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LUCA ONLINE^TM UPDATE

More and more material and information is becoming available on Luca Online^TM as an increasing number of members of the New York State Society of CPAs receive the free software that enables them to reap the benefits of electronic bulletin board technology. The process of bringing the several thousand NYSSCPA members who have requested the software onto the system is proceeding, with a new target of September or October when other subscribers of The CPA Journal will be mailed the free software.

The capabilities of Luca Online^TM are expanding. The developers have identified August as the month that basic, key-word search capabilities will be made available to assist in locating information on Luca. Also, the private forum capability will be expanded to more general availability, and e-mail for NYSSCPA members will be expanded to the Internet.

Beginning this month, Luca Online^TM will present a weekly news feature of the latest developments in state and Federal taxation, legislative and regulatory matters, and accounting and auditing professional issues. One of the first news briefs is about the workload-compression relief legislation introduced into Congress. As with most of the news items, if you need to know more--let's say you would like to read the actual legislation--you can click down to a subsection and view the details. Look for the news section when signing on. It will also be a button on the main menu. Technical editor Anthony Mancuso has labeled the news service "Latest Update on Current Affairs." *

ASB FINALIZES STATEMENTS ON AGREED UPON PROCEDURES AND PROPOSES ELIMINATION OF UNCERTAINTY DISCLOSURESAt its June meeting, the Auditing Standards Board (ASB) approved the issuance of the twin final statements on agreed-upon procedures. One of the statements will be a statement on auditing standards (SAS) and will give guidance on the performance of agreed-upon procedures to elements, accounts, or items of a financial statement. The other will be a statement on standards for attestation engagements (SSAE) and will generally cover agreed-upon procedures engagements not covered by SASs. The idea behind the two statements is that the independent auditor or accountant performs procedures agreed to by the client and the third-party user, reports what he or she finds, and gives no negative or any other assurance as a result of having performed the procedures. In the opinion of Dan Guy, vice president, auditing of the AICPA, agreed upon procedures engagements are a way for the CPA to give clients and third parties information about financial statement items and other assertions without incurring excessive liability risk. The effective date for both new statements is for reports on agreed-upon-procedures engagements dated on or after April 30, 1996, with earlier application encouraged.

Also at the June meeting, the ASB decided to move forward with an amendment to SAS No. 58, Reports on Financial Statements, to eliminate the requirement for an explanatory paragraph relating to situations involving uncertainties. The requirement for an explanatory paragraph was a carry over from what used to be called "subject to" opinions under earlier auditing standards. By no means unanimous, the decision was influenced by the issuance of SOP 94-6, Disclosure of Certain Significant Risks and Uncertainties, and other developments, which have led many to feel the required explanation in the auditor's report is no longer meaningful. *

A recent study has shown that The CPA Journal ranks high in familiarity among leading academics throughout the U.S. Responses from 181 senior accounting faculty at the Business Week (1991) "Best 40 MBA Programs" ranked The CPA Journal 12th among 44 accounting journals; over 84% of the respondents indicated that they were familiar with The CPA Journal. For the 44 accounting journals tested, familiarity scores ranged from a low of 18 percent to a high of 98 percent.

The full study, by Professors Lawrence D. Brown and Ronald J. Huefner of the State University of New York at Buffalo, appears in the summer 1994 issue of Contemporary Accounting Research. *

THE CPA JOURNAL RANKS HIGH

8AUGUST 1995 / THE CPA JOURNALTHE FUTURE OF ASSURANCE SERVICES STARTS TO TAKE SHAPERobert K. Elliott, CPA, chair of the AICPA Special Committee on Assurance Services, at a recent state society annual conference, spoke of the work of the committee to date and the direction the project seems to be heading. The committee is presently in the research phase where it is attempting to identify the needs of assurance services users. In this early phase, the committee has looked at the reasons for the apparent decline in perceived value of the audit of historical financial statements in today's information age. The committee feels there are two choices:

* Allow the value of assurance services to continue in decline by not modifying the services to reflect the changing nature of information and its sources. The final blow would be the absorption of accountancy into other industries.

