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STRATEGIC
ISSUES...ONLINE
For week of August 1, 2005, Issue #223
Featured Articles:
1. IRS Launches Study of S
Corporation Reporting Compliance
2. Focus on Fraud: Put Your
Fraud Knowledge to the Test - Part 1
3. Tech Tip Weekly: Fooling
Around with Format Painter
4. Compliance Calendar
1. IRS Launches Study of S
Corporation Reporting Compliance
Internal Revenue Service
officials announced today the launch of a study to assess
the reporting compliance of S corporations. The study,
carried out under the National Research Program (NRP),
will examine 5,000 randomly selected S corporation returns
from tax years 2003 and 2004.
S corporations are entities
whose income and deductions pass through the corporate
structure to the shareholders. Since the mid-1980s, the
number of S corporations has risen rapidly, growing from
724,749 in 1985 to 3,154,377 in 2002.
"The use of S corporations
has exploded," said IRS Commissioner Mark W. Everson.
"The IRS needs a better understanding of what this means
for tax compliance."
S corporations are now the
most common corporate entity. In 2002, the latest year
for which data is available, S corporation returns
accounted for 59 percent of all corporate returns filed
for that tax year.
Numerous restrictions and
requirements apply to S corporations. For example, an S
corporation can have no more than 75 shareholders and none
of these can be another corporation or non-resident alien.
Program officials expect
these audits to begin later this year. The new NRP
initiative will use a study approach designed to reach
statistically valid conclusions regarding compliance
behavior, while using a smaller sample of returns than in
the past.
The results of the NRP
study will be used to more accurately gauge the extent to
which the income, deductions and credits from S
corporations are properly reported on returns filed by the
flow through corporations and their shareholders. When
completed, this research will assist the IRS in selecting
and auditing S corporation returns with greater compliance
risk.
The NRP, created in 2000,
is a comprehensive effort by the IRS to measure payment,
filing and reporting compliance for different types of
taxes and various sets of taxpayers.
2. Focus on Fraud: Put Your
Fraud Knowledge to the Test - Part 1
The Certified Fraud
Examiner - CFE Exam contains over 500 questions designed
to measure your academic, as well as practical fraud
knowledge, in four main areas:
-Criminology and Ethics
-Financial Transactions
-Legal Elements of Fraud
-Fraud Examination and
Investigation
Here are two sample
questions typical to the CFE Exam in the Criminology and
Ethics section. The answers will appear in next week's
newsletter along with a couple more sample questions to
test your fraud knowledge.
1. Given all of the
following fraud prevention methods within organizations,
which one is probably the most effective?
a. reducing
rationalization
b. having an
open-door policy
c. increasing the
perception of detection
d. screening
employees
2. Beta, a fraud suspect,
said he stole money from the ABC Company because the
company didn't pay its entry-level workers a living wage.
The view that crime is primarily caused by a disadvantaged
economic class position is called:
a. economic theory
b. social process
theory
c. social
structure theory
d. none of the
above
3. Tech Tip Weekly:
Fooling Around with Format Painter
In MS Excel, when you feel
the urge to format on the fly (so to speak), use the
Format Painter on the standard toolbar (the button that
looks like a paintbrush right next to the Paste tool).
This wonderful little tool enables you to take the
formatting from a particular cell that you've fancied up
and apply its formatting to other cells in the worksheet
simply by selecting those cells.
To use the Format Painter
to copy a cell's formatting to other worksheet cells, just
follow these easy steps:
1. Format an
example cell or cell range in your workbook, selecting
whatever fonts, alignment, borders, patterns, and color
you want it to have.
2. With the cell
pointer in one of the cells you just fancied up, click the
Format Painter button in the standard toolbar.
The mouse pointer changes
from the standard thick, white cross to a thick, white
cross with an animated paintbrush by its side, and you see
a marquee around the selected cell whose formatting is to
be used by the Format Painter.
3. Drag the
white-cross-plus-animated-paintbrush pointer (the Format
Painter pointer, for short) through all of the cells you
want to format in the same manner as the example cell you
first selected.
As soon as you release the
mouse button, MS Excel applies all the formatting used in
the example cell to all the cells you just selected!
4. Compliance Calendar
August 3
-Employers deposit Social
Security, Medicare and withheld income tax for payments
July 27, 28, and 29.
August 5
-Employers deposit Social
Security, Medicare and withheld income tax for payments
July 30, 31, and August 1, and 2.
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