Accounting News Roundup: DOJ Poking Around Chinese Accounting; Most Investors Okay with Buffett Rule; FASB Revisiting Going Concern | 09.30.11

Justice Department probing Chinese accounting [Reuters]
The Justice Department is investigating accounting irregularities at Chinese companies listed on U.S. stock exchanges, said an official with the Securities and Exchange Commission, suggesting criminal charges may be brought in addition to civil proceedings. “There are parts of the Justice Department that are actively engaged in this area,” Robert Khuzami, director of enforcement at the SEC, said in an interview conducted on Tuesday and published on Thursday. A number of federal prosecutors around the United States were taking part in the investigation, he told Reuters, them.

FBI Probing Solyndra for Possible Accounting Fraud [Bloomberg]
Solyndra LLC, the solar-panel maker that filed for bankruptcy protection two months after executives extolled its prospects, is being investigated by the FBI for accounting fraud, an agency official said. The FBI is examining possible misrepresentations in financial statements submitted to the Energy Department, according to the official, who requested anonymity because the investigation is continuing. Disclosure of the fraud probe is likely to heighten Republican criticism of the Obama administration for its approval of a $535 million U.S. loan guarantee, which the company used to build a $733 million factory in Fremont, California, that opened in January.

Banks to Make Customers Pay Fee for Using Debit Cards [NYT]
Bank of America, the nation’s biggest bank, said on Thursday that it planned to start charging customers a $5 monthly fee when they used their debit cards for purchases. It was just one of several new charges expected to hit consumers as new regulations crimp banks’ profits. Wells Fargo and Chase are testing $3 monthly debit card fees. Regions Financial, based in Birmingham, Ala., plans to start charging a $4 fee next month, while SunTrust, another regional powerhouse, is charging a $5 fee. The round of new charges stems from a rule, which takes effect on Saturday, that limits the fees that banks can levy on merchants every time a consumer uses a debit card to make a purchase. The rule, known as the Durbin amendment, after its sponsor Senator Richard J. Durbin, is a crucial part of the Dodd-Frank financial overhaul law.

Canceled Flights in U.S. at 10-Year High [Bloomberg]
United Continental Holdings Inc. (UAL), Delta Air Lines Inc. (DAL) and other large carriers have scrubbed almost 104,000 flights this year through Sept. 21, or 2.36 percent of the scheduled total. A full-year rate at that level would be the highest since 2001, according to the U.S. Bureau of Transportation Statistics. The disruptions stem from a combination of foul weather in major markets such as New York and seating-capacity cutbacks to curb costs. When Hurricane Irene struck the East Coast in August, Cameron C. McCulloch faced a weeklong wait for a new ticket — so he drove the 3,000 miles from Seattle to Yale University to catch the start of classes. “There was too much uncertainty with the flights,” said McCulloch, 21, a Yale junior. “At least with driving I knew I’d be there on time and that I could control all the factors.”

You’re tax-exempt? That doesn’t always mean you’re tax-exempt [Tax Update]
Joe Kristan explains the riddle.

Obama’s Buffett Rule Backed by 63% of Investors [Bloomberg]
By a margin of 63 percent to 32 percent, respondents in a Bloomberg Global Poll approved of the president’s proposal, known as the “Buffett rule” in a nod to Warren Buffett, the chairman of Berkshire Hathaway Inc., who has said it is wrong that he pays a smaller share of his income in taxes than does his secretary.

Long Island Rail Road Expects ‘Near-Normal’ Morning Service [City Room/NYT]
Aka “typically awful.”


Pa. man frustrated with IRS sentenced for threat [HC]
64-year-old Leonard Mackey pleaded guilty on Thursday to threatening to use a weapon of mass destruction. Mackey says his frustration stemmed from a one-digit error in another person’s Social Security number. That led to a mistaken claim that his wife owed $80,000 to the IRS. On Feb. 28, Mackey told an agency worker in Bethlehem that he wanted to build a monument to the man who flew a plane into an IRS building in Texas last year.

FASB weighs ‘going concern’ self-test for US firms [Reuters]
U.S. accounting rulemakers are expected to revisit soon a 2008 proposal that would address the knotty issue of “going concern” warnings, seeking to better assure that alarms are sounded before companies fail. At issue are the standard warnings that auditors are required to include in annual reports when they have substantial doubt that a company will survive. With lucrative audit fees on the line, auditors have been accused of failing to flag going concern doubts, though some proposed changes could create new frictions between auditors and managers, some experts have said.

