Ex-Executives of Olympus Plead Guilty in Accounting Fraud

Former executives of Japanese camera and medical equipment maker Olympus Corporation pleaded guilty on Tuesday over charges related to a $1.7 billion accounting cover-up of massive investment losses in one of Japan’s biggest corporate scandals.

Prosecutors charged Tsuyoshi Kikukawa; a former executive vice president, Hisashi Mori; and a former internal auditor, Hideo Yamada, with inflating the company’s net worth in financial statements for five fiscal years to March 2011.

The three former executives had been identified by an investigative panel, commissioned by Olympus, as the main suspects in the fraud seeking to delay the reckoning from risky investments made in the late-1980s bubble economy. Read full article at Pettir.com

Hong Kong Regulator Took Ernst & Young To Court

Hong Kong’s securities regulator has taken Ernst & Young to court after the audit firm failed to turn over accounting records related to a company based in mainland China.

The auditor now faces the dilemma of complying with the order from the regulator and risking a possible breach of mainland China’s state secrecy laws, or facing sanctions in Hong Kong.

The case is the first of its kind in Hong Kong, and it mirrors one in the United States in which Ernst & Young’s rival, Deloitte Touche Tohmatsu, is fighting a request from U.S. regulators to hand over work papers from its audit of the Chinese computer company Longtop Financial Technologies.

The Securities and Futures Commission wants Ernst & Young Hong Kong to hand over records from its audit work for the water provider Standard Water.

The regulator said Monday that the audit firm had claimed it did not have the relevant records, as they were being held in mainland China by its joint-venture partner, Ernst & Young Hua Ming, and could not be produced due to restrictions under the mainland’s state secrecy laws.

IRS Closes Offshore Loophole

The IRS closed a loophole Tuesday that has been used by some taxpayers with offshore accounts. Under existing law, if a taxpayer challenges in a foreign court the disclosure of tax information by that government, the taxpayer is required to notify the U.S. Justice Department of the appeal. The IRS said that if the taxpayer fails to comply with this law and does not notify the U.S. Justice Department of the foreign appeal, the taxpayer will no longer be eligible for the Offshore Voluntary Disclosure Program (OVDP). The IRS also put taxpayers on notice that their eligibility for the OVDP could be terminated once the U.S. government has taken action in connection with their specific financial institution.

The voluntary disclosure programs are part of a wider effort by the IRS to stop offshore tax evasion, help bring people back into the tax system and ensure tax compliance. This includes beefed up enforcement, criminal prosecution and implementation of third-party reporting through the Foreign Account Tax Compliance Act, also known as FATCA.

The IRS reopened the 2012 OVDP following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. This program will remain open for an indefinite period until otherwise announced. 

Source: Pettir.com on article “IRS Closes Offshore Loophole & Announces New Details on OVDP”

Mobile Payment Processing in Your Pocket

Accepting credit cards payments is notoriously complicated and expensive. It’s no longer the case when it comes to accepting a credit card payment directly on your mobile devices; you have more options these days.

The options are Square, Intuit GoPayment, PayAnywhere, and PayPal Here. They will send you a small credit card reader or scanner when you sign up for a new account. You simply plug the card reader, which can fit in your pocket or bag, into your smartphone or tablet and launch the accompanying free app, and you’re ready to accept credit card payments for your goods or services.

Each service offers free apps for iOS (iPhone, iPod Touch, and iPad) as well as for Android. Intuit’s GoPayment also supports some BlackBerry phones. Since the scanner plug into the headphone port, they are compatible with almost any phone that can run the app.

These mobile payment processing services offer pay-as-you-go plans, in which you pay only a fixed percentage fee per transaction with no separate transaction fee or monthly fee.

Read full article “Mobile Credit Card Processing in Your Pocket” at accounting.pettir.com

Private Company Council Is Established

The Financial Accounting Foundation's board of trustees has voted to
establish a new Private Company Council that will determine whether
exceptions or modifications to U.S. GAAP for privately held companies
are necessary.

The new council will replace the Private Company Financial Reporting
Committee and will have the ability to identify, deliberate, and vote
on any proposed changes, which will be subject to endorsement by the
Financial Accounting Standards Board, which the FAF oversees, and be
submitted for public comment before being incorporated into GAAP. The
PCC will also serve as the primary advisory body to FASB on the
appropriate treatment for private companies for items under active
consideration on the FASB"s technical agenda.

Computerized Accounting

How can accounting software help you and what is the benefit of the computerization? Accounting software makes maintaining business accounting easy by computerizing the accounting system and providing simple interface between you and the accounting system.  