* Turn assurance services into a growth industry, building on the needs of users of the expanded world of information.

The second choice, as seen by Elliott, involves broadening assurance services to cover nonfinancial information as well as financial, rendering opinions on relevance as well as reliability, and reporting on systems as well as documents. Elliott can see the time that someone considering the purchase of an automobile online over his or her PC will click on a CPA icon to gain assurance about the reliability of the information about the automobile. For this assurance "check," the prospective purchaser would incur a modest fee.

In the next phase of the project, the committee intends to explore new possible services, without restriction from prior standards, definitions, or regulations.

The final product will be specific recommendations for expanded services and the framework within which they will be performed. It is Elliott's goal not to be just another special committee that makes recommendations to pass on to yet another special committee. *

ACCOUNTING AND REVIEW SERVICES COMMITTEE LIKES ASSEMBLYGUIDANCE ON AUDITOR'S REPORTS BECAUSE OF CHANGES TO YELLOW BOOK NOT FORTHCOMINGThe AICPA Accounting and Review Services Committee (ARSC) is seeking a solution to the conundrum practitioners often face of trying to provide financial information, on a cost/benefit basis, to owners and managers of clients who do not need all the bells and whistles of full GAAP presentations. AICPA chair Robert Israeloff is especially interested in a solution having raised the issue as part of his agenda last fall. At its June meeting, ARSC viewed videos of focus groups of practitioners who discussed this and other related practice issues. It also reviewed proposed solutions, including a report from a task force of CPAs from the NYSSCPA under the leadership of its president, Brian Caswell.

According to Thomas Kelley, AICPA group vice president, technical services, ARSC concluded there is a problem in need of fixing. AICPA staff was requested to proceed with the drafting of a proposed amendment to existing statements on standards of accounting and review services that would borrow from the world of forecasts and projections by introducing the concept of an "assembly" of historic financial (or nonfinancial) information to accounting and review services. The approach being drafted would permit an accountant to perform an assembly service of financial information for internal use only that would not have to conform to GAAP or OCBOA and would not require any disclosures about this lack of conformity. The information assembled would merely be marked with an appropriate legend restricting its use to those inside the organization. Kelley indicated that the proposed amendment is likely to contain requirements for an engagement letter that would clearly set forth the nature of the assembly service and the restrictions for the use of the assembled information.

Kelley also said that this service would be a completely optional one. In addition, the long-term view would be not to promote the service as a lower level one, but as an alternative bringing added value to the client by introducing nonfinancial information to the financial data, such as sales backlog, average sales per employee, and the like.

Kelly expects the draft amendments to SSARS will be considered at ARSC's August meeting. *

The 1994 revisions to Government Auditing Standards ("the yellow book") will require changes to auditor's reports on general purpose financial statements, internal control structure based on an audit of general purpose financial statements, and compliance with laws and regulations based upon an audit of general purpose financial statements. The AICPA usually gives guidance on the wording of such reports in the state and local government units audit guide or in SOPs. However, OMB Circulars A-128 and A-133, which give guidance for single audits of state and local governments and not-for-profit organizations, have not been revised to reflect the new yellow book. As a result, reports under those circulars continue to follow prior guidance set forth in the 1994 revision of the audit and accounting guide Audits of State and Governmental Units and SOP 92-9. It is believed that the AICPA will not issue revised reporting guidance as a result of the new yellow book until the two circulars are revised. *XBOOK REVIEW:
ADVISORY COMMENTS FOR GROWTH AND PROFITABILITY: A GUIDE FOR ACCOUNTANTS AND CONSULTANTS

By Peter F. Stone and Mark L. Frigo

Irwin Professional Publishing, 188 pages, $50.00

Review by Alexander A. H. Bohtling, CPA, retired from Deloitte & Touche LLP

This book presents a constructive guide to the types of advisory services that a CPA firm can provide to clients. As the book points out, clients expect CPAs to help them gain and increase profitability. At the same time, it is a matter of record that CPAs have considerably expanded their professional practices by offering their current and prospective clients the benefit of vast experiences obtained largely by servicing other clients, as well as the knowledge gained from attending continuing professional education seminars.

