ANR: 'We also think there's a problem with [Ernst & Young]'; The Envelope's Journey; Don't Blow the Tax Refund at the Strip Club | 02.26.13

HP Investor Adviser Group Seeks Board, Accountant Changes [BBW]
After a two-hour meeting with Hewlett-Packard Chairman Ray Lane and other directors (HPQ) yesterday in Washington, CtW is recommending that investors vote against the election of John Hammergren and G. Kennedy Thompson, who have been on the board since 2005 and 2006, respectively, Michael Pryce-Jones, a senior analyst at CtW, said in an interview. [...] CtW is advising shareholders to vote against the appointment of Ernst & Young, citing the auditor’s failure to unearth accounting irregularities at Autonomy Corp. that later resulted in Hewlett-Packard writing down most of the acquisition, Pryce-Jones said. “We also think there’s a problem with the auditors,” he said.

Can an auditor’s Chinese affiliate get its US arm in trouble? Deloitte is about to find out [Quartz]
What is unusual, though, is the plaintiffs’ move to hold not just Deloitte’s China office liable, but also its American one. The Securities Exchange Commission initiated administrative proceedings against the Chinese offices of Deloitte and other accounting firms for their failure to turn in audit work papers for Chinese companies facing fraud investigations. And other investor lawsuits also target the Chinese accounting units. But the ChinaCast lawsuit maintains that Deloitte’s US office shares blame, because it deemed ChinaCast compliant with US accounting standards even though it was not, according to the complaint seen by Quartz.

PwC chief Moritz shares Oscar night spotlight with First Lady [Reuters, Earlier]
PwC has been counting the Oscar ballots for 79 years. Moritz said Obama – who rivaled the Hollywood actors in her custom-made silver gown and dangling earrings – had “amazing presence.” “She was a real pro,” he said. Moritz had earlier spent a nervous 30 hours starting on Saturday as one of three people in the world who knew it would be Argo’s big night. The other two were PwC’s Los Angeles partners who oversee the tallying of the ballots and hold them in their black briefcases backstage during the broadcast. Moritz went to the White House on the big night sporting a tuxedo and carrying his own briefcase bearing a single envelope. He said as soon as he appeared on-screen handing Obama the envelope, his cellphone began to buzz. Only his wife and two children even knew he was in Washington for the day.

Oscar envelope made cross-country journey to D.C. [WE]
"He placed the card in the envelope, he sealed it, and then he kept it in his custody until he delivered it to Michelle Obama on live TV," [Brad] Oltmanns told Yeas & Nays.
 
A Costly and Unjust Perk for Financiers [NYT]
OF the many injustices that permeate America’s byzantine tax code, few are as outrageous as the tax rate on “carried interest” — the profits made by private equity and hedge fund managers, as well as venture capitalists and partners in real estate investment trusts. This huge tax benefit enriches an already privileged sliver of financiers and violates basic standards of fairness and common sense.
 
A Revolving Door in Washington With Spin, but Less Visibility [DealBook via TaxProf]
So on Jan. 25, Mr. Reid’s office announced that he had appointed Cathy Koch as chief adviser to the majority leader for tax and economic policy. The news release lists Ms. Koch’s admirable and formidable experience in the public sector. “Prior to joining Senator Reid’s office,” the release says, “Koch served as tax chief at the Senate Finance Committee.” It’s funny, though. The notice left something out. Because immediately before joining Mr. Reid’s office, Ms. Koch wasn’t in government. She was working for a large corporation. Not just any corporation, but quite possibly the most influential company in America, and one that arguably stands to lose the most if there were any serious tax reform that closed corporate loopholes. Ms. Koch arrives at the senator’s office by way of General Electric.
 
Audit Firms Get Mixed Report Card from PCAOB [AT, Report]
A new report from the Public Company Accounting Oversight Board found that firms that audit 100 or fewer public companies and are inspected every three years showed a reduced rate of reported “significant audit performance deficiencies” in their 2007 through 2010 inspections, compared to when they were inspected from 2004 through 2006, but in 2011, the rate of deficiencies showed little sign of declining. In addition, the report found that 20 firms with significant deficiencies never responded to the PCAOB with a remediation plan.
 
Accountant bringing Crundwell into suit [SaukValley]
Rita Crundwell is now a third-party defendant in the city’s lawsuit against its former auditors, according to court documents filed Monday. A third-party defendant is one whose guilt is tied to that of an original defendant. The idea is that two cases may be decided in combination and justice may be done more efficiently than having two suits. Janis Card Co., LLC, Samuel S. Card, CPA, P.C., and Samuel Card, which are being sued by the city for not detecting Crundwell’s theft of nearly $54 million from city funds, made a motion to bring the former Dixon comptroller into the suit. The Sterling-based offices served as the city’s contracted auditor after 2005. Also, Fifth Third Bank filed a motion to name itself as a defendant in the case, a legal move that will, among other things, allow it access to evidence. The lawsuit, asking in excess of $53 million in damages, also names CliftonLarsonAllen, LLP, Clifton Gunderson LLP, Todd Etheridge and Ron Blaine as defendants.

Deloitte LLP weighing Tysons Corner reshuffling [WBJ]
Shopping for a new home in NoVa.

Texas Man Who Claimed He Was Robbed Spent The Cash At Topless Bar [KWTX]
A South Texas man admitted that he concocted a story about being robbed of $1,000 because he didn't want his wife to learn he spent the money at a topless bar, police said. The man received a tax refund recently and decided to spend the money Wednesday at the bar in La Feria. Later he called police and reported that men armed with assault weapons had taken the cash. Officers searched for the robbers and then questioned the man a second time, discovering inconsistencies in his story. Jesus Mata, 21, of San Benito was arrested Thursday and charged with filing a false report.

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