Accounting News Roundup: Who Else at KPMG Knew About Stolen Info?; The Revolving Door; Pot and IFRS | 01.24.18

kpmg general electric

KPMG indictment suggests many who weren’t charged knew regulator data was stolen [MarketWatch]
Francine McKenna’s dive into the indictment surfaced with a disturbing possibility: “at least five more unnamed KPMG partners and one outside consultant either knew or chose to ignore the illegal source of the information.”

Some Accountants Got Caught in the Revolving Door [BloombergView]
Matt Levine writes a clever and insightful column on the two primary ways for regulators to get a lucrative job in the private sector:

On the one hand, every employer prefers to hire diligent ambitious go-getters, so being a diligent ambitious go-getter as a regulator sends a good signal to prospective employers. On the other hand, regulated companies may prefer not to be regulated by tough regulators — but that is all the more reason to hire you. That way you’ll stop regulating them!

This situation concerning KPMG, as you might expect, falls into the latter bucket. Also, Matt makes a good point about the “data analytics” firm that KPMG hired to predict the PCAOB selections: “That is … just sort of a strange thing to do? Building a model of which of your work regulators will look at and which they won’t? There is something almost Uber-ish about explicitly building a model to game the regulators.”

KPMG believes it will be investigated over the collapse of Carillion [BI]
The House of Klynveld across the pond has trouble of its own. Carillion, an infrastructure contractor, declared bankruptcy on January 15, but in its last annual report, KPMG gave virtually no warning that the company faced any existential threats. The U.K. firm’s deputy chair says KPMG stands by its work and will cooperate with any investigation.

California Initiative Proposes Additional Income Tax on High-Income Earners [BNA]
The initiative would lop “an additional 1 percent tax on personal income over $1 million.” The revenue raised “would be used to help fund hospitals, clinics, and primary care providers serving low-income patients.” It needs 585,407 signatures by July 17, 2018.

Pot Sector Gets ‘Audited Hallucinations’ Amid Accounting Quirks [Bloomberg]
A wrinkle in IFRS allows some Canadian marijuana companies to report gross margins greater than 100 percent. One forensic accounting expert couldn’t resist: “It’s audited hallucinations. The marijuana financial statements have absolutely nothing to do with reality.”

Previously, on Going Concern…

A running list of questions about the KPMG audit inspection conspiracy.

In Open Items, Can I move from tax to financial reporting?

From the archives: Seriously, Stop Making Saturdays Mandatory During Busy Season

In other news:

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