(excerpt from SAS 82)

Risk factors that relate to misstatements arising from misappropriation of assets may be grouped in the two categories below. The extent of the auditor's consideration of the risk factors in category ( b ) is influenced by the degree to which risk factors in category ( a ) are present.

a. Susceptibility of assets to misappropriation. These pertain to the nature of an entity's assets and the degree to which they are subject to theft.

b. Controls. These involve the lack of controls designed to prevent or detect misappropriations of assets.

Recently, I saw two articles with the same theme: the IRS and the NYS Tax Department are getting smarter. Both agencies are discovering that they can use technology more efficiently to flag potential tax cheats. The IRS, for example, is looking at mortgage interest reporting provided by banks. Of course this data can be easily cross-referenced to interest deductions to flag potentially overstated deductions. More interestingly, the IRS is wondering about taxpayers who chose not to deduct their mortgage interest, and taxpayers whose mortgage interest appears to be high in comparison to reported income.

IRS Issues Guidance for Small Business Health Credit

The new health reform law (aka Obamacare) gives a tax credit to certain small employers that provide health care coverage to their employees, effective with tax years beginning in 2010. The following questions and answers provide information on the credit as it applies for 2010-2013, including information on transition relief for 2010. Additional guidance on the credit is available in Notice 2010-44.  This article explores frequently asked questions about the Credit.