Accounting News Roundup: Creeping Towards the Cliff; Deloitte Still Wins; Lindsay Lohan Could Use a Hand Here | 12.03.12

No 'fiscal cliff' deal without higher rates, Geithner says [CNN]
The Obama administration will entertain any Republican plans to avoid a so-called "fiscal cliff" at year's end, but Treasury Secretary Timothy Geithner says the Bush-era tax cuts for top incomes must go. Speaking on CNN's "State of the Union" and other Sunday talk shows, Geithner said he's optimistic that the administration can reach a deal with Congress to avert a one-two punch budget analysts say could throw the U.S. economy back into a recession. But he added, "What we're not going to do is extend those tax cuts for the wealthiest Americans." "Those cost $1 trillion over 10 years," Geithner told CNN. "And there's no possibility that we're going to find a way to get our fiscal house in order without those tax rates going back up."

Sen. Graham: ‘We’re going over the cliff’ [The Hill]
Sen. Lindsey Graham (R-S.C.) on Sunday expressed pessimism over talks to reach a deficit-reduction deal, saying the he believes the nation is “going over the cliff.” “I think we’re going over the cliff. It’s pretty clear to me they made a political calculation,” said Graham on CBS’s “Face the Nation,” dismissing the initial White House proposal to help the nation avoid the looming “fiscal cliff” of automatic spending cuts and tax rate rises. “This offer doesn’t remotely deal with entitlement reform in a way to save Medicare, Medicaid and Social Security from imminent bankruptcy. It raises $1.6 trillion on job creators that will destroy the economy and there are no spending controls,” he added.

SEC Chief Delayed Rule Over Legacy Concerns [WSJ]
In one of her last acts as chairman of the Securities and Exchange Commission, Mary Schapiro delayed a rule potentially affecting hundreds of billions of dollars of private offerings by companies, in part because of concerns about her personal legacy, according to previously unpublished documents. Internal SEC emails, released to a congressional panel and reviewed by The Wall Street Journal, appear to show how a last-minute intervention by a consumer lobbyist might have helped persuade Ms. Schapiro to change her mind and delay one of the centerpiece measures of the Jumpstart Our Business Startups, or JOBS, Act.

Deloitte, HP And Autonomy: You Lose Some But You Win Some More, Much More [re:The Auditors]
Francince McKenna reports: "According to filings, Deloitte earned an additional £4.44m from Autonomy in the last four years for services such as tax compliance, due diligence for acquisitions and other services “pursuant to legislation”. As the preeminent Big Four tax services provider, HP’s auditor Ernst & Young, HP’s auditor, would likely start doing everything tax related for Autonomy. However, Deloitte was now free to team with Autonomy and all of its technology products as an alliance partner for systems integration engagements. That could be worth billions in consulting revenue that Deloitte’s UK firm, at least, had given up to be the auditor of a fast growing, highly acquisitive technology “Fast 50” firm."
 
Autonomy: Investors are Entitled to Know what HP's Management Knows — by New Year's Eve [Accounting Onion]
Tom Selling also wonders: "As an aside, it's also very curious that none of the information HP has put out squares with the views of Autonomy's auditor before the acquisition, Deloitte. They firmly stand by their audit – if you want to call it that, for if judged by U.S. rules (SEC, S-OX, PCAOB) Deloitte was not in a position to be considered independent. The very nature of the non-audit services provided – for example, providing advice on executive compensation schemes – makes it so. Moreover, Deloitte's revenues from those non-audit services were pretty lucrative: it has been reported that for every dollar collected from audit services, Deloitte collected approximately $1.10 from providing non-audit services. If Autonomy's accounting practices were too aggressive, would Deloitte's staff have had the gumption to push back given the stakes?  I'm just asking."
 
As Companies Seek Tax Deals, Governments Pay High Price [NYT]
A Times investigation has examined and tallied thousands of local incentives granted nationwide and has found that states, counties and cities are giving up more than $80 billion each year to companies. The beneficiaries come from virtually every corner of the corporate world, encompassing oil and coal conglomerates, technology and entertainment companies, banks and big-box retail chains. The cost of the awards is certainly far higher. A full accounting, The Times discovered, is not possible because the incentives are granted by thousands of government agencies and officials, and many do not know the value of all their awards. Nor do they know if the money was worth it because they rarely track how many jobs are created. Even where officials do track incentives, they acknowledge that it is impossible to know whether the jobs would have been created without the aid. “How can you even talk about rationalizing what you’re doing when you don’t even know what you’re doing?” said Timothy J. Bartik, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich.
 
A Long-Distance Relationship With the I.R.S. [NYT]
What Fatca is expected to raise instead of money, tax specialists warn, are confusion and expense. After widespread criticism of the law’s complexities from banks and expatriate groups — American Citizens Abroad warns on its Web site that Fatca will have a “devastating impact” — the I.R.S. announced in October that it would postpone enforcement by one year, to January 2014. The delay will give those affected by the law time to prepare, time they are expected to need. “Every foreign financial institution — insurance companies, fund companies, family offices; it isn’t just banks — has to enter into an agreement with the I.R.S. to do an electronic database search to identify Americans,” said Ian Shane, a tax lawyer at the New York firm Golenbock Eiseman Assor Bell & Peskoe. “From the moment it first came out, tax lawyers said it was mind-boggling.”

Lindsay Lohan IRS Seizes Bank Accounts [TMZ]
FYI.

The First Use of OMG Was in a 1917 Letter to Winston Churchill [Smithsonian via JDA]
Impress your friends today.
 
The first text message was sent 20 years ago today [Quartz]
k, thx.

 

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