In 2005, Halliburton hired Anthony Menendez to be the Director of Technical Accounting Research and Training in the Finance and Accounting department. Menendez trained field accountants and monitored accounting issues. A few months after he was hired, he reported to his boss, the Chief Accounting Officer (CAO), that some of Halliburton's accounting practices deviated from Generally Accepted Accounting Principles (GAAP).
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In-house counsel can be subject to various in-company pressures from executives -- especially around tax season. But you should not let the stressors in your office lead you to recommend something only plausibly legal or just plain illegal.
To keep your head in the game and your keister out of federal jail, be mindful of these three potential tax season pitfalls:
While death and taxes are a certainty for most of us, if you're a tech company in Silicon Valley, taxes may be optional (yeah, we're looking at you Apple). We're going to assume that your company is much more ethical, and actually pays taxes in the U.S. for purposes of this discussion. Which leads us to the inevitable ... are you ready to advise your company on tax issues?
Audit and tax advisory firm KPMG has put together a list highlighting business tax issues for 2014, and while everything on the list was important, we've selected some of our favorites to tell you about.
Two things in life are certain: death and taxes. Except when they are not.
For the longest time, Amazon's clearest advantage over brick and mortar stores was the lack of sales tax. That advantage, however, has been slowly dissipating, at the company has clashed with multiple states over attempts to force the online retailer to collect taxes from customers, and in many cases, relented.
Overstock is more of the same story. Now, both companies, facing different sales tax rules in each state, and facing different rules than their competitors, have petitioned for a writ of certiorari with the Supreme Court.
When President Obama stated, "You don't want to mess with Mary Jo," he wasn't kidding.
Sworn into her new position just a few months ago, SEC Chairwoman Mary Jo White is leading the charge against fraudulent SEC filings with a new Accounting Quality Model dubbed "RoboCop", report Forbes. The completely automated analytical tool flags filings with high risk indicators and high risk inducers.
It's time to cozy up to the accounting department to make sure everyone is on the same page when it comes to compliance. Here's an abbreviated list of the factors Forbes suggested as ways to avoid an SEC audit:
Occasionally, I stop for a bagel on my way into work. On Fridays, however, my office offers a carbohydrate smörgåsbord: bagels and donuts and donut holes. Oh, and fruit.
So Friday, instead of scrambling eggs at home (about 90 cents) or buying a bagel (about $2), I load up on carbs for free at the office.
Should I be taxed on that amount? The answer turns on whether the IRS considers my bagel a fringe benefit.
"Double Irish with a Dutch Sandwich." Sounds like two Guinnesses and something made out of chicken, doesn't it? It's making us hungry.
It's not food and drink, however. It's a complicated corporate tax loophole, exploited by tech companies and others with intellectual property, pioneered by Apple, and used by many to save billions of dollars in taxes.
It all begins with the licensing of patents and IP to an Irish subsidiary. When products are sold in the U.S., taxes are reduced by paying royalties to that subsidiary. Under Irish law, if the subsidiary is managed by foreigners, profits skip along, Irish tax-free, usually to a Caribbean tax haven.
Do Sarbanes-Oxley and startups make for terrible bedfellows?
Most corporate and in-house attorneys are familiar with the requirements of the Sarbanes-Oxley Act, which was passed in 2002.
Sarbanes-Oxley regulations came down at a time when Americans were outraged at the massive Enron scandal that cost shareholders and innocent employees millions.
The regulations were created partially to reduce the likelihood that similar financial catastrophes would ever surface again. And, one of the safeguards to prevent similar financial mishaps was Section 404 of the Sarbanes-Oxley Act.
Former GlaxoSmithKline general counsel Lauren Stevens has been re-indicted for obstructing a probe into Wellbutrin off-label marketing as part of her duties for the company.
Stevens' case has deep ramifications and has been closely watched. The question of just how much a GC can rely upon (and/or hide behind) outside counsel's advice will play out.
The prosecution may prove to be the first wave of a sea change in how federal prosecutors pursue not just companies, but company executives for wrongdoing.
Yesterday, June 28, the Supreme Court issued a 5-4 decision in Free Enterprise Fund v. Public Company Accounting Oversight Board. As is frequently the case, the Justices issued a narrow ruling. In fact, the 5-4 was actually affirmed in part, reversed in part, and remanded.
The case involved the Public Company Accounting Oversight Board, the board appointed as part of the 2002 Sarbanes-Oxley Act, which was passed after the accounting scandals of the early 2000s. The opinion was written by Chief Justice Roberts. Justice Breyer dissented, joined by Justices Stevens, Ginsburg, and Sotomayor. The Justices ruled that it was unconstitutional for the President to be unable to fire the members of the Public Company Accounting Oversight Board, but the Court otherwise left intact the board and the Sarbanes-Oxley Act.
The Public Company Accounting Oversight Board was designed to oversee accounting firms after the disaster and fallout from Enron and WorldCom's accounting scandals. The Court found that because the board is overseen by the SEC (whose members can only be removed for cause), the Sarbanes-Oxley Act interfered with Presidential authority.