News provided by: CPA Mobility Legislation Gains National Momentum
The American Institute of Certified Public Accountants is seeking enactment of similar laws in every state so that a national uniform mobility system will become a reality for CPAs, CPA firms, and the state boards of accountancy that regulate them. The AICPA has worked collaboratively since 2007 with the state boards of accountancy, the individual state CPA societies, and the National Association of State Boards of Accountancy to update the states' laws. "We are very pleased about how many states have enacted this uniform provision and want to thank the states for moving so quickly," said Barry C. Melancon, president and chief executive officer of the AICPA. "We also thank the lawmakers and leaders of the accounting profession and the state accountancy regulatory community for their hard work and progressive foresight." The changes to the states' uniform accountancy statutes are very important to CPAs and CPA firms of all sizes that practice public accountancy because it's common for CPAs to have clients with businesses in multiple states, Melancon explained. But the requirements for gaining a practice privilege differ so much from state to state it's almost impossible for CPAs to navigate. "Now CPAs can practice in the 21 states that have updated their laws without seeking additional licenses or permits or comply with other notification requirements that do not necessarily protect the public," he said. Governors in Connecticut and Maryland are prepared to sign legislation recently enacted by their legislatures. "The momentum has really built for this mobility initiative," Melancon said. Bills are pending in 10 other state legislatures - Alabama, Arizona, California, Delaware, Massachusetts, Michigan, New Jersey, Oklahoma, Pennsylvania, and South Carolina. The 21 states that have adopted the uniform provision are Colorado, Illinois, Indiana, Idaho, Iowa, Kentucky, Louisiana, Maine, Minnesota, Mississippi, Missouri, New Mexico, Ohio, Rhode Island, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, and Wisconsin. Under the provision enacted by the states, individual state boards of accountancy will automatically have jurisdiction over all CPAs and CPA firms practicing in their state. Therefore, states will be able to discipline CPAs with out-of-state licenses, even if the CPAs are not licensed or registered in the state. The provision is included in the Uniform Accountancy Act, which is the model CPA licensing law that is written and endorsed by the AICPA and NASBA. You can read more information on the mobility initiative. The legislation is expected to limit payments to farmers who have adjusted gross incomes of $750,000 or more. Under a proposal last week, an individual could have as much as $950,000 in annual farm income and not lose any subsidies. President Bush had wanted a $500,000 limit, according to congressional aides who spoke to The Wall Street Journal. Bush, who has called the bill "bloated," wants aggressive changes in the bill. The legislation, however, has attracted strong support from both parties. If Bush vetoes the bill, lawmakers have vowed a fight, the Journal reported. The bill makes few changes to the structure of the farm program, which dates from the Depression era. It would expand nutrition, land stewardship, specialty crop, and biofuel development programs. According to Reuters, pressure for a new law from farm country has been muted because market prices are so high that most subsidies will not be triggered. The winter wheat harvest starts in a few weeks, triggering concerns about what will be the federal safety net. The new bill will continue existing subsidy programs for grain and cotton farmers while creating an optional new plan to protect corn growers against poor yields as well as a drop in market prices. The new program would trigger subsidies when farm revenue falls below statewide targets, The Des Moines Register reported. Whatever the outcome of the bill, small farmers feel pinched. The Brian Call and Joan Gibson family of Levant, Maine, for example, are calling a meeting of congressional leaders after unsuccessfully trying to get federal and state help to keep their 1820 dairy farm afloat. "In both the past and recently, I've touched base with every federal and state agricultural agency for grants and other forms of help, and there is nothing available for small farmers," Joan Gibson told the Bangor Daily News. "I will tell you that we realize no profit from our dairy farm, nothing," she said. Brian Call said he was paid $2,194 for his milk in March. His expenses: $2,666 for grain, $78 for fuel (a low amount, he said, because they weren't working the fields last month), $340 for electricity, $150 to the veterinarian and $120 for breeding services. "The CPA Examination tests the knowledge and skills that are relevant for entry-level CPAs. In doing so, the public is protected," said Craig Mills, executive director of examinations for the AICPA. "That's why the AICPA Board of Examiners, which oversees the exam, is already assessing strategies to incorporate IFRS into the Exam." The exposure draft, titled "Proposed Content and Skill Specifications for the Uniform CPA Examination," results from the AICPA's 2008 Practice Analysis, which is the AICPA's most recent review to ensure that the CPA Examination remains valid and relevant. The exposure draft proposes that the IFRS conceptual framework be tested and that additional testing of international