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Accounting News Roundup: Deloitte and Crowdsourcing; Government Accounting and Football | 05.26.16

Deloitte and crowdsourcing

In the past, we've been somewhat critical of Deloitte, and accounting firms in general, of trying to be all things to all people. That is, mega accounting firms have this tendency to stick their toe into a lot of different services, but it's never been clear to me why they want to do that (aside from the money). Maybe I'm wrong, but by trying to do everything, these firms dilute the value of the stuff they do really, really well. Do clients really want their tax firm to also build them a digital advertising campaign? I guess some do. 

But now, Deloitte is doing something that exacerbates this "one-stop shop for professional services" even further: 

Deloitte Touche Tohmatsu has introduced Deloitte Pixel, a new service that leverages “crowdsourcing” technology to allow outside people to help the firm develop new services and projects for Deloitte and its clients.

Deloitte Pixel will enable Deloitte teams and clients around the world to access difficult-to-find expertise in specific areas. They can collaborate to develop new products or ideas, and design, build and test new assets and technology for the firm and its clients.

So, Deloitte wants to offer services that aren't even being offered yet. I think? Or at least broker services that only a handful of people on earth provide. Then there's this quote from Deloitte Consulting CEO Jim Moffatt:

“We’ve done some high-end work in market entry strategy efforts,” said Moffatt. “There’s actually some pretty significant crowdsourcing capability to get real-world perspectives on different markets or micro markets. There are also elements of large transformations. There could be some significant coding elements that can be parceled off and, if tightly managed, lend themselves directly to that. There are also some high-level analytical projects where access to a crowd data scientist for one specific algorithm or aspect is possible. We’ve done some things on the creative side to get different ideas around creative aspects of positioning a different piece of the client. If you think about the variety of crowds that are out there and what can be cultivated, there’s a multitude of uses.”

Come on. What is that? Is there something about being a Deloitte CEO that requires making unintelligible ‎statements? I guess this is why I am not a CEO at Deloitte.

Government accounting and football

A former employee of the City of Inglewood, California, is suing her former employer for beefing up its books to win an NFL team:

Barbara Ohno, Inglewood's former budget and accounting manager, claims that the future home of the Los Angeles Rams massaged its accounting books to mask its financial problems.

In the complaint, Ohno says that Mayor James T. Butts ordered employees to "create a facade of financial responsibility and well-being for the city" as it competed against Carson to house one of three football teams looking to relocate to the Los Angeles area.

Ohno, a former Deloitte auditor, alleges, "the City, at the direction of Defendant Mayor Butts, violated the rules of the program by tapping into the Asset Forfeiture Fund to pay for unauthorized expenses, again because there was insufficient money in the General Fund to cover such expenses." And that sounds pretty plausible, given the reputation of government accounting and Season 2 of True Detective. What I love, however, is the Mayor's rebutal:

"The city undergoes rigorous and thorough audits by an outside audit firm," he said in a statement. "We are proud of the improvements made during my tenure in not only improving its reserves, but our financial reporting procedures.”

Ohno was a probationary employee who was released prior to the completion of her probationary period, he said.

"The attempt to connect her separation with the efforts to secure an NFL franchise are clearly contrived and false," he added.  "During the 2 1/2-year relocation process, the city was never required to present financial data to the NFL."

This whole thing is fishy. A mayor who desperately wants an NFL franchise for his city points to "an outside firm" as evidence of accounting that's above reproach. That's a good one. But also, this whistleblower seems a little exuberant for a "probationary employee." Ohno was on the job for 10 months. Who does that? Then there's this cringe-worthy statement:

“I was told to stand down, look the other way and be a team player because when Inglewood got the Rams, there would be so much money coming in, no one would care how the city ran its finances,” Ohno said in a statement.  “I refused to comply with what I was told was the ‘plantation mentality’ in Inglewood and got fired for it.”

Eek. This'll be one to watch.

People are worried about IRS phone scams

Although they might be a little less worried now because the Treasury Inspector General for Tax Administration arrested five people in Florida for impersonating IRS agents:

TIGTA agents arrested the five suspects in Miami without incident Monday for wire fraud and conspiracy to commit wire fraud. Jennifer Valerino Nunez, Dennis Delgado Caballero, Arnoldo Perez Mirabal, Yaritza Espinosa Diaz, and Roberto Fontanella Caballero are allegedly responsible for nearly $2 million in schemes that defrauded more than 1,500 victims.

Criminal complaints were filed in federal courts in Minnesota, Texas and Arkansas against the suspects. They have been referred to the Justice Department for prosecution and additional legal action.

The good news, sayeth Inspector J. Russell George, is "TIGTA is making significant progress in our investigation." The bad news is, "The scammers are relentless." And the bad news for TIGTA investigators is that Inspector George also said, "[We] will not rest until we have brought each individual involved to justice."

On a more serious note, I think it's easy, especially for accountants, to be indifferent about these scams. The callers are so obviously not IRS agents and the coverage has been constant. However, some of the stories of frightened elderly people are gutwrenching. Here's one:

TIGTA recently made arrests in two other cases in New York and California that had ties to India. In this case, the initial referral came from a complaint made by an elderly taxpayer in Minnesota, who contacted the Senate Special Committee on Aging's Fraud Hotline (1-855-303-9470) last October.

The caller reported that her husband had recently been contacted by an individual claiming to be from the IRS and demanding immediate payment of alleged back taxes. The victim was instructed by the scammer to drive to his local Walmart to wire nearly $2,000 via MoneyGram. On his way to the retailer, the distraught victim crashed his car. The victim was so convinced that the scammer was an authentic IRS agent, however, that he left the scene of the accident to wire the payment in order to avoid the scammer’s threats of possible legal action.

That's terrible. If that doesn't make you mad, you need your pulse checked.

Previously, on Going Concern…

In his GC debut, Bryce Sanders explained why your friends don't want to be your clients. I wrote about work perks. And in Open Items, someone is asking about the Big 4 in Seattle.

In other news:

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