perhaps most influential, professional service provider in the world. Second, it snagged the #1 spot for most prestigious firm in the 2017 Vault Accounting 50 list for the last eight consecutive years. Employees also applauded the firms many positive qualities including:
- High profile clientele
- Promotions offers
- Training options
- Education opportunities
- Healthcare and retirement benefits
- Annual salary raises
- Ability to commute
- Vacation and holiday breaks
Millennials who want to be more fiscally savvy are more often looking for a little outside help. Smart accountants are stepping up and shifting their marketing to meet those needs.
In the Internet age, the simple fact is that a young person looking for a personal accountant is more likely to immediately Google “accountants near me” rather than open a Yellow Pages book or stop by an office on their commute to work.
Accountants across the field are seeing this shift, and working to keep step with it. Here are three ways you can better reach millennial consumers.
1. Clients are reaching through the Internet, reach back.
British business software host Business Backbone recommends accountants utilize social media giants like Twitter and Facebook to reach clientele, rather than traditional advertising.
65% of Americans use the Internet to research and purchase goods and services, according to Ipsos Market Research Company. Accountants seeking to tap into these markets need to establish an online presence that can keep up. Those with pages that are easy to navigate, helpful, and visually pleasing can expect a surge of business in the new year.
2. What millennials value: local business and community
In a time when corporations are larger than they’ve ever been, it can be easy for accountants who work independently or in smaller settings to forego an Internet presence. But millennial consumers value the personal service and reliability of small businesses.
Use this to your advantage by advertising specifically, rather than generally. Mention the city you practice in, their sports teams or colleges, to show you are an involved part of the community rather than a faceless entity looking for money.
3. Programs like Mint and Cashbox should be part of your arsenal
There are a whole score of Internet programs and apps for personal finance, but that does not mean that millennial consumers no longer need accounting support. Most of these apps entail large, complex spreadsheets that can be intimidating to navigate.
Accountants who understand and can refer customers to these programs, in addition to offering expertise and good finance habits, will better satisfy today’s consumer.
Accounts who succeed in these three areas should expect a surge of new business in 2016.
While the average person might employ an accountant to help them balance their budget, understanding the role that accountants have to play in governments is an extremely complicated prospect.
One need look no further than Detroit’s financial problems to understand the complexities of balancing a city’s budget. It has been a full year since the city declared bankruptcy and began reorganizing in the wake of shedding their $7 billion in debt.
Part of this process has been defaulting on future payments to many of the cities workers. Detroit’s municipal workers found their pensions and health care benefits cut, with many even being asked to repay thousands of dollars in interest accrued on their retirement savings accounts.
The reasons these kinds of debts have been a focus for Detroit now are the same reasons that Detroit bankrupted itself in the first place. They are also the same reasons that many state and local governments across the U.S. are finding themselves dealing with growing debt issues.
The crux of the issue revolves around the difference between two kinds of accounting, accrual accounting and cash-basis accounting. These are two different methods used to determine a budget. Accrual accounting is mandated by the Financial Accounting Standards Board for all public companies. It is a method of accounting that requires all expenses that will be paid in the future to be considered as a part of a current budget, not as a part of the budget during the time that they will be paid.
In other words, if a company buys a 20 dollar product but is not going to have to pay the 20 dollars for three years, that 20 dollars still has to be taken out of this year’s budget when using accrual accounting.
Governments on the other hand are more likely to use cash-basis accounting. Cash-basis accounting plans budgets based on how much money is currently available. However, this means that many governments plan their budgets based around how much money they have without taking into consideration debts they have been incurring that would previously have been taken care of in an accrual accounting system.
They will spend money they have now that should be set aside for future expenses, and then not pay those expenses when time comes to settle their debts. The International Federation of Accountants has been calling out governments on this practice for years, but changing it is an extremely complicated prospect. It means reevaluating budgeting practices and in some cases even rewriting laws.
However, applying standard accounting practices to governments may be necessary to avoid the potential of further bankruptcies like Detroit’s. In the years to come, it will be important for cities and states to deal with their debt expediently as more and more debt holders come calling.
James Schnurr, Securities and Exchange Commission Chief Accountant believes that public audit quality is improving overall but believes there is still room to improve.
While inspection comments for large and second-tier businesses have been on the rise over the past seven years, Schnurr says that does not mean audit quality is deteriorating. The increased comments are a reflection of a more mature inspection process. “Also the bar for audit quality continues to move up,” he stated.
Some firms are beginning to see a decrease in inspection comments, but Schnurr warns them not to become complacent. He urged auditing firms to monitor their growth of consulting and advisory practices, especially at larger firms. He says that larger firms tend to have “scope creep,” providing prohibited services. He stresses the importance of having a system to verify non-audit services before approving them.
After speaking on audit advice, Schnurr went on to review 2015 in an interview with Accounting Today, praising the staff of the Securities and Exchange Commission during his inaugural year as chief accountant. He expressed confidence in the personnel stating that their focus on protecting their investors was laser-sharp, stressing their overall dedication.
Schnurr then pointed out several of the achievements of his office during 2015 including:
- Advancing transparency with the Public Company Accounting Oversight Board
- Identifying issues in implementation of the new revenue recognition standards.
- Analyzing International Financial Reporting Standards for better understanding in the United States and the world.
- Rolling out changes to audit committee disclosures.
SEC agenda items for the 2016 year include the following:
- Pinpointing implementation issues before the credit impairment standard is rolled out.
- Accelerating timeliness of the Public Company Accounting Oversight Board (PCAOB) standard releases.
Schnurr wrapped up the interview stressing the importance of firms meeting professional obligations and his organization’s commitment to maintaining these standards.