02/14/2025

Well, hi there! Sit back, enjoy, and relax as you’re currently on the Daily Accrual.

Every day, I sift through the accounting noise so you don’t have to. I share to you the most relevant, juicy accounting insights that really matter – nothing phony, just some good, accounting testimony! 

💸 Profit & Loss Report

U.S. President Donald Trump has ordered to develop a plan for reciprocal tariffs, aiming to match import duties established by other nations on American goods. This directive initiates a tedious investigation into trade imbalances with major partners like China, Japan, South Korea, and the European Union. Trump’s plan also targets non-tariff barriers, including vehicle safety regulations and value-added taxes, which increase costs for U.S. export goods.

The announcement follows previous tariff measures, including a 10% tariff on Chinese goods, tariffs on all steel and aluminum imports effective March 12, and a 30-day hold on planned tariffs for Canada and Mexico. Trump has also hinted at upcoming car tariffs and duties on semiconductors and pharmaceuticals.

Markets reacted with cautious optimism - U.S. stocks rose, global stock indexes hit record highs, and U.S. Treasury yields fell, easing immediate fears of inflation. However, trade experts warn of legal hurdles, as reciprocal tariffs may require invoking the Trade Act of 1974 (capping duties at 15% for six months) or the Tariff Act of 1930, which has never been used for such measures. The deadline for Trump’s economic team to finalize tariff plans is April 1, setting the environment for possible global trade tensions and economic uncertainty in the months ahead.

Source: Reuters

💎 Rare Accounting Oddities

Financial crimes always leave a footprint behind: hidden, but never erased. A great, classic example? The downfall of Al Capone, one of history’s most notorious mobsters. While Capone evaded justice for years through bribery, violence, and other criminal enterprises, he couldn't escape his own accounting records.

 A two-year forensic accounting investigation by the U.S. Treasury Department led by special agent and accountant Frank Wilson - uncovered a financial trail of undeclared income and tax evasion. These findings provided the hard evidence needed to convict Capone, landing him an 11-year prison sentence in 1931.

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📝 Journaling Insider

Barry Melancon, the longest-serving CEO in AICPA history, predicts that despite private equity (PE) investment surges, the traditional partnership model will continue dominating the accounting realm. He estimates that 90% of CPA firms will maintain partnership-like structures over the next decade, opposing concerns of a PE-driven overhaul. In the first 11 months of 2024, global PE-backed deal values in accounting, auditing, and taxation services reached a whopping $6.31 billion, with 24 deals - the highest in three years. 

Melancon acknowledges that while PE investments are gaining traction, their worldwide impact will remain nuanced. The former AICPA President expects that some PE ventures may falter due to the profession's complexities, leading to a shift in flipping models, buy-and-hold strategies aligning with the industry's revenue model. In the past three years, PE firms have acquired stakes in five of the top 26 U.S. accounting firms. Furthermore, Melancon urges smaller firms to proactively adopt technology and strategic innovations to remain competitive in the evolving business landscape.

Source: EIN Presswire

💰 Making Cents of Accounting

#ProfitOrProphet?💸🙏