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<br /> Advisory<br /> Services<br /> Rise Again<br /> at Large<br /> Audit Firms<br /> Plus<br />  Tax Consequences of Currency Trading<br />  Hybrid Business Entities<br />  Non-Compete Agreements<br /> <br /> <br /> CONTENTS<br /> august<br /> 20 Accounting & Auditing<br /> ❙ Auditing<br /> Material Internal Control Weakness Reporting<br /> Since the Sarbanes-Oxley Act<br /> By Thomas G. Calderon, Li Wang, and Edward J. Conrad<br /> ❙ Accounting<br /> The Two-Class Stock Method for<br /> Calculating Earnings per Share:<br /> Stock Compensation Awards as Participating Securities<br /> By Josef Rashty<br /> <a title="The CPA Journal - August 2012 page 1" href="http://viewer.zmags.com/publication/5d6221e7?page=1"> Advisory Services Rise Again at Large Audit Firms</a> <a title="The CPA Journal - August 2012 page 2" href="http://viewer.zmags.com/publication/5d6221e7?page=2"> </a> <a title="The CPA Journal - August 2012 page 3" href="http://viewer.zmags.com/publication/5d6221e7?page=3"> </a> <a title="The CPA Journal - August 2012 page 4" href="http://viewer.zmags.com/publication/5d6221e7?page=4"> CONTENTS august </a> <a title="The CPA Journal - August 2012 page 5" href="http://viewer.zmags.com/publication/5d6221e7?page=5"> vol. LXXXII/no.8 58ESSENTIALS 6 PERSPECTIVES </a> <a title="The CPA Journal - August 2012 page 6" href="http://viewer.zmags.com/publication/5d6221e7?page=6"> new york state society of NYSSCPA certif</a> <a title="The CPA Journal - August 2012 page 7" href="http://viewer.zmags.com/publication/5d6221e7?page=7"> FAE 2012 Web Events FAE's Live Video Webcast</a> <a title="The CPA Journal - August 2012 page 8" href="http://viewer.zmags.com/publication/5d6221e7?page=8"> PERSPECTIVES standards setting IFRS for P</a> <a title="The CPA Journal - August 2012 page 9" href="http://viewer.zmags.com/publication/5d6221e7?page=9"> publisher's column A Poun</a> <a title="The CPA Journal - August 2012 page 10" href="http://viewer.zmags.com/publication/5d6221e7?page=10"> (Continued from page 6) ously expended a good dea</a> <a title="The CPA Journal - August 2012 page 11" href="http://viewer.zmags.com/publication/5d6221e7?page=11"> however, the FAF rejected the AICPA's rec- ommend</a> <a title="The CPA Journal - August 2012 page 12" href="http://viewer.zmags.com/publication/5d6221e7?page=12"> 2011 Max Block Awards Presented T he winners of </a> <a title="The CPA Journal - August 2012 page 13" href="http://viewer.zmags.com/publication/5d6221e7?page=13"> The Imprecise Nature of Accounting Quest</a> <a title="The CPA Journal - August 2012 page 14" href="http://viewer.zmags.com/publication/5d6221e7?page=14"> of the acquired company and the synergy that is e</a> <a title="The CPA Journal - August 2012 page 15" href="http://viewer.zmags.com/publication/5d6221e7?page=15"> accounting standards are. Currently, IFRS does no</a> <a title="The CPA Journal - August 2012 page 16" href="http://viewer.zmags.com/publication/5d6221e7?page=16"> Teaching and Advising a New Genera</a> <a title="The CPA Journal - August 2012 page 17" href="http://viewer.zmags.com/publication/5d6221e7?page=17"> itics but thought that, in the end, talented peop</a> <a title="The CPA Journal - August 2012 page 18" href="http://viewer.zmags.com/publication/5d6221e7?page=18"> professional ethics requirement: effective for re</a> <a title="The CPA Journal - August 2012 page 19" href="http://viewer.zmags.com/publication/5d6221e7?page=19"> previous years, focused on how to develop and imp</a> <a title="The CPA Journal - August 2012 page 20" href="http://viewer.zmags.com/publication/5d6221e7?page=20"> Quick Response Codes: A Marketing Tool for </a> <a title="The CPA Journal - August 2012 page 21" href="http://viewer.zmags.com/publication/5d6221e7?page=21"> inbox: letter to the editor Rethinkin</a> <a title="The CPA Journal - August 2012 page 22" href="http://viewer.zmags.com/publication/5d6221e7?page=22"> ACCOUNTING & AUDITING auditing Mat</a> <a title="The CPA Journal - August 2012 page 23" href="http://viewer.zmags.com/publication/5d6221e7?page=23"> “Earnings Management of Firms Reporting Material </a> <a title="The CPA Journal - August 2012 page 24" href="http://viewer.zmags.com/publication/5d6221e7?page=24"> Background Originally, the SEC required larger</a> <a title="The CPA Journal - August 2012 page 25" href="http://viewer.zmags.com/publication/5d6221e7?page=25"> nesses in 2004, as opposed to only 12% of large a</a> <a title="The CPA Journal - August 2012 page 26" href="http://viewer.zmags.com/publication/5d6221e7?page=26"> (MW20) have