- Pension Accounting
On March 31st, FASB issued an exposure draft that would improve financial reporting by requiring employers to recognize the overfunded or underfunded positions of defined benefit postretirement plans, including pension plans, in their balance sheets. The Board is seeking written comments on the proposal by May 31, 2006. This is the first phase of a comprehensive project to reconsider guidance in Statement No. 87, Employers Accounting for Pensions, and Statement No. 106, Employers Accounting for Postretirement Benefits Other Than Pensions. A second, broader phase will comprehensively address remaining issues.
The Committee on Benefit Finance has agreed to sign on to a joint letter with the Committee on Corporate Reporting that addresses both Committees concerns with Phase I of the exposure draft.
- Health Savings Accounts (HSAs)
CBF is closely following the debate over Health Savings Accounts (HSAs).
In the President proposal he has asked Congress to:1) fix the tax code to raise the limit on tax-free contributions to HSAs 2) give workers who buy HSA policies on their own the same tax breaks as those who get their health insurance from their employers. Several bills have been introduced but have yet to gain traction, as legislation moves on this issue CBF will continue to monitor.
- Pension Reform
There are approximately 30,000 defined benefit plans that cover roughly 23 million workers. The replacement of the 30-year Treasury rate for the determination of pension liabilities and other calculations is an issue of paramount importance for sponsors of defined benefit plans. On November 15, 2004, the Senate passed S. 1783, ''The Pension Security and Transparency Act of 2005.'' On December 15, the House voted 294 to 132 in favor of HR 2830, ''The Pension Protection Act of 2005.'' The bill is currently in conference with the Senate's S. 1783. The conference report will most likely not be ready for a vote on final passage before Memorial Day.
Although a host of issues were said to still be outstanding, Republican staffers agree that a deal is imminent. CBF is still waiting to see how the conferees addressed: Credit Balance, Hybrids, Smoothing and Transition.
There are rumors out that the provisions that were not included in a final tax reconciliation conference report for a tax reconciliation bill could be rolled over into the pension reform conference agreement.
- Department of Energy Notice on Pensions
Department of Energy (DOE) Bulletin 351.1 that would make unallowable under certain circumstances the costs of defined benefit pension costs. The basis for this position is the DOE intent to have contractors utilize more predictable defined contribution plans. The publication of this bulletin and its bypassing the normal promulgation process are significant causes for concern. CGB has been informed that Members of Congress have also expressed their misgivings on this DOE position. CGB will continue to follow this issue very closely.
- Time and Material and Labor Hour Contracts
CGB is closely monitoring a proposed rule change to FAR 52.232-7. The proposal would preclude prime contractor profit or fee on subcontracted effort, and would permit the government to refuse any payment for subcontracted effort prior to the date the contractor obtains required government consent to enter into a subcontract.
- Medical Liability Reform
CPC supports S. 4, legislation that would limit legal fees and cap noneconomic damages in medical liability cases. The committee is monitoring this legislation.
- Alternative Minimum Tax and Tax Reform
CPC supports S. 1103, which repeals the individual alternative mininum tax. CPC is also working closely with the FEI Tax Committee (COT) on issues of mutual interest. CPC and COT have sumitted testimony to the House Ways and Means Committee on various tax reform issues. A copy of the testimony can be found under the "Comment Letters" on the FEI Private Companies home page. This work is expected to continue through the remainder of the Legislative Session.
- Small Business Health Plans
CPC monitored and followed the progress of S. 1955, the small business health plan legislation. This bill would have expanded health care access and reduced costs through the creation of small business health plans. The bill would have made it possible for businesses to pool together to offer health coverage. On May 11th, 2006, a cloture vote on the bill was not invoked in the Senate, and the bill failed by a vote of 55-43.
CPC was active on this legislation through a coalition established in Washington DC. Should the bill come up again in the Senate, the CPC will similarly be active in its progress.
- Sub S Corp Reform
CPC is monitoring the status of Sub S Corp legislation, H.R. 1557. This bill would amend the Internal Revenue Code of 1986 to provide an election for special tax treatment of certain S Corporation conversions. The legislation would impact both private and public companies, but CPC has a special interest in S Corp reform legislation. The committee hopes this legislation will be active soon and is closely watching its activity.
- Estate Tax
CPC closely monitored H.R. 8/ S. 420, the estate tax legislation. The House bill, H.R. 8 previously passed the House of Representatives on April 13, 2005 by a vote of 272-162. The tax will be fully phased out in 2010, only to be completely reinstated in 2011. The House legislation would have allowed for the permanent repeal of the estate tax and eliminated the tax's reinstatement in 2011. On June 8, 2006, the Senate failed to clear a procedural hurdle necessary to procede to final consideration of the bill. Most recently, Congressman Thomas introduced the estate tax compromise bill, H.R. 5638, on June 19th.
- Tax Reconciliation
On May 17, the President will sign the tax reconciliation bill (H.R. 4297) into law. The bill stalled in conference due to disagreement between House and Senate conferees over which revenue raisers to include, and over how large the individual AMT relief provision should be. The final version of the bill sent to the President includes roughly $30 billion in individual AMT relief. It also extends the capital gains and dividend tax relief measures for another two years. It also broadens the scope of Section 179 of the I.R.C., which permits qualifying business to fully expense new business investment in the year such investments were made. Under the new measure, businesses can expense up to $100,000 in new business investment. Businesses can claim the full expense so long as their total new business investment does not exceed $400,000. The previous ceiling was $200,000.
