January 16, 2019

Accounting News Roundup: Whistleblowers; Big 4 Impunity; A Big Accounts Receivable Error | 02.22.18

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Supreme Court Curbs Protections for Whistleblowers [WSJ]
If you or someone you know is thinking about blowing the whistle on some shady behavior, forget about reporting it internally; take your tip to the Securities and Exchange Commission if you want anti-retaliation protection under Dodd-Frank. Naturally, this came out of a case of accounting shenanigans:

The case stems from a lawsuit filed by a would-be whistleblower, Paul Somers, who says he was fired from Digital Realty Trust Inc. in 2014 after complaining internally about accounting irregularities, among other matters. Mr. Somers argued he was protected by Dodd-Frank even though he didn’t report the alleged problems to the SEC.

Why is no one exposing our failing firms in advance? [The Guardian]
Long-time Big 4 gadfly Prem Sikka writes about a summary of the most recent auditor-involved scandals in the U.K., lamenting that “in the absence of meaningful sanctions the accountants operate with impunity.”

$92 million accounting error delivers blow to Edward-Elmhurst Health’s bottom line [CT]
The EY audit hero that found this doozy gets a gold star:

The west suburban hospital system discovered the error after its auditor, Ernst and Young, recommended it do an evaluation of its accounts receivable, which reflects money the hospital estimates it is owed by insurers and patients.

The analysis found accounting errors over multiple years had added up to an overestimation of $92 million as of the end of its last fiscal year June 30. Nearly half — $42 million — occurred before Edward and Elmhurst hospitals merged in 2013. The analysis was validated by independent auditing firm KPMG.

“Health care reimbursement is incredibly complicated,” the Edward-Elmurst CEO Mary Lou Mastro said.

Partner’s son admits to embezzling $827,000 from Pittsburgh law firm [PPG]
Okay, this isn’t officially an Accountant Behaving Badly, but it’s a person doing accountant-esque things and behaving quite badly:

Assistant U.S. Attorney Lee Karl said [Anthony] Calaiaro, son of partner Donald Calaiaro, handled invoices, checks and payroll, but he didn’t have signatory authority over the business account.

So he forged the name of a partner and made some 500 checks payable to himself between June 2014 and April 2016.

He then falsified the descriptions for the checks in the check register to conceal his thefts, making it look like the checks had been used to pay vendors.

Near the end of the scheme, Mr. Calaiaro also prepared six checks totaling $28,000 made payable to the law firm and drawn on the firm’s Interest on Lawyers Trust Account at Allegheny Valley Bank.

And then also remembering those bad things quite badly: “After Mr. Karl read a description of his crimes, the judge asked Mr. Calaiaro if he agreed. He and his lawyer, Linda Cohn, said he’d been on drugs at the time so couldn’t recall all that happened.”

Previously, on Going Concern…

Jason Bramwell solicited advice from controllers about moving from public accounting to industry.

From the archives: Today in IRS Resistance: Ohio Man Bulldozes His Own House

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