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Trusted<br />
<strong>he</strong><br />
Professional<br />
Vol. 13 No. 7 • April 15, 2010 T<strong>he</strong> Newspaper of t<strong>he</strong> New York State Society of Certified Public Accountants www.nysscpa.org<br />
IRS Moves to Require CPAs<br />
to Reregister PTINs, Pay Fee<br />
By MELISSA HOFFMANN LAJARA<br />
Trusted Professional Staff<br />
NEW YORK—If recently proposed IRS<br />
regulations are adopted, CPAs will be<br />
required to register and pay a “modest” fee<br />
to have t<strong>he</strong>ir exist<strong>in</strong>g preparer tax identification<br />
numbers (PTINs) reissued as a part<br />
of t<strong>he</strong> IRS’s efforts to regulate t<strong>he</strong> tax<br />
preparation <strong>in</strong>dustry, IRS spokesperson<br />
Dianne Besunder recently confirmed.<br />
What t<strong>he</strong> modest fee might be has yet to<br />
be determ<strong>in</strong>ed, Besunder said.<br />
IRS Commissioner Douglas Shulman<br />
announced on Jan. 4 that his agency would<br />
beg<strong>in</strong> regulat<strong>in</strong>g tax return preparers by<br />
implement<strong>in</strong>g t<strong>he</strong> recommendations for tax<br />
preparer regulation publis<strong>he</strong>d <strong>in</strong> a study<br />
completed last June. On March 26, t<strong>he</strong> IRS<br />
proposed regulations that would put <strong>in</strong>to<br />
effect recommendations requir<strong>in</strong>g all paid<br />
tax return preparers who sign federal<br />
returns to register or reregister with t<strong>he</strong> IRS<br />
and obta<strong>in</strong> or renew t<strong>he</strong>ir PTIN.<br />
WHAT’S INSIDE<br />
Message from t<strong>he</strong> President—New York needs<br />
mobility, page 2.<br />
Stay<strong>in</strong>g Sane <strong>in</strong> Tax Season—Page 3.<br />
Talk<strong>in</strong>g Po<strong>in</strong>ts—PCAOB seeks to enhance<br />
communication standard, page 4.<br />
Tweedie: IFRS or Bust—Page 6.<br />
W<strong>he</strong>n I Do Becomes I Don’t—Tax tips for t<strong>he</strong><br />
divorc<strong>in</strong>g couple, page 7.<br />
Balance Due—Two IRS campuses scrut<strong>in</strong>ized<br />
for collections procedures, page 9.<br />
CPAs <strong>in</strong> Industry—Page 12.<br />
Discipl<strong>in</strong>ary Matters—Page 13.<br />
New Members—Page 16.<br />
Lifel<strong>in</strong>e—CPAs, N.Y. publications partner to<br />
answer tax questions.<br />
Classifieds—Page 22.<br />
Chapter Newsletters<br />
Pages 17–20<br />
Chapters <strong>in</strong> this issue <strong>in</strong>clude:<br />
Buffalo<br />
Manhattan/<br />
Bronx<br />
Mid Hudson<br />
Nassau<br />
Nort<strong>he</strong>ast<br />
Queens/<br />
Brooklyn<br />
Roc<strong>he</strong>ster<br />
Rockland<br />
Suffolk<br />
Westc<strong>he</strong>ster<br />
PTIN reregistration will not be a one-time<br />
obligation, t<strong>he</strong> IRS said. T<strong>he</strong> proposed regulations<br />
would require a preparer to “regularly<br />
renew t<strong>he</strong> PTIN, and pay associated user<br />
fees.” More details about registration and<br />
fees would be outl<strong>in</strong>ed <strong>in</strong> future guidance,<br />
t<strong>he</strong> agency said.<br />
T<strong>he</strong> IRS’s proposal, once f<strong>in</strong>alized, will<br />
implement IRS rules requir<strong>in</strong>g an estimated<br />
1.2 million paid tax preparers <strong>in</strong> t<strong>he</strong> United<br />
States to obta<strong>in</strong> and use PTINs on all tax<br />
returns and refund claims t<strong>he</strong>y prepare after<br />
Dec. 31, 2010. A new system is expected to<br />
be launc<strong>he</strong>d by t<strong>he</strong> agency later this year<br />
w<strong>he</strong>reby all return preparers would be<br />
required to register, regardless of w<strong>he</strong>t<strong>he</strong>r<br />
or not t<strong>he</strong>y already have a PTIN, accord<strong>in</strong>g<br />
to a statement from t<strong>he</strong> agency.<br />
Tax preparers have historically been able<br />
to use t<strong>he</strong>ir own Social Security numbers<br />
(SSNs) <strong>in</strong> place of a PTIN, but this practice<br />
will no longer be permitted. T<strong>he</strong> IRS said<br />
<strong>in</strong> its proposed regulations that t<strong>he</strong> PTIN<br />
requirement would “<strong>he</strong>lp ma<strong>in</strong>ta<strong>in</strong> t<strong>he</strong> confidentiality<br />
of SSNs.”<br />
Instructions for foreign tax return preparers<br />
are <strong>in</strong> development and will be available<br />
before tax return preparers will be required<br />
to obta<strong>in</strong> a PTIN, accord<strong>in</strong>g to t<strong>he</strong> IRS.<br />
If a tax preparer uses an expired identify<strong>in</strong>g<br />
number after t<strong>he</strong> f<strong>in</strong>alized implementation<br />
date, t<strong>he</strong> proposed regulations state<br />
that <strong>he</strong> or s<strong>he</strong> would be liable for Section<br />
6695(c) preparer penalties, unless “reasonable<br />
cause” can be proven.<br />
T<strong>he</strong> plan to regulate preparers <strong>in</strong> this<br />
way was first outl<strong>in</strong>ed <strong>in</strong> recommendations<br />
made by t<strong>he</strong> agency <strong>in</strong> its Publication 4832,<br />
Return Preparer Review, launc<strong>he</strong>d <strong>in</strong><br />
June 2009, and was released <strong>in</strong> January.<br />
T<strong>he</strong> report also recommended that non-<br />
CPA preparers be subject to competency<br />
c<strong>he</strong>cks and cont<strong>in</strong>u<strong>in</strong>g professional education<br />
(CPE) requirements.<br />
This competency test<strong>in</strong>g, which will<br />
come with its own set of fees, is only be<strong>in</strong>g<br />
considered for non-CPA practitioners,<br />
Besunder said. Those regulations have not<br />
yet been released for comment.<br />
While CPAs will not be subject to t<strong>he</strong><br />
proposed competency test<strong>in</strong>g or CPE<br />
requirements at this time, t<strong>he</strong> agency has<br />
stated that it is keep<strong>in</strong>g that option open.<br />
NYSSCPA Taxation of Individuals<br />
Committee member Barry S. Kleiman<br />
feels this is unnecessary.<br />
“CPAs are already state-licensed and<br />
(Cont<strong>in</strong>ues on page 10)<br />
Photo: Melissa Hoffmann Lajara<br />
T<strong>he</strong> Times Square offices of Lehman Brot<strong>he</strong>rs <strong>in</strong> Manhattan, on Sept. 15, 2008, t<strong>he</strong><br />
day t<strong>he</strong> firm declared bankruptcy. A new report from t<strong>he</strong> court-appo<strong>in</strong>ted bankruptcy<br />
exam<strong>in</strong>er scrut<strong>in</strong>izes t<strong>he</strong> firm’s use of <strong>FAS</strong> <strong>140</strong>.<br />
<strong><strong>Repo</strong>rt</strong>: <strong>FAS</strong> <strong>140</strong> <strong>Played</strong> <strong>Role</strong> <strong>in</strong><br />
Lehman’s <strong>Repo</strong> <strong>105</strong> Account<strong>in</strong>g<br />
By CHRIS GAETANO<br />
Trusted Professional Staff<br />
Amassive bankruptcy exam<strong>in</strong>er’s 2,200page<br />
report detail<strong>in</strong>g t<strong>he</strong> specific circumstances<br />
beh<strong>in</strong>d t<strong>he</strong> demise of<br />
f<strong>in</strong>ancial giant Lehman Brot<strong>he</strong>rs Hold<strong>in</strong>gs<br />
Inc. highlights some of t<strong>he</strong> <strong>in</strong><strong>he</strong>rent weaknesses<br />
<strong>in</strong> a rules-based account<strong>in</strong>g environment<br />
due to t<strong>he</strong> firm’s utilization of an<br />
off–balance s<strong>he</strong>et device t<strong>he</strong> firm called a<br />
“<strong>Repo</strong> <strong>105</strong>” transaction, a type of repurchase<br />
and resale transaction that complied<br />
with U.S. Generally Accepted Account<strong>in</strong>g<br />
Pr<strong>in</strong>ciples (GAAP) but raises questions.<br />
<strong>Repo</strong> <strong>105</strong>, said t<strong>he</strong> report, written by<br />
Anton R. Valukas, t<strong>he</strong> court-appo<strong>in</strong>ted<br />
bankruptcy exam<strong>in</strong>er <strong>in</strong> Lehman’s Chapter 11<br />
proceed<strong>in</strong>gs, is nearly identical to any ot<strong>he</strong>r<br />
repurchase and resale transaction, which<br />
many firms use every day to raise shortterm<br />
f<strong>in</strong>anc<strong>in</strong>g, w<strong>he</strong>re<strong>in</strong> a company sells<br />
assets—<strong>in</strong> Lehman’s case, securities—with<br />
t<strong>he</strong> understand<strong>in</strong>g that t<strong>he</strong>y’ll buy t<strong>he</strong>m<br />
back with<strong>in</strong> a few days at t<strong>he</strong> same price<br />
plus some <strong>in</strong>terest.<br />
T<strong>he</strong> difference lies <strong>in</strong> how t<strong>he</strong>y are<br />
counted. Ord<strong>in</strong>arily, said t<strong>he</strong> report, t<strong>he</strong>se<br />
agreements are treated on t<strong>he</strong> balance s<strong>he</strong>et<br />
as f<strong>in</strong>anc<strong>in</strong>g transactions. <strong>Repo</strong> <strong>105</strong> transactions,<br />
on t<strong>he</strong> ot<strong>he</strong>r hand, were counted as<br />
sales. Lehman would use t<strong>he</strong> cash it got<br />
from t<strong>he</strong> <strong>Repo</strong> <strong>105</strong> transactions to pay<br />
down its liabilities, t<strong>he</strong>reby reduc<strong>in</strong>g both<br />
t<strong>he</strong> total liabilities and t<strong>he</strong> total assets<br />
reported on its balance s<strong>he</strong>et and lower<strong>in</strong>g<br />
its leverage ratios.<br />
In t<strong>he</strong> days lead<strong>in</strong>g up to a report<strong>in</strong>g period,<br />
said t<strong>he</strong> report, Lehman would <strong>in</strong>crease<br />
its use of t<strong>he</strong>se transactions to reduce its<br />
publicly reported net leverage as well as its<br />
balance s<strong>he</strong>et. T<strong>he</strong>n, a few days after t<strong>he</strong><br />
new quarter began, Lehman would t<strong>he</strong>n borrow<br />
t<strong>he</strong> necessary funds to repay t<strong>he</strong> cash<br />
borrow<strong>in</strong>g, plus <strong>in</strong>terest, repurchase t<strong>he</strong><br />
securities and restore t<strong>he</strong> assets to its balance<br />
s<strong>he</strong>et, said t<strong>he</strong> report. T<strong>he</strong>se transactions<br />
were not reported on Lehman’s periodic<br />
reports.<br />
“Although Lehman had <strong>in</strong> effect borrowed<br />
tens of billions of dollars <strong>in</strong> t<strong>he</strong>se transactions,<br />
Lehman did not disclose t<strong>he</strong> known<br />
obligation to repay t<strong>he</strong> debt,” said t<strong>he</strong><br />
report.<br />
T<strong>he</strong> report quoted former Lehman<br />
Brot<strong>he</strong>rs Global F<strong>in</strong>ancial Controller<br />
Mart<strong>in</strong> Kelly <strong>in</strong> say<strong>in</strong>g that a careful review<br />
of Lehman’s 10-K and 10-Q would not<br />
have revealed t<strong>he</strong> use of <strong>Repo</strong> <strong>105</strong> transactions<br />
and “that t<strong>he</strong> only purpose or motive<br />
for t<strong>he</strong> transactions was reduction <strong>in</strong> balance<br />
s<strong>he</strong>et.”<br />
(Cont<strong>in</strong>ues on page 14)
President’s Commentary<br />
2<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
T<strong>he</strong> Time Has Come for Mobility <strong>in</strong> New York<br />
As many of you<br />
may know, t<strong>he</strong><br />
NYSSCPA’s<br />
Board of Directors<br />
unanimously passed a<br />
resolution <strong>in</strong> January<br />
<strong>in</strong> support of CPA<br />
mobility as outl<strong>in</strong>ed<br />
<strong>in</strong> Section 23 of t<strong>he</strong><br />
Uniform Accountancy<br />
Act (UAA). This is a David J. Moynihan<br />
positive step for t<strong>he</strong><br />
Society and ultimately New York CPAs for<br />
a few reasons, but first I want to tell you<br />
exactly what this provision of t<strong>he</strong> UAA<br />
says and what it means for you, especially<br />
if you’re a small CPA practitioner <strong>in</strong> New<br />
York state.<br />
T<strong>he</strong> accountancy reform law that went<br />
<strong>in</strong>to effect last year made huge strides<br />
towards updat<strong>in</strong>g t<strong>he</strong> law that governs<br />
accountancy <strong>in</strong> New York by expand<strong>in</strong>g t<strong>he</strong><br />
CPA scope of practice, mandat<strong>in</strong>g cont<strong>in</strong>u<strong>in</strong>g<br />
professional education (CPE) for all<br />
practic<strong>in</strong>g CPAs <strong>in</strong> public practice, <strong>in</strong>dustry,<br />
government and academia, and as of<br />
Jan. 1, 2012, mandat<strong>in</strong>g quality reviews of<br />
firm attest services. Now that we have successfully<br />
updated t<strong>he</strong> accountancy law <strong>in</strong><br />
New York state, it is time to take t<strong>he</strong> next<br />
step: CPA mobility.<br />
Put simply, mobility, or t<strong>he</strong> cross-border<br />
practice privilege, allows a CPA licensed <strong>in</strong><br />
good stand<strong>in</strong>g <strong>in</strong> his or <strong>he</strong>r substantially<br />
equivalent home state to provide services to<br />
clients <strong>in</strong> ot<strong>he</strong>r states without hav<strong>in</strong>g to file<br />
any paperwork or pay any fees. It makes<br />
sense that <strong>in</strong> 2010 you could send an e-mail<br />
to a client <strong>in</strong> anot<strong>he</strong>r state without hav<strong>in</strong>g<br />
to fill out an application, right? That’s<br />
because states that have adopted this legislation—and<br />
46 states have already done<br />
so—have basically made sure that t<strong>he</strong>ir<br />
requirements for licensure are “substantially<br />
equivalent” to those outl<strong>in</strong>ed <strong>in</strong> UAA<br />
Section 23.<br />
So it’s a uniformity th<strong>in</strong>g. In order for it<br />
to work—and by work, I mean, <strong>in</strong> order to<br />
ensure that all t<strong>he</strong> CPAs provid<strong>in</strong>g services<br />
outside of t<strong>he</strong>ir home states meet t<strong>he</strong> hig<strong>he</strong>st<br />
set of standards—each state had to<br />
adopt Section 23 of t<strong>he</strong> UAA, which<br />
requires three criteria: mandat<strong>in</strong>g a 150hour<br />
education requirement to become a<br />
CPA (that went <strong>in</strong>to effect <strong>in</strong> New York <strong>in</strong><br />
August); remov<strong>in</strong>g t<strong>he</strong> state’s notification<br />
requirements (that would mean no more<br />
temporary practice permits); and—this is<br />
significant—giv<strong>in</strong>g t<strong>he</strong> state’s board of<br />
public accountancy automatic jurisdiction<br />
over visit<strong>in</strong>g CPAs and t<strong>he</strong> CPA firm<br />
employ<strong>in</strong>g t<strong>he</strong>m.<br />
If New York adopts Section 23 mobility,<br />
every CPA who practices <strong>he</strong>re under t<strong>he</strong><br />
mobility practice privilege would fall under<br />
t<strong>he</strong> jurisdiction of New York w<strong>he</strong>never t<strong>he</strong>y<br />
crossed t<strong>he</strong> border—physically, or even virtually,<br />
by e-mail or onl<strong>in</strong>e. And with t<strong>he</strong><br />
passage of t<strong>he</strong> accountancy reform law last<br />
year, I’d feel a lot safer know<strong>in</strong>g that every<br />
CPA who is practic<strong>in</strong>g <strong>he</strong>re would be subjected<br />
to our laws. I know New York’s law<br />
is tough, and it will be tough on any CPA<br />
who practices <strong>he</strong>re if we adopt mobility<br />
legislation.<br />
While all New York CPAs and CPA<br />
firms would benefit from this legislation,<br />
small firms and practitioners may benefit<br />
most, without fear of so-called “quid pro<br />
quo” retaliation by ot<strong>he</strong>r states (that’s w<strong>he</strong>n<br />
ot<strong>he</strong>r states deny New York CPAs mobility<br />
practice privileges because New York has<br />
failed to adopt Section 23 mobility). Large<br />
firms have whole departments dedicated to<br />
compliance; small firms and sole practitioners<br />
have t<strong>he</strong>mselves. T<strong>he</strong>y should not have<br />
to waste t<strong>he</strong>ir time or resources por<strong>in</strong>g over<br />
state licens<strong>in</strong>g requirements. In 2010, even<br />
small firms no longer compete with t<strong>he</strong><br />
firm just down t<strong>he</strong> street or across t<strong>he</strong> county.<br />
Technology allows t<strong>he</strong>m to compete<br />
with small firms across t<strong>he</strong> country, and<br />
def<strong>in</strong>itely across state l<strong>in</strong>es. Why would we<br />
want to restrict our sole practitioners and<br />
small firms from serv<strong>in</strong>g t<strong>he</strong>ir clients w<strong>he</strong>rever<br />
t<strong>he</strong>y may be?<br />
And remember, 46 ot<strong>he</strong>r states have<br />
already adopted mobility legislation, which<br />
means hundreds of thousands of CPAs can<br />
provide services <strong>in</strong> those 46 states, without<br />
fill<strong>in</strong>g out an application that may take<br />
months to process. That’s not real-time<br />
service for t<strong>he</strong> 21st century, which is what<br />
clients have grown to expect. New York<br />
made great strides last year w<strong>he</strong>n it overhauled<br />
its 100-year-old accountancy law.<br />
We have to <strong>he</strong>lp keep t<strong>he</strong> momentum go<strong>in</strong>g<br />
and ensure that our laws allow New York<br />
CPAs to compete across state l<strong>in</strong>es and <strong>in</strong> a<br />
global economy, while cont<strong>in</strong>u<strong>in</strong>g to ma<strong>in</strong>ta<strong>in</strong><br />
t<strong>he</strong> hig<strong>he</strong>st standards of public protection.<br />
T<strong>he</strong> law and t<strong>he</strong> protection are now<br />
t<strong>he</strong>re. It’s time for mobility <strong>in</strong> New York<br />
state.<br />
president@nysscpa.org<br />
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PRESIDENT<br />
David J. Moynihan, CPA<br />
PRESIDENT-ELECT<br />
Peggy A. Wood, CPA<br />
SECRETARY/TREASURER<br />
Joseph M. Falbo Jr., CPA<br />
VICE PRESIDENTS<br />
Elliot A. Lesser, CPA<br />
Mark L. Me<strong>in</strong>berg, CPA<br />
C. Daniel Stubbs Jr., CPA<br />
Liren Wei, CPA<br />
EXECUTIVE DIRECTOR<br />
Louis Grumet<br />
ACTING EXECUTIVE<br />
DIRECTOR<br />
Joanne S. Barry<br />
EDITOR<br />
Colleen Lutolf<br />
ASSOCIATE EDITOR<br />
Melissa Hoffmann Lajara<br />
STAFF WRITER<br />
Chris Gaetano<br />
COPY EDITORS<br />
Gene Cioffi<br />
Christop<strong>he</strong>r Davis<br />
ART DIRECTOR<br />
Larry E. Matt<strong>he</strong>ws<br />
GRAPHIC DESIGNER<br />
Roxanne Torres<br />
Permission to repr<strong>in</strong>t T<strong>he</strong> Trusted Professional articles is granted with<br />
few exceptions. Written requests <strong>in</strong>dicat<strong>in</strong>g title, author, publication<br />
date, and <strong>in</strong>tended use of t<strong>he</strong> repr<strong>in</strong>t should be made prior to each use<br />
by contact<strong>in</strong>g t<strong>he</strong> editor at 3 Park Avenue, New York, NY 10016-5991,<br />
212-719-8392, or clutolf@nysscpa.org.
3<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
Surviv<strong>in</strong>g Tax Season<br />
For CPAs work<strong>in</strong>g <strong>in</strong> taxation, t<strong>he</strong> “busy season” means phones r<strong>in</strong>g <strong>in</strong>cessantly and every client<br />
needs attention until t<strong>he</strong> dreaded April 15 personal <strong>in</strong>come tax fil<strong>in</strong>g deadl<strong>in</strong>e passes.<br />
In t<strong>he</strong> weeks lead<strong>in</strong>g up to that fateful date, some of t<strong>he</strong> NYSSCPA’s <strong>in</strong>dividual tax practitioners were k<strong>in</strong>d enough to<br />
spare a few moments <strong>in</strong> order to share t<strong>he</strong>ir secrets to stay<strong>in</strong>g sane dur<strong>in</strong>g this tumultuous time.<br />
STEPHEN P. VALENTI<br />
Member, Tax Division Oversight Committee and several<br />
ot<strong>he</strong>r Society committees<br />
“I th<strong>in</strong>k about summer musical t<strong>he</strong>ater!”<br />
JUNE BALYK-MARTIN<br />
Member, Taxation of Individuals Committee<br />
“I just back from one of my cop<strong>in</strong>g mechanisms—<br />
a luxurious hour-long massage.”<br />
BARRY S. KLEIMAN<br />
Member, Taxation of Individuals Committee<br />
“I have a putt<strong>in</strong>g green <strong>in</strong> my office; however, it is covered with<br />
tax return files. I tune <strong>in</strong> t<strong>he</strong> radio—after hours of course—<br />
to hard rock [or] <strong>he</strong>avy metal. My coworkers don’t m<strong>in</strong>d until<br />
I start s<strong>in</strong>g<strong>in</strong>g along.”<br />
ELLIOT L. HENDLER<br />
Member, SEC Practice Committee<br />
“I watch T.V. I take walks. But I’ve always had trouble<br />
separat<strong>in</strong>g my office and home lives. W<strong>he</strong>n I go home,<br />
I turn on t<strong>he</strong> computer to try to catch up on t<strong>he</strong><br />
50 e-mails I get a day.”<br />
LAWRENCE STACK<br />
Member, Taxation of Individuals Committee<br />
“I take Krav Maga. It’s an Israeli self-defense class. In this<br />
class we learn to be aggressive <strong>in</strong> hitt<strong>in</strong>g our opponents’<br />
vulnerable parts. All parts of t<strong>he</strong> body are accessible. Just like <strong>in</strong><br />
tax deductions—t<strong>he</strong> more aggressive you are, t<strong>he</strong> bigger<br />
deduction you get. T<strong>he</strong> only difference is <strong>in</strong> t<strong>he</strong> self-defense<br />
class, you can hit below t<strong>he</strong> belt and get away with it<br />
and are respected. In prepar<strong>in</strong>g taxes, you have<br />
to deal with t<strong>he</strong> IRS.”<br />
RAYMOND G. RUSSOLILLO<br />
Member, Taxation of Individuals Committee<br />
KEVIN M. LEVINE<br />
Member, Taxation of Individuals Committee<br />
“I cont<strong>in</strong>ue to bowl <strong>in</strong> a league on Sunday morn<strong>in</strong>gs at<br />
9 a.m. If I need to work seven days a week, I will come <strong>in</strong><br />
on Sunday—after bowl<strong>in</strong>g.”<br />
“I make it a po<strong>in</strong>t to never work seven days <strong>in</strong> a row. I believe I can<br />
accomplish far more <strong>in</strong> six days than seven. While commut<strong>in</strong>g, I always<br />
listen to my iPod. Recently this season, I have taken to listen<strong>in</strong>g to a<br />
Teach<strong>in</strong>g Company course entitled, ‘How to Listen to and Understand<br />
Great Music.’ This keeps me focused on t<strong>he</strong> fact that t<strong>he</strong>re<br />
is a great, wonderful world outside t<strong>he</strong><br />
Internal Revenue Code.”<br />
WILLIAM HENRY JONES<br />
Member and former Chair, Taxation of<br />
Individuals Committee<br />
“I’m t<strong>he</strong> most relaxed I’ve been <strong>in</strong> 17 years. It’s yoga.<br />
I’ve been do<strong>in</strong>g it almost every day. I don’t need<br />
a lot of sleep.”
