Author: Adrienne Gonzalez

Adrienne is a 15-year veteran of the accounting industry, if by "veteran" you mean "vulture prowling the periphery of the profession waiting for something exciting to happen." She has been spewing vitriol on Going Concern since the site was founded in 2009. A former CPA review employee, she has sat through more FAR classes than any CPA exam candidate ever could -- even one who has failed FAR seven times -- and can still recall most of the mnemonics all these years later.

Accounting News Roundup: MF Global’s MFing Accounting; Tax Credits For Prisoners and the Deceased; the Groupon Blow-Off | 11.07.11

MF Global Brokerage Can Probe, Not Share Results [Bloomberg]
U.S. Bankruptcy court judge Martin Glenn said at a hearing today that the brokerage trustee, James W. Giddens, can share documents and depositions with the Securities and Exchange Commission and the Commodity Futures Trading Commission. The trustee must probe management’s possible involvement without interference from the parent company, Glenn said. “There have already been serious allegations of misconduct,” Glenn said, citing company lawyers who told the SEC on Oct. 31 that there was a significant shortfall in its collateral for segregated accounts.

Was MF Global brought down by an accounting play? [Reuters]
Felix Salmon isn’t convinced that MF Global’s accounting methods brought it down a la Lehman.

Finding more flaws in HUD’s accounting of HOME program [Washington Post]
“The data that HUD has provided to this committee is completely unreliable,” said Rep. Randy Neugebauer (R-Tex.), chairman of the House Financial Services subcommittee on oversight and investigations, which has been probing the HOME program. “HUD has almost no way of knowing whether taxpayer dollars have been wasted or used for their intended purpose.”

Old Debts Dog Europe’s Banks [WSJ]
European banks are sitting on heaps of exotic mortgage products and other risky assets that predate the financial crisis, adding to pressure on lenders that also are holding large quantities of euro-zone government debt.

More problems are found with home buyer tax credits [LA Times]
Would you be shocked to hear that TIGTA found a few of these credits went to folks such as dead people, prison inmates and 3-year-olds?

Watch Groupon CEO Andrew Mason Blow Off A Bloomberg Reporter [Business Insider]
Maybe it started when she called him “baby-faced.”

Have You Had Prometric Issues? Tell Us!

Instead of giving the same piece of advice I’ve given a hundred times over, today’s post is a plea for information. I know MANY of you (too many, if you ask me) have had Prometric issues over the years, and by issues I mean:


• Prometric Gestapo harassing or hassling you over items not specifically listed in the CPA exam candidate bulletin
• Prometric equipment failures, blank screens, entire exams disappearing, etc
• Generally distressing exam environment issues including excessive noise, uncomfortable temperatures, etc

If you have experienced any kind of issue at Prometric (even the little ones), please leave a comment below or email me with your story. You will remain anonymous unless you tell me otherwise.

I’m hoarding your answers for a follow-up post I will put up later and submit to The Powers That Be (as in the AICPA) so please be as elaborate as you need to be. General dates help (like if you took the exam in 2006, please say that, it’s possible that Prometric has had a chance to address your issue by now). Feel free to include feelings, I won’t hate if Prometric made you cry like a baby on the way home from the exam.

Thanks in advance, guys!

White Collar Mafiosos (And Their CPA) Arrested For Strong-Arming Their Way To Business Ownership

A mobster, a lawyer and an accountant walk into a bar… Okay, maybe not.

Yesterday, thirteen people – including five lawyers and a Certified Public Accountant – were arrested in early morning raids in New Jersey, Florida and Texas for their part in a complicated scheme that involved taking a mortgage company by force and frittering away its assets.

Federal prosecutors say the son of imprisoned crime boss Nicodemo D. “Little Nicky” Scarfo and his associate Salvatore Pelullo took over Irving, TX mortgage company FirstPlus Financial Group, a company with plenty of cash but very little sophistication. The change in ownership was not amicable for both involved parties. According to the indictment, Pelullo told a member of the FirstPlus board that if he did not go along with the planned takeover, “your kids will be sold off as prostitutes.” Harsh. At what B-school do they teach that tactic?


The indictment goes on to allege that Pelullo wanted the company’s board to agree to give control over to his and Scarfo’s new board of directors and that he wasn’t willing to wait around for this to happen. “I don’t care if they’re in a funeral parlor, I don’t care if they’re in a [bad word] hospital on a respirator, we’ll send somebody there. I want their vote, I want their signature, and I want it done by the close of the day today,” he is alleged to have said to other individuals also charged in the scam.

