Weinberg & Company

              Certified Public Accountants


JUNE 2017


Dodd-Frank reform passes House 

       The Financial Choice Act, the first major legislation intended to scale back Dodd-Frank financial regulations passed the House of Representatives last week on a party-line Republican vote of 233 to 186.

       With little chance of the House bill making it through the Senate, however, Senators are already working on their own more modest version that they hope will garner some Democrat votes.

       Eventually, the House may need to break its comprehensive bill into smaller pieces, and although some aspects could also be enacted by presidential executive order or Treasury department policy, those changes could just as easily be reversed by future administrations.

       In response to President Trump’s executive order last February, a Treasury Department report was also released this week. The report endorses much of the House legislation, recommending regulatory and stress-test relief to well capitalized banks, providing small banks with more flexibility in making mortgage loans, and imposing a cost-benefit analysis for new regulations. The report was less definitive and somewhat milder on some of the more controversial issues such as the structure and power of the Consumer Financial Protection Bureau, and it did not advocate the outright elimination of the Volcker rule.

       The nonpartisan Congressional Budget Office (CBO) reported that the proposed Financial Choice Act would reduce federal budget deficits by $24.1 billion over the next decade. Much of that savings, nearly $7 billion, would come from cutting funding to the Consumer Financial Protection Bureau. In addition to reducing the bureau’s annual budget, the Act would change the way the bureau is funded — requiring a congressional appropriations process instead of allowing the bureau to draw funds directly from the Federal Reserve. [Read more: CBO report]

To GAAP or Not to GAAP… that is still the question

       Last month, the SEC issued new guidelines on the use of adjusted earnings and other non-GAAP figures over concerns that its use could misrepresent performance and paint a rosier picture of company results. As a result, more than a quarter of S&P 500 companies voluntarily changed their financial public releases to report standard results.

       However, a year after an SEC crackdown on the use of unofficial accounting figures in financial statements, some big firms have convinced the SEC that such figures are not misleading investors.

       According to an Audit Analytics analysis done for the Wall Street Journal, of the 51 companies cited in the analysis, 35 (69%) “had successfully demonstrated that their adjusted earnings figures aren’t misleading investors and the SEC concluded its conversations with the company without forcing a significant change to its adjusted earnings presentation. Some of those prevailing companies included: Medtronic MDT, Coca-Cola Co., Boston Scientific Corp., and BSX.

       “Large companies have the money and resources to lay out a successful, detailed defense of disputed accounting practices,” notes the Wall Street Journal. “Chief financial officers can tap a vast brain trust of internal finance teams, consultants and legal counsel, as well as the board’s audit committee, to respond to SEC concerns.”

PCAOB changes Auditor Report

       The Public Company Accounting Oversight Board (PCAOB) is adopting a new auditor reporting standard that will require auditors to provide new information about the audit and, according to the PCAOB, make the auditor’s report more informative and relevant to investors and other financial statement users. The final standard retains the pass/fail opinion, but makes significant changes to the auditor’s report, including:

  • The communication of critical audit matters to the audit committee that: (1) relate to accounts or disclosures that are material to the financial statements; and (2) involve especially challenging, subjective, or complex auditor judgment and how the auditor addressed those matters.
  • Disclosure of auditor tenure — the year in which the auditor began serving consecutively as the company’s auditor.
  • A number of other changes to the auditor’s report to clarify the auditor’s role and responsibilities, and make the auditor’s report easier to read.

Six years in the making, implementation of the new standard will be phased in over several years. [Read more: PCAOB Release]


Calling all Unicorns

       The New York Stock Exchange (NYSE) is seeking SEC approval to allow it to change its listing standards so that it can list “unicorns” — private startups valued at $1 billion or more, such as Spotify and Airbnb.

Private firms traditionally became listed on an exchange by going through an IPO. Direct listed companies, however, can have their shares traded without raising capital, have fewer restrictions on insider trades, and be on the exchange without being underwritten by, or pay underwriting fees to a Wall Street bank.

In a letter to the SEC, the NYSE wrote that such a change would address a “significant competitive disadvantage” it faces against Nasdaq.


Consumer Spending up

     The Commerce Department reports that personal consumption expenditures increased a seasonally adjusted 0.4% in April from the prior month – the largest one-month rise since December. “The fundamentals for consumer spending are still pretty good: income growth, inflation is low, low interest rates, rising household wealth,” said Gus Faucher, chief economist at PNC Financial Services Group.

Home Sweet ATM

       According to data released by Freddie Mac, nearly half of borrowers who refinanced their homes in the first quarter of 2017 took out cash – the highest level since the fourth quarter of 2008.

