Author: Adrienne Gonzalez

Inspired by recent events which I shall not get into here because of CPA Wrangler/client privilege, I figured now might be the time to do a quick “how to survive if you thought you were starting with the Big 87654 but suddenly won’t be until 3 quarters from now” refresher. Here you thought you got a sweet gig and now it’s all about making it until your delayed start date.
First and foremost, you’ve got your parents. They might have even put you through school. Your Dad may have called me at the CPA Factory asking if he could put your CPA Review course on his credit card (awww what a nice guy). Maybe they aren’t totally disappointed in you yet and haven’t lost their savings to Alan Greenspan’s bubble fixation. Whatever the situation, you should know by now that this is the first place to tap for extra cash, not your couch.
More, after the jump

Secondly, maybe the Universe is trying to tell you something. Is this really what you want to do with your life? Public accounting? Really? No one’s saying you’ve got to have a spiritual awakening or anything but maybe this is the time to evaluate the direction your life is trying to take. If nothing else, take it as a sign that you could use a Sabbatical.
Let’s not forget that you should be employable somewhere else. So instead of sitting around on the Xbox 360 eating ramen until you show up all pretty and polished for your first day at the Big 87654, go shop your shiny ass to other firms who might have the cash to cover your paycheck. If you’re looking for an easy way to meet the experience requirement and get your CPA and are lucky enough to have a trust fund, you’re totally fine sitting around pwning 12 year olds at Halo. But if you actually want to be an accountant for the rest of your life, go out there and sell yourself to a smaller firm who might appreciate your skills, not leave you waiting like a bad Craigslist blind date.
The last thing to keep in mind here is that sometimes it really is not you but me. Firms are scrambling to keep the quality staff they have and replenish the stock that are moving out of public accounting; take advantage of this. As we pointed out here on Going Concern already, don’t trip on the recruiters, they might be out of a job in a few months. It’s a bloodbath out there so slap on your gloves and try not to get any on your nice blue tie.
And if things get really bad, you can always froth lattes at the local coffee shop for the next few months. Give me a discount on my quad black eyes and I’ll tell you what *I feel* might be on the FAR exam next window *cough*
Hang in there, kids!

Editor’s note: Adrienne Gonzalez is founder and managing editor of Jr Deputy Accountant. You can see all of her posts for GC by going here. By day, she teaches unlicensed accountants to pass the CPA exam, though what she does in her copious amounts of freetime in the evening is really none of your business. Follow her adventures in Fedbashing and CPA-wrangling on Twitter @adrigonzo but please don’t show up unannounced at her San Francisco office as she’s got a mean streak. Her favorite FASB is 166.
Holy crap, wait a minute, is FASB trying to do something useful?
If you’re the sort of person annoyed by having to pay for software updates for your iPod, then perhaps. As with anything FASB does, intention and practical application are always two distinct and not necessarily related items. It remains to be seen whether or not this frees Apple of the strange accounting noose critics of the FASB rule claim has stifled sales.
Continued, after the jump

If you’ve ever been irked at the small charges you’ve had to pay for an iPod touch software upgrade, this may be about to go by the wayside. According to Ars Technica, a rule governed by the Financial Accounting Standards Board, that’s been heavily lobbied for by Apple and other electronics companies, may be enough to lift the charge that iPod touch owners have had to pay for updates of significant features to their devices. The rule focuses on “subscription accounting”, or devices that gain “significant new functionality” after their sale, like the iPhone, have to be reported over a series of years rather than all at the same time (presumably because the revenues associated with the product were the result of a series of updates, not just one lump sum).

(source)
Those same critics (or the financial reporting nerds, we’re not sure) claim that Apple has technically been underreporting its iPhone earnings as a result of this rule, a reversal of which would fortify Apple’s balance sheet of steel. That’s great for Apple, I suppose.
The rule is as yet in comment draft form, so go nerd on over to FASB and tell them what you think.
Does this mean billions in iPhone revenues will have to be restated going back to 2008? Rub it in, why don’t you?
This is where it gets really magical.
Stefan Sidahmed via Seeking Alpha:

The projected EPS really shows the true impact of the iPhone on Apple’s earnings. The FY10 EPS of $16.80 includes $4.02 in deferred income, so the ‘real’ EPS would be $12.78, more than double FY09 projected GAAP earnings. Likewise, the FY11 EPS contains $1.92 of deferred EPS. This should not be interpreted as Apple doubling their EPS, but rather that their current EPS is artificially suppressed by subscription accounting.

Good news for them and maybe FASB has at last done some good. Guess we’ll see when the deferred earnings run out.