By MELISSA HOFFMANN LAJARA<br />
Trusted Professional Staff<br />
T<strong>he</strong> Public Company Account<strong>in</strong>g<br />
Oversight Board (PCAOB) has released<br />
for comment a proposal that it says will<br />
improve communication between auditors,<br />
audit committees and company management.<br />
T<strong>he</strong> proposed standard <strong>in</strong>cludes new<br />
requirements for how auditors must communicate<br />
t<strong>he</strong>ir audit strategy and use of<br />
<strong>in</strong>ternal auditors’ work to a company’s<br />
audit committee and board, and also makes<br />
changes to how auditors should evaluate<br />
significant risks, a company’s ability to<br />
cont<strong>in</strong>ue function<strong>in</strong>g as a go<strong>in</strong>g concern<br />
and t<strong>he</strong> auditor’s own evaluation of t<strong>he</strong><br />
communications between t<strong>he</strong> audit team<br />
and t<strong>he</strong> company’s audit committee.<br />
T<strong>he</strong> proposed audit<strong>in</strong>g standard would<br />
supersede t<strong>he</strong> board’s <strong>in</strong>terim standards AU<br />
Section 380, Communication with Audit<br />
Committees, and AU Section 310,<br />
Appo<strong>in</strong>tment of t<strong>he</strong> Independent Auditor,<br />
as well as amend certa<strong>in</strong> ot<strong>he</strong>r PCAOB<br />
standards.<br />
In draft<strong>in</strong>g its new proposed standard,<br />
t<strong>he</strong> PCAOB also considered t<strong>he</strong> requirements<br />
of t<strong>he</strong> “relevant standards” of t<strong>he</strong><br />
International Audit<strong>in</strong>g and Assurance<br />
Standards Board and t<strong>he</strong> Audit<strong>in</strong>g<br />
4<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
PCAOB Seeks Comments on Proposed Auditor Communication Standard<br />
Standards Board of t<strong>he</strong> AICPA.<br />
“Unlike AU Section 310, which requires<br />
an understand<strong>in</strong>g to be establis<strong>he</strong>d with t<strong>he</strong><br />
client of t<strong>he</strong> services to be performed, t<strong>he</strong><br />
proposed standard requires that this understand<strong>in</strong>g<br />
be establis<strong>he</strong>d specifically with t<strong>he</strong><br />
audit committee,” t<strong>he</strong> proposal states.<br />
T<strong>he</strong> proposed standard would also<br />
require t<strong>he</strong> auditor to record this understand<strong>in</strong>g<br />
<strong>in</strong> a written audit engagement letter,<br />
which t<strong>he</strong> PCAOB said would be provided<br />
each year.<br />
T<strong>he</strong> proposed audit<strong>in</strong>g standard also<br />
<strong>in</strong>cludes a requirement for t<strong>he</strong> auditor to<br />
make <strong>in</strong>quiries of t<strong>he</strong> audit committee<br />
about risks of material misstatement,<br />
<strong>in</strong>clud<strong>in</strong>g <strong>in</strong>quiries related to fraud risks,<br />
t<strong>he</strong> PCAOB said. “It is important that t<strong>he</strong><br />
discussion of t<strong>he</strong>se matters with t<strong>he</strong> audit<br />
committee be robust and substantive,” t<strong>he</strong><br />
agency said <strong>in</strong> its proposal.<br />
Among ot<strong>he</strong>r th<strong>in</strong>gs, t<strong>he</strong> proposal would<br />
require that auditors—<br />
• communicate t<strong>he</strong> audit strategy to t<strong>he</strong><br />
audit committee, as well as its tim<strong>in</strong>g and<br />
any changes to t<strong>he</strong> audit strategy;<br />
• communicate significant risks identified<br />
that may occur dur<strong>in</strong>g t<strong>he</strong> audit due to<br />
t<strong>he</strong> results of audit procedures or “<strong>in</strong><br />
response to external factors, such as<br />
changes <strong>in</strong> t<strong>he</strong> economic environment”;<br />
• expla<strong>in</strong> how management monitors critical<br />
account<strong>in</strong>g estimates and significant<br />
assumptions used <strong>in</strong> critical account<strong>in</strong>g<br />
estimates that have a high degree of subjectivity;<br />
• evaluate w<strong>he</strong>t<strong>he</strong>r t<strong>he</strong>re is a “substantial<br />
doubt” about t<strong>he</strong> company’s ability to cont<strong>in</strong>ue<br />
as a go<strong>in</strong>g concern for “a reasonable<br />
period of time”; and<br />
• provide t<strong>he</strong> audit committee with t<strong>he</strong><br />
sc<strong>he</strong>dule of uncorrected misstatements<br />
related to account<strong>in</strong>g and disclosures presented<br />
to management.<br />
T<strong>he</strong> auditor should also <strong>in</strong>clude <strong>in</strong> t<strong>he</strong><br />
communication w<strong>he</strong>t<strong>he</strong>r persons with specialized<br />
skills or knowledge are needed dur<strong>in</strong>g<br />
t<strong>he</strong> audit process, t<strong>he</strong> auditor’s planned<br />
use of t<strong>he</strong> company’s <strong>in</strong>ternal audit function<br />
and t<strong>he</strong> extent of t<strong>he</strong> use of <strong>in</strong>ternal auditors<br />
and third parties, t<strong>he</strong> PCAOB said.<br />
“Communication of t<strong>he</strong>se arrangements<br />
to t<strong>he</strong> audit committee … facilitates an<br />
effective discussion of how t<strong>he</strong> work of<br />
ot<strong>he</strong>r parties affects t<strong>he</strong> audit,” t<strong>he</strong> PCAOB<br />
said <strong>in</strong> its proposal.<br />
T<strong>he</strong>re are several areas that t<strong>he</strong> PCAOB<br />
emphasized <strong>in</strong> meet<strong>in</strong>g this goal.<br />
T<strong>he</strong> PCAOB noted t<strong>he</strong> importance of<br />
consider<strong>in</strong>g significant risks and not<strong>in</strong>g<br />
w<strong>he</strong>n variable assumptions are be<strong>in</strong>g used.<br />
“Communication of t<strong>he</strong> significant risks<br />
identified by t<strong>he</strong> auditor gives t<strong>he</strong> audit<br />
committee an opportunity to understand t<strong>he</strong><br />
auditor’s view of t<strong>he</strong> most important risks<br />
of material misstatements and to communicate<br />
its views relat<strong>in</strong>g to those risks based<br />
on its knowledge of t<strong>he</strong> company,” t<strong>he</strong> proposal<br />
said.<br />
T<strong>he</strong> proposed standard requires communications<br />
be made no later than t<strong>he</strong> issuance<br />
of t<strong>he</strong> auditor’s report, as it notes that that<br />
“timely communications from t<strong>he</strong> auditor<br />
provide t<strong>he</strong> audit committee with t<strong>he</strong> opportunity<br />
to make <strong>in</strong>formed decisions and to<br />
take actions that may affect t<strong>he</strong> quality of<br />
both t<strong>he</strong> audit and t<strong>he</strong> f<strong>in</strong>ancial statements.”<br />
Primary Objectives<br />
For many companies and t<strong>he</strong>ir auditors,<br />
t<strong>he</strong> Sarbanes-Oxley Act of 2002 fundamentally<br />
changed t<strong>he</strong> relationship between t<strong>he</strong><br />
audit committee and t<strong>he</strong> auditor by<br />
strengt<strong>he</strong>n<strong>in</strong>g and expand<strong>in</strong>g t<strong>he</strong> role of t<strong>he</strong><br />
audit committee <strong>in</strong> oversee<strong>in</strong>g a company’s<br />
f<strong>in</strong>ancial report<strong>in</strong>g process, t<strong>he</strong> PCAOB<br />
said <strong>in</strong> its proposal.<br />
T<strong>he</strong> objectives of an auditor <strong>in</strong>clude<br />
communicat<strong>in</strong>g to t<strong>he</strong> audit committee t<strong>he</strong><br />
responsibilities of t<strong>he</strong> auditor <strong>in</strong> relation to<br />
t<strong>he</strong> audit and “establish<strong>in</strong>g a mutual understand<strong>in</strong>g”<br />
of t<strong>he</strong> terms of t<strong>he</strong> engagement,<br />
communicat<strong>in</strong>g to t<strong>he</strong> audit committee t<strong>he</strong><br />
(Cont<strong>in</strong>ues on page 11)
By LOIS WHITEHEAD<br />
NYSSCPA Public Relations Manager<br />
Two computers and t<strong>he</strong> ability to live<br />
chat gave volunteers at this year’s Daily<br />
News tax panel <strong>in</strong> Manhattan anot<strong>he</strong>r<br />
avenue <strong>in</strong> which to address t<strong>he</strong> avalanc<strong>he</strong> of<br />
questions from taxpayers struggl<strong>in</strong>g to fill<br />
out and file t<strong>he</strong>ir tax forms.<br />
Forty NYSSCPA members fielded more<br />
than 1,000 calls from t<strong>he</strong> tax-prepar<strong>in</strong>g<br />
public dur<strong>in</strong>g t<strong>he</strong> three-day panel, <strong>he</strong>ld<br />
March 23–25.<br />
To supplement t<strong>he</strong> two computers provided,<br />
CPAs also brought t<strong>he</strong>ir own laptops<br />
for chatt<strong>in</strong>g with taxpayers or view<strong>in</strong>g<br />
forms and guidance. Pamela A. Diamond,<br />
a member of t<strong>he</strong> NYSSCPA’s Personal<br />
F<strong>in</strong>ancial Plann<strong>in</strong>g Committee, said s<strong>he</strong><br />
used a computer to “walk a taxpayer<br />
through a sc<strong>he</strong>dule” and to provide anot<strong>he</strong>r<br />
caller with a phone number for t<strong>he</strong> New<br />
York state tax department.<br />
“That’s t<strong>he</strong> greatest th<strong>in</strong>g—gett<strong>in</strong>g a<br />
computer <strong>in</strong> <strong>he</strong>re,” said panel participant<br />
V<strong>in</strong>cent Cervone, who supplied his own<br />
laptop. Taxation of Individuals Committee<br />
Vice Chair Jonathan M. Horn said <strong>he</strong><br />
found t<strong>he</strong> computers useful for research<strong>in</strong>g<br />
queries.<br />
T<strong>he</strong> Daily News provided three days of<br />
publicity dur<strong>in</strong>g t<strong>he</strong> panel and listed t<strong>he</strong><br />
names of participat<strong>in</strong>g CPAs.<br />
“T<strong>he</strong> annual Daily News Tax Hotl<strong>in</strong>e was<br />
once aga<strong>in</strong> swamped with calls and<br />
e-mails this year,” said t<strong>he</strong> newspaper’s<br />
bus<strong>in</strong>ess editor, Scott Wenger. “T<strong>he</strong> hotl<strong>in</strong>e<br />
is a real community service for New<br />
Yorkers who particularly need assistance.”<br />
He thanked t<strong>he</strong> NYSSCPA members for<br />
mak<strong>in</strong>g time to <strong>he</strong>lp so close to t<strong>he</strong> fil<strong>in</strong>g<br />
deadl<strong>in</strong>e.<br />
A Range of Issues<br />
With so many callers, t<strong>he</strong> types of questions<br />
and problems for t<strong>he</strong> volunteers to<br />
work on varied greatly.<br />
Two of t<strong>he</strong> panel participants said t<strong>he</strong>y<br />
received a number of calls from senior citizens<br />
struggl<strong>in</strong>g to understand new tax rules<br />
and credits stemm<strong>in</strong>g from t<strong>he</strong> economic<br />
stimulus.<br />
“[A] high percentage of my calls were<br />
from retirees,” said Lawrence E.<br />
Shoenthal, a member of three Society Tax<br />
Division committees.<br />
Patrick R. Colabella also got a slew of<br />
calls from retirees..<br />
“T<strong>he</strong>re were too many older taxpayers <strong>in</strong><br />
a quandary about taxes,” <strong>he</strong> said. “This is<br />
not what a tax system should be. T<strong>he</strong> tax<br />
code is difficult for t<strong>he</strong> layman and should<br />
be scrapped.”<br />
T<strong>he</strong> bulk of questions for Mart<strong>in</strong> L.<br />
Greenberg focused on Social Security<br />
<strong>in</strong>come—specifically, w<strong>he</strong>t<strong>he</strong>r or not th<strong>in</strong>gs<br />
5<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
Society Volunteers Return to Daily News for Tax Panel<br />
needed to be reported and if a tax return<br />
needed to be filed if Social Security served<br />
as t<strong>he</strong> sole <strong>in</strong>come source.<br />
“Ot<strong>he</strong>r questions,” Greenberg said, “were<br />
about IRAs perta<strong>in</strong><strong>in</strong>g to <strong>in</strong>vestments …<br />
and t<strong>he</strong> taxability of such.”<br />
Marc Albaum, a volunteer for 10 years,<br />
said <strong>he</strong> fielded a lot of real estate questions.<br />
First-time panel volunteer Dov Zaidman<br />
said <strong>he</strong> was surprised by t<strong>he</strong> number of<br />
people choos<strong>in</strong>g to self-prepare t<strong>he</strong>ir<br />
returns. Elliot Schwartz found t<strong>he</strong> Daily<br />
News panel to be “an eye-open<strong>in</strong>g experience<br />
that constantly rem<strong>in</strong>ds me of t<strong>he</strong> lack<br />
of knowledge of t<strong>he</strong> general public w<strong>he</strong>n it<br />
comes to taxes.”<br />
Even so, it felt good to <strong>he</strong>lp t<strong>he</strong> taxpay<strong>in</strong>g<br />
public, said Society member Sushil<br />
Kumar.<br />
“I got so <strong>in</strong>volved <strong>in</strong> t<strong>he</strong> calls that I felt<br />
t<strong>he</strong>y were my clients,” <strong>he</strong> said. It was “a<br />
great experience.”<br />
T<strong>he</strong> volunteers <strong>in</strong>cluded:<br />
Joseph P. Acquavella<br />
Marc Albaum<br />
Donna E. Aloise<br />
Arthur Bloom<br />
Allison Brack<br />
V<strong>in</strong>cent Cervone<br />
Scott M. C<strong>he</strong>slowitz<br />
Emmanuel T. Chirico<br />
Patrick R. Colabella<br />
V<strong>in</strong>cent J. Cosenza<br />
Patrick J. Daly<br />
Pamela A. Diamond<br />
Bart L. Fooden<br />
Laurence I. Foster<br />
Mart<strong>in</strong> L. Greenberg<br />
Jonathan M. Horn<br />
Robert Jell<strong>in</strong>ek<br />
Samuel M. Kearton<br />
Sushil Kumar<br />
Elliott Lavietes<br />
Mart<strong>in</strong> Leventhal<br />
John R. Lieberman<br />
John A. Lombardo<br />
Eugene A. (Gene) Mulrenan<br />
Joseph Nacmias<br />
Avery E. Neumark<br />
Joseph Pir<strong>in</strong>ea<br />
Barry C. Picker<br />
Mark Reddy<br />
I. Jay Safier<br />
Irv<strong>in</strong>g Sandomer<br />
David Sands<br />
Elliot Schwartz<br />
Joseph B. Sesay<br />
Lawrence E. Shoenthal<br />
Craig L Venokur<br />
William D. Ward<br />
Patricia A. Wilson<br />
Dov Zaidman<br />
lwhite<strong>he</strong>ad@nysscpa.org<br />
Tax panel volunteers Mart<strong>in</strong> Leventhal, seated left, and Joseph Acquavella, <strong>he</strong>lp taxpayers<br />
f<strong>in</strong>d answers to t<strong>he</strong>ir tax questions dur<strong>in</strong>g t<strong>he</strong> pre-April 15 NYSSCPA/Daily News<br />
tax panel, a three-day event w<strong>he</strong>re Society members volunteer to answer Daily News<br />
readers’ questions about taxes and tax fil<strong>in</strong>g. T<strong>he</strong> calls were so many <strong>in</strong> number that<br />
even Daily News reporter Meredith Kolodner <strong>he</strong>lped out by queu<strong>in</strong>g t<strong>he</strong> calls for Society<br />
members.<br />
Government Account<strong>in</strong>g and Audit<strong>in</strong>g<br />
Conference<br />
Receive expert advice on emerg<strong>in</strong>g issues <strong>in</strong> GASB standards and s<strong>in</strong>gle audits.<br />
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And Much More!<br />
Course Code: 25144041(In-Person); 25144042 (Live Webcast)<br />
Fields of Study: Account<strong>in</strong>g, Audit<strong>in</strong>g<br />
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foundation for account<strong>in</strong>g<br />
FAE education
By MELISSA HOFFMANNLAJARA<br />
Trusted Professional Staff<br />
Will t<strong>he</strong> United States move forward <strong>in</strong><br />
adopt<strong>in</strong>g International F<strong>in</strong>ancial<br />
<strong><strong>Repo</strong>rt</strong><strong>in</strong>g Standards (IFRS) <strong>in</strong> June<br />
2011 now that t<strong>he</strong> Securities and Exchange<br />
Commission (SEC) recently reaffirmed its<br />
commitment to eventually adopt a s<strong>in</strong>gle<br />
set of account<strong>in</strong>g standards?<br />
F<strong>in</strong>ancial Account<strong>in</strong>g Standards Board<br />
(<strong>FAS</strong>B) Chairman Robert H. Herz wouldn’t<br />
say w<strong>he</strong>t<strong>he</strong>r <strong>he</strong> th<strong>in</strong>ks that date is still feasible—only<br />
that t<strong>he</strong> <strong>FAS</strong>B and t<strong>he</strong><br />
International Account<strong>in</strong>g Standards Board<br />
(IASB) are “redoubl<strong>in</strong>g efforts” and do<strong>in</strong>g<br />
t<strong>he</strong> best t<strong>he</strong>y can.<br />
“We probably <strong>in</strong>creased our efforts fiveor<br />
sixfold,” <strong>he</strong> told a group of bus<strong>in</strong>ess<br />
leaders, professors, CPAs and press at an<br />
IFRS forum <strong>in</strong> Manhattan on April 7. “We<br />
are really engaged <strong>in</strong> someth<strong>in</strong>g that is<br />
probably unprecedented <strong>in</strong> t<strong>he</strong> annals of<br />
account<strong>in</strong>g standard-sett<strong>in</strong>g, and we’re<br />
do<strong>in</strong>g that to try to meet this effort.”<br />
Herz was jo<strong>in</strong>ed at t<strong>he</strong> forum by his<br />
<strong>in</strong>ternational counterpart <strong>in</strong> t<strong>he</strong> IFRS push,<br />
IASB Chair Sir David Tweedie, who considers<br />
meet<strong>in</strong>g t<strong>he</strong> deadl<strong>in</strong>e set by t<strong>he</strong> IFRS<br />
roadmap, proposed by t<strong>he</strong> SEC <strong>in</strong> August<br />
2008, to be of t<strong>he</strong> utmost importance. It is<br />
6<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
Tweedie <strong>in</strong> N.Y. Makes Hard Sell for IFRS<br />
Herz Jo<strong>in</strong>s IASB Chair <strong>in</strong> t<strong>he</strong> International Standards Set Push<br />
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also considered essential, Tweedie said, by<br />
t<strong>he</strong> Group of Twenty (G-20) f<strong>in</strong>ance m<strong>in</strong>isters<br />
and central bank governors, which was<br />
establis<strong>he</strong>d <strong>in</strong> 1999 to br<strong>in</strong>g toget<strong>he</strong>r systemically<br />
important <strong>in</strong>dustrialized and<br />
develop<strong>in</strong>g economies to discuss key issues<br />
<strong>in</strong> t<strong>he</strong> global economy. T<strong>he</strong> G-20 met <strong>in</strong><br />
September and specifically asked t<strong>he</strong> standards<br />
setters to stick to t<strong>he</strong> 2011 deadl<strong>in</strong>e.<br />
“All t<strong>he</strong> countries who are chang<strong>in</strong>g to<br />
IFRS <strong>in</strong> 2011 or 2012 don’t want to change<br />
twice, so t<strong>he</strong>refore t<strong>he</strong> pressure is to try and<br />
fix this th<strong>in</strong>g,” Tweedie said. “As a result,<br />
you will see a barrage of exposure drafts <strong>in</strong><br />
t<strong>he</strong> next three months, as we try and clear<br />
off all t<strong>he</strong>se particular projects. …. People<br />
are fed up.”<br />
Internationally, Tweedie said, “t<strong>he</strong> view<br />
is, if t<strong>he</strong> U.S. doesn’t want to do it, let t<strong>he</strong>m<br />
go. Just let t<strong>he</strong>m go. Take t<strong>he</strong>m off t<strong>he</strong><br />
board, take t<strong>he</strong>m off t<strong>he</strong> trustees, take [SEC<br />
Chair Mary Schapiro] off t<strong>he</strong> monitor<strong>in</strong>g<br />
board. T<strong>he</strong> rest of us will just get on board.<br />
T<strong>he</strong> op<strong>in</strong>ion is, n<strong>in</strong>e years is enough.<br />
“T<strong>he</strong> appetite for endless U.S. convergence<br />
is dim<strong>in</strong>ish<strong>in</strong>g <strong>in</strong>ternationally as a<br />
consensus on IFRS emerges, mean<strong>in</strong>g t<strong>he</strong><br />
U.S. could lose its voice,” <strong>he</strong> said.<br />
But, said Herz, “at t<strong>he</strong> same time, we’re<br />
very cognizant that quality of both process<br />
and quality of output are essential. Due<br />
(Cont<strong>in</strong>ues on page 15)<br />
Mark Your Calendar!<br />
Tax Plann<strong>in</strong>g for Individuals Conference<br />
Wednesday, July 28, 2010<br />
New York Helmsley Hotel<br />
212 East 42nd Street<br />
Between 2nd and 3rd Avenues<br />
New York, NY 10017<br />
8:45 a.m.—5:00 p.m.<br />
Meet t<strong>he</strong> <strong>in</strong>creas<strong>in</strong>g demands of<br />
tax legislation relat<strong>in</strong>g to personal<br />
<strong>in</strong>come and tax plann<strong>in</strong>g.<br />
Lunc<strong>he</strong>on Speaker: Jack Trachtenberg, Deputy Commissioner and Taxpayer Rights<br />
Advocate, NYS Department of Taxation and F<strong>in</strong>ance<br />
Topics <strong>in</strong>clude:<br />
• Federal and New York State Tax Updates<br />
• Hot Topics: Partnership and LLC Plann<strong>in</strong>g for Your Individual Client<br />
• Elder Law: A Plann<strong>in</strong>g Update<br />
• Cost Basis Regulations: T<strong>he</strong>y Are Almost Here—Are You Ready?<br />
CPE Credit Hours: 8<br />
Field of Study: Taxation<br />
Course Code: 25620112<br />
Member Fee: $385<br />
Nonmember Fee: $485<br />
Now Available<br />
via Live<br />
Webcast<br />
Can’t attend t<strong>he</strong> event<br />
<strong>in</strong>-person? Experience t<strong>he</strong><br />
same great speakers and<br />
topics directly from your PC.<br />
Visit www.nysscpa.org/e-cpe<br />
for more details.<br />
To register, visit www.nysscpa.org, or call 800-537-3635, for more detailed <strong>in</strong>formation.<br />
foundation for account<strong>in</strong>g<br />
FAEeducation<br />
Photo: Melissa Hoffmann Lajara<br />
F<strong>in</strong>ancial Account<strong>in</strong>g Standards Board Chair Robert H. Herz is seated <strong>in</strong> t<strong>he</strong> foreground<br />
as International Account<strong>in</strong>g Standards Board Chair Sir David Tweedie speaks to t<strong>he</strong><br />
importance of t<strong>he</strong> United States adopt<strong>in</strong>g International F<strong>in</strong>ancial <strong><strong>Repo</strong>rt</strong><strong>in</strong>g Standards at<br />
a forum <strong>in</strong> Manhattan April 7.<br />
Save t<strong>he</strong> Date…<br />
Strategic Plann<strong>in</strong>g for Your<br />
High-Net-Worth Clients Conference<br />
Help your clients manage and maximize t<strong>he</strong>ir f<strong>in</strong>ancial futures.<br />
Conference Highlights:<br />
• Federal and New York State Tax Updates<br />
• AMT & NOL: What’s New?<br />
• Roth Conversions for Your Wealthy Clients:<br />
Should T<strong>he</strong>y or Shouldn’t T<strong>he</strong>y?<br />
• Invest<strong>in</strong>g Strategies: What’s Different Now?<br />
How Can You Help Your Clients Recover?<br />
CPE Credit Hours: 8<br />
Field of Study: Taxation<br />
Course Code: 25620111<br />
Member Fee: $385<br />
Nonmember Fee: $485<br />
Save on this and ot<strong>he</strong>r FAE conferences and sem<strong>in</strong>ars<br />
with FAE’s Discount Programs!<br />
See t<strong>he</strong> ad on page 9 for more details.<br />
Now Available<br />
via Live<br />
Webcast<br />
To register, visit www.nysscpa.org, or call 800-537-3635, for more detailed <strong>in</strong>formation.<br />
Tuesday, June 22, 2010<br />
New York Helmsley Hotel<br />
212 East 42nd Street<br />
Between 2nd and 3rd Avenues<br />
New York, NY 10017<br />
8:45 a.m.—5:00 p.m.<br />
Can’t attend t<strong>he</strong> event<br />
<strong>in</strong>-person? Experience t<strong>he</strong><br />
same great speakers and<br />
topics directly from your PC.<br />
Visit www.nysscpa.org/e-cpe<br />
for more details.<br />
foundation for account<strong>in</strong>g<br />
FAE education
By JOHN F. RASPANTE, CPA, CDFA,<br />
and ARTHUR GARCIA, ESQ.<br />
For CPAs, specialized areas of practice<br />
can offer practitioners nic<strong>he</strong> practices, professional<br />
prom<strong>in</strong>ence and f<strong>in</strong>ancial rewards.<br />
However, t<strong>he</strong>re is no greater example of t<strong>he</strong><br />
proverbial double-edged sword than t<strong>he</strong><br />
specialized area of matrimonial account<strong>in</strong>g.<br />
This area of practice requires a cross section<br />
of knowledge that draws from <strong>in</strong>come<br />
taxation rules and regulations, valuation<br />
