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5th December 2025
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THE HOT STORY

FASB updates guidance on government grants

The FASB has released an accounting standards update (ASU) to provide clear guidance on the accounting for government grants received by business entities. This update builds on previous guidance from 2021, addressing stakeholder requests for enhanced transparency. FASB chair Richard Jones said: "The new ASU adds guidance in an area where stakeholders have consistently highlighted a need for it, benefitting both preparers and investors." The amendments include specific disclosure requirements and recognition criteria for government grants, which are defined as transfers of monetary or nonmonetary assets from a government to a business entity. The new rules will take effect for public entities after December 15th 2028, and for other entities after December 15th 2029.

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TAX

IRS fraud enforcement: a cautionary tale

Carolyn Schenck, a former IRS attorney, warns against the risks of tax fraud, saying: “If people think that a current administration or a past administration might go soft on tax fraud, that's still an awfully big gamble.” Despite recent staffing cuts, Schenck emphasizes that the IRS maintains a strong focus on tax compliance and fraud enforcement. She suggests that increasing IRS resources and technology could enhance its ability to combat tax evasion. Schenck also highlights the importance of understanding that there is no statute of limitations on civil fraud cases, making it a risky endeavor for taxpayers to engage in fraudulent activities. As she notes: “the success rate on a civil fraud penalty case in Tax Court . . . is in the mid to high 90s,” indicating a high likelihood of prosecution.

New Washington state tax proposal targets big employers

State lawmakers in Olympia, Washington, have introduced a new revenue proposal that imposes a 5% payroll excise tax on wages exceeding $125,000, targeting the state's largest employers. This measure, if enacted, would signify a significant change in the state's revenue system, which has traditionally avoided a personal income tax. The proposal, led by Rep. Shaun Scott and Sen. Rebecca Saldaña, aims to generate approximately $3bn annually, with funds allocated to the general fund and a new “Well Washington Fund” for essential services. Scott defended the proposal, saying:“If these megacorporations were as enthusiastic about paying their taxes as they were about paying to avoid them, there are millions of Washingtonians who would not have to worry about how to pay for higher education, for health care and housing in our state.” However, the Bellevue Chamber of Commerce has expressed its strong opposition, arguing it would increase costs for families statewide. The legislative session begins on January 12th, 2026.

INDUSTRY

AICPA survey shows mixed business outlook

According to the AICPA and CIMA Economic Outlook Survey, optimism among U.S. business leaders about the economy has decreased, with only 28% of surveyed decision-makers expressing confidence for the next year, down from 34% last quarter. However, 41% are optimistic about their own companies, a slight increase from 37%. Tom Hood, CPA/CITP, CGMA, noted: “Despite a small decrease in optimism in the economy at large, we're seeing a mixed picture below that topline figure.” The survey also revealed that 52% expect a recession by the end of 2026, while domestic economic conditions and inflation remain the top challenges. Additionally, 48% of decision-makers anticipate business expansion in the coming year.

FIRMS

EY and Nvidia open AI lab in Georgia

EY has launched a physical artificial intelligence platform built with Nvidia technologies, opened a dedicated EY.ai Lab in Alpharetta, Georgia, and appointed Dr Youngjun Choi as its first global physical AI leader, as part of an expanded push into robotics and automation across industrial, energy, consumer and health sectors.  “Physical AI is transforming how businesses across sectors operate and help create value, from enhanced automation and greater efficiency to significantly helping reduce operational costs," commented EY global managing partner Raj Sharma. “By combining deep EY industry knowledge with Nvidia AI infrastructure, this new platform is expected to accelerate how EY helps clients orchestrate these developments responsibly and support them to take the leap from experimentation to enterprise-scale deployment.”

Brown Edwards expands with Shelton acquisition

On December 2nd, Brown Edwards, a top 100 accounting firm based in Roanoke, Virginia, announced its acquisition of Shelton & Co. CPAs, a Lynchburg, Virginia-based firm specializing in construction accounting for over 30 years. This acquisition adds eight professionals, including three Certified Construction Industry Financial Professionals, to Brown Edwards, increasing its total staff to 465.

ECONOMY

Jobless claims fall to three-year low

Newly-filed unemployment claims last week dropped to their lowest level in three years, according to the Labor Department, allaying fears of a sharp deterioration in labor market conditions and potentially arguing against another interest rate cut from the Federal Reserve next week. Initial claims for state unemployment benefits fell 27,000 to a seasonally adjusted 191,000 in the seven days to November 29th, the lowest level since September 2022. Economists surveyed by the Wall Street Journal had expected 220,000 new claims. The four-week moving average fell to 214,750, while continuing claims, reported with a one-week lag, dropped 4,000 to a seasonally-adjusted 1.939m. Filings tumbled 19,551 in California and decreased 8,349 in Texas; additionally, there were significant declines in Florida, New York, and Washington state.