This is the sort of story that you can’t make up. Like the story of the guy who tried to write off prostitutes and porn as a “medical expense”.
Wait a second. Oil “programs,” federal misconduct, drugs, sex, AND bad accounting?! This might be the best thing I’ve read in weeks.
Continued, after the jump

NYT:

The Interior Department announced on Wednesday that it was ending an oil and gas royalty program that ignited a scandal last year when it was disclosed that federal employees had engaged in corruption, drug use and sexual misconduct with oil industry officials.
Ken Salazar, the interior secretary, told a House committee that he was phasing out the royalty-in-kind program, which is administered by the department’s Minerals Management Service. It allows oil companies to pay the government in oil and gas rather than in cash for the right to drill on federal lands. Recent audits have shown that the government has failed to collect tens of millions of dollars worth of royalties owed it under the program.

Everyone knows I am not the mathlete but tens of millions seems fairly clear to me. Did NYT really have to use “right to drill” in that too? This might be the seediest accounting scandal I’ve seen since the phone sex company that booked revenues too soon (I think that’s called the premature double entry method):

Four Star Financial was another firm with results too good to be true. Once a thriving financial services firm that paid as much as 18 percent on returns to investors, Four Star performed well for years. The closely held firm had invested in 900-numbers and collected on their unpaid receivables. It also made short-term loans at high interest rates. But when the 900-number industry began to slide in the mid-1990s, the firm (then called 900 Capital Services) sought new ways to pay off investors.
A class action lawsuit alleges that Four Star undertook a Ponzi scheme described as the “‘Argentina arbitrage transaction” defrauding investors of at least $40 million. The deal purportedly involved the sale of long-distance telephone arbitrage contracts in Argentina.
According to the Web site Four Star Fraud.com, which apprises former investors of ongoing litigation and company news, most investors–largely concentrated on the Westside–believed Four Star dealt exclusively in telecommunications. The suit further claims that both 900 Capital and Four Star had questionable investments from their inception.

Too easy. It’s almost as if they write themselves sometimes.

Editor’s note: Adrienne Gonzalez is founder and managing editor of Jr Deputy Accountant as well as regular contributor to leading financial/investment sites like Seeking Alpha and GoldmanSachs666. You see all of her posts for GC by going here. By day, she teaches unlicensed accountants to pass the CPA exam, though what she does in her copious amounts of freetime in the evening is really none of your business. Follow her adventures in Fedbashing and CPA-wrangling on Twitter @adrigonzo but please don’t show up unannounced at her San Francisco office as she’s got a mean streak. Her favorite FASB is 166.
What do you get when you cross a Federal Reserve governor and the AICPA? Well I wish I could say unicorns and rainbows but really all you get is Fed Governor Elizabeth Duke on, what else, regulation.
Regulatory Perspectives on the Changing Accounting Landscape doesn’t exactly sound like a party but what do you expect? Unemployment is up, revenues are down and let’s face it, things aren’t looking too good for the short term. You’ve got to give Duke some level of credit for trying.
More, after the jump

Firstly, we feel it prudent to point out that Duke is no CPA. She couldn’t tell a debit from a credit if her life depended on it, at least in j/e form, but we’re willing to bet as a banker she’s probably better at sniffing out capital requirements than, say, that brainiac Bernanke.

Given my background as a community banker, I feel it is crucial that an accounting regime directly link reported financial condition and performance with the business model and economic purpose of the firm. It is difficult for me to comprehend the value of an accounting regime that doesn’t make that link.
To be frank, it has been frustrating to try to assess that viability when the value of an asset is based on the nature of its acquisition rather than the way in which it is managed or the way in which its economic value is likely to be realized.

What’s so frustrating about assessing an asset? Either it’s worth something or it’s worthless. Any idiot can figure that out, even yours truly.
Duke implies in her speech that fair value is only useful if the instrument (read: creative and probably entirely made-up security) is being sold or desired by some third party (read: those gullible Chinese who bought all of our weak ass mortgage-backed securities back in the good old housing bubble days) and entirely useless for anything else. In other words, the proof is in the cash flows.
Leave it to a banker to assume that balance sheets are so easily manipulated by instruments passing from buyer to seller and somehow entirely irrelevant in the time in between. As a banker, we expected better from her. Surely she understands that capital requirements dictate those “useless” securities on the “assets” side of bank balance sheets count towards the bank’s overall viability? Apparently not.
In fact, Duke seems to think that fair value can backfire on smaller institutions who may not have the borrowing leverage of, say, a beast like Goldman Sachs. Or better, Lehman Brothers. Before they went bankrupt that is.
All in all, interesting thoughts from the Fed Board on this one but until they pull out someone with practical accounting experience, it might as well have come from Perez Hilton for all I care. Next!

