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The Daily

NEWS HIGHLIGHTS FOR FRIDAY - 2.26.16

By:
Maya Lindsay
Published Date:
Feb 26, 2016

Good morning,

Happy Friday! Before you enjoy your weekend, take a look at some of the most recent accounting and financial news stories that have been published.

Best,

Maya

IRS Announces that Mid-Year Amendments to Safe Harbor Plans Generally Are Allowed

JDSupra Business Advisor

In January 2016, the IRS released Notice 2016-16, announcing the general permissibility of mid-year amendments to “safe harbor” 401(k) plans. Safe harbor plans covered by the Notice include those using a traditional safe harbor design to satisfy 401(k) plan nondiscrimination testing as well as those using a qualified automatic contribution arrangement (QACA). Notice 2016-16 is applicable to mid-year changes made after January 29, 2016. Prior to Notice 2016-16, the reasons for which safe harbor plans could be amended mid-year were severely limited.

New Rule to Shift Leases Onto Corporate Balance Sheets

Wall Street Journal

Accounting rule makers made their overhaul of lease accounting official on Thursday, issuing a new rule that will require U.S. companies to add huge amounts of leases to their balance sheets and thus make many companies look much more leveraged. Under the Financial Accounting Standards Board’s new rule, companies will have to add to their books the debt-like obligations they incur when they pay to lease real estate, airplanes, office equipment and other items. Currently, companies are required to disclose their lease obligations only out of the spotlight, in the footnotes to their financial statements.

Companies Will Need to Adjust to New Leasing Standard

Accounting Today

Now that the Financial Accounting Standards Board has released its long-awaited lease accounting standard, companies and their accountants will need to get ready to put their operating leases on the balance sheet. The accounting standards update will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2018. For all other organizations, the ASU on leases will take effect for fiscal years beginning after Dec. 15, 2019, and for interim periods within fiscal years beginning after Dec. 15, 2020. Early application will be permitted for all organizations.

Grow Your Practice and Profits With a Distributed Workforce

Accounting Web

If you want to operate a next-generation accounting firm, you’re going to need to expand your horizons, both figuratively and literally. You’ll need to use the latest accounting tools to extend your abilities and reach out to hire employees and contractors, not only in your own geographic region but across the United States, and even around the world. Those firms that are evolving are leveraging top-quality people, wherever they are. They’re tapping the talents of a SAHM (stay-at-home mom) in New York who has temporarily stepped away from her 9-to-5 job. Either that or they’re getting help from a CPA who’s gone back to school at Stanford for an advanced degree. And if they have a client with offices in the United States and Australia, they’re hiring experts down under to help provide full service to that client. They’re leveraging accountants everywhere who are looking for project work to make your business more productive and profitable. The trick is finding them.

Immigration Reform 2016: More Than $11B In Taxes Are Paid By Undocumented Immigrants Each Year

International Business Times

With illegal immigration a focal point of the 2016 presidential election, a new study has taken a closer look at undocumented immigrants' contributions to federal, state and local taxes. The Institute on Taxation and Economic Policy calculated that undocumented immigrants across the country pay $11.6 billion per year in income, sales and property taxes. For the estimated 10.9 million undocumented immigrants, even if they are not paid on the books, they often still pay income taxes, according to Latin Times. Others, who are not paid in federal and state withholdings, contribute to the government through sales and property taxes.

New FASB Lease Standard Could Inflate Balance Sheets

CFO.com

In a long-anticipated move that could make corporate balance sheets look a good deal fatter than they seem today, the Financial Accounting Standards Board on Thursday updated its lease accounting standard. Under the new guidance, companies that lease property or equipment will be required to recognize on their balance sheets assets and liabilities for leases with terms of more than 12 months. Like current Generally Accepted Accounting Principles (GAAP), how lease expenses and cash flows are reported will depend on the lease’s classification as a finance or operating lease. But unlike current GAAP, which requires only capital leases to be recognized on balance sheets, the updated standard will require both kinds of leases to be recognized on the balance sheet.

Engagement Letter Is The CPA'S Best Defense

Bloomberg BNA

On Feb. 24 2016, Sarah Beckett Ference, CPA; Risk Control Director, at CNA Insurance in Chicago, spoke to this Bloomberg BNA reporter on the issue of “scope creep” and the best way for a certified public accountant to avoid potential client disputes. Scope creep can be defined as a project that expands incrementally and often subtly from its original—sometimes - not well- enough-defined- goals—while it is in progress. A CPA, who becomes the victim of “scope creep,” said Sarah Beckett Ference, is usually just trying to be helpful and provide good client service by doing the extra requested work. The extra work, not properly documented and agreed upon beforehand, can result in client disputes over payment, or in the worst-case scenario, in legal action.

A Big Bet on Gold Is Getting Crowded

Wall Street Journal

Big investors such as billionaire entrepreneur Mark Cuban are buying bullish derivatives on a popular exchange-traded fund that tracks gold. And they aren’t alone. In February, the average daily trading volume of call options on the SPDR Gold Trust hit its highest level since the throes of the eurozone debt crisis in 2011, when gold prices were trading near a record, according to options-data provider Trade Alert. A call option grants the right to buy shares of the underlying stock or ETF at a certain price. Proponents say the trade is an effective, inexpensive way to make a big bet on the metal’s rapid rise. The breadth of investors participating in the trade also underscores how much the market for exchange-traded funds—and options tied to them—has matured in recent years.