Separate chapters cover the following areas: what business advisory comments can do; identifying problems; from symptom to benefit; advisory comments--political content; cross-selling by business advisory comments; help from the microcomputer; writing guidelines; and example advisory comments. These are followed by two helpful appendices.

The authors point out that as auditing is becoming more competitive, there is greater need for constructive advisory services, which are covered in considerable detail in this volume. Importantly, the book emphasizes that the auditors' suggestions in advisory reports can improve the clients' growth and profitability.

To avoid presenting the client with unpleasant surprises, the authors suggest discussing the prospective contents of the commentary report before it is presented in final form.

Also, in the chapter--writing guidelines--it is strongly recommended to use short sentences and short words, and to write concisely. Examples of commentary reports are provided in a separate chapter.

The two appendices, comprehensive advisory comment survey questionnaire and business advisory comment checklist, should be very useful for accountants and consultants.

With regard to the authors, Peter F. Stone, after many years as an instructional designer with the accounting firm of Grant Thornton, is a lecturer at the school of accountancy at DePaul University, and Mark L. Frigo is professor of accountancy at DePaul University and program administrator for the MBA program in management accounting.

In your reviewer's opinion, this book provides useful advice for accountants and consultants involved in the compilation and presentation of management reports to their clients. *

SMALL BUSINESS AGENDA SETWashington's political elite, from President Clinton to Senate Majority Leader Bob Dole and House Speaker Newt Gingrich, personally laid out their economic ideas before nearly 2,000 main street activists gathered at the White House Conference on Small Business held in June 1995. One of the purposes was to craft a legislative agenda to assist small businesses operating in today's complex economic and regulatory environment. National Federation of Independent Business (NFIB) president Jack Faris, said the agenda could serve as a guidebook for economic growth into the next century.

Nearly half of the agenda items supported by the delegates to the conference were key recommendations promoted by NFIB. Nine of the top 10 mirrored NFIB's legislative agenda, presented in January to the new Congress, which includes calls for action on issues such as tax simplification, excessive regulation, lawsuit abuse, and health-care reform.

Entrepreneurs from all 50 states discussed ways to boost jobs and solve problems that affect small-businesses during the three-day conference. The small business owners also held a vote to prioritize topics and present a small business "action agenda" to the President and Congress.

The delegates to the conference approved the following
10 recommendations:

* Clarify the definition of independent contractor,

* Allow 100% business-meals tax deduction,

* Strengthen the Regulatory Flexibility Act,

* Repeal estate taxes,

* Reform Superfund environmental law,

* Reform health care,

* Simplify pension rules,

* Enact intellectual property rights,

* Enact regulatory reform, and

* Reform liability laws/civil justice system. *

10AUGUST 1995 / THE CPA JOURNALTOP INTERNATIONAL FIRMS FOR 1994AN UNUSUAL CREDENTIAL

The Alabama CPA, the magazine of the Alabama Society of CPAs, recently reported on a member with an unusual credential for a CPA: MD. Groman Jones, MD, CPA started taking premed classes at Memphis State while teaching there. Dr. Jones then taught at the University of Alabama-Birmingham for two years before entering medical school on a full-time basis.

Earlier this month, Dr. Jones joined Birmingham's Kirklin Clinic as a specialist in internal medicine. As for his accounting background, Dr. Jones feels it will be a great resource. "As much as we want to be altruistic about it, medicine is a business now, and it has to be economically viable. Physicians are not well trained to run a business, and a lot of disastrous economic decisions are made. My hope is that the organization may benefit from my prior background." *

The British accounting journal Accountancy recently reported the top performing international firms for 1994. Topping the list this year was Arthur Andersen with $6.7 billion in fee income. KPMG Peat Marwick won the silver medal for 1994 with $6.1 billion in fee income, and Ernst and Young took the bronze with $6.0 billion.

