DOL Releases Report on Audit Quality

In May of 2015, the Department of Labor released a report on the level and quality of audit work performed by independent public accountants with respect to audits of employee benefit plans.  The assessment involved a sample size of 400 plan audits for plan years beginning in 2011.  Since the population of plan auditors is so diverse and heavily skewed to those CPA firms that audit a small number of plans, the sample was designed to look at the relationship between auditor characteristics and audit quality.

The results were not good.  The report found that 39% of the audits had major deficiencies with respect to one or more relevant GAAS requirements which would lead to rejection of a Form 5500 filing.  It found that there was a clear link between the number of employee benefit plan audits performed by a CPA and the quality of the audit work performed.  Furthermore, CPA’s who performed the fewest number of employee benefit plan audits annually had a 76% deficiency rate.  To the contrary, firms performing the most plan audits had a deficiency rate of only 12%.

The report emphasized the need and responsibility of a plan sponsor, the fiduciary, to hire a qualified CPA firm.  Ary Roepcke Mulchaey is a PCAOB registered firm with a benefit plan audit practice that has earned a strong reputation among clients for being efficient, effective and responsive.  ARM has audited hundreds of employee benefit plans over the past 30 years and has developed a depth of expertise to deliver quality audits for all of our clients each and every year.

Ohio Sales Tax Holiday

The state of Ohio has enacted a one-time only sales tax holiday to take place this summer. The holiday begins on Friday, August 7th, 2015 at 12:01am and concludes Sunday, August 9th, 2015 at 11:59pm. During these three days, there will be no sales tax on the following items: clothing priced at $75 or less, school supplies priced at $20 or less, and school instructional materials priced at $20 or less.

Keep in mind there are a few stipulations to this holiday. Most notably, any item used in a trade or business is not eligible for the tax exemption. For example, school supplies such as binders and notebooks to be used in a business are ineligible. Additionally, clothing accessories including jewelry and handbags do not qualify as clothing and are therefore not exempt from sales tax.

Items sold by mail, phone, or the Internet will qualify for the tax holiday if the consumer orders and pays for the item and the retailer accepts the order during the holiday period.  Shipping and handling charges shall also be exempt from sales tax if all items in the order qualify for the exemption. If some of the items in the order are ineligible, sales tax will be charged on the shipping and handling costs of those specific items.

ARM Announces New Audit Staff

ARM is excited to welcome Marissa Crawford as our newest staff accountant in the audit department.  Marissa is a 2015 graduate of The University of Akron’s College of Business Administration.  While attending Akron, Marissa was involved in a number of organizations including Accounting Association, Supply Chain Student Association, and Kappa Kappa Gamma.  Click here to learn more about Marissa.

Amazon Starts Charging Sales Tax to Ohio Consumers

Amazon announced that it will start collecting sales tax on online purchases shipped to Ohio starting today, June 1st, as a result of building three data centers near Columbus that are expected to create 1,000 jobs over the next few years.  Brick and mortar stores have long complained that Amazon held a competitive advantage because they were not required to collect sales taxes on purchases shipped to Ohio since the retail giant did not have a physical presence in the state.  The nearest distribution centers to Ohio are located in neighboring states (Indiana, Kentucky and Pennsylvania) and Amazon does not have any corporate offices in Ohio.  Amazon’s decision to start collecting sales tax creates a level playing field between the online retailer and local businesses around Ohio that have often served as showrooms where potential customers would often inspect the products in person only to buy them through Amazon to avoid paying sales tax.

Even though Ohio customers weren’t paying sales tax on Amazon purchases in the past doesn’t mean the purchases were tax-free.  The Ohio Department of Taxation states on their website “Ohio law requires residents to pay the use tax on untaxed purchases made from an internet or catalog (remote) vendor.”  Use tax is often reported on Line 19 of the Ohio Individual Income Tax Return (IT 1040).  The form also requires filers to certify that no sales or use tax is due, if true, by checking a box.  For more information on reporting unpaid use tax, please consult an ARM tax advisor.