Editor’s note: Adrienne Gonzalez is founder and managing editor of Jr Deputy Accountant as well as regular contributor to leading financial/investment sites like Seeking Alpha and GoldmanSachs666. You see all of her posts for GC by going here. By day, she teaches unlicensed accountants to pass the CPA exames in her copious amounts of freetime in the evening is really none of your business. Follow her adventures in Fedbashing and CPA-wrangling on Twitter @adrigonzo but please don’t show up unannounced at her San Francisco office as she’s got a mean streak. Her favorite FASB is 166.
I don’t know about you guys but when I’m trying to avoid spilling the beans, I’ll skirt around the issue as much as possible. God forbid my words come back to haunt me later, it’s so much easier to be as vague as possible.
Turbo Tim Geithner obviously subscribes to this method as well. Skirting around the issue of a tax increase? Our Treasury Secretary has that little song and dance down.
More after the jump

Politico:

Treasury Secretary Timothy Geithner said in an interview aired Sunday that the administration will do “what’s necessary” to revive the economy, and didn’t rule out new taxes as a means to do so.
“We’re going to have to look at – we’re going to have to do what’s necessary,” Geithner told ABC’s George Stephanopoulos, host of “This Week.”
“Remember the critical thing is people understand that when we have recovery established, led by the private sector, then we have to bring these deficits down very dramatically. We have to bring them down to a level where the amount we’re borrowing from the world is stable at a reasonable level. And that’s going to require some very hard choices. And we’re going to have to do that in a way that does not add unfairly to the burdens that the average American already faces.”

Well what the hell is that supposed to mean? Sounds like a tax increase to me. With our Chinese credit card already cut and record-blowing amounts of Treasury auctions flopping week after week, one can only wonder where we’re going to be forced to make those “hard choices” Geithner is talking about.
Well instead of an across the board tax increase, we have some other ideas for raising the United States’ revenue. Hope you’re listening, Timmy!
• Obama Cabinet bikini car wash on Pennsylvania Ave. – Listen, no one wants to see Larry Summers in a bikini, so maybe the fundraising will come from paying him to keep his clothes on.
• White House yard sale -Taking a cue from California, the White House could put up all those black Secret Service helicopters up for a deep, deep discount. I’m sure they could pull at least $20 a pop for cardboard cutouts of Bill Clinton that have been gathering dust in the basement
• Rent out Ben Bernanke’s industrial strength money printing machine by the hour – Listen, we already know the thing works, why not rent it out to other nations engaged in quantitative easing? I’d say rent it out to Zimbabwe but they might not be able to cover the bill
• FOMC cage match fights at Fedquarters – We’ve all heard about dissent at FOMC meetings but what if we kill two birds with one stone – bring new transparency to the monetary policy-setting process AND pull in $75 a ticket to see “El Jefe” Jeff Lacker take on “Helicopter Ben” Bernanke in spandex and Luchador masks? I know I would pay to see that.
If you’ve got other ideas, we’re all ears. And if none of these work, I guess there’s always legalized prostitution. Though I’m not quite sure how well Tim “Eraserhead” Geithner would do as a man whore… Oh well. Tax increase here we come!

Deutsche Bank wins the prize for the most well-capitalized art collection, racking up 53,000 works in one of the largest corporate art collections in the world – as of 2004, worth an estimated $124 million (USD). Does that fall under PP&E? How does one depreciate a Cezanne hanging in a corporate office anyway? Oh wait, you don’t.
In honor of the year anniversary of Lehman’s fall, we find it worth noting here that Lehman’s Dick Fuld and his wife found that when you’re in desperate need of a capital infusion and facing epic failure, pawning off your precious fine art pieces works in a pinch.
More, after the jump

Guardian UK:

The bankrupt investment bank Lehman Brothers wants to sell at least $8m (£5.2m) worth of the art collection that once decorated its offices. The news comes as $20m of postwar art, put up for sale by the former Lehman boss Richard Fuld and his wife Kathy, goes on the block tonight at Christie’s in New York.

That’s got to hurt.
But Dick isn’t alone. If only banks would have considered these precious assets while spiraling down the toilet.
Portfolio has a do-not-miss on the art collections left behind by bank failures:

From coast to coast, millions of dollars of corporate art that once hung in the offices of well-known banks has itself become entangled in the fallout from the financial crisis. The fate of that artwork is still being sorted out, along with the assets involved in many of the unprecedented bank failures and resulting mergers that took place last year. Some of the surviving financial institutions appear to be holding onto the valuable artwork for their own collections, despite the chance to cushion their coffers with its sale. Others are selling the art or donating it to local museums and nonprofits.

Well, wait a minute, will this art have the same fate as the $4 billion in WaMu deposits the failed thrift is fighting to get back from JP Morgan? Just sayin.
This is nothing new. In 1991, the FDIC netted a cool $250,000 for the art collection of failed Boston Trade Bank. Though that was a pathetic catch in comparison to the $800,000 the collection of 219 pieces was estimated to be worth but hey, every little bit helps.
Wonder why no one’s thought to tap AIG for some precious paintings? Surely General Motors has a few pricey pieces lying around corporate offices, let’s use that to recoup that $23 billion American taxpayers may never see again!