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Accounting News Roundup: Is the IASB Giving Up on the FASB?; Wake Forest Grads Crush the CPA Exam; NFL Looking at Rams Buyer’s BDO Tax Shelter Connection | 02.16.10

Posted on by Caleb Newquist

• IASB softens stance on convergence [FT]
We’re not jumping to any conclusions but yesterday the IASB made the statement that it “would no longer pursue convergence with its US peer as ‘an objective in itself'”. Now we’re not entirely sure what “an objective in itself” means but it kinda, sorta sounds like “to hell with you FASB, we’ve got our own plans.”

This revelation was part of “constitution review” in order for the IASB “to justify its public accountability” to its critics. In this review the IASB seemed to be changing its tone on just what convergence is:

In a review of its constitution published on Monday the IASB’s oversight board addressed this concern over the convergence project and said it would “emphasise that convergence is a strategy aimed at promoting and facilitating the adoption of IFRS, but it is not an objective by itself”.

So just spreading the good word about IFRS without any stated objective? Does that sound about right? It sounds a little like financial reporting evangelism.


• Wake graduates get highest passing rates on CPA exam [Winston Salem-Journal]
This is in no way presented to make you feel bad about yourself. Here are the 2008 (the most recent data available) passing rates at WF: 93% on FAR; 87.5% on Audit; 83.22% on regulation; 93.7% on BEC. The overall passing rate was 89.7%. The University has had the highest scores five years running.

If you need to go cry in the bathroom, you may do so now.

• Rams buyer’s $85 million battle with IRS [Chicago Tribune]
Shahid Khan announced last week that he was buying 60% of the St. Louis Rams. Great news right? Ordinarily, yes but now the NFL is looking into his association with a BDO tax partner that was convicted of helping clients avoid taxes through shelters.

The IRS said in court papers that the Khans hired the Chicago-based BDO Seidman accounting firm and met with tax partner Robert Greisman. The Khans engaged in at least five questionable tax shelters, with names like Son-of-Boss and Dad, and paid BDO $8.5 million in fees, about 10 percent of the alleged tax savings, according to court documents.

Yet when the revenue agency questioned Khan about his returns, he was unable to identify what services BDO provided, an IRS agent said in court documents. In April 2007, the IRS made formal requests for information to Greisman and one of his partners in Michigan in connection with its investigation of the Khans.

Greisman pleaded guilty last July to conspiracy charges related to the creation of the shelters and BDO is currently being sued by Khan for negligence and malpractice. The NFL may have saved them themselves the trouble by letting Rush Limbaugh own part of the team…

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Overstock.com Turns a Profit; Patrick Byrne Writes a Very Un-Patrick Byrne Letter to Shareholders

This morning we thought the KPMG audit team working on Overstock.com would continue slaving away through the extension deadline tomorrow to get that beast of 10-K finished. Well! Turns out they’ll bet of you tonight because the OSTK 10-K has been filed and, as promised Overstock shareholders, your humble servant Patrick Byrne and Co. are reporting an annual profit for the first time ever!


After such a high, restatement or not, we’re guessing Sam Antar definitely won’t be getting an apology but Gary Weiss has already noted a couple of things:

First–stop the presses! Overstock’s auditors at KPMG says that Overstock has insufficient internal controls.

Second, the Marin County District Attorney and four other DAs in northern California want the company to fork over $8.5 million to settle consumer ripoffs by Overstock. The company disagrees and is fighting it, so …. No, wait a moment, make that read “$7.5 million.”

First off, we share Gary’s shock — SHOCK! — on the insufficient internal controls revelation. Second – AUDITORS! We talked about this, remember? Read the 10-K carefully. Overstock’s “Risk Factors” section runs 25 pages for crissakes. A million fucking clams can’t get missed!

You know what though? Mistakes happen, so we’ll let it slide.

Oh, and about that letter to shareholders. Patsy doesn’t bring up former auditor Grant Thornton once, doesn’t quote Nietzsche, compiain about short sellers, bring up Facebook, or say anything remotely antagonizing (although on page 32, the Company’s states he still might).

This makes think: 1) Is he not feeling well? 2) We want the old Patrick back! Read for yourself:

Dear Owner:

In Q4 our revenues grew 27%, twice the ecommerce industry’s rate, and we earned $12.7 million in net income. In 2009 we grew revenues 6%, earned $7.7 million in net income, generated $46 million in operating cash flow, and generated $39 million in free cash flow. It’s nice to be profitable.

I am proud that, for the second year in a row, we rank number 2 in the NRF/Amex survey of American consumers, behind only LL Bean and ahead of Amazon, Zappos, eBay, Nordstrom, and many other fine firms.

As you may know, at the end of Q4 we engaged KPMG as our independent auditors, and announced that we were restating our FY 2008 and Q1, Q2 and Q3 2009 financial statements. I thank you for being patient with us as we worked through the questions raised by the SEC, the transition to the KPMG team, and the extra time it took to ensure that our financial statements are accurate.

I look forward to our conference call next Monday. Until then, I remain,

Your humble servant,

Patrick M. Byrne

Will Yelp Give Goldman Sachs and Citigroup 5 Stars For Its IPO?

Fun fact: yours truly used to be a hardcore Yelper, ranked San Francisco’s funniest Yelper for a good year and a half before I gave up and quit the site. God that makes me feel like a loser. As it should.

Anyway, here’s my issue with a Yelp IPO… Yelp should have quit way back when I did. The window of opportunity, in my mind, has long passed. Maybe in 2007 Yelp had a chance to blow it up but how are they even relevant anymore? Beyond the rabid fan base and drive-by Googlers, I’d say no. They blew a Google deal. They totally bit off the foursquare formula when they should have come up with it first. They still don’t have a money-making plan, as far as we can tell.

So here’s the really crazy part: according to DealBook, Yelp has brought on Goldman Sachs and Citigroup to help with its IPO. Did Jeremy S. suffer from brain-eating food poisoning?!

The offering, which is expected to value the company at $1.5 billion to $2 billion, will probably come to market in the first quarter of next year, a person close to the company said. Yelp is expected to file its prospectus by the end of this year.

In recent months, Yelp has openly telegraphed its intention to go public. At a technology conference during the summer, Yelp’s chief executive, Jeremy Stoppelman, said the company was still pursuing an I.P.O. but did not have a set time line. In late July, in a move that many interpreted as another step toward the public markets, the company hired a chief financial officer, Rob Krolik, who helped Shopping.com go public in 2004.

Just last year, Stoppelman said Yelp likely wouldn’t go public for years, while it took $25 million in funding from Bono’s Elevation Partners. Remember, Elevation Partners also bought a 25% stake in Palm – anyone remember them? Anyway, earlier this year, Stoppleman proudly declined additional financing and announced that “an IPO is back on the table” for Yelp.

Fun fact: GS and Citi also worked on Groupon’s IPO, with Goldman serving as one of the lead underwriters.

But Yelp is no Groupon (that might be a good thing). The seven-year-old start-up has yet to prove how it can make money, outside of shaking down companies and forcing them into sponsorships. Oops, did I say that out loud? I meant through “advertising” revenue from sponsoring companies interesting in “creatively shuffling” their negative reviews.

The sad part is Yelp has an extensive team of writers in its users, and they are constantly creating free content (some of them are not too shabby, either) yet it still cannot figure out how to make money off that. What on Earth is an IPO going to change about that?