• Businesses Learn To Make Do With Fewer Workers – Sound familiar to anyone? [NPR]
• Judge raps $33m bank bonus fine – “A US judge has refused to approve a $33m (£19m) fine that Bank of America agreed to pay to settle charges that it misled investors about bonuses.” [BBC]
• SEC Asks to Self Fund to Allow for Better Enforcement – OH, that was the problem. [naked capitalsm]
• AIG Breakup Is Fee Bonanza – Bankers, lawyers, accountants. Everybody’s happy. Oh wait. Taxpayers. [WSJ]
• Madoff Victims Said to Start Getting Tax Refunds – Anger will only subside briefly. [DealBook]
• Businesses Learn To Make Do With Fewer Workers – Sound familiar to anyone? [NPR]
• Who Will Defend R. Allen Stanford? – There’s always…hmmm, anyone? [DealBook]
• Judge Orders Sale of Creation Science Theme Park to Pay Evangelist’s Tax Debts Agnostic judge probably. [TaxProf Blog]
• The alleged grifter who duped corporate giants – The fairer sex, taking it to the man. [Fortune]
• A Battle of Goliaths: Michael Bloomberg and His Gun Control Group Take on the NRA – At least this is a fair match. [Washington Post]
• Huron’s ex-CEO cashed out $8.3 million since last July But it wasn’t about the money. [Greg Burns/Chicago Tribune]
• IRS Commissioner Joins alliantgroup [Press Release]
• Bernard Madoff and the Solo Auditor Red Flag [Ross D. Fuerman]
Going Concern is now on Facebook! Join the group.
Nineteen individuals have proven their passion for the business of accounting (as well as an intrepid attitude towards liability) as G to the T admitted new partners and directors effective August 1.
The press release is your standard trite lexicon but we can’t help but notice GT taking the opportunity to slip in their favorite moniker, “Global 6 accounting organization” or a derivative of such. GT is bound and determined to get this to catch fire even though no one outside of the GT press team has probably uttered the phrase.
Grant Thornton LLP admits 19 new partners and principals to the firm [Press Release]
Sir David Tweedie, IASB Chairman, would sure appreciate it if the SEC would make up its damn mind about whether or not to commit to converging U.S. GAAP with IFRS. He spoke at the American Association of Accountants (AAA) annual meeting in New York yesterday and figured he might as well call out the SEC, who seems to be stonewalling him. He’s giving them until 2011 to figure it out.
Tweedie has been making like some kind of financial reporting missionary, going all around the world preaching the good word of IFRS. He’s said he’ll have 150 believers by 2011. But everywhere he goes, all anyone can talk about is whether the U.S. is converted yet.
More, after the jump
“That is a question I am asked all around the world. The convergence program is designed to reduce the cost of transition. FASB is riding two horses: US GAAP and trying to converge at the same time, but so are we.”…If you’re going to have global standards, we need the US, but it can’t go on indefinitely,” he said
We’re impressed that the knighted bean counter is putting his foot down here. We figured the SEC and the FASB could just continue doing whatever it is they do and Tweedie would just keeping asking them about it every month or so like they owed him fifty bucks.
Tweedie Warns of 2011 Deadline for IFRS Choice [Web CPA via Accountancy Age]
Things that could be perceived as bad:
• Your auditor is putting a going concern paragraph in your audit opinion.
• You agree with your auditors when they tell you that you have a material weakness in internal controls.
• It’s August 5th and you haven’t filed your 10-K..
Along with everything listed above, Venture Financial Group entered into an agreement with the Federal Reserve Bank of San Francisco that lists a bunch of stuff that Venture can’t do. Plus they get to report to Fed-SanFran every quarter how they’re doing such a good job at not doing anything they’re not supposed to.
More, after the jump
Apparently all this was more excitement than Moss Adams could stand because they’re kicking Venture to the curb after the 2008 agreements are finished. The firm broke the news to Venture on July 24th and the SEC got the filing just last week.
Accounting firms being the dumper and not the dumpee is usually a good sign of damaged goods. Best of luck to Venture Bank in its quest to find new auditors.
Firm bows out of Venture audit [The News Tribune via Jr. Deputy Accountant]
dissecting opining on sliming P. Dubs and E&Y, we’re moving on to KPMG in round three. We’ll dispense with the pleasantries and get right to the list:
• New Century Lawsuit – This is the ball buster for KPMG. A $1 billion lawsuit filed back in April that alleges “grossly negligent audits”. This tale also includes a
smoking gun quote from an email sent from New Century engagement partner to a specialist, “As far as I am concerned, we are done. The client thinks we are done. All we are going to do is piss everybody off.” We’re not sure if it’s possible to take that out of context.
Check out the rest of the Radio Station’s list, after the jump
• Madoff Exposure – Per D&O Diary, the Radio Station is named as a defendant in at least ten lawsuits as a result of auditing the Madoff feeder funds.
• Overtime Lawsuits – Listed as a defendant in five lawuits.
• Layoffs, Pay Freezes, etc. – Allegedly, the word that pay was being frozen was slowly leaked from the top on down. Layoffs have been pretty steady for the last twelve months including rounds in November and March in the audit and advisory practices. In addition, the ubiquitous trend of performance rating cuts is in full effect, and we just learned that by the this time last year, audit interns had heard yay or nay on receiving a full time offer. That probably makes for some
nervous intoxicated co-eds.
• Miscellaneous – Phil Mickelson, the Radio Station’s walking billboard, was a bridesmaid at the U.S. Open for a
third fourth fifth time.
Done-zo. Anything else you want to see tacked on? Drop us the dirt at firstname.lastname@example.org and we’ll get it in for the final tab.
Being accountants, we don’t have too may rock stars among us. Oh sure, maybe Tim Flynn is the cock of the walk at the Radio Station or Barry Salzberg can’t walk around Big D’s office without associates crawling all over each other to touch his clothes but these men pale in comparison to the immortal we are about to present to you.
If you saw this man on the street, his swagger would make your knees week, his impeccable attire would cause you to stare uncontrollably and the sound of his voice might overcome you with so much nervous excitement that you might projectile vomit all over him.
Find out who this man-god is, after the jump
We present you with this:
Now we realize that the mere thought of Tim Gearty and Bob Herz on a cruise at the same time is probably more than most of you can handle but we had to share with you that the oracle of Becker Review was on Twitter bestowing encouragement and wisdom. All of you out there working to dominate the CPA exam can now rest easy that Tim will always be available in the Twitterverse.
Editor’s note: Adrienne Gonzalez is founder and managing editor of Jr Deputy Accountant as well as regular contributor to leading financial/investment sites like Seeking Alpha and GoldmanSachs666. By day, she teaches unlicensed accountants to pass the CPA exam, though what she does in her copious amounts of freetime in the evening is really none of your business. Follow her adve and CPA-wrangling on Twitter @adrigonzo but please don’t show up unannounced at her San Francisco office as she’s got a mean streak. Her favorite FASB is 166.
There’s nothing we appreciate more than a really juicy tale of crappy auction rate securities, fire sales ignored by regulators, and bankruptcy when the scam runs out, especially when the perps happen to be audited by a Big 4 firm you may have heard of (there are only 4, just throw a dart).
Excuse our bad grammar and run-on sentences, we just don’t know where to start with this.
More, after the jump
Once upon a time not that long ago when a tarp was just something you brought camping, LandAmerica was at the top of the 1031 exchange game. That entire story is a tad too long for today’s 140 character attention span so let’s fast-forward to the part where there are even entire forums dedicated to discussing why regulators missed LandAmerica. In short: LandAmerica exchangers are pissed off.
To get a hint at just how pissed off, take a peek at what the forum has to say:
Then LandAm files Bankruptcy proceedings on their 1031 subsidiary, saying: “…you 1031 clients of ours are ‘…going under the wheels of the Bankruptcy bus” because “we” made bad decisions in $290 million ARSs. Wow! a $300 million “wash.” A “Back-Door” merger without the “toxic” ARS funds. LandAm1031 clients get hosed!
Burn! Those are some wild accusations, is it fair to spit such venom at LandAmerica?
Well… um… yeah, actually. And
LandAmerica has due diligence to blame Fidelity has due diligence to thank.
On November 24th, 2008 LandAmerica went into free-fall after Fidelity announced that it would be pulling out of the tentative deal (subject to final due diligence). Given the BBB mark of the beast by Fitch shortly thereafter, LandAmerica slumped off to bankruptcy court. Meanwhile, those who found themselves at the short end of LandAm’s 1031 exchange stick started getting letters from the IRS while their money was off in SunTrust accounts getting killed by illiquid auction rate securities without their knowledge. You’d think more people would be discussing something that involves millions of misappropriated investor dollars but who are we to judge?
As with most (alleged) Ponzi schemes, the “scheme” escapes detection until the money runs out. And when Fidelity backed out of the LandAmerica deal, LandAmerica had what can only be called a Madoff Moment.
Making this saga even better is, that for some completely bizarre reason that escapes us, the Richmond Fed has decided to hire LandAmerica’s former legal counsel Michelle Gluck to serve on their team as Chief Legal Officer (perhaps they are taking a cue from the Fed Board of Governors who hired an ex-Enron PR girl awhile back?). We truly
love hate to wildly speculate here but this goes against logic, which we are generally used to seeing from Richmond Fed President Jeffrey Lacker and his bank. “With her broad range of leadership experience and extensive legal expertise, I know she’ll make great contributions to the Bank and to the Federal Reserve System,” he said of his new hire.
So what exactly is Richmond trying to do here? With credentials like that, I’m only slightly concerned now.
We’ll let you know if we ever figure that out. The SEC couldn’t be bothered to comment about it and reminded me why I don’t like picking up the phone.
We did however speak with one angry LandAmerica creditor who has a lot of questions and no answers and we’d be happy to update you with his comments as the investigation unravels. Oh wait, who said there was an investigation? Could someone kindly forward this to the SEC? Some of us have a day job.
Arlen Specter is many things. Senator. Cancer survivor. Some might say, turncoat. And since he is a newly minted Democrat, Specter is expected to prove his political stripes.
Well, Specter has decided that the best way to earn those stripes is to embrace the recent investor outrage and introduce legislation that will allow investors to sue accountants, lawyers, and investment banks, that provide, what Specter calls “substantial assistance” in a fraud.
More, after the jump
According to Bloomberg:
Shareholders are barred from suing parties that have only an indirect role in a fraud after Supreme Court decisions that limited liability to those directly and publicly involved in the scheme.The Specter measure would upend rulings in Stoneridge Investment Partners LLC v. Scientific-Atlanta Inc. of 2008 and Central Bank of Denver v. First Interstate Bank of Denver. Prior to the rulings, investor lawsuits against fraud accomplices were common, Langevoort said. The 1994 Central Bank decision was a “major gift” to individuals and corporations that aided in a fraud
The Refco scandal is right at the heart of this debate as attorneys, auditors, and investment bankers were all misled by Philip Bennet, Refco’s then-CEO. Suits against PwC, Grant Thornton, KPMG, and E&Y were dismissed back in April along with suits against several investment banks. Refco’s outside counsel Joseph Collins of Mayer Brown is currently involved in a lawsuit that is being reviewed by the SEC.
We’re all for making accountants responsible when they screw the pooch but if clients just flat out lie and go way the hell out of their way cover those lies up, there’s very little that can be done.
And if there’s one thing that keeps Big
5 4 partners up at night it’s the threat of litigation. The premise that this legislation would increase that litigious exposure is, at the very least, disconcerting to partners.