The largest non-Big Six firm, BDO International, ranked seventh with $1.1 billion in fee income, followed by Grant Thornton International with $1.0 billion. BKR International led the entire field in growth (17.5%) and was ranked 15th. The firm with the lowest growth was BDO International (.4%). *

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NINTH CIRCUIT HOLDS "GROSS FEE" LITIGATION COSTS DEDUCTIBLE

By Joseph A. Bailey, Jr., Price Waterhouse LLP

In May, the Ninth Circuit Court of Appeals unsettled decades of case law pertaining to attorney-client fee contracts. Costs that firms currently capitalize and may never deduct or may deduct after years of litigation followed by a client's default, may, with some planning, be currently deductible! This decision should cause legal and accounting firms to rethink the contractual relationships they have with clients.

Boccardo's quest for this result began with a 1987 Claims Court decision that he lost. In that case, the court held that Boccardo's cash-basis law firm could not deduct disbursements it made on behalf of clients under a traditional contingent fee arrangement. That type of arrangement anticipates that the firm would "pay all preparation and trial costs," which typically include filing fees, deposition costs, medical expenses, expert witness fees, and investigation expenses. The agreement became known as the "net fee" agreement because it provided that litigation costs would be subtracted from any settlement or judgment prior to calculating the law firm's charge for professional services. Under traditional case law, these costs were advances to the client and not deductible by the firm unless the client reneged on the obligation to reimburse the firm in the event the litigation was unsuccessful.

Undeterred by the 1987 decision and with the advice of a creative tax advisor, Boccardo began using a new arrangement. Under the new gross fee approach, the firm agreed that its fee for professional services (i.e., fees and expenses) would be a fixed percentage of the gross amount recovered either through settlement or a slightly higher fee if recovered through a judgment. The agreement also provided that, except in the event that a client terminated the relationship, the law firm would pay litigation costs.

Since litigation costs were not reimbursable under a gross fee method, the firm deducted them when paid. The IRS disagreed and disallowed litigation costs as firm expenses because--

* the litigation costs were paid on behalf of clients with the expectation of reimbursement,

* the gross-fee agreements were substantially similar to the net fee arrangements, under which courts have held litigation expenses to be loans or advances,

* the California Code of Professional Responsibility only permits an attorney to advance litigation costs, and

* the firm accounted for the costs on a client-by-client basis.

This time, Mr. Boccardo decided on the Tax Court for his forum...and once again lost. In its memorandum decision, the Tax Court admitted that the gross fee arrangement differed from the net fee arrangement because there was less certainty that litigation costs would be recovered under the gross fee approach. However, the Court reasoned that the economic difference between the two methods only affected the "degree of contingency."

The Ninth Circuit overruled after analyzing the gross fee and net fee arrangements and concluding their economic results were different enough that the lower court's sole reliance on the law pertaining to net fee contracts was wrong. The Court said, "The plain fact is that, under the gross fee contract, the [law] firm, like other businesses, can only make a profit if it succeeds in deriving gross fee revenue that exceeds its own expense--that is, if it succeeds in keeping its own costs, including the type singled out by the IRS, lower than the fees it obtains over the course of a given year from the clients whose cases are successful." The Court commented that a personal injury law firm necessarily must pay some client costs and that it is ordinary practice to do so. The Court was not sidetracked with what costs constitute "litigation costs." It simply held that the economics under the gross fee contract were different enough to generate ordinary and necessary expenses for the law firm at the time of payment.

The Court of Appeals addressed the ethical issue by noting that the gross fee contracts do not "violate a law of the U.S. or a state law that is generally enforced" and, therefore, are not subject to IRC Sec. 162(c)(2). Because California law did not prohibit a lawyer from paying litigation costs, this issue was not relevant.

Law firms that use the gross fee approach and currently capitalize client disbursements should realize that they cannot change their method of accounting for these costs without IRS permission. To obtain permission, a firm should file a Form 3115 within the first 180 days of the year in which the change in accounting method will take place. If a firm, however, is using the net fee method, it can switch to gross fee arrangements with clients and, because it would not constitute a change in accounting method, not request IRS permission to expense these costs.

