The Culture Was Corrupt at Olympus, Panel Finds [NYT]
An outside panel appointed by Olympus to investigate its financial scandal issued a harsh report Tuesday, calling the company’s recently departed management “rotten to the core.” The panel, led by a former Japanese Supreme Court judge, also details the roles it claims were played by three former Nomura bankers in arranging a cover-up, and it says Olympus paid the bankers for their efforts. It also criticizes Olympus’s auditors, KPMG AZSA and Ernst & Young ShinNihon, for failing to expose fraud at the company.
PCAOB Warns of Audit Concerns in Volatile Economy [AT]
The alert aims to help auditors identify matters that require additional attention. “Today’s volatile economic environment may affect companies’ operations and financial reporting, which has implications for audits,” said PCAOB chairman James R. Doty in a statement. “The alert reminds auditors of their responsibilities under these conditions.”
Olympus auditors trashed by investigators [Accountancy Age]
KPMG’s unqualified audit report in March 2009 was “inappropriate” and relied too heavily on outside experts’ opinion of Olympus accounting, the committee concluded. Ernst & Young was appointed auditor later that year and the investigation criticised the firm for allowing a questionable consulting fee to be treated as goodwill. “Even when we account for the fact that they [had] just assumed their position as auditor and they lacked knowledge of the past events, we cannot conclude this was appropriate,” the committee said.
Schools’ Ex-CFO Is Fined [WSJ]
The former chief financial officer for New York City schools has been fined $6,500 for using his city email account to line up his next job and manage his personal real-estate investments. An investigation earlier this year found that George Raab, who was responsible for handling the department’s roughly $20 billion operating budget, had started planning his “exit strategy” from the Department of Education less than a year after he started in October 2008.
IRS Backs Off On Penalties Against Billionaire Leon Cooperman [Forbes]
As detailed in a U.S. Tax Court settlement filing, Cooperman still is required to pay nearly $14 million plus interest to cover what the IRS said was a non-tax deductible contribution. But Cooperman, who said he had acted in good faith when he followed bad advice from tax advisers, doesn’t have to pay the $5 million the IRS originally demanded in accuracy-related penalties. His bill now for penalties: a mere $29,191.
South Florida residents in $120M tax fraud bust [SFBJ]
They are accused of filing more than 380 false tax returns for 180 clients from 30 states. They requested more than $120 million in fraudulent tax refunds. Most of the tax returns were filed for the 2008 tax year, and the forms reported personal debt obligations as both income and federal tax withholding. Holding seminars in Florida and Tennessee, the defendants told prospective clients about a “redemption theory” where they could ask the IRS for refunds to cover their outstanding personal debt, according to federal authorities. The clients paid $750 for the preparation of the tax return and agreed to share 10 percent of their tax refund with the defendants.
FASB, IASB Chiefs Agree New Convergence Model is Needed [JofA]
The heads of the U.S. and international accounting boards that have been working to resolve standards differences agree that their current convergence process should be replaced by one that is more manageable and effective. FASB Chair Leslie Seidman said Tuesday at the AICPA National Conference on Current SEC and PCAOB Developments that side-by-side convergence is not the optimal model in the long run. Hans Hoogervorst, chair of the International Accounting Standards Board (IASB), spoke immediately after Seidman at the conference in Washington and echoed her sentiment.