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Accounting News Roundup: Big Bankruptcy; SEC Has Probes in the Pike; Barry Minkow Going Back to Jail | 04.29.14

Big Texas Utility Files for Bankruptcy [DealBook]
The largest private equity deal in history, Energy Future Holdings, has gone kaput: "After months of on-again, off-again talks between the company, its owners and a dizzying hierarchy of creditors, the company went into Chapter 11 protection with a plan intended to stave off months of potentially rancorous fighting in court over pieces of the power company."

Bank of America’s Bad Accounting [DealBook]
Floyd Norris explains: "[Bank of America] says that it properly raised its reported capital levels to offset the reported loss caused by unrealized changes in the valuation of the securities it had issued. But it also raised the capital levels to offset losses that had been realized, something it should not have done. The realized changes came when securities issued by the bank were paid at maturity or repurchased at an earlier date. That mistake improperly increased its reported capital. Bank of America did not explain how that the error came to happen or how it was repeated year after year. Nor did it explain why the error was discovered when the first-quarter financial statements for this year were being prepared."

U.S. SEC has accounting probes in the works, White says [Reuters]
Gird your loins, Mary Jo White is being coy. She told the House Financial Services Committee: "A number of new investigations and inquiries are under way, including matters focused on both traditional and emerging financial fraud issues." 

Con man gets prison for San Diego church fraud [AP]
That man is Barry Minkow: "Minkow stole $1.7 million and obtained $1.9 million in loans that are unlikely to be repaid, prosecutors said. Patricia Kuebitz said she lent Minkow nearly $300,000, drawing on her inheritance and a home equity line, and is now deeply in debt and fearful of losing her home as she raises a 15-year-old granddaughter."

Two SEC commissioners call for stay of conflict minerals rule [JofA]
Daniel Gallagher and Michael Piwowar don't think this aspect of Dodd-Frank is ready for prime time: "Commissioners Daniel Gallagher and Michael Piwowar said marching ahead with a rule that might be invalidated would be a waste of the commission’s time and resources and of vast sums of investors’ money. The conflict minerals rule requires issuers to make an effort to determine if the gold, tantalum, tin, and tungsten used in their products originated in mines run by warlords in the Democratic Republic of the Congo (DRC) or its neighboring countries and to disclose their findings."

Anoka woman files taxes from ‘Kingdom of Heaven’ [MST]
Tami M. May didn't file tax returns from 1998 through 2005, made "obstructive and fraudulent filings with the IRS including filing frivolous ‘zero income tax returns.' " and also claimed that she and her husband are not citizens of the U.S., rather "permanent residents of the 'Kingdom of Heaven.' "

The Power of Dignity in the Workplace [HBR
A little bit goes a long ways: "According to scholar Andrew Sayer, dignity is a fundamentally social phenomenon that arises through interaction, and therefore it depends on a mix of both independence and interdependence. It involves recognition and trust, as well as autonomy and self-mastery. In dignified work relations, people carefully avoid taking advantage of the inherent vulnerability of the employment relationship and power differentials in organizations."

Harper Lee agrees to ebook version of To Kill a Mockingbird [Guardian]
Coming to a pageless device near you on July 8th. 

Posted in ANR