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    Accounting News Roundup: Pandering to Millennials and Phony Revenue | 03.10.17

    By | March 10, 2017

    CPA firms are pandering to millennials

    I look forward to the day when CPA firms are majority-owned and run by millennials so we don’t have to talk about this anymore:

    As CPA firms across the U.S. relax their dress codes and other policies, managers are recognizing that their Millennial employees expect flexibility and trust in all areas of their workplace. Today’s younger CPAs want to work at a firm that rejects rigid rules, and they desire to define their own workday, including how they dress, the number of hours they work, and where they work, as well as having a sense of community with their peers and greater opportunities for professional development and charitable work.

    THIS JUST IN: They also want to be paid a decent salary and have sufficient health care benefits. In short, they want what older generations have always wanted but weren’t afraid to: 1) Ask for and/or demand it; 2) Leave when they weren’t satisfied.

    Oh, and they have the feels:

    According to Anne Donovan, people innovation leader at PwC in Los Angeles, employee attitudes have shifted over the last seven years. “Millennials are into feelings,” Donovan said. “They want to be appreciated and supported, and they want flexibility.”

    Again, just because non-millennials didn’t ask for or talk about those things doesn’t mean they don’t want them too.

    SEC enforcement

    Here’s an SEC press release announcing charges against Medbox and its founder Vincent Mehdizadeh for making up revenue.

    The SEC alleges that Vincent Mehdizadeh created a shell company called New-Age Investment Consulting to carry out illegal stock sales and used the proceeds from those sales to boost Medbox’s revenue. Medbox allegedly issued press releases headlining the phony revenues as record earnings to legitimize itself as a viable commercial operation when in fact nearly 90 percent of the company’s revenue in the first quarter of 2014 stemmed from sham transactions with New-Age. Mehdizadeh allegedly acknowledged in a text message that “the only thing we are really good at is public company publicity and stock awareness. We get an A+ for creating revenue off sheer will but that won’t continue.”

    I invite you to read Roddy Boyd’s exceptional report on Medbox and Mehdizadeh from 2013. It includes plenty of choice on-the-record quotes from Mehdizadeh and loads of fun details like this:

    For its audits and filing preparation, Medbox turned to Irvine, Calif.-based Q Accountancy. But Q Accountancy had a problematic history of its own with regulators and a legacy of troubled clients. In 2012, a congressionally appointed industry watchdog group—the Public Company Accounting Oversight Board—uncovered a sweeping array of deficiencies in Q Accountancy’s auditing practices. And last November the SEC sued Q’s founder, Timothy Quintanilla, for issuing misleading audits based on “reckless and deficient work.”

    In June, Medbox dumped Q Accountancy and turned to Alexander Anguiano LLC, the two-man auditing outfit helping Mehdizadeh out of his IRS problems. This firm signed off on a six-page second quarter earnings release issued on Aug. 20; it lacked a cash flow statement and footnotes, was formatted in the manner a college student would track expenses and filed at the very last moment. (One day later the company released a 20-page document with standard disclosures.)

    If you read it then, you probably assumed that Medbox would have an SEC complaint in its future. And now it does!

    Has Donald Trump released his tax returns?

    Nope! And, as we’ve noted a couple times, a leak out of the IRS is pretty unlikely because it’s, you know, illegal. The New York Times revisited this unlikelihood, noting the penalties: “a prison sentence of up to five years and a $5,000 fine,” and lack of access:

    Although the I.R.S. has nearly 80,000 employees, the agency uses strict safeguards when it comes to privacy. The number of people with access to returns is limited, and improper browsing of taxpayer files is automatically flagged.

    Hard copies of presidential returns historically have been kept in a safe outside of the commissioner’s office, tax experts say.

    Another possibility would be for a leak from or hack of Trump’s accountants or lawyers. That also seems unlikely, however, people commit career limiting moves all the time, which is not us suggesting that you should or would leak Donald Trump’s tax returns, but that people do make CMLs from time to time.

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    Yesterday, Afly highlighted a Senior Litigation Accountant position with Kaufman Rossin in Fort Lauderdale. Also, Afly debuted its Meet This Firm video series on Going Concern yesterday, featuring Hannis T. Bourgeois LLP.

    Previously, on Going Concern…

    Megan Lewcyzk wrote about time-savers for busy season. In Open Items, a question about verifying someone’s Big 4 experience.

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    • Commando

      The oldest millennials are now partners. That is why the Big Four have finally decided to focus on them. The boomers are now mostly retired partners.

    • The Horniest Partner

      Public accounting has come along way. I started 20 years ago and you could get chewed out either in the partners office or in cube area and you had to wear your suit jacket if you left the office, even to go get lunch down the street in 95 degree heat. Now we realize staff have “feelings” and want to wear comfy britches.