There are lots of benefits in computerizing your accounting system if you have a small business. Automation reduces time of lengthy manual processing, eliminates human involvement in some stages of accounting process, reduces errors caused by human intervention or multiple manual processing, provides continuously up-to-date reports, and so on. They mean you're sure to increase efficiency and accuracy that eventually lead to saving time and money.  After cutting cut your accountancy fees and time, what’s more? The computerizing frees up time and energy that otherwise would be spent in manual handling. Now you can make use extra time and energy to concentrate on managing and growing your business.

If you decide that computerizing the process is the way to go then you need to decide what accounting software package will suit your needs better. The cost may be an issue, so you need to decide on your budget and how your business is likely to expand. There are variety off-the-shelf applications in the market. Among popular accounting software packages are Intuit QuickBooks and Sage Peachtree. (Read full article “Why Do You Need To Computerize Accounting Process?”)

Unemployment rate drops but job growth slows in April

The unemployment rate fell slightly to 8.1 percent and the economy
gained 115,000 jobs in April, the Labor Department reported on Friday.

Car crashes rise in tax week

Fatal car crashes rise an average of 6 percent during the week that
taxes are due, according to 30 years of statistics analyzed in a
Journal of Medical Association study. The increase in risk is similar
to that found on Super Bowl Sunday, a day notorious for drinking and
driving.

The findings suggest a variety of feelings associated with preparing
and paying one's taxes (including stress, irritability, impatience and
distraction) result in unsafe and aggressive driving. It makes sense
that late nights preparing tax forms, fretting about getting them
right and, of course, making timely payment could affect people's
judgment.

This year Tax Day falls on Tuesday, April 17th. You should be
particularly cautious driving this whole week.

Senate blocks Obama plan for 30% tax rate for millionaires

The U.S. Senate, by a vote of 51-45, has blocked consideration of the
Buffett Rule, a key initiative by President Obama to require
millionaires to pay a minimum tax rate of 30 percent. Republicans kept
the measure from receiving the 60 votes necessary to allow the Senate
to open debate.

Card processors and U.S. banks hit by security breach

Global Payments Inc discovered its systems were compromised by
unauthorized access. This data-security breach affects card-payment
processors and large U.S. banks that issue debit and credit cards.
Global Payments helps card companies processes electronic transactions
for merchants and determined that an unauthorized entity had accessed
its systems and possible customer card data in early March. .

Customers would not be held liable for any fraudulent charges that may
occur, banks and processors promised. Any financial losses from the
data breach would be shouldered by merchants, card issuers and Global
Payments rather than Visa or Mastercard, which operate payment
networks.

MasterCard announced earlier Friday that it was investigating whether
cardholder account data was improperly accessed. The payments company
has alerted law enforcement authorities and notified card issuers
about the potential breach of cardholders' account information.

Visa said in a statement Friday that it was "aware of a potential data
compromise incident at a third-party entity affecting card account
information from all major card brands." The company emphasized that
there had been no breach of any Visa system, "including its core
processing network VisaNet."

U.S. law enforcement authorities including the Secret Service are investigating.

Citigroup Inc has been notified by processors of the breach, while
Wells Fargo & Co said it was too early to comment on the impact. No
comment issued by Bank of America Corp. JPMorgan Chase & Co, as well
as American Express and Discover, which issue their own cards, said
they are monitoring customers' accounts and would issue new cards to
anyone whose information may have been compromised.

The friendliest tax burden states for retirees

The states are listed in order of tax friendliness from an overall tax
burden point of view, as measured by the Tax Foundation.

Alaska: Alaska might not seem like a retirement haven based on the
usual factors considered such as, say, weather. But it might be the
perfect place for one's golden years if taxes are a big concern.
Alaska doesn't tax personal income, including Social Security benefits
and pension income. And, there's no state-imposed sales tax. This is
not to say that you won't pay any taxes in Alaska. Instead, it means
that you'll pay other types of taxes, such as property taxes.

Nevada: Many retirees rely on income from several sources to make ends
meet these days. If you fall into that camp, Nevada might be the place
for you. This state doesn't tax income, Social Security benefits or
pension income. And its property taxes are reasonable, too. Its sales
tax, however, is higher than the national average.

South Dakota: It might not be the first or even the second state that
you think of when contemplating where to live in retirement. But South
Dakota is nothing if not a tax friendly state. The state doesn't tax
individual income, Social Security benefits or pension income. And the
overall tax burden is among the lowest in the nation.