Among those indicted are former FirstPlus Chief Executive Officer John Maxwell and former Chief Financial Officer William Handley. Court documents show that both individuals were placed on the board by, er, unconventional means that don’t include the desires of shareholders ifyouknowwhatI’msayin.

Fun fact: former Vice President Dan Quayle was once a FirstPlus board member. He is not mentioned in any indictments. Also, former Miami Dolphins quarterback Dan Marino used to be a shill for FirstPlus. The company filed for bankruptcy in 1999 and, according to a Chapter 11 filing from June of this year, was dormant but profitable due to a securitized pool of mortgages it expected to make a profit from for at least a decade. Ernst & Young resigned as the company’s auditor in 1999, citing, uh, irreconcilable differences but not anything to do with accounting issues or, you know, the fact that the company was basically broke.

The 25-count indictment includes charges of money laundering, bank fraud, wire fraud, mail fraud, securities fraud, extortion and obstruction of justice.

Authorities say that the (alleged) criminal masterminds took $12 million from the company in a year and spent it on multiple homes, weapons and ammo, pricey luxury vehicles, a plane, jewelry and a yacht. You know, the usual.

FirstPlus Financial Was Hit by Mob Takeover, 13 Charged, Prosecutors Say [Bloomberg]
US Attorney For NJ Alleges Mafia Crime Family Took Over FirstPlus [Dow Jones]

Things You Definitely Need to Take the CPA Exam

Rose from Sleep on CPA is still plugging away at the exam, but when I read her recent REG wrap-up, I noticed a funny bit she included about a fellow tester she encountered at Prometric:

I was so surprised to find a girl at Prometric who doesn’t even know what NTS is!!! She brought a print out of Prometric appointment confirmation. When a staff member was asking her for NTS, she was clueless. A staff member explained her what NTS is and told her to get a printout from her NASBA emails from a nearby Kinkos. I showed her my NTS and she came back with a print out of NTS and wrote her exam.

Can that possibly be true?! Given some of the very obvious questions I’ve gotten over the years, I guess anything is possible.

I’m sure none of you guys will ever have this issue but just in case, let’s go back over what you definitely need to sit for the exam.


1) A map to Prometric or a good GPS – Plug the address in the night before so you have one less thing to worry about on testing day.

2) GAS IN YOUR TANK – I hate to even have to say this but it’s come up (like I said, anything is possible). I’m the kind of person who plays chicken with my gas light, and it’s caused me to be late to work more than once. Fill up the night before.

3) Bring your unexpired, original NTS and AT LEAST two forms of acceptable identification – The number on your NTS will be used as your launch code to begin testing, so you definitely do NOT want to leave it at home. If you are unable to produce your NTS and two forms of identification that match it, you will not be allowed to test and will forfeit your exam fees for that day.

4) Bring extra ID just in case – In most cases, you’ll need an unexpired driver’s license and a credit card, but just in case Prometric staff have issues with your ID and want to hassle you, bring an extra bank card or credit card if you have one. Social Security cards are not accepted as identification for Prometric purposes.

5) Do NOT bring big items into the testing center with you – While you can stash your jacket or purse in Prometric lockers, they cannot accommodate golf bags, large suitcases, garbage bags full of recyclables, etc. So leave your crap at home.

Sorry for the remedial reminder, don’t want to leave anyone behind.

President’s Council on Jobs Report Suggests We Should Try Sarbanes-Oxley Light for IPOs

Barbara Roper wrote a commentary piece in WaPo Capital Business over the weekend that suggests the unthinkable: softening hard ass SOX rules for IPOs could actually kill jobs. How is that possible? Aren’t IPOs great for the economy?

Well, not always. Case in point: Groupon. Healthy, financially strong businesses are good for the economy. Scams, frauds or even overambitious accounting tricks might temporarily get the economy’s spirits up like a few rails of coke but eventually reality sets in and the economy is left broken and penniless in the alley looking for its next hit.


The report is an effort on the part of the Obama crew, who surveyed 27 business executives (including AOL’s Steve Case… and we know how his business turned out) for ideas on how to get the economy moving again. Among the suggestions, the report recommends Congress make compliance with all or part of Sarbanes-Oxley voluntary for public companies with market valuations up to $1 billion or, alternatively, exempt all companies from SOX compliance for five years after they go public.