Specter Law Would Let Investors Sue Fraud Accomplices [Bloomberg]
• Donald Trump Faces Bondholder Battle in Bid to Reclaim Casinos – Our advice: Don’t mess with this
hair ego man. [Bloomberg]
• ADP Says U.S. Companies Decreased Payrolls by 371,000 – The trend of lesser bad news continues. [Bloomberg]
• Banks Get Picky In Doling Out Credit Cards – Postal workers rejoice. [WSJ]
• Chinese survey finds prostitutes more trusted than officials – More bang for your buck. [The Raw Story via Naked Capitalism]
• Kim Pardons Journalists – Arkansas moxie does it again. We never doubted it for a second. [WSJ]
• SEC accuses GE of accounting fraud – Cue a smug but probably still unsatisfied Bill O’Reilly. [FT Alphaville]
• PayPal Users Hit by Global Service Outage – How will anyone pay for the Lehman schwag? [WSJ]
• SEC set to target flash trading – “The US Securities and Exchange Commission is preparing to clamp down on lightning-fast “flash” trades made on electronic trading systems amid growing concerns that the practice puts some investors at a disadvantage.” And disadvantages are not the American way. [FT.com]
As you may know, the mere thought of Congress legislating accounting rules makes us nauseous to the point of passing out. Barney Frank, in an attempt to alleviate this common malady among accountants, has been quoted by Web CPA saying that “We will never legislate accounting while I’m chairman [of the Financial Services Committee]”.
According to the piece, Barn says that when he, and the rest of the committee, whipped Bob Herz, FASB Chairman, into submission over changes in mark-to-market rules, this was not legislating, this was “exerting pressure”.
Depending on who you ask (ahem, Hank Paulson), exerting pressure could easily be confused with “threatening” and threatening is clearly how legislation gets done in this country, whether it’s got a signature on it or not. So call it what you like, Barney-boy, we’re on to your doublespeak .
The temptation to discuss the Big 4 Horsemen of the Apocalypse here is obvious, as many of you toil for those firms.
In order to give the non-public number crunchers out there a chance to gnash some teeth, we are inviting those of you that work on the private side of the bean counting universe to vent your frustrations here with your public counterparts.
As we mentioned earlier, accelerated filers have the Q2 filing deadline on Monday so we know you’ve been up to your ass in auditors for some time now and we imagine your irritation levels are somewhere between googolplex and critical mass.
We’re looking for stupid auditor questions, awkward sexual advances by the engagement team’s intern, whatever you got. This is your chance, non-public accountants. Make haste before you’re beaten to the chance.
Nicolas Cage is keeping his reputation as a tax scofflaw intact, as he currently owes the IRS $6.2 million due to a lien the Service slapped on his house in New Orleans. Last September, Cage settled with the Service for the diabolical sum of $666,000 after he improperly deducted $3.3 million in personal expenses, including must-haves like limo service and a Gulfstream.
Our advice to Cage would be to seriously consider going full frontal in his next film, Bad Lieutenant, Port of New Orleans. If not out of pure artistic principal and respect for the original version, do it for the extra scratch, man. A johnson shot has got to be worth, what, a couple mil?
Nicolas Cage Hit with $6.2 Million Tax Lien [Web CPA]
For those of you working on accelerated filers, you’re probably counting down the
days hours until Monday’s deadline for the second quarter.
So, if you’ve already filed, make all the other workhorses out there jealous by telling us where you’re going to happy hour the rest of the week.
If you’re working down to the wire, let us know what color your sleeping bag is or where you’ll be ordering take out. Or maybe how many days you’ve been wearing the same shirt. Has anyone put in 40 hours this week yet? You get the idea. All right, now get back to it. Regulators are waiting…
Apparently Deloitte was feeling a little left out of the populist outrage because after the news that Big D UK reported shrinking revenues yesterday, today we learn out that John Connolly, Big D CEO across the pond, earned £5.22 million this past year.
Not too shabby even though that’s a little less than his earnings last year of £5.69 million, according to the London Evening Standard.
Big John should probably send some biscuits over to the Royal Bank of Scotland for the payday as RBS paid Deloitte nearly £59 million this past year, up from the £31 million in the year prior. RBS has received billions of bailout funds from the UK government, so some crazy taxpayer wrath headed in the direction of Big D would not be outside the realm of possibility.
Deloitte boss rakes in £5.2m after the bailout of RBS [London Evening Standard]
Round two of our Firm Watch this week covers everybody’s favorite resident of Times Square, Ernst & Young. We’ll get started on E&Y’s trubs with the Schein lawsuit where the firm was recently found to be marginally negligent and were ordered to pay a smidge over $10 mil as a result. NBD really, as E&Y probably spends that much money screwing up the spelling of their name on cheesy coffee cups.
The more serious stuff on E&Y, after the jump
Here’s some major stuff that probably keeps some E&Y partners awake at night:
• Lehman Brothers – E&Y’s role in the collapse of Lehman Brothers has got little attention in the press, however, suits have already been filed by San Mateo County in California, the City of Long Beach, California and the Southern District of Texas. It wouldn’t be unreasonable to speculate that more suits are likely to be filed.
• Madoff Exposure – E&Y also has significant Madoff exposure, as the auditor of several feeder funds. D&O Diary has them listed as defendants in at least ten different lawsuits.
• Layoffs – There have lots of reports of layoffs at E&Y in the last month or so, many of which occurred in the tax practices in the Northeast, and many of those getting the axe were supposedly on visas. Real classy. This was a follow-up to layoffs that also went down in February. As if that’s not enough, there were also rumors of layoffs occurring monthly since September ’08 in the Detroit office. Plus, with lots comments about stealth layoffs at all levels, it sounds like it has been a bloodbath at E&Y.
So that seems to be the major stuff, from our view, for E&Y. Again, we want to know what we’re missing. We’re looking for tips and dirt on any of the things we discussed above and everything we didn’t mention. Email us at email@example.com and we’ll get all your additional gripes on here.
Huron Consulting, who cleaned house late on Friday and is restating three years of financial statements, is likely going to be named in a class-action lawsuit, according to Reuters.
Huron, who need we remind you, is not a CPA firm and does not perform attestation services, what with all those pesky independence rules and whatnot, has seen its stock price drop from just over $44 last week to hovering around $15.
More, after the jump
Huron was founded by two dozen Andersen partners, according to the report, including the resigning CEO, Gary Holdren. So, natch, these guys were probably viewed as having not so sterling reputations, and now, well, this is a little awkward.
more than likely pretty much a certainty that this particular accounting mishap will bring more heat on auditors, in this case, P. Dubya, as management seems to be able to manipulate their reporting, regardless of what the auditors try to do.
We reached out to PwC on this story, who would not comment on client matters. We thinks this might become a PwC matter before long…If you’ve got any information on this story shoot it our way at firstname.lastname@example.org.
In Huron scandal, shadows of Arthur Andersen [Reuters]
Editor’s Note: Teri Buhl is a Wall Street investigative reporter who has written for the New York Post, Trader Monthly and HousingWire.com. Her big scoops include breaking news on all things wrong at IndyMac, calling out Bob Steel for lying to investors about losses on CNBC, and shining a light on Wells Fargo for manipulating earnings with paper accounting gains. She resides in lower Fairfield County, CT and actually earned an accounting degree from U er case of the Feds proping up zombie banks, sources have reported that an SEC memo has stated that the FDIC will seize Guaranty Bank (GFG: 0.123, -5.38%) and it will not be sold as previously rumored.
This continues the trend of bank seizures occurring with virtually no warning. According to one prominent hedge fund manager:
“The problem is that the regulators know that if they call these things anything worse than “well capitalized”…it is a kiss of death. In many ways it is the same issue as rating agencies (curse of the AAA) that know that if they downgrade certain types of companies, they are putting them out of business. As a result, many banks are “well capitalized” until the day they are seized. It is absurd.”
More, after the jump
Austin, Texas based Guaranty Bank just updated its bank reports to show a $1.8 billion loss for the 1st quarter, of which $1.6 bil was due to “Other-Than-Temporary Impairment Charges on Debt and Equity Securities”. Um, not good.
What’s worse is that, according to our OTS sourcing, this will be a full shutdown. This means that after insured deposits are returned the bank will be unwound and put out to pasture. No cash rich private equity groups will sweep in to offset losses and clean up the regulator’s mess this time.
The updated bank regulatory reports show Guaranty’s assets are now $13.35 billion, with over 70% of those assets being real estate related. There are $2.1 billion in deposits listed as uninsured. Guaranty operates 164 branches and employs around 1,700 people.
Sourcing inside the regulator said,”Considering the OTS let the bank defer taking write-downs, I’m sure there will be skeletons that will embarrass the OTS again.”
The seizure will hit the FDIC’s budget to the tune of at least $5.3 bil according to sources within the OTS. Another top bank analyst has predicted the hit to be closer to $8 billion.
This, on top of what’s going on with Colonial Bank failing, should wipe out what’s left of the FDIC’s budget. As a result, they are going to have to borrow from the Treasury and then add that cost to our nation’s banks, which we all know just gets passed on to the taxpayer in the form of higher banking fees.
Paul Miller, analyst for FBR Capital Markets, told Going Concern, he believes that banks will be assessed a fee of 5 bps of total assets this fall in order to fund the FDIC’s empty coffers. This new fee assessment will raise $5 billion for the FDIC’s bank seizure budget.
We’ll continue to update this story as we learn more.
• UBS CEO Expects Swiss Government to Sell Stake by Year-End – Does this mean that the Swiss are better at capitalism than the Americans? [WSJ]
• Geithner Vents at Regulators as Overhaul Stumbles – Sounds like someone needs a hug. Can anyone recommend a good shrink for T. Geith? [WSJ]
• Biggest Banks Come Up Short on List of Mortgage Modifications BofA. Citi. Meh. [Bloomberg]
• Bill Clinton Lands in North Korea, May Ease Tension – “Former President Bill Clinton arrived in North Korea on a surprise visit that may help defuse tension over the communist regime’s nuclear program and secure the release of two U.S. journalists sentenced in June to 12 years.” Arkansas moxie to the rescue. [Bloomberg]
• Sizzling summer for white shirts – So sayeth Charlie Tyrwhitt [BBC]
• Goldman Princes Told: Spend Like Paupers – Apparently, LB is concerned that pubic hangings may regain popularity. [New York Post]
Editor’s note: Adrienne Gonzalez is founder and managing editor of Jr Deputy Accountant as well as regular contributor to leading financial/investment sites like Seeking Alpha and GoldmanSachs666. By day, she teaches unlicensed accountants to pass the CPA exam, though what she does in her copious amounts of freetime in the evening is really none of your busines ures in Fedbashing and CPA-wrangling on Twitter @adrigonzo but please don’t show up unannounced at her San Francisco office as she’s got a mean streak. Her favorite FASB is 166.
The Colonial BancGroup audit group is going to have some ‘splaining to do when all’s said and done. Proof that you really don’t want to mess around when it comes to $700 billion taxpayer injections.
SIGTARP top cop Neil Barofsky said early on “I hope we don’t find a single bank that’s cooked their books to try to get money but I don’t think that’s going to be the case” but evidently forgot to knock on a nearby piece of wood in the Treasury basement when he did as SIGTARP agents have raided two Florida offices in conjunction with possible TARP fraud.
