• Accounting News Roundup: Political Payback Against Big 4 and ‘I love depreciation.’ | 10.10.16

    By | October 10, 2016

    Politics

    For years, the Big 4 knew they could count on New Jersey Congressman Scott Garrett to oppose any regulatory efforts from the PCAOB. As the chair of the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises, they knew Garrett would keep the PCAOB in check:

    In 2010, Garrett refused to question the board’s acting chairman at a hearing because, he said, the system for appointing its members was unconstitutional. Two years later, at another hearing, Garrett chastised the regulator, known as the PCAOB, for “mission creep” and pursuing an activist agenda. “It’s important to remind the PCAOB it is not a policymaking entity,” he said.

    And then last summer, Politico reported that Garrett refused to "give money to the party’s congressional campaign arm because it was supporting openly gay candidates." Since the Big 4 have been strong supporters of LGBT inclusion for several years now, the firms canceled a fundraiser for Garrett and "haven’t donated to him since." That seems like comeuppance for Garrett but he doesn't seem to be taking it lying down:

    [M]any in the industry were surprised when Garrett introduced legislation on Sept. 28, just before Congress recessed prior to the November elections, that would give more power to the PCAOB. The bill would allow the regulator to disclose enforcement cases when they are filed, making it public when auditors are accused of wrongdoing. Currently the law requires cases to be heard behind closed doors; they become public once there is a resolution.

    "Even as someone who has long been concerned about government overreach, I can’t bring myself to find a good reason for why an enforcement proceeding against an auditor should be treated any differently," Garrett said, and this is quite the 180. No one, from former Massachusetts congressman Barney Frank to the US Chamber of Commerce's Tom Quaadman, saw this coming. 

    GovTrack gives the bill a 1% chance of being enacted, but I'm sure that's better odds than the Big 4 are comfortable with.

    Fake accountant gets real accountant's help

    Anna Kendrick's mom is a real accountant so naturally the actress asked her for help in preparing for her role in The Accountant.

    I sent her the script because I was like, ‘You have to explain all of this to me.’ She’s a math whiz and she’s been working as an accountant for her whole life. So she was explaining all the financial aspects of it because it’s kind of a puzzle.

    “You don’t have to be a math whiz to follow the movie but since I was saying the lines I figured I should kind of know what they mean,” Kendrick joked. “And the second I was done I was like, ‘That’s gone forever. Farewell.’”

    That's a little disappointing. I really wanted to hear that Kendrick took a method approach to this role. You know, staring at a spreadsheet for 12 hours a day for three months, eating lunch out of vending machines, driving a Honda Civic; really immersing herself into the life of accountant. I'm sure having a Mom as an accountant is helpful, but it's nothing like becoming one.

    Has Donald Trump released his tax returns?

    Nope! But during last night's debate he did admit that the $916 million loss on his 1995 returns was used to avoid federal income taxes, although declined to say for how many years. And he took the opportunity to remind everyone that he knows more about tax code than "any other presidential candidate in history" in quite Trumpian fashion:

    “I have a write-off. A lot of it is depreciation, which is a wonderful charge,” he said. “I love depreciation.”

    2016!

    Elsewhere: The New York Tale of Donald Trump’s Accountant and Did Donald Trump take advantage of the Gingrich-Edwards payroll tax loophole?

    Previously, on Going Concern…

    Bryce Sanders wrote about networking.

    In other news:

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    • As no great fan of the PCAOB, what I have always found really odd about the profession’s attitude toward the legislators including Rep. Garrett is that leadership has never appreciated the potential gain in public trust and credibility that would flow from greater transparency around the PCAOB’s inspection and enforcement results. Not that any of the Chairmen from McDonough down through Doty have ever really taken up the effort that might move the agency toward something resembling effectiveness. So this further displays the multiple aspects of the dysfunctionality in the entire model.

      • Big4Veteran

        Counterpoint:

        Shit tons of money > Public trust

    • Big4Veteran

      Donald Trump loves depreciation, except when it happens to his current wife.