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The Daily


Maya Lindsay
Published Date:
Feb 12, 2016

How to Talk about Fees with Your Clients

Accounting Today

Are CPAs really afraid to talk about fees with their clients? That’s what Tom Wheelwright, founder of the accounting firm ProVision, thinks. Wheelwright, an advisor and speaker at Robert Kiyosaki’s Rich Dad Poor Dad seminars, and a contributor to Donald Trump’s Wealth Builders Program, says most accountants are “scared to death” of talking about fees with their clients. His advice? “Talk about fees early and often,” he said. “Clients don’t like surprises, especially when it comes to fees. So the very first thing we do when a client becomes a client is talk about our fees.” Wheelwright includes an estimate of fees in his engagement letter. ”It’s about training clients and setting expectations. When we give an estimate, we make sure that the top end of the estimate is more than we could ever conceive it would cost, so the actual bill will always come under the estimate,” he said. “And we look at the estimate and figure out ways to reduce it.”

J.P. Morgan CEO Jamie Dimon Buys 500,000 of Bank’s Shares

Wall Street Journal

J.P. Morgan Chase & Co. Chairman and Chief Executive James Dimon bought 500,000 of his bank’s shares on Thursday, a person familiar with the matter said. The $26 million purchase is designed to stem the tide of negative sentiment overwhelming bank stocks this year. The big-ticket stock purchase from one of the country’s most well-known bankers followed a 20% decline in J.P. Morgan’s share price so far this year and a broader selloff that has hit big banks such as Citigroup Inc. and Bank of America Corp. particularly hard. Bank stocks have fallen about twice as much as broader stock-market averages this year as investors fret over slowing economic growth, falling energy prices and the possibility that interest rates will fall, a tough combination for bank profits. “Jamie Dimon stepped up to the plate,” said Mike Mayo, an analyst with CLSA, who took the purchase as a positive sign for shares. “It’s a big number.”

Big Tax Changes for Individuals This Year

Accounting Today

Many major tax changes go into effect this year for individual taxpayers. Many of the changes were ushered in by the Protecting Americans from Tax Hikes (PATH) Act of 2015, although legislation enacted earlier in 2015 and in 2014 also contributed a fair share. Still other changes are the result of various administrative pronouncements by IRS. This article reviews the important changes for individuals. You can read about some of the other major changes for businesses, partnerships, retirement and benefit plans and tax preparers in three of my earlier articles, Major Business Tax Changes for 2016, Important Tax Changes for Partnerships and Due Dates in 2016 and More Important Tax Changes Taking Effect This Year.

Federal Reserve Won’t Backpedal on Interest Rates, Janet Yellen Says

New York Times

The Federal Reserve and financial markets are having a difference of opinion. The Fed expects the domestic economy to keep chugging along. Investors fear a global downturn. The Fed says it is still thinking about raising its benchmark interest rate again as soon as March. Investors are betting the Fed will not move before 2017. The split-screen divide was on display Thursday, as the Fed’s chairwoman, Janet L. Yellen, delivered a relatively upbeat assessment to the Senate Banking Committee while investors were dumping stocks and shoveling money into safe havens like government debt and gold. The Dow Jones industrial average finished the day down nearly 255 points, or 1.6 percent.

Monsanto Accounting Case Came from SEC Whistleblower

Accounting Today

An internal whistleblower could collect up to $24 million of the $80 million penalty imposed by the Securities and Exchange Commission against agribusiness giant Monsanto. That could be one of the largest awards so far since the SEC instituted the current whistleblower program inaugurated under the Dodd-Frank Act of 2010. The SEC said Tuesday that the St. Louis-based company agreed to pay an $80 million penalty and retain an independent compliance consultant to settle charges that it violated accounting rules and misstated company earnings pertaining to its flagship product Roundup (see Monsanto Rounds Up $80 Million in Accounting Violations). An SEC investigation found Monsanto had insufficient internal accounting controls to properly account for millions of dollars in rebates offered to retailers and distributors of its herbicide Roundup after generic competition had undercut Monsanto’s prices and resulted in a significant loss of market share.

‘Doom Loop’ Fears Cast Pall Over Bank Shares

Wall Street Journal

Bank stocks led an intensifying rout in financial markets, amid concerns that global central banks struggling to boost growth will worsen an already tough environment for lenders. The Dow Jones Industrial Average closed down 254 points on Thursday, and U.S. oil prices fell near $26 a barrel, in a broad flight from risk that sent haven assets climbing. Gold gained 4.5% to its highest level in a year. Bond prices rose, sending the yield on the 10-year U.S. Treasury note, which tends to decline when investors get nervous, to its lowest level since May 2013. Selling continued in Asia Friday, with Japan’s benchmark stock index down more than 5% at midday to its lowest level in more than a year. Stocks in Hong Kong and Australia also fell. The recent pressure reflects concerns that investors have wrestled with for months, including falling commodity prices, a slowdown in China and heavy debt loads in emerging markets.

Morgan Stanley to Pay $3.2 Billion Over Flawed Mortgage Bonds

New York Times

Morgan Stanley will pay $3.2 billion to strike a settlement with state and federal authorities over the Wall Street firm’s creation of mortgage-backed bonds before the financial crisis. Nearly a year ago, Morgan Stanley announced that it expected to pay $2.6 billion to federal authorities in the settlement. Since then, though, Morgan Stanley was pushed to offer more money. Much of the additional money will go to New York State. The settlement, which was announced Thursday morning, is one of the last that is expected to come out of a working group that President Obama helped form in 2012 to deal with the flawed mortgaged-backed bonds that banks put together before the financial crisis. In the go-go years that preceded the crisis, Wall Street banks purchased subprime mortgages and packaged them into bonds that ended up suffering significant losses.

Risk Grows of Markets Sparking Recession

Wall Street Journal

Is the U.S. headed for recession? The markets suggest so. With Thursday’s selloff, the Dow Jones Industrial Average is now down 14.5% from its all-time high last May. Yields on risky bonds continue to climb, while investors have sought safety in U.S. Treasurys, sending those yields lower. And oil has hit a nearly 12½-year low. Yet the economic data show no recession. Job growth in January was healthy, and employers are having trouble filling vacancies. This dichotomy is neatly captured by two indexes compiled by Cornerstone Macro. One, using financial indicators such as the stock market and corporate bond yields, puts the probability the U.S. is now in recession at 50%. The other, which adds in macroeconomic data such as loan delinquencies and inflation-adjusted income, puts the probability at just 28%. Of course markets often wrongly predict recessions. But in some circumstances they can help bring them about.