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Accounting News Roundup: Who Will Watch the Watchmen?; An Emerging Firm in China; ‘Frankly, people can bake cupcakes’ | 04.17.13

Posted on by Caleb Newquist

It is time to audit our auditors [FT]
Audit Analytics, a service that tracks reports on publicly traded US companies, reports 12 resignations during 2013 thus far, but only 26 during 2012 and 33 in 2011. Of these resignations, with the exception of the recent KPMG debacle, not one was related to so-called “independence” issues – conflicts of interest – in 2013. There was only one independence-related resignation in 2012 and six in 2011. So, actually, to have a major accounting firm admit not only to discovering a breach of auditing standards but then to withdraw its previously issued audit reports, is indeed rare.

Auditors Should Open the Books [WSJ]
For a profession intimately involved in providing information, auditors are an uncommunicative bunch. Accountants' work is condensed into an anodyne, one-page report, telling investors virtually nothing they didn't already know. The pass/fail system—stating whether financial statements are fairly presented—offers no insight into judgments or concerns, or crucially where accountants and managers disagreed. Audits have been impenetrable black boxes for too long.
 
Stalking the Big Four [FT]
When Zhang Ke left Coopers & Lybrand in 1999 to set up his own accounting firm, some doubted the upstart would survive. Outside Coopers – now part of PwC – and the other big western outfits, the profession in China was weak. This did not deter Mr Zhang. “I thought China was so big, it should have some of its own accounting firms,” he recalls. Little more than a decade later, the gamble has paid off. ShineWing, the firm he started, is snapping at the heels of the industry’s biggest names in China and the avuncular, soft-spoken Mr Zhang has become perhaps the most influential accountant in the land. “He is the dean of the accounting profession right now in China,” says Paul Gillis, a professor at Peking University. “He’s the guy.”
 
IRS and States Swamped by Last-Minute Tax Filings [AT]

“Due to the significant increase in federal and state submissions transmitted on April 15th, the length of time to create federal acknowledgments and make them available for retrieval is taking longer than expected,” the IRS said in an email to tax professionals Tuesday evening. “The IRS is closely monitoring the acknowledgment rates and is working to close the gap as a top priority.” The IRS added that the majority of state tax returns are linked to the acceptance of the federal return, so the length of time it takes to make the state return available for state retrieval has also increased. It asked tax professionals not to re-transmit any tax returns if they have not yet received an acknowledgment.
 
The Gourmet-Cupcake Market Is Crashing [WSJ]

"The novelty has worn off," says Kevin Burke, managing partner of Trinity Capital LLC, a Los Angeles investment banking firm that often works in the restaurant industry. Crumbs now has 67 locations, nearly double the number it had less than two years ago. "These are singularly focused concepts," says Darren Tristano, executive vice president at Technomic Inc., a Chicago research and consulting firm that specializes in the food industry. "You're not going to Crumbs every day. It's a short-term trend and we're starting to see a real saturation," he adds. "Demand is flat. And quite frankly, people can bake cupcakes."

Lend Lease opens tender on audit role after 55 years with KPMG [Australian]
Breaking up with your auditor is hard to do.

Palm Beach accountant trained for Boston Marathon to fight tax season stress [PBP]
Michael Kaplanidis was 10 minutes from the finish when the bombs exploded.

Police clear scene in H&R Block threat [AP]
Two threats in two days. 

IRS Announces Three-Month Filing, Payment Extension Following Boston Marathon Explosions [IRS via DMWT]
File Form 4868 on July 15 if you need an additional three months after that.

Police: New Mexico man traded McDonalds for sex [KOB4]
Albuquerque police found Donald Jones, 58, at Bullhead Park with a woman he picked up near Central and Virginia. According to the criminal complaint, Jones picked up the woman in an area known for prostitution. Police watched Jones order food at a McDonald’s drive thru window and head to a nearby park. On their way to the park Jones told police he purchased the woman food and asked how she would reimburse him, the criminal complaint states. Police confronted the pair at the park and saw the woman pulling up her pants in the car.