methodologies, <strong>in</strong>surance plann<strong>in</strong>g, forensic<br />
skills and economic t<strong>he</strong>ory.<br />
CPAs may want to be aware of pitfalls<br />
w<strong>he</strong>n provid<strong>in</strong>g services to clients who are<br />
divorc<strong>in</strong>g, divorced or legally separated.<br />
T<strong>he</strong> practitioner who services divorced or<br />
divorc<strong>in</strong>g clients should ad<strong>he</strong>re to t<strong>he</strong> codes<br />
of conduct promulgated by t<strong>he</strong> IRS, t<strong>he</strong><br />
AICPA, t<strong>he</strong> New York State Board for<br />
Public Accountancy and t<strong>he</strong> NYSSCPA.<br />
Pitfall 1: Sale of a Pr<strong>in</strong>cipal Residence—<br />
Capital Ga<strong>in</strong>s<br />
W<strong>he</strong>n couples divorce, t<strong>he</strong> spouse who is<br />
required by t<strong>he</strong> divorce to vacate t<strong>he</strong> pr<strong>in</strong>cipal<br />
residence may rema<strong>in</strong> on t<strong>he</strong> deed and,<br />
t<strong>he</strong>refore, share <strong>in</strong> t<strong>he</strong> potential future proceeds<br />
from t<strong>he</strong> sale of t<strong>he</strong> former residence.<br />
IRC Section 121 offers significant exclusions<br />
if certa<strong>in</strong> conditions are satisfied.<br />
Generally, <strong>in</strong>dividuals may exclude from<br />
<strong>in</strong>come $250,000 of ga<strong>in</strong> and married couples<br />
may exclude $500,000 of ga<strong>in</strong>. T<strong>he</strong><br />
two conditions that must be satisfied are t<strong>he</strong><br />
ownership and use tests. T<strong>he</strong> ownership test<br />
is generally satisfied w<strong>he</strong>n both spouses<br />
rema<strong>in</strong> on t<strong>he</strong> deed after t<strong>he</strong> dissolution of<br />
t<strong>he</strong> marriage. However, w<strong>he</strong>n one spouse is<br />
required to vacate, satisfy<strong>in</strong>g t<strong>he</strong> use test<br />
becomes an issue. If t<strong>he</strong> divorce or separation<br />
agreement does not address this issue,<br />
t<strong>he</strong> vacat<strong>in</strong>g spouse—depend<strong>in</strong>g on w<strong>he</strong>n<br />
t<strong>he</strong> former pr<strong>in</strong>cipal residence is sold—may<br />
be subject to a capital ga<strong>in</strong> that will not be<br />
exempt under Section 121.<br />
Section 121(d)(3) provides, <strong>in</strong> pert<strong>in</strong>ent<br />
part, that “…an <strong>in</strong>dividual shall be treated<br />
as us<strong>in</strong>g property as such <strong>in</strong>dividual’s pr<strong>in</strong>cipal<br />
residence dur<strong>in</strong>g any period of ownership<br />
while such <strong>in</strong>dividual’s spouse or former<br />
spouse is granted use of t<strong>he</strong> property<br />
under a divorce or separation <strong>in</strong>strument.”<br />
T<strong>he</strong>refore, this deemed use must be identified<br />
<strong>in</strong> t<strong>he</strong> separation agreement or<br />
divorce decree <strong>in</strong> order for t<strong>he</strong> Section 121<br />
exclusions to apply.<br />
Here’s an example:<br />
Tom and Cathy decide to divorce on<br />
Dec. 31, 2009, and Tom is ordered to<br />
vacate t<strong>he</strong> family residence. Although Tom<br />
rema<strong>in</strong>s on t<strong>he</strong> deed, t<strong>he</strong> divorce decree is<br />
silent as to t<strong>he</strong> deemed use rule as enunciated<br />
<strong>in</strong> Section 121(d)(3). Tom and Cathy<br />
agree that t<strong>he</strong> home will not be sold until<br />
t<strong>he</strong>ir two daughters leave for college and<br />
Cathy’s mot<strong>he</strong>r moves to a retirement community.<br />
Six years later, those requirements<br />
are met and Cathy and Tom sell t<strong>he</strong> home.<br />
Assum<strong>in</strong>g that t<strong>he</strong> basis <strong>in</strong> t<strong>he</strong> home is<br />
7<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
5 F<strong>in</strong>ancial and Income Tax Pitfalls to Avoid <strong>in</strong> Matrimonial Dissolutions<br />
$200,000 and t<strong>he</strong> sale price is $600,000, t<strong>he</strong><br />
result<strong>in</strong>g capital ga<strong>in</strong> attributable to Tom<br />
and Cathy is $400,000.<br />
Cathy realizes a capital ga<strong>in</strong> of $200,000<br />
but will utilize t<strong>he</strong> exemption under Section<br />
121 ($250,000) and exclude t<strong>he</strong> entire ga<strong>in</strong>.<br />
Tom, who is still listed as an owner of t<strong>he</strong><br />
property, will also realize a capital ga<strong>in</strong> of<br />
$200,000 that is subject to tax. With respect<br />
to t<strong>he</strong> exemption, <strong>he</strong> will satisfy t<strong>he</strong> ownership<br />
test under code Section 121 because <strong>he</strong><br />
rema<strong>in</strong>ed on t<strong>he</strong> deed, but will fail t<strong>he</strong> use<br />
test under Section121 s<strong>in</strong>ce t<strong>he</strong> divorce<br />
<strong>in</strong>strument was silent on t<strong>he</strong> issue. Had t<strong>he</strong><br />
divorce decree provided for t<strong>he</strong> deemed use<br />
provision, Tom would be able to avail himself<br />
of t<strong>he</strong> Section121 exclusion for s<strong>in</strong>gle<br />
taxpayers, and his capital ga<strong>in</strong> would be<br />
zero.<br />
Pitfall 2: Qualified Domestic Relations<br />
Order (QDRO)—T<strong>he</strong> Alternate Payee<br />
In many divorces, one of t<strong>he</strong> largest matrimonial<br />
assets is retirement accounts. If a<br />
retirement account becomes divided<br />
between t<strong>he</strong> spouses, t<strong>he</strong> result<strong>in</strong>g <strong>in</strong>come<br />
tax considerations may be material.<br />
Generally, t<strong>he</strong> plan participant bears t<strong>he</strong><br />
responsibility for <strong>in</strong>come taxes that result<br />
from plan distributions. Section 402(e)(1)(a)<br />
provides a significant tax benefit to t<strong>he</strong><br />
spouse who is t<strong>he</strong> retirement plan participant.<br />
Accord<strong>in</strong>g to Section 402(e)(1)(a), “an<br />
alternate payee who is t<strong>he</strong> spouse or former<br />
spouse of t<strong>he</strong> participant shall be treated as<br />
t<strong>he</strong> distributee of any distribution or payment<br />
made to t<strong>he</strong> alternate payee under a<br />
qualified domestic relations order.”<br />
T<strong>he</strong>refore, distributions made by a qualified<br />
plan to an alternate payee under t<strong>he</strong><br />
terms of a QDRO will be taxed to t<strong>he</strong> alternate<br />
payee and not to t<strong>he</strong> spouse who is t<strong>he</strong><br />
plan participant. An orig<strong>in</strong>al retirement plan<br />
participant receives t<strong>he</strong> benefit of not bear<strong>in</strong>g<br />
t<strong>he</strong> <strong>in</strong>come tax burden of distributions<br />
to a spouse.<br />
Let’s go back to our scenario: Assume<br />
that Tom had a 401(k) and that t<strong>he</strong>re was<br />
no QDRO <strong>in</strong> place. T<strong>he</strong> consequence to<br />
Tom would be to bear t<strong>he</strong> responsibility for<br />
<strong>in</strong>come taxes that result from any plan distributions<br />
to Cathy.<br />
It should be noted that t<strong>he</strong> QDRO <strong>in</strong>strument<br />
is a formal judgment, decree or order under<br />
a state’s domestic relations or community<br />
property law. In addition, t<strong>he</strong> QDRO must<br />
meet strict conditions regard<strong>in</strong>g content and<br />
must conform to IRC Section 414(p),<br />
Qualified domestic relations order def<strong>in</strong>ed.<br />
Pitfall 3: Insur<strong>in</strong>g t<strong>he</strong> Property<br />
Settlement—T<strong>he</strong> Revenge at Death<br />
One of t<strong>he</strong> ma<strong>in</strong>stays of a divorce action<br />
and potential pitfall is spousal support.<br />
Generally, spousal support ends upon t<strong>he</strong><br />
death of t<strong>he</strong> payor spouse. T<strong>he</strong> surviv<strong>in</strong>g<br />
former spouse is effectively cut off from<br />
this source of <strong>in</strong>come, which may cause<br />
hardship. Buy<strong>in</strong>g life <strong>in</strong>surance may m<strong>in</strong>imize<br />
this risk. However, t<strong>he</strong> follow<strong>in</strong>g<br />
<strong>in</strong>surance decisions should be addressed:<br />
• T<strong>he</strong> recipient spouse should own t<strong>he</strong><br />
life <strong>in</strong>surance policy and make t<strong>he</strong> premium<br />
payments. This will prevent any changes to<br />
t<strong>he</strong> policy without t<strong>he</strong> knowledge of t<strong>he</strong><br />
recipient spouse.<br />
• Whole life versus term policies should<br />
be considered from both a cash flow and a<br />
cash value perspective.<br />
• T<strong>he</strong> <strong>in</strong>surance should be procured prior<br />
to t<strong>he</strong> f<strong>in</strong>al divorce decree. This would<br />
allow for a f<strong>in</strong>al property settlement and<br />
modifications <strong>in</strong> t<strong>he</strong> event t<strong>he</strong> <strong>in</strong>surance<br />
request is decl<strong>in</strong>ed by t<strong>he</strong> carrier.<br />
• Lastly, t<strong>he</strong> divorce decree should<br />
exempt t<strong>he</strong> life <strong>in</strong>surance payments from<br />
spousal support tax treatment, if t<strong>he</strong>y are<br />
paid by t<strong>he</strong> nonrecipient spouse.<br />
(It should be noted that t<strong>he</strong> CPA’s role is<br />
to advise <strong>in</strong> this area and not to select t<strong>he</strong><br />
<strong>in</strong>surance company or t<strong>he</strong> policy limits.<br />
This advice should be provided by a tra<strong>in</strong>ed<br />
and competent <strong>in</strong>surance professional.)<br />
Pitfall 4: Unsecured Debt—<br />
T<strong>he</strong> Irresponsible Former Spouse<br />
In most marriages, spouses accumulate<br />
some amount of unsecured debt, such as<br />
credit cards, personal loans and bank loans.<br />
It is quite common for t<strong>he</strong> spouse who,<br />
pursuant to t<strong>he</strong> divorce decree, is ordered to<br />
pay t<strong>he</strong> unsecured debt to become del<strong>in</strong>quent<br />
or cease to make t<strong>he</strong> payments on t<strong>he</strong><br />
unsecured debt. Under such circumstances,<br />
credit card companies seek<strong>in</strong>g collection<br />
will undoubtedly try to secure payment<br />
from both parties, <strong>in</strong>clud<strong>in</strong>g t<strong>he</strong> spouse not<br />
obligated to pay t<strong>he</strong> debt under t<strong>he</strong> divorce<br />
decree. This is due to t<strong>he</strong> contractual nature<br />
of t<strong>he</strong>se transactions and t<strong>he</strong> <strong>in</strong><strong>he</strong>rent jo<strong>in</strong>t<br />
and several liabilities.<br />
Moreover, because t<strong>he</strong>se del<strong>in</strong>quencies<br />
affect t<strong>he</strong> credit worth<strong>in</strong>ess of both parties,<br />
anyth<strong>in</strong>g that <strong>in</strong>volves credit will be affected.<br />
In our scenario, assume Cathy was<br />
responsible for t<strong>he</strong> credit card debt under<br />
t<strong>he</strong> divorce decree and s<strong>he</strong> failed to make<br />
timely payments; Tom’s credit score would<br />
be affected. If Tom sought to purchase a coop<br />
apartment, t<strong>he</strong> untimely payments would<br />
impact negatively on his application for coop<br />
board approval. If Cathy and Tom<br />
decide to ref<strong>in</strong>ance t<strong>he</strong> family home, t<strong>he</strong>y<br />
will likely pay a hig<strong>he</strong>r <strong>in</strong>terest rate due to<br />
t<strong>he</strong>ir downgraded credit worth<strong>in</strong>ess. If<br />
eit<strong>he</strong>r Tom or Cathy decides to purchase a<br />
car, each will likely pay a hig<strong>he</strong>r <strong>in</strong>terest<br />
rate on t<strong>he</strong> car loan.<br />
T<strong>he</strong>se negative results can be avoided by<br />
t<strong>he</strong> <strong>in</strong>clusion of a “hold harmless” provision<br />
<strong>in</strong> t<strong>he</strong> divorce decree that will <strong>in</strong>demnify<br />
t<strong>he</strong> nonpay<strong>in</strong>g spouse, who receives t<strong>he</strong><br />
right to collect all missed payments.<br />
Anot<strong>he</strong>r solution is to pay all credit card<br />
debt with assets at t<strong>he</strong> time of t<strong>he</strong> divorce<br />
or have t<strong>he</strong> nonpay<strong>in</strong>g spouse receive additional<br />
property to offset this possibility.
It’s Not An Option. It’s T<strong>he</strong> LAW!<br />
NEW YORK STATE HAS ADOPTED<br />
A NEW LAW THAT AFFECTS YOU!<br />
New York State Law Now Recognizes:<br />
• CPAs Who Prepare Tax Returns<br />
• CPAs <strong>in</strong> Industry<br />
• CPAs <strong>in</strong> Government<br />
• CPAs <strong>in</strong> F<strong>in</strong>ancial Services<br />
• CPAs <strong>in</strong> Education<br />
As CPAs Practic<strong>in</strong>g Public Accountancy.<br />
All CPAs Who Practice Public Accountancy<br />
Must Register with New York State and Take<br />
Cont<strong>in</strong>u<strong>in</strong>g Professional Education Courses.<br />
www.nysscpa.org/page/reform-law
By MELISSA HOFFMANN LAJARA<br />
Trusted Professional Staff<br />
T<strong>he</strong> Treasury Inspector General for Tax<br />
Adm<strong>in</strong>istration (TIGTA) gave less than<br />
encourag<strong>in</strong>g news to taxpayers and<br />
t<strong>he</strong>ir CPAs <strong>in</strong> a report that scrut<strong>in</strong>ized IRS<br />
balance-due cases <strong>in</strong> two of t<strong>he</strong> agency’s<br />
regional campuses.<br />
T<strong>he</strong> report, released on March 1, found<br />
fault with t<strong>he</strong> IRS’s handl<strong>in</strong>g of <strong>in</strong>stallment<br />
agreement arrangements with taxpayers, as<br />
well as poor documentation practices and a<br />
failure to follow procedures that t<strong>he</strong> report<br />
says are caus<strong>in</strong>g harmful delays <strong>in</strong> taxpayer<br />
service.<br />
Most worrisome, perhaps, is that workload<br />
reviews provided by management<br />
<strong>in</strong>cluded none of t<strong>he</strong> problems identified by<br />
t<strong>he</strong> TIGTA, accord<strong>in</strong>g to its report.<br />
“Management could not provide reasons<br />
why employees were not properly document<strong>in</strong>g<br />
cases, assess<strong>in</strong>g taxpayers’ ability<br />
to fully pay t<strong>he</strong>ir liabilities, or respond<strong>in</strong>g<br />
to taxpayers’ correspondence timely<br />
because management was not aware of<br />
t<strong>he</strong>se problems,” t<strong>he</strong> report said.<br />
TIGTA exam<strong>in</strong>ers selected 60 balancedue<br />
notice cases from two of t<strong>he</strong> 10 IRS<br />
regional campuses <strong>in</strong> order to evaluate<br />
w<strong>he</strong>t<strong>he</strong>r t<strong>he</strong> cases were adm<strong>in</strong>istrated properly.<br />
Half of t<strong>he</strong> cases came from t<strong>he</strong><br />
Philadelphia Compliance Services<br />
Collection Operations Center; t<strong>he</strong> ot<strong>he</strong>r half<br />
orig<strong>in</strong>ated from t<strong>he</strong> IRS’s Andover, Mass.,<br />
campus.<br />
T<strong>he</strong> problems identified are “significant,”<br />
t<strong>he</strong> report said, but unique to t<strong>he</strong> two campuses.<br />
“TIGTA’s f<strong>in</strong>d<strong>in</strong>gs about t<strong>he</strong> poor backoffice<br />
process<strong>in</strong>g of agreements is deadon,”<br />
said Jonathan M. Horn, vice chair of<br />
t<strong>he</strong> Society’s Taxation of Individuals<br />
Committee. “I’ve had situations w<strong>he</strong>re<br />
clients received four consecutive 45-day<br />
letters while try<strong>in</strong>g to establish an <strong>in</strong>stallment<br />
agreement.”<br />
Horn said <strong>he</strong> once received one letter<br />
reject<strong>in</strong>g an <strong>in</strong>stallment agreement proposal,<br />
while offer<strong>in</strong>g one at three times what<br />
t<strong>he</strong> client was able to pay; t<strong>he</strong> next day, <strong>he</strong><br />
received anot<strong>he</strong>r letter accept<strong>in</strong>g t<strong>he</strong> orig<strong>in</strong>al<br />
offer. Both letters were dated t<strong>he</strong> same<br />
day and came from different campuses.<br />
A significant problem identified <strong>in</strong> t<strong>he</strong><br />
report is t<strong>he</strong> way <strong>in</strong> which case closures are<br />
measured, t<strong>he</strong> report said. Almost any entry<br />
on a case <strong>in</strong> t<strong>he</strong> system is treated as a<br />
closed case.<br />
“For example, a case is opened and<br />
closed w<strong>he</strong>n an <strong>in</strong>stallment agreement is<br />
establis<strong>he</strong>d, and a new case may be subsequently<br />
opened and closed every time a<br />
payment is received from t<strong>he</strong> taxpayer,” t<strong>he</strong><br />
report said.<br />
T<strong>he</strong> 60 sample cases were reported as<br />
closed a total of 525 separate times, accord<strong>in</strong>g<br />
to t<strong>he</strong> report.<br />
But, as Relations with t<strong>he</strong> Internal<br />
Revenue Service Committee member Fred<br />
9<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
TIGTA Criticizes IRS Balance-Due, Procedural Practices at Two Campuses<br />
Slater po<strong>in</strong>ted out, with such variance<br />
between IRS campuses, it is difficult to<br />
determ<strong>in</strong>e how widespread t<strong>he</strong> problems<br />
cited <strong>in</strong> t<strong>he</strong> report are, and how many taxpayers<br />
may be negatively affected.<br />
T<strong>he</strong> 60 cases studied all dealt with taxpayers<br />
with outstand<strong>in</strong>g tax liabilities who<br />
received balance-due notices—<strong>in</strong>itially, a<br />
letter demand<strong>in</strong>g full payment of t<strong>he</strong> debt.<br />
“W<strong>he</strong>n t<strong>he</strong> taxpayer responds to t<strong>he</strong> balance<br />
due notices, t<strong>he</strong> [IRS] is not always<br />
properly and timely work<strong>in</strong>g t<strong>he</strong> cases or<br />
effectively manag<strong>in</strong>g t<strong>he</strong> <strong>in</strong>ventory of<br />
cases,” t<strong>he</strong> TIGTA said <strong>in</strong> its report.<br />
“Taxpayers who contact t<strong>he</strong> IRS may experience<br />
unnecessary delays or costs associated<br />
with t<strong>he</strong>ir outstand<strong>in</strong>g liabilities.”<br />
Part of t<strong>he</strong> process is automated, and<br />
some is still executed by IRS collections<br />
exam<strong>in</strong>ers and employees.<br />
Exam<strong>in</strong>ers try to close t<strong>he</strong> easiest cases<br />
first, such as w<strong>he</strong>n a taxpayer sends <strong>in</strong> documentation<br />
to support an address change. If<br />
t<strong>he</strong> case isn’t immediately closed, anot<strong>he</strong>r<br />
set of exam<strong>in</strong>ers determ<strong>in</strong>es what actions<br />
can be taken to br<strong>in</strong>g t<strong>he</strong> taxpayer <strong>in</strong>to<br />
compliance, t<strong>he</strong> report said.<br />
This is often w<strong>he</strong>re t<strong>he</strong> process starts to<br />
lag. Although t<strong>he</strong> IRS is required to provide<br />
taxpayers with a f<strong>in</strong>al response to issues<br />
with<strong>in</strong> 30 days, <strong>in</strong> 39 of t<strong>he</strong> 60 sampled<br />
cases, it took longer or no response letter<br />
was issued at all, accord<strong>in</strong>g to t<strong>he</strong> report.<br />
“T<strong>he</strong> <strong>in</strong>ternal process<strong>in</strong>g time of t<strong>he</strong> IRS is<br />
out of control,” Slater said. “Probably too<br />
many rules and regulations to deal with<br />
before t<strong>he</strong>y can reply. Who knows? T<strong>he</strong>y<br />
could spend all t<strong>he</strong>ir time send<strong>in</strong>g out notices<br />
that say ‘We need more time.’ Better to get<br />
t<strong>he</strong> rules streaml<strong>in</strong>ed and more practical.”<br />
T<strong>he</strong> options for a del<strong>in</strong>quent taxpayer<br />
<strong>in</strong>clude payoffs, time extensions and <strong>in</strong>stallment<br />
agreements.<br />
Borrow<strong>in</strong>g from t<strong>he</strong> IRS<br />
T<strong>he</strong> March 1 report also noted that<br />
<strong>in</strong>stallment payment plans are often set up<br />
for a taxpayer with no consideration of t<strong>he</strong><br />
<strong>in</strong>dividual’s ability to pay t<strong>he</strong> debt or afford<br />
t<strong>he</strong> <strong>in</strong>stallments. Fifty-seven out of t<strong>he</strong> 60<br />
cases sampled <strong>in</strong>volved <strong>in</strong>stallment agreements.<br />
Seventeen of those, accord<strong>in</strong>g to t<strong>he</strong><br />
report, were situations <strong>in</strong> which t<strong>he</strong> taxpayers<br />
may have had t<strong>he</strong> ability to pay t<strong>he</strong> liability<br />
<strong>in</strong> full, avoid<strong>in</strong>g user fees, penalties<br />
and <strong>in</strong>terest charges.<br />
T<strong>he</strong> TIGTA’s analysis showed that t<strong>he</strong><br />
<strong>in</strong>stallment agreements were establis<strong>he</strong>d<br />
without consider<strong>in</strong>g w<strong>he</strong>t<strong>he</strong>r t<strong>he</strong>y were <strong>in</strong><br />
t<strong>he</strong> taxpayers’ or t<strong>he</strong> IRS’s best <strong>in</strong>terest, t<strong>he</strong><br />
report said.<br />
IRS officials responded to that particular<br />
compla<strong>in</strong>t, say<strong>in</strong>g that t<strong>he</strong> Internal Revenue<br />
Manual <strong>in</strong>structions for streaml<strong>in</strong>ed <strong>in</strong>stallment<br />
agreements do not require t<strong>he</strong>m to<br />
contact t<strong>he</strong> taxpayer or make a determ<strong>in</strong>ation<br />
if t<strong>he</strong> taxpayer has t<strong>he</strong> ability to pay.<br />
Rat<strong>he</strong>r, t<strong>he</strong> <strong>in</strong>stallment agreements are based<br />
entirely on data provided by taxpayers on a<br />
form used to request t<strong>he</strong> <strong>in</strong>stallment plan.<br />
Some NYSSCPA members <strong>in</strong>terviewed<br />
said t<strong>he</strong>y see t<strong>he</strong> IRS’s <strong>in</strong>stallment agreements<br />
as a sav<strong>in</strong>g grace for a taxpayer who<br />
ot<strong>he</strong>rwise might face larger debts borne of<br />
private loans.<br />
“People enter <strong>in</strong>to <strong>in</strong>stallment agreements<br />
for all k<strong>in</strong>ds of reasons,” said Alan J. Straus,<br />
a member and past chair of t<strong>he</strong> NYSSCPA’s<br />
Relations with t<strong>he</strong> Internal Revenue Service<br />
Committee. “Even if it appears that someone<br />
can fully pay t<strong>he</strong>ir debt, it still may be<br />
c<strong>he</strong>aper for t<strong>he</strong>m to ‘borrow’ from t<strong>he</strong> IRS<br />
than from a credit card or ot<strong>he</strong>r source.”<br />
Or, said Slater, “Maybe t<strong>he</strong> taxpayer<br />
could fully pay, but t<strong>he</strong>y were concerned<br />
about a major bill that was com<strong>in</strong>g due and<br />
that t<strong>he</strong> IRS knew noth<strong>in</strong>g about. So t<strong>he</strong>y<br />
choose t<strong>he</strong> <strong>in</strong>stallment system.”<br />
Horn said <strong>he</strong> sometimes advises his<br />
clients to take t<strong>he</strong> agreement <strong>in</strong>stead of<br />
pay<strong>in</strong>g <strong>in</strong> full.<br />
“Just because a taxpayer appears to have<br />
t<strong>he</strong> ability to pay a balance due <strong>in</strong> full doesn’t<br />
mean it’s <strong>in</strong> t<strong>he</strong>ir best <strong>in</strong>terest,” <strong>he</strong> said.<br />
“Personally, if I have a client that can’t pay<br />
t<strong>he</strong>ir total federal and New York state tax<br />
