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ANR: Corzine in Trustee’s Crosshairs; Deloitte Investigating Indiana’s Lost Tax Revenues; Nazis and Tax Policy Rhetoric Don’t Mix | 06.05.12

Posted on by Caleb Newquist

MF Global Autopsy Flags Risks by Corzine [WSJ]
A bankruptcy trustee blamed former MF Global Holdings Ltd. Chief Executive Jon S. Corzine for events leading to the financial firm's collapse, saying he may pursue legal claims against the former financier for ramping up risks and failing to safeguard money belonging to customers. James Giddens, the trustee trying to recover money for the company's U.S. brokerage unit, said in a 275-page report Monday that he may pursue claims of "breach of fiduciary duty and negligence" against Mr. Corzine and other officials at the firm for revving up the firm's risk-taking appetite without improving controls needed to keep customer funds safe. He cited Mr. Corzine's giant trading bets and failure to put systems in place to prevent improper transfers of customer money. Monday's highly anticipated report was the most detailed autopsy yet of MF Global, which filed for bankruptcy protection on Oct. 31. The firm's customers still are owed an estimated $1.6 billion.

UK needs new accounting rules for banks – BoE's Haldane [Reuters]

Britain needs separate accounting rules for banks to allow investors and regulators to properly evaluate risks, as trying to do so now was like trying to "pin the tail on a boisterous donkey", a senior Bank of England official said. International Financial Reporting Standards (IFRS), which set accounting methodology, give a "hit and miss" view of the solvency of banks, Andrew Haldane wrote in this month's edition of the accountancy and business magazine Economia. Haldane, the Bank of England's executive director for financial stability, said Britain's accounting rules were so badly flawed that getting an accurate view of a bank's assets was like trying to "pin the tail on a boisterous donkey".

Deloitte chosen to audit Indiana Department of Revenue [FWJG]
Administration officials, with input from legislators, have selected financial firm Deloitte to handle an audit of the Indiana Department of Revenue after uncovering more than $500 million in financial miscues since December. “It was a consensus decision,” State Budget Director Adam Horst said. New York-based Deloitte will first perform a risk assessment to determine the likely weaknesses in the system and what internal controls require focus. The cost of the assessment will be less than $250,000.

 
'Zombie' companies holding back UK economy, says Ernst & Young [Telegraph]
Britain's recovery is being held back by a wave of "zombie" companies that should be allowed to fail but are instead undermining capitalism, according to Ernst & Young. The accountant said that the financial crisis had created an environment where it is "too difficult to fail", with businesses being kept afloat to the detriment of the broader economy. As a result, so-called "financially undead" companies are clinging on, despite the recession, making markets and the economy inefficient. "The expected jump in the number of companies falling into administration has not materialised," a report by E&Y said.
 
Filmmakers Shoot for Breaks [WSJ]

Declining theater attendance and crumbling DVD sales have squeezed profit margins in the movie business, making tax breaks an essential part of producers' calculations about where to film. Supporters of states' tax-incentive programs say that every dollar spent directly on a film production results in $5 to $6 in spending at hotels, restaurants, caterers and other contractors—making the incentives an inexpensive stimulus for local economies. Critics of the programs say such "multiplier effects" are overblown and that tax breaks often function as rewards for activity that would have taken place anyway, rather than true incentives. "In the harsh light of reality, film subsidies offer little bang for the buck," argued a 2010 report from the left-leaning Center on Budget and Policy Priorities.
 
Loose Talk About Nazis and Tax Policy [Tax.com/Joseph Thorndike]
An analysis from Joe Thorndike.
 
Former bath-salts addict: 'It felt so evil' [CNN]

The man is strapped onto a gurney and restrained, yet he is singing, making faces and twitching. "You know where you're at?" a paramedic asks him, but Freddy Sharp can't answer. He was, he explained later, off in his own world after overdosing on synthetic drugs known as "bath salts." "I'd never experienced anything like that," Sharp told CNN's Don Lemon. "It really actually scared me pretty bad." He said he was hallucinating about being in a mental hospital and being possessed by Jason Voorhees, the character from the "Friday the 13th" movies. "I just felt all kinds of crazy," said Sharp, now 27, of Tennessee, who says he hasn't used bath salts in months. "It felt so evil. It felt like the darkest, evilest thing imaginable."

