Income Tax Accounting and Auditing
Spring 2013
January 14 to May 10, 2013
Professor:
Office:
Joseph L. Keller
ACC 212
Office Phone: (213) 740-4846
E-mail:
jkeller@marshall.usc.edu
Lecture Class
Monday &
Wednesday
11:00 AM – 12:20 PM JKP 210
Office Hours
Mondays and Wednesdays 8:45 to 10:45 AM and Tuesdays 5:15 to 6:15
PM and by appointment
Course Description
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
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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
Required Materials
Accounting Standards Codification 740 (available on line)
Financial Reporting Developments/ Accounting for Income Taxes Ernst and Young October 2011
(will be provided on Blackboard)
Prerequisites: ACCT 544 or ACCT 572
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
Research Paper
Mid-Term 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.
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.
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Student Learning Outcomes
The objective of this course is to provide the student with a foundation in the principles
related to accounting for 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.
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
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
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MARSHALL GUIDELINES
Add/Drop Process
In compliance with USC and Marshall’s policies classes are open enrollment (R-clearance) through
the first week of class. All classes are closed (switched to D-clearance) at the end of the first week.
This policy minimizes the complexity of the registration process for students by standardizing
across classes. I can drop you from my class if you don’t attend the first two sessions. Please note:
If you decide to drop, or if you choose not to attend the first two sessions and are dropped, you risk
being not being able to add to another section this semester, since they might reach capacity. You
can only add a class after the first week of classes if you receive approval from the instructor.
Marshall Grading
Course Grading Policy: Marshall’s target mean GPA is 3.0 for required classes and 3.3 for
electives. The mean target for graduate classes is 3.3. Assignment/Exam Grading Policy: the
instructor determines what qualifies as an accurate grade on an assignment, exam, or other
deliverable, and the instructor’s evaluation of the performance of each individual student is the
final basis for assigning grades for the course.
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.
Technology Policy
Laptop and Internet usage is not permitted during academic or professional sessions unless
otherwise stated by the respective professor and/or staff. Use of other personal communication
devices, such as cell phones, is considered unprofessional and is not permitted during academic or
professional sessions. ANY e-devices (cell phones, PDAs, I-Phones, Blackberries, other texting
devices, laptops, I-pods) must be completely turned off during class time. Upon request, you must
comply and put your device on the table in off mode and FACE DOWN. You might also be asked
to deposit your devices in a designated area in the classroom. Videotaping faculty lectures is not
permitted, due to copyright infringement regulations. Audiotaping may be permitted if approved by
the professor. Use of any recorded material is reserved exclusively for USC Marshall students.
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.
Emergency Preparedness/Course Continuity Explanation:
In case of emergency, and travel to campus is difficult, USC executive leadership will announce an
electronic way for instructors to teach students in their residence halls or homes using a
combination of Blackboard, teleconferencing, and other technologies. Instructors should be
prepared to assign students a "Plan B" project that can be completed at a distance. For additional
information about maintaining your classes in an emergency please access:
http://cst.usc.edu/services/emergencyprep.html
Evaluation of Your Work
You may regard each of your submissions as an “exam” in which you apply what you’ve learned
according to the assignment. I will do my best to make my expectations for the various assignments
clear and to evaluate them as fairly and objectively as I can. If, however, you feel that an error has
occurred in the grading of any assignment, you may, within one week of the date the assignment is
returned to you, write me a memo in which you request that I re-evaluate the assignment. Attach
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the original assignment to the memo, and explain fully and carefully why you think the assignment
should be re-graded. Be aware that the re-evaluation process can result in three types of grade
adjustments: positive, none, or negative.
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.
