More details on non-GAAP abuse
“The Securities and Exchange Commission is stepping up its scrutiny of companies’ homegrown earnings measures, signaling it plans to target firms that inflate their sales results and employ customized metrics that stray too far from accounting rules,” the Wall Street Journal reported. “The move to intensify oversight signals that regulators have grown weary of the widespread use of some adjusted measures, which often result in a rosier view of profits than what is reported under generally accepted accounting principles, or GAAP.”
According to Mark Kronforst, Division of Corporation Finance chief accountant, in the coming months the SEC plans to make public letters that question companies’ practice of booking revenue on an accelerated basis. A cited example: firms that sell product on a subscription model are required to book their revenue as they deliver the goods or services. Some, however are using non-GAAP measures that assume all sales are recorded when customers are billed, which adds revenue to their books earlier than GAAP would allow. “The point is, now the company has created a measure that no longer reflects its business model,” says Kronforst. “We’re going to take exception to that practice.”
In another example, Kronforst said the SEC will challenge companies that report their adjusted earnings on a per-share basis. “The results are often higher than per-share GAAP earnings and look too much like measures of cash flow, which decades-old accounting rules prevent from being presented on a per-share basis,” the Journal reported. “We are going to look harder at the substance of what companies are presenting, rather than what the measures are called,” he said.
Source: Center for Audit Quality / WSJ
Presidential Election shaping business decisions
While the presidential election is still many months away, it is already shaping CPA executives’ view of the future, however slightly, according to survey data just released by the AICPA.
Overall, about 64% say the election will factor into business planning for the next fiscal year to some extent: 26% say the election is a slight factor, 23% say it will be a moderate factor, and 15% say it will significantly factor into business planning, budgeting, or forecasting, while 36% say the election is not a factor in their business plans for the next fiscal year. More than 80% of CFOs, controllers, and other CPA executives say they will continue hiring at their current pace or that the election will not factor into hiring.
The data comes from 540 responses to a survey conducted Feb. 9-24. In that survey, CPA decision-makers expressed growing pessimism about the economy.
Source: AICPA, Journal of Accountancy
IRS to hire 700 workers
IRS officials have been complaining for years about cuts in their budget, which they say has resulted in diminished customer services and scaled back enforcement actions. The agency earlier this month reported a $485 billion annual gap between taxes owed and actually collected; a gap they blame on budget cuts amounting to 17% since 2010. However, IRS commissioner John Koskinen just announced that he has found enough money in his current budget to hire 600-700 employees for the tax-enforcement operation, as the Wall Street Journal first reported.
“This is a good development for our tax system,” Koskinen said in his memo to employees, which was provided to and reported by The Fiscal Times. “When you look at the IRS overall, every dollar invested in us returns at least $4 to the Treasury. The numbers are even higher when it involves enforcement. Each enforcement position typically returns almost $10 to the U.S. Treasury for every dollar spent, and in many instances, much more.”
No easy chip-in
Although a majority of credit cards in the U.S. now contain a chip designed to add more security, most payment terminals at retailers can’t read the new technology, reports Bloomberg News. Intended to protect against counterfeits, all merchants were supposed to have terminals up and running by October 1, 2015 or face liability for some fraudulent charges. But, by the end of last year, only about 20 percent of terminals had been activated to process them, according to Alex Johnson, a director at researcher Mercator Advisory Group. Bloomberg reports that many merchants are slow to switch to the new EMV system due to the longer transaction times, and the expense. The National Retail Federation estimates that retailers will spend a cumulative $30 billion to $35 billion to switch to the new EMV system.
After becoming the oldest quarterback to win a Super Bowl in the Denver Broncos’ 24-10 victory over the Carolina Panthers, Peyton Manning [bio] announced his retirement. According to WEALTH-X, Manning’s net worth climbed to $280 million, up from $160 million just a year ago. Finishing the 2015-2016 season with the Super Bowl title, Manning reportedly received a $2 million bonus to his annual compensation, ending up the season with $19 million in total compensation. After 18 NFL seasons, he will retire as the all-time leader in passing yards (71,940) and touchdown passes (539).
“I revere football,” Manning, age 39, said at a press conference. “I love the game. So you don’t have to wonder if I will miss it. Absolutely. Absolutely I will. Life is not shrinking for me,” he said at his retirement announcement. “It’s morphing into a whole new world of possibilities.”
We presume he was holding a camera-facing can of Budweiser when he made his remarks.
Way too big to fail
According to a recent analysis by Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corporation, the assets of just four giant banks — JPMorgan Chase, Citibank, Bank of America and Wells Fargo — amount to 97 percent of the nation’s entire 2012 gross domestic product. The biggest banks are far larger today than they were in 2008 when they were deemed “too big to fail,” says former U.S. Secretary of Labor, Robert Reich. “Then, the five largest held around 30 percent of all U.S. banking assets. Today they have 44 percent.”
Legal marijuana sales in Spokane County, Washington, topped retail sales of wine and kitchen staples such as bread and milk last year. That’s according to sales numbers from the Washington Liquor and Cannabis Board and a survey of household expenses conducted by the U.S. Census Bureau.
Not all marijuana sold in Spokane County is consumed by county residents. State law allows the 17 state-licensed marijuana shops in the area to sell to anyone older than 21, regardless of where they live.
Spokane County marijuana retailers reported just over $43 million in sales in 2015, according to the state Liquor and Cannabis Board. That’s an average of $225.64 per household. By comparison, retail beer sales were $232.70 per Spokane County household last year, according to the Consumer Expenditure Survey administered by the Census Bureau. The average household spent $154.85 on wine, $155.37 on milk and $109.71 on bread in 2015.
After several injuries and the tragic death of a 15-year old girl in Germany who was hit by a tram at a crossing, the town where she lived has installed traffic lights in the ground to get the attention of those looking down at their mobile phones when a tram is approaching. The utility company that installed the lights says they rapidly blink red whenever the pedestrian doesn’t have the right of way, reports Atlas Obscura.
Although Germany has coined the word “smombie” — meaning smartphone zombies – the problem is worldwide. The University of Washington estimates that one in three Americans is buried in a smartphone at dangerous road crossings.
Sort of begs the question, “Have smartphones become smarter than its users?”
“This and no other is the root from which a tyrant springs; when he first appears he is a protector.”
“The worst form of inequality is to try to make unequal things equal.”
“Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws.”
“We hang the petty thieves and appoint the great ones to public office.”
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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