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iNEWS.....What You Need to Know, Right Now!

Week of September 5, 2008 • Issue No. 016

If you would like to have further information on any of these articles, let us know.
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info@pmcpa.com
This Week in the iNews:
 
▲ LUNCH & LEARN SERIES PROGRAM #2 - FRAUD
▲ AUTO DEALERS – STILL TIME FOR A TAX SAVING MOVE
▲ FOCUS ON FRAUD:  2008 REPORT TO THE NATION ON OCCUPATIONAL FRAUD AND ABUSE, ACFE – Part 6
▲ Lunch & Learn Series Program # 2 - Fraud 
Please join us for the second program of our Lunch & Learn Series at noon on Tuesday, September 16, 2008 in the Prangley Marks, LLP lunch/conference room.
 
Everything You Always Wanted To Know About Fraud, but were afraid to ask -or, better yet - 2008 Report to the Nation on Occupational Fraud and Abuse, ACFE  - Presented by Marty Grausam, CPA, CFE
 
A look into the world of occupational fraud and abuse as reported in this extensive, bi-annual world-wide study recently published.  The factors and trends may alert you or alarm you, but will definitely inform you.
Reserve your seat now! Contact Michelle Ripley at mripley@pmcpa.com or at (616)774-9004.
 
Seating is limited!
▲ AUTO DEALERS – STILL TIME FOR A TAX SAVING MOVE
 
IRS Now Approves a Single LIFO Pool for all New Vehicles
 
In Revenue Procedure 2008-23, the IRS announced that it would permit automobile dealerships to use a single, combined pool for their new vehicle LIFO calculations. The IRS will permit this change to be made as early as for your calendar year 2007 LIFO calculations.
Generally, a dealership will be better off with one LIFO pool than two for its new vehicles. With one pool, a dealership will be able to preserve the benefits of its LIFO election for a longer period of time, even though that dealership may experience a reduction of dollars invested in one class of goods (new automobiles) compared to another (new light-duty trucks). Since most dealers want to defer the repayment of their LIFO reserves for as long as possible, this recent change by the IRS is very good news.
 
It is advisable to compare the results of your 2007 LIFO calculations which were made using two separate pools with the result that you would have if a single new vehicle LIFO pool were used for your 2007 calculations. This comparison will indicate whether there is a compelling reason to make the change for 2007 in order to avoid any immediate significant repayment of your LIFO reserve. In some instances, based on this comparison, a single LIFO pool for 2007 might not produce a more beneficial result.
 
It is possible to make the change for calendar year 2007 by filing an amended return for 2007 if the income tax return has already been filed. However, in order to make this change effective for 2007, the amended return would have to filed on or before September 15, 2008.
 
Some dealers have indicated that since their LIFO calculations for 2007 have already been completed, they would prefer to wait and consider making the change in connection with their 2008 LIFO computations. This is a logical response, and for most dealers, it would be the way to proceed.
 
Please call soon so that we can discuss this further and determine how to proceed.
 
 
▲FOCUS ON FRAUD:  2008 REPORT TO THE NATION ON OCCUPATIONAL FRAUD AND ABUSE, ACFE – Part 6
 
This study is based on data compiled from 959 cases of occupational fraud that were investigated between January 2006 and February 2008.  All information was provided by the Certified Fraud Examiners (CFEs) who investigated those cases.
 
Executive Summary – Part 6, How Occupational Fraud is Committed; Definitions First
 
Based on previous ACFE research on and observations of the methods used to commit occupational fraud, the study has broken down the schemes reported into three primary categories: A) asset misappropriation, B) corruption, and C) financial statement fraud.
 
Let’s define each of these.
 
A) Asset misappropriation schemes are frauds in which the perpetrator steals or misuses an organization’s resources. Common examples of asset misappropriation include false invoicing, payroll fraud, and skimming.
 
B) In the context of occupational fraud, corruption refers to schemes in which fraudsters use their influence in business transactions in a way that violates their duty to their employers in order to obtain a benefit for themselves or someone else.  For example, employees might receive or offer bribes, extort funds from third parties, or engage in conflicts of interest.
C) Financial statement fraud involves the intentional misstatement or omission of material information from the organization’s financial reports; these are the cases of “cooking the books” that often make front page headlines. These cases often involve the reporting of fictitious revenues or the concealment of expenses or liabilities in order to make an organization appear more profitable than it really is.
 
Next time:
Executive Summary – Part 7 – How Occupational Fraud is Committed; What the Study Reveals
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