Wyoming: There's no individual income tax on Social Security benefits
or pension income in Wyoming, according to CCH. But that's not to say
you won't have to pay any taxes in Wyoming. Property taxes and sales
taxes tend to be higher than the national average.

Texas: In Texas, there's no individual income tax. But property and
sales taxes tend to be higher than the rest of the nation.

Florida: There are plenty of reasons why people choose to retire to
the Sunshine state, the low tax burden being among those reasons.
There's no individual income tax on Social Security benefits or
pension income. There are pipers to pay, however, in the forms of
property and sales taxes.

Washington: Another state not generally viewed as a traditional
retirement haven is, however, income tax friendly for retirees.
There's no individual income tax on Social Security benefits or
pension income. But if you plan on spending lots money while in
retirement, Washington might not be your first choice. It has a
relatively high sales tax.

U.S. consumer confidence declined in March

A gauge of U.S. consumer confidence declined in March due to lower
employment expectations, while views on the present situation rose to
the highest level since 2008, the Conference Board reported Tuesday.
The consumer-confidence gauge fell to 70.2 in March from a February
reading of 71.6.

"The moderate decline was due solely to a less favorable short-term
outlook," and data suggest "consumers feel the economy is not losing
momentum," said Lynn Franco, director of the Conference Board's
consumer research center.

Generally when the economy is growing at a good pace, confidence
readings are at least 90.

U.S. stock climbed: S&P 500 above 1,400

U.S. stocks climbed Thursday, with the S&P 500 finishing above 1,400
for the first time in nearly four years after another round of strong
economic reports on jobless claims and manufacturing.

Economic news is good today. Weekly claims were the best they've been
in four years, and indicate the strength we've seen in the last six
months is going to continue.

Extending a winning run into a seventh session, the Dow Jones
Industrial Average rose 58.66 points, or 0.4%, to 13,252.76.

The S&P 500 Index added 8.32 points, or 0.6%, to 1,402.60, its first
finish above the 1,400 level since June 5, 2008.

The Nasdaq Composite gained 15.64 points, or 0.5%, to 3,056.37.

U.S. unemployment unchanged at 8.3 percent in February

U.S. employers added 227,000 jobs in February to complete three of the
best months of hiring since the recession began. The unemployment rate
was unchanged, largely because more people streamed into the work
force.

The Labor Department said Friday that the unemployment rate stayed at
8.3 percent last month, the lowest in three years.

And hiring in January and December was better than first thought. The
government revised those figures to show 61,000 an additional jobs.

U.S. home prices at lowest level since 2006

U.S. home prices fell 1.1% in December to bring the year-over-year
fall to 4%, according to the Case-Shiller home price index released
Tuesday.

The 20-city composite is at its lowest level since the housing crisis
began in mid-2006. Prices in hard-hit Detroit declined 3.8% in
December, and only Phoenix and Miami saw price gains.

Senate approved bill to extend payroll-tax cut

Senate lawmakers on Friday approved a bill to extend the current 4.2%
payroll tax through the end of 2012. Senators approved the bill by a
vote of 60-36.

The measure also extends prolonged jobless benefits and prevents
payment cuts for Medicare doctors.

The House approved the bill earlier Friday and it now goes to
President Barack Obama for signature.

Preparing Form 1096 to the IRS

Form 1096 is a summary return, which shows the totals from information returns and must be submitted to the IRS along with these returns, such as forms 1099, 1098, 3921, 3922, 5496 and W4-G. Form 1096 includes information specific to the employer as well as information specific to the forms being filed.

The form 1096 must be submitted to the IRS no later than the last business day of February each year, along with the applicable returns which it summarizes.

To Complete Form 1096:

• Enter the name of your business (as the "Filer") and address; a name of a person to contact, and an email address, phone number and fax number. 
• Enter your Employer ID Number (Box 1) or Social Security Number (Box 2), if you don't have an EIN. 
• In Box 3, enter the total number of forms you are submitting with this 1096. 
• In Box 4, enter the total federal income tax withheld on all the forms you are submitting. If you didn't withhold any federal income tax, indicate "0".
• In Box 5, enter the total amount of reported payments on all the forms you are submitting. 
• In Box 6, enter an "X" in the box for the type of form you are submitting. For example, if you are submitting 1099-MISC forms, enter an X in the 1099-MISC box.
• Check Box 7 if you will not be required to file Form 1096 in the future.
• Sign and date Form 1096 before mailing to the address noted in the instructions.