There are two morals to this story: First, professional firms should revisit their fee arrangements to determine if the firm's business approach will accommodate a gross fee arrangement. Second, if at first you don't succeed, try, try again. Boccardo's persistence and creativity clearly paid off in the end.

Sources: Boccardo v. Commissioner, No. 93-70850 (9th Cir. 1995), James F. Boccardo v. Commission, 65 TCM 2739 (1993), and Boccardo, (12 Cl. Ct. 183) (1987). *

DO DRESS-DOWN FRIDAYS DISCOURAGE MARKETING?

By Troy A. Waugh, CPA, Waugh & Company

All across America, there is a mounting wave of opinion that we should loosen business dress codes. Articles in such business publications as The Wall Street Journal, Forbes, Fortune, and Business Week, extol the "dressing-down" of corporate America. When IBM announced it would no longer enforce its legendary blue-suit, white-shirt code, it made headlines. Bill Gates and David Geffen are rarely seen sporting a tie, and fashion magazines feature clothes that would have earned you a glacial stare at the better restaurants just 10 years ago.

Like other businesses, accounting firms are grappling with this issue. Most firms cite "staff morale" as a good reason for allowing "dress-down" Fridays. And yet, accounting firms that permit dress-down Fridays may unwittingly discourage marketing and selling. Why? Because partners and staff may start--perhaps even unconsciously--to avoid scheduling important meetings with clients, prospective clients, and referral sources on that last day of the week. The result? You've just reduced the time available for marketing, client relations, and business development by 20%.

And consider this. What are you going to do if a client or referral source calls you on a Friday and issues you a last-minute invitation to a really important meeting--say, with a prospect you've been courting for years? Or, your most important client bumps into a member of your staff downtown, and that person is wearing a T-shirt and Levis? CPA firms that work with attorneys in litigation consulting frequently get summoned at the last minute to an all-important deposition. Will your staff member have time to rush home, change into a suit, and still make the meeting? What did that just cost you in terms of lost efficiency and downtime?

If you're experiencing some confusion about how to establish a livable dress code for your office, consider the following suggestions.

Remember that people still judge a book by its cover. All those corny adages like, "You'll never get a second chance to make a first impression" are still true--even in the turbulent '90s. The client of an accounting firm can't easily judge the quality of your work, so he or she uses tangible, visible cues as indicators of that quality. That means you could be judged for your office decor, the quality and elegance of your report cover, and how your people dress. Only think about perfumes and cosmetics: the more elegant the packaging, the higher the price--even though the basic ingredients are fundamentally the same.

So how do you want to be perceived? Dime store or Neiman-Marcus?

When people see casual attire, their mind does not register premium pricing. Casual attire, austere office decor, and cheap report covers all transmit the idea that you are in the business of low-cost (and, by implication, low-quality) service. Do you really want to transmit this kind of message?

Here's another thought. At airline, rental-car, and hotel check-in counters, people who are dressed in business attire invariably receive more prompt and courteous attention than travelers who are in dungarees. Over 80% of what people see when they look at you is, literally, what you wear. And people form all kinds of judgments about you, based on what they see.

How would you feel if, the next time boarding American Airlines, you saw that the pilots were wearing flannel shirts, jeans, and tennis shoes, instead of their immaculate navy-style uniforms? Would it affect your sense of confidence in their credentials?

To summarize, before you consider allowing "dress-down" Fridays, think about the potential cost of this decision. Brandeis University research fellow Robert Goldberg has noted that two people meeting for a business deal will always put on suits as a token of respect for each other. Show how much you respect the quality of your client relationships and the caliber of your staff by maintaining the highest standards, given the norms of your community. *

NEW NETWORK FOR CPASA Kansas City company announced a nationwide network of support for regional CPA firms seeking to perform ISO services for their clients.

The Ironbridge Group, Inc., a developer and publisher of ISO training and implementation materials, has established the Ironbridge CPA/ISO Network. The network will provide member firms exclusive access in their market area to training programs developed by Ironbridge as well as marketing and technical support.

