How The New Pension Accounting Rules Affect the Dow 30s Financial Statements

By Barry Jay Epstein

The Sarbanes-Oxley Act of 2002 (SOX) charged the SEC with studying off–balance sheet financing, special purpose entities (SPE), and reporting transparency. The SEC completed its study on June 15, 2005, and pension accounting was a primary target of the report’s standards-setting recommendations. Noting that pension plan trusts are conceptually similar to SPEs, the SEC pointed out that large amounts of pension liabilities are not recognized on the balance sheet. The SEC further observed that the current demographic and political environment made the accounting for these benefits of critical interest at the highest levels of both the public and private sectors.

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Publisher's Column

Tax 'Cheating' by Ordinary Taxpayers: Does the Underreporting of Income Contribute to the 'Tax Gap'?

The extent to which taxpayers underreport their gross income represents taxes that go unpaid every year. The IRS and the Economic Policy Institute estimate the amount of taxes owed but not paid at $353 billion, equal to about 15% of the total taxes owed. These taxes not paid through our “voluntary and timely” system of taxation are often known as the “tax gap.”. Full Story

Muddy Waters: The AMT and the U.S. Tax Code

Few aspects of our nation’s muddled tax code exemplify the snowball effect of complexity better than the alternative minimum tax (AMT). The AMT—which is owed when tax computed using AMT rules exceeds the regular tax—was introduced by the Tax Reform Act of 1969 to ensure that high-income individuals could not use deductions and exemptions to completely eliminate their tax liability. Today, however, the AMT ensnares not just high-income taxpayers paying little or no tax, but many more people than its creators probably ever intended. Indeed, one of the most critical issues facing our nation today is the increasing burden being placed on the middle class by the AMT.
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Wrong-Headed Reactions to Information Overload Threaten Sound Decision-Making

A long-running debate about whether to develop a unique set of financial reporting standards for small and medium-sized entities (SME) or, alternatively, to extract from existing standards [e.g., U.S. GAAP or International Financial Reporting Standards (IFRS)] a slimmed-down set of requirements to serve as these enterprises’ primary source of guidance, has gathered considerable steam over the past several years and may be headed for resolution over the near term. .Full Story

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