standards occur if IFRS becomes generally accepted in the United States. The AICPA Board of Examiners noted there is a worldwide movement toward acceptance of International Financial Reporting Standards which could become a generally accepted body of accounting principles in the United States at some future date. Comments on the exposure draft (see below) are due by July 31, 2008. The comments will be considered by the Board of Examiners as the proposed content and skill specifications are finalized. The new specifications will be scheduled for implementation after they have been approved and will be available to students, educators and other interested parties well in advance of the effective date. You can read the complete exposure draft. Amazon, which is based in Seattle, filed the complaint on Friday against the new law, which has been coined the Amazon tax since it was passed last month. According to Reuters, Amazon described the law as vague and overly broad. The New York Times said that for decades New York and other states have required residents to pay use taxes on purchases made out of state for which no sales tax was collected. The question is whether the vendors must collect those taxes. At stake is what constitutes a presence in a state. Amazon pays a commission to unaffiliated Web site operators from California to Connecticut. These sites range from well-known publishers to miniscule blogs. Frequently, the Amazon presence on the sites allows customers to click from the unaffiliated site directly to Amazon.com. If the unaffiliated site is based in New York State and provides a link to the e-tailer, the referral to that site qualifies as a physical presence for Amazon, according to the law. But Amazon says its affiliates are simply sites on which it advertises. Amazon named New York Governor David Paterson and the commissioner of New York's State Department of Taxation and Finance as defendants in the case. The company is asking for the law to be declared invalid. It also requests being awarded the costs of the legal proceedings. Multiple factors combine to cloud women's retirement security, including less time in the workforce and lower lifetime earnings then men. The report finds that women earn 77 cents for every dollar earned by men, which translates into a median retirement income of just 58 percent of men's. Additionally, due to family caregiving responsibilities, women are in the workforce an average of 12 years less than men. This translates into fewer years saving or participating in an employer-provided retirement plan. The median salary for a woman working full-time in 2006 was $32,515, compared to $42,261 for men. The disparity is even more dramatic for minority women, with African-American women's median income at $27,535 and Hispanic women's median income at $22,285. Women also live, on average, five years longer than men and are far more likely than men to be widowed and living some part of their retirement years alone. Older women living alone - whether widowed, divorced or never married - face much higher rates of poverty than men do. Approximately one in five unmarried elderly women is poor. "With more years out of the workforce to care for family, combined with lower wages and a greater life expectancy, it's clear that simply being a woman in our society may jeopardize your financial security," said Cindy Hounsell, President of Women's Institute for a Secure Retirement (WISER) and author of the study. Hounsell joined Representatives Stephanie Tubbs-Jones (D-OH) and Phil English (R-PA), as well as Senators Kent Conrad (D-ND) and Gordon Smith (R-OR) and women from around the country today in calling for public action to mitigate the real risk of poverty that American women face in retirement. "The legislation my colleagues and I have introduced, The Retirement Security for Life Act, will help Americans secure a steady stream of retirement income. This will be especially helpful for women without access to traditional retirement plans, who, as this report shows, are at greater risk of having a financially insecure retirement," said Representative Tubbs-Jones. "As this report shows, all too often women are reaching retirement age without adequate savings. It's time we recognize these challenges and put public policies in place that help women take control of their financial futures," said Senator Conrad. The report finds that lifetime annuities are an important tool that women can use to plan for a more secure retirement. Life annuities relieve the risks and burdens of managing a nest egg and can maximize savings' value over the course of an individual's retirement years. Life annuities are the only vehicle besides pensions and Social Security that provide a steady stream of income for life - a "paycheck for life." To encourage Americans to secure a steady stream of income in retirement, Senators Conrad and Smith in the Senate and Representatives Tubbs-Jones and English in the House are the main congressional sponsors of The Retirement Security for Life Act (H.R. 2005, S. 1010). This legislation would provide a 50 percent tax exclusion on the income from the payout of a lifetime annuity, up to $20,000 per year. For an average American taxpayer in the 25 percent tax bracket, this would result in $5,000 of tax savings. The legislation enjoys broad bipartisan support with 66 co-sponsors in the House and 10 in the Senate. "With more than one out of every 10 women retirees living in poverty, it is important for the federal government to help women save for retirement." said Senator Smith. "As this report demonstrates, simply being a woman can put a person at greater financial risk in their golden years. We must implement solutions such the Retirement Security for Life Act, to help women plan and save for the future." "While Congress has acted to encourage retirement savings through many other vehicles, it is equally important that Congress focus on the disbursement side of retirement security," said Representative English (R-PA), a senior member on the House Ways and Means Committee, which has jurisdiction over tax policy. "By having a steady stream of income through a lifetime annuity, individuals can remove the uncertainty of knowing if their savings will be there throughout their retirement years." Other findings of the report include:
