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SIGNS OF THE TIMES
An Inca 1040?

Think accounting is the invention of modern minds? Not likely. Two Harvard researchers are convinced that ancient Incas tracked inventory and taxes through a three-tiered accounting system using knotted bundles of threads.
The researchersand many scholars pondering their reportbelieve the colorful knotted quipu strings found at a 13th century archaeological site near Lima, Peru, formed an early abacus system the Incas used to track the units of labor and time upon which taxes were based. The first two tiers of knots are double-entry accounts, they think, and the third is a summary of the numbers.

If their interpretation is accepted by the academic community, it will put to rest the Inca paradoxthe question of why these early Americans had the only complex empire with no written form of communication. They may have had no novels, it seems, but they did indeed have books.

Cheryl Rosen

ON THE RECORD
Bubbling Up

Alan Greenspan, June 9 testimony to the Joint Economic Committee of Congress

There can be little doubt that exceptionally low interest rates on 10-year Treasury notes, and hence on home mortgages, have been a major factor in the recent surge of homebuilding and home turnover, and especially in the steep climb in home prices. Although a bubble in home prices for the nation as a whole does not appear likely, there do appear to be, at a minimum, signs of froth in some local markets where home prices seem to have risen to unsustainable levels.

Although we certainly cannot rule out home price declines, especially in some local markets, these declines, were they to occur, likely would not have substantial macroeconomic implications. Nationwide banking and widespread securitization of mortgages make it less likely that financial intermediation would be impaired than was the case in prior episodes of regional house price corrections. Moreover, a substantial rise in bankruptcies would require a quite-significant overall reduction in the national housing price level because the vast majority of homeowners have built up substantial equity in their homes despite large home equity withdrawals in recent years financed by the mortgage market.

I.Q. TEST
(Innocuous Question)

Whats My Line?
Although some of these jobs still exist, most CPAs are not likely to see these titles on form 1040. Can you identify them?

1. Mercer
2. Collier
3. Cutler
4. Draper
5. Costermonger

Robert Lester Porter, CPA

NUMEROLOGY
Travel With Confidence
Americans spent more than $1 billion on travel insurance in 2004, more than 80% of it on per-trip policies that included cancellation coverage. The U.S. Travel Insurance Association says the top misconception consumers have about the need for travel insurance is that credit card companies or travel suppliers such as airlines or cruise lines will reimburse those who have to cancel trips. Despite this, more leisure travelers taking cruises, air/tour vacations and international trips last year did choose to protect their travel investment. An association survey showed 30% of them purchased travel insurance coveragea significant increase from the estimated 8% to 10% of travelers who did so before September 11, 2001.

GOLDEN BUSINESS IDEAS
Drucker on Motivation

Peter Drucker, the management guru, maintains that people motivate themselves. You cant motivate them; you can only thwart their motivation.

To be an effective leader you must recognize that the business youre really in is the obstacle identification and removal business.

SIGNS OF THE TIMES
Telephones and Taxes

Pull out your cell phone billor even the one for your land lineand look at the long list of federal, state, county and local taxes. The Washington, D.C.-based Council on State Taxation (www.statetax.org) says state and local taxes imposed on telecommunications services are more than double the average levy on general business.

A council study showed the average effective state and local tax rate on telecom services to be 14.17% compared with only 6.12% on general business. The companies themselves bear part of the compliance burdenin 2004 the average provider filed 47,921 tax returns (over 170 returns per day) compared with only 7,501 returns for an average general business. This reflects the fact that telecom companies have more than 6,683 taxing jurisdictions to contend with.

HOME FRONT
Move or Improve?

Whether you decide to remodel your home or move to a new one, it could cost you big bucks. Here are some things to consider when making the decision.

Reasons to stay
You will create the home you want.
Remodeling can be a good investment.
You like your neighborhood and the schools are good.
You enjoy remodeling.

Reasons to move
You want better schools.
Your home has an awkward layout.
Your home already is the largest and nicest on the block.
You dont like your neighborhood.

Source: Adapted from Remodel or Move? Make the Right Decision by Dan Fritchen, ABCD Publishing LLC, 2005.

Top 10
Cities for Entrepreneurs

Hot spots to start a business

Minneapolis
Norfolk/Virginia Beach/Newport News, Va.
Washington, D.C.
Atlanta
Miami
Fort Lauderdale, Fla.
Charlotte/Gastonia/Rocky Hill, N.C.
Salt Lake City
West Palm Beach, Fla.
Orlando, Fla.

Source: Entrepreneur and D&B, 2003.

Top 10
Threats to Investors

These are some common ploys often used to cheat investors.

1. Ponzi schemes. Using money from later investors to pay early ones until the scheme collapses is an old con that still finds new victims.

2. Unlicensed individuals selling securities. Unlicensed sellers should be a red flag for investors.

3. Unregistered investment products. Most legitimate investments must be registered with the state before they can be offered for sale to the public.

4. Promissory notes. Notes marketed to the general public typically turn out to be scams. If the interest rate sounds too good to be true, it probably is.

5. Senior citizen investment fraud. Con artists continue to target the savings of retirees with fraudulent schemes. Before investing check with state securities regulators for proper licenses and any complaints against the broker.

6. High-yield investments. Risk-free, guaranteed high-yield instruments are usually none of these things.

7. Internet fraud. A bad deal isnt any better because its offered on the Internet. Many online scams are new versions of old schemes.

8. Affinity fraud. Con artists are using victims religious, ethnic or other affiliations to gain their trust and then steal their life savings.

9. Variable annuity sales practices. This product isnt suitable for everyone, particularly seniors. Sales reps frequently fail to disclose high surrender charges and steep sales commissions.

10. Oil and gas scams. With high oil prices and instability in the Middle East, regulators fear con artists may renew schemes promising investors easy profits on these commodities.

Source: North American Securities Administrators Association, Washington, D.C., www.nasaa.org.