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Accounting News Roundup: Economy Adds 117,000 Jobs; FASB Takes on Private Co Accounting; Who Pays the Lowest State Business Taxes | 08.05.11

Employers hire 117,000 in July; jobless rate slips to 9.1% [Washington Post]
Hiring picked up in July, the government said Friday, offering evidence that the nation is muddling through a period of very weak growth but not falling back into recession. Employers added 117,000 jobs last month, the Labor Department said Friday, compared with a revised 46,000 in June and better than the 85,000 net new jobs that forecasters had expected. The unemployment rate ticked down to 9.1 percent, from 9.2 percent in June.

FASB Meetings to Address Private Company Accounting Issues [Journal of Accountancy]
FASB said it is hosting two public round-table meetings in October to discuss issues relating to existing private company accounting and reporting standards. The meetings, scheduled for Oct. 11 and Oct. 17, will discuss issues including accounting and disclosure requirements relating to variable-interest entities, interest rate swaps and level 3 fair value measurements.

The auditing profession in Bangladesh: Turning the tide? [The Financial Express]
There were times when the auditing profession in Bangladesh used to draw a lot of criticism from the company directors, researchers, and popular press for their perceived failure to do their job as auditors properly; the quality of audited financial statements were questioned, and the role of the Institute of Chartered Accountants of Bangladesh (ICAB) in disciplining its members was challenged.

California taxes from businesses decline [The Orange County Register]
California businesses paid $85.4 billion in state and local taxes in the 2010 fiscal year, according to a new report from the Council on State Taxation and Ernst & Young LLP. California’s corporate income tax revenue declined 18% from July 1, 2007 through June 30, 2010, and its property tax revenue plunged 27%, reflecting the state’s real estate woes.

Does Connecticut Really Have Nation’s Lowest Business Taxes? [The Hartford Courant]
Connecticut businesses have the lightest tax burden in the nation, according to a new study that is being hailed by some as proof that companies are overly coddled by the state, and slammed by others as misleading and dangerous. The study done by Ernst & Young for the Council on State Taxation (COST) adds up the total amount of state and local taxes paid by business in each state — which was $6.9 billion in Connecticut in 2010. Each state’s total is then divided by that state’s total private-sector economic output, for a percentage.

E&Y beefs up its insurance team [The Royal Gazette]
Accountants Ernst & Young (EY) has announced three new appointments to its London and Bermuda insurance team. Paul Cooper, Simon Burtwell and Ben Reid have all been appointed to senior roles due to increased demand from its clients.

Audit of Alameda County assistance program reveals gross mismanagement [The Oakland Tribune]
An Alameda County audit of a now-defunct countywide assistance program shows hundreds of thousands of dollars in mismanaged grant money and questionable expenses — including money spent on alcohol, massages and dubious travel.
The audit of the Associated Community Action Program, commonly called ACAP, also confirms what former employees had asserted — a complete lack of oversight by the program’s governing board. That board was made up of one county supervisor and one elected official from every city in the county, excluding Berkeley and Oakland.

Should Internal Audit ‘Do SOX’? [Norman Marks via Sustainable Business Forum]
There is a sharp divide among internal audit professionals as to whether the internal audit function should play a significant role in the SOX program. In the first few years of SOX, management more often than not looked to internal audit as internal control experts to lead the development and implementation of the SOX program.

Accounting News Roundup: Chinese Exports May Include More Accounting Irregularities; PwC Into Africa; Faking Sick | 07.18.11

Congress tees up crucial votes on debt limit [WaPo]
A bipartisan effort in the Senate to allow President Obama to raise the federal debt ceiling in exchange for about $1.5 trillion in spending cuts over 10 years gained momentum Sunday, as leaders agreed they would have to act in the next two weeks to avert a potential default by the U.S. government. The growing sentiment for raising the federal limit on U.S. borrowing sets the stage for a week of largely scripted actions on Capitol Hill, where leaders in both chambers are looking to build support for the plan being crafted by Senate Majority Leader Harry M. Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.).

Allegations against Chinese cos to continue, affect funding – Fitch [Reuters]
Allegations of fraud and accounting irregularities at Chinese companies are likely to continue for at least the near term and the accusations may hamper the firms’ access to funds regardless of the claims’ merit, Fitch Ratings said. A string of fraud allegations against Chinese companies listed in North America, often made by investors shorting the stock involved, has sparked a sell-off in China-related equities.

Getting Out of a Slump [WSJ]
Everyone can relate to hitting a wall at work. Whether it’s feeling unchallenged or underappreciated, most of the reasons people get stuck in their role can be resolved with planning. But you must understand the nature of the problem and determine whether it’s a workplace issue, such as being topped out in the company, or a psychological impasse.