Justice Department probing Chinese accounting [Reuters]
The Justice Department is investigating accounting irregularities at Chinese companies listed on U.S. stock exchanges, said an official with the Securities and Exchange Commission, suggesting criminal charges may be brought in addition to civil proceedings. “There are parts of the Justice Department that are actively engaged in this area,” Robert Khuzami, director of enforcement at the SEC, said in an interview conducted on Tuesday and published on Thursday. A number of federal prosecutors around the United States were taking part in the investigation, he told Reuters, but declined to name them.

FBI Probing Solyndra for Possible Accounting Fraud [Bloomberg]
Solyndra LLC, the solar-panel maker that filed for bankruptcy protection two months after executives extolled its prospects, is being investigated by the FBI for accounting fraud, an agency official said. The FBI is examining possible misrepresentations in financial statements submitted to the Energy Department, according to the official, who requested anonymity because the investigation is continuing. Disclosure of the fraud probe is likely to heighten Republican criticism of the Obama administration for its approval of a $535 million U.S. loan guarantee, which the company used to build a $733 million factory in Fremont, California, that opened in January.

Banks to Make Customers Pay Fee for Using Debit Cards [NYT]
Bank of America, the nation’s biggest bank, said on Thursday that it planned to start charging customers a $5 monthly fee when they used their debit cards for purchases. It was just one of several new charges expected to hit consumers as new regulations crimp banks’ profits. Wells Fargo and Chase are testing $3 monthly debit card fees. Regions Financial, based in Birmingham, Ala., plans to start charging a $4 fee next month, while SunTrust, another regional powerhouse, is charging a $5 fee. The round of new charges stems from a rule, which takes effect on Saturday, that limits the fees that banks can levy on merchants every time a consumer uses a debit card to make a purchase. The rule, known as the Durbin amendment, after its sponsor Senator Richard J. Durbin, is a crucial part of the Dodd-Frank financial overhaul law.

Canceled Flights in U.S. at 10-Year High [Bloomberg]
United Continental Holdings Inc. (UAL), Delta Air Lines Inc. (DAL) and other large carriers have scrubbed almost 104,000 flights this year through Sept. 21, or 2.36 percent of the scheduled total. A full-year rate at that level would be the highest since 2001, according to the U.S. Bureau of Transportation Statistics. The disruptions stem from a combination of foul weather in major markets such as New York and seating-capacity cutbacks to curb costs. When Hurricane Irene struck the East Coast in August, Cameron C. McCulloch faced a weeklong wait for a new ticket — so he drove the 3,000 miles from Seattle to Yale University to catch the start of classes. “There was too much uncertainty with the flights,” said McCulloch, 21, a Yale junior. “At least with driving I knew I’d be there on time and that I could control all the factors.”

You’re tax-exempt? That doesn’t always mean you’re tax-exempt [Tax Update]
Joe Kristan explains the riddle.

Obama’s Buffett Rule Backed by 63% of Investors [Bloomberg]
By a margin of 63 percent to 32 percent, respondents in a Bloomberg Global Poll approved of the president’s proposal, known as the “Buffett rule” in a nod to Warren Buffett, the chairman of Berkshire Hathaway Inc., who has said it is wrong that he pays a smaller share of his income in taxes than does his secretary.

Long Island Rail Road Expects ‘Near-Normal’ Morning Service [City Room/NYT]
Aka “typically awful.”


Pa. man frustrated with IRS sentenced for threat [HC]
64-year-old Leonard Mackey pleaded guilty on Thursday to threatening to use a weapon of mass destruction. Mackey says his frustration stemmed from a one-digit error in another person’s Social Security number. That led to a mistaken claim that his wife owed $80,000 to the IRS. On Feb. 28, Mackey told an agency worker in Bethlehem that he wanted to build a monument to the man who flew a plane into an IRS building in Texas last year.

FASB weighs ‘going concern’ self-test for US firms [Reuters]
U.S. accounting rulemakers are expected to revisit soon a 2008 proposal that would address the knotty issue of “going concern” warnings, seeking to better assure that alarms are sounded before companies fail. At issue are the standard warnings that auditors are required to include in annual reports when they have substantial doubt that a company will survive. With lucrative audit fees on the line, auditors have been accused of failing to flag going concern doubts, though some proposed changes could create new frictions between auditors and managers, some experts have said.

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