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Despite the fact that a rising number of foreign companies are using International Financial Reporting Standards (IFRS) to file their financial reports with the Securities and Exchange Commission (SEC), the SEC still has reservations about incorporating the international accounting compliance guidelines into the U.S. financial system, according to Accounting Today.
During a recent panel discussion at Financial Executives International’s 31st Annual Current Financial Reporting Issues conference in New York, Paul Beswick, the acting chief accountant in the SEC’s Office of the Chief Accountant, went over the findings of the SEC’s staff reports on IFRS. Beswick noted that a formal decision about whether to proceed with incorporating IFRS accounting legislation has not yet been made.
“I think a number of people were surprised that the final staff report didn’t have a recommendation to the commission,” Beswick said, as quoted by the news source. “I think it’s important to understand that wasn’t really the intent of the work plan. The intent of the work plan really was to be more information gathering, to help inform the commission’s thought process.”
The SEC staff looked at a number of elements related to IFRS, including the burden of conversion, the development of the standards themselves over the past 10 years, measures that other regions have taken in order to try to increase global application and enforcement of IFRS, the need to improve investors’ IFRS understanding, and the audit regulation and standard-setting process. Additionally, the SEC also considered the impact on private companies, issuers and the regulatory environment.
Minimizing IFRS incorporation fatigue
“The FASB and the IASB are working on some of the most fundamental standards in terms of accounting, and I think there is concern that there is a certain level of fatigue in the system,” Beswick noted, citing feedback that had been received from issuers. The acting chief accountant stressed the need to incorporate IFRS “in a rational manner that doesn’t overtax the system,” and acknowledged the acute concern about conversion costs and accompanying burdens—something of which he said the staff is acutely aware.
Beswick’s colleague, Craig Olinger, deputy chief accountant of the SEC’s Division of Corporate Finance, also spoke on the panel. He noted that most of the SEC’s approximately 9,000 domestic registrants use U.S. Generally Accepted Accounting Principles, while its 1,000 foreign registrants are more evenly divided between GAAP and IFRS.
| Summary: | The SEC still has reservations about incorporating the international accounting compliance guidelines into the U.S. financial system. |
Now that the presidential election is in the rearview mirror after months of exhaustive politicking and campaigning, politicians and citizens alike are turning their sights toward the end of the year, when a number of tax cuts, federal spending reductions and other provisions are set to expire as part of a phenomenon known as the “fiscal cliff.”
U.S. payroll tax legislation that reduced the payroll tax by 2 percent (from 6.2 percent to 4.2 percent) is one such allowance that is practically guaranteed to expire at the end of the 2012 calendar year. However, its fate was virtually already decided weeks before it came time to count the ballots, according to Paul Dillon, director of tax services at Baker Tilly Virchow Krause, in a recent interview with Accounting Today.
“Even before knowing the election results, there didn’t seem to be any support on either side of the aisle for extending the payroll tax cut,” Dillon told the news source. “We know that’s going to expire at the end of the year.”
The question of whether Congress and the Obama administration will extend the U.S. payroll legislation to further the payroll holiday appears to have been largely answered. That said, officials are expected to be mired in a plethora of other tax quandaries over the remaining weeks of 2012.
“With the payroll tax cuts, there was a two-month extension so [Congress]] could take it up in full once they got back in January,” noted Dillon. “I think you will see something like that either tied to a March deadline or when we’re expected to reach the borrowing limits.”
How payroll software can help
Employers that have comprehensive payroll technology in place can more easily brace themselves for the upcoming U.S. payroll compliance changes. These types of software solutions automate much of the payroll process, taking the onus off busy company owners and HR staff by reducing the need for them to be involved. Generally, increased automation leads to a decline in payroll tax mistakes related to human error, streamlining the entire process for companies and employees alike.
