FASB issues proposal aimed at simplification
As part of its Simplification Initiative (they could have just called it simply stated) to reduce complexity in accounting standards, the FASB is circulating an exposure draft:
The draft, Investments-Equity Method and Joint Ventures (Topic 323): Simplifying the Equity-Method of Accounting, would eliminate the requirement for an equity-method investor to account for the basis difference. It would no longer require an equity-method investor to retroactively perform a fair value allocation of the basis difference as of the original purchase date of the investment and adjust prior earnings for equity-method earnings. Instead, an entity would recognize its equity-method investment at its cost and would no longer determine the acquisition-date fair value of the investee’s identifiable assets and liabilities assumed. The FASB is taking comment until August 14.
More Audit Committee disclosures
The Securities and Exchange Commission (SEC) is expected to seek feedback from investors about the amount and value of information they are getting from corporate audit committees, according to remarks made earlier this month by SEC Chief Accountant James Schnurr at the 34th Annual Financial Reporting Institute Conference. (Schnurr Speech) Following the enactment of the Sarbanes-Oxley Act in 2002, audit committees assumed a larger role in the oversight of auditors, but were not required to disclose many details. Now, Schnurr is seeking investor feedback on how investors currently use the information provided in audit committee disclosures and the usefulness of additional disclosures, such as identifying the type of information audit committees use in their oversight of outside auditors.
But, keep it short
While the SEC believes investors may want more detailed information (see above story), a recent survey by Stanford University’s Graduate School of Business found that large investors read less than one third of each proxy statement and want companies to make them shorter (under 25 pages) and easier to read. “There has to be a balance between more disclosure and better disclosure,” said Brian Tayan, director of research for the business school’s corporate governance research initiative. Offering an easy-to-read summary section at the top of the proxy – similar to a prospectus – might be more helpful, he suggests.
From the desk of the Managing Partner
We are pleased to report that we have recently completed our latest inspection with the Public Company Accounting Oversight Board (PCAOB), and that the PCAOB’s written report found our firm to be fully compliant with no deficiencies.The PCAOB inspects all registered public accounting firms to assess compliance with the Sarbanes-Oxley Act, the rules of the Board, the rules of the Securities and Exchange Commission, and professional standards in connection with the firm’s performance of audits, issuance of audit reports, and related matters involving U.S. companies, other issuers, brokers, and dealers.In our response to the PCAOB, we said, “Our overriding objective is to make certain that all aspects of our auditing and quality control processes are the highest quality and continue to benefit the capital markets.”Corey Fischer
Reading, Writing, and 100 million dollar Arithmetic
AltSchool, founded in 2013 by the former head of personalization at Google, Max Ventilla, has just raised $100 Million from investors including Peter Thiel’s Founders Fund and Facebook’s Mark Zuckerberg. AltSchool is an innovative network of K-8 “microschools” each with about 100 students. Students between the ages of 4 and 14 are divided into three groups, not traditional grade levels. Administrative duties are centralized and there are no school principals on-site. Kids sign in through an attendance app developed by the school’s 50-person product team, which includes former employees of Apple, Uber, Zynga and Google. Billing itself as education for the 21st century, the $100 million round will include a new debt facility to fund school expansion, which comes after the startup raised $33 million in Series A financing last year. The company said it has plans to open new schools in Palo Alto, San Francisco, and Brooklyn this fall. AltSchool is just one of many startups trying to disrupt school systems and public education. 2U, an online curriculum and degree program used by universities, went public in 2014 and Flatiron School, which teaches students to code, has raised $15 million.
[Source: Business Insider. More info and photos - click AltSchool]
Getting harder to get that third comma
The wave of newly minted billionaires may be coming to an end according to the 2015 UBS-PwC Billionaire Report. The reports says that 917 new billionaires were created globally between 1995 and 2014, adding up to $3.6 trillion of wealth. Most started young, with 23% launching their first business venture before the age of 30 and 68% before turning 40.
In the U.S., technology produced the second highest number of self-made billionaires (27.3%) in the last two decades. Although the financial services sector produced 30%, they are less wealthy than their counterparts in the technology sector ($4.5 billion compared to $7.8 billion respectively). “The rich have been getting richer over the last 20 years, but we don’t think these things happen in a straight line. It’s more of an S-curve type of phenomena,” says John Mathews, head of Private Wealth Management at UBS. That curve, according to Mathews, may soon be heading downward due to slowing emerging markets globally and government responses to inequality that could result in higher taxes on the wealthy and more regulation against dominant companies.
How do you like them Apples?
Clean BayArea Recycling Center in Milpitas California is trying to find the woman who dropped off a couple of boxes of electronic junk. Turns out, one of the boxes contained an original Apple-1 computer – one of only 200 built by Steve Jobs, Steve Wozniak and Ron Wayne. CleanBayArea sold it at a private auction for $200,000 and now wants to give the woman 50% of the proceeds. The woman said her husband had passed away and she decided to clean out the garage. The Apple-1 was produced in 1976 and sold for $666.66. Last year, an Apple-1 sold at auction in New York for $905,000.
TROUBLES WITH UNCLE SAM
Lost and Found
Last week, a federal judge ordered the IRS to answer questions about certain e-mails from former employee Lois Lerner that the service had said were lost. Lerner was at the center of the scandal over the IRS’s targeting of nonprofit conservative groups for heightened scrutiny and many organizations hoped to recover her e-mails to find out what the IRS leadership knew about the targeting. Last February, the Treasury Inspector General for Tax Administration reported recovering backup tapes containing tens of thousands of Lerner’s e-mails.
Slots of luck
Gamblers must pay taxes on every dollar they win at casinos, race tracks, even from informal bets on sports. At casino slot machines, jackpots of $1200 must be reported to the IRS and play is automatically suspended until a casino employee arrives with a tax form. Bloomberg News reports that as part of a broader re-write of gambling tax rules, the IRS earlier this year floated the idea of lowering the mandatory-reporting threshold for slot machines to $600. Casinos oppose changing the reporting threshold. The industry’s lobbying group, the American Gaming Association, argues the change would be an expensive hassle. Casinos would need to update their systems and hire extra staff to handle more frequent reportable jackpots. Extra labor could cost Caesars Entertainment an extra $18.5 million per year, the company told the IRS. The IRS is set to hold a hearing on its proposed regulations on June 17.
If you are truly serious about preparing your child for the future, don’t teach him to subtract – teach him to deduct. ~ Fran Lebowitz
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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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