Navigating Tax Risks In Shareholder Executive Compensation
IRS disputes with business owners over shareholder executive compensation is the topic of a recent article titled "Navigating Tax Risks In Shareholder Executive Compensation,"written by principal Natasha Perssico Escobedo, MBA, CPA, AM-ASA, and published on Law360.com. The article also addresses relevant federal income tax statutes and judicial precedents related to shareholder-executive compensation. In recent years, the Internal Revenue Service has focused on shareholder executive compensation paid to executives who are shareholders in business enterprises, to ensure compliance with employment and income tax requirements. These steps are part of the IRS' goal to improve tax compliance by corporations and high-income taxpayers. C [...]
Corporate Governance Failures as the Handmaiden of Financial Fraud
Financial reporting frauds (also called management frauds) have become endemic, with huge losses being inflicted upon shareholders, creditors and others. Some of the most infamous frauds of the past two decades – Enron, WorldCom, Satyam, Olympus, Toshiba, and Parmalat being a small sample – have implicated the same key concerns. These include: the deviant "dark triad" personalities of "C-suite" executives; failures by outside independent auditing firms; and gross inattention by those charged with corporate governance, the board of directors or audit committee members. The failure of corporate governance is of concern for the following brief narrative. Corporate governance is a [...]
Valeant Accounting Concerns Focus on Revenue Recognition
The latest news about Valeant Pharmaceuticals International Inc., suggesting the need for restatements of recent periods’ financial statements, albeit with limited details reported thus far, again focuses attention on the common matter of the possible abuse of revenue recognition accounting principles. According the Valeant’s public disclosures to date, the issue appears to pertain to an entity, Philidor Rx Services LLC, a distributor for certain Valeant products organized in 2013, which has been a significant (but under the 10% threshold for “major customer” disclosure) customer for Valeant. The accounting issue, according to Valeant, is whether sales to Philidor should have been [...]