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September 29, 2023

Accounting News Roundup: Raids on Olympus; Deloitte’s PCAOB Inspection Report; The ATR Nice and Naughty List | 12.21.11

Republicans in House Reject Deal Extending Payroll Tax Cut [NYT]
By turning down a bill that was overwhelmingly supported by both parties in the Senate as well as the White House, the conservative House majority that has spent the year inciting combative legislative showdowns is now staring over the brink, standing fast against legislation with significant financial consequences for nearly every American household. Over just a few hours on Tuesday, President Obama held an impromptu news conference to sharply criticize them, the House floor exploded with partisan derision and many members then headed for the airports, not knowing how or if the legislative battle would end. In a year of bitter legislative standoffs, the preholiday clash over the payroll tax was as tense as any, ripe with potential political repercussions in the first days of an election year.

Olympus offices, homes raided in accounting scandal [Reuters]
Dozens of black-suited investigators, marching double-file, raided the office building of three small Olympus Corp subsidiaries Wednesday, one of 20 sites searched in a probe of a $1.7 billion accounting scandal that threatens the once-proud Japanese medical device maker's survival. Other teams were seen waiting patiently to be buzzed inside a luxury condominium – the home of a former company president – and piling from a van in an underground car park at Olympus' high-rise headquarters. The raids, telegraphed in advance to the media, are part of a rare joint probe by Tokyo prosecutors, police and financial regulators targeting the 92-year-old company, which has admitted to concealing investment losses via questionable M&A deals and other accounting tricks stretching back over two decades.

Accounting Board Finds Faults in Deloitte Audits [WSJ]
Inspectors for the government's audit-oversight board found deficiencies in 26 audits conducted by Deloitte & Touche LLP in its annual inspection of the Big Four accounting firm. The report from the Public Company Accounting Oversight Board, released Tuesday, said some of the deficiencies it found in its 2010 inspection of Deloitte's audits were significant enough that it appeared the firm didn't obtain enough evidence to support its audit opinions. The 26 deficient audits found were out of 58 Deloitte audits and partial audits reviewed by PCAOB inspectors. The inspectors found that, in various audits, Deloitte didn't do enough testing on issues like inventory, revenue recognition, goodwill impairment and fair value, among other areas. In one case, follow-up between Deloitte and the audit client led to a change in the client's accounting, according to the report.

MF Global Transfer Draws Scrutiny [WSJ]
Investigators on the hunt for missing customer money from MF Global Holdings Ltd. are scrutinizing about $200 million moved to a company account at J.P. Morgan Chase & Co. three days before the securities firm filed for bankruptcy protection, according to people familiar with the matter. The transfer has drawn interest from investigators partly because J.P. Morgan asked MF Global in a letter the following day to attest that the Oct. 28 shift of funds didn't violate regulations designed to protect customer money. The letter suggests that officials at J.P. Morgan, which cleared some trades for MF Global, had become concerned that the securities firm might have gotten the money by dipping into customer funds. Commodity Futures Trading Commission rules prohibit futures brokers from using customer money for their own trading purposes. J.P. Morgan accepted the roughly $200 million transfer, using it to help cover an overdraft in MF Global's proprietary-trading account at the bank. It isn't clear if J.P. Morgan still has the money.

A Two-Month Payroll Tax Cut is Dumb, So Is How Congress Got There [TaxVox]
Howard Gleckman: "House Republicans are right about one thing at least: Extending this year’s payroll tax cut for two months is ridiculous. The trouble is they are largely to blame for the very policy they are criticizing."

'Tis the season: Grover Norquist names his naughty, nice list [The Hill]
Norquist, the president of Americans for Tax Reform, named a trio of congressional Republicans with whom he has had very public spats this year — Sen. Tom Coburn of Oklahoma and Reps. Frank Wolf of Virginia and Steven LaTourette of Ohio — to his “naughty” list. Meanwhile, in a tongue-in-cheek move, ATR named Senate Majority Leader Harry Reid (D-Nev.) and former Sen. Alan Simpson (R-Wyo.), both of whom have also sparred with Norquist, to its “nice” list.

A C.P.A. Figures Out What Business Owners Really Want [YTB/NYT]
Besides lower fees.

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