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Accounting News Roundup: Dimon’s Day on the Hill; Senate Bill Gives IRS Budget a Boost; Latest in Nortel Fraud Trial | 06.13.12

Dimon to Fault Controls on Risk [WSJ]
In his first trip to Capitol Hill since J.P. Morgan Chase & Co. disclosed that trading blunders have cost it at least $2 billion, Chief Executive Officer James Dimon is expected to blame a combination of overconfidence, poor judgment and faulty risk controls. Mr. Dimon, scheduled to appear before the Senate Banking Committee on Wednesday morning, intends to apologize for the miscues—a stark departure from his normal shoot-from-the-hip demeanor. But Mr. Dimon will push back on any implication that the incident is lastingly detrimental to the largest U.S. bank by assets. In fact, the New York company expects its second quarter to be "solidly profitable" despite the losses, Mr. Dimon said in an early copy of his prepared remarks. "We will not make light of these losses, but they should be put into perspective," Mr. Dimon is expected to say. "We will lose some of our shareholders' money—and for that, we feel terrible—but no client, customer or taxpayer money was impacted by this incident."

Senate panel sets increase in IRS funds [WaPo]
The Internal Revenue Service would receive additional money for taxpayer services and tax law enforcement, and several financial regulatory agencies would gain funding increases to help them enforce Wall Street reforms, under a spending bill approved Tuesday by a Senate panel. Approved by the Appropriations subcommittee on financial services and general government, the bill would provide $12.5 billion for the IRS in fiscal 2013, which starts in October, an increase of 6 percent from the 2012 level but still 2 percent below the White House request. “Resources provided will allow the IRS to meet an increasing demand for services and to make improvements that will permit taxpayers to access automated self-service applications including refund inquires, freeing staff to handle more complex tax law inquiries,” the bill summary says.

Sen. Graham: GOP should break with Norquist tax pledge for grand bargain [The Hill]

Sen. Lindsey Graham (R-S.C.) said Tuesday he believed Republicans should consider eliminating loopholes in the tax code even if they aren't replaced by additional tax cuts, a move that would break with an anti-tax pledge many GOP lawmakers have signed with activist Grover Norquist. "When you eliminate a deduction, it's OK with me to use some of that money to get us out of debt. That's where I disagree with the pledge," Graham told ABC News. The South Carolina senator said while he believed some of the money from closing deductions should go to lowering tax rates, he also believed the increased revenues could be used to help pay down the federal debt. "I just think that makes a lot of sense. And if I'm willing to do that as a Republican, I've crossed a rubicon," said Graham.
Nortel executives clashed over accounting entries [Globe and Mail]
Nortel Networks Corp. controller Michael Gollogly was prepared to resign after he found out his boss had booked three accounting entries, without consultation, that had the effect of transforming a small loss to a profit in the second quarter of 2003, an Ontario court heard Tuesday. The fraud trial of three former Nortel executives – including Mr. Gollogly and former chief financial officer Douglas Beatty – heard testimony from a Nortel auditor, Donald Hathway. He said Mr. Gollogly called him at home on a Sunday in July, 2003, to tell him he was upset to discover Mr. Beatty had made three entries totalling $20-million (U.S.) while Mr. Gollogly was out of the office the previous Friday. Mr. Hathway, then the lead audit partner from Deloitte & Touche overseeing the Nortel audit, said he met the next day with Mr. Gollogly at Nortel’s head office in Brampton, Ont. He testified that Mr. Gollogly told him “he was going to see Mr. Beatty and demand these entries be reversed and if they wouldn’t be reversed, he was prepared to resign.”
Accountant accused of creating fake employee to steal from company [WSB]
Police are looking for a former accountant of Peach State Roofing in Gwinnett County accused of stealing thousands of dollars from the company before she was fired. Gwinnett County Police Cpl. Jake Smith says 37-year-old Summer Payne was told earlier this year she would be fired after failing to pay $100,000 in state taxes on the company’s behalf. When she was kept on for several more weeks to train her replacement, Smith says she created a fake employee named “Pedro Perez” and deposited those paychecks into her own account.

Local Woman Says Border Patrol Agent Attacked Her [10News]
The woman, who was only identified as "Jenny", said she was beaten by Border Patrol agent Kellie Lamb Helwig while she was leaving a Cirque du Solei performance on May 27. "Next thing I knew, she punches me on my left temple," said Jenny, who is a military doctor. "I didn't feel the other two hits. She hit me on the right side of my jaw and the left side of my jaw." Jenny said Helwig was waiting for her after the show was over. She said she had exchanged words with Helwig and another Border Patrol agent, Gerald Joseph Torello, during the performance. According to a report by the San Diego County Sheriff's Department, several other people say they saw Helwig performing fellatio on Torello. "Her head and her hands were moving up and down rhythmically," said Jenny. "I could only assume that there was some sort of sex act being performed."


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