bills, I usually recommend t<strong>he</strong>y pay t<strong>he</strong><br />
state <strong>in</strong> full and take an agreement with t<strong>he</strong><br />
IRS, s<strong>in</strong>ce t<strong>he</strong> IRS charges a much lower<br />
<strong>in</strong>terest rate.”<br />
foundation for account<strong>in</strong>g<br />
FAE education<br />
“T<strong>he</strong>re are dozens of situations w<strong>he</strong>re a<br />
taxpayer may not want to dra<strong>in</strong> t<strong>he</strong>ir personal<br />
sav<strong>in</strong>gs to pay t<strong>he</strong> IRS <strong>in</strong> one shot,”<br />
Horn said, cit<strong>in</strong>g examples such as an<br />
anticipated large medical expense or sole<br />
proprietors expect<strong>in</strong>g to lose a major client.<br />
“With streaml<strong>in</strong>ed [<strong>in</strong>stallment agreements],<br />
t<strong>he</strong> taxpayer isn’t be<strong>in</strong>g forced to enter <strong>in</strong>to<br />
one; it’s t<strong>he</strong>ir choice. I disagree with<br />
TIGTA’s f<strong>in</strong>d<strong>in</strong>gs that t<strong>he</strong> taxpayer is be<strong>in</strong>g<br />
harmed.”<br />
Recommendations<br />
T<strong>he</strong> TIGTA recommended several<br />
changes with<strong>in</strong> t<strong>he</strong> agency to moderate or<br />
elim<strong>in</strong>ate t<strong>he</strong> problems it identified <strong>in</strong> t<strong>he</strong><br />
report, <strong>in</strong>clud<strong>in</strong>g suggestions that t<strong>he</strong> IRS<br />
consider revis<strong>in</strong>g t<strong>he</strong> streaml<strong>in</strong>ed <strong>in</strong>stallment<br />
agreement procedures to ensure that<br />
t<strong>he</strong> agreements are beneficial to both t<strong>he</strong><br />
IRS and t<strong>he</strong> taxpayer, and that it establish<br />
workload criteria to ensure that balance-due<br />
notice cases are worked <strong>in</strong> compliance with<br />
collection function guidel<strong>in</strong>es and policy.<br />
POP 2010<br />
can save<br />
NYSSCPA Members<br />
up to $2,055! †<br />
mlajara@nysscpa.org<br />
FAE’s Discount Programs Can Save You Money<br />
A NEW 2-4-1 OFFER<br />
FROM FAE IN 2010!<br />
This year, FAE is extend<strong>in</strong>g a<br />
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t<strong>he</strong> last five years (January 1, 2004 to<br />
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To receive t<strong>he</strong> 2-4-1 offer, call<br />
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Visit www.nysscpa.org for pric<strong>in</strong>g and more <strong>in</strong>formation.<br />
Download t<strong>he</strong> registration form, and return it with<br />
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meet annual CPE requirements,” <strong>he</strong> said.<br />
“CPAs should be exempt from t<strong>he</strong> competence<br />
test<strong>in</strong>g and CPE requirements.”<br />
Ot<strong>he</strong>r Society members see some additional<br />
potential problems related to this<br />
issue.<br />
“T<strong>he</strong>y’re still go<strong>in</strong>g to be monitor<strong>in</strong>g<br />
CPAs to see if t<strong>he</strong>y have to broaden t<strong>he</strong><br />
scope,” noted Step<strong>he</strong>n P. Valenti, a Society<br />
Tax Division Oversight Committee member.<br />
“Obviously, we are subject to our own<br />
standards. We were very concerned that this<br />
was go<strong>in</strong>g to come out and we’d have to<br />
conform to t<strong>he</strong>ir regulatory procedures.”<br />
In terms of registration and fees, it seems<br />
as this is already happen<strong>in</strong>g. And many<br />
CPAs f<strong>in</strong>d it to be unnecessary, <strong>in</strong> light of<br />
t<strong>he</strong> profession’s exist<strong>in</strong>g str<strong>in</strong>gent standards.<br />
“T<strong>he</strong>re is still a big difference <strong>in</strong> skill<br />
and knowledge and value that comes with<br />
t<strong>he</strong> CPA license, which is a hig<strong>he</strong>r standard<br />
[than] a tax preparer,” noted Steven B.<br />
Zel<strong>in</strong>, a member of t<strong>he</strong> NYSSCPA’s<br />
Taxation of Individuals Committee.<br />
But with new regulations <strong>in</strong> place for<br />
non-CPA preparers, will t<strong>he</strong> public still<br />
10<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
IRS Moves to Require CPAs to Reregister PTINs, Pay Fee<br />
(Cont<strong>in</strong>ued from page 1)<br />
NYSSCPA 113th ANNUAL<br />
ELECTION MEETING AND DINNER<br />
2009–2010 President, Presid<strong>in</strong>g<br />
David J. Moynihan, CPA<br />
•Introduction of Honored Guest and Officers<br />
•Election of Officers and Directors<br />
NOMINATED OFFICERS OF THE NYSSCPA 2010–2011<br />
President-Elect: Richard E. Piluso, CPA<br />
Nom<strong>in</strong>ee of 2009-2010 NYSSCPA Nom<strong>in</strong>at<strong>in</strong>g Committee<br />
Vice President: Scott M. Adair, CPA<br />
Vice President: David R. Herman, CPA<br />
Vice President: Martha A. Jaeckle, CPA<br />
Vice President: Gail M. K<strong>in</strong>sella, CPA<br />
Secretary/Treasurer: Joseph M. Falbo Jr., CPA<br />
NOMINATED DIRECTORS-AT-LARGE, JUNE 1, 2010–MAY 31, 2013<br />
Robert W. Berl<strong>in</strong>er, CPA<br />
Step<strong>he</strong>n E. Franciosa, CPA<br />
Rosemarie A. Giov<strong>in</strong>azzo-Barnickel, CPA<br />
Pei-Cen L<strong>in</strong>, CPA<br />
Robert E. Sohr, CPA<br />
NOMINATED DIRECTORS AS CHAPTER REPRESENTATIVES,<br />
JUNE 1, 2010–MAY 31, 2013<br />
Jennifer R. George, CPA (Mid Hudson)<br />
F. Michael Zovistoski, CPA (Nort<strong>he</strong>ast)<br />
Adrian P. Fitzsimons, CPA (Queens/Brooklyn)<br />
Mitc<strong>he</strong>ll L. Gusler, CPA (Rockland)<br />
Robert R. Ritz, CPA (Utica)<br />
know t<strong>he</strong> difference? Taxation of<br />
Individuals Committee member Raymond<br />
G. Russolillo th<strong>in</strong>ks so.<br />
“We have always been t<strong>he</strong> tax advisors<br />
of choice for more discern<strong>in</strong>g taxpayers and<br />
I do not believe that rais<strong>in</strong>g t<strong>he</strong> bar on t<strong>he</strong><br />
low end of t<strong>he</strong> market will hurt us competitively,”<br />
<strong>he</strong> commented. “That said, I also<br />
believe that we, as a profession, need to<br />
cont<strong>in</strong>ually rem<strong>in</strong>d t<strong>he</strong> public of t<strong>he</strong> CPA’s<br />
value.”<br />
Good Idea for Non-CPAs<br />
While requir<strong>in</strong>g additional registration<br />
and fee payment by CPAs may seem redundant<br />
<strong>in</strong> light of t<strong>he</strong> profession’s current<br />
requirements, Society members <strong>in</strong>terviewed<br />
agreed that it’s a good idea for t<strong>he</strong> IRS to<br />
establish a system <strong>in</strong> which t<strong>he</strong>y can track<br />
and review t<strong>he</strong> work of less-tra<strong>in</strong>ed paid<br />
practitioners.<br />
Lawrence Stack, a member of t<strong>he</strong><br />
NYSSCPA’s Taxation of Individuals<br />
Committee, noted a prevalence of “tax preparer<br />
impersonators” who know little and<br />
file often.<br />
Thursday, May 13, 2010<br />
New York Marriott Marquis<br />
at Times Square<br />
1535 Broadway, at 45th Street<br />
New York City<br />
President-elect’s Address:<br />
Margaret A. Wood, CPA<br />
2010–2011 President<br />
Jo<strong>in</strong> Your Friends and Colleagues<br />
at t<strong>he</strong> D<strong>in</strong>ner to:<br />
* Congratulate t<strong>he</strong> w<strong>in</strong>ners of t<strong>he</strong><br />
Society Awards<br />
* Elect t<strong>he</strong> 2010–2011 NYSSCPA<br />
officers and directors.<br />
Reception: 7th Floor Foyer, 5:45 p.m.<br />
D<strong>in</strong>ner and Meet<strong>in</strong>g: Astor Ballroom,<br />
6:45 p.m.<br />
• For Society members wish<strong>in</strong>g to attend t<strong>he</strong><br />
meet<strong>in</strong>g portion only, seat<strong>in</strong>g will be provided at<br />
6:45 p.m. T<strong>he</strong> time for t<strong>he</strong> bus<strong>in</strong>ess meet<strong>in</strong>g is<br />
approximate. RSVP by April 23.<br />
“T<strong>he</strong>se t<strong>he</strong>spians speak a good game,<br />
say<strong>in</strong>g l<strong>in</strong>es to clients who don’t really<br />
understand, and t<strong>he</strong>n run to t<strong>he</strong> closest hills<br />
w<strong>he</strong>n t<strong>he</strong>ir client gets audited,” <strong>he</strong> said.<br />
But this, <strong>he</strong> said, is partly because under<br />
current law, any <strong>in</strong>dividual may prepare a<br />
tax return or submit a claim for refund. In<br />
t<strong>he</strong> Return Preparer Review, it was recommended<br />
that “t<strong>he</strong> IRS establish new eligibility<br />
standards that an <strong>in</strong>dividual must<br />
meet <strong>in</strong> order to prepare tax returns”—<br />
<strong>in</strong>clud<strong>in</strong>g test<strong>in</strong>g, cont<strong>in</strong>u<strong>in</strong>g education and<br />
tax compliance c<strong>he</strong>cks, accord<strong>in</strong>g to t<strong>he</strong><br />
proposed regulations posted to t<strong>he</strong> March 26<br />
Federal Register.<br />
“This way, t<strong>he</strong> unscrupulous tax preparers<br />
can be identified and reported,” Zel<strong>in</strong> said.<br />
“Anyth<strong>in</strong>g that <strong>in</strong>creases t<strong>he</strong> quality of t<strong>he</strong><br />
tax preparation product for t<strong>he</strong> public <strong>he</strong>lps<br />
our [profession].”<br />
“With t<strong>he</strong>se regulations, at least those<br />
[preparers] play<strong>in</strong>g t<strong>he</strong> tax game will need<br />
basic competence to play,” Stack agreed.<br />
This is especially important because, as<br />
t<strong>he</strong> agency put it, “tax return preparers assist<br />
a majority of U.S. taxpayers <strong>in</strong> meet<strong>in</strong>g<br />
REGISTRATION FORM<br />
NYSSCPA 113th Annual Election Meet<strong>in</strong>g and D<strong>in</strong>ner<br />
Thursday, May 13, 2010<br />
New York Marriott Marquis at Times Square<br />
1535 Broadway, at 45th Street<br />
New York City<br />
Total cost of d<strong>in</strong>ner is $190 per person.<br />
Reservations must be received by April 23.<br />
Enclosed is a c<strong>he</strong>ck for $_________ to cover_________ ticket(s)<br />
for t<strong>he</strong> follow<strong>in</strong>g person(s):<br />
Name (Please Pr<strong>in</strong>t)<br />
t<strong>he</strong>ir <strong>in</strong>come tax fil<strong>in</strong>g obligations. Beyond<br />
prepar<strong>in</strong>g tax returns, tax return preparers<br />
also <strong>he</strong>lp educate taxpayers about t<strong>he</strong> tax<br />
laws, and facilitate electronic fil<strong>in</strong>g.”<br />
Russolillo said t<strong>he</strong> complexity of t<strong>he</strong> tax<br />
system makes “requir<strong>in</strong>g regulation of<br />
those who profess to have more knowledge<br />
than t<strong>he</strong> average taxpayer seem like a nobra<strong>in</strong>er,”<br />
add<strong>in</strong>g that competency test<strong>in</strong>g<br />
“will <strong>he</strong>lp weed out t<strong>he</strong> bad apples, which<br />
is an overall good th<strong>in</strong>g for society.”<br />
T<strong>he</strong> IRS expects to see <strong>in</strong>creased compliance<br />
result from this procedural change, as<br />
well as better service to taxpayers.<br />
Comments, due by April 26, may be sent<br />
to: CC: PA: LPD: PR (REG–134235–08),<br />
Room 5205, Internal Revenue Service,<br />
P.O. Box 7604, Ben Frankl<strong>in</strong> Station,<br />
Wash<strong>in</strong>gton, DC, 20044. Comments may<br />
also be e-mailed via an address l<strong>in</strong>ked from<br />
t<strong>he</strong> IRS Web site at www.irs.gov, under t<strong>he</strong><br />
“Tax Professionals” tab.<br />
Certification No.<br />
Firm<br />
Address<br />
City State Zip<br />
Telephone<br />
E-mail<br />
Method of payment:<br />
C<strong>he</strong>ck made payable to NYSSCPA<br />
MasterCard Visa American Express<br />
Credit Card No.<br />
Expiration Date<br />
Cardholder’s Name<br />
Cardholder’s Signature<br />
Tables accommodate ten persons.<br />
•Any person/firm with whom you would like to be seated (if possible)?<br />
Please select one:<br />
Beef Fish Kos<strong>he</strong>r Vegetarian<br />
Special dietary needs (please specify):<br />
mlajara@nysscpa.org<br />
Please fax your credit card payment reservation form to t<strong>he</strong> attention of Nellie Gomez at<br />
1-866-495-1354 or mail t<strong>he</strong> completed reservation form, toget<strong>he</strong>r with a c<strong>he</strong>ck payable to NYSSCPA<br />
(please write “for AEMD 2010” on t<strong>he</strong> c<strong>he</strong>ck), to t<strong>he</strong> Society at t<strong>he</strong> follow<strong>in</strong>g address:<br />
New York State Society of CPAs<br />
P.O. Box 416135<br />
Boston, MA 02241-6135<br />
Attention: AEMD<br />
Your ticket, seat assignment, and program will be available at t<strong>he</strong> door. Seat<strong>in</strong>g will be prearranged.<br />
For more <strong>in</strong>formation or to register onl<strong>in</strong>e, visit t<strong>he</strong> Society’s Web site at www.nysscpa.org.
PCAOB Seeks Comments on Proposed Auditor<br />
Communication Standard<br />
(Cont<strong>in</strong>ued from page 4)<br />
audit strategy and tim<strong>in</strong>g, provid<strong>in</strong>g t<strong>he</strong><br />
audit committee with “timely observations”<br />
that are significant to t<strong>he</strong> f<strong>in</strong>ancial report<strong>in</strong>g<br />
process, and evaluat<strong>in</strong>g t<strong>he</strong> efficacy of t<strong>he</strong>se<br />
communications, t<strong>he</strong> PCAOB wrote.<br />
T<strong>he</strong> board’s primary objectives <strong>in</strong> propos<strong>in</strong>g<br />
this new standard, as stated <strong>in</strong> its<br />
proposal, are to enhance t<strong>he</strong> relevance and<br />
effectiveness of t<strong>he</strong> communications<br />
between t<strong>he</strong> auditor and t<strong>he</strong> audit committee<br />
and emphasize t<strong>he</strong> importance of effective,<br />
two-way communication between t<strong>he</strong><br />
auditor and t<strong>he</strong> audit committee to “better<br />
achieve t<strong>he</strong> objectives of t<strong>he</strong> audit.”<br />
T<strong>he</strong> proposal also comes on t<strong>he</strong> <strong>he</strong>els of<br />
a report by t<strong>he</strong> bankruptcy exam<strong>in</strong>er for t<strong>he</strong><br />
Lehman Brot<strong>he</strong>rs Hold<strong>in</strong>gs bankruptcy that<br />
spotlighted questionable account<strong>in</strong>g practices<br />
that went unchallenged by t<strong>he</strong> <strong>in</strong>vestment<br />
bank’s auditors, Ernst & Young.<br />
Accord<strong>in</strong>g to a March 11 report from<br />
exam<strong>in</strong>er Anton R. Valukas, Lehman’s own<br />
corporate audit group, toget<strong>he</strong>r with<br />
Lehman’s <strong>in</strong>dependent auditor, Ernst &<br />
Young (EY), <strong>in</strong>vestigated allegations about<br />
balance s<strong>he</strong>et substantiation problems made<br />
<strong>in</strong> a May 16, 2008 “whistleblower” letter<br />
sent to senior management.<br />
“At a June 13, 2008 meet<strong>in</strong>g, Ernst &<br />
Young failed to disclose that allegation to<br />
t<strong>he</strong> Board’s Audit Committee,” t<strong>he</strong> report<br />
said.<br />
However, <strong>in</strong> a statement sent to Ernst &<br />
Young client audit committees, t<strong>he</strong> firm<br />
stated that “w<strong>he</strong>n we learned of t<strong>he</strong> letter,<br />
our lead partner promptly called t<strong>he</strong> Audit<br />
Committee Chair; we also <strong>in</strong>sisted that<br />
Lehman’s management <strong>in</strong>form t<strong>he</strong><br />
Securities and Exchange Commission and<br />
t<strong>he</strong> Federal Reserve Bank of t<strong>he</strong> letter. EY’s<br />
lead partner discussed t<strong>he</strong> whistleblower<br />
letter with t<strong>he</strong> Lehman Audit Committee on<br />
at least three occasions dur<strong>in</strong>g June and<br />
July 2008.”<br />
“I don’t know w<strong>he</strong>t<strong>he</strong>r … t<strong>he</strong>se requirements<br />
would have changed anyth<strong>in</strong>g that<br />
happened,” said Mitc<strong>he</strong>ll J. Mertz, chair of<br />
t<strong>he</strong> NYSSCPA’s Account<strong>in</strong>g and Audit<strong>in</strong>g<br />
Oversight Committee. “In an audit of that<br />
nature and size, I cannot guess if this would<br />
have been brought to light or would even<br />
be discussed with an audit committee.”<br />
T<strong>he</strong> PCAOB said that t<strong>he</strong> proposed standard<br />
has been <strong>in</strong>fluenced by a number of<br />
factors and developments, <strong>in</strong>clud<strong>in</strong>g t<strong>he</strong><br />
<strong>in</strong>creased use of risk-based audit methodologies<br />
and t<strong>he</strong> emphasis on judgments and<br />
estimates <strong>in</strong> t<strong>he</strong> f<strong>in</strong>ancial report<strong>in</strong>g frameworks.<br />
“Audit committees play an important<br />
role <strong>in</strong> protect<strong>in</strong>g t<strong>he</strong> <strong>in</strong>terests of <strong>in</strong>vestors,”<br />
t<strong>he</strong> PCAOB said <strong>in</strong> its proposal. “T<strong>he</strong> audit<br />
committee assists t<strong>he</strong> board of directors <strong>in</strong><br />
fulfill<strong>in</strong>g its responsibility to company<br />
shareholders and ot<strong>he</strong>rs to oversee t<strong>he</strong><br />
<strong>in</strong>tegrity of a company’s f<strong>in</strong>ancial statements<br />
and t<strong>he</strong> f<strong>in</strong>ancial report<strong>in</strong>g process.”<br />
Educat<strong>in</strong>g t<strong>he</strong> public and public companies<br />
about t<strong>he</strong> importance of audit quality is<br />
not just a major concern for t<strong>he</strong> PCAOB<br />
and t<strong>he</strong> economy’s overall <strong>he</strong>alth, but is<br />
11<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
also a major focus of t<strong>he</strong> NYSSCPA under<br />
t<strong>he</strong> leadership of its president, David J.<br />
Moynihan, an auditor who has brought his<br />
audit quality message to CPAs, companies,<br />
municipal and nonprofit f<strong>in</strong>ancial professionals<br />
and members of t<strong>he</strong> public<br />
statewide.<br />
Clear communication is at t<strong>he</strong> <strong>he</strong>art of<br />
any truly transparent process, and t<strong>he</strong><br />
PCAOB is seek<strong>in</strong>g to enhance t<strong>he</strong> transparency<br />
of audits by requir<strong>in</strong>g auditors to<br />
expla<strong>in</strong> more about t<strong>he</strong>ir methods, concerns<br />
and results.<br />
“An audit committee that is well<strong>in</strong>formed<br />
about account<strong>in</strong>g and disclosure<br />
matters relat<strong>in</strong>g to t<strong>he</strong> audit may be better<br />
able to carry out its role of oversee<strong>in</strong>g t<strong>he</strong><br />
f<strong>in</strong>ancial report<strong>in</strong>g process,” t<strong>he</strong> PCAOB<br />
said <strong>in</strong> its proposal.<br />
T<strong>he</strong> proposed standard <strong>in</strong>cludes a new<br />
requirement for t<strong>he</strong> auditor to communicate<br />
to t<strong>he</strong> audit committee t<strong>he</strong> anticipated<br />
application of new account<strong>in</strong>g or regulatory<br />
pronouncements that are not yet effective,<br />
but which may, upon adoption, have a significant<br />
effect on t<strong>he</strong> company’s f<strong>in</strong>ancial<br />
report<strong>in</strong>g, t<strong>he</strong> proposal said.<br />
“A discussion of such matters <strong>in</strong> more<br />
detail with t<strong>he</strong> audit committee may allow<br />
audit committees time to properly consider<br />
t<strong>he</strong> effects on future f<strong>in</strong>ancial statements as<br />
well as ramifications on t<strong>he</strong> f<strong>in</strong>ancial<br />
report<strong>in</strong>g process,” t<strong>he</strong> PCAOB said.<br />
Although Anthony S. Chan, chair of t<strong>he</strong><br />
NYSSCPA’s SEC Practice Committee,<br />
doesn’t see this hav<strong>in</strong>g “a significant<br />
impact on t<strong>he</strong> tim<strong>in</strong>g or extent of an audit,”<br />
<strong>he</strong> expects t<strong>he</strong> proposed standard to have a<br />
positive effect on audit quality.<br />
“This proposed standard is needed to furt<strong>he</strong>r<br />
enhance t<strong>he</strong> quality of t<strong>he</strong> two-way<br />
communication and t<strong>he</strong> awareness of t<strong>he</strong><br />
audit committee on matters that could significantly<br />
affect t<strong>he</strong> audit,” <strong>he</strong> said.<br />
Mertz said <strong>he</strong> is not sure that all audit<br />
committee members possess t<strong>he</strong> necessary<br />
<strong>in</strong>formation and understand<strong>in</strong>g to fulfill<br />
t<strong>he</strong>ir obligations.<br />
“I sometimes feel that audit committees<br />
should be required to have on t<strong>he</strong>m, or be<br />
required to consult with, an expert <strong>in</strong> t<strong>he</strong>se<br />
areas to <strong>he</strong>lp t<strong>he</strong>m understand t<strong>he</strong> process<br />
and ascerta<strong>in</strong> that t<strong>he</strong> company and [its]<br />
auditors have done t<strong>he</strong>ir jobs properly,” <strong>he</strong><br />
said. “This would, I believe, enhance t<strong>he</strong><br />
audit committee’s oversight function and<br />
<strong>he</strong>lp strengt<strong>he</strong>n t<strong>he</strong> f<strong>in</strong>ancial report<strong>in</strong>g<br />
process.”<br />
Comments on t<strong>he</strong> proposal must be<br />
received no later than t<strong>he</strong> end of t<strong>he</strong> bus<strong>in</strong>ess<br />
day on May 28, and if approved by t<strong>he</strong> SEC,<br />
t<strong>he</strong> standard would be effective for audits of<br />
fiscal years beg<strong>in</strong>n<strong>in</strong>g after Dec. 15, 2010.<br />
mlajara@nysscpa.org<br />
You manage your<br />
client’s compliance.<br />
Estate Adm<strong>in</strong>istration<br />
Conference<br />
Cover<strong>in</strong>g t<strong>he</strong> latest issues<br />
affect<strong>in</strong>g estate and trust<br />
adm<strong>in</strong>istration and plann<strong>in</strong>g.<br />
Topics will <strong>in</strong>clude:<br />
Tuesday, May 18, 2010<br />
FAE Conference Center<br />
3 Park Avenue, at 34th<br />
Street<br />
19th Floor<br />
New York, NY 10016<br />
8:45 a.m.–4:45 p.m.<br />
• Hot Topics and Current Developments <strong>in</strong> Estate and Trust<br />
Adm<strong>in</strong>istration<br />
• Foreign Trust Compliance<br />
• Generation-Skipp<strong>in</strong>g Transfer Tax<br />
• Fiduciary Account<strong>in</strong>g and Responsibilities<br />
• Distributable Net Income and Separate Share Rules<br />
Plus: An Interactive Lunch Discussion Focus<strong>in</strong>g on Estate and Trust Adm<strong>in</strong>istration<br />
Dur<strong>in</strong>g T<strong>he</strong>se Turbulent Times—Br<strong>in</strong>g Your Questions; Share Your Experiences!<br />
CPE Credit Hours: 8 • Field of Study: Taxation • Course Code: 25608011<br />
Member Fee: $325 • Nonmember Fee: $425<br />
Note: This program satisfies requirements for PACE Recertification credit.<br />
Participants can earn 8 credit hours by attend<strong>in</strong>g. This program has been accepted by t<strong>he</strong><br />
CFP® Board for 8 CE credit hours.<br />
Save on this and ot<strong>he</strong>r FAE conferences and sem<strong>in</strong>ars<br />
with FAE’s Discount Programs! See t<strong>he</strong> ad on page 9 for more details.<br />
Can’t attend t<strong>he</strong> event <strong>in</strong> person? Experience t<strong>he</strong> same great<br />
speakers and topics directly from your PC.<br />
Visit www.nysscpa.org/e-cpe for more details.<br />
Are you manag<strong>in</strong>g your own?<br />
Learn what you need to do to comply with<br />
N.Y.’s new accountancy reform law.<br />
Visit www.nysscpa.org/page/reform-law<br />
Now Available<br />
via Live<br />
Webcast<br />
foundation for account<strong>in</strong>g<br />
FAE education<br />
To register, visit www.nysscpa.org, or call 800-537-3635, for more detailed <strong>in</strong>formation.
