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November 29, 2022

Accounting News Roundup: Audit Committee Disclosure; Tax Blood Baths; Crocs’ CFO | 09.09.15

Big Companies Boost Voluntary Audit Committee Disclosures [CFOJ]
A study from EY found that companies are disclosing more about how audit committees oversee auditors. How much more? A lot more!

At the 100 largest U.S. companies, 61% of firms now disclose that their audit committee was involved in the selection of their lead audit partner, according to a study by Ernst & Young’s Center for Board Matters. That is up from 44% in 2014, and 18% in 2013. No firms disclosed this information as recently as 2012.

Investors are increasingly aggressive about asking for disclosures. This past year, the United Brotherhood of Carpenters sent letters to 85 companies asking for better disclosures about the audit committee’s work, citing voluntary disclosures by companies such as Pfizer, PepsiCo Inc., and Medtronic.

Damn unions, amirite? Always being all union-y, doing those union-y things. They oughta just make 'em illegal. Although, another finding from the study was that 1 in 5 companies now disclose that the audit committee is "responsible for the auditor’s fee negotiations, up from none in 2012." The number of companies disclosing auditor tenure also rose quite a bit, from 25% in 2012 to 59% in 2014.

Given the amount of work audit committees do, it seems logical that companies would disclose more about their activities. Also, the SEC has been looking into this so it's not unlikely some people saw that coming and are trying to get ahead of the game a bit.

Bankrate paying $15M to settle SEC charges on false results [AP
A little revenue inflation here, a little expense omission there; that got the SEC on the scent of three Bankrate execs including former vice president, Hyunjin Lerner, who settled the charges without admitting (but not denying!) wrongdoing. His colleagues, however, aren't giving up that easy:

The SEC is continuing the case against the two others, who are contesting the charges: Edward DiMaria, Bankrate's former chief financial officer, and Matthew Gamsey, its ex-accounting director. DiMaria sold more than $2 million in Bankrate stock to profit from the artificially inflated stock price, the agency alleged.

An attorney for DiMaria, Barry Berke, said the allegations were "unfair" and DiMaria expects to be vindicated. "At all times, Edward DiMaria worked diligently and in good faith to make sure that Bankrate's financial reporting accurately reflected the company's performance," Berke said in a statement.

Gamsey's attorney, Robert Knuts, said his client "did nothing wrong by raising concerns early in the financial reporting process about certain accounting entries that were immaterial to Bankrate's unaudited financial statements." Gamsey looks forward to establishing his innocence in court, Knuts said.

Yahoo’s Plan for Tax-Free Alibaba Spinoff Faces IRS Setback [WSJ]
The bad news is that the IRS isn't going to approve Yahoo's plan for the spinoff. The good news is the IRS hasn't "concluded the planned spinoff should be taxable," but if they do, Victor Fleischer  says it will be a "blood bath."

IRS To Refuse Checks Greater Than $100 Million Beginning In 2016 [Forbes]
“There’s no evidence that he acted in anything but good faith,” Elkan Ambramowitz said of his client, Steven Davis.

Crocs, Inc. CFO Jeff Lasher to Step Down [Crocs via CFOJ]
If you like rubber shoes and want to move to Niwot, Colorado (a fine town, btw), this is the job for you!

Russian 5yo boys dig way out of kindergarten, try to buy Jaguar sports car [ABC.NET.AU]
"After reaching freedom, the boys walked two kilometres to a car showroom selling luxury cars. A female driver noticed the unaccompanied children and asked them what they were doing. They told her they had come from their kindergarten to buy a Jaguar but did not have any money. She put them in her car and drove them to a police station."

Image: David/Wikimedia Commons

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