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Accountancy Slice
USA
5th September 2025
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THE HOT STORY

CPA leaders report cautious optimism regarding U.S. economy

According to the Q3 AICPA and CIMA Economic Outlook Survey, CPA business leaders have shown a slight improvement in their outlook on the U.S. economy, with 34% expressing optimism for the next 12 months, up from 27% last quarter. However, concerns about inflation and tariffs persist, with 54% anticipating a recession soon. Tom Hood, CPA, CGMA, CITP, noted: “Volatility in trade policy continues to pose planning challenges.” Despite these challenges, hiring remains stable, with 16% of executives looking to hire immediately. Projected revenue growth is expected to be 1.5%, while profit expectations have slightly improved to just above break-even at 0.1%. The survey indicates that while there are positives, uncertainty continues to dominate business planning, said Tom Hood, AICPA executive vice president of business engagement and growth. He added: "[V]olatility in trade policy continues to pose planning challenges. With tariff effects still playing out, the next quarter could prove pivotal in shaping economic sentiment."

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TAX

Iowa's tax cuts lead to drop in state revenue

Iowa's revenue has dropped by $42.4m, or 6.7%, in August compared to last year, primarily due to income tax cuts enacted by the Republican-led legislature. The Iowa Legislative Services Agency reported that personal income tax receipts fell by 13.1% to $350m in August 2024. The tax cuts, initiated in 2019, have reduced income tax brackets and rates, leading to a projected budget deficit exceeding the $8.5bn revenue forecast. Republican leaders plan to utilize the state's $2bn general fund surplus and $4bn Taxpayer Relief Fund to address the deficit, stating they expect revenue growth to surpass spending in the future.

INDUSTRY

FASB streamlines debt reporting process

The FASB has approved a plan to enhance how companies report debt exchange transactions involving multiple creditors. This initiative aims to improve corporate financial reporting by ensuring that exchanges of economically comparable debt instruments are accounted for in a similar manner. FASB vice chair Hillary Salo said: “This is one of those instances where we are able to provide more decision-useful information to investors at a lower cost to preparers.” The unanimous decision was made on Wednesday, marking a significant step towards more transparent financial reporting.

Tech tips for audit innovation

The Technology Innovation Alliance (TIA) Working Group has presented four strategic recommendations to the PCAOB to enhance technology use in the audit sector. Formed in November 2022 by board member Christina Ho, the group aims to address the evolving technological landscape. Ho emphasized that the recommendations remain pertinent despite rapid advancements, stating, "they remain relevant even with the unprecedented advancement in technology." The TIA's suggestions include promoting structured data in audits, exploring AI applications, establishing an "Innovation Lab" for testing technology, and enhancing auditor technology literacy through research and academic collaboration. These initiatives aim to improve audit quality and foster innovation in the industry.

FIRMS

AI revolutionizes tax consulting at KPMG

KPMG is rapidly advancing its artificial intelligence (AI) technology in tax consulting, moving from basic chatbots to sophisticated systems capable of managing entire processes. AI "personas" are enhancing efficiency for consultants, allowing them to focus on complex legal issues. Currently, AI models handle significant portions of tax projects, streamlining tasks like data extraction and legal rule selection. KPMG's implementation in Germany has shown that generative AI can effectively manage 40% of previously bottlenecked tasks. Looking ahead, KPMG anticipates the emergence of advanced "think tank" agents that will autonomously manage workflows and enhance decision-making. Christian Stender, head of AI for Tax and Legal at KPMG International, emphasizes the importance of fine-tuning AI models with specific tax content to ensure accuracy, as even minor errors can lead to serious financial consequences.

ECONOMY

New jobless claims rise to highest level since June

New applications for U.S. unemployment benefits have risen to their highest since June, according to a report Thursday from the Labor Department. Initial claims increased by 8,000 to 237,000 in the week ended August 30th, well ahead of the 230,000 expected among economists polled by Reuters. The four-week average of claims rose by 2,500 to 231,000, while the total number of claimants for unemployment benefits, reported with a one-week lag, fell by 4,000 to 1.94m. 

