Accounting Law Commons^™

Translations In Regulatory Space: The Arenas Of Regulatory Innovation In Accounting Standard Setting, Yasmine Chahed

Indiana Journal of Global Legal Studies

This paper investigates the conditions of possibility for innovation in regulatory space. The first-time inclusion of narrative reporting on the agenda of the British Accounting Standards Board (ASB) is studied in terms of a complex web of discursive schemes, which co-constituted the regulatory issue and the context in which it emerged. By exploring the discursive level of accounting reform, the approach shows how the emergence of narrative reporting on the agenda of the ASB was mediated in a historically specific constellation of formal institutional structures, professional trajectories, and changing conceptions of the roles and purposes of accounting in business management …

Corporate Revenue Miscalculations & The Impact On Stakeholders, Karen Cascini, Alan L. Delfavero, Ryan Bezner

WCBT Faculty Publications

Corporate earnings restatements are regarded as one of the most significant issues in accounting today. While there are various factors that can influence profitability, revenue is the key contributor to a business’ net income. During the 2000s, a multitude of domestic and multinational corporations faced significant issues with their revenue recognition practices. Although the investing public might regard any revenue restatement as laden with possible fraud, this is not always the case. Multinational firms face dual accounting systems, such as U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). Currently, similarities and differences between the accounting systems …

Fiduciary Principles And The Jury, Ethan J. Leib, Michael Serota, David L. Ponet

Faculty Scholarship

This Essay argues that because jurors exercise state power with wide discretion over the legal and practical interests of other citizens, and because citizens repose trust and remain vulnerable to jury and juror decisions, juries and jurors share important similarities with traditional fiduciary actors such as doctors, lawyers, and corporate directors and boards. The paradigmatic fiduciary duties – those of loyalty and care – therefore provide useful benchmarks for evaluating and guiding jurors in their decision-making role. A sui generis public fiduciary duty of deliberative engagement also has applications in considering the obligations of jurors. This framework confirms much of …

Lawyers And Fools: Lawyer-Directors In Public Corporations, Lubomir P. Litov, Simone M. Sepe, Charles K. Whitehead

Cornell Law Faculty Publications

The accepted wisdom—that a lawyer who becomes a corporate director has a fool for a client—is outdated. The benefits of lawyer-directors in today’s world significantly outweigh the costs. Beyond monitoring, they help manage litigation and regulation, as well as structure compensation to align CEO and shareholder interests. The results have been an average 9.5% increase in firm value and an almost doubling in the percentage of public companies with lawyer-directors.

This Article is the first to analyze the rise of lawyer-directors. It makes a variety of other empirical contributions, each of which is statistically significant and large in magnitude. First, …

Whose Trojan Horse? The Dynamics Of Resistance Against Ifrs, Martin Gelter, Zehra Kavame Eroglu

Faculty Scholarship

The introduction of International Financial Reporting Standards (“IFRS”) has been debated in the United States since at least the accounting scandals of the early 2000s. While publicly traded firms around the world are increasingly switching to IFRS, often because they are required to do so by law or by their stock exchange, the Securities Exchange Com-mission (“SEC”) seems to have become more reticent in recent years. Only foreign issuers have been permitted to use IFRS in the United States since 2007. By contrast, the EU has mandated the use of IFRS in the consolidated financial statements of publicly traded firms …

Risky Returns: Accounting For Risk In The Federal Budget, David Kamin

Indiana Law Journal

There has been a growing consensus among academics, analysts, and policymakers that the official federal budget estimates should reflect the “cost of risk”—the amount that the private market would demand to bear risk. The result would be to add tens, if not hundreds, of billions of dollars in annual costs to the federal budget and, in combination with the budget enforcement laws now in place, make it much more difficult for the federal government to create or expand programs that involve risk—ranging from student lending to home mortgage guarantees to, potentially, broad social insurance programs like unemployment insurance. This Article …

Zappers & Employment Tax Fraud, Richard Thompson Ainsworth

Faculty Scholarship

Beyond the grey area of worker misclassifications and general employment tax irregularities there are darker employment relationships where workers are intentionally paid in cash “off-the-books” or “under-the-table.” Grey employment relationships present civil enforcement issues that may become criminal; darker-relationships are criminal from the beginning. Zappers are found on the dark side.