The whole thing, after the jump
“I can confirm for you that our office, the Office of the Special Inspector General for the Troubled Asset Relief Program, has executed two search warrants today in the state of Florida,” said Kristine Belisle, communications director. “It’s our investigation. It’s our agents that have executed search warrants.”
Belisle said the warrants were sealed.
“I can’t provide any further information because of the nature of an on-going investigation,” Belisle said.
While Belisle is hesitant to get into the details, we’d be happy to catch you up for now.
The story, as we understand it, goes something like this: Colonial BancGroup, finding itself under increased pressure by both federal and state regulators including the FDIC, Federal Reserve, and the Alabama State Banking Department to bump up capital, thought it had a $300 million deal in the bag with Florida-based Taylor, Bean & Whitaker. We’d like to point out here that while the author enjoys stirring up trouble wherever possible, it’s never a good idea to do so when Federal regulators are involved, especially when they toss out demands like this:
WHEREAS, on July 15, 2009, the board of directors of BancGroup at a duly constituted meeting adopted a resolution authorizing and directing Simuel Sippial, Jr. to enter into this Order on behalf of BancGroup, and consenting to compliance with each and every provision of this Order by BancGroup and its institution-affiliated parties (blah blah blah)
(a) The consolidated organization’s and the Bank’s current and future capital requirements, including compliance with the Capital Adequacy Guidelines for Bank Holding Companies: Risk-Based Measure and Tier 1 Leverage Measure, Appendices A and D of Regulation Y of the Board of Governors (12 C.F.R. Part 225, App. A and D) and the applicable capital adequacy guidelines for the Bank issued by the Bank’s federal regulator;
Our emphasis/edit. Long story short, the Taylor, Bean & Whitaker deal was never a go and Colonial shares have been in full-on death watch ever since. But wait, there’s more!
As of about 11a EST this fine Monday morning, SIGTARP agents have crawled around both Colonial and TBW offices in search of… well, we don’t know exactly what they were looking for as company reps and regulators have been fairly tight-lipped since this story broke but we’re pretty sure they aren’t trying to track down Michael Jackson’s body.
Not so coincidentally, Colonial (CNB) reported a $606 million loss on Friday. The phrase “going concern doubt” was probably invented just for cases like this, although we have our own phrasing that we like to use including “totally screwed!” and “Just Big Enough to Fail”
This is the first large SIGTARP case that we are aware of and if Colonial is closed by regulators, it will be the largest bank failure of the year. No disclosures, though we will be excited to see what else Barofsky’s office is cooking up (no pun intended).
Feds raid Colonial Bank office in Florida [Reuters]
• Ruth Madoff Can’t Spend $100 Without Telling Trustee – Don’t forget to call before buying that Metrocard Ruthie. [Bloomberg]
• Investor Ross: ‘Washington Is The New Wall Street’ – Blasphemy. [NPR]
• BofA settles Merrill bonus case with SEC for $33 million – Classic case of not admitting or denying charges, just throwing money at the problem. End of story. [Reuters]
• A.I.G. Appoints a New Chief Executive – The self-loathing is contagious today. [DealBook]
• Antidepressant Use in U.S. Doubled Over Decade to 10% in 2005 – Depressing news. Where the hell is our Prozac? [Bloomberg]
In what appears to be serious case of self-loathing, former Citigroup CFO, Sallie Krawchek has just taken a position to run the global wealth and investment division at Bank of America.
It’s rumored that Krawchek left Citi because she and Vikram couldn’t play nice, so apparently she thinks that working for a rarely sober Ken Lewis will be a much more manageable.
Former Citi CFO takes Bank of America job [AP]
Big D’s UK revenue was down 2% to £1.93 bil for the latest fiscal year, marking the first time a Big 4 firm has reported declining revenues in six years.
Partners are still doing okay though, as they will receive £601 million. That’s an average of £883,000 per partner. Not too shabby, even though that’s down over 7%.
Leaders within the firm are expecting another rough year ahead for the economy but are still planning for “growth not contraction”. We’re not sure how that fuzzy math will work but whatevs.
Oh, and little D’s, don’t worry, you got a shout-out from John Connolly the UK CEO: “our success will continue to be the product of our exceptionally talented people being relentlessly committed to our clients, to market leading, innovative service and to an obsession with quality”.
Relentlessly committed. Obsession with quality. Sounds like they must have re-instituted the tradition of shipping the
criminals lesser performers down under.
Deloitte revenue drops in `extremely tough’ market [Accountancy Age]
Deloitte’s UK revenues shrink 2% [FT.com]
We’re not going to debate about healthcare here because after about one-tenth of a nanosecond we’d consider jumping out the window. What we would like to discuss is Barry Salzberg, CEO of Deloitte-period, giving imaginary advice to the President on how to proceed with his strategy in getting support behind his reform efforts.
Check out some real advice, after the jump
Bar lays out his advice for B to the O in classic accountant fashion, ” I would counsel more patience.” and “Measured haste, you might call it. My advice to the president would be to find that balance of urgency and patience.” Haste. Balance. VOMIT. Wouldn’t you like to see one of these stoic Big 4 CEO’s just give completely batsh!t crazy advice on something, JUST ONCE?
Like if Salz advised that Obama’s strategy should consist of hosting Lebowski Fest at the White House. Bowling, white russians, chicks in viking costumes. That’ll get the people behind your plan Bam.
Measured haste. Pfffft. Is it any wonder everyone thinks accountants are boring? Feel free to discuss your favorite Big 4 CEO and all their words of wisdom they’re constantly bestowing upon you.
Rumor out of Deloitte down-under, where, supposedly, some associates got canned because of organizing drug deals on Big D’s premises. Details are pretty scarce but this got us thinking:
More, after the jump
1. They were probably tax associates. They’re an unassuming bunch.
2. Is the pay so bad in Australia that Big D associates are resorting to illegal means of earning supplemental income? Wouldn’t turning tricks be easier?
3. How in God’s holy name did these f’n amateurs get busted? We’re they walking around soliciting potential customers like they were at a Phish concert?
We reached out to a Deloitte spokesperson who said they won’t comment on rumors. If you hear of other extracurricular activities going on at any of the firms, shoot us the scoop at email@example.com
The task of keeping Allen Stanford out of hell no longer falls on Dick DeGuerin. Clearly DeGuerin didn’t appreciate his client’s crusade to vindicate his name and reputation because he couldn’t even get the guy A/C.
Robert Luskin, a managing partner at Patton Boggs now gets the honor of leading Sir Al’s defense team. At the rate things are going, we’ll handicap the over/under on the number of attorney changes prior to 2010 at 4. Any takers?
Allen Stanford replaces criminal defence lawyer [Reuters]
The Radio Station is throwing caution to the wind in the UK, accepting a new arrangement with Rentokil Initial, that brings out the ghosts of accounting scandals past. Under the new agreement, the firm will serve as both the external auditors and take on internal audit work, working alongside the client’s internal audit staff.
Prior to the new agreement with KPMG, Rentokil’s external auditor was PwC and internal audit services were provided by Deloitte.
Last we checked, audit textbooks still state that external auditors are to be independent in fact and appearance but KPMG UK must have got their hands on an edition that was printed in auditor bizarro world.
Rentokil’s KPMG deal raises eyebrows [FT.com]
This week we’re putting together a series of posts on the six largest accounting firms to give you an idea what their latest image seems to be based on the latest news and rumors we’ve read or heard about them. At the end of the week we’ll wrap up with a completely unscientific and probably unfair ranking which you will be
allowed expected to take exception with.
We’ll start with P. Dubs because they seem to have had the uncanny ability to attract bad news lately:
Get the gory details, after the jump
• Satyam Fraud in India – $1b fraud, two auditors rotting in jail, Satyam throwing the Firm under the bus every chance it gets. This is the story that will definitely not go away.
• Discrimination Suit in London – GBP 40 million lawsuit, including alleged sexual harassment. P. Dubs is saying the lawsuit is “without merit” but at the very least there are a number of bigots working there.
• Rumors of PwC interns working 60 hour weeks in the New York office. Might as well give them an idea of what they’re in for, right?
• Chosen to take a
suicide mission contract in Somalia to monitor the incoming aid
• Wage and hour lawsuits in California – Listed as defendant in three cases
• Huron Consulting Restatement – P. Dubs isn’t mentioned in this debacle. YET.
• Madoff exposure – listed as a defendant in over a dozen lawsuits.
As for layoffs, we haven’t heard much lately. There was a rumor that the PwC Denver office had let some associates go in the past few weeks but we don’t have any more details than that. Layoffs that have occurred in the past year at PwC we’re rumored to be of the stealth variety and not related to the recession which nobody really believes.
So, that does it for P. Dubya for now. What are we missing? Whatever office you work out of, send us the latest scoop on layoffs, performance reviews, promotions, pay raises, bonuses, juicy gossip, scandalous stories, etc. to firstname.lastname@example.org and we’ll update the posts appropriately throughout the week.
Fridays are great for lots of reasons. They’re especially great for announcing bad news long after everyone has left work to get their drink on.
Huron Consulting announced late last Friday that the CEO, CFO, and Chief Accounting Officer were all quitting and that their financial results for 2006-2008 were being restated. The restatements result in total net income for that period being reduced by nearly 50% from $120 million to $63 million.
According to Reuters:
The restatements are being made because Huron’s board audit committee discovered that shareholders of four businesses that Huron acquired between 2005-2007 redistributed portions of their acquisition-related payments among themselves and to certain Huron employees.
More, after the jump
Soooo, regardless of what Huron is saying,
the CEO, CFO, and CAO sounds like someone might have been taking kickbacks, which we totally understand considering the economy and whatnot.
Huron was ranked 43rd on Fortune’s list of 100 fastest growing companies just last year. They help their clients “face complex matters that demand extraordinary combinations of financial, technical, and industry expertise.” Clearly they are not using any of this expertise on their own books but whatevs, nobody’s perfect.
What’s also strange is that Huron really goes out of their way to put the universe on notice that they are not a CPA firm and do not provide attestation services.
“Huron is a management consulting firm and not a CPA firm, and does not provide attest services, audits, or other engagements in accordance with the AICPA’s Statements on Auditing Standards.” This is stamped at the bottom of virtually every page on the website because THEY WANT TO MAKE THAT CLEAR.
Btw, Huron’s auditors are PwC, who really don’t need any additional bad publicity. If any of you Chicago P. Dubs peeps got any inside info on this story, shoot it our way to email@example.com. The stock is getting hammered today so we’ll continue to watch this to see how it plays out.
Huron CEO, CFO quit as restatements slash profits [Reuters]
• UBS not to pay fine in U.S. tax settlement: reports Chocolate solves everything. [Reuters]
• Jobless graduate sues her college Worth a shot, no? [BBC]
• Goldman Sachs’ reputation tarnished – Being referred to as a “vampire squid on the face of humanity” certainly couldn’t have helped. [FT.com]
• HSBC, Barclays profits hit by surge in bad debt [Reuters]
• Bank Spy Scandal Widens – “A detective at the center of the Deutsche Bank AG spying affair says the international banking giant’s effort to monitor its critics was more extensive than previously disclosed in that it involved a plan to target as many as 20 people, including a number of investors.” We’re thinking that a spy scandal is probably the last thing the banking industry needed. [WSJ]
• House Votes to Extend ‘Clunkers’ Program – We just printed more money. It’s fine. [WSJ]
• U.S. House Passes Bill Allowing Ban on Incentive Pay None of that printed money will be going to bankers. [Bloomberg]
• Court Orders Shorter Sentence For Ex-Qwest CEO – Might have been worth it had there been some adultery involved. [NPR]
• Nothing like a little shameless PR… – Deloitte providing accounting services, pro bono [Accounting Nation]
We know you’ve all been shaking with anticipation about the tchotchke results and frankly, we expected more of you. P. Dubs and Deloitte turned out squat and they’re the top two dogs, so that really dashed our hopes. Grant Thornton and BDO are zeros too. Are you all working too much? Regardless here are some results from our experiment:
Check out the schwag after the jump
Bandage container for those E&Y Dads who have kids that wear harnesses and helmets.