consistently appeared to be either th</a> <a title="The CPA Journal - August 2012 page 27" href="http://viewer.zmags.com/publication/5d6221e7?page=27"> Accounting and Financial Studies Journal, vol. 12</a> <a title="The CPA Journal - August 2012 page 28" href="http://viewer.zmags.com/publication/5d6221e7?page=28"> ACCOUNTING & AUDITING accounting T</a> <a title="The CPA Journal - August 2012 page 29" href="http://viewer.zmags.com/publication/5d6221e7?page=29"> must be included in the two-class method calculat</a> <a title="The CPA Journal - August 2012 page 30" href="http://viewer.zmags.com/publication/5d6221e7?page=30"> EXHIBIT 1 An Illustratio</a> <a title="The CPA Journal - August 2012 page 31" href="http://viewer.zmags.com/publication/5d6221e7?page=31"> ods of net loss if, based upon the contrac- tual </a> <a title="The CPA Journal - August 2012 page 32" href="http://viewer.zmags.com/publication/5d6221e7?page=32"> all outstanding awards (not just the awards St</a> <a title="The CPA Journal - August 2012 page 33" href="http://viewer.zmags.com/publication/5d6221e7?page=33"> the stock compensation arrangements using the tre</a> <a title="The CPA Journal - August 2012 page 34" href="http://viewer.zmags.com/publication/5d6221e7?page=34"> ACCOUNTING & AUDITING auditing The</a> <a title="The CPA Journal - August 2012 page 35" href="http://viewer.zmags.com/publication/5d6221e7?page=35"> Fraud. Fraud has become a major area of concer</a> <a title="The CPA Journal - August 2012 page 36" href="http://viewer.zmags.com/publication/5d6221e7?page=36"> decision makers to make good choices. Auditors ca</a> <a title="The CPA Journal - August 2012 page 37" href="http://viewer.zmags.com/publication/5d6221e7?page=37"> Resource management. An integrated internal au</a> <a title="The CPA Journal - August 2012 page 38" href="http://viewer.zmags.com/publication/5d6221e7?page=38"> TAXATION federal taxation </a> <a title="The CPA Journal - August 2012 page 39" href="http://viewer.zmags.com/publication/5d6221e7?page=39"> provisions of IRC section 1045 and then excluding</a> <a title="The CPA Journal - August 2012 page 40" href="http://viewer.zmags.com/publication/5d6221e7?page=40"> 15%. Without congressional action extend- ing tha</a> <a title="The CPA Journal - August 2012 page 41" href="http://viewer.zmags.com/publication/5d6221e7?page=41"> basis of the newly purchased stock is $400,000 ($</a> <a title="The CPA Journal - August 2012 page 42" href="http://viewer.zmags.com/publication/5d6221e7?page=42"> issued by any qualified small business, the aggre</a> <a title="The CPA Journal - August 2012 page 43" href="http://viewer.zmags.com/publication/5d6221e7?page=43"> gain when the AMT is ignored and the 2012 tax rat</a> <a title="The CPA Journal - August 2012 page 44" href="http://viewer.zmags.com/publication/5d6221e7?page=44"> TAXATION international taxation Foreign C</a> <a title="The CPA Journal - August 2012 page 45" href="http://viewer.zmags.com/publication/5d6221e7?page=45"> er notional amount than the long forward contract</a> <a title="The CPA Journal - August 2012 page 46" href="http://viewer.zmags.com/publication/5d6221e7?page=46"> mination of these forward contracts (IRC sec- tio</a> <a title="The CPA Journal - August 2012 page 47" href="http://viewer.zmags.com/publication/5d6221e7?page=47"> terminated on the date the taxpayer takes </a> <a title="The CPA Journal - August 2012 page 48" href="http://viewer.zmags.com/publication/5d6221e7?page=48"> assigned, by lapse or otherwise.” IRC section 125</a> <a title="The CPA Journal - August 2012 page 49" href="http://viewer.zmags.com/publication/5d6221e7?page=49"> many of the IRS's arguments. Like the tax- payer </a> <a title="The CPA Journal - August 2012 page 50" href="http://viewer.zmags.com/publication/5d6221e7?page=50"> FINANCE not-for-profit organizations </a> <a title="The CPA Journal - August 2012 page 51" href="http://viewer.zmags.com/publication/5d6221e7?page=51"> L3Cs for program-related investments and other pu</a> <a title="The CPA Journal - August 2012 page 52" href="http://viewer.zmags.com/publication/5d6221e7?page=52"> ■ The organizational language must require that</a> <a title="The CPA Journal - August 2012 page 53" href="http://viewer.zmags.com/publication/5d6221e7?page=53"> B corporations. Prior to the adoption of this leg</a> <a title="The CPA Journal - August 2012 page 54" href="http://viewer.zmags.com/publication/5d6221e7?page=54"> an insubstantial part of the organization's activ</a> <a title="The CPA Journal - August 2012 page 