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Archive for Corporate Executive Compensation Compliance

Corporate Executive Compensation Compliance: Fringe Benefits (Part V)

Issue Description

Corporate executives often receive extraordinary fringe benefits that are not provided to other corporate employees. Any property or service that an executive receives in lieu of or in addition to regular taxable wages is a fringe benefit that may be subject to taxation. In 1984, the Internal Revenue Code (“Code”) was amended to include the term “fringe benefits” i n the definition of gross income found in §61. A fringe benefit provided in connection with the performance of services, regardless of its form, must be treated as compensation includible in income under §61.

Whether a particular fringe benefit is taxable depends on whether there is a specific statutory exclusion that applies to the benefit. For example, when §61 was amended to include the term “fringe benefits”, §132 was added to provide exclusions for certain commonly provided fringe benefits that had previously not been addressed in the Code. Read more

Corporate Executive Compensation Compliance: Audit Techniques Guide (Part IV)

Every publicly held corporation maintains its executive compensation records differently. Likewise, every publicly held corporation maintains different methods for compensating its executives. As the examining agent, you must first learn the identity of the individual(s) within the corporation who are most familiar with how the executive compensation records are maintained. You will need to have a general discussion with that person regarding the record maintenance and retention practices of the corporation with regard to executive compensation. This discussion will help you narrow the focus of your IDRs and will also familiarize you with in-house terminology that is utilized by the corporation when discussing and researching records concerning executive compensation. Read more

Corporate Executive Compensation Compliance: General Audit Steps (Part III)

General Audit Steps

I. Examining Constructive Receipt and Economic Benefit Issues

Issues involving constructive receipt and economic benefit generally will present themselves in the administration of the plan, in actual plan documents, employment agreements, deferral election forms, or other communications (written or oral and formal or informal) between the employer and the employee. The issues may also be present in related insurance policies and annuity arrangements. Ask the following questions and request documentary substantiation where appropriate:

  • Does the employer maintain any qualified retirement plans?
  • Does the employer have any plans, agreements, or arrangements for employees that supplement or replace lost or restricted qualified retirement benefits?

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