June 23, 2018

Accounting News Roundup: The SEC Looks at Exxon and Stealing From Foster Homes | 09.21.16


Last week we learned that the New York Attorney General was curious as to why ExxonMobil hasn't written down any of its reserves since the price of oil started dropping. Turns out, the SEC is curious too and is even asking PwC, Exxon's auditor, for information about it. But there's slightly more to it than just write-downs:

The probe is also homing in on how Exxon calculates the impact to its business from the world’s mounting response to climate change, including what figures the company uses to account for the future costs of complying with regulations to curb greenhouse gases as it evaluates the economic viability of its projects.

That represents an escalation of the legal questions Exxon faces over its past and future response to climate change. The company has spent much of this year confronting investigations by Mr. Schneiderman and other Democratic state attorneys general.

The probe may also signal the opening of a new front of climate-related regulation and enforcement at the SEC, a direction with far-reaching consequences for the oil and gas industry. The SEC has separately begun as a policy matter to re-examine its disclosure rules, including whether to require the mandatory disclosure of potential climate risks by public companies.

I have to say, it's a pretty impressive move by regulators to lump investigations into accounting and climate change together. If the SEC were just looking into costs related to climate change, Exxon supporters would be screaming bloody murder. But when you're asking qustions about why a company hasn't suffered any impairment while its peers have been getting crushed, you can't really be too upset about it. Their concerns seem pretty legitimate! And the CEO explanation of, "We don't do write-downs," and, "We hold people accountable," doesn't really explain anything! So the SEC wants to look at the details…and figured as long as they were doing that, they'd take a look at the climate change stuff too. It'll save them a trip.

Elsewhere in PwC getting roped into things: Wells Fargo CEO John Stumpf admitted that the bank hired the firm in August 2015 "to help determine whether customers were hurt" after the Office of the Comptroller of the Currency found "shortcomings" in WF's sales methods.

Accountants behaving badly

As we've discussed, organizations that help the elderly, the terminally ill, the poor etc. etc. seem particularly vulnerable to accountants who like embezzling money. And it makes sense, since accountants know that these businesses are strapped for cash to begin with, they also know that there will be cracks in their controls. In any case, here's another case of an accountant stealing money from foster homes in Los Angeles:

Gary Batchelor, 64, was the chief financial officer at one of the organizations, Moore’s Cottage, where he and a co-defendant stole more than $100,000 between June 2011 and October 2013, prosecutors said.

The co-defendant in that case, Steven Smith, was Moore’s Cottage’s executive director, according to the District Attorney’s office.

Smith and Batchelor were charged in that case in 2015.

In April, a grand jury indicted them both in a separate case for allegedly embezzling almost $200,000 from another foster care organization, the You Are the Difference Foundation.

You were the difference, Gary Batchelor! Scumbag.

Has Donald Trump released his tax returns?

Nope! The New York Times editorial board shared its theories as to why he hasn't released them, although their theories aren't different from anyone else's. Trump's other favorite paper, the Washington Post, wonders why no one from the IRS has leaked the returns yet and the answer to that question is pretty simple:

For one thing, it’s a felony to disclose confidential tax information. Federal employees could lose their job, pension, freedom and reputation.

The IRS says its 84,000 employees must attend annual trainings on taxpayer confidentiality. To identify snoopers, IRS computers track the electronic movements of all employees and contractors. Even an employee who legitimately opens the tax return of a neighbor of a high-profile taxpayer like Trump could be flagged, former IRS officials say.

Plus, although most people would be preoccupied with DJT's returns, the IRS doesn't really need the bad press.

Elsewhere in Trump tax fun: Trump used $258,000 from his charity to settle legal problems

Previously, on Going Concern…

Bryce Sanders examined people's motives for breaking the law. In Open Items, an internal auditor needs some career advice.

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.