Author: Caleb Newquist

Founding editor, Going Concern.

David Cay Johnston: President Obama Has Out-Norquisted Grover Norquist

Granddaddy of tax gazetteers, David Cay Johnston, is poking at Grover Norquist again, this time over the quagmire that the Republicans find themselves in over President Obama’s payroll tax cut proposal. The very proposal that could make Obama the biggest Grinch of 2011. Ruined holidays aside, DCJ points out that if the Republicans shoot this down, they do so at the behest of what seems to be a very popular idea:

[N]umerous opinion polls show overwhelming public support for continuing tax cuts for workers and for raising taxes on millionaires. That has left Republican leaders no choice but to silently cry uncle and agree to the president’s request to extend and possibly expand the payroll tax cut.

The reason that Republicans aren’t so hot on the payroll tax cut is that it’s “temporary.” They’d rather see “permanent” tax cuts enacted, although those “permanent” tax cuts are never “permanent.” The “permanent” Bush tax cuts, for example, had to be “extended” last year because they were about to “expire” which basically makes them “temporary.” The payroll tax cut was originally enacted last year with the Bush tax cuts but as Paul Ryan says, it’s supposed to be like a holiday, which is to say, “We lived through it and we’ll just move on with our lives and never to speak of it again.” DCJ writes that this means Obama has beat the Republicans at their own game:

Having outsmarted Norquist, Obama gets to run for a second term as the champion of at least a $100 billion tax cut. Obama can even say that if Republicans had had their way, working people’s taxes would have gone up while taxes on billionaires would have gone down. And he gets to tell small business owners that, but for Republicans, their taxes would have gone down too.

This is a marketing fiasco for Republicans to rival the Ford Edsel and New Coke. Already more than 40 congressional Republicans have taken steps to distance themselves from Norquist, who scowls at the mere mention of what could have been his, but is now Obama’s, very popular tax cut.

In other words: Whose shorties are snagged now?

Republicans paint themselves into a tax-cut corner [DCJ/Reuters]

It Sounds Like KPMG Is *ThisClose* to Jumping Ernst & Young in Revenues

Not sure how we missed this story but thanks to the random commenter who brought it to our attention. New KPMG Global Chairman Michael Andrew was recently interviewed by The Australian and it sounds like KPMG had a pretty kickass fiscal 2011.

We’re still waiting for the official revenue numbers (I’m guessing they’ll be out next week) but Drew kinda spilled the beans already:

New KPMG global chairman Michael Andrew revealed to The Weekend Australian yesterday that the company had recorded a 10.1 per cent increase in revenue in the past financial year, to $22.7 billion. The numbers are due to be released officially later this month.

“If we had not had the Japanese earthquake, I suspect we would have gone past Ernst & Young. Japan is a good market for us. We had really good growth in the Americas and really good growth in tax,” he said yesterday.

FUCKING JAPAN AND YOUR EPIC NATURAL DISASTER! You just cost one of the premier professional services firms on EARTH the chance to leave a rival in the dust. Since there was enormous death and destruction, I guess everyone at the firm will let this go but they’re trying really hard not to throw out some pro forma numbers just for the sake of argument. ANYWAY, for those of you scoring at home, the $22.7 bil puts the House of Klynveld slightly behind E&Y who racked up $22.9 billion for FY ’11. It will also make for the second straight year of a bumper crop of Omaha Steaks for the employees at the firm.

But despite earthquakes and actual hard numbers, Mike is calling it like he sees it:

“We are basically equal No 3. There is still a big gap to PwC and Deloitte, which have been buying large consulting practices in the systems implementation area.”

In other words, if all things were equal, KPMG would probably be the largest firm. They’re just keeping their heads about it.

KPMG grows to match rival Ernst & Young [The Australian]

Some Holiday Housekeeping

It’s the Holiday Season and that means two things: 1) Big Surprises; 2) Big Disappointments. With that in mind, I’m here to share with you, first, a surprise.


Tomorrow, barring any unforeseen sabotage by internal detractors, we’ll be launching a redesigned look and feel for Going Concern. We’ve been sporting our current layout for quite awhile and the feeling amongst us (and many of you that participated in our fall survey) was that we need to update things a bit. After quite a bit of yelling and few instances of people stomping around the room like 3 year-olds, we’ve got something we’re all (more or less) happy with.

Personally, I wanted to spring the revamped website on you like your parents divorce at the Thanksgiving table but I was convinced to share the news with you a day before for the sake of goodwill, transparency and all that crap. Along with the redesign, there will be some upcoming promotions and other new stuff that will undoubtedly change your lives forever.

Now, after an initial freak out, I’m sure you’ll have plenty of questions, which you are invited to share in the comments or by emailing us. But I will save you the trouble of asking the obvious – Yes, we will be maintaing the same commenting format, so you’ll be able to protect your true identities with cleverly devised Internet personas.

