November 30, 2017

“Screw You for Reading This”

Sorry. I couldn’t help myself. The title of this blog was the title of a fictional play mentioned in last night’s episode of “Modern Family.” Not related at all to the title of this blog comes this news about a possible new PCAOB Chair, Bill Duhnke – who’s a veteran Staffer for Senator Richard Shelby (who used to be the Senate Banking Committee Chair). Here’s the intro from this Bloomberg article:

A little-known Republican Senate aide is in line to lead the accounting industry’s watchdog, setting up an official who lacks experience in the auditing profession for one of the highest-paying jobs in financial regulation. William Duhnke, a veteran staff member for former Senate Banking Committee Chairman Richard Shelby, is on track to be selected to become chairman of the Public Company Accounting Oversight Board, according to four people familiar with the matter. An announcement by Securities and Exchange Commission Chairman Jay Clayton could be made in the coming weeks, said one of the people, who like the others asked that they not be named discussing the plan.

The job is seen as one of the most attractive regulatory roles in Washington because it pays more than $670,000 per year — well above the president’s $400,000 salary. The selection of Duhnke, whose name has been circulating as a possible pick for more than a year, would likely be controversial among investor advocates concerned that he would promote a pro-business agenda.

Do You Need a Risk Factor for the Proposed Tax Reform?

We love blogging about risk factors – they can be tough judgment calls. And we are constantly updating our “Risk Factors Handbook” as a result. Anyway, this Dorsey blog by Kimberley Anderson gives us some nice “food for thought” (don’t forget to tailor your risk factors to your own company’s circumstances):

Tax reform efforts by Congress are ongoing, and the substance of the tax bills remains fluid. However, for foreign corporations with U.S. operations, there are some specific potential risks to consider, such as additional limitations on the deductibility of interest, the migration from a “worldwide” system of taxation to a territorial system, and the use of certain border adjustments.

Foreign corporations with U.S. operations may want to consider including a risk factor in their periodic reports or offering documents regarding the potential impact of U.S. tax reform. A sample risk factor (based on the current iteration of the tax bills) is below. As the tax bills are amended during the legislative process, the language of the risk factor may need to be edited prior to use.

Possible U.S. federal income tax reform could adversely affect us.

The new U.S. administration and certain members of the U.S. House of Representatives have stated that one of their top legislative priorities is significant reform of the Internal Revenue Code. Proposals by members of Congress have included, among other things, changes to U.S. federal tax rates, imposing significant additional limitations on the deductibility of interest, allowing for the expensing of capital expenditures, the migration from a “worldwide” system of taxation to a territorial system, and the use of certain border adjustments. There is substantial uncertainty regarding both the timing and the details of any such tax reform. The impact of any potential tax reform on our business and on holders of our common shares is uncertain and could be adverse. [Prospective investors should consult their own tax advisors regarding potential changes in U.S. tax laws.]

Poll: Does the PCAOB Chair Need Deep Auditing Experience?

Please take a moment to anonymously indicate whether you think the PCAOB Chair should have extensive auditing experience:

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Broc Romanek