The Watson Wyatt analysis found that employees who rely on their employers for health care coverage and do not expect to receive employer-provided health benefits in retirement are 16.5 percentage points less likely to retire in any given year than workers with access to health care coverage through another source. These sources can include a spouse's health insurance plan, public health insurance, COBRA coverage, or employer-sponsored retiree health insurance. Watson Wyatt analyzed data collected from 1992 to 2004 as part of the University of Michigan's Health and Retirement Study, a biannual survey of 22,000 older U.S. workers. "The link between health care and retirement security is just one of the factors affecting older workers' decisions about retirement," said Mark Warshawsky, director of retirement research at Watson Wyatt. "Most factors point to an aging workforce, driven by delayed retirements. A holistic view of these factors will help employers develop a better understanding of how their workforce might change in coming years and what that might mean for their business." The analysis of workers over age 50 found that a number of factors, in addition to health care, influence retirement decisions:
"Retirement is the result of a complex decision-making process that is influenced not only by employees' benefit packages but also by environmental factors," added Kevin Wagner, senior retirement consultant at Watson Wyatt. You can read more information about the factors affecting workers' retirement behavior. "An IRS-run tax filing system is a conflict of interest. The IRS preparing and filing your taxes would be like the bank balancing your personal check book," said Rob Atkinson, President of ITIF. "It may not be in the best interest of the taxpayer." The national poll, conducted by The Mellman Group, found that 62 percent of taxpayers do not trust the IRS to prepare their taxes for them and 74 percent believe it is a conflict of interest for the same government agency to be responsible for both tax collection and tax preparation. The Mellman Group surveyed 800 registered voters nationally from April 25th - April 29th. Results are subject to a margin of error +/-3.5 percent. "Voters do not support and indeed express significant concerns about an IRS sponsored Web site that would prepare tax returns. Most do not trust the IRS to prepare their taxes, seeing an inherent conflict of interest between collecting taxes and preparing them," states a memo prepared for ITIF by The Mellman Group. "In fact, the public is much more supportive of the current system under which taxpayers...get access to privately developed tax preparation software such as TurboTax or H&R Block's TaxCut for free." "The majority (57 percent) of taxpayers believe if the IRS prepared their taxes they would pay more than they really owed and that the IRS would not maximize their refund. Rather, taxpayers have confidence in private-tax preparation software to look out for their best interests by maximizing their refund," said Atkinson. The poll findings come on the heels of several legislative proposals calling for IRS-run-tax filing systems, such as the often-discussed 'I-File' proposal. Under the current system, known as the Free File Alliance, a public-private partnership between the IRS and software companies in the tax preparation industry, taxpayers can visit the IRS Web site to access commercial online tax preparation and e-filing services at no charge. You can read the memo prepared by The Mellman Group. This analysis represents the findings of a national survey of 800 registered voters. Interviews were conducted by telephone April 25th - April 29th, 2008 using random digit dialing techniques to insure an unbiased sample. The margin of error for this survey is +/-3.5 percent at the 95 percent level of confidence. The margin of error is higher for subgroups. "While the current economic conditions and market turmoil are likely to impact the C-Suite this year, our results show that the salaries of the overall financial professional group are still up," said FEI/FERF CEO and President Michael P. Cangemi. "As an important benchmark, the Financial Executives Compensation Survey is unique since it is completed by financial executives themselves, and members of the financial community will be able to utilize it as a tool to measure how their pay stacks up against their peers'." Salary and Bonuses The estimated average salary increase of all respondents was 4.75 percent, with public companies awarding the highest salary increases (4.96 percent). The two industries with the highest reported salary increases were advertising (8 percent) and metals (7.5 percent). For the