Accounting News Roundup: PwC Counting on Africa; Zombie Directors; Acting Legally vs. Acting Ethically | 07.19.12

PwC says emerging markets to drive revenue growth [Reuters]
Dennis Nally, chairman of PwC International, said Africa was a key part of the group's strategy and it had overhauled its governance structure by consolidating its 17-member firms on the continent as opposed to operating as individual legal entities. PwC was expanding in Africa to meet demand for services from large multinational clients growing into the region to offset slowing growth in their home markets, he said. These plans could easily see Africa's contribution to its revenue double over the next five years from $575 million in 2011, the company said. "We expect that by the year 2016, about 30 percent of our revenues globally will come from developing markets … including Nigeria and that is a very significant shift," Nally told reporters during a visit to Lagos. "Our business mirrors what's going on with our clients. So the shift that our clients are experiencing from the developed markets to the developing markets, we see that."

Microsoft's $6.2B accounting charge could saddle it with 1st quarterly loss as public company [AP]
Microsoft may be reporting its first quarterly loss as a public company because of a flopped purchase of an online ad company. The software maker will release its latest quarterly results after the market closes on Thursday. The fiscal fourth-quarter numbers will include a $6.2 billion charge to reflect that Microsoft's 2007 acquisition of aQuantive hasn't yielded the returns envisioned by management. Microsoft Corp. paid $6.3 billion for aQuantive as part of its effort to lure Internet advertisers away from Google Inc. But since the deal closed, Google has expanded its share of the online ad market while Microsoft's online division has suffered billions of dollars in losses. The non-cash charge is so large that it could wipe out Microsoft's earnings from April through June. Analysts polled by FactSet had predicted Microsoft would earn about $5.3 billion in the three-month span. That doesn't reflect the aQuantive charge. Microsoft didn't spell out how its quarterly results would be affected when it announced the charge on July 2.

Zombie Directors Should Exit U.S. Boardrooms [Bloomberg]
The genius of the corporate structure is the checks and balances that are supposed to make sure the interests of the providers of capital and the managers who spend it are aligned. The responsibility for that alignment is so important that the legal system imposes the highest level of care and loyalty, the fiduciary standard, on boards. That means directors must act for the benefit of shareholders, setting aside their personal interests. It doesn’t mean much if shareholders can’t replace directors who fail to meet the standard. Edward Jay Epstein, an investigative journalist, has said that director elections are “procedurally more akin to elections held by the Communist party of North Korea than those held in Western democracies.”
 
Coca-Cola follows McDonald’s in paying Olympic taxes [Accountancy Age]
Coca-Cola will pay tax on revenues derived from the Olympics despite its entitlement to tax breaks. The move follows a similar step taken by fast food giant McDonald's yesterday after campaign group 38 Degrees collected more than 150,000 signatures urging sponsors to waive their rights to the relief. While British Airways said the break was not applicable to UK companies, corporations including Visa and Adidas currently stand to augment profits they make from the Games.
 
Business ethics need to move beyond what’s illegal [Felix Salmon]
"[A]cting ethically, even if such actions are legal and don’t maximize profits, is something that many more business-school students should be encouraged to consider."
 
Accused Child Foot Licker Blames President Obama [HP]
A man in Rochester, N.Y., who was arrested Tuesday for allegedly inappropriately touching children's feet, claims he's the victim of a setup by no less than President Barack Obama. Anthony Parri, 49, was arraigned on two felony sex abuse and endangering the welfare of a child charges. According to court documents obtained by WHAM-TV, Parri removed a child's shoe, fondled her foot and pressed it up against his nose and mouth. […] "I'm being set up by the President Barack Obama and the city and federal government," he said after the arraignment. "My family was killed here. My uncle was killed here. This is a set up… they had women following me in Wegmans."

 

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