Solutions such as the Sage BusinessWorks Payroll module allow companies to quickly and precisely carry out in-house payroll tasks, with the help of a comprehensive employee information database that facilitates the compilation of paychecks, W-2s and government reports at both the federal and state level.
| Summary: | Companies can rely on payroll technology to help them handle complications associated with the payroll tax holiday expiration. |
There are many types of laws that govern the manufacturing industry. These rules and regulations are intended to address a whole range of manufacturing compliance facets, ranging from worker safety to environmental protection.
Here is a list of some of the most important and far-reaching examples of manufacturing legislation that companies in the industry are expected to follow:
Chapter 85 of the United States Clean Air Act—Air Pollution Prevention and Control
This federal law was put in place in 1963 to address air pollution in the nation, and has since been changed significantly to bring it up to date with subsequent industry developments. The legislation gives the Environmental Protection Agency the authority to put together and implement regulations that protect the public from hazardous airborne contaminants.
Pollution Prevention Act
Companies in the manufacturing industry are sometimes perceived to be nefarious polluters by the public. Pollution prevention, also referred to as P2, addresses sources of pollution within the sector in the following ways:
- Altering production processes
- Encouraging the use of non-toxic or less toxic alternatives to dangerous substances
- Re-using and recycling materials, as opposed to letting them be discarded/disposed of as waste
- Introducing conservation techniques
Section 6(a) of the Williams-Steiger Occupational Safety and Health Act
The Occupational Safety and Health Administration (OSHA) introduced this law in 1970. Its goal is to ensure national occupational safety and health standards are sufficiently promulgated in order to give manufacturing employees the best chances of being as informed as possible when it comes to safeguarding and improving their health and workplace safety. The act covers a diverse selection of health and safety issues, including means of egress, personal protective equipment, toxic and hazardous substances and electrical systems.
US Manufacturing Enhancement Act
Signed by President Barack Obama at the height of the recession, this 2010 legislation amended the nation’s Harmonized Tariff Schedule to temporarily modify rates of duty and reduce tariffs on materials and parts not easily available in the country, with the goal of easing expenses for U.S. manufacturers.
These pieces of legislation have markedly different goals—to mitigate and prevent pollution, protect workers’ health and safety and cut costs for manufacturing companies—but complying with each is equally important.
| Summary: | There are numerous pieces of manufacturing legislation in place in the United States, each with different objectives. |
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Sage BusinessWorks Getting Started with Payroll Realtime course
November 08, 2012; 08:00 AM – 09:30 AM Pacific Time (US & Canada)
Are you new to Sage BusinessWorks or possibly thinking about bringing your payroll in house? Getting Started with Payroll is your first step. Learn the proper steps to successfully set up your payroll.
Sage BusinessWorks Payroll Year End Processing Realtime course
November 29, 2012; 08:00 AM – 09:30 AM Pacific Time (US & Canada)
Processing Year-end Payroll can be stressful, but is an important process that requires planning to guarantee correct results. Attend this class to learn from one of our Senior Payroll Instructors the steps for successfully processing W-2s and other year-end reports that assist you in complying with Goverment filing.
Sage BusinessWorks User Defined Reports
December 06, 2012; 08:00 AM – 09:00 AM Pacific Time (US & Canada)
Explore the powerful capabilities of the new reporting system in V2012. If you are a current Sage Business Care customer, this course may be free of charge. Please contact support if you have not received your promotional code.
Sage BusinessWorks Payroll Year End Processing Realtime course
December 20, 2012; 08:00 AM – 09:30 AM Pacific Time (US & Canada)
Processing Year-end Payroll can be stressful, but is an important process that requires planning to guarantee correct results. Attend this class to learn from one of our Senior Payroll Instructors the steps for successfully processing W-2s and other year-end reports that assist you in complying with Goverment filing.
To register for a Tech Thursday workshop, visit SageU.
The National Association of Manufacturers (NAM) recently honored several members of Congress for supporting manufacturing compliance policies and other industry-specific legislation identified by the organization as critical to the growth of the sector in the United States during the 112th Congress.
