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November 27, 2022

Accounting News Roundup: Happiness at Work and SEC Enforcement | 01.19.17

Happiness at work

A recent article in the New York Times discusses what prevents people from being engaged (read: happy) at work. You won't be surprised to learn that money only satisfies us to a degree:

[W]e found that promotions and raises were important for people both in their current job and in applying for future jobs. What was interesting, though, was that the majority cared a lot about present benefits (such as doing something interesting with people they like) in their current job, but they expected not to care very much about those things in their future jobs. When envisioning themselves in the future, they predicted that they would almost solely be driven by delayed benefits like salaries.

Most people who have worked in public accounting, particularly larger firms, often say that their favorite part of the job is/was, "The people." And it's true, you do meet a lot of interesting, smart people who are good at their jobs and a pleasure to work with. On the other hand, you almost never hear anyone who worked in public accounting say that their favorite part of the job is/was, "The money." Then why do people pursue jobs with the Big 4 et al., with "money" and the "future opportunities" as their main focus?

The reason, I think, is people measure their success by things like money and titles and not by whether they enjoy the work, the people they work with, the quality of life they have, etc. Which is not to say that professional advancement and financial success doesn't make people happy, it most certainly does for a period of time; it just won't last forever.

SEC enforcement

I wrote about MDC Partners settling an order with the SEC yesterday, but boy there was a lot of SEC accounting-related action yesterday. Texas-based Orthofix International admitted wrongdoing in its settlement over "improperly booked revenue" and bribery charges. The company agreed to pay over $14 million in fines.

Then there's General Motors and their ignition problems. How is this an accounting issue, you ask? Here's the SEC press release:

[W]hen loss contingencies such as a potential vehicle recall arise, accounting guidance requires companies like General Motors to assess the likelihood of whether the potential recall will occur, and provide an estimate of the associated loss or range of loss or otherwise provide a statement that such an estimate cannot be made.  The SEC’s order finds that the company’s internal investigation involving the defective ignition switch wasn’t brought to the attention of its accountants until November 2013 even though other General Motors personnel understood in the spring of 2012 that there was a safety issue at hand.  Therefore, during at least an 18-month period, accountants at General Motors did not properly evaluate the likelihood of a recall occurring or the potential losses resulting from a recall of cars with the defective ignition switch. 

This is a civil case, so I understand that the SEC has a responsibility to pursue these things, but it's still a little odd that General Motors is paying $1 million because it failed to notify its accountants about something before it told the owners of its cars. The first recall wasn't announced until February 2014 after many people had died. 

Accountants behaving badly

Edward Abellana, an A/P supervisor, admitted that he stole $1.95 million from his former employer, a metals company in San Diego, and it sounds like he spent every bit of it:

Abellana conceded that he used the embezzled funds for an array of purchases, including private-jet rentals; luxury vacations to Hawaii, Las Vegas and Disneyland; and trips to a Super Bowl and other sporting events, court documents state.

On most occasions, Abellana would simply use the firm’s credit cards to make his lavish purchases, though he also issued more than $162,000 in unauthorized company checks to pay for personal expenses, according to the U.S. Attorney’s Office in San Diego.

Abellana then altered the credit card statements to cover his tracks. The article doesn't say how the scam was discovered, but I'll bet it happened when he was on one of those fancy vacations. The thing about running a scam like this is, if you really want to keep it going, you can't take a day off. Running a scam is pretty much like having a second full-time job. I don't know why anyone would want all that additional responsibility. 

Previously, on Going Concern…

Greg Kyte's Exposure Drafts cartoon addressed diversity in the accounting profession. In Open Items, someone is having a CPA exam crisis.

In other news:

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