 

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Bin Laden Is Dead, President Obama Says [NYT]
Osama bin Laden, the mastermind of the most devastating attack on American soil in modern times and the most hunted man in the world, was killed in a firefight with United States forces in Pakistan on Sunday, President Obama announced. In a dramatic late-night appearance in the East Room of the White House, Mr. Obama declared that “justice has been done” as he disclosed that American military and C.I.A. operatives had finally cornered Mr. bin Laden, the Al Qaeda leader who had eluded them for nearly a decade, and shot him to death at a compound in Pakistan.

Satyam Investors’ U.S. Lawsuit OvPwC for $25.5 Million [Bloomberg]
Investors in Satyam Computer Services Ltd. (SCS) settled a lawsuit against PricewaterhouseCoopers LLP for $25.5 million related to its audit of the Indian firm that included a $1 billion overstatement of assets. Satyam, the software exporter embroiled in India’s biggest corporate fraud probe, reached a $125 million settlement in February in the class action in New York. Satyam agreed last month to pay $10 million to settle a U.S. Securities and Exchange Commission lawsuit.

The Osbournes — 357,000 More Tax Problems [TMZ]
Clearly the moral of the story is, don’t cancel meetings with your accountants.

Ohio accounting students meet fraud expert [AW]
The old cliché, “If you want to build a better hen house, ask a fox,” rang loud and clear today at The Ohio State University Fisher College of Business. You’re probably familiar with Enron, WorldCom, and Madoff scandals, but do you remember the ZZZZ Best Carpet Cleaning fraud from the 1980s and the man behind it, Mark Morze? Morze was found guilty of stealing $100 million and creating more than 10,000 phony documents and several fake tax returns. None of the auditors, lawyers, and bankers who were charged with examining the books detected the fraud. This legendary tale of deception is now must-read material for accounting and business students, helping them prepare to be able to make decisions that will shape their own careers and lives.

Is Going Public Going Out of Style? [CFO]
No matter how you slice it, the number of publicly traded companies in the United States continues to fall. On the major exchanges, there were 5,091 companies, including foreign-based ones, listed at the end of February, a 2% drop from 2009 and a 42% decline from the peak of 8,823 in 1997, according to new data from Grant Thornton. Looking across all U.S. exchanges, including the over-the-counter (OTC) market, the number of U.S.-based companies has fallen more than 30% since 2000, according to Audit Analytics.

Some Closer than Others: Inside The Berkshire Hathaway Annual Meeting [Forbes]
Aka: Francine goes to Omaha.


Deloitte’s leader makes her case for diversity in the executive suite [Boston Globe]
With less than a month to go as chairman of Deloitte, Sharon Allen continues making the rounds.

E&Y awaits ruling on challenge to ICAI [FT]
Ernst & Young is due to learn this month if it can proceed with a legal challenge that could derail an investigation into its auditing of Anglo Irish Bank, the property lender that had to be rescued by the Irish government in 2009. The Irish arm of the global accountancy network has objected to the way that the Institute of Chartered Accountants in Ireland has probed its work at Anglo Irish before its nationalisation.

New H&R Block CEO Cobb gets $900,000 sign-on bonus [KCBJ]
H&R Block Inc. will pay new CEO William Cobb a base annual salary of $950,000 on top of a $900,000 cash sign-on bonus, plus the potential for millions of dollars in additional compensation. Former CEO Alan Bennett will stay with H&R Block full time until July 31, then get a monthly fee of $15,000 under a one-year consulting contract, according to a Friday filing with the Securities and Exchange Commission. After that, he’s eligible for a one-time cash bonus to be determined by the board.