NAM represents manufacturers in every industrial sector and in all 50 states, making it the largest manufacturing association in the nation. Recipients of the organization’s Award for Manufacturing Legislative Excellence were chosen based on the positions they took with regard to key manufacturing legislation that covered issues such as energy policy, taxes and regulations. Specifically, NAM’s Key Vote Advisory Committee selected congresspeople whose voting records reflected support for pro-growth, pro-business laws at least 70 percent of the time.
Members of Congress who received the award this year include Robert Hurt of Virginia, Judy Biggert of Illinois and Jeff Denham of California, all of whom are members of the Republican party.
“Manufacturers today compete in a global marketplace,” said Jay Timmons, CEO and president of NAM. “It is critical that Washington creates policies to keep us competitive and maintain our mantle of economic leadership.”
In a recent statement, Congresswoman Biggert said manufacturing is critical to the country’s future and underscored the importance of enacting policies to “drive U.S. exports, promote innovation and help create good jobs here in America.”
Meanwhile, Dave Zuchowski, executive vice president of sales for Hyundai Motor America, publicly thanked Congressman Denham for supporting the manufacturing sector. Zuchowski added that lawmakers who vote in favor of key initiatives to help bolster the industry recognize that manufacturers are “drivers of economic growth, job creation and prosperity.”
Hurt, Biggert and Denham have plenty of company—this year, 248 members of the House of Representatives and 48 senators were acknowledged by NAM for voting in favor of pro-manufacturing policies, which set a new record.
Still a long way to go
However, according to Timmins, gridlock prevented Congress from acting on the sweeping reforms necessary to enact positive changes and reverse the economic recession.
“The choice we face now is whether we continue down a path of uncertainty and risk falling in the fiscal abyss or pursue a thriving manufacturing economy that encourages investment and jobs here in the United States,” he said.
| Summary: | The National Association of Manufacturers recently acknowledged lawmakers who supported manufacturing legislation critical to the sector’s growth. |
A recent report from Family Office Exchange, a global membership organization of single family offices and their advisors, revealed that accounting and financial reporting consume nearly one-third (32 percent) of the average family office’s time.
The study also found that eight in 10 family offices supply their clients with quarterly financial reports, while more than half (51 percent) provide consolidated annual reports. Approximately two-thirds (67 percent) still generate hard-copy reports, even in an age of accounting software and myriad other technological advances—email, cloud computing, mobile devices such as smartphones and tablets.
“Effective financial reporting is a matter of communication,” said Family Office Exchange CEO Sara Hamilton in a statement. “The challenge is to show how the numbers are relevant to the client’s goals in a manner that accounts for their learning style, preference for information and financial literacy.”
Family offices are private companies that manage investments and trusts for single families, using the families’ own wealth as their financial capital. Accounting consultants who work with family members to set and achieve individualized goals must take several key factors into account, including client objectives, preferred method of delivery, timing and audience sophistication. Additionally, the need to maintain accounting compliance should not be overlooked, as penalties for both willful and unintended infractions can quickly get costly—not to mention the time it takes to sort everything out.
Exemptions for family offices
Last year, the Securities and Exchange Commission signed off on a separate set of rules pertaining to family offices that exempted them from the definition of an investment adviser under the Investment Advisers Act of 1940. The exemption was proposed in anticipation of the Dodd-Frank Wall Street Reform and Consumer Protection Act’s repeal of the private adviser exemption from registration, and was promulgated by the SEC in June 2011.
Whenever accounting legislation or other regulations are introduced or changed, it is important that entities take the time to keep abreast of the developments. Integrating accounting software into operations can automate much of the process, freeing up professionals to attend to other tasks without having to worry about whether compliance standards are being met.
