PCAOB Chair Doty Warns Against Auditing Shortcuts [AT]
“In the United States, large audit firms’ revenues from consulting are growing rapidly, at some firms more than 15 percent a year,” he said during an audit conference at Baruch College in New York on Thursday. “Audit fees have stagnated at, basically, the inflation rate. Thus, audit practices have shrunk in comparison to audit firms’ other client service lines. This, I think, threatens to weaken the strength of the audit practice in the firm overall.”
Who Will Be the Next Hewlett-Packard? [Bloomberg]
Jon Weil asks you to consider Xerox: "At the start of 2007, Xerox had a stock-market value of $16 billion. Since then, the Norwalk, Connecticut-based printer and copier pioneer has paid about $9.1 billion to acquire 41 other companies. It has destroyed more value than it created. At $6.79 a share, Xerox’s market value is $8.6 billion — equivalent to 71 percent of its common shareholder equity, or book value. The most glaring sign that large writedowns may be needed at Xerox is a line on its books called goodwill, which is the intangible asset that a company records when it pays a premium in a takeover. Xerox’s balance sheet would have investors believe that its goodwill alone, at $9 billion, is more valuable than what the market says the whole company is worth."
Grocery giant Kroger wins $567 million tax fight [Reuters]
Kroger Co said Thursday it won a tax battle with the U.S. Internal Revenue Service, which has dropped an effort to collect $567 million in disputed deductions from the grocery giant. The U.S. Ninth Circuit Court of Appeals earlier this month dismissed the government's claims against Kroger, the Cincinnati-based company disclosed in a securities filing. The dismissal by a three-judge panel came several weeks following a government move to drop its claims, after pursuing Kroger for nearly a decade, court papers showed.
In a bid to become less reliant on Facebook, Zynga disclosed in a filing on Thursday that it has amended the terms of its relationship with the world's largest social network so that it can now host its Web games outside of Facebook's platform, among other things. The new agreement also leaves the door open for Facebook to produce its own games and become a direct competitor to Zynga.
Tim Durham, Ex-National Lampoon CEO, Faces Fraud Sentence [BBW]
Timothy S. Durham, once the chief executive officer of National Lampoon (NLMP) Inc., and two other men may spend the rest of their lives in prison for their roles in a fraud scheme that prosecutors say “squandered” $208 million in investor money. The office of Indianapolis U.S. Attorney Joseph Hogsett asked U.S. District Judge Jane Magnus-Stinson to sentence Durham, to a 225-year term in a brief filed this week. James Cochran, former chairman of Fair Finance Co., should get 145 years and Rick Snow, Fair Finance’s ex-chief financial officer, 85 years under advisory sentencing guidelines, prosecutors said. Sentencing is set for today. “Durham, Cochran and Snow are responsible for one of the largest and most brazen frauds in Midwest history, and due to its terrible impact on the victims, also one of the most egregious frauds in history,” the prosecutors said.
MS: "In its 2011 report on deficit reduction options the Congressional Budget Office suggests capping the deduction for state and local taxes to 2 percent of adjusted gross income. My idea is to turn the CBO proposal on its head: turn the ceiling into a floor, that is, only allow deductions for state and local taxes above 2 percent of AGI (or some other percentage of income)."