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GOP moves closer to tax plan, eyes debt ceiling deal

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Republican leaders say they are getting close to agreeing on a plan to pass an extension of President Donald Trump’s 2017 tax cuts and an increase to the debt ceiling, as Congress looks to approve an economic package by the end of May.

“I don’t want to get out in front of what the Senate is going to do. But it sounds like we will not be far apart, and that’s a good thing, so we’ll be able to move,” House Speaker Mike Johnson told reporters, following a meeting at the Treasury Department on Tuesday. 

Johnson said the Senate was “coming around” to supporting a debt ceiling increase as part of the legislation. Senate Majority Leader John Thune said he believes “there’s consensus forming around” the debt ceiling plan, an issue that had been a key sticking point between the two chambers for weeks.

A House plan, approved earlier this month, calls for lifting the debt ceiling by $4 trillion as part of the tax legislation, an idea Senate Republicans have been slow to embrace.

Deep divisions still remain among Republicans with at least two Senators — Josh Hawley of Missouri and Tommy Tuberville of Alabama — saying they don’t support the House plan because it could cut Medicaid and other health programs their constituents use.

Senator Rand Paul, a Kentucky Republican, said he’d never vote for the tax package if it contained a debt ceiling increase.

Including the debt ceiling language in the tax bill puts pressure on the party to pass the legislation before the government runs out of room to keep paying its bills on time, which economists anticipate will hit this summer or early fall unless Congress steps in.

House lawmakers say they intend to move even quicker, with a goal of approving the tax cut legislation before the Memorial Day weekend. That’s an ambitious timeline given the remaining divisions within the party and narrow majorities in each chamber that mean the GOP will largely need to stick together to pass the bill.

Republicans are hoping to score a legislative win to soothe markets that have been roiled by the haphazard rollout of Trump’s tariff policies. Party leaders have warned that failing to extend the 2017 tax cuts, which expire at the end of the year, for individuals and privately held businesses could upend markets and economic expectations.

“We have to bring stability to the market,” Johnson said earlier Tuesday, adding that negotiators need to give people certainty so they can “make decisions about expanding their businesses and jobs.”

Treasury Secretary Scott Bessent, along with Trump’s National Economic Council Director Kevin Hassett, hosted the meeting of the so-called “Big Six” tax negotiators at the Treasury Department with Thune and Johnson. Senator Mike Crapo and Representative Jason Smith, who chair the tax committees in each chamber, also attended.

Bessent, in a readout of the meeting issued by the Treasury Department, said it was a “productive meeting” that “gives me confidence that a swift timeframe is achievable.”

Bridgewater Associates founder Ray Dalio warned House Republicans earlier Tuesday of the dangers of rising U.S. deficits. House lawmakers said it reinforced their push to offset any new tax cuts with spending reductions, according to lawmakers who attended a private meeting with the former hedge-fund manager. Those spending cuts, including potential reductions to Medicaid, are making some GOP senators squeamish.

There’s also opposition in the House, where Republicans hold an extremely narrow majority. Representative David Schweikert, an Arizona Republican, has repeatedly warned the tax bill should be offset with spending cuts or other revenue raisers, in order to lower federal debt loads. That view is not particularly popular among the GOP leadership.

To get a tax package passed by the end of May, House and Senate negotiators will have to settle on a shared approach. Thune set the week of April 7 as the deadline for the Senate to pass a budget resolution outlining the tax cuts.

House Republicans passed their version of a tax blueprint earlier this month that agreed to $4.5 trillion in tax cuts along with $2 trillion in spending reductions. But Senate Republicans want to change the blueprint to add trillions more in tax cuts without more spending cuts. 

Republicans must also align on the overall size of the package, which tax elements to include and how to offset the cost of the cuts, a dynamic that is sure to pit fiscal hawks against members seeking tax breaks.

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Accounting

IAASB tweaks standards on working with outside experts

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The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.

The proposed narrow-scope amendments involve minor changes to several IAASB standards:

  • ISA 620, Using the Work of an Auditor’s Expert;
  • ISRE 2400 (Revised), Engagements to Review Historical Financial Statements;
  • ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information;
  • ISRS 4400 (Revised), Agreed-upon Procedures Engagements.

The IAASB is asking for comments via a digital response template that can be found on the IAASB website by July 24, 2025.

In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.  

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Accounting

Tariffs will hit low-income Americans harder than richest, report says

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President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an analysis from the Institute on Taxation and Economic Policy.

The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings. 

Trump has imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.

Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.

Food prices could rise by 2.6% in the short run due to tariffs, according to an estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed. 

The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.

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Accounting

At Schellman, AI reshapes a firm’s staffing needs

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Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist Schellman do more things with fewer people, allowing the firm to scale back hiring and reduce headcount in certain areas through natural attrition. 

Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time. 

“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said. 

One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load. 

“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai. 

Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies. 

“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.

However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area. 

“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai. 

As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales. 

“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai. 

While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves. 

“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”

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