Income Tax Accounting and Auditing
Spring 2014
January 14 to May 10, 2014
Professor:
Office:
Joseph L. Keller
ACC 212
Office Phone: (213) 740-4846
E-mail:
jkeller@marshall.usc.edu
Lecture Class
Tuesday
&Thursday
2:00 PM – 3:20 PM JKP 202
Office Hours
Tuesdays and Thursdays 11:00 AM to 1:30 PM and by appointment
Course Description and Objective
The objective of this course is to provide the student with a foundation in the principles related to accounting
and auditing income taxes. The course is designed to provide an understanding of the roles of company
personnel and outside advisors in the preparation and review of the accrual of income taxes in connection
with financial audits. The course will also focus on identifying tax issues and planning opportunities in
connection with tax accrual work.
Learning Objectives
Upon taking this course, the student will be able to:
1. Create a set of working papers to facilitate the analysis and audit of a
corporation’s income tax provision by completing a group case study project
2. Prepare and explain the income tax footnotes to financial statements by
preparing sample footnotes
3. Determine the tax adjustments required to be booked in connection with a
business combination by analyzing fact patterns and solving problems
4. Explain financial statement reporting of the tax consequences of issuing stock
based compensation by analyzing footnotes of public companies and solving
problems
5. Calculate and audit the amount of tax liability that should be recorded on the
financial statements for uncertain tax positions by completing a group case study
project
6. Analyze the need for and determine the amount of any valuation allowance
needed for deferred tax assets by preparing a report and solving problems
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Student Learning Outcomes
Graduate Program Student Learning Outcomes
“Attached to this syllabus are the five Student Learning Outcomes developed for
this program by the USC Leventhal faculty and administration and filed with the
AACSB, the accrediting body for accounting and business schools.
This course will deal primarily with the Outcome #1 Technical, Conceptual,
Problem-Solving Requirement which states:
1. Technical, Conceptual, Problem-Solving Requirement
Students will be competent in and be able to apply discipline-specific knowledge
and skills in the fields of accounting or taxation. This learning outcome includes
the development of critical thinking and problem solving skills, as well as an
understanding of the strategic role of accounting in business organizations and
society.
To a lesser extent, this course will touch on two of the other Learning Outcomes: #
2 Professional Development Requirement and #4 Ethical Principles and
Professional Standards Requirement
Required Materials
Accounting Standards Codification 740 (available on line)
Financial Reporting Developments/Income Taxes, Ernst and Young, September 2013
(will be provided on Blackboard)
Prerequisites: None
Course Notes: Power point handouts will be posted in advance for each class on Blackboard
Grading Policy
There will be a Mid-term and Final Exam. This course follows the Leventhal School of
Accounting and Marshall School of Business grading policies.
Make-up exams will be given only when a student has received approval from the instructor. The
following points will be assigned for the determination of final grades:
Class participation
Problem Assignments
Case Study
Midterm Examination
Final Examination:
Total
100
100
100
300
300
900
Notes on grading policy
1. All assignments, exams, and class participation will be evaluated on effectiveness of your
communication. This includes grammar, spelling, organization, format and the other essentials
of strong and effective communication. All problems are to be the student’s individual work
and any collaboration or sharing of answers will be considered a violation of the honor code.
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2.
All assignments are due on the dates indicated on the course syllabus. Late assignments will
receive a grade of ZERO.
3.
Class attendance is very important in developing a coherent view of the materials covered in
the course. It is expected that each student will be prepared for each class and will participate
through volunteering or by being called on to add to the discussion.
We adhere to the USC Leventhal School of Accounting and Marshall School of Business grading
standards for graduate programs. In general, final course grades at the graduate level in a core
course average approximately B+ (3.3), but may vary based on class performance. For elective
courses, the class average is usually higher--approximating 3.5, which is between a B+ and an A-.
You must receive a C or better to pass a required class, and you must have an overall B average
(3.0 minimum) in order to graduate from USC.
Emergency Information
USC Emergency # (213) 740-4321
USC Emergency Information Line (213) 740-9233
USC Information # (213) 740-2311 and KUSC Radio 91.5 FM
Paperwork Retention Policy
Returned paperwork, unclaimed by a student, will be discarded at the end of the semester. All
graded paperwork, not returned, will be kept for one year.
Statement for Students with Disabilities
Any student requesting academic accommodations based on a disability is required to register with
Disability Services and Programs (DSP) each semester. A letter of verification for approved
accommodations can be obtained from DSP. Please be sure the letter is delivered to me (or to TA)
as early in the semester as possible. DSP is located in STU 301 and is open 8:30 a.m.–5:00 p.m.,
Monday through Friday. The phone number for DSP is (213) 740-0776.
Academic Integrity – Leventhal School of Accounting Honor Code
Students enrolled in any class offered by the Leventhal School of Accounting are expected to
uphold and adhere to the standards of academic integrity established by the Leventhal School of
Accounting Student Honor Code. Students are responsible for obtaining, reading, and
understanding the Honor Code System handbook. Students who are found to have violated the
Code will be subject to disciplinary action as described in the handbook. For more specific
information, please refer to the Student Honor Code System handbook, available in class or from
the receptionist in ACC 101
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Student Learning Outcomes
USC Leventhal Masters Programs
1. Technical, Conceptual, Problem-Solving Requirement
Students will be competent in and be able to apply discipline-specific knowledge and skills in the
fields of accounting or taxation. This learning outcome includes the development of critical
thinking and problem solving skills, as well as an understanding of the strategic role of
accounting in business organizations and society.