PwC putting $100m into Africa [FT]
The latest long-term investment into Africa comes from PwC, which on Monday said it would put $100m into the region over the next five years. PwC is among several international organisations that have upped their spending in east Africa of late, and the firm believes the value of the continent’s economic output could double to nearly US $3,000bn by 2020.

The “Independent” Auditor’s Real Client? Time to Re-Assess, I Kid You Not [Re:Balance]
Forget the investors! Sort of.

43% of College Grades Are A’s [TaxProf]
Gosh, the kids must be getting smarter.

One in three workers ‘admits to skiving’, survey suggests [BBC]
PwC polled 1,190 people, of which 34% admitted having taken time off under false pretences. The majority of so-called “skivers” said they did so because they were bored and depressed with work. Illness is the most common excuse. Four out of 10 said they planned their sick days by faking symptoms around the office in advance. Some of the more incredible excuses given for missing work included a rabbit running away and amnesia.

Accounting News Roundup: Auditors ‘Portray Worrying Lack of Skepticism’; Are Tax Strategies Patentable?; Method Man Pleads Guilty, Cuts Check for NYC Tax Evasion | 06.29.10

FSA accuse auditors of failing to question management bias [Accountancy Age]
The Financial Services Authority has decided that it was about time it called out a few people, “Auditors have become yes men who don’t adequately question management bias according to concerns raised by the UK’s chief financial regulators. The Financial Services Authority (FSA) and the Financial Reporting Council today released a scathing discussion paper into the profession following concerns raised in the wake of the financial crisis. Among its concerns is that auditors ‘portrays a worrying lack of skepticism’ when scrutinising potential management bias.”

Not onlef=”http://www.accountancyage.com/accountancyage/news/2265630/fsa-audit-report-regulator”>FSA wants new enforcement powers including the ability to ” fine, censure or disqualify audit firms.” The FSA also wants to meet with auditors several times a year, rather than just once, as well as direct access to audit committees.

Alex to Become Hurricane as Swells Reach Gulf Spill [Bloomberg]
“Tropical Storm Alex, the first named system of the Atlantic hurricane season, strengthened today, forcing the evacuation of rigs in the Gulf of Mexico and pushing swells toward the worst U.S. oil spill.

The storm, packing maximum sustained winds of 70 miles (110 kilometers) per hour, was 460 miles southeast of Brownsville, Texas, before dawn today, moving north-northwest at 8 mph, the U.S. National Hurricane Center said in an advisory. The circulating winds were near reaching hurricane status of 74 mph.”

New York state may tax out-of-state hedge fund execs [Reuters]
Desperate idea of the day from the brain trust in Albany, “Recession-hit New York could raise an extra $50 million a year by collecting income taxes from people who work for hedge funds in the state but live elsewhere, according to a legislative plan to raise revenue…A spokesman for Democratic Assembly Speaker Sheldon Silver said by telephone on Monday that it means hedge fund managers would be treated the same way as other commuters.”


Aprill: The Impact of Bilski on Tax Strategy Patents [TaxProf Blog]
In non-PCAOB SCOTUS news, the decision in Bilski v. Kappos addressing “Whether a ‘process’ must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing (‘machine-or-transformation’ test), to be eligible for patenting….” was examined by Ellen P. Aprill of Loyola-L.A. regarding the impact on tax strategy patents:

“Bilski is at best a mixed bag for those who think tax strategies should be patentable. It gives little help and does allow business method patents, albeit somewhat begrudgingly. It demonstrates that for those who believe that tax strategies should not be patented, legislation is needed.”

Method Man pleads guilty to NYC tax-evasion charge [AP]
“Hip-hop star Method Man pleaded guilty to a tax-evasion charge Monday, writing a check on the spot for the final $40,000 restitution payment after owing about $106,000.” What, no cash?

U.S. Court to Hear Janus Appeal In Securities Case [Reuters]
“The lawsuit, brought on behalf of those who bought Janus stock from mid-2000 through early September 2003, alleged that the prospectuses of several of Janus funds created the misleading impression that the company would adopt measures to curb market timing, when in fact secret arrangements with several hedge funds permitted such transactions, to the detriment of long-term investors.”