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February 2, 2023

Accounting News Roundup: Cloud Privacy Worries and Oscar Analysis | 02.19.16

Why Using the ‘Cloud’ Can Undermine Data Protections [WSJ]
One of the classic worries about the cloud is "security." The thinking goes, "If it's in the cloud, how can I know that the information is safe?" Companies who build and offer "X as a Service" have invested a lot in security over the years to put these worries to rest, however, now there's a whole other security wrinkle for cloud worriers to worry about:

While the increasing use of encryption helps smartphone users protect their data, another sometime related technology, cloud computing, can undermine those protections.

The reason: encryption can keep certain smartphone data outside the reach of law enforcement. But once the data is uploaded to companies’ computers connected to the Internet—referred to as “the cloud”—it may be available to authorities with court orders.

Major cloud-computing suppliers, including smartphone providers such as Alphabet Inc.’s Google, Microsoft Corp. and Apple Inc., routinely comply with court orders and search warrants to turn over data that in many cases would have been harder for law enforcement to obtain had users kept it solely on their devices.

“The safest place to keep your data is on a device that you have next to you,” said Marc Rotenberg, head of the Electronic Privacy Information Center. “You take a bit of a risk when you back up your device. Once you do that it’s on another server.”

Oh, well that explains all those guilt trips my iPhone gives me about not being backed up in 4 weeks, doesn't it?

But seriously, part of me thinks that the type of people who worry about cloud security would also gladly worry about cloud privacy. And here's the money quote for those worriers: 

“Your phone is an incredibly intricate surveillance device. It knows everyone you talk to, where you are, where you live and where you work,” said Bruce Schneier, chief technology officer at cybersecurity firm Resilient Systems Inc. “If you were required to carry one by law, you would rebel.”

If this article falls into the hands of a colleague or superior who's a cloud worrier, good luck trying to tell them not to worry.

SEC Enforcement
If you're looking to settle in with some good SEC enforcement reading, look no further than this case of Marrone Bio Innovations' former COO Hector M. Absi Jr. who "concealed from Marrone Bio’s finance personnel and independent auditor various sales concessions offered to customers, leading the Davis, Calif.-based company to improperly recognize revenue on sales." Here are some highlights:

  • In November 2015, Marrone Bio restated its results for fiscal 2013 and the first half of fiscal 2014, reversing approximately $2 million of previously reported revenue.
  • Absi previously inflated Marrone Bio’s revenues by offering distributors “inventory protection,” a concession that allowed distributors to return unsold product.
  • Absi also inflated Marrone Bio’s revenue by directing his subordinates to obtain false sales and shipping documents and intentionally ship the wrong product to book sales.
  • Absi abused Marrone Bio’s expense reporting system to pay for personal items, including vacations, home furnishings, and professionally installed Christmas lights for his home.  Absi falsified his bank and credit card statements to make it appear as though he had incurred the expenses for legitimate business purposes.
  • Absi personally profited from his scheme, receiving more than $350,000 in bonuses, stock sale proceeds, and illegitimate expense reimbursements.

Absi now faces criminal charges. Hope those professionally installed Christmas lights were worth it.

And The Award For Worst Career After An Oscar Win Goes To… [FiveThirtyEight]
With the Oscars only a couple weeks away, you can expect continued hype and gimmicks from PwC. Despite what you may hear, what this service really comes down to is an excessively elaborate exercise that could handled just fine by Count von Count.

I haven't seen any signs of the firm doing any kind of analysis or historical trends around the awards (other than white actors winning, which anyone can figure easily) but now that FiveThirtyEight has given us some for free, the firm may have missed its chance to upsell some services.      

Previously, on Going Concern…
Megan Lewczyk wrote about Platform as a Service. Jim Peterson shared his experience of dress codes in Paris. I wrote about IRS scammers. On Open Items someone wants to know about Big 4 SALT.

In other news:

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