• ParenteBeard’s “Audit” of Santa Is as Reliable as Santa Himself

    By | December 12, 2012

    ParenteBeard, the 23rd largest CPA firm on the whole damn planet, issued the following press release earlier this month.

    This holiday season, ParenteBeard, a top 25 U.S. accounting firm, is helping to balance the books of what would be the largest nonprofit in the world: Santa, Inc. […] ParenteBeard began its audit of Santa, Inc. by delving into its hard costs.
    First off, let's clarify that this was not an audit because if it was, I never received an accounts payable confirmation, and that son of a bitch has owed me a Schwinn since 1981. What ParenteBeard performed was at best an agreed-upon procedures engagement to estimate Santa Claus' current fiscal year expenses. More likely it was a CPA firm trying to be cute.
    ParenteBeard estimated Santa's gift production costs at $39.5 billion, based on an "estimated $75 value for each gift" given to each of the world's 526 million children "who presumably celebrate Christmas." Seventy-five dollars is wildly overestimated. I always asked Santa for awesome gifts like a Schwinn dirt bike (see above), but my mom would always blame the crap gifts on Santa. Any gift that said "from Santa" on the tag was either tube socks or college-ruled filler paper or a hair dryer1
    In addition to this, I think it's reasonable to assume that at least a few of the 526 million children receiving these $75 gifts live in the Democratic Republic of Congo, one of the poorest country in the world. Not to give too much away, but I'm pretty sure $75 will buy you your own revolutionary army in the Democratic Republic of Congo. I believe this fact substantiates that $75 per gift is well above a reasonable estimate for gift production.
    Employee salaries were estimated at $2 billion. This assumes 50,000 elves receiving $40,000 per year which is bullcrap because elves don't work for money. Elves work for hugs and smiles and happy thoughts. Just like interns.
    The report also mentions the following:
    The exact number of elves in the North Pole has never been revealed.
    Again, if this were an audit, looks like Santa’s not complying with the auditors' reasonable requests for access to information and records. I may be on Santa's naughty list, but now he's on my "adverse opinion" list.
    Health benefits for the elves were estimated at $773 million. BS. Elves don't get sick; they're naturally immortal. Duh.
    In fact, the only costs considered in this report are raw materials, employee salaries, health benefits, electricity, and "reindeer costs." ParenteBeard clearly overlooked other costs, like depreciation. To make 526 million gifts in one year, every single one of those 50,000 elves has to produce one gift every 12 minutes. That implies a significant investment in PP&E, a portion of which needs to be allocated to the current period, unless this report was requested on a cash basis, and that would be ridiculous. Nothing in this report is ridiculous. 
    To top it off, Santa would have a hard time surviving an audit because auditors always test existence.
    Jeffrey Ferro, the president of ParenteBeard said the following:
    As experts, we thought, "Why not determine what it would cost to run Santa’s North Pole operation?”
    Why not? The same reason I've never tried to get Mel Gibson's autograph: it's a waste of time, some people will think I'm stupid for doing it, and it will marginalize the Jews.
    Even though this report made it easy for me to take a pot shot at ParenteBeard, and even though I'm sure the CPAs who helped create the report were grumbling about how stupid it was, I actually think it's pretty cool that ParenteBeard tried to take our profession and have some fun with it.
    I'm not sure how the general public will react to the report. They may think that PB nerded up a perfectly good holiday. They may get hung up on the fact that anybody attempting to audit Santa is automatically on the naughty list. Or maybe, for once, they'll see accountants not taking themselves too seriously.
    Until I ruin the good feelings and holiday cheer by taking a dump on ParenteBeard's report because I took it too seriously.
    1 The Volume Boost Infiniti Pro, the most expensive Conair hair dryer on market, retails for $59.99. Where's the other $15, fat man?
    • name

      I thoroughly enjoyed this article. Very entertaining.

    • AUD studier

      “Again, if this were an audit, looks like Santa’s not complying with the auditors’ reasonable requests for access to information and records. I may be on Santa’s naughty list, but now he’s on my “adverse opinion” list.”

      Wouldn’t this be a disclaimer?

      Damn you CPA studying…damn you…

      • Yes, it would be a disclaimer, but I couldn’t come up with a good title to for that list. “Disclaimer opinion list” doesn’t sound right, nor does “disclaimed opinion list” or “disclaimer list.”

      • $19577774

        Couldn’t it be a qualified opinion due to a scope limitation? I guess it depends on how much ParenteBeard is being paid for this engagement.

        • Guest

          Just seeing if there is any point to all the shit I’m forced to learn for the CPA

    • GAAPforce1

      The PCAOB is on this, PB’s inspection report isn’t going to look good…

      • Ms. Statement

        PCAOB would not be involved with this, nonprofit

        • GAAPforce1

          Ah missed that detail at the top.

    • $19577774

      I’d bet that BoMo is tearing PwC’s marketing department a new one for not coming up with this idea first.

    • awesome post

      i submitted this twice to the tip box, i’m glad you wrote about it!

    • cool story brah

      What’s next? Top 100 Accounting Firm audits Tooth Fairy, Inc?

    • BKGreed

      What percentage were the audit fees?

    • Oy Humbug

      “experts analyzed what it would take to actually operate Santa’s North Pole”
      I think a heavy dose of Cialis would be all that it takes…

    • guest

      What kind of valuation are they putting on the intangibles?.. You know, flying reindeer, stopping time to travel the world..