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International Accounting Standards

September 8th, 2009

Comparable, transparent, and reliable financial information is fundamental for the smooth functioning of capital markets. In the global arena, the need for comparable standards of financial reporting has become paramount because of the dramatic growth in the number, reach, and size of multinational corporations, foreign direct investments, cross-border purchases and sales of securities, as well as the number of foreign securities listings on the stock exchanges. However, because of the social, economic, legal, and cultural differences among countries, the accounting standards and practices in different countries vary widely. The credibility of financial reports becomes questionable if similar transactions are accounted for differently in different countries.

To improve the comparability of financial statements, harmonization of accounting standards is advocated. Harmonization strives to increase comparability between accounting principles by setting limits on the alternatives allowed for similar transactions. Harmonization differs from standardization in that the latter allows no room for alternatives even in cases where economic realities differ. » Read more: International Accounting Standards

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Public Hearings with Independence Standards Board

September 8th, 2009

The ISB may seek information about independence matters by holding a public hearing. The basis for a public hearing generally will be an exposure draft, although the ISB may also determine to hold a public hearing for any other purpose. Each public hearing will be conducted by one or more members of the ISB or IIC, the executive director, or technical staff pursuant to procedures approved by the ISB for such hearing.

The ISB will publicly announce its intent to hold a public hearing at least sixty days prior to the hearing, unless a shorter period (but in no event less than thirty days) is considered appropriate by the ISB, in any manner reasonably designed to inform the public. » Read more: Public Hearings with Independence Standards Board

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The Independence issues committee

September 2nd, 2009

The Independence Issues Committee (IIC) assists the ISB in establishing independence standards through the timely identification and discussion of emerging independence issues within the framework of existing authoritative literature.

The IIC also addresses broader interpretative issues, including those that emerge from inquiries fielded by the ISB staff, and communicates its consensus on such issues to the board. The IIC makes publicly available its consensuses and the rationales or bases for such conclusions.

The IIC is comprised of nine certified public accountants (CPAs), drawn from SECPS member firms that audit SEC registrants, who are knowledgeable about the existing independence literature and are in positions to be aware of emerging practice issues as they develop. The SECPS Executive Committee nominates the nine members of the IIC, in consultation with and subject to the approval of the ISB. The ISB specifies the terms of the IIC members. The ISB names the chair from the nine members of the IIC. » Read more: The Independence issues committee

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Extension of income tax to the state level

September 2nd, 2009

Wisconsin was the first state to adopt an income tax in 1911. Massachusetts and New York soon followed by adopting income taxes when faced with problems related to World War I. Most other states adopted the income tax as a response to revenue crises created by the Great Depression.

At the state level, definitions of taxable income differ from the federal definition and differ among states. Exemptions, deductions, and rates of taxation vary among states. As of January 2000, Nevada, South Dakota, Washington, and Wyoming did not impose individual or corporate income taxes; Alaska, Florida, New Hampshire, and Texas did not impose an individual income tax and Michigan did not impose a corporate income tax. Formulas are used to allocate the income of multistate corporations among the states in which they operate.

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Administration of federal income tax

August 31st, 2009

The Internal Revenue Service (IRS), which administers the income tax, is part of the U.S. Department of Treasury. Adapting to changes in technology to achieve the most efficient processing of information is a major challenge for the IRS. For many years the IRS was organized on a geographical basis, but in 1998 it was reorganized into four functional divisions differentiated by type of taxpayer.

For corporate and individual taxpayers that report on a calendar-year basis, annual tax returns are due on or before March 15 and April 15, respectively, following the close of the calendar year. Providing that the tax due is paid, time extensions for filing returns may be obtained. Although the closing dates for the quarters differ, both individuals and corporations are subject to the payment of estimated tax in quarterly installments. Taxpayers who fail to file tax returns or fail to pay taxes are subject to monetary penalties, fines, and possibly prison sentences.

Extention of income tax to the state level

Wisconsin was the first state to adopt an income tax in 1911. Massachusetts and New York soon followed by adopting income taxes when faced with problems related to World War I. Most other states adopted the income tax as a response to revenue crises created by the Great Depression. » Read more: Administration of federal income tax

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