PCAOB inspection reports
The PCAOB released Deloitte's and PwC's inspection reports for 2015 yesterday. Deloitte's deficiency rate was 24%, slightly worse than last year's of 21%. PwC's deficiency rate was 22%, slightly better than last year's of 29%. Michael Rapoport reports a few of the details:
At both firms, accounting for revenue was one of the areas in which the PCAOB inspectors found the greatest number of deficiencies, according to the inspection reports. At Deloitte, inspectors found deficiencies in accounting for inventory and long-lived assets; at PwC, they found deficiencies in accounting for business combinations and for goodwill and other intangible assets.
It's hard to get worked up about the reports these days. Deficiency rates greater than 20% are pretty dismal, but considering that those rates used to be above 40% means that there's been quite a bit of improvement. Still, confidence in auditing can't be high; the collective deficiency rate for Big 4 audits in 2014 was 35%.
But what is an acceptable deficiency rate? Something in the single digits might be nice. Perhaps they'll get there once machines are doing most of the work.
How's the SEC's whistleblower program going?
Pretty well, actually, if they do say so themselves:
The Securities and Exchange Commission’s awards to whistleblowers have surpassed the $100 million mark with the program’s second-largest award of more than $22 million announced earlier today.
That $22 million award was for a former Monsanto financial executive whose tip led to the SEC's discovery of "lax internal controls failed to account for tens of millions of dollars in rebates given to retailers and distributors as incentives to drive sales of Roundup."
The whistleblower, whose identity is kept secret, issued an interesting statement about what (s)he sees as an ongoing problem:
I believe the case will raise awareness of the gaps that still exist today with respect to auditor independence and result in regulators looking closer at this issue and ultimately bring new rules forward to mitigate the impact this has on investors.
I guess that's a fair warning? Perhaps we'll see some independence violation self-reporting in the near future. That could be a decent retirement plan for one of you lucky auditors if the whistleblower payout is in the $22 million range. Or even the $2 million range.
Has Donald Trump released his tax returns?
Nope! The Monmouth poll that I linked to yesterday found some additional revelations that you won't find surprising:
Republicans view Trump more generously (including on tax returns) and Democrats view Clinton more generously … and independents dislike them both. That's made obvious in Monmouth's delineation of how voters feel about the two candidates: A plurality dislike them both.
I know, this is a stretch for the HDTRHTR section. I'm hoping that DJT decides to make some tax return-related news in Mexico.
Accountants behaving badly
I think one of my favorite plot twists in any "accountant embezzles from employer" story is when the suspected accountant is confronted and then he or she immediately confesses. Such was the case with Shirley Ferrenberg, a former accountant at Westmoreland County Community College in Youngwood, PA:
Ferrenberg was asked by college officials about several questionable entries discovered in computerized account ledgers and “really didn't have an answer,” [Detective Randy] Gardner said.
Gardner reported in the affidavit that on July 8, Ferrenberg called off work and college officials texted her requesting a meeting.
Ferrenberg later met with a WCCC official and Ferrenberg reported that “she did a bad thing” and owed money back to the clubs, Gardner said.
College President Tuesday Stanley said Monday that Ferrenberg was dismissed immediately after the theft was discovered.
In my corny imagination, the exchange went like this:
"Surely, you didn't take that money."
"I did a bad thing. And, yes, my name is Shirley."
Previously, on Going Concern…
In Open Items, someone's asking about the California Competes Tax Credit.
In other news:
- EU Apple Tax Ruling Stirs Fears of Revenue Loss in U.S.
- Former Oxbridge accountant sues, says he was fired on family leave
- UK accounting watchdog closes probe into former Tesco CFO
- More Than 100 Law Professors To Congress: Impeaching The IRS Commissioner Is A Bad Idea
- A Grateful Dead Fan, Sentenced To Life In Prison, Has Been Pardoned By Obama
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