Despite the setback that was the creation of the PCAOB, the Big 4 have to be pret-tay, pret-tay, pret-tay pleased with the privacy they get when it comes to the Board’s disciplinary actions.
Perpetually-acting chair Dan Goelzer wrote a letter to the Senate Banking and House Financial Services Committees saying that by keeping the proceedings mysterio and out of the public eye. The current arrangement “gives firms and auditors an incentive to drag out litigation, sometimes for years,” and that simply won’t do.
Despite the general public’s disinterest in all things accounting (until the shit hits the fan, of course), the Board is still trying to find its place as the relatively new kid on the bureaucratic block. This request seems to be an attempt at fitting in:
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If you recall, the PCAOB got really busy not too long ago and doubled its audit standards virtually overnight, leading one CPA exam candidate to reach out and ask if this is at all relevant to his exam experience. If you don’t want to read the following and just want the short answer, it’s probably no.
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Well team, despite the little setback for the PCAOB earlier this week, Team Peek is not discouraged. In fact, they were so motivated by the SEC’s little stunt that they thought they’d churn out three major inspection reports today, just to show everyone that they get to say what’s what with these accounting firms (even if it is in an indecipherable combination of vague and wonky prose).
BDO, Grant Thornton and PwC all got their papers issued today, which leaves just KPMG as the last major U.S. firm to not have their report issued. We’ll give you the quick and dirty on these three but if you want the gory details, you’ll have to read them in depth yourself (some of us have lives, you know). We’ll go in alphabetical order so no one gets bent out of shape.
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The PCAOB has had a pretty good run of late. It all started with the SCOTUS handing them a loss that was really a win and the Board has, most recently, gotten ambitious with new risk assessment standards. What’s more is the call of acting Chair Dan Goelzer to have the Board’s enforcement inspections held publicly so audit firms can’t get all mysterio about what they did and did not do to warrant said inspection.
Well, the run of luck appears to have come to an end as the SEC issued a new rule that takes effect next month that marginalizes the Board to the benefit of the accounting firms it oversees (our emphasis).
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“We thought auditors and investors would like to have an avenue to report violations of accounting and auditing standards and financial fraud.”
~ Claudius Modesti, PCAOB Enforcement and Investigations Division director. Last year, the Board fielded 179 tips – a record – that alleged wrongdoing by audit firms and their employees.
As we mentioned late yesterday, the PCAOB has been working hard these days. Late nights, weekends, ordering in and whathaveyou. Adrienne told you about the new eight auditing standards that you’re all expected to have memorized by Labor Day, and we wrapped up with Dan Goelzer snagging QOTD for the Board’s move towards open enforcement proceedings. This move will, presumably, be used in order to shame the pants off of those of you that dare to break the rules.
But the Board had one more thing to serve up yesterday and that was to put it out there that they don’t think too highly of the job auditors are doing supervising the worker bees:
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BP Completes Cementing Macondo Oil Well From Top [Bloomberg]
“BP Plc completed a cement plug at the top of its Macondo well in the Gulf of Mexico, sealing off the source of millions of gallons of oil spewed into the sea after a drilling rig exploded in April.
The procedure completes the so-called static kill. The next stage for BP is to finish a relief well to inject cement at the bottom and ensure there’s no leakage inside the 13,000-foot-long (3,962 meters) well bore beneath the seabed, National Incident Commander Thad Allen said yesterday.”
Ten Signs It’s Time to Leave Your Job: The Finance Edition [FINS]
Check yourself for some of these symptoms: “You’ve been holding back from voicing your grievances.”; “You have no clue where the company is headed.”; “You start to believe you can’t do better.”
And that’s just in the first five listed.
Altus completes PricewaterhouseCoopers deal [Bloomberg BusinessWeek]
PwC sells their real estate appraisal management for, what we can only assume to be, a decent chunk of change.
H&R, Jackson Hewitt shares fall on new IRS rule [Reuters]
“Shares of top two U.S. tax preparers H&R Block Inc (HRB.N) and Jackson Hewitt Tax Service Inc (JTX.N) fell Thursday on the Internal Revenue Service’s decision to eliminate debt indicator for tax-refund loans.
On Thursday, the IRS said starting with next year’s tax filing season it will no longer provide tax preparers and associated financial institutions with ‘debt indicator,’ which is used to facilitate refund anticipation loans (RALs).”
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“I believe the time has come for us to ask Congress to change the law and make our enforcement proceedings public, unless there is some good reason for a particular matter to be closed.”
~ Dan Goelzer, Acting Chair of the PCAOB, would like to get things out there.
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Since the PCAOB was only up to Audit Standard 7 last time we checked and seems to take the conservative approach when it comes to issuing new ones, we have to say we were more than shocked to see them almost double their audit standards overnight. Gee, must be serious.
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Geithner Pushes Tax Boost for Wealthy [WSJ]
“Treasury Secretary Timothy Geithner made the Obama administration’s economic case for letting tax cuts for high earners expire at the end of this year, saying that failure to do so would harm rather than help economic growth.
In a speech Wednesday in Washington, part of the administration’s broader strategy to overcome Republican opposition on the issue, Mr. Geithner said that keeping current tax levels even on a short-term basis “would hurt economic recovery by undermining confidence that we are prepared to make a commitment today to bring down our future deficits.” The government needs the revenue it would get from allowing tax rates for the wealthy to rise, he said.”
PCAOB Logs No Progress on International Inspections [Compliance Week]
“The Public Company Accounting Oversight Board isn’t yet making much headway in catching up on overdue international inspections, but the Dodd-Frank financial reform bill at least clears an obstacle the board has repeatedly blamed for its inability to meet its inspection mandate.”
Regulator fears auditors may abandon scepticism to meet deadlines [Accountancy Age]
“The Auditing Practices Board (APB), which sets standards for the industry, is concerned auditors might be abandoning their professional scepticism to meet contractual audit deadlines, and wants to coach them in how to be sceptical.
Audit contracts are often negotiated on the assumption few problems will be revealed, according to the APB. When a potential issue does arise timetables often have to be extended.”
A-Rod’s Home Run Ball: a Tax Headache for the Record Books? [WSJ]
The ball is reportedly worth around $100k and if the ball is technically Yankees’ property and the team were to give it to A-Rod, then he may owe tax and the Yanks would get a corresponding deduction. The team could also argue that the ball is technically A-Rod’s property and then neither would owe tax.
Of course then the question remains, what if A-Rod sells or donates the ball to a nonprofit? If he sold it, then it would depend on how long he keeps it (less than a year would be at ordinary rates, greater than a year would be at capital gain rates). While donating the ball after one year could net him a near full deduction.
TheStreet.com names Thomas Etergino finance chief [AP]
Tom starts his new gig on September 7th.
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