The AICPA has prepared a Q&A on individual and business tax-related provisions in the American Recovery and Reinvestment Act of 2009. CPAs, especially tax practitioners, will find the Q&A helpful in addressing client or employer inquiries. Among the subjects covered for individuals are the first-time home-buyer credit, college-funding tax credit, unemployment benefits, benefit for use of public transit and the alternative minimum tax exemption. For businesses, the Q&A highlights depreciation, expensing, capital gains, work opportunity credit and penalty relief from underestimating taxes.

Stimulus Act Extends COBRA Coverage; DOL Web Site Offers Details

The American Recovery and Reinvestment Act of 2009 provides a subsidy for the cost of COBRA coverage for employees who are involuntarily terminated between Sept. 1, 2008, and Dec. 31, 2009. The subsidy also applies to the employees’ family members who were covered under the plan immediately prior to the termination of employment. Assistance eligible individuals pay a reduced premium and the employer pays the rest. The employer then is reimbursed for the subsidy by taking a credit on its quarterly payroll tax return (Form 941). The Department of Labor’s Web site offers a COBRA premium reduction fact sheet, employer and employee FAQs, and other material on these new rules. Information also is available from the Internal Revenue Service.

Highlights of Board of Directors’ January Meeting

Following are some of the more significant actions and events that took place at the AICPA Board of Directors’ meeting Jan. 29 - 30:

AICPA President and CEO Barry Melancon reported on the Institute’s response to issues facing CPAs and the public as a result of the economic downturn, including the newly launched AICPA Economic Crisis Resource Center, enhancements to the CPA Job Finder program and the work of the AICPA Benevolent Fund to assist members in financial distress.
Several agenda items at the meeting addressed the high-priority “CPA pipeline” issue. In his report, Board Chairman Ernie Almonte described progress on the AICPA Leadership Academy, which will offer leadership development for CPAs between the ages of 25 and 35. The academy’s first class is set to take place in July. In addition, the Institute’s vice president of students, academics and membership discussed steps being taken to maintain a steady flow of new CPAs. Given the profession’s commitment to increasing diversity among CPAs, representatives from the National Association of Black Accountants were asked to provide an update to the board as well.
Staff members from the AICPA Washington office briefed the board on some of the changes to be expected under President Obama’s administration, including likely steps to improve regulation. The board also heard updates on the Institute’s steps to advocate on behalf of the profession and the public interest regarding important tax and pension legislation.
Melancon discussed a letter he sent to the CEO of H&R Block to protest its advertisements that are critical of the CPA profession and his ongoing dialogue with the company on the subject. In response, H&R Block said it would revisit its marketing efforts and discontinue running the ads referring to CPAs.
The board reviewed the AICPA comment letter to the Securities and Exchange Commission on the proposed International Financial Reporting Standards roadmap and will issue a comment letter before the Apr. 20 deadline. Board members also heard a report and agreed on points for a comment letter on a proposed new constitution related to the International Accounting Standards Board, which promulgates IFRS.
The board passed a resolution supporting the International Federation of Accountants' proposed Revised Framework for International Educational Standards, which amends its rules to accommodate both the education-based model for entry into the profession used in the United States and the experience-based model used in some other countries.
The board presented Bea Sanders, a former Institute vice president and long-time staff member, with an AICPA Special Recognition Award for contributions to accounting education and student development.

CHAIR’S CORNER

By Ernest A. Almonte, CPA, CITP, CFF
Chairman, AICPA Board of Directors

When times get tough, it’s good to know there’s one place you can turn for the professional support you need. Throughout the current recession, the Institute has been working hard to provide you with the right resources to address the many challenges you may be facing on the job and in your own financial life. I’m very pleased to tell you that as part of that effort, we launched the Economic Crisis Resource Center in Jan. This comprehensive online resource offers a rich array of material responding to every member segment. I encourage you to visit the site and see how we can help you, now and in the future.