12<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
CPAs IN INDUSTRY<br />
Upcom<strong>in</strong>g Industry Committee Meet<strong>in</strong>gs<br />
Apparel and Textile Tues., April 27<br />
Bank<strong>in</strong>g Thurs., May 6<br />
Chief F<strong>in</strong>ancial Officers Thurs., April 29<br />
(CPE: What Every Bus<strong>in</strong>ess Professional<br />
“Technically” Needs to Know About Digital Forensics)<br />
Construction Contractors Thurs., May 20<br />
Enterta<strong>in</strong>ment and Sports Tues., April 27<br />
Family Office Thurs., May 20<br />
Hospitality Industry Tues., April 20<br />
(CPE: NYS Sales Tax for Restaurants and Hotels)<br />
Investment Management Tues., May 4<br />
Media and Publish<strong>in</strong>g Thurs., April 22<br />
Real Estate Tues., May 4<br />
Small Bus<strong>in</strong>ess Outreach Thurs., April 22<br />
Stock Brokerage Thurs., April 29<br />
This is a partial list<strong>in</strong>g, which is subject to change. For a complete and updated list<strong>in</strong>g of<br />
meet<strong>in</strong>gs, visit www.nysscpa.org, click on “About Us,” and choose “Committees” from t<strong>he</strong><br />
dropdown menu.<br />
Interested <strong>in</strong> jo<strong>in</strong><strong>in</strong>g a committee? Fill out an application onl<strong>in</strong>e or contact Committee<br />
Services Senior Manager Nereida Gomez at 212-719-8358 or ngomez@nysscpa.org, to f<strong>in</strong>d out<br />
more <strong>in</strong>formation.<br />
Upcom<strong>in</strong>g Conferences<br />
Broker/Dealer May 11<br />
CFOs, Controllers, and F<strong>in</strong>ancial Executives June 17<br />
Hedge Funds and Alternative Investments July 29<br />
To register for t<strong>he</strong>se conferences, visit www.nysscpa.org or call 800-537-3635 or 212-719-8383.<br />
Broker/Dealer Conference<br />
T<strong>he</strong> Securities Industry of 2010<br />
Hear Keynote Speaker:<br />
Ken Fis<strong>he</strong>r, Founder, Chairman,<br />
and CEO, Fis<strong>he</strong>r Investments<br />
Conference Highlights:<br />
Tuesday, May 11, 2010<br />
New York Marriott Marquis<br />
at Times Square<br />
1535 Broadway, at 45th Street<br />
New York, NY 10036<br />
8:00 a.m.–5:00 p.m.<br />
• 2010 Economic and Market Update: Richard A. Weiss, of City National Bank<br />
• Account<strong>in</strong>g, Audit<strong>in</strong>g, and Tax Updates<br />
• FINOP, Legal, and Regulatory Matters<br />
• Net Capital Bus<strong>in</strong>ess Compliance<br />
• Regulatory Panel Update<br />
• And much more<br />
Save on this and ot<strong>he</strong>r FAE conferences and sem<strong>in</strong>ars with<br />
FAE’s Discount Programs! See t<strong>he</strong> ad on page 9 for more details.<br />
Can’t attend t<strong>he</strong> event <strong>in</strong> person? Experience t<strong>he</strong> same great speakers<br />
and topics directly from your PC.<br />
Visit www.nysscpa.org/e-cpe for more details.<br />
Now Available<br />
via Live<br />
Webcast<br />
CPE Credit Hours: 8<br />
Field of Study: Specialized<br />
Knowledge and Applications<br />
Course Code: 25558011<br />
Member Fee: $375<br />
Nonmember Fee: $475<br />
foundation for account<strong>in</strong>g<br />
FAE education<br />
To register, visit www.nysscpa.org, or call 800-537-3635, for more detailed <strong>in</strong>formation.<br />
Talk to HR: Reta<strong>in</strong><strong>in</strong>g Talent<br />
BY PEI-CEN LIN<br />
NYSSCPA Human Resources<br />
Committee Chair<br />
New hires can cost an organization with<br />
more than 500 employees more than<br />
$10,000, and that’s not <strong>in</strong>clud<strong>in</strong>g<br />
tra<strong>in</strong><strong>in</strong>g or salaries. That means reta<strong>in</strong><strong>in</strong>g<br />
talent and motivat<strong>in</strong>g current staff should<br />
be a major concern for companies try<strong>in</strong>g to<br />
survive a recession.<br />
“No matter what is a<strong>he</strong>ad for your<br />
account<strong>in</strong>g firm, it is never a good time to<br />
lose great people,” said Carol Ann<br />
Caccioppoli, director of Retensa, an<br />
employee retention strategies firm, who<br />
recently aided Human Resources<br />
Committee members <strong>in</strong> ensur<strong>in</strong>g t<strong>he</strong>ir firms’<br />
and companies’ best account<strong>in</strong>g talent is<br />
be<strong>in</strong>g reta<strong>in</strong>ed.<br />
Employee disengagement is also a widespread<br />
issue that needs attention. Sixtyeight<br />
percent of employees feel disconnected<br />
from t<strong>he</strong>ir work responsibilities, accord<strong>in</strong>g<br />
to Retensa’s Web site. A company<br />
could have bodies <strong>in</strong> t<strong>he</strong> seats, but t<strong>he</strong>y<br />
may not be produc<strong>in</strong>g.<br />
Chason Hecht, t<strong>he</strong> strategy firm’s president,<br />
put it this way: “Some people quit<br />
and leave. Some people quit and stay,”<br />
But how do you determ<strong>in</strong>e who should<br />
stay and how to keep those high-perform<strong>in</strong>g<br />
employees loyal and productive?<br />
History has shown, Caccioppoli cautioned,<br />
that as unemployment decreases,<br />
voluntary turnover <strong>in</strong>creases—and most<br />
often, it is t<strong>he</strong> top talent who leaves.<br />
Employee turnover can cost up to<br />
40 percent of a company’s annual profits,<br />
Caccioppoli said, For example, an organization<br />
with 1,000 employees, with an average<br />
turnover rate of 20 percent and average<br />
salaries of $42,000, spends approximately<br />
$8.4 million on employee turnover each<br />
year, s<strong>he</strong> said.<br />
Retention strategies differ, but follow some<br />
of t<strong>he</strong> same guidel<strong>in</strong>es, Caccioppoli added.<br />
“Employers should not be spend<strong>in</strong>g more<br />
than 15 percent of t<strong>he</strong>ir time with low performers,”<br />
s<strong>he</strong> said, “or less than 25 percent<br />
of t<strong>he</strong>ir time with high performers.”<br />
S<strong>he</strong> also recommended that top management<br />
pay special attention to a subgroup of<br />
high-perform<strong>in</strong>g workers s<strong>he</strong> called “high<br />
potentials.”<br />
High potentials are those high-perform<strong>in</strong>g<br />
employees with t<strong>he</strong> desire and ability to<br />
move forward with<strong>in</strong> an organization. T<strong>he</strong>y<br />
are often motivated by more than just cash,<br />
Caccioppoli said.<br />
“Money is only t<strong>he</strong> motivator w<strong>he</strong>n you<br />
are do<strong>in</strong>g everyth<strong>in</strong>g else wrong,” s<strong>he</strong> said.<br />
Instead, employers must speak to t<strong>he</strong>se<br />
valuable employees’ values. High potentials<br />
tend to put a hig<strong>he</strong>r value on fulfill<strong>in</strong>g t<strong>he</strong>ir<br />
development goals than on dollars and<br />
cents. Most high potentials, Caccioppoli<br />
said, want a clearly def<strong>in</strong>ed career path,<br />
learn<strong>in</strong>g opportunities and t<strong>he</strong> benefits of<br />
real-life work experience and apprenticeship,<br />
a mentor to guide t<strong>he</strong>m, frequent performance<br />
appraisals and feedback.<br />
CPAs In Industry need<br />
airtight credentials.<br />
Are you <strong>in</strong> compliance with t<strong>he</strong> new law?<br />
pei-cen.l<strong>in</strong>@nysscpa.org<br />
F<strong>in</strong>d out at www.nysscpa.org/page/reform-law
Us<strong>in</strong>g this method, Lehman was able to<br />
move some $50.38 billion worth of securities<br />
from its balance at t<strong>he</strong> end of t<strong>he</strong> second<br />
quarter on May 30, 2008; this number was<br />
slightly up from t<strong>he</strong> previous quarter’s use<br />
of <strong>Repo</strong> <strong>105</strong> transactions, said t<strong>he</strong> report.<br />
Lehman Brot<strong>he</strong>rs, t<strong>he</strong> report said, was able<br />
to do this because of a provision <strong>in</strong> F<strong>in</strong>ancial<br />
Account<strong>in</strong>g Standards (<strong>FAS</strong>) No. <strong>140</strong>,<br />
Account<strong>in</strong>g for Transfers and Servic<strong>in</strong>g of<br />
F<strong>in</strong>ancial Assets and Ext<strong>in</strong>guishments of<br />
Liabilities.<br />
Although this standard is usually discussed<br />
<strong>in</strong> t<strong>he</strong> context of securitization transactions,<br />
paragraph 98 of <strong>FAS</strong> <strong>140</strong> specifies<br />
that t<strong>he</strong> transfer of assets <strong>in</strong> a repo agreement<br />
shall be accounted for as a sale of<br />
f<strong>in</strong>ancial assets with a forward purchas<strong>in</strong>g<br />
agreement, provided that t<strong>he</strong> transferor has<br />
surrendered control over t<strong>he</strong> transferred<br />
assets, accord<strong>in</strong>g to t<strong>he</strong> report.<br />
One of t<strong>he</strong> ways that <strong>FAS</strong> <strong>140</strong> counts an<br />
entity as hav<strong>in</strong>g surrendered control is if an<br />
arrangement to repurchase or lend readily<br />
obta<strong>in</strong>able securities falls with<strong>in</strong> a m<strong>in</strong>imum<br />
of a 102 percent overcollateralization.<br />
As Lehman’s <strong>Repo</strong> <strong>105</strong> transactions were<br />
overcollateralized by <strong>105</strong> percent (<strong>he</strong>nce<br />
t<strong>he</strong> name), t<strong>he</strong> firm was able to declare t<strong>he</strong><br />
transaction as a sale of an <strong>in</strong>ventory security<br />
<strong>in</strong>stead of a loan, mov<strong>in</strong>g t<strong>he</strong> assets off<br />
t<strong>he</strong> balance s<strong>he</strong>et.<br />
“If t<strong>he</strong> <strong>Repo</strong> <strong>105</strong> transaction technically<br />
qualified for true sale account<strong>in</strong>g under<br />
S<strong>FAS</strong> <strong>140</strong>, Lehman was not required for<br />
account<strong>in</strong>g purposes to record a liability,<br />
although t<strong>he</strong> economic reality was that<br />
Lehman had borrowed cash it had to repay.<br />
Instead, Lehman recorded t<strong>he</strong> cash proceeds<br />
of t<strong>he</strong> <strong>Repo</strong> <strong>105</strong> transaction as an<br />
asset (cash), but re-characterized this<br />
secured f<strong>in</strong>anc<strong>in</strong>g as a sale of t<strong>he</strong> securities<br />
used as collateral for t<strong>he</strong> borrow<strong>in</strong>g, result<strong>in</strong>g<br />
<strong>in</strong> a reduction to its Securities Inventory<br />
balance,” Valukas said <strong>in</strong> his report.<br />
Lehman’s <strong>in</strong>dependent auditors, Ernst &<br />
Young, were aware of but did not question<br />
Lehman’s use and nondisclosure of t<strong>he</strong><br />
<strong>Repo</strong> <strong>105</strong> account<strong>in</strong>g transactions, accord<strong>in</strong>g<br />
to t<strong>he</strong> exam<strong>in</strong>er’s report. T<strong>he</strong> exam<strong>in</strong>er<br />
stated that <strong>he</strong> believes a “colorable claim of<br />
professional malpractice” exists aga<strong>in</strong>st<br />
Ernst & Young.<br />
“T<strong>he</strong> Exam<strong>in</strong>er concludes that t<strong>he</strong>re is<br />
sufficient evidence to support a colorable<br />
claim that … certa<strong>in</strong> of Lehman’s officers<br />
breac<strong>he</strong>d t<strong>he</strong>ir fiduciary duties by expos<strong>in</strong>g<br />
Lehman to potential liability for fil<strong>in</strong>g<br />
materially mislead<strong>in</strong>g reports and … Ernst<br />
& Young … was professionally negligent <strong>in</strong><br />
allow<strong>in</strong>g those reports to go unchallenged,”<br />
Valukas said.<br />
In May 2008, said t<strong>he</strong> report, Lehman<br />
Senior Vice President Matt<strong>he</strong>w Lee <strong>in</strong> t<strong>he</strong><br />
f<strong>in</strong>ance division wrote a letter to management,<br />
identify<strong>in</strong>g possible violations of<br />
Lehman’s ethics code related to account<strong>in</strong>g<br />
and balance s<strong>he</strong>et issues.<br />
In t<strong>he</strong> course of <strong>in</strong>vestigat<strong>in</strong>g t<strong>he</strong>se<br />
claims, Ernst & Young met with Lee on<br />
June 12, 2008, w<strong>he</strong>re <strong>he</strong> <strong>in</strong>formed Ernst &<br />
14<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
<strong><strong>Repo</strong>rt</strong>: <strong>FAS</strong> <strong>140</strong> <strong>Played</strong> <strong>Role</strong> <strong>in</strong> Lehman’s <strong>Repo</strong> <strong>105</strong> Account<strong>in</strong>g<br />
(Cont<strong>in</strong>ued from page 1)<br />
Young about Lehman’s use of $50 billion<br />
of <strong>Repo</strong> <strong>105</strong> transactions <strong>in</strong> t<strong>he</strong> second<br />
quarter of 2008, accord<strong>in</strong>g to t<strong>he</strong> report.<br />
T<strong>he</strong> next day, said t<strong>he</strong> report, t<strong>he</strong> auditors<br />
met with t<strong>he</strong> Lehman Board Audit<br />
Committee but did not <strong>in</strong>form t<strong>he</strong> committee<br />
of Lee’s allegation, despite t<strong>he</strong> express<br />
direction from t<strong>he</strong> committee chair to <strong>in</strong>vestigate<br />
every allegation raised by Lee. Ernst<br />
& Young met with t<strong>he</strong> audit committee<br />
aga<strong>in</strong> <strong>in</strong> July and aga<strong>in</strong> did not mention<br />
Lee’s allegations, t<strong>he</strong> report said.<br />
T<strong>he</strong> report critiques Ernst & Young for<br />
tak<strong>in</strong>g no action to <strong>in</strong>vestigate t<strong>he</strong> <strong>Repo</strong> <strong>105</strong><br />
allegations, or to question or challenge t<strong>he</strong><br />
nondisclosure by Lehman of its use of<br />
$50 billion of temporary, off–balance s<strong>he</strong>et<br />
transactions.<br />
Ernst & Young defended its actions <strong>in</strong> a<br />
letter t<strong>he</strong> firm sent to client audit committee<br />
members after t<strong>he</strong> Valukas report was<br />
released. T<strong>he</strong> letter was obta<strong>in</strong>ed by<br />
Reuters and was publis<strong>he</strong>d onl<strong>in</strong>e. It states<br />
that, <strong>in</strong> t<strong>he</strong> firm’s op<strong>in</strong>ion, Lehman’s f<strong>in</strong>ancial<br />
statements were fairly presented <strong>in</strong><br />
accordance with U.S. GAAP, add<strong>in</strong>g that<br />
t<strong>he</strong> company’s bankruptcy was caused by a<br />
collapse <strong>in</strong> its liquidity, which was <strong>in</strong> turn<br />
caused by decl<strong>in</strong><strong>in</strong>g asset values and loss of<br />
market confidence <strong>in</strong> Lehman.<br />
“It was not caused by account<strong>in</strong>g issues<br />
or disclosure issues,” said t<strong>he</strong> letter.<br />
T<strong>he</strong> letter said t<strong>he</strong> report did not challenge<br />
Lehman’s account<strong>in</strong>g for its <strong>Repo</strong><br />
<strong>105</strong> transactions and added that, because<br />
effective control of t<strong>he</strong> securities was surrendered<br />
to t<strong>he</strong> counterparty <strong>in</strong> t<strong>he</strong> <strong>Repo</strong><br />
<strong>105</strong> arrangements, t<strong>he</strong> account<strong>in</strong>g literature<br />
required Lehman to account for <strong>Repo</strong> <strong>105</strong><br />
transactions as sales rat<strong>he</strong>r than as f<strong>in</strong>anc<strong>in</strong>gs.<br />
T<strong>he</strong> letter furt<strong>he</strong>r stated that Lee’s<br />
whistleblower letter raised “various significant<br />
potential concerns about Lehman’s<br />
f<strong>in</strong>ancial controls and report<strong>in</strong>g but did not<br />
mention <strong>Repo</strong> <strong>105</strong>.<br />
“In t<strong>he</strong> <strong>in</strong>vestigations that ensued, t<strong>he</strong><br />
letter writer did briefly reference <strong>Repo</strong> <strong>105</strong><br />
transactions <strong>in</strong> an <strong>in</strong>terview with EY partners,”<br />
t<strong>he</strong> audit firm’s letter states. “He also<br />
confirmed to EY that <strong>he</strong> was unaware of<br />
any material f<strong>in</strong>ancial report<strong>in</strong>g errors.”<br />
Ernst & Young’s letter goes on to say<br />
that Lehman’s 2008 bankruptcy prevented<br />
t<strong>he</strong> firm from complet<strong>in</strong>g its assessment of<br />
Lee’s allegations and that t<strong>he</strong>y would have<br />
been t<strong>he</strong> subject of “significant attention”<br />
had t<strong>he</strong> firm completed its third-quarter<br />
review and 2008 year-end audit.<br />
Though t<strong>he</strong> report did not make a judgment<br />
as to w<strong>he</strong>t<strong>he</strong>r t<strong>he</strong> use of <strong>Repo</strong> <strong>105</strong><br />
transactions technically complied with t<strong>he</strong><br />
provisions of <strong>FAS</strong> <strong>140</strong>, it also said that this<br />
question doesn’t matter s<strong>in</strong>ce, regardless of<br />
w<strong>he</strong>t<strong>he</strong>r Lehman was <strong>in</strong> technical compliance<br />
with U.S. account<strong>in</strong>g rules, t<strong>he</strong> company’s<br />
failure to disclose its use of <strong>Repo</strong><br />
<strong>105</strong> transactions may be seen as materially<br />
mislead<strong>in</strong>g.<br />
“This <strong><strong>Repo</strong>rt</strong> does not reach t<strong>he</strong> question<br />
w<strong>he</strong>t<strong>he</strong>r Lehman’s <strong>Repo</strong> <strong>105</strong> transactions<br />
technically complied with t<strong>he</strong> relevant<br />
f<strong>in</strong>ancial account<strong>in</strong>g standard, S<strong>FAS</strong> <strong>140</strong>,<br />
because t<strong>he</strong> answer to that question does<br />
not impact w<strong>he</strong>t<strong>he</strong>r a colorable claim exists<br />
regard<strong>in</strong>g Lehman’s failure to disclose its<br />
<strong>Repo</strong> <strong>105</strong> practice and w<strong>he</strong>t<strong>he</strong>r that failure<br />
rendered t<strong>he</strong> firm’s f<strong>in</strong>ancial statements<br />
materially mislead<strong>in</strong>g,” t<strong>he</strong> report states.<br />
“Even if Lehman’s use of <strong>Repo</strong> <strong>105</strong> transactions<br />
technically complied with S<strong>FAS</strong> <strong>140</strong>,<br />
f<strong>in</strong>ancial statements may be materially mislead<strong>in</strong>g<br />
even w<strong>he</strong>n t<strong>he</strong>y do not violate<br />
GAAP.”<br />
It quoted t<strong>he</strong> second circuit <strong>in</strong> say<strong>in</strong>g<br />
that “GAAP itself recognizes that technical<br />
compliance with particular GAAP rules<br />
may lead to mislead<strong>in</strong>g f<strong>in</strong>ancial statements<br />
and imposes an overall requirement that t<strong>he</strong><br />
statements as a whole accurately reflect t<strong>he</strong><br />
f<strong>in</strong>ancial status of t<strong>he</strong> company.”<br />
George I. Victor, a Manhattan/Bronx<br />
Chapter member who sits on t<strong>he</strong> SEC<br />
Practice Committee, said that t<strong>he</strong> issue with<br />
<strong>Repo</strong> <strong>105</strong> transactions represents an <strong>in</strong><strong>he</strong>rent<br />
problem that can arise <strong>in</strong> a rules-based<br />
account<strong>in</strong>g environment such as U.S.<br />
GAAP.<br />
Rules-based account<strong>in</strong>g, <strong>he</strong> said, can be<br />
very advantageous <strong>in</strong> t<strong>he</strong> sense that it’s easier<br />
to account for and easier to audit<br />
because one has a “specific recipe book” to<br />
refer to. T<strong>he</strong> problem, <strong>he</strong> said, is that sometimes<br />
account<strong>in</strong>g rules can drive t<strong>he</strong> transactions<br />
as well as t<strong>he</strong> account<strong>in</strong>g for t<strong>he</strong>se<br />
transactions and t<strong>he</strong> f<strong>in</strong>ancial presentations<br />
of t<strong>he</strong>se same transactions.<br />
“I like to call that f<strong>in</strong>ancial eng<strong>in</strong>eer<strong>in</strong>g:<br />
W<strong>he</strong>n a contract is be<strong>in</strong>g structured, sometimes<br />
that contract, t<strong>he</strong> terms of that contract,<br />
will be f<strong>in</strong>ancially eng<strong>in</strong>eered to follow<br />
specific account<strong>in</strong>g rules for desired<br />
results, as opposed to what is t<strong>he</strong> appropriate<br />
account<strong>in</strong>g result. It is ‘what do we<br />
want it to result <strong>in</strong>,’ and that is easier to do<br />
with rules-based account<strong>in</strong>g than pr<strong>in</strong>ciples<br />
based account<strong>in</strong>g,” said Victor.<br />
As an example, <strong>he</strong> said imag<strong>in</strong>e two<br />
companies, Company A and Company B,<br />
both operat<strong>in</strong>g under U.S. GAAP. Both<br />
companies lease an airplane. Company A<br />
manages to structure t<strong>he</strong> lease transaction<br />
so that t<strong>he</strong> airplane’s present value factor (a<br />
discount <strong>in</strong>terest rate factor used to determ<strong>in</strong>e<br />
t<strong>he</strong> present value of a sum <strong>in</strong> t<strong>he</strong><br />
future) is 89 percent.<br />
T<strong>he</strong> way Company B’s lease has been set<br />
up, though, sets its airplane’s present value<br />
factor at 90 percent. Despite this difference<br />
of only one percent, said Victor, Company<br />
A’s lease is counted as an operat<strong>in</strong>g lease<br />
and will, t<strong>he</strong>refore, not be on t<strong>he</strong> balance<br />
s<strong>he</strong>et; <strong>in</strong>stead, it will be a footnote disclosure<br />
discuss<strong>in</strong>g t<strong>he</strong> terms of t<strong>he</strong> lease.<br />
Company B’s airplane, however, would<br />
count as a capital lease and would show up<br />
on t<strong>he</strong> balance s<strong>he</strong>et as a liability.<br />
“So you have two companies, A and B,<br />
[with] essentially t<strong>he</strong> same transaction,”<br />
Victor said. “However, one company is<br />
show<strong>in</strong>g t<strong>he</strong> airplane as an asset and liability,<br />
t<strong>he</strong> ot<strong>he</strong>r, only because it’s one percent<br />
[different], is not show<strong>in</strong>g it as an asset and<br />
liability. … So if you, as a reader, look at<br />
t<strong>he</strong>se two companies side by side, you have<br />
to ask t<strong>he</strong> question as to w<strong>he</strong>t<strong>he</strong>r that is a<br />
fair presentation because one company will<br />
look more advantaged than t<strong>he</strong> ot<strong>he</strong>r but it<br />
has substantially similar terms on t<strong>he</strong>ir<br />
lease.”<br />
Victor said that, had Lehman been under<br />
a pr<strong>in</strong>ciples-based account<strong>in</strong>g approach—<br />
which is more focused on provid<strong>in</strong>g a conceptual<br />
basis for accountants to follow<br />
rat<strong>he</strong>r than a list of detailed rules—<strong>Repo</strong><br />
<strong>105</strong> transactions would have been much<br />
more difficult to structure, as t<strong>he</strong>re wouldn’t<br />
be any specific parameters or po<strong>in</strong>ts that<br />
transactions are be<strong>in</strong>g h<strong>in</strong>ged upon.<br />
NYSSCPA Past President Sharon Sabba<br />
Fierste<strong>in</strong>, a Nassau Chapter member who<br />
is also on t<strong>he</strong> PCAOB’s Stand<strong>in</strong>g Advisory<br />
Group, agreed with this view, say<strong>in</strong>g that a<br />
perception that <strong>Repo</strong> <strong>105</strong> agreements would<br />
not have been able to go through, had<br />
Lehman been operat<strong>in</strong>g under a pr<strong>in</strong>ciplesbased<br />
rat<strong>he</strong>r than rules-based approach, is<br />
“probably a reasonable assessment.”<br />
“Standards aren’t supposed to be cookbooks,”<br />
s<strong>he</strong> said. … “I th<strong>in</strong>k w<strong>he</strong>n t<strong>he</strong>re’s a<br />
cookbook approach, people try to work<br />
t<strong>he</strong>ir way around it, which is not ad<strong>he</strong>r<strong>in</strong>g<br />
to t<strong>he</strong> underly<strong>in</strong>g pr<strong>in</strong>ciple.”<br />
S<strong>he</strong> noted that, <strong>in</strong> recent years, t<strong>he</strong> <strong>FAS</strong>B<br />
has come to recognize this as well and has<br />
been mov<strong>in</strong>g more toward a pr<strong>in</strong>ciplesbased<br />