Radio Station magic 8-ball so the employees can get answers on whether they’ll have jobs in the next six months.
Rubik’s cubes are way more difficult than anything a 2nd year associate does.
Chairs that Radio Station partners with Napoleon-complexes sit.
We do things with so much quality we don’t bother using spellcheck.
Congress seems hella determined to keep accountants from writing accounting rules. HR 1349, aka the Federal Accounting Oversight Board Act, which was introduced in the Spring would create a board that would consist of the chairs of the Fed, SEC, FDIC, PCAOB, and the Secretary of the Treasury.
This merry band of bureaucrats would basically get to slap the FASB around whenever they want. According to Newt “My head isn’t that big” Gingrich, a supporter of the bill, because of the FASB’S independence, politicians can’t torpedo accounting rules that are “destructive”.
More, after the jump
This gem of legislation has 14 co-sponsors, including seven members from the House Financial Services Committee, along with Gingrich and Paul Volcker. It has been referred to the Financial Services Committee so it will getting some Barney Frank lovin’ soon enough.
Say what you will about the wonks in Norwalk but we’re of the strong opinion that handing over the accounting rule bazooka to this board could possibly be the worst legislation since…anything Maxine Waters has introduced.
Congressional Bill Supports Federal Takeover of Financial Reporting [FinCriAdvisor via Jr. Deputy Accountant]
Big 4 firms dodge a bullet in the UK as the highest court dismissed a negligence lawsuit against an accounting firm that failed to detect fraud that brought down a trading company. The ruling will significantly limit the firms’ liability in cases “where a determined criminal drives a company to financial ruin”.
Doesn’t make sense to us, since if you can’t make auditors accountable, who the hell is accountable? Hey, whatevs, we’re sure the Big 4 and other accounting firms won’t be celebrating long anyway, since a ruling like this won’t happen in the States, which is where the serious money gets handed over.
Auditors win ruling over Madoff-style frauds [FT.com]
UBS is going to name names, albeit not all of them, bringing us to ever so close to the bitter end of the whole IRS/UBS standoff.
All the gory details are expected to be released on August 10th, when hopefully everyone will kiss and make up officially.
The focus of the settlement will be around 7,000 or so accounts that are associated with offshore companies and trusts that are possibly tied to some financial shenanigans. Under the potential settlement, UBS won’t turn over any names until after September 23rd, which is the last day for offshore account holders to confess their sinful ways.
Deal Reached in UBS Tax Battle [WSJ]
Wealthy taxpayers now have some legit data that allows them to give the finger to all the rabid populist outrage that’s been going around. According to the most recent data provided by the IRS, the top 1% of taxpayers pay more taxes than the bottom 95%. The wealthiest 1% picks up 40.4% of the tax bill while the bottom 95% gets 39.4%.
This amounts to pretty inconvenient data for lots of
Democrats politicians who have been screaming for years that the wealthiest Americans need to pay more taxes.
Tax Burden of Top 1% Now Exceeds That of Bottom 95% [Tax Policy Blog via TaxProf Blog]
Ex-BDO partners that were involved with the firm’s tax shelters are continuing to drop like flies. This time, Mark Bloom, a hedge fund manager and former BDO partner that worked in the Tax Solutions group, pleaded guilty to several charges.
Bloom agreed to forfeit assets as part of his plea agreement including a boat and two Steinway pianos which Bloom performed versions of his favorite songs on:
Check out the song selection, after the jump
Following up on yesterday’s post on KPMG’s slashing of ratings, we checked with a source that gave us the lowdown on the rating system at Deloitte:
“From what I heard, all of the 4s and 5s have already been shown the door. D&T is known to suppress ratings, so I doubt that there will be a lot of 1s or even 2s this year.”
So we asked them to elaborate on “suppress ratings”:
Get the details, after the jump
Your Senior and your manager will give you a rating. Lets say that you are good and they give you a 2. They will need to justify this rating to the entire firm when they have the review meeting (I forget the exact name). Since every Senior thinks that their staff is the shit, a lot of the 2s tend to get pushed down to 3s because if everyone is performing at a higher level, then that is the average. Then, they have a limited number of 2s to fight over…2s get paid more and I think that they get some kind of performance bonus. So they have an incentive to limit the number of 2s given out every year.
Sound familiar to anyone? Discuss.
We’re smack in the middle of performance review time so email us any shady changes, adjustments, throwing people under the bus, etc. going down to firstname.lastname@example.org
BDO Seidman’s revenue for the fiscal year end June 30 dropped nearly 6% to $620 million and dammit, we’re disappointed. Sure tax revenue is up 6% but assurance revenue was down 9% and consulting revenue was down over 15%. What’s the reason for this? According to BDO’s CEO Jack Weisbaum it’s…wait for it…yes, the recession. What a news flash.
According to Web CPA, BDO’s revenue breakdown is 60/25/10 for audit/tax/consulting and the remaining 5% is a grab bag of stuff. Point is, BDO is a whore for audit and considering how the whole Banco Espirito thing turned out…
Speaking of Portuguese banks, BDO is still on the hook for $522 million. No word on how that fits into the firm’s plans to bounce back in fiscal year 2010.
BDO Seidman Revenue Falls Due to Recession [Web CPA]
• Buffett Posts $1 Billion Profit on China Hybrid Carmaker BYD – “The automaker has jumped fivefold in Hong Kong trading since the deal was announced on Sept. 27, helped by Buffett’s investment and rising demand for fuel-efficient vehicles.” – YAWN. [Bloomberg]
• ‘Cash For Clunkers’ Lacks Cash For Clunkers [NPR]
• U.S. Recession Worse Than Previously Estimated, Revisions Show – “The first 12 months of the U.S. recession saw the economy shrink more than twice as much as previously estimated, reflecting even bigger declines in consumer spending and housing, revised figures showed.” Government data estimates not even close? THE HORROR. [Bloomberg]
• Regulators Are Getting Tougher on Banks -“Federal regulators have escalated the number of wounded banks they have essentially put on probation, with some of the targeted banks complaining that the action is too harsh.” [WSJ]
This is our initial coverage of the overtime lawsuits against some of the major accounting firms doing business in California. For those of you not up to speed, these suits were filed by non-licensed associates who believe they were misclassified under California law as exempt professionals and are due overtime and other benefits due to non-exempt employees.
The suits are all in various stages but the key case that may determine how the other cases will proceed is Campbell v. PricewaterhouseCoopers.
Campbell is currently awaiting argument before the 9th Circuit Court of Appeals. The primary issue before the court has to do with whether or not, under the professional exemption, an associate is required to be licensed by the state of California in order to qualify for exempt status. Counsel for Campbell essentially argues that only licensed or certified accountants can qualify for exempt status in California while PwC argues that uncertified accountants who can qualify as “learned professionals” are exempt employees and thus not eligible for overtime pay.
The U.S. District Court of the Eastern District of California granted summary judgment on liability in favor of Plaintiff Campbell and ruled that attest associates must have a license in order to be exempt. The court further held that they may not qualify for exempt status under the “learned professional” section of the exemption. However because the trial court felt it was a close question, it certified the matter to the 9th Circuit Court of Appeals for interlocutory appeal.
According to Bill Kershaw, of Kershaw, Cutter, Ratinoff LLP, lead counsel for the plaintiffs, the ruling in this matter could have significant repercussions for other remaining wage and overtime lawsuits. Mr. Kershaw believes that if 9th Circuit does rule in the favor of the plaintiffs, then the likelihood of the case resolving itself prior to trial would substantially increase.
If the court of appeals rules that learned professionals can be defined as exempt, PwC (and likely the other defendant accounting firms) will center their argument back in the trial court on the appeals court’s ruling that unlicensed accountants are indeed “learned professionals.”
We contacted Dave Nestor, Head of Communications for PwC in the U.S. and he provided us with the Firm’s statement:
PwC believes that its attest associates are professionals who spend the majority of their time engaged in challenging work requiring the use of their intellectual abilities, judgment and discretion. Based on these and other factors, PwC’s attest associates are properly considered exempt under applicable law, and are therefore appropriately compensated.
We’ve provided a list below of all the cases against accounting firms currently in the courts in California for your information. Check the list for your firm and please remember that it is your right to participate in any of the class action lawsuits if you meet the criteria set forth in the case. Even if you are still employed by the firm being sued, they cannot retaliate against you.
Likewise, you can participate in the case on behalf of the defendants if you are approached and choose to do so. You also have the right to not participate at all if you so choose.
If you receive any correspondence from your firm regarding the overtime and wage lawsuits, please let us know using email@example.com. We’ll always keep you anonymous.
We’ll be covering this story as it progresses and continue to check back here for periodic updates.
• N.Y. Attorney General Details Bonuses At Bailed-Out Banks – Cue populist outrage [NPR]
• Subpoenas Issued to Goldman Sachs, JPMorgan, U.S. Senator Says – YES! Political theatre to ensue [Bloomberg]
• CNBC Viewership Down 28% – DB has some ideas on how to get a boost (maybe literally) [Zero Hedge]
• Exxon Reports Lowest Profit Since 2003 – “earnings of $3.95 billion” Meh. [WSJ]
• Glenfiddich 50-Year $16,000 Whisky Tempts Investors – Who loves scotch? [Bloomberg]
In some very comforting news, CFO’s in a recent poll said they’re unsure about how at transition to IFRS would affect their company.
More scary stats include 8% of those surveyed said that they are “very familiar” with how their company will be affected and 43% said they were not familiar at all. So what does all of this IFRS ignorance mean?
Check out the list after the jump
A) Lots of CFO’s don’t give a rat crap
2) Lots of CFO’s don’t really believe IFRS will come to the States
D) Lots of CFO’s need to work on their qualifications
The obtuseness may work out though. At the pace the conversion debate is going, by the time the conversion gets done we’ll all be dead.
Survey: CFOs unsure how international rules will affect U.S. business [DBJ]
This is the final call for your firm’s schwag. The following submission is especially nice because someone at Ernst & Young was cool with a less than perfect item.
See this high-quality piece, after the jump
Quality in Everything We Do – Damn straight.
Commenter Guest @ 2:39 brought to our attention that the Radio Station is cutting performance ratings circa now. This is a little more salt in the wound after pay freezes were
announced slowly leaked. If you’ve had your performance review recently and you got blindsided by a cut rating let us know. Email your tips to firstname.lastname@example.org
Did you ever dream of being inducted into any form of a hall of fame. Baseball? Rock ‘n Roll? Calculus? Did you think all hope was lost for this particular career goal when you decided to become a pointy-headed number cruncher?
Well, we’ve got great news for you. The Financial Executive International Hall of Fame was established four years ago (how did we miss that?) and just announced this year’s recipients. Now you too can fulfill those dreams of giving a teary-eyed speech, thanking all the little people you stepped over and around to become the finance and accounting oracle that you are.
