As almost any contractor that does business with the government knows, section 511 of the Tax Increase Prevention and Reconciliation Act of 2005, or TIPRA, required the federal government, along with most state and local government entities, to withhold three percent from most of their payments to these contractors, as this summary from the IRS explains. Section 511 initially was to be effective for payments made after December 31, 2010, although this later was postponed, and wouldn’t take effect January 1, 2013.

This week, the three percent withholding rule took one more step toward extinction. On Wednesday, the House passed a bill, H.R. 674, to remove Sec. 3402(t), which followed from Section 511, from the Internal Revenue Code. H.R. 674 received almost unanimous support in the House, with 405 Congressional representatives voting in support of it, versus just 16 opposed, according to Govtrack.us. Twelve members either weren’t present or didn’t vote. The bill now heads to the Senate. more

Every CFO has experienced dueling spreadsheets. Rival business advocates present compelling spreadsheets. The arguments are clear and persuasive, backed by an impressive array of quantitative data.

On closer inspection, however, the dueling spreadsheets reveal disturbing inconsistencies in the data. Overall 3Q sales for Region 2 are significantly different; customer data in one points in a different direction than the other. Even data about the company’s products are different. How can that be?

Enterprises struggle to gain a consistent, shareable and accurate single version of data across their enterprises—a single version of the truth—according to Gartner’s latest Magic Quadrants for Master Data Management. Yet, achieving and maintaining a single, semantically consistent version of master data is a critical capability that supports many business drivers, from sales to compliance. more

In my previous entry I mentioned a new study on M&A success factors. Since the pace of M&A activity is intensifying in China, I checked in with Tero Kosonen, the managing director of MPS China (BPI Group’s China-based firm), who this week conducted a presentation, “Managing in China,” in Chicago.

M&A activity is soaring in China. A record 4,251 announced transactions, the combination of which were valued at more than $200 billion, were completed in the 2010 calendar year. Compared to 2009, this activity represents a 16 percent increase in the number of deals and a 27 percent increase in the combined value of deals.

“Foreign companies are buying out their old [China] joint venture partners or acquiring Chinese companies,” Kosonen explains. “These processes include significant risks and oftentimes the due diligence in only done for finance, legal and operations, but not for HR. Many times these target companies have been run in a totally different management style than in the West. Therefore, the management should be carefully assessed already during the due diligence process.” more

The Basel Committee on Banking Supervision has adopted two technical changes to regulations regarding capital adequacy when it comes to trade finance. The Basel Committee on Banking Supervision, located at the Bank for International Settlements in Basel, Switzerland, provides a forum for discussion and cooperation on bank supervisory issues. It is best known for setting international standards on capital adequacy, among other activities. Members come from the U.S. and several dozen other countries.

These changes are explained in the report, “Treatment of trade finance under the Basel capital Framework.” As the report notes, the Committee consulted with the World Bank, the World Trade Organization and International Chamber of Commerce before making its changes.

As a starting point, the Committee agreed to waive the one-year maturity floor for some trade finance instruments, under what’s known as the advanced internal ratings-based approach (AIRB) for credit risk. The report notes that, the average trade finance transaction is significantly less than a year. Waiving the floor for issued and confirmed letters of credit (LOC) reduces capital requirements for banks engaged in trade finance and that use the AIRB. This will be particularly helpful for lower-income countries importing goods. more

What’s the best way to reduce the risk of M&A failure?

Do a stock deal. Oh, and do the deal in an even year.

A new KPMG study of M&A performance, finds that deals financed with cash declined on average 12.7 percent after one year and 9.2 percent after two years. However, stock deals that took place during the same year (2007) declined an average of 5.1 percent after one year and increased 1.3 percent after two years.

The study analyzed 311 global deals announced between January 1, 2007 and December 31, 2008. Performance success – as defined by stock price change – was evaluated for one and two years after each deal’s announcement. more