Home
»
Trains Magazine
»
Forums
»
General Discussion
»
Don Phillips column about Amtrak accounting

Edit post

Edit your reply below.

Post Body
Enter your post below.
[quote user="ecoli"] [quote user="Sam1"] ...To know how Amtrak allocates its costs, one would have to be an insider or have an insider give him or her access to the company's books. As per the external auditor's report, Amtrak keeps its books in accordance with, "accounting principles generally accepted in the United States of America", which is frequently referred to as GAAP.  It's standards, which are promulgated by the Financial Accounting Standards Board, are codified in FASB Statements, Interpretations, FASB Staff Positions, Technical Bulletins, and EITF Abstracts.  These are the standards that govern Amtrak's accounting, although it may adhere to some government accounting standards.   The implication that Amtrak's officers are unduly influencing the company's accounting procedures and practices, i.e. not following GAAP as well as governmental accounting principles where applicable, is not supported.  The further implication that the external auditors from one of the world's most highly regarding accounting firms are turning a blind eye to these accounting irregularities is likewise without foundation.  Amtrak follows the same accounting principles as every other stock company in the United States. That is not to say that they don't have some wiggle room in how they interpret and apply accounting standards, especially when it comes to estimates, i.e. depreciation, amortization, retiree benefits, etc., but any estimates that they use must be supported, and they must be consistent.  <div style="clear:both;"></div> [/quote] Multiple newspapers recently reported that Starbucks claimed zero profit in the UK for tax purposes by charging its UK operations with a large cost for licensing the Starbucks brand from its Dutch subsidiary and buying raw coffee from its Swiss subsidiary, wiping out what would otherwise have been a substantial profit (see <a target="_blank" href="http://latitude.blogs.nytimes.com/2012/12/12/after-avoiding-taxes-for-years-starbucks-has-become-a-target-for-london-protesters/">http://latitude.blogs.nytimes.com/2012/12/12/after-avoiding-taxes-for-years-starbucks-has-become-a-target-for-london-protesters/</a>). This defies common sense: does anyone believe that if Starbucks shut down all of its stores in the UK, its total global profit would not decrease? If its MBAs believe so, they should eliminate all those redundant retail outlets, expecting that magically the Dutch and Swiss subsidiaries will still show the same profit as before, even though they will no longer sell any raw coffee or intellectual property to the vanished UK subsidiary. The motive for this accounting skulduggery is that profits are taxed at a lower rate in Switzerland and the Netherlands. I have seen no suggestion that the accountants have violated any rules, or that the auditors have given Starbucks anything besides a clean report. This leads me to believe that Amtrak's accountants and auditors are perfectly capable of doing exactly what Phillips claims. I agree that Phillips doesn't give us enough information to judge for ourselves. [/quote] Starbucks is not breaking any laws. The ability to defer taxes on foreign income or avoid them altogether is sanctioned by America's tax laws and tax treaties with other countries.  Whether the laws and treaties are good policy is another issue. By the same token the company's auditors are simply affirming that Starbucks, as well as others taking advantage of the same laws, are complying with them in accordance with the standards of GAAP and the International Accounting Standard Board. Philips assertions are not supported.  I wrote him a letter, as opposed to an email, asking him to tell me his sources and provide me with the accounting information.  I have not heard from him.
Tags (Optional)
Tags are keywords that get attached to your post. They are used to categorize your submission and make it easier to search for. To add tags to your post type a tag into the box below and click the "Add Tag" button.
Add Tag