In late May the American Job Builders Tax Reform Act of 2011 (H.R. 1993), a bipartisan bill, was introduced in congress that would modify the tax code for how small construction contractors can elect to be taxed.
Currently contractors cannot use the completed contract method of accounting for income taxes if their average annual gross receipts exceed $10 million. The American Job Builders Tax Reform Act will raise this threshold to $40 million. This would allow contractors who exceed the current $10 million threshold to elect the completed contract method, which would provide relief from paying taxes based on the “look back” provisions for changes in contract profit estimates from year to year. In addition, this bill would provide relief from the Alternative Minimum Tax‘s long term contract adjustment. Continue reading »
For the third consecutive month the American Institute of Architects (AIA) Architecture Billing Index (ABI) decreased. This trend is concerning and may represent further contraction within the industry through 2011 and the beginning of 2012. Another concern expressed by the AIA’s chief economist, Kermit Baker, this month is the current debt ceiling debate in Washington D.C. which will adversely impact construction spending with increases in borrowing rates.
Though the June ABI index reflected poor scores, there was an increase in the new projects inquiry score. This is good news as this score represents the possibility of these inquiries developing further in the future into new projects.
You can read the full press release for the June ABI at the AIA website.
On June 29, 2011, Kathleen Casey, SEC Commissioner, stated, “The commission is slated to make a decision on these questions this year, and we can no longer kick the can down the road.” The SEC supports the adoption of IFRS as it would provide for a uniform, international method of financial reporting. Continue reading »
As U.S. accounting standards continue to evolve and move closer and closer to IFRS, now more than ever it is important for private companies, CPA’s and their financial statement users to take action and to help shape the future of private company financial reporting.
During December 2009, the American Institute of Certified Public Accountants (AICPA), the Financial Accounting Foundation (FAF), and the National Association of State Boards of Accountancy (NASBA) created the Blue Ribbon Panel on Private Company Financial Reporting. Members of the panel consist of various financial reporting constituencies, including lenders, investors, and owners as well as preparers, auditors, and regulators. The panel was formed to explore the necessary changes needed to best meet the needs of users of private company financial statements and whether or not there should be a standard-setting process that recognizes that there are differences between public and private companies.
In January 2011, the panel finalized its recommendations on the future of standard setting for private companies and submitted a report to the FAF. The panel concluded that a problem does exist where private company financial reporting is concerned. As a result, it had two significant recommendations. It proposed that the FAF accept: Continue reading »
The Construction Industry FASB Coalition Takes on the FASB Multi-employer Benefit Plan Exposure Draft
If you own or work for a construction company that employs union workers, and participate in a multi-employer benefit plan this may interest you.
In case you were not aware, in September 2010 the FASB released Exposure Draft 715, Compensation – Retirement Benefits – Multi-employer Plans. The objective of this exposure draft is to have companies who participate in multi-employer benefit plans to disclose in more detail the company’s participation in the multi-employer benefit plan, and any effects on the company’s cash flows from its participation in the multi-employer benefit plan. The exposure draft details a list of required disclosures at 715-80-50-1B. In the opinion of many trade associations and construction companies alike, the increased disclosure requirements will be overly burdensome and costly to comply with, as well as potentially misleading to users of financial statements. Continue reading »
On August 17, 2010, the Financial Accounting Standards Board jointly with the International Accounting Standards Board released a Proposed Accounting Standards Update on Leases that represents a fundamental change to lease accounting.
The proposed standard would apply to all leases except leases of intangible assets, leases to explore for or use minerals, oil, natural gas and similar non-regenerative resources, and leases of biological assets.
The proposed standard is intended to address concerns from financial statement users of lack of comparability since similar transactions can be accounted for differently and improve the financial statement representation of lease transactions. Continue reading »
The Federal Unemployment Tax Act (FUTA) is a tax imposed on employers of 6.2% on the first $7,000 of income paid to each employee annually. The 6.2% tax has two components; a 6% permanent tax and a .2% temporary surtax. The tax first came into existence in 1939 to guarantee financing for a national unemployment system. The “temporary” surtax was added in 1976, 35 years ago, and has been extended 8 times, most recently in 2009 to expire on June 30, 2011. Continue reading »
On the heels of bad news released by the American Institute of Architects (AIA) earlier this month indicting the possibility of future decreases in construction spending, the U.S. Department of Commerce has released construction data for the month of May which reflected a decrease in construction spending. Read the article here as provided by the Associated Press.