Accounting News Roundup: Wells Fargo Comes Out Against FASB Fair Value Proposal; PwC Buying Diamond Management; MLB Teams Financials Leaked | 08.24.10

Proposal Would Create New Accounting Standard-Setter for Private Companies [NYT]
The parent organization of the Financial Accounting Standards Board will propose on Tuesday that a new body be set up to modify accounting rules for private companies, some of which have complained that existing rules are too complicated and costly. The new group, to be called the Small Company Standards Improvement Council, would be able to modify or allow exceptions to Generally Accepted Accounting Principles, known as GAAP, for nonpublic companies. The new group would be led by a member of FASB, ad include all seven members of the accounting standards board, said John J. Brennan, the chairman of the Financial Accounting Foundation, which appoints members of the accounting board. Decisions would be subject to ratification by FASB, which presumably would want to keep variations in standards to a minimum.

No big outflows since trade scandal: UBS CFO [Reuters]
“We saw no material change in net new money flows as a result of the trading incident,” CFO Tom Naratil told an investor conference in London. “We believe there is further upside to our overall performance,” he also said.

SEC Asks Apple CFO for Information on Nokia Patent Litigation Settlement [Bloomberg]
The two mobile-phone makers had been in litigation since October 2009, when Nokia filed a lawsuit accusing Cupertino, California-based Apple of infringing patents. Nokia also demanded royalties on the millions of Apple iPhones sold since the device’s introduction in 2007. Nokia said in March it had 46 patents asserted against Apple in civil lawsuits and complaints lodged with the U.S. International Trade Commission.

U.S.-Chinese Progress on Accounting Is Dealt Setback [WSJ]
U.S.-Chinese negotiations to allow American audit-firm inspectors into China suffered a setback Monday, as U.S. regulators indicated that a planned visit to Washington by their Chinese counterparts to continue the talks has been postponed. Regulators previously said the Chinese were slated to visit Washington this month for a second round of the talks, which began in Beijing in July. The two countries are negotiating on whether to allow inspectors from the Public Company Accounting Oversight Board, the U.S.’s auditing regulator, into China to scrutinize the work of Chinese accounting firms which audit U.S.-traded companies.

Crowe to Merge in Perry-Smith [AT]
Puts CH in the San Francisco and Sacramento markets.

Giant Alien Snails Attack Miami, Though They’re Not in Much of a Rush [WSJ]
Floridians have grown accustomed to invasions of exotic creatures, like the Burmese pythons slithering throughout the Everglades. But residents here are especially grossed out by the latest arrivals: giant African land snails that grow as long as eight inches, chew through plants, plaster and stucco, and sometimes carry a parasite that can infect humans with a nonlethal strain of meningitis.

Fannie Mae Waited on Loan Abuse Action [Bloomberg]
The inspector general of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, released a report today on outside law firms hired by the government- sponsored firm to handle mortgage defaults. Among other things, the report said, Fannie Mae didn’t act on the December 2003 allegation from an unidentified shareholder until it hired a law firm two years later to look into the matter. In May 2006, the law firm reported to Fannie Mae that Florida-based foreclosure attorneys were “routinely filing false pleadings and affidavits.” Fannie Mae didn’t notify its regulator of the findings, according to the inspector general.

Profits Thrive in Weak Recovery [WSJ]
Two years after the official end of the recession, a range of indicators show that the economic recovery has been the worst, or one of the worst, since the government began tracking such data after World War II: Unemployment is too high, bank lending necessary to spur spending is too low, home prices are depressed while household expectations for financial well-being are near record low levels. Many economists predict the sluggish rebound may continue for years.

How Zynga Recognizes Revenue [Dow Jones]
Washington Mutual Inc. (WAMUQ) and other co-defendants agreed to settle a consolidated shareholder class-action lawsuit for $208.5 million, putting behind it one chunk of the failed bank’s litigation issues. The suit in federal court in Seattle was the consolidated version of several other class-action lawsuits filed by shareholders, in multiple courts, that all essentially alleged that Washington Mutual failed to stop them from investing when the now-failed thrift knew, or should have known, how much trouble it was in. Some of the lawsuits were actually filed long before the thrift’s collapse, though the plaintiffs regularly updated the consolidated case to include the latest reports on Washington Mutual.

2 Republicans Open Door to Increases in Revenue [NYT]
One of the senators, John Cornyn of Texas, said he would consider eliminating some tax breaks and corporate subsidies in the context of changes in the tax code, provided there was not an overall increase in taxes. “I think it’s clear that the Republicans are opposed to any tax hikes, particularly during a fragile economic recovery,” Mr. Cornyn said on “Fox News Sunday.” “Now, do we believe tax reform is necessary? I would say absolutely.”

Budget Needs Let Fireworks Fly Lawfully [NYT]
Desperate to find any source of untapped revenue, many cities, counties and states are scrapping decades-old restrictions on firework sales, trying to rescue budgets battered by several years of economic doldrums. A 65-year-old ban on fireworks in Hawkins County, Tenn., was lifted in May after a county commissioner persuaded colleagues that the sales could generate as much as $200,000 in annual permit fees and sales tax revenue. “Every penny helps,” said Shane Bailey, the county commissioner.

Minnesota Lawmakers, Governor to Discuss Ending Shutdown After Holiday [Bloomberg]
Minnesota Republican legislative leaders are returning to the capital in St. Paul today after a long holiday weekend ready to resume talks with Democratic Governor Mark Dayton on ending a government shutdown, said Senator Geoff Michel, the deputy majority leader. “It was probably healthy for the legislature and the governor to get out of St. Paul and get a little perspective,” Michel said in a telephone interview yesterday from Edina.

Unpaid taxes total $400B, but little political will to pursue it [Seattle Times]
In its most recent analysis, from 2001, the Internal Revenue Service estimated about 84 percent of federal taxes were voluntarily paid on time that year, leaving a gross tax gap of $345 billion, or roughly 16 percent, uncollected. Late payments and IRS collection efforts cut the net tax gap to $290 billion in 2001. But similar estimates point to a gross tax gap of $410 billion to $500 billion in 2010, said Benjamin Harris, a research economist at the center-left Brookings Institution. “You could go a long way toward solving our budget mess by closing the tax gap, but the problem is, it’s not easily closed,” Harris said.

Dominique Strauss-Kahn Accuser Said to Have Lied on Tax Return [AT]
Prosecutors found a number of inconsistencies in the accuser’s story about the incident as well as her finances, according to The New York Times. They found that she had lied on her application for asylum from Guinea about a gang rape, and misrepresented her income in order to qualify for public housing. She also claimed a friend’s child as her own on her tax return as a dependent, in addition to her own daughter.

China listings in U.S. could slow on accounting scandals -PwC partner [Reuters]
The negative sentiment towards some North America-listed Chinese companies triggered by recent accounting scandals will probably slow the momentum of Chinese firms’ IPOs in the United States, a partner at accounting firm PricewaterhouseCoopers China operations said on Monday. “The current negative public opinion on Chinese companies in overseas markets, especially in the United States, will definitely affect Chinese companies seeking a listing in those markets,” Jean Sun, assurance partner with PwC in Beijing, told reporters. “Investors are now less willing to dip into their pockets (for Chinese companies), so it’s understandable that the listing momentum will slow,” said Sun.