Al Lund, president of Ironbridge Group, commented on the creation of the network. "When a company begins considering ISO registration, where do they look for assistance? Their CPA firm often receives the first call. In many cases, the CPA is as knowledgeable about the company and its systems as anybody outside the organization itself, which dramatically reduces the learning curve. What's more, CPAs are experienced in documentation and documentation needs, and understand first-hand the concept of third-party audits...both of which are critical to the ISO 9000 process."

Among the resources available through the network is the multiple-session program "Strategic Quality: Building the Foundation with ISO 9000," the one-day ISO documentation workshop "Taming the Paper Tiger," and a three-day workshop on internal quality audits, "Roadmap for Quality."

For more information about the Ironbridge CPA/ISO Network call (800) ISO-9001. *

XTHE ARMEY-SHELBY FLAT TAX

By Andre S. Montero, CPA, Kingsborough Community College

Politicians as far left of the political center as former California Governor Jerry Brown and as far right as Speaker of the House Newt Gingrich have expressed an interest in replacing the current Internal Revenue Code with a flat tax. With politicians on both sides of the political aisle expressing support, it is time to take the possibility of a major overhaul of the Internal Revenue Code seriously.

On July 14, 1995, the House Majority Whip Dick Armey and Senator Richard Shelby are scheduled to introduce to Congress The Freedom and Fairness Restoration Act, which they describe as a comprehensive plan to shrink the government and grow the economy. The cornerstone of the bill is a plan to replace the current tax system with a low, simple flat tax. The act provides for an individual wage tax and a business tax.

Individual Wage Tax. Starting in 1995, all wages, salaries, and pensions would be taxed at a flat 20% rate. In 1997, the rate is scheduled to drop to 17%. A single person would be permitted a personal exemption $13,100, a single head of household $17,200, and a married couple filing jointly $26,200. In addition, taxpayers would be allowed a $5,300 exemption for each dependent. All income from savings, such as interest, dividends, and capital gains would not be subject to taxation. The bill allows for no deductions other than the exemptions mentioned above. This means the elimination of such popular deductions as home mortgage interest, property taxes, state and local income taxes, and charitable contributions.

The bill calls for radical change in the way people pay their taxes. It would eliminate income tax withholding and instead require taxpayers to write a check to the IRS each month. The bill sponsors believe that the tax withholding system hides the burden of high Federal taxes from the American people.

All of the tax forms currently in use would be replaced by a single new form that is the size of a postcard. The following illustration shows a complete tax return for a married couple with two children who have wage income of $36,800, the maximum amount that they could earn before having any tax liability. Under current tax law, using the standard deduction, their tax liability would total $3,836.

Business Tax. The business tax would apply to "corporations, partnerships, professional [firms], farms, rental properties, and royalties." The owners of businesses would pay a 17% rate on the difference between revenue and expenses. Taxable income is defined as revenue less purchases of goods and services, capital equipment, structures, land, and wages paid to employees. No deductions are permitted for fringe benefits, interest, or payments to owners.

At the time this article was written, full details about the bill were not available. But a summary released by Armey's staff is enough to indicate that this is a bill that will turn the economy and all tax planning upside down. Since the bill is designed to raise as much money as the Internal Revenue Code it replaces, there will be as many economic losers as winners.

Losers might include taxpayers in the Northeast region of the country which has high local taxes and real estate values. Part of the cash value of homes is their tax-preference component. Some economists are predicting that without the deduction for real estate taxes and home mortgage interest, real estate values would fall by 20%.

Winners would include those who would pay no taxes because their income falls below the exemption amount. Since earnings on savings would not be taxed, taxpayers with large amounts of interest, dividends, and capital gains would probably also pay less tax.

A change in the tax structure of this magnitude would have effects on the economy that are hard to predict. The value of real estate, municipal bonds, and the stock market would certainly change, affecting many people. Additionally, the authors of the bill expect a surge in economic activity, but this is anybody's bet.

