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Accounting News Roundup: Ex-Taylor Bean Chairman Found Guilty; Did Auditors Miss Fraud at Lloyds, RBS?; Tax Prep in the Classroom | 04.20.11

Posted on by Caleb Newquist

Ex-Taylor Bean Chairman Farkas Found Guilty on All 14 Counts in Fraud Case [Bloomberg]
Lee Farkas, the ex-chairman of Taylor, Bean & Whitaker Mortgage Corp., was found guilty of 14 counts of conspiracy and bank, wire and securities fraud in what prosecutors said was a $3 billion scheme involving fake mortgage assets. A federal jury in Alexandria, Virginia, yesterday returned the verdict after one day of deliberations. Farkas, who was free during the trial, was taken into custody. He faces a maximum sentence of 30 years on the conspiracy and bank-fraud charges and 20 years or more on the wire-fraud and securities-fraud counts when he’s sentenced on July 1.

Auditors ‘could have missed fraud’ at Lloyds and RBS [Accountancy Age]
Auditors might not have picked up on financial mismanagement at Lloyds and RBS, so great was the confusion surrounding the banks’ assets in 2008. So concluded the Public Accounts Committee, which today called it “alarming” that neither lender was able prove their assets were not linked to fraud or criminality when they entered the Treasury’s Asset Protection Scheme in January 2009.

Yahoo CFO Says ‘Investments Starting To Pay Off’ [Dow Jones]
Yahoo Inc.’s (YHOO) first quarter-results show that investments the Internet giant has been making are “starting to pay off,” Chief Financial Officer Tim Morse said Tuesday. In an interview with Dow Jones Newswires, Morse noted that Yahoo beat the midpoint of its revenue guidance and topped analysts’ earnings-per-share forecasts by 1 cent. He also noted that that number of users of Yahoo’s branded properties was up 15% over last year and the minutes they spent on the sites rose 17%.

Facebook Seeking Friends in Beltway [WSJ]
Facebook is still trying to find a path to Washington, where the company has only a fledgling lobbying operation, even though it finds its privacy policies under increasing scrutiny and is trying to navigate a politically sensitive expansion into China. In seven years, Facebook has risen from a tiny start-up to an Internet power with a potential market value estimated at more than $50 billion. Now an online forum with more than 600 million users, Facebook faces growing pressure from lawmakers and regulators concerned about the way it uses personal information shared by its users.

State launches probe into campaign to provide superhero capes to jobless [Orlando Sentinel]
Dubbed the “Cape-A-Bility Challenge,” a $73,000 public-relations campaign by Workforce Central Florida features a cartoon character named “Dr. Evil Unemployment” and includes handing out about 6,000 red superhero capes to jobless Central Floridians. The campaign, revealed Saturday in a report in the Orlando Sentinel, was met with derision by many unemployed who questioned spending more than $14,200 on capes and $2,300 on foam cutouts of “Dr. Evil Unemployment.” They said the campaign’s tone risked minimizing the severity of the region’s labor problems.


Subotnik: Why All Students in the Basic Tax Course Should Prepare a Return [TaxProf Blog]
Novel idea.

What Not to Say in a Job Interview [FINS]
Job interviews should not be therapy sessions.

Posted in ANR

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Accounting News Roundup: Second Tier Firms Lobby EC on Big 4 Dominance; UN Audit Reveals Preference for PwC; Tax Effects: Divorce v. Annulment | 02.09.11

Brussels urged to end Big Four dominance [FT]
Four international accountancy networks have taken the unusual step of jointly calling for changes to the audit market in Europe and arguing that regulatory intervention is needed to dilute the power of the profession’s biggest operators. BDO International, RSM International and Grant Thornton International, the world’s fifth, sixth and seventh-biggest networks by fees, according to International Accounting Bulletin, have allied with smaller rival Mazars to lobby the European Commission. They want Michel Barnier, EU internal market commissioner, to take steps to reduce the dominance of Deloitte, Erd PwC in the auditing of large, listed companies.

U.N. Deal With PwC Is Faulted In Audit [WSJ]
United Nations officials made “serious breaches” of U.N. rules in awarding PricewaterhouseCoopers with a multimillion-dollar consultant contract on a project to overhaul the U.N.’s computer system, according to a U.N. audit reviewed by The Wall Street Journal. The audit report from the U.N.’s Office of Internal Oversight Services contends there were numerous ways in which the U.N. procurement department and the U.N.’s project director skirted U.N. regulations to favor PwC over other bidders. The report argues that PwC’s approximately $16 million contract bid was nearly $11 million higher than the lowest bid and exceeded the $11 million the U.N. had allocated for the project. The project, known as Umoja, involves a redesign of the U.N. procurement, human resources and financial management computer systems.

Accounting chief calls for more credible bank test [Reuters]
Last year’s European Union bank stress tests were not credible as they failed to reflect falls in sovereign debt prices, the incoming head of the world’s biggest accounting standard setter said on Wednesday. “One reason for scepticism was that sovereign bonds on the banking book were deemed to retain their full value, despite the fact that many were trading at steep discounts in the market,” Hans Hoogervorst, who takes over on July 1 as chair of the International Accounting Standards Board (IASB), told a European Commission hearing in Brussels.

FDIC Makes A Case Against Auditors For Bank Failures [Forbes]
Francine McKenna explores the possibility that the FDIC will turn its unique powers of suing the service providers of the failed banks that it takes into receivership.

Business opportunities make forensics, fraud examination credential worth investigating [AW]
The increasing demand for forensic accounting services from businesses of all sizes, including nonprofit organizations, has made qualifying for a second certification in forensics and fraud examination an attractive option for accountants. Organizations around the world lose an estimated 5 percent of their annual revenues to fraud, according to research performed by the Association of Certified Fraud Examiners (ACFE). Small businesses are especially vulnerable to fraud because of the lack of internal controls. The ACFE estimated the median loss suffered by organizations with fewer than 100 employees to be $200,000 in 2008.

3 reasons why your customers are unfriending you on Facebook [BZUK]
Aside from your trite weather updates.


London and Toronto Exchanges Announce Merger [DealBook]
The London Stock Exchange and the TMX Group, the parent company of the Toronto Stock Exchange, announced an all-share merger on Wednesday morning. If approved by shareholders, the combined exchange would form what would probably be the largest market for mining and other natural resource stocks. While TMX chairman Wayne Fox called the transaction “a merger of equals,” current London exchange shareholders will own 55 percent of the merged company, which has yet to be named. Xavier Rolet, the chief executive of London, will retain that position in the new company.

Divorce Versus Annulment: the Big Tax Difference [HuffPo]
FYI for those of you that made a big mistake recently,”To a couple interested only in the fastest way to untie the knot, the question may seem to be an unimportant technicality. Those watchful souls at the Internal Revenue Service, however, think that there’s an important difference when Form 1040 time rolls around. According to an IRS ruling, if an annulment is retroactive, the couple was never married. Result: they had no right to file joint returns.”

AIG to Post $4.1 Billion in Costs for Chartis’s Loss Reserves [Bloomberg]
American International Group Inc. said higher-than-forecast claims costs cut fourth-quarter profit by $4.1 billion, and $2 billion previously designated to repay its bailout will be used to bolster the property-casualty unit. The insurer reached an agreement with the U.S. Treasury Department permitting the company to keep $2 billion of proceeds from the sale of Star Life Insurance Co. and Edison Life Insurance Co., New York-based AIG said today in a statement. Funds will be used by Chartis for losses tied to coverage including workers’ compensation and asbestos liability.