2. Professional Development Requirement
Students will be able to communicate clearly, and strategically, after considering the relevant
audience, situation, and purpose of the communication. Students will develop the ability to
work productively with others to accomplish established goals.
3. Research/Life-Long Learning Requirement
Students will be able to use relevant research databases and academic/professional literature
to gain new knowledge and analyze business situations.
4. Ethical Principles and Professional Standards Requirement
Students will be able to apply ethical principles and professional standards in analyzing
situations and making informed decisions.
5. Globalization Requirement
Students will be able to demonstrate an international perspective and appreciation for
diversity and cultural differences, along with their significance in global business.
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INCOME TAX ACCOUNTING AND AUDITING
ACCT 583
2014 SPRING SEMESTER
SESSION
DATE
01
1/14
02
1/16
03
1/21
INTRODCUTION
OF CASE STUDY
04
1/23
05
1/28
OBJECTIVES AND
BASIC
PRINCIPLES
TEMPORARY
DIFFERENCES
06
1/30
07
2/4
08
2/6
AN ENACTED
CHANGE IN TAX
LAWS OR RATES
CHAPTER 8
09
2/11
VALUATION
ALLOWANCE I
CHAPTER 6
6 – 6.5.3
10
2/13
VALUATION
ALLOWANCE II
CASE STUDY
DISCUSSION
CHAPTER 6
6.6 – 6.12.2
2/18
TOPIC
READING
E & Y’S
FINANCIAL
REPORTING
DEVELOPMENTS
ACCOUNTING
FOR INCOME
TAXES
CHAPTER 1
INTRODUCTION
AND COURSE
OVERVIEW/
HISTORY
SCOPE AND
APPLICABILITY
RECOGNITION
AND
MEASUREMENT
CASE STUDY
DISCUSSION
HOMEWORK
ASSIGNMENTS
CHAPTER 2
CHAPTER 3
3 - 3.2
CHAPTER 4
4 – 4.2.7
4.2.9 -4.5
CHAPTER 5
11
2/20
CONTINUATION
OF SESSION 9
CHAPTER 7
12
2/25
BUSINESS
COMBINATIONS I
CHAPTER 11
11 - 11.3.5
13
2/27
BUSINESS
COMBINATIONS
II
CHAPTER 11
11.5 – 11.13.1
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OTHER
SUPPLEMENTAL
READING
ASSIGNMENT
#1 DUE
ASSIGNMENT
#2 DUE
CASE STUDY
ELEMENTS 1 &
2 DUE
ASSIGNMENT
#3 DUE
CASE STUDY
ELEMENT 3 & 4
DUE
DELOITTE
BUSINESS
COMBINATION
ROADMAP
SECTION 8 113135
ASSIGNMENT #
4 DUE
CASE STUDY
ELEMENT 6
DUE
SESSION
DATE
TOPIC
READING
E & Y’S
FINANCIAL
REPORTING
DEVELOPMENTS
ACCOUNTING
FOR INCOME
TAXES
14
15
3/4
SESSION 12
CONTINUED
CHAPTER 12
CHAPTER 13
ASSIGNMENT
#5 DUE
3/6
MID TERM EXAM
3/11
FINANCIAL
STATEMENT
PRESENTATION
CHAPTER 18
18 – 18.2.5
CASE STUDY
ELEMNT 11
DUE
16
OTHER
SUPPLEMENTAL
READING
HOMEWORK
ASSIGNMENTS
17
3/13
CONTINUATION
OF SESSION 16
CHAPTER 18
18.3 – 18.9.1
18
3/25
CHAPTER 14
14 – 14.2.7.4
14.3 -14.7
ASSIGNMENT
#6 DUE
19
3/27
OPINION 23/
SUBSIDIARY
BASIS
ADJUSTMENTS
INTRAPERIOD
TAX
ALLOCATION
CHAPTER 15
15 – 15.2.1.4
15.3 – 15.4
CASE STUDY
ELEMENT 9
DUE
20
4/1
INTERIM
REPORTING
CHAPTER 20
21
4/3
STOCK BASED
COMPENSATION
ARRANGEMENTS
22
4/8
CONTINUATION
OF SESSION 21
23
4/10
CASE STUDY
DISCUSSION
ASSIGNMENT #
7 DUE
24
4/15
CASE STUDY
DISCUSSION
CASE STUDY
ELEMENTS
7 & 8 DUE
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Deloitte Stock
Based
Compensation
“ROADMAP”
pages 132-148
Deloitte Stock
Based
Compensation
“ROADMAP”
pages 149-156
SESSION
DATE
TOPIC
READING
E & Y’S
FINANCIAL
REPORTING
DEVELOPMENTS
ACCOUNTING
FOR INCOME
TAXES
OTHER
SUPPLEMENTAL
READING
25
4/17
UNCERTAIN TAX
POSITIONS I
CHAPTER 19
19.1 – 19.8
DELOITTE
“Roadmap to
Accounting for
Income Taxes”
Pages 155-164
26
4/22
27
4/24
28
4/29
CONTINUATION
OF SESSION 25
UNCERTAIN TAX
POSTIONS II
CONTINUATION
OF SESSION 26
CHAPTER 19
19.9 – 19.110
CHAPTER 19
19.9 – 19.11
29
5/1
HOMEWORK
ASSIGNMENTS
FINAL CASE
STUDY DUE
IFRS
ASSIGNMENT #
8 DUE
30
5/9
FINAL
EXAMINATION
11:00 TO 1:00 PM
Problem assignments will be posted to Blackboard at least one week before they are due
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