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The Daily

NEWS HIGHLIGHTS FOR FRIDAY - 2.19.16

By:
Maya Lindsay
Published Date:
Feb 19, 2016

Compliance is the Grim Reaper of Accounting Firms

Accounting Today

Progressive accounting firms seek consulting opportunities so their firms can take advantage of more lucrative advisory service offerings. Often the amount of time taken to complete certain advisory services is less than traditional compliance engagements that would yield the same return. However, there is a lot of fear holding firms back from expanding their services. If a CPA never portrays the benefits of advisory services or asks their clients about them, then any fear a firm has about implementing these services is unfounded. Time has always been one of the most limited resources for CPAs. With the number of tax returns and amount of compliance work that an average firm provides, it’s difficult for accountants to go beyond their traditional role. Ultimately this difficulty in transition is not due to a lack of technical knowledge but to a fear of creating financial instability.


7 Things Investors Should Watch For in 2016

Wall Street Journal

If January signaled what the stock market is going to be like in 2016, fund investors could face a gut-wrenching year. Worries about China and the global economy, a surging dollar and oil’s collapse helped send the S&P 500 index down 5.07% in January, the market’s worst performance for that month since the 2009 financial crisis. The poor start came after the index’s six-year winning streak ended in 2015. What’s more, stocks may not have seen the lows for this correction yet, money managers caution. But big market moves present opportunities, and there are things that investors might do—or avoid doing—to enhance future returns, professionals say. With valuations now lower, it might make sense to add to current stock positions or diversify to trim overall risk in a portfolio, they say.


IRS Chief Counsel Notice Highlights Tax Court Procedure Changes Due to PATH Act

Forbes

The Protecting Americans from Tax Hikes (PATH) Act of 2015, which was signed into law on December 18, 2015, affected several Tax Court procedural matters. A recent IRS Chief Counsel Notice addresses some of those changes. Appellate Venue - I.R.C. § 7482(b) provides for the specific venue for appellate review of Tax Court decisions. Generally, for a taxpayer other than a corporation, it is the circuit of the taxpayer’s legal residence; if the taxpayer is a corporation, then it’s the circuit of the principal place of business. If not provided for in (b), a catchall provision provides that venue is in the District of Columbia Circuit. Some common cases that were not provided for in § 7842(b) were collection due process cases (known as CDP cases) and innocent spouse cases.


Hedge Funds Will Pay for You to Own Small-Cap ETFs

Bloomberg Business

With many exchange-traded funds already dirt cheap, everyone is waiting for the first free ETF. Turns out, it's already here. In certain pockets of the industry, ETFs are consistently beating the return on the indexes they're meant to track. Theoretically, an ETF should lag its index by roughly the amount of its fee to investors. But that doesn't account for revenue from securities lending. ETFs can lend out as much as 33 percent of their equity holdings to short sellers in return for a small fee. ETFs can then use that revenue to offset the expense ratio. In some cases, an ETF has securities in its portfolio that are in such high demand from short sellers that the lending fees add up to more than the fund's expense ratio—so the ETF not only makes up its fees but also pushes returns above those of the index.


Consumers Warned of New Surge in IRS E-mail Schemes during 2016 Tax Season; Tax Industry Also Targeted

IRS.gov

The Internal Revenue Service renewed a consumer alert for e-mail schemes after seeing an approximate 400 percent surge in phishing and malware incidents so far this tax season. The emails are designed to trick taxpayers into thinking these are official communications from the IRS or others in the tax industry, including tax software companies. The phishing schemes can ask taxpayers about a wide range of topics. E-mails can seek information related to refunds, filing status, confirming personal information, ordering transcripts and verifying PIN information. Variations of these scams can be seen via text messages, and the communications are being reported in every section of the country. "This dramatic jump in these scams comes at the busiest time of tax season," said IRS Commissioner John Koskinen.


Bank-Stock Rout Ripples to Bonuses

Wall Street Journal

For bankers, getting a bonus in stock has become an albatross. Employees at Goldman Sachs Group Inc. have been hit with more than $400 million in paper losses thanks to a plunge in the value of stock bonuses paid out early last year, according to a Wall Street Journal analysis. Similar declines have been felt by advisers, traders and other staff across Wall Street. J.P. Morgan Chase & Co., Bank of America Corp., Citigroup Inc. and Morgan Stanley haven’t yet reported how much stock they granted a year ago as part of employees’ bonuses, but the declines in banks’ share prices—based on their averages from January 2015—have been equally severe, ranging from a 32% drop at Morgan Stanley to a 17% decline at Goldman. (J.P. Morgan, an exception, is up 2%.)


IRS Warns On Use Of Tax Shelters

Tax-News.com

The US Internal Revenue Service (IRS) has warned taxpayers that the use of "abusive tax shelters and structures to avoid paying taxes" continues to be a major problem during the current 2016 filing season. "Taxpayers should steer clear of unscrupulous promoters who sell phony tax shelters with no real purpose other than to avoid paying what is owed," said IRS Commissioner John Koskinen. "These schemes can end up costing taxpayers more in back taxes, penalties, and interest than they saved in the first place." The IRS pointed out that such tax schemes "have evolved from simple structuring of abusive domestic and foreign trust arrangements into sophisticated strategies that take advantage of the financial secrecy laws of some foreign jurisdictions and the availability of credit/debit cards issued from offshore financial institutions."


Accounting News Roundup: PwC and Digital Asset; Nonprofit Problems; CFOs Down on Reporting | 02.18.16

GoingConcern

PwC and Digital Asset - You've probably noticed but we have a bit of blockchain fever around here. Chances are, we caught it from EY. The latest news of accounting firms diving headfirst into speculative technology is that Digital Asset and PwC (Accenture and Broadridge, too) have announced a "non-exclusive strategic business relationship." Maybe this means other Big 4 firms can play, too? It's not clear. Anyway, the press release is filled with buzzy blockchainy goodness: “We are excited to enter into relationships with Accenture, Broadridge and PwC and are already working with them to provide value to our clients and the industry,” said Blythe Masters, CEO of Digital Asset. “These alliances will accelerate innovation, drive growth and broaden our reach in different segments across the world.”


Three Steps for Connecting With CPAs of New Clients

WealthManagment.com

It seems as though I’m always playing catch-up trying to connect with the CPAs of my clients,” groaned Doug as he was forming in his mind the question he was about to ask: “Are you going to show us a better way to handle this?” Doug’s question came on the tail end of a role-play during our recent Affluent Marketing Symposium where the objective was to schedule a meeting with a CPA of a top client. Preceding this exercise, I’d asked how many made a concerted effort to meet with the CPAs and attorneys of their top 25 clients. Less than 5 percent of the advisors raised their hands.  This wasn’t our first rodeo; we’ve been conducting these symposiums for years and anticipated this response. In next segment, we walked them through the 3 Steps we’ve gleaned from coaching elite advisors.


Feb. 25: Lessees, Be Aware! New Rules Loom

Bloomberg BNA

Feb. 25 will be among the more momentous days this year for the Financial Accounting Standards Board. On that day, FASB plans to release its long-gestating standard on lease accounting. And companies that lease equipment, vehicles and other transportation hardware, real estate and other big ticket items should pay the kind of special attention to the FASB website, www.fasb.org, that many enterprises apparently aren’t paying right now. That’s the reading—passed along, from anecdotal evidence—by  a specialist in lease accounting who has followed FASB’s efforts, and those of the International Accounting Standards Board, for many years. IASB published its own impactful lease accounting standard in January.