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First Quarter Accounting and Financial Reporting Issues Update
Posted by Larry Kaplan on Mon, Jun 23, 2014 @ 09:20 AM

The first quarter of 2014 saw a number of activities by the governing regulatory bodies in the accounting profession. Several significant final standards were released that may impact financial reporting for private companies. We presented a summary of this information in our CBIZ & Mayer Hoffman McCann Executive Education Series webinar. This article provides a brief recap of the first quarter activities. For more detailed information, please see the respective publications issued on each topic.

Private Companies

There was significant activity related to the Private Company Council's (PCC) proposed accounting alternatives for qualifying private companies during the first quarter of 2014. These activities included the issuance of three final accounting standards and the removal of a project from their agenda as described below.

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Topics: Larry Kaplan, Accounting and Financial Reporting Issues

Transfer Pricing Roadmap Gives Insight on Examination Issues
Posted by Claudia Mullen on Thu, Jun 19, 2014 @ 09:14 AM

In February 2014, the IRS Transfer Pricing Operations (TPO) team issued a Transfer Pricing Audit Roadmap. The roadmap is intended to assist IRS examination teams with identifying and auditing transfer pricing issues. The creation of this roadmap reflects the Service's increased focus on transfer pricing matters. The roadmap also gives us insight into which transfer pricing issues will be scrutinized more closely and what kind of documentation the IRS expects to be in place to support the taxpayer's position.

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Topics: Claudia Mullen, Transfer Pricing Audit Roadmap, transfer pricing

FASB Raises the Threshold for Discontinued Operations
Posted by Kristen Shepley on Wed, Jun 18, 2014 @ 11:11 AM

Accounting Standards Update 2014-08 Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (ASU 2014-08) was issued by the Financial Accounting Standards Board (FASB) in April. Among other things, this standard creates a higher threshold for meeting the criteria for discontinued operations which is expected to result in fewer disposals, or classifications as held for sale, meeting the criteria of a discontinued operation.

The Issue

In 2001, the FASB had broadened the definition of discontinued operations resulting in the inclusion of many small groups of assets that were recurring in nature. The inclusion of these disposals in discontinued operations resulted in excessive cost to preparers in preparing financial statements.

The project to modify the reporting of discontinued operations began in 2008, and as discussed in our prior article, the FASB had proposed a new standard in 2013. Most of the 2013 proposal remains intact with the issuance of this standard.

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Topics: FASB

Supreme Court Holds Severance Payments are Wages for FICA Purposes
Posted by Kristen Shepley on Tue, Jun 17, 2014 @ 09:43 AM

On March 25, in an 8-0 decision, the Supreme Court reversed the Sixth Circuit Court of Appeals' decision in U.S. v. Quality Stores, Inc. and held that severance payments constitute wages for purposes of FICA withholding. This ruling resolves a conflict between circuits and ends any possibilities that taxpayers may receive refunds from protective claims filed for previous tax years.

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Topics: severance payments, FICA, FICA withholdings

Final Revenue Recognition Standard Issued
Posted by Paul Languirand on Tue, Jun 17, 2014 @ 09:26 AM

The FASB's much-anticipated final standard on revenue recognition has been issued. FASB Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers: Topic 606, is the culmination of a joint project with the IASB which simultaneously issued IFRS 15, Revenue from Contracts with Customers. The issuance of these documents completes the joint effort by the FASB and the IASB to improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and IFRS.

The new revenue recognition guidance affects all entities that either enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or leasing contracts). This ASU will supersede the current revenue recognition requirements found in Topic 605, Revenue Recognition, and does away with most industry-specific guidance that has been developed over several decades.

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Topics: Paul Languirand, Revenue Recognition Standard, FASB

New Tangible Property Guidance Allows Late Partial Disposition Elections
Posted by Kristen Shepley on Fri, Jun 13, 2014 @ 09:31 AM

On February 28, the IRS issued new guidance that allows taxpayers to claim a loss on structural components of buildings retired in prior years. Rev. Proc. 2014-17 provides updated automatic consent procedures for accounting method changes, which allows taxpayers to make a late partial disposition election accounting method change. The guidance also allows taxpayers to revoke any general asset account elections made under the temporary regulations. Rev. Proc. 2014-17 supersedes Rev. Proc. 2012-20.

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Topics: Tangible Property Regulations, Partial Dispositions, IRS

A Pushdown Accounting Proposal for All
Posted by Kristen Shepley on Tue, Jun 10, 2014 @ 09:20 AM

Pushdown accounting — the recording of a new basis in assets and liabilities in the stand-alone financial statements of a newly acquired subsidiary entity — has been addressed by the Securities and Exchange Commission (SEC), but the Financial Accounting Standards Board (FASB) has not previously provided guidance that would apply to all nonregistrants.

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Topics: accounting, pushdown accounting, goodwill, ASU, FASB

IRS’ Latest Compliance Check Program Targets the Roth Feature in 401(k) Plans
Posted by Bernard Kaplan on Thu, Jun 5, 2014 @ 09:12 AM

IRS Sending Employers with Retirement Plans Containing the Roth Feature Questionnaires Seeking Information on Noncompliance Issues

The IRS Employee Plans Compliance Unit has recently launched a Roth Compliance Check Questionnaire Program aimed at helping the IRS understand compliance related to the Roth deferral provision in 401(k) plans. It is intended to verify whether the plans randomly selected comply with the Code as it relates to the Roth provisions, as well as identify any noncompliance issues. If noncompliance is discovered, the IRS may launch a plan audit or advise the employer to seek voluntary correction through the IRS.

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Topics: IRS, Bernard Kaplan, 401(k), noncompliance

Patient-Centered Outcomes Research Institute (PCORI) Fees Due July 31
Posted by Bernard Kaplan on Mon, Jun 2, 2014 @ 09:03 AM

What are PCORI fees?

PCORI fees represent a new tax under the Affordable Care Act. 

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Topics: Bernard Kaplan, Diane Caron, Affordable Care Act, PCORI

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