second year in a row, the base salaries of public and private company CFOs were proportionate to the annual revenues of their employers. However, median base salaries for CFOs at public company with less than $25 million or over $5 billion in annual revenues are generally consistent or slightly higher from the prior year. No public company CFOs from companies with annual revenues of less than $25 million earned more than $400,000 per year. 2008 CFO Median Base Salary Ranges Public companies: Private companies With regard to bonuses, annual bonuses of private company CFOs were lower than those of public company CFOs. Most bonus percentages for public company CFOs fell within the range of 21-70 percent, while those of private company CFOs fell within the range of 11-60 percent. The study also showed that many public companies with annual revenues of $99 million or less received discretionary bonuses. Beyond the Paycheck For the second year in a row, the trend indicates more specialized technical and compliance-type responsibilities at public companies, which include legal, purchasing, operations, investor relations, planning, M&A, and Sarbanes-Oxley compliance. Additionally, private company respondents reported more responsibility in the areas of treasury, tax, human resources, administration and risk management/insurance than their public company counterparts. "As we all know, executive compensation is more than just salary, and this study continues to examine the structure of pay packages in their entirety," said Cheryl de Mesa Graziano, vice president, research and operations for FERF. "The results of this year's study showed decreases in other compensation benefits, such as long-term and retirement incentives, and we feel this helps to illustrate a complete and clearer picture of the overall impact that the broader economy has on financial executives." Key statistics from areas additional to salary and bonus include: Retirement
Long-term incentives
Perks
Performance measures
The report includes detailed tables of the base salary and annual bonus for each major title, and is broken down further by company's annual revenue and public or private status. To purchase the survey report for $129, visit the FERF bookstore. About FEI and FERF Financial Executives Research Foundation (FERF) is the non-profit 501(c)(3) research affiliate of FEI. FERF researchers identify key financial issues and develop impartial, timely research reports to FEI members and non-members alike, in a variety of publication formats. The charges stated that H&R Block failed to disclose the bonds' risk including, according to The Star, "credit ratings downgrades, Enron's earnings restatements, a Securities and Exchange Commission investigation of Enron, and Enron's warning that it might not be able to continue as a going concern." H&R Block, which is based in Kansas City, sold Enron bonds one month before Enron filed for bankruptcy protection on Dec. 2, 2001. The allegations involved sales made by 54 H&R Block Financial Advisor employees to more than 90 customers between October 29 and November 7, 2001, the Kansas City Business Journal reported. CNNMoney.com reported that FINRA's panel said the agency's department of enforcement failed to present a preponderance of evidence that H&R Block misrepresented or omitted facts in connection with the sales. H&R Block denied the charges and requested a hearing, which was held in three states for a total of 24 days from May 2006 to August 2007, The Star reported. The panel determined that brokers for H&R Block had recommended small purchases and made presentations that were reasonably balanced to customers and only sold Enron bonds to customers for whom they were suitable. FINRA is the largest non-governmental regulator for all securities firms doing business in the United States. Twenty-five percent of respondents in the survey of 1,026 adults said they were spending wisely or not spending as much as a means of saving money. This is a sharp increase from 2007, when only 2 percent said they were spending wisely or cutting spending in order to accumulate savings. "It's both surprising and very encouraging that in the space of a year, so many more people are thinking about their spending habits in the context of saving," said Carl George, chair of the AICPA's National CPA Financial Literacy Commission. Spending wisely or not spending as much ranks second as a savings strategy in the current survey. Interest-bearing savings accounts take the top spot, with 40 percent of respondents. Other strategies cited were company-sponsored retirement plans (13 percent); stocks, bonds, and mutual funds (11 percent); IRAs (7 percent); and CDs (5 percent). Interestingly, 3 percent said conserving energy was part of their savings plan. "We'd like to see more people taking advantage of company retirement plans like 401(k)s," George said. "Many employers match a percentage of a worker's contributions. A matching contribution is basically free money." The study was conducted by telephone within the United States by Harris Interactive on behalf of the American Institute of Certified Public Accountants between March 5 and March 9, 2008, among 1,026 Americans over the age of 18. Results were weighted for education, age by sex, race, household size (number of adults), number of voice/telephone lines in the household, and 8-point region where necessary to align them with their actual proportions in the population.
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