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Accounting News Roundup: Big 4 Audits and Disclosure Quality; Substance, Schmubstance; Spot the Liar | 01.18.13

Posted on by Caleb Newquist

Using Big Four improves disclosure quality [Accountancy Age] 
Companies that have a Big Four auditor are likely to provide better quality disclosures in financial statements prepared under IFRS, independent research has found. Research from Cass Business School also found that high-quality financial reporting practices are more likely to be observed by companies operating in countries with stronger regulatory regimes. According to the study, there is "considerable variation" across European countries in compliance with some impairment disclosure requirements, suggesting uneven application of IFRS.

The Death and Transfiguration of "Substance Over Form" in U.S. GAAP [Accounting Onion]
Tom Selling: "IFRS adoption in any form would be an unmitigated disaster, with the ridiculous notion of 'substance over form' playing a leading role. It's a concept that should have no place in U.S. GAAP, and convergence is to blame for bringing it back."

Reality not politics dictates cash hoarding [FT]
“Concern over mounting corporate cash seems mistaken,” […] “While businesses have increased the share of assets they hold as cash … they have simultaneously decreased their share of current assets held in non income-earning forms.”

Accounting firm BKD is looking to tap into growth opportunities [SABJ]
Since its merger with locally based The Hanke Group PC in 2008, BKD LLP has worked to expand its service offerings to the San Antonio business community with a renewed focus on financial services. And in recent years, the firm is finding new opportunities in the oil and gas sector as businesses grow and expand around the Eagle Ford Shale in South Texas.

I am an experienced tax accountant. AMA. Or don't, and pay Uncle Sam. [Reddit]
For the auditors out there.

The Lance Armstrong Lie Cloud [ZH]
For the burgeoning fraud detectors out there.

TIGTA: Prisoner Tax Fraud Claims Continue to Skyrocket [TaxProf]
There were over 91,000 fraudulent tax returns filed by prisoners in 2010.

Pros And Cons Of A Career In Porn [HP]
You can't say you haven't thought about it. We've basically covered it before.

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Estate Tax Planning with the Exuberant Accountant

The Exuberant Accountant isn’t the spamming type so when he sent out an email to, presumably, all of his blog’s email subscribers as a warning about new estate tax rules in 2010, it was clear this wasn’t a casual tax issue. Scott Heintzelman was kind enough to give me a few minutes to break down what this means for estates and why we should care.

Disclaimer: I took an estate tax class no less than two months ago and have since forgotten everything I learned so I needed a refresher anyway. As always, if you need advice on actually planning your estate, don’t listen to me and get yourself a CPA and/or tax lawyer. “We are accountants, ultimately we don’t draft agreements,” says Scott and he’s absolutely right. Get a trained mine-sniffer on that particular cluck mission.


Scott pointed to a recent post from his firm’s McKonomics blog called “No Estate Tax is a Good Thing, Right?” and it goes without saying he doesn’t believe this “no estate tax thing is good” by any means.

He gave the example of getting hit by a bus (awww, don’t run over the Exuberant Accountant!): If he walks out of his office tomorrow and dies, certain language in his will might leave a trust with $0 for poor Mrs Exuberant Accountant. What about the little Exuberant Accountant Jrs?! The humanity! Don’t worry, we’d start a charity drive.

Anyway, from McKonly & Asbury:

[M]any estate planners wrote wills with such language that the bypass trust would be funded with an amount equal to “the current lifetime exemption amount.” Since we currently have no estate tax, and no lifetime exemption amount, if a spouse dies in 2010, we could potentially have an unfunded bypass trust. This is especially alarming since we can all assume the estate tax will come back and we may have a taxable estate once the second [spouse passes] away.

Thanks for the heads up Scott, here’s to hoping you don’t get smashed by a bus this year. Look on the bright side, the estate tax goes up to 50% next year!

Earlier: Five Questions with The Exuberant Accountant

Blind Item: Which Big 4 CEO Sent This Poorly Timed Email About Working in the Wee Hours of the Morning?

In light of recent events, the following email was forwarded to us with our tipster admitting that intentions were good while the timing was not.

I recently met with a [BIG executive] who formerly served as a Former Big Four partner and [some hotshot internal group (I think)]. Most of the discussion was focused on how we might help [BIG executive’s company] with their global HR transformation. Quite unexpectedly, he began our meeting with a story about a senior manager on our team, [Sally Worksherassoff].

Just a day earlier, he had asked [Sally Worksherassoff] if she could find any information explaining the relevance of Dodd-Frank legislation to Human Resource leaders. When he woke up the next morning, he noticed that [Sally Worksherassoff] had emailed a whitepaper outlining exactly what he needed…at 2:00 am. The timing was critical, as he needed to deliver a presentation to [BIG executive’s company] leaders later in the day. After I left [BIG executive]’s offices, he sent an unprompted note to our project team recounting this story and remarking that “seemingly small things like this can add significant value to [BIG executive’s company].” The subject header of his note: How to “wow” a client.

My takeaway: small things, big difference. It can be easy to get lulled into reserving our extra energy and special effort for those situations, requests, and issues that seem like “big deals”. But as our client pointed out, there are no small things when it comes to delivering an exceptional client experience.

— [Big 4 CEO]