You must submit a separate 1096 for every type of return you have given to a recipient.

U.S. Unemployment Rate Falls to a 3-Year Low

Economy recovery seems finally to be reaching American workers as the government reported that the unemployment rate and the number of jobless fell to 8.3 percent, in January to the lowest levels since
early 2009.

The Labor Department's latest snapshot of the job market, released on Friday, makes clear that employers have been hiring more in recent months, with 243,000 net new jobs in January. The unemployment rate now stands at 8.3 percent, down from 8.5 percent a month earlier and from 9.1 percent as recently as last August. The report revealed job gains not just for the last month but for previous months. December job growth was revised to 203,000, from the original 200,000. The job gains for November, originally 100,000 jobs, were revised upward to 157,000, creating a picture of a job market that has been gathering steam.

UPS shift to mark-to-market pension accounting method

United Parcel Service Inc. is changing the way it accounts for gains and losses related to its pension plans. The change has no effect on the actual pension plans.

The shipping company will switch to recording pension-related gains and losses each year, rather than spreading the impact over several years. It follows several other major companies that have recently adopted the accounting method, such as AT&T Inc and International Business Machines Corp.

The accounting change will reduce fourth-quarter earnings by 51 cents a share, but should raise adjusted earnings by 3 cents. Full-year earnings will be reduced by 41 cents, but adjusted earnings will rise by 12 cents.

The company previously forecast adjusted earnings of $4.15 to $4.40 for the year.

U.S. banks are rely on their insurance for Europe’s Debt exposure

United States banks are betting that their insurance is going to pay out as the European financial crisis threatening a trail of defaults.

Five large American banks, including JPMorgan Chase and Goldman Sachs, have more than $80 billion of exposure to the most economically stressed nations (Italy, Spain, Portugal, Ireland and Greece) in the euro currency zone, according to a New York Times analysis of the banks’ financial disclosures.

These banks have made extensive use of a type of financial insurance, called credit-default swaps, to help them offset any losses that might occur if defaults swamped the five troubled nations. Using these swaps, along with other measures, the five banks have cut their theoretical exposure to the troubled countries by $30 billion, to $50 billion.

The Greek government on Sunday appeared close to a deal with the majority of its creditors that would lead to big write-down in the value of its debt. But even a deal could spawn a series of events that could lead to payouts on Greek credit-default swaps. While the Greek swaps would probably be paid, they represent only part of the $602 billion of swaps that have been written on the five troubled countries.

Some market participants now doubt credit-default swaps would work properly during periods of great financial instability. Credit-default swaps were also a big source of systemic weakness in 2008, when the American International Group (AIG) nearly collapsed because it could not make payments on its side of its swaps contracts.

Credit-default swaps can be dangerous because they have the ability to hit one side of the trade with a demand for an overwhelmingly large payout if a default occurs. The bank that sold the protection might then have to post a lot of cash to ensure it would make good on the swap. Large cash calls like that might drain some banks of liquid assets, causing systemic stress.

Why accounting method matters

The accounting method a business uses can have a major impact on the total revenue the business reports as well as on the expenses that it subtracts from the revenue to get the bottom line. Here's how:

Cash-basis accounting: Expenses and revenues aren't carefully matched on a month-to-month basis. Expenses aren't recognized until the money is actually paid out, even if the expenses are incurred in previous months, and revenues earned in previous months aren't recognized until the cash is actually received. However, cash-basis accounting excels in tracking the actual cash available.

Accrual accounting: Expenses and revenue are matched, providing a company with a better idea of how much it's spending to operate each month and how much profit it's making. Expenses are recorded (or accrued) in the month incurred, even if the cash isn't paid out until the next month. Revenues are recorded in the month the project is complete or the product is shipped, even if the company hasn't yet received the cash from the customer.

The way a company records payment of payroll taxes, for example, differs with these two methods. In accrual accounting, each month a company sets aside the amount it expects to pay toward its quarterly tax bills for employee taxes using an accrual (paper transaction in which no money changes hands, which is called an accrual). The entry goes into a tax liability account (an account for tracking tax payments that have been made or must still be made). If the company incurs $1,000 of tax liabilities in March, that amount is entered in the tax liability account even if it hasn't yet paid out the cash. That way, the expense is matched to the month it is incurred.

In cash accounting, the company doesn't record the liability until it actually pays the government the cash. Although the company incurs tax expenses each month, the company using cash accounting shows a higher profit during two months every quarter and possibly even shows a loss in the third month when the taxes are paid.