Zappers are fraud-technologies that automatically (and remotely) skim cash from electronic cash registers (ECRs) or back room point of sales (POS) systems. Globally, tax auditors are finding that Zappers frequently provide the cash that is used to compensate “under-the-table” workers. In fact, a Zapper appears to be at the …

Pitfalls In Brazilian Bankruptcy Law For International Bond Investors, Jeffrey M. Anapolsky, Jessica F. Woods

Journal of Business & Technology Law

No abstract provided.

The Tax Import Of The Fasb/Iasb Proposal On Lease Accounting, George Mundstock

Articles

No abstract provided.

Strengthening Financial Reporting: An Essay On Expanding The Auditor’S Opinion Letter, James D. Cox

Faculty Scholarship

Users of financial statements, foremost of which are investors, have a voracious appetite for information that better enables them to assess the financial position and performance of the reporting firm. Even though financial statements purport to address their needs, because the statements, which are prepared by the firm’s managers, conceal a range of managerial estimates, assumptions, judgments, and choices, investors are deprived of the most fundamental kernel of information they seek, namely the overall quality of the financial reports themselves. In this Article, the author sets forth several modest steps that would enhance the overall quality of financial reporting by …

Dodd-Frank And International Regulatory Convergence: The Case For Mutual Recognition, Nicholas W. Turner '12

NYLS Law Review

No abstract provided.

Lexis Nexus Complexus: Comparative Contract Law And International Accounting Collide In The Iasb-Fasb Revenue Recognition Exposure Draft, Kurt S. Schulzke, Gerlinde Berger-Walliser, Pier L. Marchini

Vanderbilt Journal of Transnational Law

U.S. and international accounting-standard setters plan to launch a new, global revenue accounting standard, Revenue from Contracts with Customers, in 2013. Poised at the nexus of comparative contract law and international accounting, the proposal's contract-based revenue recognition model creates new legal risks and opportunities for accountants, lawyers, clients, and financial statement users. Despite its focus on legally enforceable contracts, the proposed standard was drafted without input from the legal community. This Article models the proposal's complex contract-analysis process, demonstrating that its revenue outcomes may vary materially because of seemingly minor interjurisdictional differences in law applicable to "open-price" contracts; offers practice …

Implications And Impacts Of Making Mandatory The Voluntary Imo Member State Audit Scheme : From Legal And Practical Perspectives, Yang Liejun

World Maritime University Dissertations

No abstract provided.

Building The House On A Weak Foundation: Edenfield V. Fane And The Current State Of The Commercial Speech Doctrine, Dennis William Bishop

Pepperdine Law Review

No abstract provided.

Mandatory Adoption Of International Accounting Standards In Germany: Financial Statement Effects, Sarah Wagemann

Graduate Theses

This paper addresses the mandatory adoption of International Financial Reporting Standards (IFRS) in Germany in 2005. The financial, statement effects and the variability of key accounting measures are analyzed under the German Commercial Code (Handelsgesetzbuch - HGB, German GAAP) and IFRS. I find that book value of equity and net income are slightly larger under IFRS than under German GAAP which reflects the fair value orientation of IFRS. Only weak evidence exists that the mandatory adoption of IFRS results in significant accounting differences unlike the results found in financial statements of German firms that voluntarily adopted IFRS.

Refund Fraud? Real-Time Solution!, Richard Thompson Ainsworth

Faculty Scholarship

When seven million dependents vanished from the tax rolls in 1986 the IRS recovered three billion dollars in revenue. A simple enforcement measure was applied. Taxpayers were required to list the social security number (SSN) for any dependent they claimed on their tax return. Costing next to nothing to implement, the benefits of this enforcement action continue to this day.