The report blames burdensome SOX rules for the sharp drop in small IPOs in recent years, writing:

In the aftermath of the dot-com bubble and unintended consequences stemming from the Spitzer Decree and Sarbanes-Oxley regulations, the number of IPOs in the United States has fallen significantly. This is especially true for smaller companies aspiring to go public. As noted earlier, the share of IPOs that were smaller than $50 million fell from 80% in the 1990s to 20% in the 2000s. Well-intentioned regulations aimed at protecting the public from the misrepresentations of a small number of large companies have unintentionally placed significant burdens on the large number of smaller companies.

That would totally work as a justification except the SEC already debunked this silly idea. In a report earlier this year recommending no new 404(b) exemptions, SEC analysis showed that the United States has not lost U.S.-based companies filing IPOs to foreign markets for the range of issuers that would likely be in the $75-$250 million public float range after the IPO. “While U.S. markets’ share of world-wide IPOs raising $75-$250 million has declined over the past five years, there is no conclusive evidence from the study linking the requirements of Section 404(b) to IPO activity,” the report stated.

And as we all know, companies under $75 million haven’t had to worry about the SOX burden at all thanks to Congressional intervention. So how could it be that the burden they haven’t had has somehow prevented them from going public?

New boogeyman, please. I’m no huge fan of SOX but you’re going to have to come up with something better than this to convince me it’s a good idea to can it.

CPA Requirements: Meeting the 150 Credit Rule on a Budget

Happy Friday, people! Is it a blackout month yet? I guess not. But hey, we have a good question I received via Twitter yesterday to talk about. If you have a CPA exam question, life question, career question or general insult to hurl at me, tweet or email me.

Done w/ exam but do u have any recs on getting 150 cred other than grad school. I don’t want to pay the $$ for it. #cpahelp

Ahhh, the good old 150 rule. Intended to turn bright-eyed young accounting students into skilled leaders of the industry, the 150 rule has driven a lot of you right off the steaming pile of debt. But unless your state actually requires a Master’s (I can’t name a single one that does), there is absolutely no reason to take that route unless you feel that it will improve your salary prospects or if you can afford it. Otherwise? Please.

So. What’s a 4-year-college underachiever to do?


The truth is that many state boards accept credits from any educational institution recognized in that state, meaning you can easily sign up for 30 units at community college and meet the 150 unit requirement for licensure. Now, the key here is to take classes that you think will round you out as a human being, actually be interesting, or at least inspire you to show up for class. In my experience taking night classes at a community college back in the day, community college professors can actually be a lot more fun than the professors you might be used to. Many work in the industry or field that they will be teaching you about, which allows them a real world practical experience that many academic accounting professors might not have (sorry, guys, you know I’m right). If you are single, you can also definitely find some tail at community college, so there’s another bonus.

Community college will be your cheapest option (if recognized by your state board), but if that isn’t something you’re able to do, there are always online colleges. A lot of these are for-profit, overpriced and not always fun to attend, though I can’t say that from personal experience. I’ve heard stories, mmkay? If you have the money, there’s nothing wrong with enrolling to take some online classes this way but it is definitely more feasible for the left-brainers out there.

Whatever you decide to do, take the opportunity to get creative with your education. Those additional units are meant for you to advance your knowledge so you can be better at your job protecting the public trust or whatever it is you’re meant to do when you get your CPA. A fucking art class wouldn’t kill you, it rounds you out.

New Jersey Works Out Its Big CPA Exam Application Kink

You guys remember earlier this month when we found out that some eligible CPA exam candidates in New Jersey were incorrectly rejected by CPAES, the company the NJ Board uses to process exam applications? Yeah, well, that’s fixed now.


According to NJSCPA Director of Communications Don Meyer, the current NJ regulations regarding educational requirements to sit for the CPA Exam have been and will continue to be the “law of the land” until the State Board determines otherwise.

• Under the current regulations, applicants wishing to take the CPA exam prior to earning the full 150 credit hours must earn a bachelor’s degree from an accredited college or university, take 60 semester hours of “liberal arts” courses AND take specific government, finance and business courses.

• However, due to some confusion about the interpretation of those regulations, the Board will on an interim basis grant waivers to candidates to sit for the exam if they have 120 semester hours of general college level education and a bachelors degree.

To read more, check out this update from NJSCPA.

Note: The IRS Does Not Appreciate You Not Reporting Your Embezzlement Gains

Let this serve as a warning to any would-be embezzlers out there, if you steal, you better report it to the IRS.


