Connecting the Dots? Count Me In

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JANUARY 2008 - I enjoyed Lou Grumet’s Publisher’s Column “Connecting the Dots: The Estate Tax and Social Security” (October 2007). What a wonderful idea! Alas, what are the chances in this era of hostile politics for such a proposal to even begin to see the light of day? I must admit that my own prejudices will leap to the fore as I rail against politicians who demonize the estate tax, preferring to use the “death tax” sobriquet that seems to find a sympathetic audience, primarily among those who will never be either the direct or indirect subject of that levy.

In any event, if you feel that grassroots supporters might be helpful in getting some air under your proposal, count me in and let me know what I can do.

Gary Haber, CPA
San Rafael, Calif.

Social Security: A Well-Trod Path

Thank you for a thoughtful Publisher’s Column [“Connecting the Dots: The Estate Tax and Social Security” (October 2007)]. Please consider your technical solution as merely addressing the “symptoms” of the Social Security shortfall.

Unfortunately we all trod this path all too often.

The cause of the Social Security shortfall is rampant government fiscal irresponsibility fueled by self-interest, bureaucracy, and general disregard for the population and future (i.e., the period of time beyond the next election) of the country. Until we have term limits or some other limit on government whimsy, we must live with the egos and chicanery of our elected officials—“our government.”

I encourage you to continue presenting CPAs’ technical solutions to our nation’s fiscal problems. But please, in future columns, emphasize the causes of fiscal problems in concert with the solutions. Maybe if enough of us focus on the causes of our nation’s fiscal problems, we may garner the will to institute systemic solutions rather than technical fixes.

Dan Zegibe, CPA
Stamford, Conn.

Sarbanes-Oxley: A Bill of Goods

Responding to Editor-in-Chief Mary-Jo Kranacher’s November 2007 editorial, “The SEC: Still the Investor’s Advocate,” we have to rethink the efficacy of the Sarbanes-Oxley Act (SOX) before we push it onto small public companies. Here is an excerpt from Citigroup’s 2006 Form 10-K, dated February 23, 2007:

Citigroup management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2006 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on this assessment, management believes that, as of December 31, 2006, the Company’s internal control over financial reporting is effective.

Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2006 has been audited by KPMG LLP, the Company’s independent registered public accounting firm … which expressed unqualified opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2006.

The investing public received these assurances about 11 months ago. Nevertheless, lurking beneath the figures in the Form 10-K were huge losses and billions of off–balance sheet exposure that sooner or later were going to be disclosed. What good is SOX section 404 if the assurances about internal controls over financial reporting are as ineffective as they appear to be in the case of Citigroup? Add Merrill Lynch to the list, as just a week before the Citigroup write-offs, then-CEO Stan O’Neal announced similar billion-dollar write-offs.

It is a human tendency to believe all we need is just another law or set of rules to make things right. I’m sorry, but the investing public has been sold the proverbial “bill of goods” with SOX. All it has done is drive up the cost of doing business without much benefit to the investing public.

Joseph V. Bencivenga, CPA

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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