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September 22, 2023

Accounting News Roundup: Boycotting TurboTax and Tribune’s Troubles | 03.30.16

Boycotting TurboTax

I don’t recall what my first real job was. It was either a paper route or McDonald’s or a dishwasher or something else glamorous, but needless to say, I started working early on in life.

That also means that I got a pretty early start on having experience with tax returns. A W-2 would show up, my parents would take me to the public library to get the forms, we’d fill them out together and drop them in the mail. Several weeks later a refund check would show up and it was amazing.

These days, tax returns aren’t nearly as fun. They’re so unfun in fact, that I pay a CPA to prepare them. I’m more organized compared than most people and I was a CPA who prepared tax returns for a time, so I’m an easy client for her.

But I’m not most people. Most people have very simple returns. Most people don’t have the need for a CPA. Most people are not organized, however. And most people didn’t used to be CPAs like me, so to most people tax returns seem frighteningly complicated.

This fear of taxes causes many, many people to use TurboTax, H&R Block and other paid services to prepare their returns. Vox’s Dylan Matthews would like everyone to stop doing that:

Don't give Intuit money. Don't give H&R Block money. To do so is to perpetuate the status quo in which you have to file your own taxes in the first place. The best way to escape this trap is for millions of taxpayers to start doing their own taxes in hopes of weakening Intuit and H&R Block and depriving them of money they could use to lobby against auto-filing. This requires privileging your own long-term interests ahead of your short-term ones; it's mildly annoying to do your taxes by hand for now, but in the long run, if the plan works, you won't have to do your own taxes at all.

The “plan” is to boycott TurboTax and I'm with him in spirit. But it’s a great idea for February, not two weeks before the April filing deadline when many people have already plunked down money on TurboTax or something else.

But more generally, boycotts are bad ideas because they don’t work. Just like all those emails you got asking you to boycott Exxon filling stations on a specific day when gas prices are high, a blog post suggesting to suck it up and do your taxes "by hand" (not really, there's FreeFile Fillable Forms) is not going stop people from buying TurboTax.

No, people are going to have to beat Intuit and H&R Block at their own game. That means lobbying! One Stanford professor spent $30k of his own money to hire a lobbyist to push "return-free filing." I'm not suggesting that we all dip into our 401ks to fight BIG TAX PREP but maybe we can recruit the AICPA; they seem to be in a feisty mood right now. Anyway, it's an idea that needs fleshed out. In the meantime, don't use TurboTax. Tell your friends not to use TurboTax. You're accountants, they'll listen to you.

Non-GAAP worries

We've noticed quite a bit of worrying about non-GAAP measures this month, but now we're seeing the worrying shift to another group: the people who cause everyone to worry about non-GAAP measures!

As business models continue to change due to fast-evolving technology, finance chiefs are introducing new ways to measure their companies’s financial performance.

Adopting new business metrics without sufficient planning or, worse, introducing inappropriate or misleading ones, runs the risk of alarming investors or upsetting regulators, experts said.

In other words, CFOs should worry that their non-GAAP measures could cause a bunch of worrying. To avoid being the source of all this worry is to let other people cause the worrying, of course. "CFOs typically don’t want to be on the leading edge of introducing new financial metrics to the analysts," says a Protiviti guy.

Elsewhere in non-GAAP worrying: It’s Time Again for Audit Committees to Mind the Non-GAAP.

Tribune's troubles

Newspapers are on their way out. It's sad but true. Earlier this week Tribune Publishing fired PwC as their auditor and replaced their CFO and it sounds like the housecleaning may have been due to some material weaknesses:

It's very unusual for a company to report material weaknesses in its financial reporting system two years in a row, accounting professionals said. The deficiencies are a problem in their own right, but the lapses also reverberate across the business because they affect how outsiders view the company, they said.

“This goes to the heart of the operations of the business, in addition to the financial part,” said Harry Cendrowski, an accountant who leads Cendrowski Corporate Advisors, which has offices in Chicago and Bloomfield Hills, Michigan. “It has ramifications.”

Especially for Merrick Media who just took a 16.5% stake in the company:

The new investor wouldn't be happy about the company reporting back-to-back material weakness issues, and the auditor wouldn't be either, said Joseph Weber, an MIT Sloan School of Management accounting professor in Cambridge, Massachusetts. PricewatershouseCoopers [sic] probably wasn't sorry to leave a situation like that, he added. (It was replaced by Ernst & Young.)

“I don't think auditors like to be associated with firms that have material weaknesses because it increases the possibility that you're going to have a restatement” of the company's financial reports, Weber said.

Previously, on Going Concern…

Leona May wrote about a time when a recruiter told her she had a lousy personality. And over at Open Items, someone wants to know about good FDD firms.

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