Accounting News Roundup: Big 4 ‘Insufficiently Independent’; Non-Big 4 Barely Restrain Themselves; Washington’s Cigarette Tax Evasion Problem | 02.22.13

UK watchdog takes aim at UK accounting deals [Reuters]
Britain's listed companies could be forced to switch accountants to boost competition and end the cozy relationships that have dismayed shareholders, a UK watchdog warned on Friday. Competition in the UK audit market is restricted by factors that make it hard for companies to switch accountants, the Competition Commission said in preliminary findings from a probe it began in 2011. There is also a tendency for auditors to focus on satisfying management rather than shareholder needs, it said.

Big four accountants 'insufficiently independent and sceptical' of City [Guardian]
Companies are overpaying for lower-quality audits from the "big four" accountancy firms because of a lack of competition, according to the Competition Commission. The review into how Ernst & Young, Deloitte, KPMG and PwC, audit 90% of UK-listed blue-chip businesses said they were "insufficiently independent from executive management and insufficiently sceptical in carrying out audits". While the commission found no evidence of collusion between the four, it said there was a restricted amount of competition in the market. As a result "companies are offered higher prices, lower quality and less innovation" than would be the case in a more competitive market.

Big Four’s rivals welcome audit shake-up [FT]
Mazars, one of the firms that wants to pick up big contracts from the leading quartet, called the regulator’s provisional findings “a clear indictment” of the market for FTSE 350 audits.
 
Xerox Exec to Join IASB as Newest U.S. Member [AT]
That would be chief accounting officer Gary Kabureck.
 
Bellingham tax preparer sentenced for 'outrageous' stalking of ex-girlfriend [BH]
A Bellingham accountant pleaded guilty Thursday, Feb. 21, to stalking his ex-girlfriend by gluing her home's doors shut, turning off the gas, cutting her phone and cable lines, and dumping paint remover all over her car. Charles Lysander Storrs IV, 54, harassed the woman for almost a year and a half before police had enough evidence to arrest him.
 
Holy Smokes! Washington Loses $376 Million to Cigarette Tax Evasion in 2012 [TF]

The Washington Department of Revenue released a report last month estimating that over 35 percent of total state cigarette sales illegally evaded cigarette taxes. That amounts to $376.4 million in lost revenue. To put that in perspective, that’s enough to buy nearly 42 million packs of cigarettes in Washington State. By comparing in-state per capita cigarette sales with per capita consumption, the Department concluded that there were 147.9 million packs of untaxed cigarettes consumed during the 2012 fiscal year. Just over 46 million of those packs were legally exempted from taxation, leaving 101.4 million illegally untaxed packs sold in 2012.

Revealed: al-Qaeda's 22 tips for dodging drones [Telegraph]
News you hopefully don't have to use.

 

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