October 23, 2018

Accounting News Roundup: FDIC’s Win Against PwC Could Be a Bellwether | 01.05.18

pwc culture

FDIC win against PwC could finally force auditors to look for fraud [MarketWatch]
Francine McKenna reports that representatives from PwC have given contradictory testimony in separate civil trials in the past year about the firm’s responsibility to design its audits to detect fraud. In the Colonial case where Judge Barbara Jacobs Rothstein ruled that PwC failed to design its tests to detect fraud, the damages that the firm will be ordered to pay will be public, a rarity since details of many past settlements are private. One defense attorney is quoted, “Any [penalty] with a ‘B’ in it is going to be an extraordinary burden to any firm. Whether it is enough to tip a firm into non-existence is one thing, but it certainly would be enough to change the cost of the audits going forward.”

Bonus reading: At heart of FDIC’s win v. PwC, an unsettled theory

The New ‘Qualified Business Income Deduction’ Varies Based On Your Business Type – Or Does It? [Forbes]
Tony Nitti continues his yeoman’s work on breaking down the Tax Cuts and Jobs Act, particularly the pass-through deduction under Section 199A. He lays out various scenarios of the same business with different entity types to see if results differ. Nitti writes, “If we are to interpret Section 199A based on its most obvious reading, the new law will provide anomalous results, rewarding some business types over the other at one level of income, and then reversing those results at a different income level.”

Deadlines Loom for Reporting Tax Act’s Impact [CFO]
Yes, the SEC guidance says your company can admit to not having enough information to explain the impact, but a Deloitte partner told CFO, “[Y]ou can’t go pencils down.”

Steinhoff CFO steps down amid probe into accounting irregularities [FT]
Ben la Grange isn’t totally peacing out. He will “focus on the preservation and procurement of liquidity for the group, as well as the ‘finalisation of the company’s audited 2017 consolidated financial statements.'”

Former accountant sentenced for using Oklahoma Beef Council as her ‘personal cash cow’ [TulsaWorld]
File to Accountants Behaving Badly: It’s easier than raising venture capital. If you recall, Melissa Day Morton wrote about 790 fraudulent checks to herself over seven years “to finance a children’s clothing boutique.” All told, she embezzled $2.68 million, and that earned her 57 months in prison.

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Previously, on Going Concern…

Jason Bramwell talked to six controllers about their big priorities for 2018.

In Open Items, a user wonders about someone at a Big 4 firm “basically contract[ing] off all their work to a freelancer.”

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You Know That Guy Who Panhandles on Your Block? He May Be a CPA.

Anybody out there looking to help their fellow CPA, who’s down on his luck?
The Wall St. Journal is reporting that the former BDO Seidman LLP CEO, Denis Field may have to pay back a portion of $180 million that is being sought by prosecutors in the tax shelter case that involves Field and six others.
Natch, everybody has denied wrongdoing. The charges include conspiracy and tax evasion. Good luck with that.

Prosecutors Seek Ex-BDO Seidman CEO, 6 Others To Forfeit $180M
[WSJ]

Partners at Grant Thornton are Just Getting Lazy

Grant-thornton-logo.JPGGrant Thornton is really making our lives easy today: “Grant Thornton has agreed to pay nearly £6,000 in fines and costs after it failed to correctly sign off 43 audit reports.”
Measly fine, obv but 43 audit reports? And a incorrectly signed off report is one that, “had not been signed off by a responsible individual of the firm”.
So apparently the Brits have got their interns signing off on the audits. Gold star for you today, GT.
ICAEW fines Grant Thornton over audit sign-offs [Accountancy Age]