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ANR: Ernst & Young Settles Over Sino-Forest; BDO/PKF Merger Update; Mortgage Interest Deduction By State | 12.04.12

Posted on by Caleb Newquist

Ernst & Young to Pay $117.6 Million to Settle Sino-Forest [Bloomberg]
The largest settlement with an auditor in Canadian history.

Treasury Needs a Tax Expert, Not a Wall St. Banker [Fiscal Times]
Bruce Bartlett: "[T]ax policy has historically been one of the Treasury secretary’s primary areas of focus. But that has changed over the last 20 years, as various secretaries have taken more interest in banking, finance and international economic issues. During both the Bill Clinton and George W. Bush administrations, Treasury ceased to be the lead agency on tax policy. The White House tended to signal general ideas about tax policy to Congress and then let it work its will. An important consequences of this laissez-faire policy has been that the tax code has become unbelievably screwed-up as new tax provisions became layered on old ones, the interactions between old and new provisions were ignored, the administrative aspects of tax policy took a back seat to scoring cheap political points, and Treasury’s recommendations for legislative fixes to various tax problems were routinely ignored by Congress year after year. […] I hope President Obama looks beyond the usual Wall Street banker-types when choosing a replacement for Mr. Geithner. I think he needs a tax guy; someone steeped in the intricacies of the tax code with long experience in tax policy."

BDO/PKF merger vote to be completed this week [Accountancy Age]
Partners are expected to vote on the merger at both firms by Friday this week, with the votes to be counted by early next week. BDO and PKF are planning to make a public announcement before Christmas as to whether the merger will go ahead, although experts predict it is unlikely there will be any roadblocks. A merged entity would create a firm with more than £400m in revenues, with 3,500 staff.

Tchenguiz brothers seek millions from Serious Fraud Office [Guardian]

Robert and Vincent Tchenguiz, who once owned 1% of all the residential property in Britain but lost out heavily in the financial crisis, were arrested in dawn raids on their homes in March 2011. But the SFO was forced to drop its three-year investigation into the pair's involvement in the collapse of Icelandic bank Kaupthing after it admitted to serious failings. The brothers on Monday began legal action demanding the SFO pay damages estimated at up to £200m each. If they win the case, which is scheduled for trial at the high court in January 2014, it will trigger the biggest payout in the SFO's 25-year history and increase the pressure on the agency's former boss, Richard Alderman. […] Vincent Tchenguiz said the damages should not be paid by the taxpayer alone and added that the "intervention of third parties in this unlawful process warrants further assessment". This is understood to be a reference to the role accountants Grant Thornton played in supplying much of the information the SFO relied on for its investigation. In a letter included in evidence filed at the court, lawyers claimed that Grant Thornton made "unfounded allegations of fraud against Vincent Tchenguiz" in "misleading information" the accountants provided to the SFO. The letter added that there was a "serious question" as to whether Grant Thornton "succumbed to a conflict of interest and may have improperly misled the SFO in order to advance their own and their clients' commercial interests".

The full moon doesn't make you crazy, study confirms [NBC]
[A] new Canadian study dismisses this popular belief and suggests that more people with psychological problems do not show up at hospital emergency rooms during a full moon. Researchers found little evidence that the moon's lunar cycles were linked to an increased incidence of mental health concerns. In other words, the moon's behavior seems to have no effect on human behavior on planet Earth. Sure, the word "lunatic" derives from the Latin word "luna" for "moon," but science has found little connection between the moon and madness.

Michigan Town Woos Hollywood, but Ends Up With a Bit Part [NYT]
Hollywood may make movies about the evils of capitalism, but it rarely works without incentives, which are paid for by taxpayers. Nationwide, about $1.5 billion in tax breaks is awarded to the film industry each year, according to a state-by-state survey by The New York Times. Within two months, 24 movies had signed up to film in Michigan — up from two the entire year before. The productions estimated that they would spend $195 million filming there, and in return they would be refunded about $70 million in cash.

SEC to study what information should be required in broader financial reporting [JofA]
The SEC plans to study the issue of what information should be required in the financial reporting package outside the financial statements—an examination aimed at providing investors the right information in the right places while preventing overlap in demands on preparers. “We intend to initially focus on whether the issue should be further explored, including, for example, whether there are any perceived gaps in the disclosures today, and what are the critical decision points regarding this issue of the dividing line between what should appear in the financial statements versus the broader reporting package,” Paul Beswick, the SEC’s acting chief accountant, said Monday at the AICPA Conference on Current SEC and PCAOB Developments in Washington.

Mortgage Interest Deduction by State [Tax Foundation]
Nearly 37% of Maryland residents claim the MID. Connecticut, Virginia, Colorado, Minnesota round out the top five.
 
Democrats Needlessly Insisting on Rate Hikes [Martin Sullivan]
MS: "Yes, it will be politically impossible to massively cut tax expenditures for the wealthy. But it is mathematically possible and if done right could be better economics. If the Republicans are insisting on not raising rates AND agreeing to have tax increases fall exclusively on the wealthy, why don't Democrats simply let the Republicans float their plan for base-broadening without rate hikes?"
 
Milan diocese creates exorcism hotline [BBC]

Seems like Twitter would be easier: "The Catholic diocese of Milan has doubled the number of priests who practice exorcism and set up a hotline to deal with the volume of calls. In an interview published on a Church-affiliated news website, it said it had increased the number of specially trained priests from six to 12. […] Monsignor Angelo Mascheroni, who has trained priests to carry out exorcisms for the past 15 years, said demand had soared recently. "From the number of calls we receive, the need has doubled," he told the diocese's news website Incrocinews."

 

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The shine on the trophy hasn’t even faded!


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Oh boy, “The SEC and the PCAOB would not confirm that their enforcement actions regarding the Satyam audit were finished.”

BDO USA Settles Bankest Suit With Former Client Banco Espirito Santo [Bloomberg]
BDO’s statement emailed to Bloomberg: “BDO USA LLP has entered into confidential settlement agreements with Banco Espirito Santo and Barry Mukamal, the bankruptcy trustee of E.S. Bankest LC, pursuant to which the lawsuits against BDO have been resolved,” sounds a lot like what we published yesterday.

The Kabbalah Centre in Los Angeles is the focus of an IRS investigation into tax evasion [LAT]
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New PCAOB Chairman Pushes for Audit Overhaul [AT]
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U.S. auditor watchdog hopeful of access to China [Reuters]
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