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November 29, 2022

Accounting News Roundup: More on Those (Alleged) PwC Vegas Bachelor Parties; Pokémon Go and the IRS | 07.13.16

DWP vs. PwC

Last week we mentioned that the Los Angeles Department of Water and Power modified its lawsuit against PwC to include some pretty juicy allegations. DWP claims that PwC personnel threw "lavish bachelor parties" in Las Vegas that include prostitutes, bottle service, a cabana party, etc. The usual, really.

What's curious/hilarious about these new allegations is that a) Someone didn't follow "What happens in Vegas, stays in Vegas" protocol (i.e. a whistleblower); and b) It's pretty unlikely that anyone on the PwC team was submitting receipts for hookers and the other alleged Vegas activities. Here's more from City Watch LA:

The most difficult challenge for the City will be proving that the cost of the extra-curricular activities in Las Vegas were actually billed. It is one thing for a manager to suggest an unethical action (perhaps under the influence of alcohol), and quite another to actually pull the trigger. Regardless, at a minimum it would probably be viewed as unprofessional conduct by the State Board of Accountancy even if the expenses were not passed through.

The original contract for the system was for $57 million and grew to $69 million. Is there at least a tenuous trail that could connect the specific hours spent partying as a very small piece of the $12 million increase? That would be like looking for a needle in a haystack.

Are there progress billings with hours traceable to the dates and times of the activities in question? Hard to conceive that would be the case.

There may be no smoking gun with fingerprints.

I mean, how much do two lavish Vegas bachelor parties cost anyway? $10,000? $20,000? I hate to say it, but it seems that PwC's lawyer Dan Thomasch is right and DWP is using the provocative nature of their allegations to drag PwC through the mud. Now, I have to confess that I appreciate DWP taking this particular approach, but, obviously, this doesn't mean it's a credible claim.

Pokémon Go and the IRS

Pokémon Go fascinates me. I don't understand it, even after reading a 400-word explainer and yet, I'm enamored with the idea of people walking around, phones in hand, trying to capture little imaginary creatures. Joe Kristan shares my wonder but he has quite the knack of bringing the whole back to Earth. He points to the IRS' recent commentary on "Tax Consequences of Virtual World Transactions" and ties it to the "experience points": 

“Money, property or services.” If you can convert experience points to cash, you likely have an “accession to wealth” as you earn them. Now I’m not going to tell you to report your experience points on your 1040. That’s between you and your virtual conscience, and I expect your conscience to not to fight very hard.

There is, though, a broader point worth making: you don’t have to convert something to cash to be taxable on it. Barter deals, swaps of goods for services, and so on are taxable unless they fit one of the narrow carve outs, like the ones for “like-kind exchanges” and for corporate and partnership formations. A non-cash deal might be harder for the IRS to find, but it’s still taxable.

That does kinda kill the fun, doesn't it? Also: stop playing at the Holocaust Museum.

Accountants behaving badly

Recently I've lamented about accountants embezzling money from nonprofits and people with cancer (as well as loser baseball teams). And while stealing from cancer patients and organizations that help the disabled is despicable, I get it. Nonprofits will take all the help they can get and so they make easy targets for criminals. Here's another story of a nonprofit accusing its accountant of walking off with money that isn't theirs: 

A Fort Collins nonprofit that helps youth and adults with disabilities and veterans is suing its former accountant for stealing more than $200,000.

No Barriers USA filed a civil lawsuit against Meredith Kanter and her business, Freelance Bean Counter, LLC, on June 29, according to documents obtained by the Coloradoan on Tuesday.

The complaint, filed at the Larimer County Courthouse, alleges Kanter stole a total $208,057.44 from No Barriers' reserve funds, debit cards and credit cards through more than 220 unauthorized transactions, including 106 transactions totaling $69,915.41 from one bank account between May 1, 2014, to  Aug. 29, 2015.

Ms. Kanter denied the allegations on Facebook, saying that, "We were a part of a team of volunteers and employees who recorded transactions to the best of our ability, in a very busy, open office, with few processes set up." Oh, so she admits there was opportunity!

Elsewhere in ABB: Accountant gets four years following plea in BP scam.

Previously, on Going Concern…

I mentioned those new ethics rules. And in Open Items: someone asked about internal audit at a Big 4 firm.

In other news:

  • I spoke with Bob Berchtold on the Abacus podcast.
  • "Mr. BamBrogan accuses Mr. Pishevar’s brother, Afshin, Hyperloop One’s former chief legal officer and formerly a personal injury lawyer, of placing a noose on his office chair while the two worked there."
  • JP Morgan Chase is handing out raises.
  • Wiseguys: Mobsters who went to college made more moolah than their less-educated mafia pals
  • Larry the Cat.

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