42-year-old Collette Snyder of Timonium, MD pleaded guilty earlier this month to filing false tax returns in 2007 and 2008 after she neglected to claim over $382,000 embezzled from her former employer, Towson, MD-based Maple Leaf Title.

As part of her duties at the title company, Snyder had signature authority over the company’s operating, settlement and recording accounts, which allowed her to begin embezzling money from MLT accounts starting in 2007. She deposited company checks directly into her personal bank account, as well as made checks payable to her husband without his knowledge, forging his signature to deposit those checks in an account he was not aware of. At that point, Snyder had been an employee of MLT for two years.

Snyder took around $149,560 in 2007 and $232,968 in 2008. These embezzled funds were used to purchase jewelry, a BMW, trips, home improvements and private school tuition.

Because reporting this money to the IRS without it clearly declared on her W-2 (despite her writing “payroll” in the memo section of company checks she wrote out to herself) would have alerted authorities to the fraud, Snyder neglected to mention the ill-gotten gains. This resulted in an estimated tax loss of $115,529.37 for her 2007 and 2008 returns.

Due to the embezzlement by Snyder and MLT President Anthony Weis, MLT was unable to perform its duties as a provider of settlement services. With MLT’s escrow account drained, existing mortgage notes could not be paid off by MLT, meaning clear and free title could not be passed to the new lender and borrower of those notes. An insurance company that had issued title insurance policies to the borrowers guaranteeing clear title ultimately paid out $3.9 million to financial institutions that held mortgage notes.

Weis pleaded guilty to wire fraud, was sentenced to 78 months in prison and was ordered to pay restitution of $4,007,705, which includes the loss to the title insurance company and the expenses of the individual victims. He began his sentence in May of this year. The interesting part of this story is that Weis stole money intended for his clients’ real estate closings. And then Snyder stole from the company. Birds of a feather…

Snyder faces a maximum sentence of three years in prison and a fine of $250,000. U.S. District Judge Catherine C. Blake has scheduled her sentencing for February 3 , 2012 at 11:00 am.

“Mortgage fraud adds to the underground economy that erodes the integrity of our tax system and threatens the financial health of our communities. IRS Criminal Investigation is committed to ‘following the money trail’ to ensure that those who engage in these illegal activities are vigorously investigated and brought to justice,” said IRS – Criminal Investigation Special Agent in Charge Jeannine A. Hammett.

How Do Big 4 Exiles Get Their CPE?

File this one under first world problems.

Hello,

I’m starting to think about post-Big 4 opportunities and I am wondering how people maintain their CPE credits after leaving the Big 4. Since we need to take 80 hours of CPE credits every 2 years to maintain a CPA, do most employers offer trainings that give CPE credits? If not, will they give you time off and pay for the classes? I’d be very interested in hearing from you, and from the Going Concern community.


Well considering so many of the country’s employable CPAs somehow manage to meet their board of accountancy’s CPE requirements year after year, there’s got to be a trick to stay current that doesn’t involve firms forking out the cash for “experts” to school their staff on all things billable to the CPE time code. Are you telling me you have somehow escaped the wrath of NASBA and don’t get emailed weekly with new CPE offers? Congratulations.

I spoke to one of my favorite HR people at a reasonably-sized but definitely not Big 4 firm to find out what their CPE policy is and found out that most firms above 50 people pay for CPE in one way or another. According to a national survey conducted by the AICPA and the Texas Society of CPAs, 42 percent of the smallest firms paid for CPE in 2010. So unless you end up working out of some ancient CPA’s basement, you will probably not be expected to pay your own way.

Obviously, smaller firms will not be able to provide in-house CPE but you can likely get your online CPE comped, or get reimbursed for any travel associated with in-person CPE you attend. But seriously?! In-person CPE? Get with the times, man.

If you do end up needing to pay your own way (again, totally unlikely as long as you stay gainfully employed by a real accounting firm, even a tiny one), your state society of CPAs can probably provide information on their CPE offerings, or there is always NASBA (as anyone on their email list will tell you) or the AICPA.

Remember too that if you are attending conferences like AICPA Council, you get CPE for doing so, so maybe those dumb meetings aren’t so pointless after all.

CPA Exam Candidate’s Study Break Results in Caption Ingenuity

As many of you are painfully aware, accountants aren’t generally known for their sense of humor. DUIs? Maybe. Organizational skills? Definitely. Freakish ability to memorize a dictionary’s worth of FASB ASCs? Sadly, yes.

But every now and then, the world is blessed with an accountant who smashes the mold.

