Tuesday, December 25, 2012

Auditing 'It's a Wonderful Life'

Business news site Quartz provides a little holiday levity with an audit of the Bailey Bros. Building & Loan Association from the Christmas classic "It's a Wonderful Life." Let's just say the company's internal controls didn't inspire much confidence from the auditors from PotterHouseErnstCooper LLP. (That would be, what, the Big One?)

It wasn't just an $8,000 discrepancy on the books that led to the auditors' concerns. Vice President William "Uncle Billy" Bailey drew this scathing description:
Let us be blunt. “Uncle Billy,” as Mr. Bailey is known, exhibits clear symptoms of early stage dementia. And while we are sympathetic, his involvement in key operational activities amounts to a threat to survival of this institution.
Here's hoping the VSCPA's members working in audit don't have to deliver this kind of bad news to their clients.

Tuesday, December 18, 2012

Clarity on IRS Lockbox Changes?

A VSCPA member recently asked where to send fourth-quarter estimated tax payments in light of the closure of some U.S. Internal Revenue Service (IRS) lockbox operations. We reached out to the IRS and got this answer:

"Other practitioners have raised this issue, too. I did find an Issue Management Resolution System issue very similar to this (IMRS - 07-0000496). Apparently, the same type of thing happened to taxpayers in 2007. Then, payments sent to the old site were date stamped and forwarded to the new site. I am assuming (IRS emphasis - ed.) the same thing will happen for the 2012 4th quarter estimated tax payments. It appears the IRS would prefer them to send the payment to the new address but, if they send it to the old address, it should still be processed."

Does anyone have any insight on this issue?

Tuesday, December 11, 2012

Digital CPA Conference Wrap-Up

By Jen Syer
VSCPA Technology Director

"It's like being covered in pixie dust!" That's how Jennifer Wilson of ConvergenceCoaching, LLC, summed up the 3-day experience that was the Digitial CPA Conference in Washington, D.C., from Dec. 5-7, hosted by the American Institute of CPAs (AICPA) and CPA2Biz.

I had the great fortune to attend the event, along with VSCPA Chair John Montoro, CPA and according to the registration list, 500 other CPAs and accounting-related professionals, ~20 of whom were VSCPA members!

As one would expect, the main theme surrounded cloud, albeit largely from the CAS perspective vs. day-to-day office operations. Speakers articulated their points surrounding SaaS, CAS standardization and fixed-fee schedules, encouraging CPAs to more effectively serve their niche market.

Jim Collins and Steve Jobs quotes were tossed around like footballs, with good reason... When CPAs focus on their strengths, understand their brand and leverage technology to reduce cycle time, the road to a million-dollar practice can become a reality (hard work is  — of course — still requisite)!

Most attendees I spoke with seemed to follow the normal change management distribution curve. Regardless of where your firm sits on said curve, resources are available which can introduce or foster your ongoing relationship with the cloud... I'll discuss these in an upcoming post, in the hopes of spreading the "pixie dust" effect!

In the meantime, I hope you enjoy the following whitepaper, written by Dr. Geoffrey Moore, shared by CPA2Biz.
Accounting Services: Harness the Power of the Cloud.

Monday, December 3, 2012

Guest Blogger: IRS Future on Display at the AICPA Tax Conference

By Julia Rogers, CPA
Rogers & Associates

The American Institute of CPAs (AICPA) Tax Conference, held last month in Washington, D.C., boasted several speakers from the U.S. Internal Revenue Service (IRS) who discussed the future of the organization. Here’s what they talked about:

IRS Taxpayer Advocate Nina Olson talked about her office’s decline in case inventory, which she attributed to declines in new homebuyer credit cases and acceptance of new cases.

IRS Commissioner Faris Fink discussed small business/self-employed (SBSE) taxation. He says the next big focus will be on partnerships, with particular attention paid to basis and other advanced issues. That project is in the planning stage now and will be in effect in 2014.

Fink also discussed the National Research Project (NRP) audits, which are shifting into new areas of focus after the completion of the 2008–2010 employment tax research cycle. Corporate NRP audits have been reduced from a three-year cycle to a one-year cycle.

According to Fink, offers in compromise are skyrocketing, with a 121 percent increase over the past four years. The IRS is attempting to reduce inventory by providing less stringent criteria for simple wage cases.

Peggy Bogadi, the IRS’s director of submission processing, talked about filing, refunds and the challenges of legislation that will come from the lame-duck Congressional session. More than 80 tax forms and schedules will have a change from 2011.

Bogadi also discussed:
  • The alternative minimum tax (AMT), which is set to cover many more taxpayers. Forms are currently programmed assuming a patch will be passed.
  • IRS Form 1040, which will now only be accepted via modernized e-file (MeF). Legacy data continues to be phased out as IRS Form 940 and 1041 filings will move to MeF for 2012, while the IRS continues to work on Form 1040X.
  • Identity theft, which is causing major problems for the 2012 filing season as 600,000 taxpayers will need personal information numbers (PIN) to file their tax return and process refunds.
She said that guidance will be issued soon on the Individual Taxpayer Identification Number (ITIN) application process.

Outgoing IRS Commissioner Doug Shulman discussed his tenure at the agency, citing the following as his key accomplishments:
  • Foreign investment issues
  • Better relationships with taxpayers and advisors
  • Technology upgrades
  • The Registered Tax Return Preparer (RTRP) and Preparer Tax Identification Number (PTIN) programs
  • The agency’s data analysis of preparers and possibly fraudulent refund claims
  • The Real-Time Tax System, which remains in process
  • Customer satisfaction, which is up to 73 percent, a 41 percent change since 1998
Carol Campbell, director of the IRS’s Return Preparer Office (RPO), talked about the agency’s PTIN program, which oversees 730,000 PTIN holders nationwide. She said a searchable PTIN database will be available next year once all testing is complete.

Campbell noted that compliance checks for continuing professional education (CPE) requirements are not yet in place, meaning that CPE compliance remains on the honor system. She said that less than 5,000 preparer visits will take place this tax season, two-thirds of which will take place over the phone. Preparers found to have issues will be required to take additional CPE.