This year’s ceremony will induct Donald Nicolaisen, former Chief Accountant at the SEC and Dennis Dammerman, former vice chairman at GE. So what if you’ve never heard of them? They’ve achieved financial professional immortality! You could be next. Oh, and Bob Pisani of CNBC is hosting. Joan Rivers won’t be far behind. Is there a reason that this ceremony isn’t being beamed into every home in America?
Nicolaisen, Dammerman Named to FEI Hall of Fame [FEI Financial Reporting Blog]
A study put out by Big D states that 60% of business executives believe that they have every right to know how you portray yourself and the organization you work for.
And while they’re checking that out, they’ll probably go ahead and sneak a peek at your photos from your friend’s bachelorette party where phallic hats and straws were passed out to anyone who would accept them.
Not surprisingly, the study also states that the majority of 18-34 year old employees want The Man to BTFO of their online social networking. While this demand for privacy may exist, apparently you’re still aware that the power of rumor mill known as the Internet can still take your employer down like
Nixon Dick Fuld Arthur Andersen.
While less than 20 percent of the overlords out there actually have Big Brother in place, almost half of employees say that they will still flagrantly update their status as “I hate Mondays” or “The weather is way too nice to be working!”
Deloitte’s 2009 Ethics & Workplace Survey Examines the Reputational Risk Implications of Social Networks [Deloitte Press Release]
The IRS is saying that wealthy taxpayers are rethinking their sinful offshore banking ways in expectation of a tax evasion rapture.
Last week the Service had 400 applicants for its temporary voluntary disclosure program which is four times the amount they had in all of last year suggesting that some taxpayers are seeing the light.
The IRS evangelism has come about mostly because of their pursuit of the 52,000 secret names held by UBS. While this battle for souls is still continuing, the IRS figured they’d make a run at converting other, non-UBS, sinners.
Seek thy truth, after the jump
Some taxpayers are remaining non-believers however, thanks to their agnostic attorneys:
Yet attorneys say that those who come forward now risk supplying the IRS with more financial information than the agency may have otherwise been able to collect. “These taxpayers reasonably fear that applying to the program could supply the agency with a roadmap it would not otherwise have,” said Barbara Kaplan of Greenberg Traurig in New York, who handles voluntary-disclosure cases. “They worry that they could wind up both rejected for clemency and helping the IRS case against them.”
Ultimately, all taxpayers will have to take their own path but if they find themselves cast into the darkness, they won’t be able to say that the truth wasn’t presented to them.
Tax Evaders Flock to IRS to Confess Their Sins [WSJ]
So you’re an attorney for Goldman Sachs, married, three kids, live in
WestchesterManhattan, life is pretty mundane. You’re probably getting a nice bonus this year, why not have a little fun?
So you “accidentally” stumble into a chat room. You start chatting innocently, with a fifteen year old girl, no big deal, just talking. You might make mention of a certain Jonas brother or whatever 15 year old girls are into. Then you start getting brave and might start asking about her VS Pink undies. Then you’re really feeling comfortable and start talking posish.
WHAM. Next thing you know, cops at the door, yelling, “you like VS Pink you pervert?!? You planning on doing a little wheelbarrow and switching it into a reverse cowgirl? Nice try SICKO!”
Then after six months in
Chino Riker’s you’re walking door to door telling everyone you’re a pederast how you really like VS Pink undies.
UPDATE 1:47 PM: After further review, looks like the perv is a Manhattan resident and travelled to Westchester to seal the deal. Our bad. Anyway, turns out the guy was really just looking out for his fellow GS employees.
DA: Goldman Sachs lawyer Todd Genger caught soliciting ’15-year-old’ [NYDN]
• Moore’s ‘Capitalism: a Love Story’ to Debut in Venice – We thought it might debut at 85 Broad but whatevs. [Bloomberg]
• In downturn, robots laid off – Statistics also show that robot suicides and chemical dependency is up. [Miami Herald]
• Madoff gives feeder fund managers’ names to lawyer – Something about spending 150 years in prison makes a man want to talk. [Reuters]
• Cablevision to spin off Madison Square assets: report – In other news, Penn Station will remain a toilet. [Reuters]
• Air Canada Gets Bailout From Ottawa – “Air Canada has secured a 1 billion Canadian dollar ($922 million) lifeline with help from the federal government, giving the carrier a crucial infusion of cash to help it survive the recession and avoid another trip through bankruptcy protection, The Globe and Mail reported.” It’s the North American way. [DealBook]
Sometimes when two married people decide to get down to some adulterous activity, bad things can happen. Divorce, confused kids, awkward dinner parties. Most people probably don’t count on getting involved with serious insider trading allegations.
Steamy details after the jump
Eventually the two settled into a comfortable day-to-day routine in their respective offices in New York and Philadelphia, staring at the same Yahoo Finance screen. Mr. Gansman led Ms. Murdoch in a guessing game about which deals he was working on, she said.
• Trustee Sues Ruth Madoff for More Than $44 Million – You knew it was coming Ruth. Forget living in Manhattan. [WSJ]
• Fed Says Most Districts Report Slower Pace Decline – TRANSLATION: Things suck less than previously [Bloomberg]
• No More Bank Deals for Wilbur Ross? – WTG SheBair [DealBook]
• Obama expects GM, Chrysler to repay loans – Don’t hold your breath BO [Reuters]
• FASB Chief to speak on fair value – SNOOZE [Accountancy Age]
• Lights Go Out in New Delhi as Billionaire Ambani Brothers Feud – Two feuding billionaires, living with their Mom. The house is probably large enough to house every Indian citizen but still…AWESOME. [Bloomberg]
Now that American consumers have maxed out their credit cards, they’re trying to pay for everything in cash or using their debit cards. Noble attempt but if they buy something when their account is zero, the dreaded overdrafts fees are bleeding them out. IT’S NOT FAIR!
It’s becoming apparent that banks will be vilified for anything that results in revenue. And who comes to the rescue when banks are wronging the American people? Congress, obv.
That’s right, thank God we’ve got lawmakers working for the people because right now the banks are “walking across the battlefield and shooting the wounded”, which, we have to admit, is a pretty awesome analogy.
Yes, banks are charging fees for too many things that shouldn’t be allowed. Consumers need to be able keep to spending long after their accounts are at zero. How hell else can this economy get rolling again if Americans aren’t spending?
Nevermind that 3,000 banks may collapse if legislation passes that would limit overdraft charges. And forget about setting up automatic transfers from savings, THERE ARE NO SAVINGS. Help us, Congress. PLEASE.
Overdraft Debit Fees Treat Customer to $300 Fast-Food Charge [Bloomberg]
Accounting is still a hot degree according to the latest report from the AICPA. For the 2007-2008 school year, 66,000 bachelor’s and master’s degrees were awarded, a 3.5% increase from the previous school year.
Enrollments were also up, to 213,000 students in undergraduate, graduate, and doctoral programs, a 4.7% increase.
One thought we have is that this trend can’t possibly continue forever. We talked to one campus recruiter for a Big 4 firm and they said that while the trend of graduates and enrollment will eventually slow down, the number of students at on-campus events is not getting smaller. “Lots of finance majors have seen the banking sector implode and rather than become biology majors, they jump into accounting because it’s an easy transition.”
More after the jump
While the need for accountants is obvious, we’re wondering if these students know what they’re getting themselves into. What would be interesting is to know how many of them end up leaving the industry after a few years and do something entirely different (like become a D-list blogger).
What continues to impress us, however, is how the Big 4 and the larger regional firms are able to make accounting so glamorous. The students are drooling at these recruiting events, mostly for beer, but they’re drooling nonetheless. The competition for the top talent is fierce and the firms pull out all the stops to get that talent. It also doesn’t hurt that most campus recruiting professionals are dead sexy but whoever heard of someone taking a job for shallow reasons?
Accounting Degrees Continue Historic Upward Trend, According to AICPA Report [AICPA Press Release]
2009 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits [AICPA.org]
The whole IRS/UBS tango has gotten to the point where we’ll take any kind of resolution.
Like if the IRS decided that it was too much trouble and said, “We don’t need no stinking names”, we’d be thrilled. Or if UBS decided to hand over a truckload of Toblerones in order to bury the hatchet we’d think, “that was our idea” .
But no, the standoff continues, as the parties confirmed Friday’s meeting today to discuss the progress they’ve made in reaching a settlement. Regardless if a settlement is announced on Friday or the stalemate continues and the case starts on Monday the sooner this thing is over, the better.
UBS, IRS to Meet on Friday [WSJ]
The Times Online put out its “Top 100 Graduate Employers” list today and P. Dubya tops this list for the fifth year in a row. We congratulate P. Dubs on this momentous achievement but can’t help but wonder about such a dominating performance by a Big 4 firm.
More details, after the jump
The first thing we notice on the list is that the TOP THREE (PwC, Deloitte, KPMG) are Big 4 firms. These four came in the exact same order on last year’s list. The red-headed step child of the Big 4 is apparently E&Y who comes in at #11.
Accenture came in at #4 and Goldman Sachs sneaks in at #10 but JP Morgan, Morgan Stanley, IBM, and Google all fall outside the top 20. Other notables include McKinsey & Company at #48 and Grant Thornton at #97 (that’s eight spots behind the Transport of London, btw).
So what we’re wondering is how the Big 4 can dominate this list while in States they seem to be all over the map (highest on Fortune’s list was E&Y at #51) . Are the firms in the UK allowing employees to crush three or four pints at lunch and thus making work infinitely more tolerable?
UK readers, let us know why you’ve seemingly got it so good across the pond. As for my fellow Americans, what do you think is going on over there that we’re all missing out on? We’ve never seen The Queen in her damned undies, so maybe that’s it? Anyone done any rotations and have first hand knowledge of the awesomeness that is the Big 4 life in the UK? We’re thinking there’s got to be some reasons…
The Times Top 100 Graduate Employers [List]
Top 100 graduate employers: No 1 – PricewaterhouseCoopers [Times Online]
Deloitte has gotten dumped by UAL, the parent company of United Airlines, for E&Y. The change will be effective after D-Period finishes the 2009 fiscal year-end audit engagement. This continues the trend of heartbreak for Deloitte, who was kicked to the curb by Heelys over fees.
UAL claims that it doesn’t have any disagreements with Deloitte which we don’t really believe. They have to disagree on something. White Sox vs. Cubs fans at the very least.
More after the jump
Also, changing your auditor isn’t like changing your underwear (well, it might be hard for some). We’ve got the feeling some top brass at UAL were sick of shacking up with Deloitte. However, the article also states that UAL cited the mandatory rotation of the lead partner, “firms often choose to seek bids for audit work in anticipation of that rotation.” Okay, going out to bid to tease the other firms is one thing but actually opting for a change is quite another.
We’re guessing there’s more to this story, so if you’ve got some inside dirt on this latest break up, let us know at email@example.com.
UAL hires E&Y to replace Deloitte as accountant [Reuters]
In another demonstration that the rich and famous either hate taxes or simply play dumb to their existence, Brazilian soccer star Romario has been convicted of tax evasion and faces three and a half years in prison. He’s appealing the conviction so it’s likely that he will end up coaching soccer to troubled youth for five years.
The allegations were that he skipped on paying $500,000 in taxes in 1996 and 1997. Romario’s attorney claims he is innocent because “it’s not his fault” which is a similar excuse that might be used by a third grader who tripped someone at recess.
According to USA Today, Romario also has trouble paying child support having been arrested for it twice, once in 2004 and just a few weeks ago. He was released in both instances after paying what he owed or proving that he had already paid.