approach <strong>in</strong> its rule mak<strong>in</strong>g.<br />
But that also does not mean a more pr<strong>in</strong>ciples-based<br />
system of account<strong>in</strong>g, such as<br />
International F<strong>in</strong>ancial <strong><strong>Repo</strong>rt</strong><strong>in</strong>g Standards<br />
(IFRS), would prevent companies from<br />
structur<strong>in</strong>g transactions to meet account<strong>in</strong>g<br />
and report<strong>in</strong>g objectives, said Richard C.<br />
Jones, an account<strong>in</strong>g professor at Hofstra<br />
University.<br />
Prior to teach<strong>in</strong>g, Jones said <strong>he</strong> advised<br />
<strong>in</strong>vestment bankers at an <strong>in</strong>ternational<br />
f<strong>in</strong>ancial <strong>in</strong>stitution. Part of his job was<br />
advis<strong>in</strong>g <strong>in</strong>vestment bankers of t<strong>he</strong> different<br />
account<strong>in</strong>g rules for various transactions.<br />
“After t<strong>he</strong>y understand t<strong>he</strong> rules, t<strong>he</strong>y create<br />
t<strong>he</strong> f<strong>in</strong>anc<strong>in</strong>g structure,” <strong>he</strong> said, mak<strong>in</strong>g<br />
it hard to prevent those who are set on<br />
do<strong>in</strong>g it to use account<strong>in</strong>g methodologies to<br />
“w<strong>in</strong>dow dress t<strong>he</strong> f<strong>in</strong>ancial statements.”<br />
“So, despite IFRS rules be<strong>in</strong>g somewhat<br />
more pr<strong>in</strong>ciples-based than U.S. GAAP,<br />
IFRS is not perfect,” Jones said. “It conta<strong>in</strong>s<br />
rules…some of which are very specific.<br />
W<strong>he</strong>re possible, smart <strong>in</strong>vestment bankers<br />
will use those rules to develop f<strong>in</strong>anc<strong>in</strong>g<br />
and ot<strong>he</strong>r transaction approac<strong>he</strong>s that allow<br />
for account<strong>in</strong>g and f<strong>in</strong>ancial report<strong>in</strong>g<br />
objectives.”<br />
S<strong>in</strong>ce Lehman’s collapse <strong>in</strong> 2008, t<strong>he</strong><br />
<strong>FAS</strong>B has tried to addressed t<strong>he</strong> part of<br />
<strong>FAS</strong> <strong>140</strong> <strong>in</strong> question through anot<strong>he</strong>r standard,<br />
<strong>FAS</strong> No. 166, Account<strong>in</strong>g for<br />
Transfers of F<strong>in</strong>ancial Assets, which was<br />
approved <strong>in</strong> June 2009 and was effective<br />
for annual reports beg<strong>in</strong>n<strong>in</strong>g after Nov. 15,<br />
2009. Accord<strong>in</strong>g to t<strong>he</strong> <strong>FAS</strong>B, t<strong>he</strong> board<br />
drafted t<strong>he</strong> standard <strong>in</strong> response to certa<strong>in</strong><br />
(Cont<strong>in</strong>ues on page 15)
process really contributes to t<strong>he</strong> overall<br />
quality and acceptability of t<strong>he</strong> results.”<br />
So, <strong>he</strong> said, “at this po<strong>in</strong>t, what we’re<br />
try<strong>in</strong>g to do is get out t<strong>he</strong>se many exposure<br />
drafts and engage <strong>in</strong> a very <strong>in</strong>tensive outreach<br />
program with constituents …. And<br />
t<strong>he</strong>n we’ll have to see, based on t<strong>he</strong> comments,<br />
but we will t<strong>he</strong>n resume our very<br />
<strong>in</strong>tensive efforts.”<br />
Most recently, a jo<strong>in</strong>t exposure draft was<br />
issued by t<strong>he</strong> IASB and t<strong>he</strong> <strong>FAS</strong>B on t<strong>he</strong><br />
report<strong>in</strong>g entity concept. In June, both<br />
boards will tackle <strong>he</strong>dge account<strong>in</strong>g as part<br />
of t<strong>he</strong> two boards’ Account<strong>in</strong>g for F<strong>in</strong>ancial<br />
Instruments Jo<strong>in</strong>t Project.<br />
Ot<strong>he</strong>r topics to be addressed through t<strong>he</strong><br />
convergence project are performance<br />
report<strong>in</strong>g, leases and pensions, Tweedie<br />
said.<br />
Regard<strong>in</strong>g fair value, or mark-to-market,<br />
account<strong>in</strong>g standards, “we’ve taken t<strong>he</strong><br />
U.S. standard … basically, t<strong>he</strong> U.S. standard<br />
has proved very effective,” Tweedie<br />
said. And, <strong>he</strong> said, t<strong>he</strong> IASB has already<br />
tackled and resolved t<strong>he</strong> issue of bus<strong>in</strong>ess<br />
comb<strong>in</strong>ations.<br />
In addition to a loom<strong>in</strong>g deadl<strong>in</strong>e, ot<strong>he</strong>r<br />
possible potholes l<strong>in</strong>e t<strong>he</strong> path to adoption<br />
of IFRS <strong>in</strong> 2011, Tweedie warned.<br />
“It might not work if people c<strong>he</strong>at,” <strong>he</strong><br />
said. “If we don’t have good audit<strong>in</strong>g, it<br />
won’t work; if t<strong>he</strong> standards aren’t enforced<br />
by regulators … it won’t work eit<strong>he</strong>r. T<strong>he</strong><br />
regulators have got to get t<strong>he</strong>ir act toget<strong>he</strong>r.<br />
We’re try<strong>in</strong>g to put pressure on t<strong>he</strong>m. And<br />
that’s why we feel t<strong>he</strong> SEC has a major role<br />
to play <strong>in</strong> this. If t<strong>he</strong> SEC commits, it gets a<br />
seat at t<strong>he</strong> table, a seat at t<strong>he</strong> <strong>he</strong>ad of t<strong>he</strong><br />
table. It is t<strong>he</strong> world’s most powerful regulator.”<br />
Tweedie added that adoption of <strong>in</strong>ternational<br />
standards also won’t work if people<br />
keep try<strong>in</strong>g to amend t<strong>he</strong> provisions.<br />
“This is t<strong>he</strong> advice I give people w<strong>he</strong>n<br />
t<strong>he</strong>y compla<strong>in</strong> about t<strong>he</strong> f<strong>in</strong>al standards ….<br />
Between <strong>FAS</strong>B and ourselves, we’ve made<br />
a call. We’re totally <strong>in</strong>dependent, we’re not<br />
paid by organizations, [and] this is what we<br />
th<strong>in</strong>k t<strong>he</strong> answer is,” Tweedie said. “In t<strong>he</strong><br />
15<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
<strong><strong>Repo</strong>rt</strong>: <strong>FAS</strong> <strong>140</strong> <strong>Played</strong> <strong>Role</strong> <strong>in</strong> Lehman’s <strong>Repo</strong> <strong>105</strong> Account<strong>in</strong>g<br />
(Cont<strong>in</strong>ued from page 14)<br />
behaviors it had seen with regard to <strong>in</strong>terpretations<br />
of <strong>FAS</strong> <strong>140</strong>, as well as concerns<br />
over t<strong>he</strong> accuracy of certa<strong>in</strong> f<strong>in</strong>ancial statements.<br />
T<strong>he</strong> statement clarifies t<strong>he</strong> purpose of t<strong>he</strong><br />
part of <strong>FAS</strong> <strong>140</strong> that Lehman had used,<br />
say<strong>in</strong>g that it is to determ<strong>in</strong>e w<strong>he</strong>t<strong>he</strong>r a<br />
transferor and all of t<strong>he</strong> entity <strong>in</strong>cluded <strong>in</strong><br />
t<strong>he</strong> transferor’s f<strong>in</strong>ancial statements be<strong>in</strong>g<br />
presented have, <strong>in</strong>deed, surrendered control<br />
over transferred f<strong>in</strong>ancial assets.<br />
T<strong>he</strong> conditions for a transfer to be counted<br />
as a sale are that t<strong>he</strong> asset is isolated<br />
from t<strong>he</strong> transferor and t<strong>he</strong> transferor’s<br />
creditors, t<strong>he</strong> transferee can pledge or<br />
exchange t<strong>he</strong> assets it received with no conditions,<br />
and t<strong>he</strong> transferor made no agreements<br />
that both obligate and entitle it to<br />
repurchase or redeem t<strong>he</strong> assets or an<br />
agreement to have t<strong>he</strong> transferee unilaterally<br />
cause t<strong>he</strong> holder to return specific assets.<br />
Rat<strong>he</strong>r than establish<strong>in</strong>g new conditions,<br />
<strong>FAS</strong> 166 clarifies t<strong>he</strong> already-exist<strong>in</strong>g ones.<br />
Among t<strong>he</strong> clarifications, <strong>FAS</strong> 166 specifies<br />
that t<strong>he</strong> rule is applicable only to f<strong>in</strong>ancial<br />
assets; it says that assets must also be<br />
isolated from consolidated affiliates; “transferees”<br />
are expanded to also <strong>in</strong>clude thirdparty<br />
holders, if t<strong>he</strong> transferee is an entity<br />
whose sole purpose is to engage <strong>in</strong> securiti-<br />
Tweedie <strong>in</strong> N.Y. Makes Hard Sell for IFRS<br />
(Cont<strong>in</strong>ued from page 6)<br />
meantime, don’t start fiddl<strong>in</strong>g with it. If<br />
you do, we’ll never have global standards.<br />
“If it blows apart at this stage, it will<br />
take about 20 years to put it back toget<strong>he</strong>r<br />
aga<strong>in</strong>,” <strong>he</strong> said.<br />
Tweedie said that t<strong>he</strong>re will be postadoption<br />
analysis to ensure that t<strong>he</strong> goal of<br />
a “s<strong>in</strong>gle set of high-quality global account<strong>in</strong>g<br />
standards” is truly be<strong>in</strong>g met by t<strong>he</strong> f<strong>in</strong>is<strong>he</strong>d<br />
IFRS product.<br />
“We’ve agreed that two to three years<br />
after t<strong>he</strong> standard becomes effective, we’re<br />
go<strong>in</strong>g to have a review,” <strong>he</strong> said.<br />
T<strong>he</strong> morn<strong>in</strong>g forum was <strong>he</strong>ld at t<strong>he</strong><br />
Japan Society <strong>in</strong> Midtown Manhattan, and<br />
Tweedie noted that <strong>in</strong> contrast to t<strong>he</strong> U.S.—<br />
which won’t make a f<strong>in</strong>al decision on IFRS<br />
until 2011—<strong>in</strong> Japan, “t<strong>he</strong> decision is<br />
made,” along with 117 ot<strong>he</strong>r countries that<br />
are said to be mov<strong>in</strong>g more quickly to<br />
adoption than t<strong>he</strong> U.S, Tweedie said.<br />
“And more are com<strong>in</strong>g,” <strong>he</strong> said. “Next<br />
year is t<strong>he</strong> big year for Asia: [South] Korea<br />
changes <strong>in</strong> March, India <strong>in</strong> June [and]<br />
Japan has agreed to converge to t<strong>he</strong>se standards<br />
by t<strong>he</strong> end of June.”<br />
Why Change at All?<br />
Tweedie cont<strong>in</strong>ued his pitch for IFRS by<br />
list<strong>in</strong>g several benefits <strong>he</strong> said will come<br />
from t<strong>he</strong> f<strong>in</strong>al adoption of a s<strong>in</strong>gle set of<br />
global account<strong>in</strong>g standards:<br />
• Increased comparability, which will<br />
reduce t<strong>he</strong> cost of analysis;<br />
• More effective regulation <strong>in</strong>ternationally,<br />
with active enforcement, to reduce opportunities<br />
for f<strong>in</strong>ancial manipulation;<br />
• Reduced compliance costs, lead<strong>in</strong>g to<br />
greater returns for shareholders;<br />
• Reform and transparency for <strong>in</strong>vestors<br />
w<strong>he</strong>re needed and w<strong>he</strong>re national efforts<br />
have stalled;<br />
• It “sets up a race to t<strong>he</strong> top, not t<strong>he</strong> bottom”;<br />
• Reduces opportunities for regulatory<br />
arbitrage and would serve as a barrier to<br />
political <strong>in</strong>tervention <strong>in</strong> standards-sett<strong>in</strong>g<br />
across t<strong>he</strong> board; and<br />
• With SEC <strong>in</strong>volvement, t<strong>he</strong>re would be<br />
zation or asset-backed f<strong>in</strong>anc<strong>in</strong>g activities<br />
and that entity is constra<strong>in</strong>ed from pledg<strong>in</strong>g<br />
or exchang<strong>in</strong>g t<strong>he</strong> assets it receives; and<br />
that effective control has been given up.<br />
T<strong>he</strong> new standard goes <strong>in</strong>to a few examples<br />
of what it means to ma<strong>in</strong>ta<strong>in</strong> control.<br />
T<strong>he</strong>se <strong>in</strong>clude keep<strong>in</strong>g an agreement that<br />
both entitles and obligates t<strong>he</strong> transferor to<br />
repurchase or redeem t<strong>he</strong> f<strong>in</strong>ancial assets<br />
before t<strong>he</strong>ir maturity, an agreement giv<strong>in</strong>g<br />
t<strong>he</strong> transferor t<strong>he</strong> unilateral ability to cause<br />
t<strong>he</strong> holder to return specific f<strong>in</strong>ancial assets<br />
(different from hav<strong>in</strong>g t<strong>he</strong> transferee unilaterally<br />
do so), and hav<strong>in</strong>g an agreement that<br />
permits t<strong>he</strong> transferee to require t<strong>he</strong> trans-<br />
greater U.S <strong>in</strong>fluence of <strong>in</strong>ternational f<strong>in</strong>ancial<br />
report<strong>in</strong>g practices.<br />
Tweedie said that it would also be <strong>in</strong>congruous<br />
for t<strong>he</strong> U.S. to cont<strong>in</strong>ue us<strong>in</strong>g<br />
Generally Accepted Account<strong>in</strong>g Pr<strong>in</strong>ciples<br />
w<strong>he</strong>n everyone else is gett<strong>in</strong>g on t<strong>he</strong> IFRS<br />
bandwagon.<br />
“If major U.S. companies use IFRS,<br />
feror to repurchase t<strong>he</strong> transferred f<strong>in</strong>ancial<br />
assets at a price that is so favorable to t<strong>he</strong><br />
transferee that it is probable that t<strong>he</strong> transferee<br />
will require t<strong>he</strong> transferor to repurchase<br />
t<strong>he</strong>m.<br />
<strong>FAS</strong> 166 does ma<strong>in</strong>ta<strong>in</strong> t<strong>he</strong> 102 percent<br />
overcollateralization feature of t<strong>he</strong> orig<strong>in</strong>al<br />
<strong>FAS</strong> <strong>140</strong>, though it does add that “judgment<br />
should be applied based on t<strong>he</strong> facts and<br />
circumstances.”<br />
cgaetano@nysscpa.org<br />
Japan uses it, Europe uses it, why are you<br />
us<strong>in</strong>g national standards?” <strong>he</strong> asked.<br />
T<strong>he</strong>re was a time w<strong>he</strong>n it made sense to<br />
stick with national account<strong>in</strong>g rules, but not<br />
today, Tweedie said. Initially, “account<strong>in</strong>g<br />
standards should [have been] national<br />
because that’s w<strong>he</strong>re you get t<strong>he</strong> money<br />
from,” Tweedie said. “You just set your<br />
Anti-Fraud/Anti-Money Launder<strong>in</strong>g<br />
Conference<br />
T<strong>he</strong> Fraud/Money Launder<strong>in</strong>g Interface:<br />
Challenges and Opportunities for CPAs and T<strong>he</strong>ir Clients<br />
Wednesday, June 9, 2010<br />
8:30 a.m.–5:00 p.m.<br />
New York Marriott Marquis at Times Square<br />
1535 Broadway, at 45th Street<br />
New York, NY 10036<br />
Conference Highlights:<br />
• Keynote Speaker: S<strong>he</strong>ila Gowan, Trustee of t<strong>he</strong> Marc Dreier Case<br />
• Money Launder<strong>in</strong>g Crimes and Consequences for CPAs<br />
• Hear from a Former Federal Judge on Expert <strong><strong>Repo</strong>rt</strong>s and Testimony<br />
• Understand FINRA’s Expectations for Independent Tests of AML Programs<br />
• Receive a F<strong>in</strong>CEN Update on Fraud and Money Launder<strong>in</strong>g<br />
• Get t<strong>he</strong> Latest Update on t<strong>he</strong> Federal False Claims Act, a.k.a. T<strong>he</strong> Whistleblower Law<br />
…And Much More!<br />
Course Code: 25175111 (In-Person);<br />
25175112 (Live Webcast)<br />
Field of Study: Audit<strong>in</strong>g<br />
CPE Credit Hours: 8<br />
Fees: Members $385; Nonmembers $485<br />
Save t<strong>he</strong> Date!<br />
To register, please visit www.nysscpa.org, or call 800-537-3635.<br />
Save on this and ot<strong>he</strong>r FAE conferences and sem<strong>in</strong>ars with FAE’s Discount<br />
Programs! See t<strong>he</strong> ad on page 9 for more details.<br />
(Cont<strong>in</strong>ues on page 21)<br />
This new conference is primarily designed for CPAs,<br />
chief compliance officers, <strong>in</strong>ternal and external<br />
auditors, attorneys, corporate f<strong>in</strong>ancial officers,<br />
controllers, accountants, and security directors who have<br />
a stake <strong>in</strong> prevent<strong>in</strong>g, deterr<strong>in</strong>g, or detect<strong>in</strong>g fraud and<br />
money launder<strong>in</strong>g at t<strong>he</strong>ir client’s or <strong>in</strong> t<strong>he</strong>ir own workplace,<br />
as well as money managers, <strong>in</strong>vestment advisors,<br />
broker/dealers, f<strong>in</strong>ancial pr<strong>in</strong>cipals, f<strong>in</strong>ancial officers, and<br />
f<strong>in</strong>ancial planners with Bank Secrecy Act responsibilities.<br />
Now Available<br />
via Live Webcast<br />
Can’t attend t<strong>he</strong> event <strong>in</strong> person? Experience t<strong>he</strong><br />
same great speakers and topics directly from your PC.<br />
Visit www.nysscpa.org/e-cpe for more details.<br />
foundation for account<strong>in</strong>g<br />
FAE education
Buffalo<br />
Christie Adamczak<br />
Janelle Breitnauer<br />
James M. McKenna<br />
Kyle J. Rookey<br />
Donna E. Schirch<strong>in</strong>g<br />
Ashley Snider<br />
Jeanne Spauld<strong>in</strong>g<br />
Manhattan/Bronx<br />
Marv<strong>in</strong> Agyemang<br />
Shakeel Amir<br />
James Argiriou<br />
Sant<strong>in</strong>o Asaro<br />
Elizabeth Barrett<br />
Adam Baruch<br />
Thomas Botero<br />
C<strong>he</strong>ryl R. Callender<br />
Jie C<strong>he</strong>n<br />
T<strong>he</strong>odore C<strong>he</strong>ung<br />
Robert F. Corrales<br />
Magdalena M. Czerniawski<br />
Abraham J. Daniel<br />
Xixi Dong<br />
Victor A. DuBois<br />
Phillip Esaian<br />
Shanon S. Fable<br />
Scott Ferrara<br />
As<strong>he</strong>r Friedman<br />
Michael A. Garcia<br />
Su Guan<br />
Kev<strong>in</strong> J. Hanratty<br />
Brittni L. Hausler<br />
James P. Johns<br />
Ewart L. Johnson<br />
Pallav Kapoor<br />
Kwok-Pui Lau<br />
Chia-Hs<strong>in</strong>g Lee<br />
Daniel H. Lee<br />
Benjam<strong>in</strong> M. Lehrhoff<br />
Cat<strong>he</strong>r<strong>in</strong>e Leonard<br />
Iris Lo Po Ki<br />
W<strong>in</strong>nie Y. Loo<br />
Jeffrey P. Mastronardi<br />
Anthony C. Mennella<br />
Georg<strong>in</strong>a M. Nichols<br />
Shum<strong>in</strong>g Ou<br />
Patrick Payano<br />
16<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
Louis P<strong>in</strong>to<br />
Evan Piontnica<br />
C<strong>in</strong>dy P. Pollack<br />
Darya Prokopenko<br />
Tamiko Pyronneau<br />
Matt<strong>he</strong>w Rubock<br />
Roman Shneyder<br />
Michael S<strong>in</strong>ca<br />
Jacob J. Sperry<br />
John B. Talbott<br />
Peter D. Vicario<br />
Joseph<strong>in</strong>e M. Viglione<br />
Claud<strong>in</strong>e Viselli<br />
Robert J. Wisniewski<br />
L<strong>in</strong>g P. Wong<br />
Step<strong>he</strong>n K. Wong<br />
Andy W. Yan<br />
Yi Yang<br />
Jacob Yavil<br />
Mid Hudson<br />
Wendy A. Freyhagen<br />
Jenna Pelella<br />
Nassau<br />
Daniela Barbu<br />
Yashima Bhatia<br />
Joseph J. Bittner<br />
Step<strong>he</strong>n R. Brown<br />
Deanna Far<strong>in</strong>a<br />
Anita Jackson<br />
Jacquel<strong>in</strong>e Joseph<br />
Jason Lisogorsky<br />
Frederick C. Mart<strong>in</strong><br />
Nicole Paone<br />
Isabel Rahmani<br />
Alexis Roth<br />
Irv<strong>in</strong>g Schoenfeld<br />
Matt<strong>he</strong>w C. Schramm<br />
Robert Schwartz<br />
Omar J. Tejeiro<br />
Evan B. Whitacare III<br />
Nort<strong>he</strong>ast<br />
Ryan S. McEvoy<br />
Claire E. Neumann<br />
Queens/Brooklyn<br />
Adriana Agost<strong>in</strong>elli<br />
Terrence Ahoua<br />
Lilia E. Andia<br />
New Members<br />
Welcome New NYSSCPA Members<br />
New members who jo<strong>in</strong>ed t<strong>he</strong> NYSSCPA between Feb. 16 and April 1, 2010:<br />
Olayiwola Babalola<br />
Yelena Babenko<br />
Elibert Cabral<br />
Giancarlo Castano-Jimenez<br />
Marlene A. Cowan-Dockery<br />
Stela Dzhavarov<br />
Michael Eisenberg<br />
Rabiya Hass<br />
T<strong>in</strong>a Jiang<br />
Liyuan Liu<br />
Richard Luttman<br />
Verna Mackmedley<br />
Eleonora Mavas<strong>he</strong>v<br />
Anna Maykova<br />
Robert Mohs<br />
Nazia Ni<strong>he</strong>r<br />
Ivan Olkhovenko<br />
Natalia Oudalova<br />
Dave Persaud<br />
Sapna Pillai<br />
Mahbub Rabbani<br />
Fangyan Shi<br />
Abdrahman Tabbara<br />
Demetria Tsialas<br />
Maria L. Vona<br />
Franz M. Walter<br />
T<strong>in</strong>gt<strong>in</strong>g Wang<br />
Xiaokai Wang<br />
Hon San Wu<br />
XiaoFen Wu<br />
Roc<strong>he</strong>ster<br />
Ellen T. DeGregorio<br />
Kelly Emborsky<br />
Daniel S. Hawthorne<br />
Olufemi Olaode<br />
Lee Plummer<br />
Rockland<br />
Tamara Kopko<br />
Staten Island<br />
David Gonzalez<br />
Mario Lee Gonzalez<br />
Step<strong>he</strong>n Massimillo<br />
John Paol<strong>in</strong>o<br />
Yuriy Y. Shirokikh<br />
Edmond Sukalic<br />
Suffolk<br />
David Albrecht<br />
Edw<strong>in</strong> Casanova<br />
Jennifer M. DeMaula<br />
Mark DiMichael<br />
Odalys Franco<br />
Nicholas Greene<br />
James C. Johnis<br />
Arber Kokoneshi<br />
Nicholas G. Lazzaruolo<br />
Thomas Melody III<br />
Joanna Pasko<br />
Andrew Taffurelli<br />
Gregory Thompson<br />
Amy Tillotson<br />
T<strong>in</strong>g-Hwa Tong<br />
Juan Velez<br />
Syracuse<br />
Rob D. Bloom<br />
L<strong>in</strong>dsay M. Cronkright<br />
Lena D’Addio<br />
Timothy J. Hammond<br />
Nicholas L. Kelley<br />
Michael Lilienthal<br />
Susan M. Padrao<br />
Robert S. Smith<br />
Piper N. Titus<br />
Westc<strong>he</strong>ster<br />
Matt<strong>he</strong>w D. Callahan<br />
Cassandra Campbell<br />
Edward P. Galati<br />
Fabio Guglielmi<br />
Ahad B. Khan<br />
Elzbieta Lechowska<br />
Out-of-State<br />
Monique A. Bachman<br />
Salvatore G. Cantarella<br />
Karen R. Conron<br />
Cecelia Kash-Valenti<br />
Do Hyun Kim<br />
Michi Miller<br />
Anthony Moschitta<br />
Tigran Muradyan<br />
Barry J. P<strong>in</strong>cus<br />
Sylvia Quenum<br />
Christ<strong>in</strong>a M. Ribaudo<br />
Robert L. We<strong>in</strong>ste<strong>in</strong>
More Tax Questions, More<br />
Answers from Chapter Volunteers<br />
By CHRIS GAETANO and<br />
CARA PATTERSON<br />
At least once a year, almost everyone<br />
needs to deal with t<strong>he</strong> labyr<strong>in</strong>th<strong>in</strong>e and<br />
often baffl<strong>in</strong>g world of t<strong>he</strong> U.S. tax<br />
code. Some tax issues can be confus<strong>in</strong>g<br />
even for those with a CPA license, but t<strong>he</strong>se<br />
professionals are t<strong>he</strong> best equipped to handle<br />
t<strong>he</strong> questions that result.<br />
With this <strong>in</strong> m<strong>in</strong>d, NYSSCPA chapters<br />
around t<strong>he</strong> state each worked with an area<br />
publication to provide t<strong>he</strong> technical expertise<br />
for reader tax call-<strong>in</strong> panels, dur<strong>in</strong>g which<br />
chapter members volunteered with local<br />
media outlets to answer tax questions from<br />
t<strong>he</strong> publications’ readers.<br />
This year’s volunteers agreed that t<strong>he</strong>re<br />
was great diversity <strong>in</strong> t<strong>he</strong> types of questions<br />
t<strong>he</strong>y received, which ranged from new tax<br />
credits to Social Security benefits.<br />
Most questions were simple, though<br />
t<strong>he</strong>re were some stumpers.<br />
Mid Hudson Chapter Past President<br />
Tracy Badgley, who served on t<strong>he</strong><br />
Poughkeepsie Journal’s tax panel on March<br />
24, fielded a question about stock options,<br />
which s<strong>he</strong> referred to anot<strong>he</strong>r volunteer at<br />
that panel, Robert J. Centrello III, who<br />
had more experience with clients <strong>in</strong> that<br />
<strong>in</strong>dustry. Like several ot<strong>he</strong>rs that day, t<strong>he</strong><br />
caller was prepar<strong>in</strong>g his own return and was<br />
look<strong>in</strong>g for confirmation that <strong>he</strong>’d filled it<br />
out correctly.<br />
Centrello recommended that t<strong>he</strong> caller<br />
seek t<strong>he</strong> paid assistance of a CPA for more<br />
<strong>in</strong>formation about how to treat t<strong>he</strong> complicated<br />
trades on his return.<br />
CHAPTER CONTENTS<br />
In this issue:<br />
Save T<strong>he</strong>se Dates 19<br />
Nassau 20<br />
17<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
“He should, but probably won’t [hire a<br />
CPA],” Centrello figured.<br />
Badgley also fielded a call from a taxpayer<br />
who wondered if <strong>he</strong> qualified for a<br />
home office deduction. A home office<br />