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
2013 SPRING SEMESTER
SESSION
DATE
01
1/14
02
1/16
03
1/23
04
1/28
05
1/30
06
2/4
07
2/6
08
2/11
09
2/13
10
11
12
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TOPIC
INTRODUCTION
AND COURSE
OVERVIEW/
HISTORY
SCOPE AND
APPLICABILITY
READING
E & Y’S
FINANCIAL
REPORTING
DEVELOPMENTS
ACCOUNTING
FOR INCOME
TAXES
CHAPTER 1
HOMEWORK
ASSIGNMENTS
CHAPTER 2
OBJECTIVES AND
BASIC
PRINCIPLES
TEMPORARY
DIFFERENCES
RECOGNITION
AND
MEASUREMENT
SAMPLE TAX
PROVISION
AN ENACTED
CHANGE IN TAX
LAWS OR RATES
CHAPTER 3
3 - 3.2
VALUATION
ALLOWANCE I
VALUATION
ALLOWANCE II
CHAPTER 6
2/20
CONTINUATION
OF SESSION 9
CHAPTER 7
2/25
BUSINESS
COMBINATIONS I
CHAPTER 11
11.1 - 11.3.5
BUSINESS
COMBINATIONS
II
CHAPTER 11
11.5 – 11.13.1
2/27
OTHER
SUPPLEMENTAL
READING
CHAPTER 4
ASSIGNMENT
#1 DUE
ASSIGNMENT
#2 DUE
CHAPTER 5
CHAPTER 8
ASSIGNMENT
#3 DUE
CHAPTER 6
ASSIGNMENT #
4 DUE
DELOITTE
BUSINESS
COMBINATION
ROADMAP
SECTION 8
DELOITTE
BUSINESS
COMBINATION
ROADMAP
SECTION 8
SESSION
DATE
TOPIC
READING
E & Y’S
FINANCIAL
REPORTING
DEVELOPMENTS
ACCOUNTING
FOR INCOME
TAXES
13
3/4
SESSION 12
CONTINUED
CHAPTER 12
CHAPTER 13
14
3/6
MID TERM EXAM
FINANCIAL
STATEMENT
PRESENTATION
CHAPTER 18
3/11
CONTINUATION
OF SESSION 16
OPINION 23/
SUBSIDIARY
BASIS
ADJUSTMENTS
INTRAPERIOD
TAX
ALLOCATION
CHAPTER 18
CHAPTER 20
15
16
3/13
17
3/25
18
3/27
19
4/1
INTERIM
REPORTING
20
4/3
STOCK BASED
COMPENSATION
ARRANGEMENTS
21
4/8
CONTINUATION
OF SESSION 21
22
4/10
CASE
DISCUSSION
23
4/15
CASE
DISCUSSION
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OTHER
SUPPLEMENTAL
READING
HOMEWORK
ASSIGNMENTS
ASSIGNEMTN
#5 DUE
CHAPTER 14
14 – 14.27
14.3 -14.7
ASSIGNMENT
#6 DUE
CHAPTER 15
15 – 15.2.1.4
15.3 – 15.4
Deloitte Stock
Based
Compensation
“ROADMAP”
pages 132-156
Deloitte Stock
Based
Compensation
“ROADMAP”
pages 132-156
ASSIGNMENT #
7 DUE
SESSION
DATE
TOPIC
READING
E & Y’S
FINANCIAL
REPORTING
DEVELOPMENTS
ACCOUNTING
FOR INCOME
TAXES
OTHER
SUPPLEMENTAL
READING
HOMEWORK
ASSIGNMENTS
24
4/17
UNCERTAIN TAX
POSITIONS I
CHAPTER 19
19.1 – 19.8
DELOITTE FIN 48
“ROADMAP”
PAGES 1-24 & “A
Roadmap to
Accounting for
Income Taxes”
CASE STUDY
DUE
25
4/22
26
4/24
CONTINUATION
OF SESSION 25
UNCERTAIN TAX
POSTIONS II
CHAPTER 19
19.9 – 19.110
DELOITTE FIN 48
“ROADMAP
PAGES 25-57 &
“A Roadmap to
Accounting for
Income Taxes”
27
4/29
28
5/1
CONTINUATION
OF SESSION 26
IFRS
CHAPTER 19
19.9 – 19.11
ASSIGNMENT #
8 DUE
31
5/8
FINAL
EXAMINATION
11:00 AM TO 1:00
PM
Problem assignments will be posted to Blackboard at least one week before they are due
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