Can somebody get this guy an accountant? He’s having a hell of a time with non-soccer responsibilities.
• Bernie Madoff gloats from prison: I can’t believe I got away with Ponzi scheme for so long – That explains the smirking. [NYDN]
• Microsoft and Yahoo Reach Deal on Search Partnership – Thank God. We thought we’d never see the end of this awkward flirting [New York Times]
• EU examines Latvia bank bail-out – They’re likely to discover some questionable collateral at the very least. [BBC]
• Bank of America May Trim Branches as Customers Use Web, Phones – Personal banking on the web. What a concept. Real reactionary, Charlotte. [Bloomberg]
• KKR Plans a Dollar General IPO – Cheap stuff + Bad Economy = Big Money [WSJ]
• Phibro mum after White House slams reported $100 million payday – “Phibro LLC, the energy trading arm of beleaguered bank Citigroup, was mum Tuesday after the White House criticized a reported $100 million pay plan for its top trader Andrew Hall as ‘out of whack.'” [Reuters]
• Sprint-Nextel to acquire Virgin Mobile USA – “Sprint Nextel, the third-largest US mobile network operator, unveiled a $420m deal on Tuesday to acquire Virgin Mobile USA, the wireless phone company in which Sir Richard Branson’s Virgin Group is the largest shareholder.” [FT.com]
• House Panel Approves New Rules on Executive Pay – “Marking an important victory for the White House, a congressional committee approved on Tuesday legislation closely resembling the Obama administration’s proposal that attempts to impose new restraints on executive pay.” [New York Times]
• Baldness Not a Requirement for Working at Goldman Sachs [Daily Intel]
• Backdating Returns to the Spotlight – “The IRS released new tax guidance this month related to so-called backdated stock options. But discounted options are still not considered ‘qualified performance based compensation.'” [CFO.com]
After everything the SEC has been through, you might expect some government bureaucracies to wither and die at the hands of some irate congressional committee (ahem, Financial Services).
Not the Commission. No, the SEC has HAD IT with everybody’s Monday morning quarterbacking and is going to start kicking ass and taking names.
And they’re going to start by aggressively interpreting the clawback provisions in Sarbanes Oxley. Sounds incredibly snoozerific, we realize, but in the past the Commission has only gone after the bonuses of the actual scofflaws.
The new SEC has decided that it’s going to try and clawback the bonuses and performance-based pay back from those who knew squat about the fraud and just cashed checks.
Last week, the regulator asked a court to order the return of $4m (€2.82m, £2.43m) paid to Maynard Jenkins, former chief executive of CSK Auto, whose profits were allegedly inflated by accounting fraud committed by others: Mr Jenkins was not involved.
We especially feel bad for the guy being made to be an example at the hands of the SEC. The House of Schape/Cox has been the joke of the establishment for months so the Commission figures that if it has to make a few people miserable while they crawl their way back to semi-respectability, it’s a small price to pay.
‘Clawback’ marks tougher SEC stance [FT.com]
Sweet justice has finally arrived for supporters of mark-to-market accounting. According to the Financial Crisis Advisory Group, MTM may have actually understated some of the losses suffered by banks and “did not contribute to the pro-cyclical nature of the economic system.”
The Group also stated that public flogging of accounting rule wonks for the purposes of shameless political grandstanding doesn’t really help matters, “We have become increasingly concerned about the excessive pressure placed on the two boards to make rapid, piecemeal, uncoordinated and prescribed changes to standards, outside of their normal due process procedures”.
Our money is on the pols BTFO for as long as banks want them to and as inconvenient changes are proposed, which will likely be soon, the public beatings will continue.
Politicians Accused of Meddling in Bank Rules [Floyd Norris]
Accounting is semi-officially exonerated from causing crisis [FT Alphaville]
In a move that probably just adds one more annoying hoop to jump through for auditors, audit engagements will now go through quality review with adoption of AS No. 7, Engagement Quality Review (EQR).
According to the press release, “The EQR standard provides a framework for the engagement quality reviewer to objectively evaluate the significant judgments made and related conclusions reached by the engagement team in forming an overall conclusion about the engagement.”
We’re hoping the engagement quality reviewers will be given free range to document their “overall conclusions” as they wish. Some that we would suggest: “You call yourselves auditors?“, “I’m recommending that the PCAOB inspect this engagement” or “What in God’s holy name are you blathering about?“. It would be a shame for the firms to institute a check-the-box method that would compromise artistic integrity.
In other PCAOB news, the Board is asking for comments on its Concept Release “to consider the effects of a potential requirement for the engagement partner to sign the audit report.” We speculated last week that signatures in blood or dog excrement might be appropriate in many cases but if you’ve got other ideas, you’ve got 45 days to give them better suggestions.
Press Release [PCAOBUS.org]
The SEC would like everyone to know that it was “actively investigating” Stan the Man “well before the multibillion-dollar fraud by Bernard Madoff was revealed” but was “hampered by a lack of cooperation” from the Gun Show.
The investigation started back in 2005 but the SEC decided it wasn’t really time to get serious with Stan until after the whole Madoff SNAFU broke. So it sounds like from 2005 to late 2008, the “actively investigating” consisted of the following:
SEC: Hi. Are you running a Ponzi scheme?
Stan: I’ll die and go to hell if it’s a Ponzi Scheme
SEC: Good enough for us. Thanks for your help.
Give the SEC a break people. They were really trying on this one.
Stanford Hampered SEC Probe [WSJ]
This is probably not how Henry Louis Gates wants to move on from his arrest that occurred last week.
A foundation created and run by Gates is amending its 2007 tax return after an investigation showed that some funds that were initially characterized as “research grants” were, in fact, compensation. This little whoopsie increased the administrative costs of the foundation to 40% of the spending, up from 1%, which some might say, is a lot.
All it probably adds up to is another headache for a man who is probably most annoyed that his last name is one letter away from being exactly the same as the suffix applied to every scandal that has ever occurred in this country since the early 1970s.
Foundation Run by Harvard’s Gates Is Revising Tax Return After Questions Raised [ProPublica via Inside Higher Ed and TaxProf Blog]
Congress isn’t so sure that Ticketmaster inviting Live Nation into its tentacles is a good idea. Lawmakers think that the deal would remove our only hope to defeat the Dark Side of the live entertainment industry.
Senator Herb Kohl, D-WI, who chairs the antitrust subcommittee, has said that the merged company “would enjoy a virtual stranglehold over the live entertainment industry.” Translation: Help us DOJ. You’re our only hope.
We get Congress’s desire to ask the DOJ to scrutinize the deal but if they really wanted to do something to help concert-goers, they need to have Ticketmaster explain how the “Convenience Charge” is actually convenient and why it is usually somewhere between 15 and 25% of the actual cost of the ticket. Oh, and why processing fees, handling fees, and venue fees are all ness. K, thanks. And may the force be with you.
Ticketmaster and Live Nation Merger Raises Concerns [DealBook]
The town-hall meeting format is getting out of control. It’s been in the political arena for some time now and it seems to fit in fine. But with Ben Bernanke is taking monetary policy directly to the people, apparently now anyone thinks they can just hit the road and talk about complex issues with the common folk.
So when IRS Commissioner Doug Shulman announced that the Service is diving into the populace to get their take on the Commission and give their ideas, comments, and suggestions.
What we’re picturing is a Ricky Bobby-type standing up and having a conversation with Doug Shulman that might go like this:
Ricky Bobby: Why do taxes suck?
Doug Shulman: Taxes are an important part of our system. They pay for things like roads, schools, fire fighters, and police officers. The Vice-President even said that paying taxes is Patriotic.
RB: You know what I think is patriotic?
DS: What, sir?
DS: Are there any other questions?
RB: Oh, wait, I’ve got another question. I heard about an IRS agent that threatened to kill some guys that came to his house. Uh, is that true?
DS: I did see that in the news.
RB: Do you know that guy?
RB: Okay, no, wait. No, okay, I’m done. Thank you. Thanks you, Jesus.
You got questions for the IRS? We’ll have our own little town-hall right here to get things warmed up for the main event on Thursday in DC.
IRS Asks Public for Ideas on Tax Preparer Standards [Web CPA]
Two Pennsylvania CPA firms, Parente Randolph and Beard Miller Co., announced yesterday that they are merging.
The combined firm, still without a name (we’re pulling for “Beard”) will have 170 partners, over 1,200 professionals, and 27 offices in Pennsylvania, New York, New Jersey, Maryland, Delaware, and Texas(?).
The combined firm will have a stranglehold on the coveted Quaker market in Pennsylvania and will be well positioned in the New York City market. It will be focusing its growth efforts to find similarly pious and plain clothed, plain speaking business people in upstate New York, New Jersey, and Maryland.
Pa. accounting firms Parente Randolph, Beard Miller to merge [Triangle Business Journal]
• House Members Have More Questions for Goldman – “In a two-page letter Monday, the House members, including Representatives Alan Grayson, (D-Fla.), Ron Paul (R-Texas), Maxine Waters (D-Calif.) and Walter B. Jones (R-NC), asked the Federal Reserve to explain why it granted a special exemption to Goldman which allowed it to take on more risk over the past few quarters.” Get on it Max. [DealBook]
• Swine flu boosts handwash sales – …And shrinks specializing in germaphobes [BBC]
• Sprint to Buy Virgin Mobile USA; I.B.M. to Buy SSPS [DealBook]
• Kerviel Lawyer Says SocGen Knew of Trading Positions – “Jerome Kerviel, the trader blamed by Societe Generale SA for a 4.9 billion-euro ($7 billion) loss last year, repeated arguments in a court filing that his superiors knew about his activities.” [Bloomberg]
• Traders Blamed for Oil Spike – “The Commodity Futures Trading Commission plans to issue a report next month suggesting speculators played a significant role in driving wild swings in oil prices — a reversal of an earlier CFTC position that augurs intensifying scrutiny on investors.” [WSJ]
• U.S. Rep. Frank sees finance reform by year-end – Weekend pool parties with friends will remain fluid until the end of summer [Reuters]
• Loans Shrink as Fear Lingers – “The total amount of loans held by 15 large U.S. banks shrank by 2.8% in the second quarter, and more than half of the loan volume in April and May came from refinancing mortgages and renewing credit to businesses, not new loans, an analysis by The Wall Street Journal shows.” [WSJ]
• N.F.L. Grants Vick an Opening – Unfortunately for Vick, he’ll remain completely unmarketable for endorsement purposes [NYT]
• U.S. Economy: New-Home Sales Up 11%, Most Since 2000 [Bloomberg]
• SEC to Limit ‘Naked’ Short-Selling – “The Securities and Exchange Commission issued new rules to govern short selling, promising investors new information about the volume and velocity of negative bets placed against companies but dropping a requirement that hedge funds disclose details of short positions to regulators.” [WSJ]
&bull U.S. Said to Focus on UBS Banker Visits to Clients [DealBook]
In case some of you missed our request last week, or in the event that some of you chose to ignore the request, we are asking for your tchotchke submissions. So keep sending us your pics! You know you have pride in the frivolous junk with your firm’s name on it.
The gimmickyness of this exercise is obvious but if we are forced to discuss the trend of pessimism among CFO’s, a couple things may happen: A) Someone may fall asleep while reading and 2) the vitriol may reach critical mass. Either way, here’s a taste of the submissions we received so far:
That’s a KPMG magic 8 ball for those of you scoring at home.