would have to be t<strong>he</strong> owner’s pr<strong>in</strong>cipal<br />
place of bus<strong>in</strong>ess and meet ot<strong>he</strong>r strict<br />
requirements <strong>in</strong> order to qualify for a<br />
deduction, Badgley told t<strong>he</strong> caller, who<br />
may have been hop<strong>in</strong>g for more promis<strong>in</strong>g<br />
advice. S<strong>he</strong> had better news for anot<strong>he</strong>r<br />
caller, w<strong>he</strong>n s<strong>he</strong> affirmed for a condo<br />
owner who was rent<strong>in</strong>g out t<strong>he</strong> space that<br />
t<strong>he</strong> condo fees were deductible.<br />
One of t<strong>he</strong> Buffalo volunteers, Tim<br />
Hoelsc<strong>he</strong>r, became an unexpected matrimonial<br />
referee as <strong>he</strong> addressed t<strong>he</strong> concerns<br />
of a divorc<strong>in</strong>g couple over t<strong>he</strong> phone.<br />
Syracuse Chapter member Donna<br />
Ascenzi also reported that s<strong>he</strong> found <strong>he</strong>rself<br />
<strong>in</strong> a rat<strong>he</strong>r <strong>he</strong>ated discussion with a caller<br />
over t<strong>he</strong> IRS.<br />
“He was gett<strong>in</strong>g <strong>in</strong>to a political debate<br />
with me about t<strong>he</strong> IRS that got a little nasty<br />
and I had to tactfully cut him off at one<br />
po<strong>in</strong>t,” Ascenzi said. “[As] one of t<strong>he</strong> ot<strong>he</strong>r<br />
CPAs said, ‘Don’t shoot t<strong>he</strong> messenger.’”<br />
Ascenzi, serv<strong>in</strong>g on t<strong>he</strong> panel at t<strong>he</strong><br />
Syracuse Post-Standard, noted that t<strong>he</strong>re<br />
were also some people who were obviously<br />
do<strong>in</strong>g t<strong>he</strong>ir tax returns over t<strong>he</strong> phone,<br />
which s<strong>he</strong> called a “little annoy<strong>in</strong>g.”<br />
“You could tell t<strong>he</strong>y were do<strong>in</strong>g t<strong>he</strong>ir tax<br />
Husband-and-wife team Dennis and Jane Jewell team up to answer readers’ questions at<br />
t<strong>he</strong> Buffalo News tax panel on March 18.<br />
returns and wanted to get a CPA to do it for<br />
t<strong>he</strong>m but didn’t want to pay for it,” s<strong>he</strong><br />
said.<br />
New Tax Provisions Dom<strong>in</strong>ate<br />
Hoelsc<strong>he</strong>r, who took part <strong>in</strong> t<strong>he</strong> March<br />
18 panel at t<strong>he</strong> Buffalo News, said that a lot<br />
of t<strong>he</strong> calls <strong>he</strong> fielded had a common<br />
thread, <strong>in</strong> that t<strong>he</strong>y centered around new tax<br />
provisions that emerged as part of t<strong>he</strong> economic<br />
stimulus, <strong>in</strong>clud<strong>in</strong>g questions on t<strong>he</strong><br />
Mak<strong>in</strong>g Work Pay credit, t<strong>he</strong> American<br />
NYSSCPA members Christ<strong>in</strong>e A. Learman and Bruce Zgoda field tax questions at t<strong>he</strong><br />
Buffalo News tax panel on March 18.<br />
Opportunity Credit, various energy credits<br />
and how Social Security payments should<br />
be taxed. Hoelsc<strong>he</strong>r said that many of those<br />
who called <strong>in</strong> found out that t<strong>he</strong>y were gett<strong>in</strong>g<br />
more money back from t<strong>he</strong> government<br />
than expected due to energy credits.<br />
“It felt good to be able to <strong>he</strong>lp people<br />
because we did a service and <strong>he</strong>lped t<strong>he</strong>m<br />
figure out t<strong>he</strong>se th<strong>in</strong>gs,” <strong>he</strong> said.<br />
Ascenzi said s<strong>he</strong> also received a wide<br />
variety of questions dur<strong>in</strong>g t<strong>he</strong> Syracuse<br />
Chapter’s panel on March 22, with many<br />
wonder<strong>in</strong>g how t<strong>he</strong> estate tax would specifically<br />
affect t<strong>he</strong>m and w<strong>he</strong>t<strong>he</strong>r t<strong>he</strong>y should<br />
start redraw<strong>in</strong>g t<strong>he</strong>ir wills. Aga<strong>in</strong>, Social<br />
Security also figured prom<strong>in</strong>ently.<br />
T<strong>he</strong> Syracuse Chapter benefited from<br />
hav<strong>in</strong>g its own research team available: two<br />
college students whom Ascenzi—who is<br />
also an account<strong>in</strong>g professor—brought with<br />
<strong>he</strong>r. T<strong>he</strong> students, s<strong>he</strong> said, got an opportunity<br />
to <strong>he</strong>ar t<strong>he</strong> k<strong>in</strong>ds of th<strong>in</strong>gs that a CPA<br />
will need to address <strong>in</strong> everyday practice.<br />
“It was a wonderful experience for t<strong>he</strong><br />
students and gave t<strong>he</strong>m an idea of what<br />
k<strong>in</strong>ds of questions were asked and how to<br />
go about answer<strong>in</strong>g t<strong>he</strong>m,” said Ascenzi. At<br />
t<strong>he</strong> same time, t<strong>he</strong> volunteers could turn to<br />
t<strong>he</strong> students to look th<strong>in</strong>gs up as t<strong>he</strong>y spoke<br />
to callers.<br />
T<strong>he</strong>re was a mix of bus<strong>in</strong>ess and personal tax<br />
questions at t<strong>he</strong> panel <strong>he</strong>ld at t<strong>he</strong> Westc<strong>he</strong>ster<br />
County Bus<strong>in</strong>ess Journal on Feb. 20, accord<strong>in</strong>g<br />
to Robert W<strong>in</strong>ton, who organized it.<br />
This was both t<strong>he</strong> first year that W<strong>in</strong>ton<br />
organized t<strong>he</strong> Westc<strong>he</strong>ster event and t<strong>he</strong><br />
first year it was hosted by t<strong>he</strong> county’s<br />
Bus<strong>in</strong>ess Journal.<br />
“A lot of people volunteered, which I<br />
was really happy with, and next year we’ll<br />
see if we can ratc<strong>he</strong>t up t<strong>he</strong> advertis<strong>in</strong>g of it<br />
with t<strong>he</strong> Bus<strong>in</strong>ess Journal and see if we<br />
(Cont<strong>in</strong>ues on page 19)
BUFFALO<br />
Educator’s Night with Student Awards and CPE Session<br />
W<strong>he</strong>n: April 27, 3 p.m. registration, 6 p.m. d<strong>in</strong>ner<br />
W<strong>he</strong>re: Salvatore’s Italian Gardens (6461 Transit Road, Depew)<br />
Course Code: 29010010<br />
Contact: Sandy August<strong>in</strong>e (saugust@hilbert.edu)<br />
MANHATTAN/BRONX<br />
Scotch Tast<strong>in</strong>g and CPE Session<br />
W<strong>he</strong>n: April 21, 6–8:30 p.m.<br />
W<strong>he</strong>re: McGladrey and Pullen (1185 Avenue of t<strong>he</strong> Americans, between 46th and<br />
47th Streets)<br />
Cost: $40 per person<br />
Contact: Pat Gillespie (212-372-1661) or Gene S<strong>he</strong>ar (212-372-1202)<br />
2010–2011 Election Meet<strong>in</strong>g and New York Economic Recovery CPE Session<br />
W<strong>he</strong>n: April 29, 6–8 p.m. (c<strong>he</strong>ck-<strong>in</strong> beg<strong>in</strong>s at 5 p.m.). Preregistration is required.<br />
W<strong>he</strong>re: Citigroup Center (601 Lex<strong>in</strong>gton Ave., 14th Floor, between 53rd and 54th<br />
Streets). Refreshments will be served.<br />
Cost: Free for members; $5 nonmembers<br />
Course Code: 29150012<br />
Personal Core Brand<strong>in</strong>g<br />
W<strong>he</strong>n: May 4, 6–8 p.m. (5:30 p.m. registration)<br />
W<strong>he</strong>re: FAE Conference Center (3 Park Avenue, 19th floor, New York City)<br />
Cost: $10 members; $15 nonmembers<br />
Course Code: 45150010<br />
A Game of Sport and Skill: a YCC Network<strong>in</strong>g Event<br />
W<strong>he</strong>n: May 11, 6–8 p.m.<br />
W<strong>he</strong>re: T<strong>he</strong> Mean Fiddler (266 West 47th Street)<br />
Cost: $25<br />
Contact: D<strong>in</strong>a Esposito (desposito@bdo.com)<br />
2010 IFRS & U.S. GAAP Update<br />
W<strong>he</strong>n: June 16, 6–8 p.m. (5:30 registration)<br />
W<strong>he</strong>re: New York Life Insurance Company (44 East 27th Street, between Park<br />
and Madison)<br />
Cost: $15 members; $25 nonmembers<br />
Course code: 29150101<br />
CPE Credit: 2 (account<strong>in</strong>g)<br />
MID HUDSON<br />
Post-Busy Season Mixer<br />
W<strong>he</strong>n: April 22, 5:30 p.m.<br />
W<strong>he</strong>re: Torc<strong>he</strong>s on t<strong>he</strong> Hudson (120 Front Street, Newburgh)<br />
Contact: Rebecca Hasbrouck (845-567-9000 or rhasbrouck@vddw.com)<br />
NASSAU<br />
Nassau Chapter Full-Day Estate Plann<strong>in</strong>g Conference<br />
W<strong>he</strong>n: May 1, 9 a.m.–5:15 p.m. (c<strong>he</strong>ck-<strong>in</strong> at 8:30 a.m.)<br />
W<strong>he</strong>re: Melville Marriott (1350 Old Walt Whitman Road, Melville)<br />
Cost: $150 for members; $250 for nonmembers<br />
Course Code: 28603026<br />
57th Annual Installation D<strong>in</strong>ner/Dance<br />
W<strong>he</strong>n: May 6, 7 p.m. (RSVP by April 27)<br />
W<strong>he</strong>re: Crest Hollow Country Club (8325 Jericho Turnpike, Woodbury)<br />
Cost: $80 per person; $160 per couple; $800 for a table of 10<br />
Contact: Kirsten Dalland (kdalland@fmcocpa.com)<br />
18<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
Save T<strong>he</strong>se Dates<br />
Women’s Focus Group<br />
W<strong>he</strong>n: May 14, 12–2:30 p.m.<br />
W<strong>he</strong>re: T<strong>he</strong> Milleridge Inn (585 North Broadway, Jericho)<br />
Cost: $30<br />
Contact: Christ<strong>in</strong>e P. Hallahan (c.hallahan@pascpa.com)<br />
T<strong>he</strong> Ellen Gordon CPAs 4(a): CAUSE 9th Annual 5K Run/Walk<br />
W<strong>he</strong>n: June 13, 8 a.m. registration, 9 a.m. race<br />
W<strong>he</strong>re: Wantagh Park (East Merrick Road and Wantagh Parkway, Wantagh)<br />
Contact: Ray Floch (RFloch@edwards-topple.com)<br />
or Roy B. Massa (roymassa@yahoo.com)<br />
NORTHEAST<br />
Account<strong>in</strong>g Educators’ Conference<br />
W<strong>he</strong>n: April 9 (8:45 a.m.–5 p.m.) to April 10 (8:45 a.m.–12:45 p.m.)<br />
W<strong>he</strong>re: Holiday Inn (205 Wolf Road, Albany)<br />
Cost: $150 members; $160 nonmembers<br />
Course Code: 28604042<br />
Young CPAs After-Busy Season Celebration<br />
W<strong>he</strong>n: April 29, 5:30–7:30 p.m.<br />
W<strong>he</strong>re: Wolf 1-11 (111 Wolf Road, Albany)<br />
Contact: Jaclyn Ferrucci (jaclyn.ferrucci@ge.com) or Eric Scar<strong>in</strong>ge<br />
(escar<strong>in</strong>ge@tbccpa.com)<br />
QUEENS/BROOKLYN<br />
Account<strong>in</strong>g and Audit<strong>in</strong>g Update Conference<br />
W<strong>he</strong>n: May 19, 8 a.m.–5 p.m.<br />
W<strong>he</strong>re: St. John’s University, Queens Campus, D’Angelo Center, Rooms 416 A, B and C<br />
(8000 Utopia Parkway, Jamaica)<br />
Cost: $100 members; $125 nonmembers<br />
CPE Credit: 8 (4 Account<strong>in</strong>g, 4 Audit<strong>in</strong>g)<br />
Course Code: 28116022<br />
ROCHESTER<br />
Roc<strong>he</strong>ster World of Account<strong>in</strong>g<br />
W<strong>he</strong>re: May 14, 8 a.m.–1 p.m.<br />
W<strong>he</strong>n: HSBC Build<strong>in</strong>g (100 C<strong>he</strong>stnut Street, Roc<strong>he</strong>ster)<br />
Contact: Ken Hall (kennetha@homeproperties.com)<br />
ROCKLAND<br />
Post-Busy Season Bash/Election D<strong>in</strong>ner<br />
W<strong>he</strong>n: April 28<br />
W<strong>he</strong>re: Jade Village Restaurant (606 S. Pascack Road, C<strong>he</strong>stnut Ridge)<br />
Cost: $25 members; $35 nonmembers<br />
Contact: Shari Berk (seberkcpapc@aim.com)<br />
SUFFOLK<br />
Suffolk Chapter’s 39th Annual Golf Out<strong>in</strong>g<br />
W<strong>he</strong>n: May 10, 10 a.m. registration, 11:30 a.m. shotgun start, 5:30 p.m. d<strong>in</strong>ner<br />
W<strong>he</strong>re: Southward Ho Country Club (601 West Montauk Highway, Bay Shore)<br />
Cost: $450 golf, brunch, d<strong>in</strong>ner. $200 cocktails, d<strong>in</strong>ner only.<br />
Contact: Robert Quarte or Irene Howell (631-434-9500)<br />
(Cont<strong>in</strong>ues on page 19)
Save T<strong>he</strong>se Dates<br />
(Cont<strong>in</strong>ued from page 18)<br />
Fourth Annual Membership Event<br />
W<strong>he</strong>n: May 25, 6:30–9:30 p.m.<br />
W<strong>he</strong>re: Bayard Cutt<strong>in</strong>g Arboretum, Great River<br />
Cost: Free to members<br />
Contact: Paul Becht (PBecht@hrrllp.com)<br />
Suffolk Chapter’s 9th Annual Long Island Ducks Out<strong>in</strong>g and Picnic<br />
W<strong>he</strong>n: June 18, 5:30 p.m. picnic, 7:25 p.m. ballgame (please RSVP by May 18)<br />
W<strong>he</strong>re: Citibank Park (3 Court House Drive, Central Islip)<br />
Cost: Picnic and game ticket: $30 adults; $24 for kids 9 and under. Game ticket only: $10<br />
Contact: Melissa Portelli (mportelli@hrrllp.com)<br />
T<strong>he</strong> 15th Annual Young Professionals Golf Classic<br />
W<strong>he</strong>n: Sept. 23, 7:30 a.m.–2 p.m.<br />
W<strong>he</strong>re: Hamlet Willow Creek Golf & Country Club (1 Clubhouse Drive, Mt. S<strong>in</strong>ai)<br />
Cost: $250 per <strong>in</strong>dividual golfer<br />
WESTCHESTER<br />
Employment Issues <strong>in</strong> Labor Law CPE Session<br />
W<strong>he</strong>n: April 21, 7:45–9:15 a.m.<br />
W<strong>he</strong>re: Merrill Lynch White Pla<strong>in</strong>s (360 Hamilton Avenue, 8th Floor)<br />
Cost: Free<br />
CPE Credit: 1<br />
Contact: Jake Meyer (Jacob.Meyer@genspr<strong>in</strong>g.com) or Deborah Rub<strong>in</strong><br />
(Dbrub<strong>in</strong>@optonl<strong>in</strong>e.net)<br />
Estate, Tax and F<strong>in</strong>ancial Plann<strong>in</strong>g Conference<br />
W<strong>he</strong>n: May 10, 8:45 a.m.–5:15 p.m.<br />
W<strong>he</strong>re: Citigroup Conference Center (188 K<strong>in</strong>g Street, Armonk)<br />
Cost: $125 members; $150 nonmembers<br />
Course Code: 28611033<br />
19<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
More Tax Questions, More Answers from Chapter Volunteers<br />
(Cont<strong>in</strong>ued from page 17)<br />
could f<strong>in</strong>d ot<strong>he</strong>r ways to get callers,” <strong>he</strong> said.<br />
“It was a nice community service and everyone<br />
who volunteered was really gracious.”<br />
Overall, t<strong>he</strong> volunteers said t<strong>he</strong>y came<br />
away from t<strong>he</strong> panel feel<strong>in</strong>g good about<br />
us<strong>in</strong>g t<strong>he</strong> knowledge t<strong>he</strong>y had to <strong>he</strong>lp out<br />
t<strong>he</strong> public.<br />
“I th<strong>in</strong>k it’s great exposure for t<strong>he</strong><br />
Society and I th<strong>in</strong>k it’s nice to be able to<br />
<strong>he</strong>lp out some of t<strong>he</strong>se people who are<br />
do<strong>in</strong>g t<strong>he</strong>ir tax returns t<strong>he</strong>mselves and<br />
maybe are stuck on a po<strong>in</strong>t and maybe<br />
can’t afford to pay someone,” said Adam<br />
Panek, a Syracuse Chapter member who<br />
has participated <strong>in</strong> t<strong>he</strong> panels for many<br />
years. “Some of t<strong>he</strong>se senior citizens can’t<br />
pay $100, $200 for a tax return, so it’s nice<br />
to be able to <strong>he</strong>lp t<strong>he</strong>m out.”<br />
For some, it also offered a time-out from<br />
t<strong>he</strong> tumult of t<strong>he</strong> tax season. After f<strong>in</strong>ish<strong>in</strong>g<br />
t<strong>he</strong>ir morn<strong>in</strong>g shifts as volunteers at t<strong>he</strong><br />
Journal panel, several NYSSCPA Mid<br />
Hudson Chapter members were <strong>he</strong>aded<br />
back to t<strong>he</strong>ir offices to work until 9 or 10<br />
p.m., a sc<strong>he</strong>dule t<strong>he</strong>y said t<strong>he</strong>y expected to<br />
ma<strong>in</strong>ta<strong>in</strong> through t<strong>he</strong> busy season.<br />
To illustrate t<strong>he</strong> constant pressure tax<br />
practitioners are under, participant<br />
Kathleen B. Smith described t<strong>he</strong> constant<br />
stream of calls as a “nice break from tax<br />
season.”<br />
T<strong>he</strong> follow<strong>in</strong>g members participated <strong>in</strong><br />
t<strong>he</strong> chapter tax panels:<br />
Buffalo News<br />
Peter Bellanti, Daniel Tirone, Tim<br />
Hoelsc<strong>he</strong>r, Joseph Kabac<strong>in</strong>ski, Rosemarie<br />
Steeb, Jennifer Hatc<strong>he</strong>r, Christ<strong>in</strong>e A.<br />
Learman, Todd Zgoda, Anthony Goffigan,<br />
Bruce Zgoda, Dennis Jewell, Jane Jewell<br />
Poughkeepsie Journal<br />
James Passikoff, Ira Lev<strong>in</strong>e, V<strong>in</strong>cent<br />
Pangia, Jennifer Adler, Kathleen B. Smith,<br />
Tracy Badgley, Robert Centrello, Shaun<br />
Lemister, Dana Sperry<br />
Syracuse Post-Standard<br />
Connie Chiu, Oksana D<strong>in</strong>is, Kathleen<br />
Kam<strong>in</strong>ski, Adam Panek, Shae Riley,<br />
Mark Schmidt, Donna Ascenzi, Michael<br />
Germa<strong>in</strong>, Timothy Pethybridge, V<strong>in</strong>cent<br />
Salvagni, Thomas Tartaglia, Lisa Szymanski<br />
Westc<strong>he</strong>ster Bus<strong>in</strong>ess Environment CPE Session<br />
W<strong>he</strong>n: May 19, 7:45–9:15 a.m.<br />
W<strong>he</strong>re: Merrill Lynch White Pla<strong>in</strong>s (360 Hamilton Avenue, 8th Floor)<br />
Cost: Free<br />
CPE Credit: 1<br />
Contact: Jake Meyer (Jacob.Meyer@genspr<strong>in</strong>g.com) or Deborah Rub<strong>in</strong><br />
(Dbrub<strong>in</strong>@optonl<strong>in</strong>e.net)<br />
Annual Golf Out<strong>in</strong>g<br />
W<strong>he</strong>n: June 22 (time TBA)<br />
W<strong>he</strong>re: Sa<strong>in</strong>t Andrew’s Golf Club (10 Old Jackson Avenue, Hast<strong>in</strong>gs-on-Hudson)<br />
Contact: Jeff Schwartz (jeff@stantonandleone.com)<br />
President’s D<strong>in</strong>ner<br />
W<strong>he</strong>n: May 25, 6 p.m.<br />
W<strong>he</strong>re: Willow Ridge Country Club (123 North Street, Harrison)<br />
Cost: $50<br />
Contact: Kate DeMello (KDeMello@berdonllp.com)<br />
Small Bus<strong>in</strong>ess Taxation Conference<br />
W<strong>he</strong>n: Nov. 1 (time TBA)<br />
W<strong>he</strong>re: Citigroup Conference Center (188 K<strong>in</strong>g Street, Armonk)<br />
Individual and Estate Plann<strong>in</strong>g Conference<br />
W<strong>he</strong>n: Dec. 6 (time TBA)<br />
W<strong>he</strong>re: Citigroup Conference Center (188 K<strong>in</strong>g Street, Armonk)<br />
On t<strong>he</strong> left, NYSSCPA member Kathleen B. Smith fields a call from a confused taxpayer<br />
at t<strong>he</strong> Poughkeepsie Journal tax panel on March 24, as fellow NYSSCPA member<br />
Jennifer Adler looks on.<br />
Westc<strong>he</strong>ster Bus<strong>in</strong>ess Journal<br />
William M<strong>in</strong>off, Steven Sh<strong>in</strong>der, Rodney<br />
Ertisc<strong>he</strong>k, Mark Leeds, Step<strong>he</strong>n D’Angelo,<br />
Denise Magnani, Jeffrey Gold, Barbara Bel,<br />
Susan Kozera, Felix Lopez, Spencer<br />
Barback, Les Thompson, Lisa Silvestro,<br />
Tony Khalil, Michael Moss<br />
cgaetano@nysscpa.org<br />
cpatterson@nysscpa.org
Nassau<br />
By MARK S. WARSHAVSKY<br />
Nassau Chapter President<br />
Ihope this time of t<strong>he</strong> year has been go<strong>in</strong>g<br />
smoothly for all of our chapter members.<br />
Although yet anot<strong>he</strong>r busy season is<br />
start<strong>in</strong>g to w<strong>in</strong>d down, events <strong>in</strong> t<strong>he</strong> Nassau<br />
chapter are just <strong>he</strong>at<strong>in</strong>g up. We have lots of<br />
events listed <strong>in</strong> this issue’s calendar section<br />
and w<strong>he</strong>t<strong>he</strong>r your <strong>in</strong>terests lie <strong>in</strong> taxation,<br />
audit<strong>in</strong>g, account<strong>in</strong>g, practice management<br />
or all of t<strong>he</strong> above, you’ll certa<strong>in</strong>ly f<strong>in</strong>d an<br />
event that can benefit you.<br />
With t<strong>he</strong> spr<strong>in</strong>gtime comes one of my<br />
favorite events: t<strong>he</strong> Ellen Gordon CPAs<br />
4:(a) CAUSE 9th Annual 5K Charity<br />
Run/Walk, which will be <strong>he</strong>ld on Sunday,<br />
June 13. This event is a great way to m<strong>in</strong>gle<br />
with fellow chapter members (and guests)<br />
<strong>in</strong> a casual atmosp<strong>he</strong>re.<br />
T<strong>he</strong> 57th Annual Installation D<strong>in</strong>ner/<br />
Dance will be <strong>he</strong>ld on Thursday, May 6 at<br />
t<strong>he</strong> Crest Hollow Country Club <strong>in</strong><br />
Woodbury. That night, Mark Me<strong>in</strong>berg<br />
20<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
Nassau Chapter Plann<strong>in</strong>g a Busy Spr<strong>in</strong>g<br />
will be assum<strong>in</strong>g t<strong>he</strong> position as president<br />
of our chapter. Mark is both capable and<br />
enthusiastic and I am certa<strong>in</strong> <strong>he</strong> will serve<br />
our chapter well. Besides Mark, I wish to<br />
congratulate all of our new officers and<br />
directors as t<strong>he</strong>y assume t<strong>he</strong>ir respective<br />
positions. My s<strong>in</strong>cerest thanks goes out to<br />
t<strong>he</strong> current roster of chapter leaders<br />
who have volunteered t<strong>he</strong>ir time<br />
to make this past year a success.<br />
I am proud to have<br />
served alongside such wonderful<br />
people. Thank you,<br />
Mark Me<strong>in</strong>berg, Craig<br />
Morris, Ronald F<strong>in</strong>kelste<strong>in</strong>,<br />
Lisa Haynie, Howard F<strong>in</strong>e, Jack<br />
Angel, Noelle Geiger, Richard Zerah,<br />
Lynne Fuentes, John Pellitteri, Michael<br />
Ga<strong>in</strong>es and Scott Sanders.<br />
I would be totally remiss if I didn’t also<br />
thank each and every person who contributed<br />
towards gett<strong>in</strong>g our newsletter publis<strong>he</strong>d.<br />
We pr<strong>in</strong>t seven a year, each br<strong>in</strong>g<strong>in</strong>g<br />
with it a stressful deadl<strong>in</strong>e and many ot<strong>he</strong>r<br />
logistical challenges. T<strong>he</strong> two chairs of t<strong>he</strong><br />
Newsletter Committee are Mark Me<strong>in</strong>berg<br />
and Lynne Fuentes; however I realize and<br />
appreciate t<strong>he</strong> many ot<strong>he</strong>rs who <strong>he</strong>lp get<br />
our newsletter to pr<strong>in</strong>t.<br />
I’d also like to thank everyone who<br />
attended t<strong>he</strong> Town Hall Meet<strong>in</strong>g on Jan. 7.<br />
T<strong>he</strong> event was <strong>he</strong>ld at t<strong>he</strong> Chateau<br />
Briand <strong>in</strong> Carle Place. T<strong>he</strong><br />
attendees, number<strong>in</strong>g well<br />
<strong>in</strong> excess of 300, got an<br />
opportunity to <strong>he</strong>ar about<br />
t<strong>he</strong> current state of t<strong>he</strong><br />
NYSSCPA and our <strong>in</strong>dustry.<br />
We also benefited from<br />
an enlighten<strong>in</strong>g CPE session on<br />
ethics presented by NYSSCPA President<br />
David J. Moynihan.<br />
March, April and May are t<strong>he</strong> conclud<strong>in</strong>g<br />
three months <strong>in</strong> our chapter’s fiscal year. In<br />
May and June, each committee holds organizational<br />
meet<strong>in</strong>gs. T<strong>he</strong>se meet<strong>in</strong>gs are<br />
very important because t<strong>he</strong>y <strong>he</strong>lp t<strong>he</strong> committee<br />
chairs <strong>in</strong> select<strong>in</strong>g timely and relevant<br />
Nassau First to Beg<strong>in</strong> Statewide Chapter Membership Push<br />
By CHRIS GAETANO<br />
Trusted Professional Staff<br />
T<strong>he</strong> NYSSCPA Nassau Chapter, hop<strong>in</strong>g<br />
to <strong>in</strong>crease its numbers and offer t<strong>he</strong><br />
benefits of Society membership to more<br />
Long Island CPAs, has begun a new membership<br />
drive that its organizers say, if successful,<br />
could be used as a model for ot<strong>he</strong>r<br />
Society chapters.<br />
Nassau Chapter Membership Committee<br />
cochair John Pellitari, one of t<strong>he</strong> membership<br />
drive organizers, said that t<strong>he</strong> chapter<br />
noticed that events were be<strong>in</strong>g attended by<br />
mostly t<strong>he</strong> same people each time, with few<br />
new ones com<strong>in</strong>g <strong>in</strong>.<br />
“We saw, for whatever reason, enrollment<br />
<strong>in</strong> t<strong>he</strong> chapter wasn’t what we thought<br />
it should be and we wanted to re<strong>in</strong>vigorate<br />
t<strong>he</strong> chapter, draw<strong>in</strong>g not only members that<br />
used to be part of t<strong>he</strong> organization, br<strong>in</strong>g<strong>in</strong>g<br />
t<strong>he</strong>m back,” Pellitari said, but add<strong>in</strong>g “new<br />
blood” as well.<br />
Lisa Haynie, t<strong>he</strong> ot<strong>he</strong>r membership<br />
cochair, said that t<strong>he</strong> chapter’s latest effort<br />