Since every taxpayer is situated differently, predicting the tax liability effect on individual taxpayers must be done on an one-on-one basis. To get some idea, I have contrasted the flat-tax proposal at 17% and 20% with the current tax law, using 1994 rates, for four hypothetical taxpayers. *

ETIQUETTE: THE COMPETITIVE EDGE FOR THE CPA

By Carolyn Flatt and L. K. Williams

[Editor's note: This is the third and final segment of a few basic rules of etiquette that, if followed, will help CPAs and the organizations they represent distinguish themselves in a positive way from their competitors. We conclude with a discussion of business dining.]

Business Dining

Business dining has become commonplace, with restaurants serving as branch offices and boardrooms. If you are hosting a business meal, a couple of issues should be taken care of before ordering. First, give your guest an indication of price range by saying what you are having or by recommending items on the menu. Second, allow your guest to order first and ask the server to give the check to you.

Table etiquette exists to create attractiveness and smoothness while eating. Some practical guidelines should be followed.

* Do not dip a piece of partially eaten food (e.g., snack chips or raw vegetables) back into a dip bowl shared with others. When possible, place the dip on your plate.

* Dinner napkins go on the lap and half unfolded.

* When a formal place setting has many forks and spoons, a general rule is to start from the outside and work in toward the plate. Forks are almost always on the left side of the plate and knives and spoons are on the right side of the plate. Therefore, if the first course of the meal is salad, the left-most fork should be used. If soup is served as an appetizer, the right-most spoon is to be used. A spoon or fork at the top of the plate is for dessert. If in doubt, do as your host/hostess and other guests are doing.

* Offer the bread basket to your guests first.

* Pass the salt and pepper together.

* Keep bread and rolls on your plate (do not place them on the table).

* Keep personal belongings such as a purse, a briefcase, or books off the table.

* Never leave spoons sticking out of bowls, cups, or dishes.

* Do not gesture with silverware.

* Allow servers to pick up dropped food or silverware.

* Taste food before seasoning with salt or pepper.

* Never place used silverware back on the table; keep it on your dinner plate, bread plate, or saucer.

* Silverware is to be placed on your plate in four o'clock position when you have finished eating.

* If you have to leave the table before you are finished eating, cross your knife and fork in the center of the plate and leave your napkin in your seat to let your server know not to take your plate.

* Butter only one or two bites of bread or roll at a time. Likewise, cut only one or two bites of meat at a time.

* Keep voices low and conversation nonconfrontational.

* Remove unwanted gristle or a foreign object from your mouth with the thumb and middle finger and place it on your plate as discretely as possible so that it is out of sight.

* Avoid foods that are hard to eat such as corn on the cob, fried chicken, crab legs, and fruit with seeds.

Wrap-Up

Proper etiquette creates an environment of thoughtfulness and consideration that are keys to a pleasant professional or social situation. Developing these skills takes a small amount of time and effort to read up and brush up. But these skills are not only easy to develop, they are professionally beneficial. George Bernard Shaw said, "There is no accomplishment so easy to acquire as politeness and none more profitable." Good manners are profitable because an attitude of civility generates positive professional relations; it is magnetic. And surely those that will find success in the accounting profession will be ones that are skilled in proper behavior. *

Carolyn Flatt is personal development institute director and L. K. Williams a professor of accounting at Morehead State University.

TAX DEPARTMENT DOUBLES TANKER FLEET

With the seizure of two gasoline tanker trucks, the New York State Department of Taxation and Finance raised the number of seized fuel trucks to four. Shutting down major gasoline bootlegging operations by Federal and state authorities has forced gasoline smugglers to revert to transporting untaxed motor fuel a tanker load at a time.

"With the decline of the old 'daisy chain' and buy-out, bust-out scams involving phony companies and bogus sales, we've seen an increase in the physical bootlegging of motor fuel across our state lines," said Tax Commissioner Michael H. Urbach. "We trust that the seizure of, not just the untaxed fuel, but the very expensive trucks it is transported in, will provide strong financial disincentive to bootleggers." Urbach stated that law-abiding citizens and honest merchants are those who are harmed by bootlegging.

