China, PCAOB
Over the weekend, the Wall Street Journal reported that two of China's most visible companies — Alibaba and Baidu — "and their outside auditors are preparing for audit inspections" by the PCAOB. Funny thing, it sounds like they've been preparing for awhile:
One person at a Big Four accounting firm said that the firm has been preparing for years for the possibility that the PCAOB will inspect its working papers for U.S.-listed Chinese companies. The firm has been conducting mock reviews of PCAOB audits for the past few years, going over questions and grading the employees on how well they answered, the person said.
Wait, do PCAOB inspectors stick people under glaring lamps during questioning? Are there lie detector tests? TICKLE TORTURE? I know PCAOB inspections aren't fun but this makes it sounds like the Chinese affiliates are preparing with resistance to interrogation training.
Regardless of what the audit firms are doing, Paul Gillis is skeptical that this will amount to much:
The move toward inspections is a “good first step” in thawing relations between U.S. and Chinese regulators, said Paul Gillis, an accounting professor at Peking University’s Guanghua School of Management. “But that doesn’t mean that the inspections will be meaningful.”
Auditing the auditors
Two KPMG auditors who oversaw the TierOne Bank engagement got some less than stellar news about their roles in the bank's collapse:
The [SEC] voted 2-1 to bar John J. Aesoph, a KPMG partner from Omaha, from working with SEC-regulated companies for three years, and Darren M. Bennett, a senior manager from Elkhorn, for two years.
In 2014, an SEC judge recommended bans of one year for Aesoph and six months for Bennett. The two filed an appeal of those suspensions within weeks of the judge's decision, but oral arguments were not held until last month.
The proposed suspensions were based on their work on the year-end 2008 audit of TierOne, which SEC administrative law judge Carol Fox Foelak called "a single instance of highly unreasonable conduct."
This included "egregious violations of multiple auditing standards" that "indicate a lack of competence to practice before us." Ouch.
IRS phone scams
After another alert from the IRS, there have been lots of stories of phone scams over the past week including one in Nevada where the local police phone number shows up on caller ID. Plus, many that report the perps are still accepting payment in iTunes gift cards. It's like the crooks know that everyone is heading back to school and want to take advantage of the ensuing madness.
Previously, on Going Concern…
Chris Hooper lamented over lost hobbies. And in Open Items, someone asked about the timing of a resignation letter.
In other news:
- Accounting is a profitable industry.
- The rise and fall of itemized deductions
- From Lemmings to Lotus 1-2-3, you can now relive Commodore Amiga's glory days
- "The star showed an odd pattern of dimming that could not be explained by any known natural phenomenon. Among the hypotheses that has yet to be disproved: the star is surrounded by an alien megastructure."
- Whopperito.
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