Oh right, the disappointments. If you’re devastated by this news and tomorrow your vision is completely shattered by the eyesore in front of you, we invite your feedback and suggestions for what will make your experience less sucky.

You may now shriek with glee.

Accounting News Roundup: Olympus Culture ‘Rotten to the Core’; NYC Schools Ex-CFO’s Email Use; Your Florida Tax Scam Du Jour | 12.07.11

The Culture Was Corrupt at Olympus, Panel Finds [NYT]
An outside panel appointed by Olympus to investigate its financial scandal issued a harsh report Tuesday, calling the company’s recently departed management “rotten to the core.” The panel, led by a former Japanese Supreme Court judge, also details the roles it claims were played by three former Nomura bankers in arranging a cover-up, and it says Olympus paid the bankers for their efforts. It also criticizes Olympus’s auditors, KPMG AZSA and Ernst & Young ShinNihon, for failing to expose fraud at the company.

PCAOB Warns of Audit Concerns introng> [AT]
The alert aims to help auditors identify matters that require additional attention. “Today’s volatile economic environment may affect companies’ operations and financial reporting, which has implications for audits,” said PCAOB chairman James R. Doty in a statement. “The alert reminds auditors of their responsibilities under these conditions.”

Olympus auditors trashed by investigators [Accountancy Age]
KPMG’s unqualified audit report in March 2009 was “inappropriate” and relied too heavily on outside experts’ opinion of Olympus accounting, the committee concluded. Ernst & Young was appointed auditor later that year and the investigation criticised the firm for allowing a questionable consulting fee to be treated as goodwill. “Even when we account for the fact that they [had] just assumed their position as auditor and they lacked knowledge of the past events, we cannot conclude this was appropriate,” the committee said.

Schools’ Ex-CFO Is Fined [WSJ]
The former chief financial officer for New York City schools has been fined $6,500 for using his city email account to line up his next job and manage his personal real-estate investments. An investigation earlier this year found that George Raab, who was responsible for handling the department’s roughly $20 billion operating budget, had started planning his “exit strategy” from the Department of Education less than a year after he started in October 2008.

IRS Backs Off On Penalties Against Billionaire Leon Cooperman [Forbes]
As detailed in a U.S. Tax Court settlement filing, Cooperman still is required to pay nearly $14 million plus interest to cover what the IRS said was a non-tax deductible contribution. But Cooperman, who said he had acted in good faith when he followed bad advice from tax advisers, doesn’t have to pay the $5 million the IRS originally demanded in accuracy-related penalties. His bill now for penalties: a mere $29,191.


South Florida residents in $120M tax fraud bust [SFBJ]
They are accused of filing more than 380 false tax returns for 180 clients from 30 states. They requested more than $120 million in fraudulent tax refunds. Most of the tax returns were filed for the 2008 tax year, and the forms reported personal debt obligations as both income and federal tax withholding. Holding seminars in Florida and Tennessee, the defendants told prospective clients about a “redemption theory” where they could ask the IRS for refunds to cover their outstanding personal debt, according to federal authorities. The clients paid $750 for the preparation of the tax return and agreed to share 10 percent of their tax refund with the defendants.

FASB, IASB Chiefs Agree New Convergence Model is Needed [JofA]
The heads of the U.S. and international accounting boards that have been working to resolve standards differences agree that their current convergence process should be replaced by one that is more manageable and effective. FASB Chair Leslie Seidman said Tuesday at the AICPA National Conference on Current SEC and PCAOB Developments that side-by-side convergence is not the optimal model in the long run. Hans Hoogervorst, chair of the International Accounting Standards Board (IASB), spoke immediately after Seidman at the conference in Washington and echoed her sentiment.

Grover Norquist Thinks This Donald Trump Debate Is a Dynamite Idea

Perhaps you’ve heard that oafish hair transplant recipient Donald Trump is going to moderate a GOP debate. Shockingly, a number people aren’t taking this idea too seriously and for good reason! The man is rich. And busy. And important. Plus, he has young kids at home. You know how kids are. How could he possibly squeeze such an important event into his schedule? Seems impossible. Oh, and then there’s the part where he’s an egomaniac that pretended he was thinking about running for President while maintaining that the President was born on Mars or some damn place. That too.

But you know who thinks this whole Donald Debate is fabulous idea? Yep:

I am assured that Donald Trump will be a fair-minded moderator and joined by serious journalists. This contrasts with several debates that have already occurred which have been moderated by hostile members of the left wing media. I strongly urge all GOP candidates to attend this debate.

At this time we’ll presume that being MIA from the debate will not equate a violation of the Taxpayer Protection Pledge but Mittens is skipping this circus, GGN’s choice may be easy.

[via ATR]

Here’s Your KPMG Town Hall Open Thread

We’ve got it on good authority that the KPMG town hall is happening circa now although I am definitely not present for the event.