Home Sweet $100 million Home

       Last year 10 homes were sold for over $100 million, according to a new report from Christie’s International Real Estate – twice the old record of five sales in 2014. The total value of nine-figure homes sold last year topped $1.4 billion. 

Amazon Chief climbs to top of wealth ladder

       With Amazon shares now flirting around $1,000, its founder and Chief, Jeff Bezos is close to topping Bill Gates to become the richest man. Bezos’ worth has climbed to around $85 billion, according to the Bloomberg Billionaire’s Index. The index puts Bill Gates at $88.8 billion – just $3.8 billion ahead.

Just one share
       Class A shares of Berkshire Hathaway Inc. are the priciest of U.S. listed equities. Now trading at around $256,890 a share, it is up more than 3 million percent since Warren Buffett bought the stock in 1962 at $7.50 a share.


Where to Retire

Part 2

       In our last issue we noted that our tax professionals are often asked where the best places are to retire. We offered a few tongue-in-check suggestions that apparently were very well received by our readers – we got a lot of mail. (Who said Accountants can’t be funny?)

       So, we thought we would take another shot in helping you decide where to live after you retire.

       Since we always strive to provide information in the most simply stated way, we realized that a simple way to learn a lot about a state is by its motto. We dusted off another old entry to illustrate the point.

Some State Mottos:

Alabama: Yes, We Have Electricity
Alaska: Yeah, But It’s a Dry Cold
Arizona: There’s Nothing like Living on the Sun
Arkansas: Litterasy Ain’t Everything
California: What Federal Government? We Make Our Own Rules!                    
Colorado: If You Don’t Ski, Don’t Bother
Connecticut: Like Massachusetts, Only The Kennedys Don’t Own It
Delaware: Everything is Smaller Here!
Florida: Get Off of My State, You Kids!
Georgia: Without Atlanta, we’re Alabama                                                              
Hawaii: Haka Tiki Mou Sha’ami Leeki Toru (Go home but leave your money)        
Idaho: More than Just Potatoes. Well Okay, Not Really, But the Potatoes Sure Are Real Good
Illinois: Please Don’t Pronounce the “S”                                                              
Indiana: Dan Quayle’s Favorite Country!
Iowa: We Do Amazing Things with Corn
Kansas: No, We Don’t Know Dorothy!
Louisiana: We’re Not ALL Drunk Cajun Wackos, but That’s Our Tourism Campaign
Maine: We’re Really Cold, but We Have Cheap Lobster
Maryland: If You Can Dream It, We Can Tax It
Massachusetts: Our Taxes are Lower Than Sweden’s (For Most Tax Brackets)
Minnesota: 10,000 Lakes And 10,000,000,000,000 Mosquitoes
Mississippi: Come and Feel Better About Your Own State
Missouri: Your Federal Flood Relief Tax Dollars at Work
Nebraska: Bring Something to Do!
Nevada: Come Happy, Leave Broke                                                                            
New Hampshire: Think this is bad? You should see Old Hampshire
New Jersey: You Want a ##$%##! Motto? I Got Yer ##$%##! Motto Right Here!
New Mexico: Lizards Make Excellent Pets
North Carolina: Tobacco is a Vegetable
North Dakota: Um… We’ve got… Um … Dinosaur Bones? Yeah, Dinosaur Bones!!
Oklahoma: Like the Play, Only No Singing
Oregon: It’s OR-EE-GUN, you idiot!
Pennsylvania: Free Lube Job with Oil Change!                                                      
Rhode Island: We’re Not REALLY An Island
South Carolina: Remember the Civil War? We Didn’t Actually Surrender
South Dakota: Closer Than North Dakota                                                              
Tennessee: As Seen on COPS
Texas: Belt Buckles as Big as Your Head
Utah: Set Your Watch Back 30 years
Vermont: Bet Ya Can’t Name Two of our Towns                                                            
Virginia: Please Don’t Confuse Us with West Virginia
Washington: We Look Good in Flannel 
Wyoming: Wynot



Simply the right choice


Weinberg & Company is a leading, international, full service, multi-office CPA firm serving clients throughout the United States and the Pacific Rim. Founded over two decades ago, the practice groups include: Assurance and Audit, Tax and Accounting, and Advisory Services. Weinberg has a depth of knowledge and experience to meet the needs of both public and privately held companies, high net worth individuals, entrepreneurs, family offices, and can provide customized business management services. www.weinbergla.com

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Los Angeles, CA 90067

(310) 601-2200

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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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Corey Fischer
Firm Managing Partner



Jeffrey B. Engler
Director of Tax,
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Bruce Weinberg
Florida Managing Partner




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