Case in point, 24-year-old David Woodbridge. A native of Lake Forest, IL, Woodbridge just won the New Yorker’s caption contest for his chortle-worthy caption which appeared in the magazine’s October 10th issue. Odds of winning the contest are estimated at 1 in 10,000 due to the large number of submissions, according to the magazine’s cartoon editor. Anyone care to take a guess on the odds that an accountant could win the contest?

The best part of the story? He came up with the winning entry while taking a break from studying for the CPA exam:

Woodbridge said he first tried the contest about three years ago but gave up after not winning after several attempts. Upon graduating from college, he decided to try the weekly contest again this summer while studying for the CPA exam.

Now I know what you’re asking… what was this hilarious caption?

Woodbridge’s winning caption was “Looks like they’re making cuts at the top” to a drawing of two janitors standing in the lobby of a building with headless corporate executives entering the building around them. He beat out “I dare anyone to say we missed a spot” and “It seems a bit extreme, but it does keep the zombies away” to win an original drawing of his captioned cartoon (valued at $250).

Uhhh… congrats?

Easy CPA Exam Answers

Sometimes, the answers come easy:

Hello. I am taking the REG and AUD sections of the CPA exam during the latter part of the Oct/Nov testing window. In your opinion, how much “rote memorization” is required to successfully pass the two sections referenced above.

Thank you for your assistance.

DMF

Simple. Zero.


For every hour of CPA review lecture video you watch, you should do 2 – 3 hours of homework for that section. If you rewatch a lecture, I would still do an additional 2 – 3 hours homework (MCQ or practice simulations) for each subsequent viewing. There is no such thing as practicing too much but don’t tell that to people who have scored in the mid to upper 90s.

Rote memorization? I wouldn’t call the effort you put into studying for these sections “rote memorization,” though you will be engaging in repetition (to the point of nausea) to really indoctrinate the concepts into your head.

In order to actually learn the concepts you need to pass, you will need to know why the answers are right and wrong, not just what the answers are. That’s why you don’t hear about people smuggling answers out of Prometric (they could if they really wanted to), it wouldn’t do anyone any good.

You will need to memorize certain concepts (don’t bother remembering every single tax form and SAS) but generally speaking, your most effective strategy is going to be to get in as much practice as you can. That means plowing through questions but thinking about the answers as you do so. Use the guide above to figure out just how many hours you need to put into each section but the “magic number” varies wildly for each candidate, you may need more or you may need less.

Would Anyone Actually Download This AICPA App?

That’s a serious question.

I’ve been to events with lots of accountants huddled up in a room showing off their technology so I am not implying that CPAs don’t care about apps, I’m just wondering if anyone would download an app dedicated to a particular AICPA conference.

CrowdCompass released the AICPA Not-For-Profit Financial Executive Forum app on October 15th and as far as I can tell, no one cares about it.


The description reads as follows:

Between the slowed-down economy and a more stringent regulatory environment, the last few years have led to a “new normal.” Gaining lost momentum and getting back on track with smart new strategies and practical solutions are necessary for success.

This AICPA Not-for-Profit Financial Executive Forum is the solutions-based conference that features top experts and is designed specifically to address these issues and provide the answers for your financial, technical and structural operations. You’ll come away with valuable insights and tools to take back to your organization and implement immediately.

The 2011 NFP FEF (if that isn’t a mouthful…) sounds like a great time for anyone actually interested in non-profits (my unofficial research shows there are about 7 of you). Not-for-profit financial executive staff members, CEOs, CFOs/executive directors and directors of finance in NFP could probably learn a lot and enrich the very core of their work by hanging around at one of these forums. Hey, you can even check in on foursquare from the conference. But the Android app? I’m not sure I see the benefit there.

Does an app make navigating the conference any easier? You still have to remember the name of the person you met three hours ago who you’re being introduced to again and no app can help you with that. It’s not like there are several square miles of territory to navigate as you’re cruising the conference circuit, so is it necessary to have your exact position on the map? Maybe I’m just an old BlackBerry user who doesn’t get it.

Anyway, the conference is from October 27-28, 2011 at the Westin in my former hometown of San Francisco, CA so it isn’t too late for you to register and fly out there to the Land of Fruits and Nuts for some non-profity goodness.

If anyone actually downloads and uses this app, can you please get in touch with me? I’m curious to hear what you did with it. Sorry, that’s kind of lazy but the AICPA isn’t going to sell me the email list of anyone who buys the app so this is the best we’ve got.