Weinberg & Company

            Certified Public Accountants

SIMPLY STATED

MARCH  2016

Weinberg Showcases at Roth Conference
If you’re attending the 28th Annual Roth conference in Dana Point, California (March 13-16), come visit our booth in the Monarch Bay Courtyard.  This is Weinberg’s 10th year of participation in this prestigious, invitation-only investment conference where several of our clients are presenting.

Weinberg Registers with the CPAB
Weinberg & Company has expanded its Assurance and Audit services into Canada through registration with the Canadian Public Accountability Board (CPAB).  As a CPAB-registered firm, Weinberg now offers services needed to meet the audit and disclosure requirements of Canadian or cross-border listed companies on the TSX, TSX-Venture and Canadian Securities Exchanges.”Our professional staff consists of Big 4 veterans whose training and experience ensures the quality and the integrity of the audit,” said Corey Fischer, Weinberg Firm Managing Partner. “We are proud to say that our PCAOB audits are consistently without deficiencies and we will strive to provide the same level of quality work to Canadian and cross-border listed issuers.”

ACCOUNTING NEWS 

Final approval for Lease Accounting Rule 

Eleven years in the making, the Financial Accounting Standards Board (FASB) made it official last month, issuing a new rule requiring U.S. companies to add leases to their balance sheets.  Currently disclosed in the footnotes, leases for such things as real estate, airplanes, even office equipment will move to the forefront. Short-term leases, those lasting less than one year, will be exempt.Some large companies will be adding billions of dollars to their balance sheets to account for the debt-like obligations they incur as lessees.  Some estimate that balance sheets overall could swell as much as $2 trillion.Since both assets and liabilities associated with leases will be reported on the balance sheet, a company’s book value should not change much.  A company’s leverage, however will become far more prominent, and some financial ratios will certainly change.Although the new FASB standard won’t take effect for public companies until 2019, companies will need to furnish investors and regulators with two years of past financial statements for comparison.  “It is not too early for management to start the process of addressing the issues that the impending new accounting requirement will bring,” says Weinberg Firm Managing Partner, Corey Fischer. “Most importantly, management should determine if it has the processes in place, and the human resources within its current accounting department to handle the increased reporting requirements. {Related reading: Are You Ready for Lease Accounting?}

Disclosure overload: Hiding in plain sight

In the name of transparency, regulators continue to require companies to disclose more and more financial information.  Some, however are questioning if it may have gone too far – actually becoming less helpful to investors and other financial statement readers.

The pursuit of a streamlined financial reporting process must be balanced with ensuring that investors aren’t overwhelmed by those disclosures, according to former SEC Commissioner Troy Paredes.  “It’s about the way in which investors can be actually worse off when they’re overwhelmed with a lot of information that’s not particularly useful to making an informed investment or voting decision.”

More blunt: “If the old way of hiding information or making it less prominent was to put it in the footnotes, the new way is to leave it in the text,” said Ron Schneider, Director of Governance Services for R.R. Donnelley, which operates EDGAR Online and annually files more than 166,000 documents with the SEC.

The WSJ reports that according to a study by executive data provider Equilar Inc., the average length of an S&P 100 company’s Compensation Discussion and Analysis portion of their annual proxy statement has increased by 705 words in the last five years to 9,121 words in 2015.

The result, according to Equilar, is that a growing number of companies have added “proxy summaries” to their filings to help readers navigate through all that information. While fewer than 5% of S&P 100 companies had a proxy summary in 2011, 73% included one in their most recent year, according to Equilar.

Modifying SOX

Earlier this month the U.S. House Financial Services Committee approved H.R. 4139, the Fostering Innovation Act of 2015.  The bill would extend the Sarbanes-Oxley 404(b) exemption for emerging growth companies (EGCs) until the earlier of ten years after the EGC’s IPO, the end of the fiscal year in which the EGC’s average gross revenues exceed $50 million, or when the EGC becomes an accelerated filer ($700 million in public float).

IRS focusing on high earners

Data released by the IRS showed the agency audited nearly 10% of returns with income of more than $1 million, up from 7.5% the year before. The IRS has shifted more of its attention and resources to high earners over the past decade.  In 2006, just 5.3% of taxpayers reporting at least $1 million of income were audited, reports the WSJ.

MONEY TALKS

Good news for Wall Street haters? Maybe not

Wall Street bonuses are down for the second straight year, and recent market volatility and cutbacks suggest that 2016 is shaping up to be a difficult year for the securities industry, according to New York State Comptroller, Thomas DiNapoli, who presented his projections to lawmakers in his state capitol.The finance industry contributes over 17% of New York State’s annual tax revenue.  So, when Wall Street suffers, Main Street feels the pain – including retailers, restaurants, real estate firms and auto dealers, to name a few.  The securities industry accounted for 22% of private sector wages paid in New York City in 2014 even though it made up just 5% of private sector jobs.Volatile markets have taken its toll, causing many banks to cut jobs in trading.  Additionally, Wall Street has had to comply with new government regulations that forced it to take on less risk, which also has resulted in taking in less profit.  Overall, securities industry profit fell 10.5% last year, to $14.3 billion, the lowest since 2011, reports the New York Times.The concerned Comptroller said, “Both the state and city budgets depend heavily on the securities industry, and lower profits could mean fewer industry jobs and less tax revenue.”

And the Winner is….

Whether they won an Oscar or not, this year’s nominees went home a winner when it comes to wealth, according to WealthX, the global authority on wealth intelligence.

Leading the pack is six-time Oscar nominee Leonardo DiCaprio boasting a higher net worth than any of his peers nominated for the Best Actor or Actress in a Leading Role category.

Leonardo DiCaprio, Age: 41, Los Angeles, California – Net Worth: US$280 million
2016 Nomination: The Revenant, Actor in a Leading Role

Matt Damon, Age: 45, Cambridge, Massachusetts – Net Worth: US$160 million
2016 Nomination: The Martian, Actor in a Leading Role

Cate Blanchett, Age: 46, Melbourne, Victoria, Australia – Net Worth: US$55 million
2016 Nomination: Carol, Actress in a Leading Role

Jennifer Lawrence, Age: 25, Louisville, Kentucky, US – Net Worth: US$40 million
2016 Nomination: Joy, Actress in a Leading Role

Michael Fassbender, Age: 38, Heidelberg, Germany – Net Worth: US$30 million
2016 Nomination: Steve Jobs, Actor in a Leading Role

However, the wealthiest individuals in the American film industry are behind the scenes.  Last year, Wealth-X ranked the top 10 Hollywood tycoons, all of whom are male film producers and directors.  Star Wars creator George Lucas was No. 1 on the 2015 list, followed by producer Arnon Milchan and influential filmmaker Steven Spielberg.  Read the full list here.

QUOTABLE

When you’re up to your armpits in alligators, it’s hard to remember to drain the swamp.
Ronald Reagan
 

WEINBERG & COMPANY

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

1925 Century Park East, Suite 1120  

Los Angeles, CA 90067

(310) 601-2200

6100 Glades Road, Suite 205

Boca Raton, FL 33434

(561) 487-5765  

Room 2109, 21/F, Shui On Centre

6-8 Harbour Road, Wanchai, Hong Kong P.R.C.

DISCLAIMER:
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.
Quick Links

Corey Fischer
Firm Managing Partner

310-601-2200

CoreyF@weinbergla.com

Jeffrey B. Engler
Director of Tax,
Los Angeles 

310-601-2200
JeffreyE@weinbergla.com

Bruce Weinberg
Florida Managing Partner

561-487-5765

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