Tariff pressures weighed on U.S. factory orders in September

U.S. factory orders rose 0.2% in September, below economists' expectations of a 0.5% increase, the Commerce Department reported on Thursday, as manufacturers continued to face constraints from President Donald Trump’s tariffs. This followed a downwardly revised 1.3% gain in August. On an annual basis, orders were up 3.5%. Non-defense capital goods orders excluding aircraft, a key indicator of business investment, climbed 0.9%, with shipments matching that pace.

CORPORATE

Tesla scores big with tax credits

Tesla has secured the largest allocation of advanced energy project tax credits, amounting to $240.3m, as announced by the IRS. The certification is part of the second round of allocations under Section 48C(e). To claim the credit, Tesla must place the project in service within two years. The allocation process requires taxpayers to apply for consideration. The recent tax-and-climate law passed by Democrats in 2022 has renewed and expanded the qualifying advanced energy projects.

REGULATORY

New accounting model for banks unveiled by IASB

The IASB has proposed a new Risk Mitigation Accounting model aimed at improving how banks and financial institutions manage interest rate risks. This initiative responds to concerns that existing hedge accounting requirements do not accurately reflect practical risk management. IASB chair Andreas Barckow said: "Our proposed Risk Mitigation Accounting model aims to bring accounting and risk management closer together." The proposal includes amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures, while also seeking feedback on withdrawing IAS 39 Financial Instruments: Recognition and Measurement. The consultation period is open until July 31st 2026, allowing institutions to test the model with their data.

HEALTHCARE

Fraud risks plague ACA subsidies

Identity theft and fraud continue to threaten the advance premium tax credit (APTC) for health insurance under the Affordable Care Act, according to a recent report from the Government Accountability Office (GAO). The report highlights that fraud risks have persisted since the GAO's initial findings for plan years 2014-2016. "For example, we were able to get subsidized insurance for fake enrollees," the report stated. The GAO's ongoing testing revealed that the federal marketplace approved coverage for nearly all fictitious applicants in plan years 2024 and 2025. Notably, 18 out of 20 fictitious applicants remained covered as of September 2025, costing over $10,000 per month in APTC. The report also identified vulnerabilities related to Social Security number misuse and unauthorized enrollment changes, emphasizing that CMS has not updated its fraud risk assessment since 2018.

TECHNOLOGY

Managed IT: a lifeline for accountants

Managed IT services have become crucial for accounting firms as they face increasing cyber threats and regulatory demands. According to IBM's 2024 Threat Intelligence Report, professional services, including accounting, are among the top five most attacked industries, with an average breach cost of $5.9m. An AICPA survey revealed that 91% of accounting firms experienced at least one attempted cyberattack in the past year. Compliance with IRS Publication 4557 and the FTC Safeguards Rule is now mandatory, requiring firms to maintain a Written Information Security Plan. Managed IT services offer numerous benefits, including enhanced security, predictable costs, cloud infrastructure support, and improved client experiences. As Dr. Sangeeta Chhabra, co-founder of Ace Cloud Hosting, emphasizes: "For modern accounting firms, this isn't an upgrade; it's a necessity for survival and a foundation for growth."

TOOLS

Revolutionizing quality management for CPAs

AuditFile has introduced QualityLink, an artificial intelligence-driven solution aimed at assisting CPA firms in adhering to various quality management standards, including the AICPA Statement on Quality Management Standards No. 1 and SQMS No. 2. The platform integrates AI with existing audit automation technology to streamline compliance, reduce administrative burdens, and enhance consistency across engagements. Key features include AI-driven risk assessments, automated monitoring, and centralized dashboards for real-time compliance visibility.

INTERNATIONAL

Seoul's luxury property transfers under scrutiny

Korea's National Tax Service (NTS) will investigate 2,077 property-transfer cases in upscale Seoul districts for suspected tax evasion. The cases involve high-value real estate gifts with missed gift tax filing deadlines from January to July 2023. The NTS noted a trend among wealthy individuals gifting homes to bypass regulations and lending restrictions. Investigators will scrutinise tax evasion schemes, including nominal loans taken by children while receiving cash from parents.
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