August 2003, the New York Times reported that abusive
tax shelters cost the U.S. federal government $85 billion
in lost tax revenue from 1993 through 2003. They also cost
state governments an additional $12 billion a year. According
to a 2001 report from the Multistate Tax Commission, this
represents approximately one-third of states’ tax
revenue. KPMG sold tax shelters to at least 350 people,
which brought the firm $124 million in fees and cost the
Treasury $1.4 billion in unpaid taxes between 1996 and 2002.
Money Laundering and the CPA
In the ongoing battle to prevent money laundering,
perhaps no professional has more at stake than the CPA.
The reason is simple: Money laundering usually involves
fraudulent financial transactions, and a major component
of the CPA’s job is reporting on financial transactions.
As a result, whenever money laundering is discovered, you
can bet that both the public and the government will be
taking a cold, hard look at the work of the CPAs involved.
Big GAAP Versus Little GAAP
following is in response to the article “GAAP Requirements
for Nonpublic Companies,” by Jeffrey S. Zanzig and
Dale L. Flesher (The CPA Journal, May 2006). I
have been a CPA in public accounting, a CFO in industry,
and a lender to nonpublic companies for the past 24 years.
From the outset, I felt strongly that this whole exercise
of rewriting GAAP for nonpublic companies is futile and
should be discontinued.