A similar enforcement measure could be employed against refund fraud. Even though the solution is not as simple as that adopted in 1986, it is similar. The effort is worth making. The revenue loss is much larger. As before, the …

Transfer Pricing: Data Dumps And Comparability — Studies From The U.S., U.K., Canada, And Australia, Richard Thompson Ainsworth, Andrew B. Shact

Faculty Scholarship

Comparability is the heart of transfer pricing. The OECD, U.K., Canadian, Australian, and U.S. transfer pricing rules all echo one another on how critically important the comparability analysis is. Performing this analysis and proving comparability, however, is a demanding exercise.

What makes proving comparability so difficult is that the analysis is two sided. Both controlled and uncontrolled transactions must be thoroughly analyzed. Just as much effort needs to be applied to determine the functions, contract terms, risks and the economic conditions for the unrelated party comparables as is spent on analyzing the related parties (taxpayers).

But there is more to …

Responsible Profitability - Not On My Balance Sheet, 61 Cath. U. L. Rev. 651 (2012), Arthur Acevedo

UIC Law Open Access Faculty Scholarship

Many free-market capitalists believe in the syllogism that if a free market results in progress, and if progress is good, then by definition a free market must be good. Two hundred years of economic development support this proposition. The capitalist model, which is premised on free-market ideology, is credited with producing many of the riches enjoyed by society as a whole. Indeed, the pursuit of economic freedom ranks among the primary motivations for the founding of the United States. The corporation has enabled that pursuit and can be credited with greatly contributing to the advancement of free-market capitalism.

Proponents of …

Responsible Profitability? Not On My Balance Sheet!, Arthur Acevedo

Catholic University Law Review

No abstract provided.

The Unjustified Subsidy: Sovereign Wealth Funds The Foreign Sovereign Tax Exemption, Jennifer Bird-Pollan

Fordham Journal of Corporate & Financial Law

The taxation of Sovereign Wealth Funds in the United States is outmoded and due for reconsideration. Offering a tax exemption to the billion dollar investment funds owned by foreign governments is both unfair and ineffective. Founded in the principles of sovereign immunity, the foreign sovereign tax exemption, codified in I.R.C. § 892, fails to satisfy the Congressional goals that motivated its creation. This Article explains the current taxation of foreign sovereigns and, by extension, Sovereign Wealth Funds. It then illustrates that the current exemption is simultaneously too broad, providing a tax exemption for activities that are clearly nongovernmental activities, and …

Personal Foul…Roughing The Taxpayer: The Irs’ Triple Penalty On Hardship Distributions, Michael Flynn, Craig C. Minko

Fordham Journal of Corporate & Financial Law

Everyone knows of someone, a family member, a co-worker, a neighbor or just an acquaintance, who has been adversely affected by the downturn in the economy. For many, this means dipping into retirement accounts to help out others, to fund college tuition, to pay for unexpected medical bills or just to make ends meet. Then the surprise hits. The retirement account funds, filled with money that each participant paid in for reasons just like these, are not readily available. To the extent that they are available, the funds come at a steep price even though the participant is in desperate …

Asset Protection Through The Use Of Premarital Agreements, Robert T. Rose

CMC Senior Theses

The number of multi-million dollar divorce settlements has been increasing rapidly in the last decade. Although Donald Trump's divorce from his first wife, Ivana, wherein $25 million was awarded to the former spouse, may have seemed like a significant sum in 1992, this amount appears quite minuscule today.1 In December of 2011, Mel Gibson's soon to be ex-wife Robyn Moore received $425 million in the couples' divorce settlement.2 In March of 2012, Frank McCourt was forced to sell his professional franchise, the Los Angeles Dodgers, in bankruptcy during his divorce proceedings with Jamie McCourt.3 It seems as if every month …

Combating Moral Hazard: The Case For Rationalizing Public Employee Benefits, Maria O'Brien

Faculty Scholarship

The current crisis in public employee benefits is a fairly conventional moral hazard story about overly generous promises made by both private sector employers and politicians spending public dollars. The private sector, forced by the Financial Accounting Standards Board (FASB) in 1993 to confront the true cost of promises made to future retirees, dealt with the newly discovered debt in a number of ways, including the termination of defined benefit plans which were quickly replaced by defined contribution plans. The public sector was also forced to confront its own largesse with the implementation of GASB 45 which focused careful attention …