As trusted objective experts, CPAs can be financial leaders at work, at home and in the community. The Economic Crisis Resource Center will help ensure you have the timely information and insights to be the professional people turn to for advice and guidance. The Center, which you’ll find at www.aicpa.org/economy, features:

Tools for minimizing the effects of a recession on your firm or company. Whether you have questions about risk management, financing and liquidity, personal financial planning, career issues or a wide range of other topics, this is the place to go.
Webcasts on credit and financing impacts. We’ve designed informative presentations to address the most pressing concerns for firms and companies.
Articles on strategic planning, budgeting and forecasting. And don’t miss the video, “Plan for the Worst and the Best Might Happen,” which is part of the Institute’s new free Webcast series -- Braving the Economic Crisis. In the video, we cover timely topics such as budgeting, updating forecasts, measuring success against your peers and adapting your capital plan.
CPE courses on fraud detection and maintaining the public trust.
Professional development resources, including the new CPA Job Finder, a great benefit in an uncertain economy. Job seekers can post résumés or search active job listings on the site. Employers can use the site to recruit qualified candidates.

The Center also is a quick and easy place to find other valuable resources, such as the AICPA Audit Risk Alert, Current Economic Crisis, as well as timely updates, including articles on topics such as the effects the Emergency Economic Stabilization Act of 2008 will have on individuals.

We will continue to develop new content to help you, your employers, clients and family navigate through these troubling times. A short video on the Web site’s homepage describes the Institute’s commitment to support you as you work to provide sound financial guidance and influence decision making.

In a tough economy, businesses and individuals turn to their CPAs for help in maintaining their financial equilibrium. I encourage you to turn to the Institute for the information and support you need to fulfill this role. Together, we can help the country reach a better place offering more hopeful opportunities for all.

FASB Initiates Projects to Improve Measurement and Disclosure of Fair Value Estimates

Robert H. Herz, chairman of the Financial Accounting Standards Board, announced the addition of new FASB agenda projects intended to improve the application guidance used to determine fair values and disclosure of fair value estimates. The projects were added in response to recommendations contained in the Securities and Exchange Commission’s recent study on mark-to-market accounting, as well as input provided by the FASB’s Valuation Resource Group. More information about the VRG and its members is available online.

The fair value projects address both application and disclosure guidance:

The projects on application guidance will address determining when a market for an asset or a liability is active or inactive; determining when a transaction is distressed; and applying fair value to interests in alternative investments, such as hedge funds and private equity funds.
The project on improving disclosures about fair value measurements will consider requiring additional disclosures on such matters as sensitivities of measurements to key inputs and transfers of securities between categories.

The FASB anticipates completing projects on application guidance by the end of the second quarter of 2009, and the project on improving disclosures in time for year-end financial reporting. Read the Proposed FASB Staff Position (FSP) FAS 107-b and APB 28-a.

Exposure Drafts of Proposed Auditing Standards Available

The Auditing Standards Board has issued the following exposure drafts as part of its Clarity Project:

Proposed Statement on Auditing Standards, Consideration of Laws and Regulations in an Audit of Financial Statements (Redrafted): Supersedes AU Section 317, Illegal Acts); comment period ends May 29.
Proposed Statement on Auditing Standards, Initial Audit Engagements, Including Reaudits—Opening Balances: Supersedes AU Section 315, Communications Between Predecessor and Successor Auditors; comment period ends May 29.
Proposed Statement on Auditing Standards, Audit Sampling (Redrafted): Supersedes AU Section 350, Audit Sampling); comment period ends May 29.

COSO Releases Guidance on Monitoring Internal Control

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) announced the release of its Guidance on Monitoring Internal Control Systems. Developed by COSO, of which the AICPA is a member, the guidance is designed to help organizations better monitor the effectiveness of their internal control systems and to take timely corrective actions if needed. The introduction is available for free download from COSO’s Web site.

The guidance consists of three volumes. “Volume I: Guidance” presents the fundamental principles of effective monitoring, linking to COSO’s Internal Control — Integrated Framework. “Volume II: Application” conveys in greater detail the principles outlined in Volume I and provides guidance to those responsible for implementing effective monitoring. “Volume III: Examples” provides case studies of internal control monitoring. The publication can be ordered in electronic or hard-copy format online.

New IFAC Framework Supports Accountants in Creating Sustainable Value

The recognition governments and many organizations have given to “sustainability” are changing business culture and society. The global challenge is to ensure that organizations remain profitable at the same time as improving their environmental and social performance. This requires radical changes in the way organizations do business and presents opportunities for accountants to take a significant role in helping organizations focus on the key drivers of long-term success.

The new Sustainability Framework, developed by the Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants, highlights the issues organizations must address to make sustainability an integral part of their business model. For example, it offers guidance on how to inject sustainability leadership into the management cycle, from making and executing strategic decisions to reporting on performance to stakeholders.