Trade deficit widens to largest in four months

U.S. imports and exports rebounded slightly in July following several months of sluggish trade, with the trade deficit expanding 32.5% to $78.3bn. The median estimate in a Bloomberg survey of economists called for a near-$78bn deficit. Imports of goods and services rose 5.9%, while exports increased 0.3%. The surge in imports was driven by industrial supplies, which rose to the highest level in four months amid a surge in inbound shipments of gold. 

U.S. Q2 worker productivity revised upward

U.S. labor productivity rose 3.3% in the second quarter, much higher than the Labor Department's initial 2.4%  jump. Economists polled by Reuters had forecast productivity growth would be upgraded to a 2.7% rate. Unit labor costs, the price of labor per single unit of output, increased at a 1% rate, down from the previously-reported 1.6% pace. 

LEGAL

Trump warns of 'economic catastrophe' if tariffs ruled illegal

President Trump is seeking a swift and definitive decision on tariffs from the Supreme Court that he helped shape, saying the country would be on “the brink of economic catastrophe” without the import taxes he has imposed on U.S. rivals and allies alike. The tariffs and their erratic rollout have shaken global markets, alienated U.S. trading partners and allies, raising fears of higher prices and slower economic growth. “The President and his Cabinet officials have determined that the tariffs are promoting peace and unprecedented economic prosperity, and that the denial of tariff authority would expose our nation to trade retaliation without effective defenses and thrust America back to the brink of economic catastrophe,” said Solicitor General D. John Sauer.

Oregon taxpayers win kicker credit battle

The Oregon Tax Court has ruled in favor of a group of taxpayers, granting them their kicker credit refund for the 2023 tax year. The case arose when taxpayers contested the Department of Revenue's claim that they had irrevocably chosen to donate their kicker credit to the State School Fund. The court determined that the taxpayers' incomplete tax return filing was ambiguous and did not represent a valid election to donate under ORS 305.792. The ruling emphasized that "an ambiguous election cannot be recognized by the Department," allowing taxpayers to receive their refunds despite the Department's objections.

HEALTH CARE

Virginia lawmaker fights for ACA tax credit extension

Rep. Jen Kiggans (R-VA) highlighted that 33,000 constituents in Virginia's second district have utilized the tax credit to reduce their premium costs. She emphasized: “We can't pull the rug out from under hardworking families—we must give Americans more time to plan.” She is part of a group that is aiming to extend these enhanced premium tax credits for an additional year, ensuring more families continue to benefit from this financial support. If they are not extended, premiums could rise 18% on average for 2026, according to analysis from the research firm KFF of insurance filings across the country. “I believe the American people in a few weeks are going to get sticker shock on their premiums and it is not just going to be the ACA market,” Sen. Ron Wyden (D-OR) said earlier this week. “We have been ready to go for months.”

AUDIT

Unlocking the secrets of CAMs

Critical audit matters (CAMs) are essential for lease accounting teams to understand, as they significantly impact a company's financial health. Mark McDonald emphasizes that “critical audit matters are a valuable communication tool, especially in times of disruption and uncertainty.” Since 2018, auditors have documented CAMs related to lease accounting, focusing on asset impairment, fair market value, and incremental borrowing rates. A survey by the Center for Audit Quality revealed that 92% of institutional investors consider CAMs when making investment decisions, highlighting their importance. Understanding CAMs can enhance transparency in audits, providing stakeholders with crucial insights into the financial statements.

INTERNATIONAL

Sweden slashes food tax to boost spending

As Sweden approaches an election year, the government has proposed reducing the value-added tax on food from 12% to 6%, effective from April 2024 until the end of 2027. This initiative aims to stimulate private consumption, which has been identified as a significant weakness in the Swedish economy. The finance ministry and the central bank have noted that households are currently cautious about their spending. According to the Riksbank's latest policy statement, "households remained cautious about their spending," highlighting the need for this financial boost to support households in the largest Nordic nation.
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