Padded résumés and politics
Early last month, we briefly discussed Florida Senate candidate and former Deloitte auditor Patrick Murphy's padded résumé. Here's what I wrote at the time:
Yes, state hopping to sit for the CPA is lame. Murphy's claim of "several years" experience as a CPA is a stretch at best. And claiming two degrees out of one is shady. Most of this is forgivable except when you're running for the US Senate.
The rest of June didn't go so well for Murphy as the story of his embellished credentials gained some traction and yesterday the editorial board of the Orlando SunSentinel put their stamp on it:
We get that if you stress technicalities and kind of squint at the facts, Murphy can sort of justify most of the material he has included on his resume. We get that he wants to stress his financial expertise and soft-pedal the extent to which his wealthy father has boosted his career.
But this kind of resume-padding is what you'd expect from the guy who wants to manage a dollar store. It's not what voters deserve from a man who wants to be their senator.
The moral, obviously, is don't run for the US Senate.
Now that the second quarter is over, companies will start reporting earnings soon and they'll have to contend with the SEC's new compliance and disclosure interpretive guidance that came out in May. That will make for some interesting hoop-jumping on earnings calls:
CEOs and CFOs who love painting amazing pictures of the businesses they oversee will need to talk in a completely different way to investors. Whereas at this time last year a CEO could hop on an earnings call and only focus on more upbeat non-GAAP earnings, now he or she will be forced to speak about the raw business performance. Unfortunately for many companies, that raw business performance may not be so hot, and that could open the door for a whole new range of questions by analysts and investors.
Will it? It's not like analysts and investors weren't able to ask these questions before. At any point in time, someone could ask any questions of a company's management team about GAAP earnings and management would likely answer the questions. Sure, they might pivot back to the non-GAAP stuff because that's the story they want to focus on, but it's not as if management would refuse to answer questions about the GAAP earnings just because that's not what they want to discuss.
Having said that, companies do want to focus on the story that they want to tell and that will change things a bit:
Headlines on corporate earnings releases will need to be written differently by communications teams. That could cause some initial stress for institutions that trade on headlines and media that are covering the results, especially for the news machines that now churn out the first takes on a company's results. Here is a basic example of what could transpire: XYZ Company misses by five cents on a GAAP basis, an outcome that will need to be worked into the press release headline. But, upon greater analysis of the quarter (meaning using non-GAAP measures), it's found the company actually beat earnings estimates by two cents a share amid a decent quarter and share repurchases. In effect, the changes by the SEC staff may add increased volatility to earnings season.
Again, I'm not so sure. Just because people haven't focused on GAAP earnings in the past doesn't mean that GAAP earnings don't exist. I almost get the feeling that management teams will cover the GAAP earnings in a perfunctory way. Something like, "Okay, let's get this GAAP discussion out of the way so we can talk about the important numbers." There's no guarantee that forcing GAAP earnings into the headline of a press release will make people care about it. Many people will discharge their duty to mention GAAP earnings and then simply segue into, "But the real story is the growth in adjusted EBITDA."
Accountants behaving badly
Yesterday, we discussed a guy who stole from a popular baseball team and a cancer patient. Today we have another accountant who allegedly embezzled from nonprofits that "[offer] vocational rehabilitation programs for people with mental and physical disabilities." The motive?
Investigators have traced large amounts of missing money from three non-profit agencies to a 62-year-old former accountant who told police she had a shopping addiction.
The missing funds total more than $200,000.
Beverly Steffey of Kittanning faces 3 felony counts each of theft, identification theft and forgery.
Okay, I guess we need to remind everyone: Stealing is bad.
Previously, on Going Concern…
BDO has some new partners. And in Open Items: Tax Implications of Wade to Chicago?
In other news:
- Accounting camp.
- BlackBerry to Discontinue Traditional Keyboard Phone
- Andrew W.W. Caspersen Pleads Guilty to Stealing Millions From Investors
- Pet trusts.
- Multitasking brain drain.
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