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Accounting News Roundup: IKEA Shelters Profits Through Charity Holding Company; Obama to Call for Spending Freeze; Quitting Your Job on Good Terms | 01.26.10

Posted on by Caleb Newquist

• Flat-pack accounting [The Economist via TaxProf Blog]
Oh the Swedes. They’re pretty clever with the flat-packed furniture but the entity structure is a whole other matter. The Economist reports that IKEA’s profits are largely sheltered from taxes by virtue of its holding company, which just happens to be organized as a foundation. The foundation’s stated purpose is to more or less educate you on matching the drapes with the paint you chose for the living room:

If Stichting Ingka Foundation has net worth of at least $36 billion it would be the world’s wealthiest charity. Its value easily exceeds the $26.9 billion shown in the latest published accounts of the Bill & Melinda Gates Foundation, which is commonly awarded that accolade.
Measured by good works, however, the Gates Foundation wins hands down. It devotes most of its resources to curing the diseases of the world’s poor. By contrast the Kamprad billions are dedicated to “innovation in the field of architectural and interior design”. The articles of association of Stichting Ingka Foundation, a public record in the Netherlands, state that this object cannot be amended. Even a Dutch court can make only minor changes to the stichting’s aims.
The Kamprad foundations compare poorly with the Gates Foundation in other ways, too. The American charity operates transparently, publishing, for instance, details of every grant it makes. But Dutch foundations are very loosely regulated and are subject to little or no third-party oversight. They are not, for instance, legally obliged to publish their accounts.

This allows IKEA to pay as little as 3.5% tax on its profits. Ragnar Danneskjöld would be proud.
• Obama to Call for Three-Year Freeze on Some Federal Spending [Bloomberg]
In case you’re unaware, the POTUS is giving a big speech tomorrow evening where he’ll talk about, amongst other things, a three-year spending freeze for domestic programs to get the deficit under control.

The Environmental Protection Agency and the Commerce, Interior and Justice Departments are among the executive branch agencies subject to the freeze, officials said, while the Defense Department, Department of Homeland Security, Veterans Affairs and unspecified international affairs programs would be exempt.

With the DoD and DHS exempt from the freeze, one would think that GOP types would be pleased with this idea. Not so.

A spokesman for House Republican leader John Boehner of Ohio was critical of Obama’s plan. “Given Washington Democrats’ unprecedented spending binge, this is like announcing you’re going on a diet after winning a pie-eating contest,” the spokesman, Michael Steel, said yesterday.

Wait a minute. Wouldn’t going on a diet right after the pie-eating contest be the perfect time?
• How Many Ways Can You Say Goodbye to a Job? [WSJ]
The temptation to go out in a blaze of glory by virtue of a BodySuit man type stunt is only for the boldest of souls. The Journal has plenty of advice on how to bow out gracefully, despite the temptation to use all your vacation, return to work and then give notice.

Some 60% of workers say they intend to leave their jobs when the economy improves, according to a survey by Right Management, a talent and career-management consulting firm in Philadelphia. It might be tempting to give the boss an earful if you land a new job in the coming months. But the way you quit can have a long term impact on your career.

Taking your fancy Swingline isn’t such a good idea either.

Posted in ANR

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Accounting News Roundup: GOP Senators Not Caving on Tax Cuts; NY Court of Appeals Hears In Pari Delicto Cases; Convicted Ex-PwC Employee Loses Case to Get MBA Back | 09.14.10

~ Good morning capital market servants. It’s Dan Braddock’s favorite day of the week. Just another reminder that we’ll be on a lighter posting schedule today as TPTB continue to interrogate us about our lack of influence. We’ll pop in from time to time today to make sure everyone is playing nice and be back to a full schedule tomorrow.

A Career in Accounting [WSJ]
“[W]hile jobs dried up during the economic crisis, hiring in accounting wasn’t hit as hard, and cutbacks have created a need for more hiring as the econmy Thompson, the U.S. campus recruiting leader at PricewaterhouseCoopers. She’ll be hiring 3,000 people this year, up from 2,600 last year.”