Medical Deduction Allowed For In-Home Personal Use, Danny A. Pannese

WCBT Faculty Publications

The Tax Court held that payments made to an elderly woman's providers of personal care that she required due to her diminished capacity qualified as long-term-care services and were therefore deductible under IRC § 213(d)(1)(C). Lillian Baral was diagnosed with dementia by her physician in 2004. The court agreed with Baral's estate that the amounts paid to the caregivers for their services were deductible as qualified long-term-care services. Baral was chronically ill, and the care was medically necessary to protect her from threats to her health and safety, as determined by her physician. The court also held the amounts paid …

United States V. Textron: The Right Answer To A Billion-Dollar Question, Ned Hillenbrand

Washington and Lee Law Review

No abstract provided.

Will Cutting The Payroll Tax Increase Jobs In The U.S.? Empirical Evidence From The Eu Vat, Richard Thompson Ainsworth

Faculty Scholarship

Red Ink Rising, the Peterson–Pew Commission on Budget Reform’s report presents the country with a fiscal/employment dilemma – Congress must act immediately to stem the federal debt, but it must move carefully lest it harm employment in the fragile economy. In short, we must act fast and slow – we must decrease the debt and increase employment. This is a difficult task.

The Peterson-Pew dilemma (notably its jobs-creation aspect) was taken to heart by both of the reform commissions that issued reports soon thereafter (National Commission on Fiscal Responsibility and Reform, The Moment of Truth and The Debt Reduction Task …

Credit Default Swaps And Clearing, Nazanin Baseri

Legislation and Policy Brief

In an article from 2000, an investigative journalist from The Banker warned against the hidden dangers of credit default swaps (CDS). Although CDSs can be a useful financial instrument for the banking industry, the article warned of the anonymity of credit derivatives, lack of transparency, and the potential for disaster. In an unfortunately accurate conclusion, the journalist opined that a crisis might occur because banks may not put in place the proper risk control systems in time to avert a disaster. Fast forward eight years and the financial meltdown of 2008 developed into one of the largest economic disasters in …

Leverage, Sanctions, And Deterrence Of Accounting Fraud, Urska Velikonja

Faculty Scholarship

The empirical evidence suggests that firms overpay for fraud liability and overspend on internal compliance mechanisms (which are not very effective at preventing fraud). Yet, insiders who commit fraud are rarely sanctioned for their wrongdoing, which produces moral hazard and individual underdeterrence.
Two factors explain the failure to sanction managers who commit fraud. First, managers control the information revealing who was involved in account fraud and, thus, can impede external investigations and sanctions. Second, managers also influence whether the firm will investigate and sanction accounting fraud internally. Managers’ control over settlement and the availability of directors’ and officers’ insurance further …

Irs's Recent Uncertain Tax Positions Initiative: A Tangle Of Accounting, Tax And Privilege Issues, 9 Depaul Bus. & Comm. L.J. 401 (2011), Kathryn J. Kennedy

UIC Law Open Access Faculty Scholarship

Given the extremely limited source of resources available to the IRS in recent years, it's not surprising that it is exploring all sorts of avenues to increase its efficiency, particularly relying on corporate taxpayers to self report questionable tax positions. Under the banner of "corporate governance" and "transparency," the Service issued a series of proposals in 2010 requiring disclosure of uncertain tax positions ("UTPs") by corporate taxpayers. The Service essentially piggybacked on the recently imposed 2006 audit requirements that reserves be posted for contingent tax liabilities (i.e., tax positions that could later not be sustained, and therefore had to be …

The New Governance And The Tools Of Public Action: An Introduction, Lester M. Salamon

Fordham Urban Law Journal

A fundamental re-thinking is currently underway throughout the world about how to cope with public problems. Stimulated by popular frustrations with the cost and effectiveness of government programs and by a new-found faith in liberal economic theories, serious questions are being raised about the capabilities, and even the motivations, of public-sector institutions. This type of questioning has spread beyond American political discourse to other parts of the world. Underlying much of this reform surge is a set of theories that portrays government agencies as tightly structured hierarchies insulated from market forces and from effective citizen pressure and therefore free to …