Accounting News Roundup: Deloitte’s Year in the UK; Obama Campaign Makes Romney an Offer; ExxonMobil’s Taxes | 08.17.12

The UK arm of Deloitte, the auditor and consultant, is aiming to capitalise on its role in the London 2012 Olympics after costs associated with sponsoring the event helped to constrain annual profit growth. The company avoided the reputational damage suffered by G4S over its connection with the games, and hopes that this operational sure-footedness will lure new clients. David Sproul, chief executive and senior partner, would not disclose how much it paid to secure the right to be “official professional services provider” to the Olympics. “We have written that money off each of the past four years. We anticipate seeing the benefits of that over the next 10 years,” he said.

Obama campaign offers Romney to release 5 years of tax returns, says would ask for no more [AP]
Obama campaign manager Jim Messina made the tax-disclosure offer to Romney campaign manager Matt Rhoades in a letter Friday morning. Messina said he was taking the step because Romney “apparently fears the more he offers, the more our campaign will demand that he provide.”Romney’s wife, Ann, has repeatedly stated that concern in interviews, arguing that the more the couple releases, the more questions are asked.

Accounting Differences Crimp Cross-Border Mergers [CFO]
Dissimilar national accounting standards and the lack of adherence to international financial reporting rules seem to be a major deterrent to companies eyeing targets beyond their borders, according to a recent academic study. At the same time, cross-border acquisitions by companies of target firms in countries with similar accounting strictures tend to relieve CFOs and other senior executives of financial and administrative burdens, says Shawn Huang, assistant professor at the University of Arkansas and one of the survey’s authors, along with Jere Francis, a professor at the University of Missouri, and Inder Khurana, a professor at the University of Missouri-Columbia. That’s because there’s less of a learning curve involved, Huang notes. Based on M&A deals in 32 countries that totaled $3.5 trillion between 1998 and 2004, the study finds that differences in local versions of generally accepted accounting principles (GAAP) between an acquirer and a potential target in another country can decrease the number of mergers. Lacking similar standards to their targets, acquirers might find it tougher to identify value-creation opportunities in the first place and to combine the two firms operationally later on, Huang says.

[P]assengers on Air France Flight 562 were asked to open their wallets to check if they had enough cash to pay for more fuel. The plane, heading from Paris to Lebanon's capital, diverted amid tensions near the Beirut airport on Wednesday. Low on fuel, it instead landed in Damascus, the capital of neighboring Syria, where a civil war is raging. An Air France spokesman explained Friday that the crew inquired about passenger cash only as a "precautionary measure" because of the "very unusual circumstances." Sanctions against Syria complicated payment for extra fuel. He said Air France found a way to pay for the fill-up without tapping customer pockets – and apologized for the inconvenience. The airline had never resorted to such a request before, he said.

Are we being set up for a rhetorical bait and switch? If Romney paid a very low tax relative to the increase in his net worth, he can still say he paid something. If he was using Son of Boss deals to shelter his income he might have been paying a higher percentage of tax relative to his adjusted gross income. Unless he paid nothing in 2008, his percentage was most certainly higher, but it was probably a much lower tax. If Romney did participate in tax shelters that are now considered sketchy but were then blessed by prestigious national firms, I don’t think it says anything about him that we don’t already know. It just annoys me when people throw out percentages when the actual numbers are available.

ExxonMobil Paid $1 Trillion in Taxes Since 1999, Three Times Its Profits [TaxProf]
FYI.

Police arrest man with RIDICULOUS name in Florida [HP]
Jackmeoff Mudd, 54, was arrested on charges of assault, disorderly conduct, resisting an officer, possession of alcohol in an open container, and violation of probation. He is being held at a Broward County jail on a $300 bond, which means that at some point in the last few days, a somber county judge read his name aloud in court.