Question: KPMG 8 ball, will Going Concern readers ridicule this post?
Answer: It is certain
The SEC sent a team to India in order to make sure that everything was hunky-dory re: Satyam. The three-member team met with Ashwani Kumar, the Central Bureau of Investigation (CBI) Director, and the Securities and Exchange Board of India (SEBI). The SEC also met with the KPMG team that is responsible for restating Satyam’s balance sheet.
No details were given on any of the meetings but we imagine that the SEC/KPMG meeting went something like this:
SEC Bureaucrat: Hello KPMG India.
KPMG Paper Pusher: Hello SEC America.
SEC: How are things progressing?
KPMG: Oh this is a blast. Restating balance sheets is a dream job. We were just talking about how we wish we could work in the States so we could do stuff like this all the time.
SEC: What do you mean?
KPMG: Well, there seems to be much more fraud and other problems in the United States than here in India so the need for forensic accountants would be extremely high.
SEC: Are you insinuating that the Commission is unable to detect fraud?
KPMG: Well there have been some signficant fraud over there lately that you guys pretty much ignored or missed. Either way, it makes for a high demand for forensic accountants. Plus, we hear that the guy who tried warning you about the Madoff fraud has issues but still won an award.
SEC: This meeting is over. Keep us informed.
Satyam scam: SEC team meets CBI, SEBI, KPMG officials [The Hindu Business Line]
It’s bad enough that Allen Stanford can’t get out of jail in order to properly prepare his defense but now he’s dealing with what may be a preview of what happens if he’s found guilty of running a Ponzi scheme.
It’s bad enough that there isn’t any cricket coverage in prison but the walking gun show has complained about day to day annoyances like the lack of air conditioning in his prison cell, which he shares with 8 to 10 of his closest friends and also a power outage which likely prevented him from reading How to Win Friends and Influence People (The Prison Edition).
Sir Allen discovers there’s no air conditioning in jail [FT Alphaville]
The PCAOB has announced Daniel Goelzer will be acting Chairman of the Board effective August 1. Goelzer brings an impressive resume with him, not to mention a sheriff-like mustache that will undoubtedly let the accounting firms know that he is not to be trifled with.
Late on Friday we told you about the rager that the IFAC was throwing over the weekend in London and today we get the less than surprising news that they want the governments of the world to push for global accounting standards.
“According to IFAC, participants at the conference agreed that the public interest would best be served by a single set of high-quality, principles-based financial reporting and auditing standards for listed and public interest entities.”
The problem with this whole push for IFRS is that getting anyone to care about accounting rules is like trying to get men interested in the whole Jon & Kate Plus 8 drama. They’re completely clueless at first mention and when you attempt to get into the details interest is immediately lost.
Leading accountants tell governments quicken pace of global standards adoption [Accountancy Age]
Last week we asked for some perspective on the chicanery and lovable idiocy of your interns. Today we learn that about a Grant Thornton intern who “verifies that clients’ accounting records are accurate and sits in on important meetings.”
That’s right, interns are verifying accounting records and going to important meetings. Probably the type of meetings where they get to take notes on internal control procedures while the experienced associates can barely keep from strangling themselves with a network cable.
Yet, life remains unfair for the interns, “Interns who talked to RedEye said they are gaining experience to prepare them for the workforce, but increased intern responsibilities typically don’t come with increased pay or perks or even more respect.”
After going to those important meetings, interns still aren’t feeling respected people. No increased pay. No perks. How can this be? Haven’t they done enough? They tried to earn your respect by making the copies that you asked for and getting totally bombed at firm events. They didn’t mean to ask so many questions about the copier. They’re just new, so they want to make sure they don’t screw anything up.
What else can they do? Shine your shoes? Fill your car up with gas? Buy your lunch (they’re probably making more than associates on a per hour basis anyway)? The summer internship season is winding down so make sure you’re letting them know (and us) how they can go that extra mile to get that full-time offer.
Chicago interns move up corporate ladder [Redeye]
Super-star fraud detector Harry Markopolos was named Certified Fraud Examiner of the Year at the ACFE Fraud Conference and Exhibition in Las Vegas last week where he discussed his excellent card-counting method and the Madoff Ponzi scheme.
Harry wanted to everyone to know that just because he blew the whistle on Master de Ponz, that didn’t mean he was a hero. “Heros are brave”, he said, “I don’t think I was brave. I know I wasn’t.” He went on to describe his lack of bravery:
“When I started this case, my underwear were white, they quickly became brown and often times turned yellow”
Okay, after that sinks in, let’s discuss some things:
• We don’t want our fraud detection super-heros to tell us that they soil themselves. It ruins the sex appeal.
• Harry Markopolos wears tighty-whiteys. We were certain that he was a boxers man.
• Was no one helping this guy out? You couldn’t let the guy have a break so he can properly evacuate?
Seriously, the least Marko could have done is stuck his dirty undies, the whites, in a case so the ringer wouldn’t look empty.
Go to Clip 3, “The Math Never Worked Out for Us” on page linked below to see the video. Meanwhile, we’re busy looking for new fraud detection hero that can control themselves.
Madoff Whistleblower Named CFE of the Year [fraudconference.com via Accounting Nation]
So the H&R Block/McGladrey & Pullen soap opera break-up has gotten more annoying. At first, it simply looked like a firm falling out of love with its parent company because M&P didn’t want to be stuck with a loser their whole life.
Natch, H&R Block wasn’t going to just let M&P walk away from the best thing that ever happened to the firm. M&P was not going to have that conversation and said that they were still walking out.
The Block feels so strongly that M&P is making a mistake, that it was announced late last Friday, probably in order to not make a scene, that H&RB sued M&P to prevent the termination of their administrative service agreement. Essentially saying, “WE ARE GOING TO TALK ABOUT THIS!”
M&P is not impressed with this desperate attempt to be won back:
“We are disappointed that H&R Block has chosen to pursue litigation,” said McGladrey & Pullen managing partner Dave Scudder. “We are committed to respecting our legal obligations and are confident we are doing so. Thus we are confident this lawsuit has no merit. Under the terms of our shared services agreement, we have every right to terminate that arrangement. We have chosen to do so because it is the best business decision for McGladrey & Pullen LLP in order to serve our clients in the increasingly complex business and regulatory environment.”
M&P is over being held back by HR&B and wants to get out there on their own. Besides, all The Block does is sit around and prepare tax returns for people who can’t read the instructions on the tax forms. You’ve got no motivation, Block. Oh sure, you got into the online tax return prep business but now what? M&P just wants time to be alone, so please respect that.
Block Files Suit Against McGladrey & Pullen [WebCPA via CPA Trendlines]
• Bernanke defends bail-out package – “Ben Bernanke, the boss of the US central bank, has defended the US bail-out plan citing his fears of a second Great Depression, during a public talk.” [BBC]
• Citi public exchange offer gets 99 percent shares – “Citigroup Inc said on Sunday some 99 percent of its stock was tendered in an exchange offer for publicly held securities, in a key step toward giving the U.S. government a 34 percent equity stake in the bank.” [Reuters]
• Kuwait financier facing U.S. fraud suit found dead – “A brash Kuwaiti financier facing a fraud suit by U.S. authorities was found dead Sunday in an apparent suicide that sent shockwaves through the Gulf Arab financial sector.” [Reuters]
• Chinese state steel workers beat private firm boss to death -“Thousands of angry Chinese steel workers clashed with police and beat to death an executive of the firm trying to take over their company, a Hong Kong-based human rights organisation has said.” [The Guardian]
• Geithner urges end to ‘dumb regulation’ – “Tim Geithner, Treasury secretary, said there was “a lot of dumb regulation in our country” and urged lawmakers to act quickly in spite of resistance from the financial industry and other regulators to the administration’s plan.” [FT.com]
• California Senate Approves Budget Plan – “The California Senate early Friday approved a plan to close a $26 billion budget shortfall through steep spending cuts and a medley of one-time solutions and accounting moves.” Creative accounting, Cali? FTW! [WSJ]
• Buffett: I’m keeping my Goldman Sachs warrants – But thanks for asking. [Reuters]
• Madoff Trustee Battles Israeli Charity Over $4.7 Mln – “A charity for homeless and runaway Israeli children that lost money in Bernard Madoff’s fraud told a U.S. judge that the trustee liquidating the con man’s business wrongfully rejected its $4.72 million claim in the case.” [Bloomberg]
In a follow-up to the most annoying potential corporate partnership in recent memory, Yahoo’s directors actually met with one another yesterday, after just yapping on the phone about it, to decide if they like Microsoft. Microsoft has been putting the moves on the search engine company for over a year now and some directors still aren’t sure they’re ready to put out.
Some directors are still grossed out and think that Microsoft will do naughty things like, “paying Yahoo for selling ads next to its search results”. GROSS. Other directors also don’t think that regulators would like the two companies getting together because it wouldn’t look very good.
No doubt we’ll be hearing more about these two flirting which will continue to make us nauseous.
Yahoo Board to Meet on Microsoft Search Deal [WSJ]
In what might be the biggest rager of the weekend, the International Federation of Accountants (IFAC) are meeting today and tomorrow in London to get down to brass tacks on the whole global meltdown thing.
Also on the agenda for the IFAC: Coming up with a plan to get one set of global accounting standards, and also figure out how to convince the likes of Maxine Waters to BTFO of accounting rules and stick to cooking up dead-end legislation on banning of credit default swaps.
Let us know how it goes.
Accountants’ Group Calls for Single Set of International Rules [Bloomberg]
Because we know that many of you feel that way on a daily basis. But nope, sorry. Dealbreaker tells us about the prosecutors in the Stanford case piecing shredded documents back together. If your job sucks worse than that, tell us about it because…WHOA.
CFO.com has an article on “What to Do on the Way to CFO“. This encouraged us to come up with our own suggestions but we thought we’d expand our list to include you public accountants as well, so here’s a short list of our key suggestions on “What to Do on the Way to Making CFO/Partner”:
• Develop a personality disorder – Whether it’s OCD, schizophrenia, or histrionic personality disorder, few bean counters make it to the highest levels without a screw coming loose.
• Master the art of small talk – As a CFO or Partner you will likely have to engage with several “little people” in your organization that you are unacquainted with. Small talk is essential to avoid awkwardness in these interactions. Weather, weekend plans, sports are standard topics that will help you avoid the dreaded silence.
Maybe the most important thing is after the jump
&bull Get really passionate about accounting and finance Remember those Grant Thornton commercials that used to run on CNBC? That’s exactly the kind of passion that we’re talking about. If you find it difficult to talk to your spouse, friends, children, and especially co-workers about anything other than financing options for acquisition, key shortcuts in Excel, or how the general public doesn’t seem to appreciate the proposed changes to fair value accounting, then you probably don’t have what it takes to be a partner or CFO.
We realize that this is not an all-inclusive list and welcome your input on what other traits and skills are imperative to achieving the lofty and glamarous heights of a partner or CFO.
ABC/ESPN college football commentator and former Ohio St. QB, Kirk Herbstreit and his wife donated their house to to the local fire department back in 2004 and the Herbstreits took a $330,000 deduction on their tax return.
In an extremely convenient coincidence, the IRS, for the first time, challenged the practice of donating individuals’ homes for such purposes the same year.
The Herbstreits were audited and paid back taxes and interest of $134,606 but are now suing the IRS to get that money back.