55" href="http://viewer.zmags.com/publication/5d6221e7?page=55"> other factors, be conclusive evidence of </a> <a title="The CPA Journal - August 2012 page 56" href="http://viewer.zmags.com/publication/5d6221e7?page=56"> MANAGEMENT practice management The Incre</a> <a title="The CPA Journal - August 2012 page 57" href="http://viewer.zmags.com/publication/5d6221e7?page=57"> guage in the covenant, only reasonable restrictio</a> <a title="The CPA Journal - August 2012 page 58" href="http://viewer.zmags.com/publication/5d6221e7?page=58"> the firm's protective covenants carefully and com</a> <a title="The CPA Journal - August 2012 page 59" href="http://viewer.zmags.com/publication/5d6221e7?page=59"> the court approved, in theory, a liquidated- dama</a> <a title="The CPA Journal - August 2012 page 60" href="http://viewer.zmags.com/publication/5d6221e7?page=60"> RESPONSIBILITIES & LEADERSHIP perception</a> <a title="The CPA Journal - August 2012 page 61" href="http://viewer.zmags.com/publication/5d6221e7?page=61"> of the faster revenue growth and perceived higher</a> <a title="The CPA Journal - August 2012 page 62" href="http://viewer.zmags.com/publication/5d6221e7?page=62"> issue, however, is not whether the Big Four are d</a> <a title="The CPA Journal - August 2012 page 63" href="http://viewer.zmags.com/publication/5d6221e7?page=63"> Capgemini expired in 2005. Ironically, the rebuil</a> <a title="The CPA Journal - August 2012 page 64" href="http://viewer.zmags.com/publication/5d6221e7?page=64"> are able to offer nonprohibited advisory services</a> <a title="The CPA Journal - August 2012 page 65" href="http://viewer.zmags.com/publication/5d6221e7?page=65"> of the drop in advisory services revenue, increas</a> <a title="The CPA Journal - August 2012 page 66" href="http://viewer.zmags.com/publication/5d6221e7?page=66"> Since 2008, advisory services revenues have co</a> <a title="The CPA Journal - August 2012 page 67" href="http://viewer.zmags.com/publication/5d6221e7?page=67"> from $1.6 billion in 2000 to a peak of $2.5 billi</a> <a title="The CPA Journal - August 2012 page 68" href="http://viewer.zmags.com/publication/5d6221e7?page=68"> playing at the large accounting firms during the </a> <a title="The CPA Journal - August 2012 page 69" href="http://viewer.zmags.com/publication/5d6221e7?page=69"> that future waves of audit failures could lead to</a> <a title="The CPA Journal - August 2012 page 70" href="http://viewer.zmags.com/publication/5d6221e7?page=70"> TECHNOLOGY it management Business E-mails</a> <a title="The CPA Journal - August 2012 page 71" href="http://viewer.zmags.com/publication/5d6221e7?page=71"> fidential information. When such preventive polic</a> <a title="The CPA Journal - August 2012 page 72" href="http://viewer.zmags.com/publication/5d6221e7?page=72"> from persons who had taken the drug Paxil (Barton</a> <a title="The CPA Journal - August 2012 page 73" href="http://viewer.zmags.com/publication/5d6221e7?page=73"> The question of whether to place such a discla</a> <a title="The CPA Journal - August 2012 page 74" href="http://viewer.zmags.com/publication/5d6221e7?page=74"> TECHNOLOGY what to bookmark Website of t</a> <a title="The CPA Journal - August 2012 page 75" href="http://viewer.zmags.com/publication/5d6221e7?page=75"> Corporate Governance The corporate governance </a> <a title="The CPA Journal - August 2012 page 76" href="http://viewer.zmags.com/publication/5d6221e7?page=76"> CLASSIFIEDMARKETPLACE PROFESSIONAL OPPORTUNITY l </a> <a title="The CPA Journal - August 2012 page 77" href="http://viewer.zmags.com/publication/5d6221e7?page=77"> Peer Review If you need help, the</a> <a title="The CPA Journal - August 2012 page 78" href="http://viewer.zmags.com/publication/5d6221e7?page=78"> Melville Long Island on Rte 110 Two windowed offi</a> <a title="The CPA Journal - August 2012 page 79" href="http://viewer.zmags.com/publication/5d6221e7?page=79"> TAX CONSULTANCY INNOVATIVE STRATEGIES for sales </a> <a title="The CPA Journal - August 2012 page 80" href="http://viewer.zmags.com/publication/5d6221e7?page=80"> </a> <a title="The CPA Journal - August 2012 page 81" href="http://viewer.zmags.com/publication/5d6221e7?page=81"> ECONOMIC & MARKET DATA monthly upd</a> <a title="The CPA Journal - August 2012 page 82" href="http://viewer.zmags.com/publication/5d6221e7?page=82"> EDITORIAL a message from the editor-in-c</a> <a title="The CPA Journal - August 2012 page 83" href="http://viewer.zmags.com/publication/5d6221e7?page=83"> </a> <a title="The CPA Journal - August 2012 page 84" href="http://viewer.zmags.com/publication/5d6221e7?page=84"> </a>