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NEWS HIGHLIGHTS FOR WEDNESDAY - 4.13.16

By:
Maya Lindsay
Published Date:
Apr 13, 2016

Fed Banks Spar Over GDP Data
Wall Street Journal
The race to provide credible real-time data on U.S. economic growth is pitting the Federal Reserve Bank of New York against its sibling in Atlanta, to the puzzlement of some traders. The New York Fed said Tuesday that on Friday it will begin issuing a new report tracking U.S. gross-domestic-product growth. In doing so, the bank is indirectly facing off with the Federal Reserve Bank of Atlanta, which has published its own regularly updated GDP estimate, GDPNow, since July 2014.

Senate Panel Pushes IRS to Fix Cybersecurity Problems
Accounting Today
The Senate Finance Committee held a hearing Tuesday to examine the Internal Revenue Service’s recent failures to protect taxpayer information from cybercriminals. The hearing probed the IRS’s efforts to protect private taxpayer information this tax season to determine what improvements may be needed to better safeguard taxpayers from cybercriminals.

New PCAOB Standard
Seeking Alpha
The Public Company Accounting Oversight Board has proposed new auditing standards that will significantly affect audits of US-listed Chinese companies. The proposed standards address two of the problems with audits of US-listed Chinese companies. The first problem relates to the Big Four in Hong Kong signing off on audits that are mostly or completely done by the China member firm.

Seeking Bold Tax Overhaul, Texas Lawmaker to Test Congress
New York Times
Over two decades in Congress, Representative Kevin Brady has always been popular with colleagues. Now that the genial Texas Republican has become chairman of the House Ways and Means Committee, Mr. Brady has got real power, too. Or does he? The committee has authority over taxation, health policy and retirement benefit programs, and it holds the potential to significantly influence the economy not just in the United States but the entire world.

Preparing for the FASB’s New Lease Accounting Standards
Commercial Property Executive
One of the most far-reaching regulatory changes in recent memory arrived with relatively little fanfare this past winter. In February, the Financial Accounting Standards Board (FASB) released its long-awaited revised guidance on accounting for lease transactions, following the International Accounting Standards Board’s (IASB) similar guidance for international companies. The centerpiece of the new rules is the requirement that lessees (tenants) bring most real estate and equipment leases onto their balance sheets.

The Fed’s Inflation Puzzle: The Dollar Piece Changes Shape
Wall Street Journal
With the chill that U.S. prices caught from abroad coming to an end, inflation this year might do something it hasn’t done in a while: come in hotter than the Federal Reserve expects. The Labor Department on Tuesday said prices for imports to the U.S. rose 0.2% in March from February. That still left them 6.2% below their level of a year earlier. Much of that annual decline was about oil, however.

Estate Planning with Cost Segregation
Accounting Today
One of the most significant ways to reduce the tax burden on the estate of a recently deceased loved one is by conducting a cost segregation study on buildings they held before the decedent’s last tax return is filed. This typically generates a large accelerated depreciation deduction that can eliminate tax owed on the final federal income tax return, all while reducing the building’s tax basis.

Venture capital funding stays strong in NYC, slips everywhere else
Crain’s New York Business
It was a very good first quarter for venture capital-backed companies in New York. For companies in California and Massachusetts, not so much. Bucking a national downturn that began late last year, VC spending in New York totaled $2.6 billion, a 76% spike over the previous quarter and a 75% improvement over the same period a year ago.

FASB Clarifies Principal vs. Agent in Revenue Recognition
AccountingWEB
A recent Accounting Standards Update (ASU) issued by the Financial Accounting Standards Board (FASB) provides four amendments to the application of revenue recognition guidance depending on whether an entity is the principal or the agent. The update is the result of input from the Joint Transition Resource Group for Revenue Recognition, created by the FASB and the International Accounting Standards Board in 2014.

Lease Accounting Changes Are Around the Corner: How Will This Affect Borrowers Under Credit Facilities?
JD Supra Business Advisor
Off-balance sheet operating leases are an important part of many companies’ financing strategies.  A key attraction of operating leases is that neither leased assets nor lease payments are recorded on a company’s balance sheet under existing accounting rules.  Pending changes to those accounting standards could have a material impact on borrowers’ economic, legal, and compliance obligations under credit facilities.

Documents Undercut U.S. Case for Taking Mortgage Giant Fannie Mae’s Profits
New York Times
On a Friday in August 2012, the federal government changed the terms of its bailout of Fannie Mae and Freddie Mac, sending all the mortgage finance giants’ profits to the Treasury. The surprise decision prompted a lawsuit from shareholders, who argued that the collection of profits was an improper taking of private property without compensation. As the lawsuit proceeds through Federal Claims Court, documents unsealed in the case on Monday undermine an important defense made by the United States government.

Sustainable Accounting Standards Developed For All Industries
CPA Practice Advisor
After completing provisional standards for 79 industries in 10 sectors, The Sustainability Accounting Standards Board (SASB) has launched its next phase of standards development. In this juncture, SASB will enter a period of consultation on the provisional standards and proposed process to codify and maintain them. The organization has opened three key documents—the SASB Rules of Procedure, the SASB Conceptual Framework, and proposed changes to its Sustainable Industry Classification System (SICS) — for a 90-day public comment period.

Tax-Rule Changes Ripple Widely
Wall Street Journal
The Treasury Department’s new corporate rules will reach far beyond the few companies that moved their legal addresses to low-tax countries, forcing many firms based in the U.S. to change their internal financing strategies and tax planning. Corporate tax lawyers, who have spent the past week trying to understand one of the Obama administration’s most far-reaching tax regulations, say the rules cast aside decades of precedents and force corporations to alter routine cash-management techniques.

Regulators Set to Reject Some Big Banks’ ‘Living Wills’
Wall Street Journal
Regulators are set to reject the so-called living wills of at least half of the U.S.’s systemically important banks, including J.P. Morgan Chase & Co., sending them scrambling to revise plans for a potential bankruptcy, according to people familiar with the matter. The move, which could come as soon as this week, would raise the prospect of higher capital requirements or other regulatory sanctions for some of the institutions, and underscore fears that the firms remain “too big to fail” without a taxpayer bailout.

IRS Admits It Encourages Illegals To Steal Social Security Numbers For Taxes
Forbes
This isn’t exactly the kind of story the IRS wants buzzing around at tax time. The IRS and Justice Department normally want ‘scared straight’ stories just before Tax Day. Ideally, when an indictment or conviction for tax evasion hits the news, it makes you think twice. Somehow, you think just a bit more about all those deductions, or if you really reported all your income, before you sign your return under penalties of perjury.

Wall St. Gains on Mixed Earnings Reports
New York Times
Stocks posted solid gains on Tuesday, led by energy companies, after news reports said Saudi Arabia and Russia were working toward an agreement to cut oil production. Investors also worked through the initial batch of earnings from the first quarter of the year. The Standard & Poor’s 500-stock index climbed 19.73 points, or 1 percent, to 2,061.72 and the Nasdaq composite increased 38.69 points, or 0.8 percent, to 4,872.09.