The Web-based Framework, which is available online from the Professional Accountants in Business section of the IFAC Web site, will be subject to ongoing review and development and new links and references to good practice will be provided over time. To help the development process, IFAC welcomes feedback from accountants and others on how the Framework presents the field of sustainability and the particular role of accountants in facilitating and supporting sustainability and sustainable development. Comments can be sent to Stathis Gould, Senior Technical Manager, PAIB Committee.

AICPA Supports Global Accounting Alliance’s Clarity Initiative

The AICPA is participating in an initiative undertaken by the Global Accounting Alliance, an organization consisting of the world’s leading accountancy bodies, to provide recommendations for improving financial reporting worldwide based on research and study. The GAA issued a key report recently, “Getting to the heart of the issue – Can financial reporting be made simpler and more useful?” The report draws on interviews conducted with financial regulators in the U.S., UK, Canada, Australia, China, South Africa, France, the European Commission and international regulators.

The GAA is arranging a number of roundtable events where regulators and other stakeholders in financial reporting around the world can begin discussions on the ideas emerging from the research. This will assist the broader adoption of principles based standards and address the increasing complexity and detail in company financial statements. There have been increasing complaints from companies, investors and lenders about the length and complexity of financial statements, according to the report. Many users say that some of the most important information just isn’t there, or isn’t easily accessible or understandable. The AICPA will help organize an event this spring in New York City. The GAA report, “Getting to the heart of the issue – Can financial reporting be made simpler and more useful?,” is available for download from the GAA Web site at www.globalaccountingalliance.com.

SBA Issues Modernized SOP for Lender and Development Company Loan Programs Adding Licensed CPA Following SSVS 1 or ABV as “Qualified Source”

The U.S. Small Business Administration has revised loan processing SOP 50-10 5(A), which becomes effective Mar. 1, 2009. Included in this revision, under “Appraisal and Business Valuation Requirements” of Subpart B, Chapter 4, is a requirement for an “independent business valuation” from a “qualified source” for all loans to finance a change of ownership that are either in excess of $250,000 or if there is a close relationship between the buyer and seller. “Qualified source” is defined to include a licensed CPA who performs the business valuation in accordance with the AICPA’s “Statement on Standards for Valuation Services No. 1,” as well as those holding the AICPA’s Accredited in Business Valuation credential. [See page 181 & 182 of the SOP.] The complete text of SOP 50-10 5 (A) can be found by clicking here. To download a free copy of SSVS1, click here.

RSS Headline Feeds Available for Daily and Monthly AICPA E-Newsletters; Daily Also Has Widget for You

Put more news on your company or firm’s Web site. RSS headline feeds for the AICPA’s family of e-brief products are available. Just allocate some room on your Web site (work with your Information Technology team) and design the space so it has the look and feel of your homepage. The headlines of the e-newsletter automatically will feed onto your site with each issue. Here are the links to use for the RSS headline feeds:

CPA Letter Daily, http://smartbrief.com/news/cpa/rss.jsp
IFRS Report, http://smartbrief.com/news/ifrs/rss.jsp
InfoTech Update, http://smartbrief.com/news/aicpait/rss.jsp
Financial Planning Digest, http://smartbrief.com/news/pfp/rss.jsp
Forensic & Valuation Reporter, http://smartbrief.com/news/fvs/rss.jsp

Other than the Daily, the publications are monthlies. The Daily also has a widget you can place on your site. Go to www.aicpa.org, locate the CPA Letter Daily box in the upper right corner and use its Grab this! function. The widget will replicate on the Web page you designate (the widget uses Flash which may not be compatible with your existing software platform). If you need assistance, contact Greg Wright at gwright@aicpa.org.

AICPA Continues Efforts to Improve Diversity in Accounting Profession

The AICPA has a long history of improving the diversity of the nation’s CPAs. For more than 35 years, the AICPA has identified, recognized and supported strategies and efforts within the organization and profession so that members of the CPA profession would better reflect the population at large. The Institute’s Minority Initiatives Committee oversees a comprehensive program of scholarship support, faculty development and partnerships with outreach organizations. Additionally, the AICPA’s Fellowship for Minority Doctoral Program has been one of the Institute’s most successful programs. The results are strong since the inception of this program in 1975, with 97% of PhDs funded teaching accounting at universities throughout the U.S.; 91% of those PhDs are also CPAs.

