Accounting News Roundup: Plan 'B'lew It; Banker Arrested in Olympus Scandal; Bentley Professor Quits After Research Retraction | 12.21.12

Boehner Cancels Tax Vote in Face of G.O.P. Revolt [NYT]
Speaker John A. Boehner’s effort to pass fallback legislation to avert a fiscal crisis in less than two weeks collapsed Thursday night in an embarrassing defeat after conservative Republicans refused to support legislation that would allow taxes to rise on the most affluent households in the country. House Republican leaders abruptly canceled a vote on the bill after they failed to rally enough votes for passage in an emergency meeting about 8 p.m. Within minutes, dejected Republicans filed out of the basement meeting room and declared there would be no votes to avert the “fiscal cliff” until after Christmas. With his “Plan B” all but dead, the speaker was left with the choice to find a new Republican way forward or to try to get a broad deficit reduction deal with President Obama that could win passage with Republican and Democratic votes.

U.S. Makes Arrest in Olympus Scandal [NYT]
Federal agents arrested a former bank executive in Los Angeles on Thursday in connection with the accounting scandal that erupted last year at Olympus, the Japanese camera and medical equipment maker. Prosecutors in New York said that the executive, Chan Ming Fon, received more than $10 million from Olympus for assisting in its accounting fraud. The Federal Bureau of Investigation said Mr. Chan, 50, was a citizen of Taiwan living in Singapore. He was charged with conspiracy to commit wire fraud, with a maximum potential penalty of 20 years in prison. [...] Mr. Chan was a principal at a fund that received large payments from Olympus, according to the F.B.I. The bureau contends that Mr. Chan told Olympus’s auditors in 2009 that the fund held hundreds of millions of dollars on behalf of Olympus, in the form of conservative investments like Japanese government bonds. The complaint says, however, that the money had been passed on to an entity controlled by Olympus to pay off a loan. In the complaint, the F.B.I. said that Mr. Chan “acknowledged that it was wrong to assist Olympus in deceiving its auditor.”

SEC Enforcement Chief Khuzami to Leave Post [WSJ]
Robert Khuzami, head of the Securities and Exchange Commission's enforcement unit, plans to leave the agency as soon as next month, a person familiar with the expected move said Thursday. Mr. Khuzami, a former federal prosecutor, was recruited by former SEC Chairman Mary Schapiro to lead the unit in 2009, when the SEC was reeling from the embarrassment of missing Bernard L. Madoff's Ponzi scheme. He overhauled the division, eliminating a layer of management and setting up specialized units to focus on hedge funds, market abuses and other areas. Under Mr. Khuzami, the enforcement division cracked down on insider trading and brought 133 cases tied to the financial crisis, resulting in $2.6 billion in financial penalties. But critics faulted the agency for striking weak settlements with wrongdoers.
 
PwC and Thomson Reuters In China, U.K. Business Alliance Violating Auditor Independence [Forbes]
FM: "Thomson Reuters announced it signed a three-year contract with PwC, the company’s auditor, to provide use of the Thomson Reuters ONESOURCE Corporate Tax solution for China. PwC U.K. also uses this Thomson Reuters software for its tax clients. Business alliances between a company and its auditor are prohibited under U.S. law and U.K. auditor regulations."

Bentley professor resigns after his research is retracted [BG]
A prominent Bentley University accounting professor, in the midst of an internal investigation over the retraction of a scholarly article he coauthored, has resigned. James E. Hunton will leave Bentley Dec. 31, a spokeswoman for the Waltham school confirmed, citing “family and health reasons.” Bentley launched a review last month of the retraction by the professor, who is widely published in accounting journals and has received numerous awards. In a statement in response to a Globe inquiry, the school said, “Bentley University and its faculty take the research process extremely seriously, and we place the highest expectations for rigor, diligence and ethical methods on our faculty.” The American Accounting Association’s “Accounting Review” first posted a notice of the retraction last month: “The authors confirmed a misstatement in the article and were unable to provide supporting information requested by the editor and publisher. ­Accordingly, the article has been retracted.”

Seidman hopeful for converged expected loss approach despite differing FASB, IASB proposals [JofA]
“If you roll the clock back a couple of years ago where we were really divided on this approach, the FASB model looked nothing like the IASB approach,” Seidman said during a conference call with reporters. “We have come a lot closer together. … I think that we are now at least both looking at an expected loss approach, and I think with the benefit of an additional round of commentary, we will be in a better position to ultimately come to a converged approach that people around the world view as an improvement.”

Mayan prophecies: Life after the (non) end of the world [BBC via AWEB]
Dr Geoffrey Braswell of University of California, San Diego: "The 2012 phenomenon is essentially an accounting problem; a misinterpretation of some very ancient book keeping. It is based on the Maya calendar, which counts the days since a date in the mythical past. This count reset after the last creation (on or about 11 August, 3114BC). On 21 December, we will reach that same number of days once again, and many now are concerned that a calendrical reset the following day will mean the end of the world. But it is not even clear that the Maya themselves agreed on this book-keeping issue. Two ancient inscriptions emphasise the importance of the date. But a third focuses on 13 October 4772, the end of an even bigger cycle that cannot happen if a reset occurs in 2012."

NHL Cancels Games Through Mid-January; 51% of Season Wiped Out [Bloomberg]
While the two sides have no new bargaining sessions scheduled, NHL Deputy Commissioner Bill Daly was optimistic the season could be saved. Speaking on a Canadian radio show two days ago, Daly said “yes” when asked if there would be an agreement reached in time. Daly was told he was only allowed to answer “yes or no” in the interview.

Judge: La. woman can flip finger in holiday lights [AP via ATL]
A federal judge says a Louisiana woman has the right to display holiday lights on her roof in the form of an extended middle finger. Sarah Childs sued Denham Springs, its mayor and police chief, claiming she was threatened with arrest if she didn't take down the display. The American Civil Liberties Union of Louisiana filed the suit Thursday on Childs' behalf. Soon after, U.S. District Judge James Brady issued a temporary restraining order barring officials from interfering with the display in the city near Baton Rouge. Childs erected the lights last month as part of a continuing dispute with her neighbors. She says she has removed them twice after one police officer told her she could be fined and another threatened to arrest her.

Comments