Read the press release here and access the report here.
| Summary: | Family offices, like other types of organizations, need to balance accounting compliance requirements with the extensive responsibilities of reporting. |
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At the end of 2012, a range of tax breaks will expire and new spending cuts will be introduced. The expiring allowances include U.S. payroll tax legislation that reduced the amount workers were required to pay from 6.2 percent to 4.2 percent—representing a deficit change of approximately $95 billion—and Bush-era tax cuts comprising a possible $221 billion deficit change.
As well as the U.S. payroll legislation and the assorted tax cuts introduced by President George W. Bush, additional elements include the Medicare doctor payment cut ($11 billion), healthcare reform taxes ($18 billion), emergency unemployment insurance benefits ($26 billion), the tax extender expiration ($65 billion), the budget sequester ($65 billion) and other revenue/spending alterations ($105 billion). Together, the expirations and spending cuts could add up to a deficit change of as much as $606 billion, according to Seeking Alpha.
A recent survey by the Association for Financial Professionals revealed that three-quarters of executives who manage corporate finances are concerned about the potential effects of these developments, which are collectively referred to as the “fiscal cliff.” Half (49 percent) said they were eager for Washington, D.C., to focus on implementing post-election changes with the goal of avoiding the fiscal cliff, and nearly two-thirds (63 percent) called for the federal government to resolve long-term fiscal and deficit issues. Other common requests included reducing regulatory complexity and uncertainty (42 percent), resolving political gridlock (37 percent), implementing corporate tax reform (33 percent), introducing policies that uphold the safety and soundness of the banking system (20 percent) and addressing foreign companies’ anti-competitive practices (10 percent).
“Companies are looking beyond the elections,” said AFP president and CEO Jim Kaitz. “The most important issue is resolving long-term fiscal and deficit issues.”
What does the fiscal cliff mean for workers?
Arguably the most immediate effect felt by the nation’s employees will be in relation to the expiration of the payroll tax holiday. According to The Wall Street Journal, the average family’s tax bill will be cut by nearly $1,000 as a result, a total of approximately $120 billion for middle-income families.
| Summary: | U.S. payroll tax legislation and other allowances are set to expire at the end of the year, to the concern of both corporations and their employees. |
Although a key piece of manufacturing legislation—the Food Safety Modernization Act (FSMA), which has been called “the most sweeping reform of our food safety laws in more than 70 years”—was signed into law at the beginning of January 2011, many of its components will not be fully integrated until after the November elections. Food manufacturers are taking advantage of this fact by using the extra time to make sure they are as prepared as possible to meet new manufacturing compliance regulations.
The chief purpose of the FSMA is to ensure that the U.S. food supply is safe by refocusing manufacturers’ efforts from responding to contamination after it occurs to preventing it from happening in the first place. The law puts into place a clear regulatory framework that requires comprehensive controls centered on prevention and quality control across the food supply chain in order to facilitate improvements to food safety.
Preparing for the FSMA
In a recent piece for leading industry news provider Manufacturing.net, Katie Beissel, global industry manager of food and beverage for GE Intelligent Platforms, laid out a three-pronged blueprint for manufacturers eager to ready themselves for the FSMA rollout. Specifically, Beissel recommended gaining clarity about the regulations, taking steps to achieve compliance by developing food safety plans and looking beyond the current laws toward more holistic food quality planning.
In her summary of the FSMA, Beissel breaks down the legislation into three main ideas:
- The orchestration of accurate and appropriately-sized product recalls in a timely manner following the discovery of problems. This should occur in a way that facilitates understanding of what happened, how many products were affected, where they were produced and how to handle the situation going forward.
- The implementation of hazard analysis and critical control point processes (HACCP) as part of food safety program improvements, with the goal of heading off bad-quality products before they reach the public. Part of this step involves empowering the FDA to conduct inspections and reviews at any time.
- The retention of key quality data for two years (in comparison to the previous 90-day requirement) in order to facilitate more in-depth FDA reviewing.
| Summary: | Manufacturers need to prepare for the sweeping manufacturing compliance reform outlined within the Food Safety Modernization Act. |