- LIFO Accounting
Congress has considered eliminating LIFO inventory accounting for tax purposes. An early provision included in the tax reconciliation bill (H.R. 4297) was aimed specifically at oil and gas companies. While that provision was defeated, a later provision would have applied across all industries. That, too, was defeated. However, Senate Finance Committee Chairman Charles Grassley plans to hold hearings later this year to determine whether LIFO accounting should be abandoned. The COT is now participating in a coalition of companies and associations working to preserve LIFO accounting.
- Tax Reform
The Presidents Advisory Panel on Tax Reform released its report on November 1. The panel has recommended both a simplified income tax plan and a Growth and Investment tax plan. Each plan would impact the business community in similar ways: The simplified income tax plan would reduce the corporate tax rate to 31.5%; provide for accelerated depreciation on all asset classes; shift from a worldwide to a territorial tax system; and eliminate the corporate AMT. The growth and investment tax plan would also reduce the corporate tax rate; permit expensing of all business investment; shift to a territorial tax system; and eliminate the corporate AMT. On May 9, The House Ways and Means Committee held a hearing on the need for corporate tax reform. The COT submitted a comment letter (jointly signed by the CPC) advocating the importance of reducing the domestic and international tax burden currently placed on U.S. companies. The testimony further called for reducing the complexity of the tax code.
- Mandatory Electronic Filing of Federal Tax Returns
In January, the IRS published temporary regulations that would require any corporation with assets in excess of $50 million to file their federal income tax returns electronically, beginning in 2006 for tax year 2005. Many business groups (including the COT) have expressed strong reservations with the proposal Taxpayers worry about security breaches; failure-to-file penalties whena return is filed electronically but (for whatever reason) the submission is rejected by the IRS server; and potential software problems since most tax-filing software is geated toward individual filers, not large corporations. FEI's Commitees on Taxation; Private Companies; and Finance and Information Technology will continue to engage policymakers on the importance of improving this regulation
- CEO Certification of Federal Tax Returns
Over the past two years, Congressional policymakers have considered legislative language that would require corporate CEOs to certify their companies' federal income tax filings. To date, the language has not been adopted into law. FEI's Tax Committee has worked diligently on this issue, urging Congress to reject the provision as bad policy. FEI's COT will continue to engage policymakers on this issue, and will update the membership as appropriate.
- Executive Compensation Disclosure
In January, the SEC published a proposed rulemaking that would greatly enhance the disclosure requirements for compensation paid to executives of publicly-traded companies. The rulemaking would include disclosures for current-year compensation, as well as deferred compensation (including both post-retirement benefits as well as any benefits that may be activated under change in control provisions). CCF submitted a comment letter to the SEC encouraging the use of streamlined disclosures (e.g., the information provided on the W-2 or its foreign equivalent), and discouraging the SEC from requiring any non-executive officers from being included in the disclosure requirements. The CCF will continue to engage the SEC on this topic as the rulemaking process proceeds.
- Credit Rating Agency Reforms
Both the SEC and the House Financial Services Committee are considering changes to the ways in which credit rating agencies are regulated. The SEC recently published a proposed rulemaking that would clarify the circumstances under which rating agencies might qualify as ''Nationally Recognized Statistical Rating Organizations.'' FEI's Committee on Corporate Finance submitted comments to the SEC urging the Commission to support greater disclosure requirements for rating agencies. Meanwhile, Rep. Mike Fitzpatrick (R-Pa), has introduced the ''Credit Rating Agency Duopoly Relief Act of 2005'' (H.R. 2990). The legislation would eliminate the current ''no action'' process for recognizing NRSROs, and would require the SEC to register credit rating agencies that have satisfied enumerated criteria. FEI's CCF has met with -- and will continue to meet with -- congressional staff to strengthen this legislation as it moves through Congress.
XBRL Reference Guide: Guidance for the Application and Conversion Capabilities of XBRL:
Power Point Presentation on XBRL and Assurance Services
D. Keith Wilson, Associate Chief Auditor
Public Company Accounting Oversight Board (PCAOB)
December 2005 CFIT meeting:
Power Point Presentation on XBRL Data: Real Life Solutions
Greg Adams, CFO and COO, EDGAR Online, Inc.
December 2005 CFIT meeting:
Power Point Presentation on XBRL As Interactive Financial Data
Taylor Hawes, Microsoft Corporation, and Greg Adams, EDGAR Online, Inc.
December 2005 CCR meeting:
Power Point Presentation on SECs Voluntary Filing Program
Taylor Hawes, Controller Global Platforms & Operations
Current Financial Reporting Issues Conference, November 2005:
- System Controls and Section 404
Power Point Presentation on Microsoft Security: Progress and Strategy Andre Mintz, Chief Security Strategist and Director of Trustworthy Microsoft Corporation March 2006 CFIT meeting: http://www.fei.org/rf/download/Microsoft_Security_Strategy.ppt
- Corporate Performance Management
Power Point Presentation on Microsoft Biz Sharp Peter Bull, Group Program Manager, Microsoft March 2006 CFIT meeting: http://www.fei.org/rf/download/BizSharp_Overview.ppt
Power Point Presentation on Integrated Performance Management David Pleasance, Partner, Deloitte Consulting March 2006 CFIT meeting: http://www.fei.org/rf/download/Integrated_Performance_Management.ppt
- Business Process Outsourcing
Power Point Presentation on Transforming the Finance Function
(Business Process Outsourcing and Corporate Performance Management)
Paul Gaynor, Partner, and Joshua Rogowsky, Director of Advisory Services,
December 2005 CFIT meeting: