August 19, 2018

Accounting News Roundup: Kiting and Backpacks | 10.13.17

Kiting

Here’s a doozy:

The Securities and Exchange Commission today announced charges against former senior officers of Mexico-based homebuilding company Desarrolladora Homex S.A.B. de C.V. for their roles in the company’s $3.3 billion accounting fraud. Homex settled SEC charges earlier this year without admitting or denying allegations that it reported fake sales of more than 100,000 homes to boost revenues during at least a three-year period.

The SEC used satellite imagery to help uncover the accounting scheme and illustrate its allegation that Homex had not even broken ground on many of the homes for which it reported revenues.

The image shows the purported home site with dozens of units highlighted as those that were sold. And the other image of the actual site shows enormous pieces of undeveloped land. This scam was carried out by the CEO, CFO, Controller, “a manager in the company’s operations department” and they layered their borrowing with 13 banks “in check-kiting fashion” and “mischaracterized them to Homex’s auditors.”

As a student, I remember thinking that check kiting was the stupidest way to commit fraud. On the other hand, it sounds a fun fraud because I imagine it’s a bit of a challenge to stay one step ahead of the float. Still, if the fraudster doesn’t have a plan to come up with actual money, then it becomes exhausting, and once you take a day off, you’re busted.

However, I suppose if you’re a massive corporation with a dozen or more banks at your disposal, you could borrow money “in check-kiting fashion” quite a bit longer, but I still imagine that would be a tedious task for whoever’s in charge of the kiting. It’d be enough that the person would probably be tempted to rob a bank just to make it stop. This story will probably wind up in an accounting textbook.

Elsewhere in SEC enforcement: Lawyers Charged With Assisting a Microcap Fraud Scheme

Backpacks

Good lord, here’s The Wall Street Journal on the latest in alpha male business executive power trends: The fancy backpack.

Driving that uptick, in part, is the backpack’s evolution into a higher species of bag. “Men’s backpacks have gotten more executive,” explained NPD analyst Marshal Cohen. That means fewer sad-sack shapes in cheap polyester and more finely crafted designs in sumptuous leather. “Backpacks have evolved from utilitarian and technical versions, from brands like Oakley or Victorinox, to ones that are [more upscale] in leather, or a mix of fabrication,” said Mr. Cohen.

Imagine being so self-conscious about whether backpacks are lame or not that you convince yourself to spend $1,000 or more on one. “But wait,” I hear you saying, “It’s not just a status item, it’s very practical!”

“The backpack has exploded as the go-to accessory in the man’s wardrobe,” said Roopal Patel, the senior vice president at Saks.

Sure, she said, some of this growth can be traced to the rise of dress-code-allergic startups and a more casual attitude about business attire overall. But whether you’re an executive or an intern, a backpack suits the densely stacked schedule many men now face. “We think about how a man is living his everyday life,” Ms. Patel said, describing the thought process behind the store’s selection of bags. “We look at functionality: Does it fit his laptop and workout gear—how about a water bottle?” A briefcase can get you to the office and back, but what if you have tennis at 8 a.m., meetings all afternoon and ceramics class at 7 p.m.? A backpack, she added, better targets a modern man’s needs.

I know that when my densely stacked schedule includes tennis followed by all-day meetings followed by ceramics, my lavish backpack is the only thing keeping me grounded.

Brought to you by Accountingfly

The featured job of the week is a Senior Financial Analyst with BlueCross BlueShield of Tennessee in Chattanooga.

Previously, on Going Concern…

I mentioned that the New York AG is looking into the Deloitte hack.

In other news:

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Accounting News Roundup | 01.21.10

How to find the “best and brightest” [CPA Success]
This may be a better topic for the friendly HR professional but figuring out who these future accounting rock stars are before they show up on their first day is “more art than science”, as Tom Hood notes.
Popular to some old-school thought, GPA does not always indicate who’s going to dominate in the real world and “soft skills” — besides being a terrible term — are in more demand than ever.
Help The The American Red Cross of Greater Chicago Help Haiti [Re: The Auditors]
The American Red Cross of Greater Chicago is having a drive today and since Francine’s friend is the CFO, we’ll be glad pass around the news:

One of my oldest and dearest friends, Guillermo Becerra, is the CFO of the American Red Cross of Greater Chicago. I asked him how I could help him, and the Red Cross, during what must be an incredibly busy time post-Haiti earthquake.


“The Chicagoland community will come together on Thursday, January 21 to give to the American Red Cross as we help the people of Haiti recover from the catastrophic earthquake that devastated their country last week.
The Chicago Helps Haiti media relief drive begins at 5 a.m. and lasts until 11 p.m. Nearly every TV and radio station in our area will be promoting this fundraising effort throughout the day. You can help too, by giving via phone or online, and sharing your thoughts here, on Facebook or Twitter, and by asking others to give.
To give from 5 a.m. to 11 p.m. CALL 1 (877) 565-5000 or visit www.chicagoredcross.org/haiti

Plus, we’re guessing that if you give, your 2009 tax return isn’t much of a concern.
If Your Password Is 123456, Just Make It HackMe [NYT]
The Times is concerned that you have a shitty password which puts you at a huge risk of being hacked by someone sitting in their parents’ basement.

Imperva found that nearly 1 percent of the 32 million people it studied had used “123456” as a password. The second-most-popular password was “12345.” Others in the top 20 included “qwerty,” “abc123” and “princess.”

You know who you are, ye with stupid passwords. Also, don’t even think of changing it to “654321” because that drops in at #19.

Accounting News Roundup: Haiti Relief Passes Senate; Accounting Job Surge? CPAs Basically Control People’s Lives | 01.22.10

Senate votes for faster tax breaks for Haiti gifts [WaPo]
As expected, the U.S. Senate unanimously passed legislation yesterday that allows taxpayers to deduct donations made for Haiti relief efforts. You have until the end of February to donate so that it may be included on your 2009 return.

Maybe it’s bad legislation but we’ve been over that.

CPA Jobs Set for Surge. But When? [CPA Trendlines]
That’s the question, isn’t it? Rick Telberg, who has done a great job of tracking the Bureau of Labor Statistics on accountants, points out that while the latest BLS forecasts a 22% increase (279,400 jobs) by 2018, there’s no indication that it’s happening now:

[M]any tax, accounting and finance professionals are still slogging through the Great Recession. The Association for Financial Professionals, for instance, reported that about one in four respondents say their organizations will contract in 2010. At the same time, a PricewaterhouseCoopers survey of private companies found 43 percent of CEOs and CFOs still budgeting no expansion over the next 12 months to 18 months. The data just seem to reinforce economic uncertainties and a weak outlook.


The BLS is looking past the past the recession for the jump in opportunities but just when the hell will that be? Just because the economy isn’t contracting currently, doesn’t mean it won’t in the future and this “recovery” has been tepid at best.

Theismann to CPAs: You Are the Conscience of America [Web CPA]
Joe Theismann gets it. He knows that without all of you out there in CPA land, your clients don’t stand a chance. They’d be finished. Finished!

“You’re the conscience of America,” Theismann told conference-goers. “You are the survivors in tough times. With accountants, I’m not looking for someone to file taxes and do my financials. I can do that myself online. In your position you can basically control people’s lives.”

So get out there and control somebody’s life. Joe Theismann is expecting it.