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ANR: MF Global’s Internal Controls or Lack Thereof; Concern Over Supercommittee Failure; “These French Fries Are Like Crack” – Yep! | 11.02.11

Lack of MF Global Controls Exposed by Missing Money [Bloomberg]
MF Global Holdings Ltd. (MF)’s bankruptcy, the eighth-largest in U.S. history, is exposing a lack of internal controls that may have prevented a last-minute rescue of Jon Corzine’s futures broker. The day it filed for Chapter 11 protection, New York-based MF Global disclosed a shortfall in customer accounts that people with knowledge of the matter said may be about $700 million. CME Group Inc., which has the authority to audit those accounts, said yesterday it didn’t know how much client money was missing.

Judge Blocks H&R Block from Buying TaxAct [AT]
A federal judge has ruled against H&R Block to prevent the tax prep giant from moving forward with its $287.5 million acquisition of 2SS Holdings, whose 2nd Story Software unit develops TaxAct software, after the Justice Department objected to the deal.

Tax impasse threatens US deficit progress [FT]
Negotiations to strike a deal that could revive confidence in America’s ability to control its public finances are reaching a critical juncture, with a 12-member panel of Congress – equally split between Republicans and Democrats – weighing competing proposals to break the impasse. But so far there is scant evidence that a large-scale fiscal compromise is in the works, with big divisions persisting, particularly over taxes. The so-called “supercommittee” is due to report on November 23, and if a majority cannot recommend at least $1,200bn in savings for the US government over the next decade, a “trigger” will force automatic spending cuts worth that amount starting in 2013.

Deficit Panel Is Warned That It Must Not Fail and Is Urged to Compromise [NYT]
A co-chairman of President Obama’s fiscal commission told members of a powerful Congressional panel on deficit reduction Tuesday that he feared they would fail, and he said the consequences of such failure could be calamitous. Four experts on fiscal policy — two Democrats and two Republicans — told the panel that Congress should reduce the budget deficit by adopting spending cuts and increases in tax revenues. One co-chairman of the president’s fiscal commission, Erskine B. Bowles, said he had great respect for each member of the committee, but added, “I am worried you’re going to fail — fail the country.” Former Senator Alan K. Simpson, the other co-chairman of the commission, denounced Grover G. Norquist, the conservative antitax advocate, and AARP, the lobby for older Americans, saying both were obstructing efforts to reduce the deficit.

Cattles Claims ‘Gross Misstatement’ of Debt in PwC Audits [BBW]
Cattles has claims against PwC tied to the firm’s audits of its finances from 2005 through 2007 that could result in “substantial damages,” according to an outline of the case by Judge Henry Bernard Eder in London, who ruled yesterday on preliminary issues. The company said PwC’s audit led to a “gross misstatement” of the company’s bad debt. While an official complaint hasn’t yet been filed, Cattles was awarded some legal costs against PwC in an evidentiary dispute. Cattles claims groups of loans that were “ostensibly” set aside for debt collection were in reality just buckets for bad debt, Eder said in the ruling, which didn’t address the merits of the case. “Once the misstatements became clear, the group could not continue trading and became worthless.”

MF Global Goes Belly Up, So Where Was the Going Concern Opinion? [GOA]
Grumpies: “To answer the question, yes, we do think PwC probably should have issued a going concern opinion. There were plenty of breadcrumbs to reveal the cupboard was bare.”

Reznick Group Appoints Five New Principals [RG]
Adam Kleeman, Lucas Matesa, Marshall Phillips, Rick Suid, and Joseph Wallace all got their sports coats out for the occasion.

Graduate job applications up 140% at E&Y [Accountancy Age]
Ernst & Young has seen applications to its graduate and undergraduate placements rocket in the last year. Graduate job applications have increased 140% in a year, while undergraduate trainee schemes, which offer work experience at the firm, has also seen a frenzy of activity as submissions grew 215% compared to last year.

Fatty Foods Addictive as Cocaine in Studies [Bloomberg]
You’re all a bunch of junkies.

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