Does Anyone Really Want to Be an Accountant? A Tailgate Survey [Re:Balance]
Jim Peterson articulates two time-honored traditions: college football and accounting. The former’s popularity is never in question but Jim talked to some young tailgaters that might make you doubt the substantive popularity of the latter.

Senate Republicans firm on tax cuts for rich [Reuters]
“Republicans in the U.S. Senate poured cold water on Monday on hopes for a compromise with President Barack Obama that would have allowed Bush-era tax cuts for the wealthiest Americans to expire.

Taxes have become a flashpoint going into a November 2 election in which Republicans are seeking to wrest control of Congress from the president’s fellow Democrats. Obama says the cost of keeping the tax cuts for the rich is too high as the United States emerges from recession with a massive budget deficit.”

AIG Plots End to U.S. Aid [WSJ]
“American International Group Inc. and its government overseers are in talks to speed up an exit plan designed to repay U.S. taxpayers in full while enabling the giant insurer to regain independence, according to people familiar with the matter.

Under the plan, which could commence as early as the first half of 2011, the Treasury Department is likely to convert $49 billion in AIG preferred shares it holds into common shares, a move that could bring the government’s ownership stake in AIG to above 90%, from 79.8% currently, the people familiar said. The common shares would then be gradually sold off to private investors, a move that would reduce U.S. ownership and potentially earn the government a profit if the shares rise in value.”

Auditors Anticipate NY Ruling on Malpractice Exposure [Compliance Week]
“A group of investors in the reinsurance firm American International Group are suing the company’s audit firm, PricewaterhouseCoopers, for failing to detect a long-running bid-rigging and accounting fraud scheme at AIG. PwC won a dismissal of the suit contending AIG shared blame because it was AIG employees who carried out the fraud that PwC failed to identify, a common defense for audit firms against shareholder claims.

The investor group, led by the Teachers Retirement System of Louisiana and the City of New Orleans Employees’ Retirement System, appealed the dismissal and will have their day in the New York Court of Appeals this week. A Delaware appeals court handed the case over to the New York Appeals court, saying ‘a resolution of this appeal depends on significant and unsettled questions of New York law.’ “


Seeking An Equitable Outcome: NY State Court of Appeals Hears In Pari Delicto Cases [RTA]
Francine McKenna’s take on the case above.

Verizon Finance Chief Joh Killian Announces Plan to Retire After 31 Years [Bloomberg]
Get your résumé in now.

So Then I Guess Accounting Is Mostly Influenced By Middle-Aged White Dudes? [JDA]
“I’m on a roll with offending people lately so let’s just take this all the way and pull the diversity card, specifically when it comes to Accounting Today’s recent list of 100 Most Influential in accounting.

OK so some faces were predictable and totally warranted; soon-to-be-former FASB Chairman Bob Herz (we’re talking about influence in the profession, not sexiest), GASB Chairman Robert Attmore, PwC Chairman Dennis Nally, IRS Commissioner Doug Shulman… you get the idea. No, I mean you really get the idea, as the rest of the list is comprised of middle-aged white guys too except for 13 women and 3 1/2 black men (Barack Obama counts as .5 if we’re looking at this in a strictly statistical way). Yeah, we noticed.”

Convicted Accountant Loses Legal Bid for MBA Degree [BusinessWeek]
“A certified public accountant who hid his conviction for insider trading from his teachers at New York University’s graduate business school wasn’t entitled to the MBA degree that he thought he earned, a judge ruled.

In February 2007, three months after completing his course work at NYU’s Stern School of Business, Ayal Rosenthal pleaded guilty to charges that he leaked to his brother secret tips that he learned at his job at PricewaterhouseCoopers LLP. Rosenthal never told the school about the investigation of him or his guilty plea, even while serving as a teaching assistant in a professional responsibility course, according to a court ruling.”