<strong>in</strong>volves actively seek<strong>in</strong>g out CPAs <strong>in</strong> t<strong>he</strong>ir<br />
area and show<strong>in</strong>g t<strong>he</strong> benefits of NYSSCPA<br />
participation that s<strong>he</strong> and Pellitari have<br />
prospered from throughout t<strong>he</strong>ir careers.<br />
“He and I have both had so much positive<br />
experience of be<strong>in</strong>g part of t<strong>he</strong> NYSSCPA<br />
that we would be remiss to not share that<br />
with ot<strong>he</strong>r people and not get more <strong>in</strong>volved,”<br />
Haynie said.<br />
Chapter member outreach is already<br />
under way. Membership Committee members<br />
will beg<strong>in</strong> contact<strong>in</strong>g area CPAs who<br />
have previously attended chapter events and<br />
give an appeal specifically tailored to t<strong>he</strong><br />
area of t<strong>he</strong> profession <strong>in</strong> which t<strong>he</strong> potential<br />
member works. This appeal will be <strong>he</strong>lped<br />
along by members of a newly formed<br />
Nassau Chapter Mentorship Committee, a<br />
group that was organized to complement<br />
t<strong>he</strong> chapter’s recruitment efforts.<br />
“Instead of wait<strong>in</strong>g for t<strong>he</strong>m to come to<br />
us, we’re sort of com<strong>in</strong>g to t<strong>he</strong>m,” Haynie<br />
said.<br />
T<strong>he</strong> mentors, which Haynie called “t<strong>he</strong><br />
first l<strong>in</strong>e of <strong>in</strong>terest,” will talk with t<strong>he</strong><br />
potential members about how Society<br />
membership could benefit t<strong>he</strong>m, and also<br />
how t<strong>he</strong>y, as new members, could get more<br />
<strong>in</strong>volved.<br />
“If t<strong>he</strong>y have an aff<strong>in</strong>ity for a particular<br />
area, w<strong>he</strong>t<strong>he</strong>r it be tax or audit<strong>in</strong>g, [we<br />
hope to] give t<strong>he</strong>m a portal to reach out to<br />
someone and talk to t<strong>he</strong>m about it, see what’s<br />
go<strong>in</strong>g on and how t<strong>he</strong> NYSSCPA can <strong>he</strong>lp<br />
t<strong>he</strong>se potential people w<strong>he</strong>t<strong>he</strong>r through programs<br />
or relations and work<strong>in</strong>g with colleagues<br />
and collaborat<strong>in</strong>g with events,” said<br />
Haynie.<br />
In addition to ga<strong>in</strong><strong>in</strong>g new members,<br />
Pellitari said, fact f<strong>in</strong>d<strong>in</strong>g is a mission of<br />
t<strong>he</strong> recruitment drive. He said that t<strong>he</strong> chapter<br />
would like to know how t<strong>he</strong> Society can<br />
better serve t<strong>he</strong> CPA community <strong>in</strong> t<strong>he</strong><br />
future. Pellitari noted that any bus<strong>in</strong>ess<br />
should reevaluate its bus<strong>in</strong>ess model to see<br />
what it can improve. In t<strong>he</strong> same way, <strong>he</strong><br />
said, t<strong>he</strong> chapter is look<strong>in</strong>g to create more<br />
topics for t<strong>he</strong> upcom<strong>in</strong>g year. Please try to<br />
attend one of t<strong>he</strong>se organizational meet<strong>in</strong>gs—<br />
t<strong>he</strong>y’re a great way to get <strong>in</strong>volved <strong>in</strong> t<strong>he</strong><br />
Society and get a chance to <strong>he</strong>lp your profession.<br />
Our newest committee, t<strong>he</strong> Practice<br />
Cont<strong>in</strong>uity Committee, is start<strong>in</strong>g its second<br />
year to rave reviews and we <strong>in</strong>vite our<br />
members to stop by a meet<strong>in</strong>g and see what<br />
it’s all about. If practice cont<strong>in</strong>uity isn’t<br />
your th<strong>in</strong>g, however, t<strong>he</strong> chapter has many<br />
different committees that you can jo<strong>in</strong>.<br />
We’ve made it easy for members to participate<br />
<strong>in</strong> any of t<strong>he</strong>se meet<strong>in</strong>gs. All you need<br />
to do is RSVP with t<strong>he</strong> chair and t<strong>he</strong>n show<br />
up.<br />
As always, should you have any questions<br />
or concerns, please do not <strong>he</strong>sitate to<br />
contact me.<br />
Contact Mark S. Warshavsky at<br />
mwarshavsky@gmslny.com.<br />
value for its members and use t<strong>he</strong>se ideas<br />
to move forward.<br />
“I th<strong>in</strong>k a lot of it will be fact f<strong>in</strong>d<strong>in</strong>g for<br />
us <strong>in</strong> w<strong>he</strong>re we need to improve,” Pellitari<br />
said. “W<strong>he</strong>re do we evolve as an organization?<br />
What worked 120 years ago might not<br />
be work<strong>in</strong>g anymore, so it will give us<br />
some <strong>in</strong>telligence on how to position ourselves<br />
go<strong>in</strong>g forward.” Pellitari noted that<br />
this is especially relevant now that New<br />
York’s accountancy reform law is <strong>in</strong> effect.<br />
T<strong>he</strong> Nassau Chapter is t<strong>he</strong> first to undertake<br />
this type of membership <strong>in</strong>itiative,<br />
Haynie said, not<strong>in</strong>g that as a member of t<strong>he</strong><br />
statewide Membership Committee, s<strong>he</strong> has<br />
discussed launch<strong>in</strong>g a similar <strong>in</strong>itiative with<br />
ot<strong>he</strong>r chapter leaders. T<strong>he</strong> chapter is plann<strong>in</strong>g<br />
this membership drive, Pellitari said,<br />
on a semiannual basis.<br />
cgaetano@nysscpa.org
Key<br />
GEOGRAPHIC<br />
AREA<br />
Field of Study<br />
Date<br />
Course Title<br />
Course Description<br />
Field of Study Course Code Site<br />
Developer<br />
Member Fee/Nonmember Fee<br />
ALBANY<br />
Account<strong>in</strong>g<br />
05/04<br />
Government Account<strong>in</strong>g and Audit<strong>in</strong>g Conference<br />
This conference will provide attendees with expert<br />
advice on emerg<strong>in</strong>g issues <strong>in</strong> GASB standards and<br />
s<strong>in</strong>gle audits.<br />
AC/4, AU/4 25144041 Albany Marriott<br />
Foundation for Account<strong>in</strong>g Education<br />
$345\$445<br />
05/04<br />
Government Account<strong>in</strong>g and Audit<strong>in</strong>g Conference<br />
(WEBCAST)<br />
AC/4, AU/4 25144042<br />
Foundation for Account<strong>in</strong>g Education<br />
$345\$445<br />
Audit<strong>in</strong>g<br />
05/04<br />
Government Account<strong>in</strong>g and Audit<strong>in</strong>g Conference<br />
See course list<strong>in</strong>g under Account<strong>in</strong>g.<br />
05/04<br />
Government Account<strong>in</strong>g and Audit<strong>in</strong>g Conference<br />
(WEBCAST)<br />
See course list<strong>in</strong>g under Account<strong>in</strong>g.<br />
21<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
Accord<strong>in</strong>g to New York State<br />
Regulations, courses may only be<br />
categorized as t<strong>he</strong> follow<strong>in</strong>g fields of<br />
study for CPE accreditation:<br />
Account<strong>in</strong>g AC<br />
Advisory Services AD<br />
Audit<strong>in</strong>g AU<br />
Ethics E<br />
Specialized Knowledge SK<br />
Taxation T<br />
Courses that have a concentration <strong>in</strong><br />
more than one field of study are<br />
labeled with t<strong>he</strong> quantity of credits that<br />
apply to each category.<br />
NASSAU<br />
Taxation<br />
05/01<br />
Nassau Chapter All-Day Estate and Personal<br />
F<strong>in</strong>ancial Plann<strong>in</strong>g Conference<br />
TX/8 28603026 Melville Marriott Long Island<br />
Foundation for Account<strong>in</strong>g Education<br />
$150\$250<br />
NEW YORK CITY<br />
Account<strong>in</strong>g<br />
05/06<br />
Employee Benefits Conference<br />
AC/1, AU/2, TX/5 25621011 FAE Conference Center<br />
Foundation for Account<strong>in</strong>g Education<br />
$325\$425<br />
05/06<br />
Employee Benefits Conference (WEBCAST)<br />
AC/1, AU/2, TX/5 25621012<br />
Foundation for Account<strong>in</strong>g Education<br />
$325\$425<br />
For more <strong>in</strong>formation about FAE programs, please visit www.nysscpa.org, or call 800-537-3635.<br />
Tweedie <strong>in</strong> N.Y. Makes Hard Sell for IFRS<br />
(Cont<strong>in</strong>ued from page 15)<br />
from,” Tweedie said. “You just set your<br />
own rules. But by 1975, th<strong>in</strong>gs were start<strong>in</strong>g<br />
to globalize and th<strong>in</strong>gs started to<br />
change, and gradually people felt it was a<br />
good idea to have t<strong>he</strong> same sort of standards.<br />
People actually copied each ot<strong>he</strong>rs’<br />
standards, but t<strong>he</strong>re was noth<strong>in</strong>g formal<br />
go<strong>in</strong>g on.”<br />
In today’s f<strong>in</strong>ancial account<strong>in</strong>g, “<strong>in</strong><br />
Tokyo or Toronto, we should get t<strong>he</strong> same<br />
answer,” Tweedie said. “And if we don’t,<br />
why don’t we?”<br />
That, <strong>he</strong> said, is why so many countries<br />
are now us<strong>in</strong>g IFRS.<br />
“People understand t<strong>he</strong>m,” Tweedie said.<br />
“You can’t have a s<strong>in</strong>gle market with 27<br />
different ways of account<strong>in</strong>g.”<br />
For companies, this means big sav<strong>in</strong>gs:<br />
“If people understand what you’re do<strong>in</strong>g,<br />
t<strong>he</strong> risk is less, so t<strong>he</strong> cost of capital is<br />
less.”<br />
Convergence to IFRS has been a gradual<br />
process <strong>in</strong> t<strong>he</strong> U.S., and some have made<br />
t<strong>he</strong> argument that reconciliation should just<br />
cont<strong>in</strong>ue to be used—but Tweedie said t<strong>he</strong><br />
reconciliation of U.S. GAAP to IFRS has<br />
brought with it a lot of resentment.<br />
Convergence, <strong>he</strong> said, “is not an end po<strong>in</strong>t.”<br />
“Differences will persist,” <strong>he</strong> said,<br />
“despite <strong>in</strong>tense efforts to converge, and<br />
t<strong>he</strong>re’s t<strong>he</strong> cont<strong>in</strong>ued possibility of regulatory<br />
arbitrage. Convergence without adoption<br />
entails cost of change without gett<strong>in</strong>g<br />
t<strong>he</strong> full benefit of adoption.”<br />
For April 15, 2010, through May 15, 2010<br />
AICPA Pric<strong>in</strong>g Sc<strong>he</strong>dule<br />
For AICPA-developed courses, t<strong>he</strong> follow<strong>in</strong>g pric<strong>in</strong>g sc<strong>he</strong>dule applies.<br />
8-hour course 16-hour course<br />
If you are:<br />
A member of both AICPA and NYSSCPA: $295 $465<br />
Only a member of t<strong>he</strong> NYSSCPA: $325 $525<br />
Only a member of t<strong>he</strong> AICPA: $395 $565<br />
A member of neit<strong>he</strong>r AICPA nor NYSSCPA: $425 $625<br />
For 4-hour courses, please see course description for price <strong>in</strong>formation.<br />
For details, refer to t<strong>he</strong> registration <strong>in</strong>formation on www.nysscpa.org.<br />
Please confirm exact time and location w<strong>he</strong>n register<strong>in</strong>g, as sc<strong>he</strong>dule is<br />
subject to change.<br />
Audit<strong>in</strong>g<br />
05/06<br />
Employee Benefits Conference<br />
See course list<strong>in</strong>g under Account<strong>in</strong>g.<br />
05/06<br />
Employee Benefits Conference (WEBCAST)<br />
See course list<strong>in</strong>g under Account<strong>in</strong>g.<br />
Specialized Knowledge and Applications<br />
05/11<br />
Broker/Dealer Conference<br />
SK/8 25558011 New York Marriott Marquis<br />
at Times Square<br />
Foundation for Account<strong>in</strong>g Education<br />
$375\$475<br />
05/11<br />
Broker/Dealer Conference (WEBCAST)<br />
SK/8 25558012<br />
Foundation for Account<strong>in</strong>g Education<br />
$375\$475<br />
Taxation<br />
05/04<br />
International Estate Plann<strong>in</strong>g<br />
TX/3 27411020 FAE Conference Center<br />
Foundation for Account<strong>in</strong>g Education<br />
$50\$55<br />
He said that Herz’s appo<strong>in</strong>tment to t<strong>he</strong><br />
chairmanship of t<strong>he</strong> <strong>FAS</strong>B was partly to<br />
s<strong>he</strong>p<strong>he</strong>rd convergence <strong>in</strong>to adoption.<br />
“What many people don’t remember is<br />
that Bob was one of our found<strong>in</strong>g members<br />
<strong>in</strong> t<strong>he</strong> IASB and his selection as chairman<br />
of t<strong>he</strong> <strong>FAS</strong>B was not an accident,” Tweedie<br />
said. “I th<strong>in</strong>k that was a very strong symbol<br />
that t<strong>he</strong> U.S. acknowledged … and wanted<br />
to have <strong>in</strong>put <strong>in</strong>to <strong>in</strong>ternational standards<br />
and move closer toward t<strong>he</strong>m.”<br />
T<strong>he</strong> <strong>FAS</strong>B, t<strong>he</strong> SEC and t<strong>he</strong> IASB<br />
moved through those difficult times to<br />
develop a roadmap “that t<strong>he</strong> SEC could<br />
accept,” Tweedie said.<br />
A memorandum of understand<strong>in</strong>g<br />
between t<strong>he</strong> IASB and t<strong>he</strong> <strong>FAS</strong>B was drafted<br />
05/04<br />
International Estate Plann<strong>in</strong>g (WEBCAST)<br />
TX/3 27411021<br />
Foundation for Account<strong>in</strong>g Education<br />
$50\$55<br />
05/06<br />
Employee Benefits Conference<br />
See course list<strong>in</strong>g under Account<strong>in</strong>g.<br />
05/06<br />
Employee Benefits Conference (WEBCAST)<br />
See course list<strong>in</strong>g under Account<strong>in</strong>g.<br />
WESTCHESTER<br />
Taxation<br />
05/10<br />
Westc<strong>he</strong>ster Chapter Annual Tax, Estate,<br />
and F<strong>in</strong>ancial Plann<strong>in</strong>g Conference<br />
TX/8 28611033 Citigroup Executive Plann<strong>in</strong>g Center<br />
$125\$150<br />
<strong>in</strong> 2006, t<strong>he</strong>n renewed by t<strong>he</strong> agencies <strong>in</strong><br />
November 2009.<br />
“We got a roadmap from [SEC]<br />
Chairman [Christop<strong>he</strong>r] Cox’s adm<strong>in</strong>istration,<br />
which of course was swept away by<br />
t<strong>he</strong> f<strong>in</strong>ancial crisis and also by t<strong>he</strong> new<br />
adm<strong>in</strong>istration,” Tweedie said, “but that was<br />
renewed by Mary Schapiro just a few<br />
weeks ago and we’re mov<strong>in</strong>g on, sett<strong>in</strong>g a<br />
deadl<strong>in</strong>e of June 2011 to try and f<strong>in</strong>ish this<br />
th<strong>in</strong>g.”<br />
mlajara@nysscpa.org
PROFESSIONAL OPPORTUNITIES<br />
A well known and well establis<strong>he</strong>d full<br />
service, reliable, CPA firm seeks merger,<br />
practice purchase or any viable association.<br />
We have professional space, f<strong>in</strong>ances and<br />
fantastic staff. Past transactions have resulted<br />
<strong>in</strong> 99 percent retention and full payout. We<br />
are flexible and guarantee an easy transition.<br />
Our primary goal is client satisfaction.<br />
E-mail your confidential response to<br />
Lawrence Katz, CPA, CFP PFS at<br />
LKatz@akmcpa.com.<br />
WWW.ACCOUNTING-FIRM-<br />
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212-532-5525<br />
jerry@jerrykl<strong>in</strong>gandco.com<br />
A well-establis<strong>he</strong>d full-service CPA firm<br />
seeks merger or purchase of practice. We<br />
have space, f<strong>in</strong>ances, staff and experience<br />
to assure an easy transition with high client<br />
retention and client satisfaction as t<strong>he</strong> goal.<br />
E-mail your confidential response to Lisa at<br />
lrosenberg@gsrcpa.com.<br />
22<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
CPA with construction experience wanted<br />
to work with and take over account<strong>in</strong>g<br />
practice <strong>in</strong> Bayside from retir<strong>in</strong>g accountant.<br />
SUngvary@yahoo.com.<br />
WESTERN NASSAU COUNTY CPA FIRM<br />
Establis<strong>he</strong>d 22 person firm with offices <strong>in</strong><br />
NYC and Long Island seeks to acquire or<br />
merge with retirement-m<strong>in</strong>ded practitioner<br />
and/or firm. Call partner at 516.328.3800 or<br />
212.576.1829.<br />
SPACE FOR RENT<br />
AAA PROFESSIONAL OFFICES FOR<br />
RENT, NASSAU COUNTY.<br />
1-, 2-, 3- room suites fac<strong>in</strong>g Hempstead<br />
Tpke. FREE UTILITIES. FRONT<br />
PARKING. (516) 735-6681.<br />
OFFICE SPACE AVAILABLE<br />
THROUGHOUT MANHATTAN<br />
300 square feet to 15,000 square feet.<br />
Elliot Forest, Licensed Real Estate Broker,<br />
212-447-5400.<br />
MINEOLA – CPA OFFICE SPACE<br />
16X16 AVAILABLE, 2ND FL., WIN-<br />
DOWED, RECP, TELEPHONES, UTIL,<br />
CONFR RM, STORAGE, COPIER &<br />
FAX MACHINES ALL INCL. NEAR<br />
COURT HOUSES, 495 & NORTHERN<br />
STATE. CALL TONI 516-877-1900.<br />
BEAUTIFUL ALL INCLUSIVE PRIVATE<br />
OFFICE SPACE AVAILABLE PRICES<br />
INCLUDE RENT AND ELECTRICITY<br />
BUILT TO SUIT INCLUDING WALLS<br />
AND PARTITIONS 2-50 PERSON<br />
OFFICE SPACES. UP TO 5,000SF LONG<br />
TERM LEASES AVAILABLE. CALL<br />
NIGEL 212 366 0408.<br />
Woodbury-CPA firm has 4th floor w<strong>in</strong>dowed<br />
& non-w<strong>in</strong>dowed offices available.<br />
Recp, Telephones, Util, Conf Rooms, Copy<br />
Mach<strong>in</strong>es, Fax Mach<strong>in</strong>es, all <strong>in</strong>cluded.<br />
Close to 495, 135, Nort<strong>he</strong>rn State and<br />
Jericho Tpk. $1,200.00-$2,000.00 per<br />
month. One to three year leases available.<br />
Call Craig or Jim 516-364-8888.<br />
OFFICE SPACE<br />
THREE WINDOWED PRIVATE OFFICES<br />
AVAILABLE IN BOUTIQUE CPA FIRM<br />
TOWER SUITE, LOCATED NEAR<br />
GRAND CENTRAL.<br />
ACCESS TO KITCHEN AND CONFER-<br />
ENCE ROOM WITH EAST RIVER<br />
EXPOSURE.<br />
RECEPTION DESK AND OTHER ADMIN<br />
SPACE MAY ALSO BE AVAILABLE.<br />
THE OFFICES CAN BE RENTED INDI-<br />
VIDUALLY OR COLLECTIVELY.<br />
ALTHOUGH NOT REQUIRED, TENANTS<br />
IN SYNERGETIC PROFESSIONS WILL BE<br />
CONSIDERED AS WELL. 212-953-5550.<br />
CLASSIFIED SECTION<br />
PRIVATE WINDOWED OFFICE IN CPA<br />
SUITE, ACROSS PENN STATION. FUR-<br />
NISHED, CONFERENCE AREA, ALL<br />
SERVICES AVAILABLE. 212-868-2253.<br />
AVNERBOOYA@AOL.COM.<br />
NYC Middle Market Account<strong>in</strong>g Firm has<br />
office to sublet <strong>in</strong> a Top “A” Build<strong>in</strong>g w/5<br />
w<strong>in</strong>dowed offices, 15 Cubicles, use of<br />
Conference Rooms, Reception Area,<br />
Kitc<strong>he</strong>n, Full office Support available. For<br />
furt<strong>he</strong>r <strong>in</strong>formation please contact (212)<br />
404-5403.<br />
Midtown CPA firm has large, furnis<strong>he</strong>d,<br />
w<strong>in</strong>dowed corner office, <strong>in</strong>clud<strong>in</strong>g <strong>in</strong>ternet.<br />
Services available. Contact David Mond at<br />
dmond@akmcpa.com or 212-382-0404.<br />
LEGAL SERVICES<br />
PROFESSIONAL CONDUCT EXPERT<br />
Former Director Professional Discipl<strong>in</strong>e,<br />
25 Years Experience, Licensure, Discipl<strong>in</strong>e,<br />
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Transfer of Practice; AICPA and NYSSCPA<br />
Proceed<strong>in</strong>gs, Professional Bus<strong>in</strong>ess Practice.<br />
Also available <strong>in</strong> Westc<strong>he</strong>ster County<br />
ROBERT S. ASHER, ESQ.<br />
295 Madison Avenue,<br />
New York, NY 10017<br />
(212) 697-2950<br />
SITUATIONS WANTED<br />
CPA Per Diem desires audit or tax work.<br />
Experienced <strong>in</strong> various <strong>in</strong>dustries <strong>in</strong>clud<strong>in</strong>g<br />
non profit and governmental. E-mail:<br />
perdiemcpa@att.net.<br />
Experienced CPA seeks per diem work,<br />
audit and tax, 845-878-0051,<br />
kbgralak@optonl<strong>in</strong>e.net.<br />
New York City Metro Technical<br />
Account<strong>in</strong>g/Audit<strong>in</strong>g Pro seeks issues-oriented<br />
and f<strong>in</strong>ancial statements completiontype<br />
work, such as draft footnotes and<br />
statement format, on a project or ot<strong>he</strong>r<br />
basis at a reasonable professional rate for<br />
CPAs <strong>in</strong> need of this type of temporary<br />
<strong>he</strong>lp. Also available for audit, reviews or<br />
compilations workpaper or report review.<br />
Can serve <strong>in</strong> SOX/PCAOB concurr<strong>in</strong>g<br />
partner review function or <strong>in</strong>dependent<br />
monitor<strong>in</strong>g function under new<br />
Engagement Quality Review (EQR) <strong>in</strong><br />
years between smaller firm AICPA Peer<br />
Reviews. Call 516-249-2882.<br />
FINANCIAL ACCOUNTING &<br />
AUDITING SERVICES<br />
Experienced CPA is available for attestation,<br />
employee benefit plan audits, quality control,<br />
<strong>in</strong>spections, GAAP/ SEC consultation,<br />
and <strong>in</strong>ternal control. Reply<br />
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TAX CONSULTANCY<br />
INNOVATIVE STRATEGIES<br />
for sales and use tax compliance, audits,<br />
refunds, appeals, and bankruptcy.<br />
Extensive multistate experience.<br />
Jeffrey J. Coren, CPA<br />
212-594-6970
SALES TAX CONSULTANTS<br />
Stewart Buxbaum, CPA, MBA<br />
• Former Senior Sales Tax Auditor, Team<br />
Leader, Instructor, and Supervisor.<br />
• Over 30 years’ experience with t<strong>he</strong> New<br />
York State Sales Tax Bureau and as <strong>in</strong>dependent<br />
consultant handl<strong>in</strong>g audits, refunds,<br />
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• Recipient of t<strong>he</strong> 1992 Outstand<strong>in</strong>g<br />
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• Former Member of t<strong>he</strong> NY State<br />
Division of Tax Appeals Advisory Panel<br />
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audits, appeals, and refunds, <strong>in</strong>clud<strong>in</strong>g:<br />
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3. Manufacturers<br />
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5. Construction Contractors<br />
6. Telecommunication Companies<br />
• Founder of NYsalestax.com, a Provider<br />
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• Member of t<strong>he</strong> NYSSCPA’s NY State,<br />
Municipal, and Local Taxation Committee<br />
• Frequent Author and Lecturer<br />
(845) 352-2211 or (212) 730-0086<br />
E-mail: Stewart@nysalestax.com<br />
Michael@nysalestax.com<br />
www.nysalestax.com<br />
23<br />
New York State Society of Certified Public Accountants/April 15, 2010<br />
SALES TAX PROBLEMS?<br />
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consultation. Rothbard & S<strong>in</strong>chuk LLP,<br />
516-454-0800, x204.<br />
SALES TAX, ISAAC STERNHEIM &<br />
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E-mail: lr.cole@verizon.net<br />
LRC Group Inc.<br />
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Nick Hartman<br />
INTERNATIONAL TAX<br />
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Former IRS Agent (Foreign Operations<br />
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CLASSIFIED SECTION<br />
Best References. Completely Confidential.<br />
Reply to Consultant, 305 East 86th Street,<br />
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BUSINESS SERVICES<br />
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Complete Incorporation Package Includes:<br />
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Toll Free 800-842-9990<br />
margenjid@yahoo.com<br />
CORPORATE MINUTES<br />
CPA.BLOG IS HERE!<br />
Let Your Voice Be Heard.<br />
CPA.BLOG is t<strong>he</strong> NYSSCPA’s new dest<strong>in</strong>ation<br />
to discuss t<strong>he</strong> latest regulatory<br />
developments, account<strong>in</strong>g and f<strong>in</strong>ancial news,<br />
and Society actions.<br />
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PEER REVIEW<br />
DATA F O R<br />
C L A SS I F I E D<br />
A DV E RT I SERS<br />
Please submit all ads <strong>in</strong> typed form and<br />
<strong>in</strong>dicate what section t<strong>he</strong><br />
ad should appear <strong>in</strong>.<br />
Clos<strong>in</strong>g date: We must receive t<strong>he</strong> ad<br />
and payment not later than t<strong>he</strong> 2nd<br />
Friday of t<strong>he</strong> month preced<strong>in</strong>g issue<br />
dates.<br />
Payments: Payment must accompany<br />
ads. T<strong>he</strong>re is no bill<strong>in</strong>g.<br />
Rates: Basic rate: $4.00 per word.<br />
$56 m<strong>in</strong>imum—14 words.<br />
Word count: Symbols and abbreviations<br />
count as words.<br />
Box and phone numbers = 2 words;<br />
hyp<strong>he</strong>nated words = 2 words.<br />
Classified display ad: 2 1 ⁄4'' x col. <strong>in</strong>ch =<br />
$150.00 net.<br />
All classifieds are noncommissionable.<br />
Replies to Box Numbers<br />
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