Apparently this is a matter of debate amongst tax wonks out there, some saying the donation is kosh and some saying it isn’t. You Michigan fans obviously hope Herbie gets stuck paying the extra scratch but the real question is whether Lee Corso is getting to the age where he’s burning down houses just because he’s totally gone senile.
Herbstreit ‘fire’ puts focus on IRS dispute [Columbus Dispatch via TaxProf Blog]
In the spirit of Lehman Brothers’ desperation, we’re looking to find out which firm out there has the best chance of financing its next big settlement by virtue of hocking its tchotchkes on eBay.
Because no one can say with absolute certainty which big firm will be the next be rendered extinct (although there are some wagers on it) and thus, none of you working for any firm can be sure when all that schwag you’re accumulating in your cube farm will be worth anything, we thought we would get your submissions so that we can determine which firm has as shot at using auctions in cyberspace as opposed to closing up shop. At first glance, E&Y has nothing on eBay but books, so we’re guessing you guys have the most to prove here.
Check out another schwagtastic example after the jump
Some of you have probably checked out for the day already anyway, so you might as well start putting that camera phone to use and email your submissions to firstname.lastname@example.org. Big firms, small firms, we don’t care, we know there are some real finds out there. Just like this beauty:
The best submissions will be posted here and the respective firm’s ability to spend money on frivolous junk will be duly ridiculed.
The details are still being worked out but another idea being floated around is giving partners the option of signing some opinions in dog feces, when the opinion being signed is in fact, of equivalent value.
Press Release [PCAOB.org]
PwC has investigators all up in their grills again as another audit is going to be subject to an investigation. This time a sub-prime lender in the UK, Cattles.
Cattles is blaming the whole shitshow on a “breakdown in internal controls”, which has been the standard PR sound bite since before Enron.
The Accountancy and Actuarial Discipline Board (AADB), which regulates the profession, announced the inquiry on Thursday.The board, part of the Financial Reporting Council, said it would examine the conduct of PwC and its individual auditors concerning the preparation of financial statements of Cattles and Welcome Financial Services, its subsidiary, for the year ended December 31 2007 and for the six months ended June 30 2008.
According to one analyst referenced in FT Alphaville, Cattles was letting loans go 240 days delinquent before taking any impairment charges. Apparently PwC was okay with that practice.
And since the AADB is going to be looking at “individual auditor conduct”, what are they going to discover? Besides the partner and manager’s daily fat-cat lunches, obv. We invite your thoughts.
We’ve also got the feeling that this might be the type of engagement where you could include a high-def photo of the manager dry-humping the partner’s leg (wearing a leash and spiked collar, natch) as part of the audit workpapers and it would get signed off on anyway. But, like we said, it’s just a feeling.
UK watchdog opens probe into PwC audit of Cattles [Reuters]
Regulator probes PwC over Cattles audit [FT.com]
• Warren Buffett to Teach Kids About Finance in New Web Cartoon [Bloomberg]
• U.K. GDP Shrinks More Than Expected – “Hopes that the U.K. economy was on the road to recovery after a severe recession received a major blow Friday with official data showing output contracted far more than expected in the second quarter.” [WSJ]
• After Buffett Rebuff, CIT Eyes a Breakup – “Conglomerates Berkshire Hathaway Inc. and Leucadia National Corp. made a bid to buy parts of CIT Group Inc. but were rebuffed by CIT, according to people familiar with the matter, because the price was too low.” [WSJ]
• The Man Who Sank New Jersey [Forbes]
• Council fired Scott Janke after learning of marriage to porn star Anabela Mota aka Jazella Moore – Last we checked, this was still America and bagging a porn star is in the Declaration of Independence or something [NYDN]
• Dozens Arrested in New Jersey Corruption Probe – “Federal agents swept into New Jersey towns across several counties Thursday morning, charging 44 people, including three mayors and religious leaders, in a federal investigation into public corruption and money laundering.” [WSJ]
• Wall Street Journal Coverage Of Crisis Finally Gets Serious – Cankles. Page one. Yes. [DealBreaker]
• Microsoft revenue misses, shares tumble – In other news, Bill Gates is still rich. [Reuters]
A reader was kind enough to share with us a letter they sent to Becker after the software expired and was rendered utterly useless.
Here’s an excerpt:
“The Becker lectures sang to me like a siren’s song. Much like poor Odysseus, I screamed for more. Yet, unlike Odysseus, there was no one there to keep me safe. Tim Gearty became the man that I yearned to be. He is smart, funny, humorous, debonair, more dashing than James Bond and full of more knowledge than Ken Jennings. His style rivals that of GQ’s Man of the Month.”
Check out more love for Tim Gearty and Peter Olinto in the whole letter, after the jump
In 2004, Congress wanted to lay the smackdown on individuals and entities using tax shelters. In order to scare the beejesus out those thinking about the practice, Congress enacted penalties of $100,000 for individuals and $200,000 for entities per non-disclosure to the IRS.
Problem is, Congress, who often pulls out the jump to conclusions mat, didn’t give the IRS any discretion on enforcement so Mom & Pop (who often don’t have kids) shops were getting hammered with fines they couldn’t pay:
In one case cited by the Small Business Council of America, a husband and wife followed the advice of a consultant and set up a limited liability company and Roth individual retirement accounts. When the IRS challenged the way the transactions were done and found income tax deficiencies of $6,812, it was required to impose a penalty of $1.2 million.
The IRS figured that maybe, just maybe, this wasn’t really working the way it was intended and has suspended the collection of fines in order to make the penalties more proportional. Not to worry though, the IRS hasn’t decided whether or not apply the changes retroactively and are only suspending the fines until September 30. They wouldn’t want to tarnish their image as faceless cold-blooded bureaucrats.
IRS Halts Fine Linked To Tax Shelters [WSJ]
Okay, so the purpose of the Elijah Watt Sells post was not to make any of you feel like you’re lesser accountants. We just figured that a good portion of you were hung over today and the story of 10 individuals that got vomit-worthy scores on the CPA exam would get you past the nausea and running to the bathroom to lose that 3 am breakfast.
Now that you’re feeling better, we want to appeal to the rest of you. We want your CPA exam horror stories. Not because we want you to send you running back into the bathroom to sob in the stall. Not because some people we know passed all four sections in one sitting and don’t have any good stories. No, no. We want your stories because we here to listen to you. Besides, they’re probably funny now anyway. Aren’t they? Even if you’re still mortified or pissed off, this your opportunity to vent about it.
Sooooo, did you run out of gas on the way to the exam site? Did your computer crash with 10 minutes to go and you had to re-take the entire exam? We’re you caught cheating?!? Or watching porn? Impress us…
Okay number-crunchers, we realize you don’t have the most exciting jobs in the world and sometimes you need a little distraction from Excel. Totally natch. Checking out ESPN, Perez Hilton, Going Concern, Facebook is even encouraged in some circles.
Some of you might even be so bold to see what the latest uploads on YouPorn, XTube, et al. are. Fine. We get that. It’s just your biology running wild right? We totally understand. What we can’t understand is those of you that are blatantly watching two girls, one guy, and a Clydesdale reenact the Kama Sutra in your cubicle.
Of course, when somebody catches you drooling on your keyboard, you have to act completely dumbfounded about how such a graphic display of human and equine love could have ended up on your screen. Somehow your superiors don’t buy your stammered out explanation and you’re out on your ass. Time to find to new job that’s not so uptight anyway, right?
So when you’re sitting in the interview with the potential new boss and he/she asks you why you left your last job, how do you explain your penchant for bestiality in a way that gets you hired? The Journal seems to think honesty is the best policy. Just admit what you did and swear that you’ll never, never, never do it again. We’re not convinced this would go over well but whatevs.
Anyone been fired for “inappropriate” Internet use? Did you cover it up in your next interview with “management and I had differences”? Or did you do your damnedest to find a workplace with a less stringent web use policy? Discuss.
Getting Fired for Inappropriate Web Use [WSJ]
It starts to get interesting around the 54 second mark.
The AICPA announced the winners of the Elijah Watt Sells awards yesterday. For you mere mortals, this is an award for the 10 highest cumulative scorers on the CPA exam.
Glancing over the recipients we notice that two Big 4 firms (KPMG and Deloitte)
enslave employ five of the recipients. A couple of recipients work in industry and a few more work for smaller, local firms.
This leads to the obvious question of why the hell P. Dubya and E&Y were totally shut out? Grant Thornton and BDO were also blanked. Are the honchos at the Radio Station and Big D giving the worker bees more time to study? Are P. Dubs, E&Y, et al. cutting out the bonuses for passing and thus destroying anyone’s motivation for passing? Are those of you looking to pass already choosing between eating and sleeping (and maybe sex) so studying just isn’t happening? Sells was a Big D founder so maybe the whole thing is rigged? Thoughts anyone?
Oh and congratulate the recipients while you’re at it (without vomiting on them).
Apparently the wonks in Norwalk are girding up their loins to take on the banks again over fair value, described by FASB member Marc Siegel as a “religious war” (our pick would be The Crusades).
Under new preliminary proposals issued by the FASB last week, all financial assets, including loans would be marked to market every quarter and classifications like held to maturity, held for investment, and held for sale would go the way of the Dodo.
Jonathan Weil conceptulizes:
Think how the saga at CIT Group Inc. might have unfolded if loans already were being marked at market values. The commercial lender, which is struggling to stay out of bankruptcy, said in a footnote to its last annual report that its loans as of Dec. 31 were worth $8.3 billion less than its balance sheet showed. The difference was greater than CIT’s reported shareholder equity. That tells you the company probably was insolvent months ago, only its book value didn’t show it.
Got it? Well, banks are obviously not cool with this, as one lobbyist is quoted, “I guess the nicest thing I can say is it’s difficult to find the good in this.” I guess it’s on then bitches, as it sounds like the banks would much rather bleed out their orifices until the bitter, bitter end as opposed to report anything that is remotely transparent.
Accountants Gain Courage to Stand Up to Bankers: Jonathan Weil [Bloomberg]
Earlier in the week we told you about McGladrey & Pullen falling out of love with H&R Block. Well, H&RB is not going to just let M&P walk away. The Company cares too much about this relationship:
“We believe the path proposed by certain of M&P’s leaders is fraught with significant business and financial risks and is not in the best interest of M&P partners, employees or clients,” Block CEO Russ Smyth in a release Wednesday. “Whether the full M&P partnership is willing to assume these immense risks remains to be seen.”
Nevermind the fact that H&R Block is the used car salesman of tax preparers. Nevermind that H&RB is probably responsible for the failed appointments of several Obama cabinet members. This about love lost (and probably sex lost).
H&R Block questions McGladrey & Pullen decision [Kansas City Business Journal]
• Obama Approval 49% Among U.S. Investors, 87% Overseas – “President Barack Obama has rock- star appeal among the investing class — except in his own country.” [Bloomberg]
• Investment Bank Helps Boost Credit Suisse’s Net Income – Reigning in on the company wide Shake Shack outings is probably helpful too. [WSJ]
• One-time gain boosts Ford results – Don’t call it a comeback [BBC]
• Manure means money to handlers gathered in Iowa – Sometimes there’s money in shit [AP via Miami Herald]
• Bardem Turns Down Role in ‘Wall Street’ Sequel – “The actor Javier Bardem has turned down a role in the sequel to Oliver Stone’s seminal 1980s treatise on greed, “Wall Street.” Mr. Bardem, who won an Oscar in 2008 for his performance in “No Country for Old Men,” was to have played the world’s villain du jour: a hedge fund manager.” [DealBook]