Our editor is taking a personal day so you can post news and questions for discussion in Open Items. We'll be back to full speed on Monday.
Prosecutorial Bent Shows in SEC Accounting-Fraud Push, Ex-Official Says [LawBlog/WSJ]
A couple of years ago, the SEC started an accounting fraud task force. So, how's it going?
The push has led to a steady increase in those types of cases: 134 in the year ended in September, up from 98 the previous year and 68 the year before that.
Behind that increase, according to David Woodcock, who led the SEC’s accounting-fraud task force from its inception in 2013 and is now in private practice at law firm Jones Day, is a new approach to the cases.
“The SEC is now largely run by former prosecutors who also have spent time at large law firms defending complex fraud. That background has translated into a more aggressive and technical approach to enforcement,” Mr. Woodcock said in a paper co-written with Jones Day colleagues.
“The SEC isn’t just looking for egregious fraud,” he said, “it is also on the hunt for minor violations that may foretell larger frauds and technical violations in which the agency was not interested previously.”
Incredibly, this new task force has now "created more competition internally for the cases" and the relying on restatements and tips from whistleblowers to find cases. Maybe if you're lucky, you can retire early? Or if you're unlucky, not so much.
Accounting Giant KPMG Axes Dozens Of Partners [Sky News]
Around 50 UK-based partners have been told that their services are no longer needed "in a bid to improve its performance and respond to changing demand from its clients." As you may or may not recall, the House of Lords of Klynveld didn't have the best of years:
The reduction in the number of partners at KPMG follows a fall in profit to £383m in the year to 30 September, with a modest rise in revenue meaning it was overtaken by EY to become the smallest of the quartet which dominate the industry.
I'm not aware of any firm policy that says if you lose a size position to a rival that means people lose their jobs. Although I'm sure it doesn't help matters.
The FASB released its new lease accounting standard yesterday and that gets an "Enron" in a headline at the New York Times; as if off-balance sheet debt didn't exist before Jeff Skilling and Andy Fastow came along. The opposition to the new rule is still out there and US Chamber of Commerce is the vanguard:
“This standard can have a severe impact on the ability of businesses to go out and get debt,” said Tom Quaadman, at the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness.
Quaadman concedes that FASB has been "very receptive to hearing what the problems are."
In other lease accounting news, the new visibility could cause "CFOs to start making potentially different decisions and cut costs" and manage leases more closely for more savings. This is all music to accountants' years, I suppose.
In other news:
- "Mitt Romney, who was one of the dumbest and worst candidates in the history of Republican politics, is now pushing me on tax returns. Dope!"
- Another VIE collapse
- Layoffs in the energy sector are adding up.
- Litterbug shaming.