Urbach also stated the New York State Tax Department would continue seizing the illegal fuel and trucks used to transport it into New York state. "We owe it to the honest service-station owners, fuel dealers, and the taxpaying public to make it as hard and costly as possible for gasoline bootleggers. We are not interested in becoming a major trucking concern, but if that's what it takes to get the message across that we intend to enforce New York's excise taxes and ensure a level playing field, we will keep seizing vehicles used to smuggle fuel into our state."

The commissioner commented that the same measures aimed at gasoline bootlegging are applied equally to the illegal importation of untaxed cigarettes and liquor.

Urbach, incidentally, is a CPA and former partner in the Albany, NY office of Urbach Kahn & Werlin P.C. *

THE PROPER APPROACH TO OFFICE POLITICS

Technology and globalization has drastically changed that corporate landscape. But one element has remained constant: office politics.

"Office politics are basic to the business world," said Andrew Denka, executive director of OfficeTeam, a administrative support staffing firm. "If allowed to get out of hand, they can be negative and destructive; but dealt with properly, they enable work to be accomplished more smoothly. Employees who want to advance in their careers must learn to make use of the positive, diplomacy aspects of office politics, while avoiding the negative side."

Denka offers the following tips on dealing with office politics:

* Avoid the Rumor Mill. If you get caught up in gossip and rumor-mongering, you will ultimately damage your professional reputation. You could harm your career or even the future of your company. Never reveal confidential information and avoid confirming or denying any rumors.

* Mutual Protection Alliances. Seek to cultivate good relationships with others in your company--it will make your work life easier. Be pleasant and offer help when co-workers need it. Volunteer for a committee or join a company-wide sports team to form bonds with colleagues outside your department. Remember, too, that both positive and negative statements you make about others will often find their way to those people.

* Personal PR. Be aware that your appearance and demeanor reveal a great deal about you: Ability is paramount, but other factors count. If you want to gain respect and be seen as a prime candidate for promotion, strive to look and act professionally in all circumstances.

* Understanding the Who, What, and Why. Try to gain insight into the work style and habits of the people with whom you interact. Does your supervisor prefer written communication over verbal? Is your co-worker usually less than alert early in the morning? Be observant, and use what you learn about your colleagues to maximize relationships.

* Social Savvy. Social situations with co-workers, whether at lunch, after work, or on weekends, can be tricky. It's great to relax and have fun, but be much more careful than you might be with other friends. Remember that whatever you say or do may be back in the office before long.

* Coping with Attila the Hun. If a co-worker loses his or her temper or becomes verbally abusive, keep your cool and don't allow yourself to become hostile. Try to leave the scene professionally and diplomatically. Uncontrolled emotions and behavior will harm your image in the company, no matter how much the other person provoked you.

"While politics will always be a part of any business environment, one key to success is knowing how to navigate all of the aspects--the good, the bad, and the ugly," Denka said. *

Taxpayer A. Single, wages $28,000, interest $800

Taxpayer B. Married filing jointly, wages $95,000, two children, mortgage interest $20,000, real estate taxes $3,000, state and local income taxes $8,000, contributions $2,500.

Taxpayer C. Married filing jointly, wages $250,000, three children, interest and dividends $5,000, capital gains $15,000, state and local taxes $18,000, mortgage interest $32,000, real estate taxes $6,000, contributions $5,800.

Taxpayer D. Married filing jointly, wages $350,000, no dependents, only non-taxable municipal interest, real estate tax $10,000, mortgage interest $60,000, contributions $12,000.

Results:

Tax Liability-- Tax Liability--

Tax Liability-- Armey/Shelby Armey/Shelby

TAXPAYER Current Law Flat Tax (17%) Flat Tax (20%)

A $3,386 $2,533 $2,980

B $9,543 $9,894 $11,640

C $59,971 $35,343 $41,580

D $77,342 $55,046 $64,760

(Continued on page 74)14AUGUST 1995 / THE CPA JOURNAL

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