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December 3, 2022

ANR: SEC’s Latest Investigation of a Deloitte Shanghai Client; Ernst & Young’s Tepid Film Tax Credit Report; International Experience a ‘Must-have’ for Aspiring Bigwigs | 05.10.12

S.E.C. Is Investigating Accounting of Chinese Client of Deloitte in Shanghai [NYT]
The Securities and Exchange Commission disclosed Wednesday that it was investigating another Chinese client of the Shanghai affiliate of Deloitte, the large accounting group, on suspicion of accounting fraud. It did not identify the company, but an official said the investigation, which began in 2010, was continuing. The S.E.C. filed an administrative action against Deloitte Touche Tohmatsu CPA Ltd. of Shanghai for refusing to provide audit work papers related to the unidentified company. Deloitte said it had provided the work papers to Chinese regulators but could not provide them to United States regulators under Chinese law. The case will be heard by an S.E.C. administrative law judge under a provision of the Sarbanes-Oxley law that requires auditors of foreign companies whose securities are registered in the United States to provide audit work papers when asked to do so by the S.E.C. It appears to be the first time that provision has been cited in an enforcement action.

China orders "Big Four" auditors to restructure [Reuters]

The world's top four accounting firms will have to bring in Chinese citizens to run their operations in China and end the dominance of foreign partners under new rules announced by the Finance Ministry on Thursday. The Big Four auditors – Deloitte Touche Tohmatsu, Pricewaterhousecoopers, Ernst & Young and KPMG – must start to convert their practices this August and comply with all the new rules by the end of 2017. The rules require them to "localise" their operations so that they are led by Chinese citizens and dominated by accountants holding China's accountancy qualifications.
 
Olympus Losses Deepen [WSJ]
Olympus Corp. said Thursday it sank deeper into the red in the fiscal fourth quarter from a year earlier, weighed by the costs of dissolving the three Japanese firms it acquired during a decadelong effort to hide $1.5 billion in investment losses. The Japanese maker of cameras and medical-imaging equipment logged a net loss of ¥15.90 billion during the January-March quarter, compared with a loss of ¥1.98 billion a year earlier.
 
House GOP calls for independent counsel in MF Global investigation [OTM/The Hill]
"Simpy put, this matter stinks," said Rep. Bob Turner (R-N.Y.) Wednesday. "We do not trust you, you are too conflicted to do this properly." Rep. Michael Grimm (R-N.Y.) has gathered 27 GOP signatures on a letter that will be sent to Holder, making the request. In it, the members argue that Corzine, who previously served as New Jersey's Democratic governor and senator and an Obama fundraiser, is too close to the White House to ensure a proper investigation and prosecution. "I don't have faith that the Attorney General would push this thing to move along to a full trial," said Grimm.

Coffee Mogul Defends Loans [WSJ]
It turns out the 68-year-old [Robert] Stiller also bought costly real estate and piled up hundreds of millions of dollars in debt borrowed against his company stock and other investments. His two worlds collided on Monday, as Mr. Stiller was forced by his bankers to sell $123 million worth of Green Mountain stock, cutting his stake to 5.4% from nearly 10% in March. The sudden sale prompted the company's board to strip him of his title as chairman and publicly criticize the transaction, saying it was "inconsistent with the company's internal trading policies." On Wednesday, Mr. Stiller disclosed that he also had sold Monday his 12% stake in Krispy Kreme Doughnuts Inc., raising nearly $50 million.

Ex-Marvell Employee Gets 2 Years Probation in Stock Case [Bloomberg]
Former Marvell Technology Group Ltd. (MRVL) accountant Stanley Ng was sentenced to two years’ probation for his role in an insider-trading scheme involving so-called expert networking firms. Ng, who was the Securities and Exchanges Commission reporting manager for Hamilton, Bermuda-based Marvell, pleaded guilty in December, admitting that he passed information about the chipmaker’s earnings in 2007 and 2008 to two members of an “investment club” that prosecutors said was set up to trade illegal stock tips.

Ernst & Young Struggles to Say Nice Things About Film Tax Credits [Tax Foundation]
Ernst & Young, the large accounting firm, has a new study out today that lists potential benefits from state film tax credits. Because the study was paid for by the Motion Picture Association of America, whose members benefit the most from such subsidies, I presume they wanted a study that endorsed the credits as good economic development policy. E&Y did not do that.
 
Don't Unpack That Suitcase [WSJ]
As the process of bringing products to market involves an increasingly global web of commerce, managers gunning for the C-suite should be ready to complete multiple stints abroad. Such double- and triple-dipping workers are in high demand, because time spent overseas develops their ability to manage complex, interconnected operations—skills that just can't be developed back at headquarters or in one brief foreign assignment, recruiters and human-resources executives say. "There's nothing like being on site to see the realities of how business actually gets done," says Tom Kolder, president of executive-recruiting firm Crist|Kolder. "We've seen it go from being 'nice to have,' to 'must have.' "

Baby, 18 months old, ordered off plane at Fort Lauderdale airport [WPBF]
So that's nice.

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