That being said, since we’re aware of the proceedings, it seems fair to allow the same opportunity for Klynveldians as we gave to the mini-BoMos. So if you’re hearing things from John Veihmeyer that you like, don’t like, or you’ve ideas of the names Johnny V. would mistakenly call me other than “Colin” feel free to sound off below.

Accounting News Roundup: Dems Making Another Run at Payroll Tax Cut; Audit Reform Turkey; Taking Our Tax Medicine | 12.06.11

~ Colin, here: I’ve got some professional obligations to attend to today that will, unfortunately, keep me tied up so posting will be on the light side. Despite my absence, keep us apprised of any holiday spirit shenanigans going on out there and I’ll do my best to turn them around pronto.

Democrats Say They Will Try Again on Payroll Tax [NYT]
Senate Democrats said Monday that they would try for the fifth time in two months to raise taxes on top earners to pay for legislation that would reduce Social Security payroll taxes, as President Obama sought l Republicans on the defensive, asserting that their intransigence could cause a tax increase for tens of millions of American workers.

Olympus Faces Tokyo Delisting After Management Hid $1.7 Billion of Losses [Bloomberg]
Olympus Corp. risks being delisted even if it makes a Dec. 14 deadline to announce earnings, the Tokyo Stock Exchange said after the release of an independent report into false accounting by the Japanese camera maker. Senior management was “rotten to the core” and corrupted other layers of executives that touched it, according to the report of a panel probing Olympus’s schemes to cover up 135 billion yen ($1.7 billion) in losses and payments to advisers dating back decades. Failings by auditors and aid from banks in Europe and Singapore helped hide the losses, it said.

Corzine Rebuffed Internal Warnings on Risks [WSJ]
MF Global Holdings Ltd.’s executive in charge of controlling risks raised serious concerns several times last year to directors at the securities firm about the growing bet on European bonds by his boss, Jon S. Corzine, people familiar with the matter said. The board allowed the company’s exposure to troubled European sovereign debt to swell from about $1.5 billion in late 2010 to $6.3 billion shortly before MF Global tumbled into bankruptcy Oct. 31, these people said. The executive who challenged Mr. Corzine resigned in March.

Esprit Drops as CFO Departs Amid Revival Drive [Bloomberg]
Esprit Holdings Ltd. (330), the clothing retailer struggling to recover from a 98 percent profit slump, fell the most in more than two months in Hong Kong trading after Chief Financial Officer Chew Fook Aun quit. The biggest clothing retailer listed in Hong Kong fell 11 percent to HK$10.72 and the close of trading in the city, its biggest drop since Sept. 21. The stock is down 71 percent this year compared with an 18 percent drop for the benchmark Hang Seng Index. Chew’s resignation for personal reasons will take effect by June 1 as he is “unable to spend the required time in Europe,” the Hong Kong-based casual clothing chain said in a statement yesterday. Esprit, which on Sept. 15 said its brand had “lost its soul,” faces declining sales on the continent, where it made 79 percent of revenue.

Woman gets 18 months for claiming 20 nonexistent children to IRS [LAT]
A former Los Angeles resident drew an 18-month federal prison sentence Monday for filing fraudulent income tax returns involving 20 nonexistent children, all with the same birthday. Norma Coronel, 40, an illegal immigrant who now lives in Livermore, was ordered by U.S. District Judge Manuel Real to pay $302,186 in restitution to the Internal Revenue Service. In a plea agreement, Coronel admitted that she applied for and obtained Social Security numbers for at least 20 fictitious children in 2002. She claimed all the children had been born at a Los Angeles hospital on Dec. 11, 2002.

Audit Reform in the European Union — Michel Barnier Delivers A Holiday Turkey [Re:Balance]
Jim Peterson: “[Barnier’s] “final” proposal to re-engineer the structure and business model of the large accounting firms […] is much revised from the draft leaked in September, resembling the original no more than does turkey hash its original hormone-injected source – ‘fowl’ though they both are.”

The Cartoon that Killed Arthur Andersen [The Summa]
You’re a bad auditor, Charlie Brown.

I’m in a JIT: the Ernst & Young “I’m on a boat” parody video, explained [ACS]
Details that you may not have previously known.

Study Shows Auditors Slow to Adopt Hi-Tech Fraud Detection Strategies [CPAT]
The machines are scary.

Supermodel Christie Brinkley super sorry [Tax Watchdog]
Robert Snell’s scoop has an uptown girl all out of sorts.


New Auditors’ Reporting Model Proposal Set for Release in Q2 [JofA]
The PCAOB’s proposal for a new auditors’ reporting model should be completed by the second quarter of 2012, PCAOB Chairman James Doty said Monday. Speaking at the AICPA’s National Conference on Current SEC and PCAOB Developments in Washington, Doty gave an update on the PCAOB’s initiative on the form and content of the standard auditors’ report.

Pick Your Poison: VAT or Higher Income Tax Rates [TaxVox]
Yes, you have to.