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USA
25th November 2022
 
TAX
IRSAC: Congressional confidence in IRS modernization 'spotty'
According to the 2022 annual report from the IRS Advisory Council, increased funding will bring long-denied and long-needed "modernized, resilient and secure" operations to the IRS. "The bar for IRS performance is continually being raised as taxpayers experience new technologies in their personal lives that deliver on-demand, seamless customer experiences," the report reads. Still, "besides fluctuations in the timing or amount of funding, the implementation of the IRS modernization plan and projects can be affected by other factors … The Inflation Reduction Act was largely partisan legislation, which may foreshadow a lack of broader long-term bipartisan support necessary to sustain the IRS's objectives. Congressional understanding of and confidence in IRS modernization plans seems spotty." The 2022 report includes recommendations on 21 issues, including: IRS business and information technology modernization; reduction in the electronic filing threshold for information return filers; alignment of electronic signature requirements on withholding certificates; accelerated issuance of IRS Form 6166; and the redesign and updating of Form Series 8038, including consolidation of the 8038 and the 8038-G into one information return and increasing the threshold amount for the 8038-GC.
INDUSTRY
New quality control standards proposed by PCAOB
New standards for quality control systems have been proposed by the PCAOB in a new document open for public comment. PCAOB chair Erica Y. Williams said: "Quality control systems set the foundation for how firms perform their audits, so making sure those systems are effective in today's economy is essential to protecting investors." The PCAOB's proposed QC standards would replace AICPA standards that the PCAOB adopted on an interim basis in 2003, shortly after the board's formation. According to the proposal, the PCAOB's proposed standards attempt to build on the basic structure of AICPA standards (SQMS No. 1) used by firms in the United States and International Auditing and Assurance Standards Board (IAASB) standards (ISQM 1) used by firms internationally.
TECHNOLOGY
Accountants investing in tech to keep up with demands
The latest Annual Accountants Survey: Top Challenges & Tech Wishlist from LeaseQuery has concluded that the movement  towards more technology investment for accountants is driven first and foremost by the need for efficiency, streamlined workflows and added value to their business. The survey polled 237 accounting professionals across public, private, nonprofit and government organizations on their technology maturity, wishlist and areas for growth. When asked about accountants’ top priorities, improved accuracy and compliance was the top choice, followed by lower costs and faster delivery. Sarah O’Sullivan, Director of Product Accounting at LeaseQuery, said: "Automation has become the accountant’s best friend. Accountants are facing mounting pressure to deliver more accurate results in less time, and they are increasingly turning to technology to help scale their work. This, in turn, drives high expectations for ROI for this technology.”
FIRMS
EY is sifting millions of resumes as recruitment surges
EY expects to sift through more than 3m resumes this year as the firm moves to recruit around 220,000 people in the twelve months to July 2023, Trent Henry, the firm’s global vice chair for talent, has said – and that’s before a potential break-up of its auditing and consulting divisions takes effect, which could further boost a hiring drive that reached about 160,000 in the 2022 financial year, Bloomberg notes. EY is using automation to help its recruitment professionals and match candidates to job postings, Henry said. Bloomberg says the growth in recruitment underlines the continuing boom in demand for professional services, even as other industries are affected by lay-offs. “While there is a cooling off in the job market overall, accountancy has stood up pretty well,” observes Simon Wingate, managing director at job search website Reed UK. “If you look at traditional comparators like banking or legal, accountancy is by far and away the biggest in terms of job postings on our website.”
CORPORATE
Retail CFOs: Holiday discounts to be steeper this year
Retail CFOs have revealed that holiday discounts will be steeper this year as markdowns help to clear excess stock and attract Black Friday shoppers, but crimp profit margins. Due to a combination of high inflation, surplus inventory, and rising consumer expectations for price reductions, profit margins in the sector have fallen recently. According to S&P Global Market Intelligence, among retailers in the S&P 500 that reported financial results through November 22, the average margin on earnings before interest and taxes decreased to 10.7% in the third quarter from 13.2% in the same time last year. Markdowns, according to some chief financial officers in the retail industry, are necessary to start the new year free of the burden of excess inventory on shelves. Rapid shifts in consumer purchasing patterns caught businesses off guard earlier this year, leaving them with an excess of early pandemic favorites like athletic wear and household items. Other CFOs claim that their organizations see the promotional environment as a chance to draw in additional clients. The Wall Street Journal carries a round-up of retail CFOs’ remarks on this topic during recent earnings calls.
ECONOMY
Latest weekly jobless claims jump to 240,000
First-time weekly claims for unemployment benefits jumped to 240,000 for the week ended November 19th, according to data from the Department of Labor, a sharp increase from the previous week’s upwardly revised tally of 222,000, and surpassing economists’ expectations of 225,000. It’s the highest weekly total since August 13th, according to Labor Department data. Continuing claims, which count people who have filed for jobless aid for at least two weeks in a row, rose to 1.55m for the week ending November 12th, an eight-month high.

 
CNN
PERSONAL FINANCE
U.S. consumers are still applying for credit cards
Despite the Federal Reserve aggressively raising borrowing costs this year, U.S. consumers continued to seek out more credit cards, which decreased demand for mortgages, auto loans, and other forms of credit, according to research from the New York Fed. According to the most current credit access survey from the New York Fed, application rates for credit cards "remained robust" this year, reaching 27.1% in October, up from 26.5% a year earlier and above the pre-pandemic level of 26.3% in February 2020. In contrast, after a comeback in 2021, credit application rates overall slightly decreased this year. The study showed that demand is  strongest from consumers with high credit scores. Application rates for people with credit scores over 760 were above pre-pandemic levels, while rates for consumers with credit scores below 680 were below pre-pandemic levels.
CRYPTO
Bankman-Fried ran FTX as personal fiefdom, court hears
The first bankruptcy hearing for FTX was held on Tuesday with attorneys for the collapsed crypto exchange describing how former CEO Sam Bankman-Fried ran the business as his "personal fiefdom" with $300m spent on real estate for his parents and senior staff. FTX filed for protection in the U.S. after traders pulled $6bn from the platform in three days and rival exchange Binance abandoned a rescue deal. The collapse has left an estimated one million creditors facing losses totaling billions of dollars. James Bromley, a U.S. restructuring lawyer at Sullivan and Cromwell, said the company’s lawyers had seen “a lack of corporate controls at a level that none of us in the profession have ever seen.” 

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