As part of the Institute’s commitment to diversity, the AICPA partnered with The PhD Project. The PhD Project’s mission is to increase the diversity of corporate America by increasing the diversity of business school faculty. They attract African-Americans, Hispanic-Americans and Native Americans to business Ph.D. programs, and provide a network of peer support on their journey to becoming professors. As faculty, they serve as role models attracting and mentoring minority students while improving the preparation of all students for our diverse workplace and society. Since 1998, the AICPA has contributed funds to The PhD Project and has been supportive in other ways as well. Denny Reigle, AICPA Director of Academic and Career Development, is the current chair for The PhD Project.

In addition, the Institute’s involvement with the PhD Project helped lead to the creation last year of the Accounting Doctoral Scholars program, aimed at reversing the shortage of Ph.D. accounting faculty in auditing and tax in U.S. colleges and universities. For more information about the Accounting Doctoral Scholars program, e-mail ADSprogram@aicpa.org or call 919.402–4524.

New AICPA Study Shows Many Americans Delaying Retirement

After a year in which the U.S. saw rising job losses, crashing financial markets, deep reductions in consumer confidence and poor pension performance, a new AICPA study shows clients of financial planners have made adjustments in their lives to match the changing economic environment.

CPA financial planners surveyed reported that nearly 35% of their clients approaching retirement age are postponing leaving the workforce because of recent economic conditions. This number is a 3% increase from the 32% who last year said they were planning to delay their retirement. However, a majority of those who are postponing retirement (67%) plan to delay it no more than five years. Only 9.6% are postponing for six years or more.

Sixty percent of CPA financial planner clients are postponing vacations, 52% are postponing car purchases and/or the buying or selling of a home and 42% have canceled home renovations. Only 11% of CPAs have clients who have no plans to change their current spending.

AICPA Sponsors Greatest Potential Impact on Practice Award

The winners of the first Greatest Potential Impact on Practice Award for research in management accounting are Janek Ratnatunga, Norman Gray and Bala K. R. (Kashi) Balachandran. This new award, given by the American Accounting Association’s Management Accounting Section and sponsored by the AICPA, Chartered Institute of Management Accountants (CIMA) and Society of Management Accountants of Canada (SMAC), recognizes academic papers considered to be most likely to have a significant impact on management accounting practice. The award was presented to the three winners for their research and work on the paper, “The Capability Economic Value of Intangible and Tangible Assets (CEVITA™): The Valuation and Reporting of Strategic Capabilities,” which was originally published in Management Accounting Research, CIMA’s research journal.

The award-winning paper by Ratnatunga, Gray and Balachandran introduces the CEVITA™, a new technique for measuring and reporting the impact of tangible and intangible asset combinations on the value creation potential, or strategic capability of a business.

Ratnatunga has been a professor of accounting and finance at Monash University in Australia since 1990, and has served as chair in business accounting since 1993. Previously, Ratnatunga practiced as a chartered accountant with KPMG and has held previous positions in academia at the University of Canberra and at the Universities of Washington and Rhode Island.

Balachandran is a professor of accounting and operations management at New York University Stern School of Business. He received his Bachelor of Engineering in Mechanical Engineering from the University of Madras, India and attended the University of California, Berkeley for his Master of Science in Industrial Engineering and Doctor of Philosophy in Operations Research.

Now retired, Gray previously was the head of the Airborne Early Warning and Control Division of the Defense Materiel Organization, within the Department of Defense in Australia.

Irvin F. Diamond Receives AICPA’s 2008 PFP Distinguished Service Award

The AICPA has named Irvin F. Diamond, CPA/PFS, of Albuquerque as the recipient of the 2008 Personal Financial Planning Distinguished Service Award. The PFP Distinguished Service Award is given to an AICPA volunteer who significantly contributes to the advancement of personal financial planning as a practice discipline and exemplifies the CPA as financial planner.

Diamond is a founding member of the National CPA Financial Literacy Commission, the leadership body for the CPA profession’s financial literacy efforts, 360 Degrees of Financial Literacy (www.360financialliteracy.org), designed to help all Americans improve their financial understanding, and Feed the Pig (www.feedthepig.org), a public service announcement campaign targeted to 25 – 34 year-olds to encourage saving and spending wisely. Through membership in the Financial Literacy Speakers Bureau, he remains active with these efforts. In addition, he has served as vice president and member of the AICPA’s Board of Directors and was a past president of the New Mexico Society of CPAs.