Author: Caleb Newquist

Some companies pay their CEOs more than Uncle Sam, study says [WaPo]
It has become a bipartisan article of faith in some quarters that the income tax on U.S. corporations must be lowered. But for many large U.S. companies, the burden of U.S. taxation pales in comparison with what they pay their chief executives, according to a study released Wednesday by the Institute of Policy Studies, a liberal think tank. Of last year’s 100 highest-paid corporate executives in the United States, 25 earned more in pay than their company recorded as a tax expense in 2010.

[Bloomberg]
Memo to Grover Norquist.

GOP Tax Expert to Lead Deficit-Committee Staff [WSJ]
The panel’s co-chairmen chose as their staff director Mark Prater, a senior aide and chief tax counsel to Republicans on the Senate Finance Committee. “Mark has a well-earned reputation for being a workhorse who members of both parties have relied on,” said the committee’s co-chairmen, Sen. Patty Murray (D., Wash) and Rep. Jeb Hensarling (R., Texas).

SEC Lawyer Blew Whistle Before [WSJ]
Darcy Flynn, who started in the SEC’s enforcement division in 1995, earned the large payout after reporting alleged Medicare fraud in 1993 as an insurance-claims auditor in Michigan, according to public records and people familiar with the case. Nearly two decades later, Mr. Flynn is again accusing his employer of misbehavior. This time, Mr. Flynn is targeting the Wall Street regulator, which hired him to ferret out wrongdoing. He was initially asked to probe accounting scams, insider trading and other financial frauds. Since early 2010, Mr. Flynn has been supervising record-keeping related to enforcement cases that have been closed.

Auditors under fire over Greek debt [FT]
Auditors and regulators have come under fire for allowing European financial institutions to take wildly divergent approaches to Greek government bond writedowns. The criticism comes amid claims that some banks and insurers should have reported bigger Greek losses than they had acknowledged in recent first-half results announcements. “Auditors have not enforced a consistent approach among their clients,” said analysts at JPMorgan Cazenove in a report drawing attention to the way that some significant financial institutions had written down Greek sovereign debt holdings by half, while others had cut their value by only a fifth.

SEC recovers bonus from ex-Beazer CFO [Reuters]
The former finance chief of Beazer Homes USA (BZH.N) has agreed to reimburse the company for over $1.4 million that he earned in bonus payments and stock sale profits when the Atlanta-based homebuilder was committing accounting fraud, the SEC announced on Tuesday. The Securities and Exchange Commission said James O’Leary had not been charged with misconduct, but was still required under the Sarbanes-Oxley Act to pay back the money he received while the fraud was going on.

Ex-Rite Aid exec Franklin Brown freed after resentencing on accounting scandal charges [PN]
Brown, 83, of Susquehanna Twp., had served 71 months of a 7 1/2-year prison term that Rambo imposed last September, but that was overturned by a federal appeals court in May. In 2003, a federal jury convicted Brown of multiple conspiracy and other charges for an accounting fraud that prosecutors said cost East Pennsboro Township-based Rite Aid more than $18 million.

Bellevue accountant stole nearly $1 mil. from elderly couple, police claim [SPI]
A Bellevue accountant swindled an elderly couple – his clients of more than 15 years – out of nearly $1 million through a fake investment, King County prosecutors claim. Filing securities fraud and felony theft charges, prosecutors contend Shawn Eric Stoller bilked a 90-year-old man and an 88-year-old woman to pay off his own house and motor home.

IASB criticises Greek debt writedowns [FT]
In a letter sent to the European Securities and Markets Authority, the European Union’s market regulator, the International Accounting Standards Board criticised the inconsistent way in which banks and insurers have been writing down the value of their Greek sovereign debt. “This is a matter of great concern to us,” Hans Hoogervorst, IASB chairman, said in the letter, which was published on Tuesday after the IASB’s concerns were revealed by the Financial Times. People familiar with the IASB’s thinking said the intervention was unprecedented and reflected its belief that some European compaking enough provisions for Greek sovereign debt losses.

Dead Enron CEO Lay Beats IRS in Tax Court [Bloomberg]
Kenneth Lay, the deceased chief executive officer of Enron Corp., defeated the Internal Revenue Service in the agency’s bid to collect $3.9 million from his estate and his wife, the U.S. Tax Court ruled. The case decided yesterday involved transactions among Lay, his wife, Linda, and Enron that were executed on Sept. 21, 2001. The Lays sold $10 million in annuities to Enron as part of an agreement for him to retake the CEO position, under the stipulation that the annuities would be returned to Lay if he worked a 4.25-year term. The company didn’t survive that long, and it filed for bankruptcy protection in December 2001.

House Tax Chief Pitches No-New-Revenue Plan to Wary Voters [Bloomberg]
Representative Dave Camp’s summer- recess ritual of visits with constituents at a retirement home, the Rotary Club and an airport construction site was punctuated this past week by voters’ misgivings about the deficit fight in Washington in which Camp plays a central part. As he crisscrossed his hometown district of Midland, Michigan, on Aug. 25, the chairman of the House Ways and Means Committee repeated to residents — some of whom he has known since childhood — his promise not to raise taxes to cut the deficit. The 11-term Republican House member encountered voters who supported him while expressing doubt that Congress can tackle a $1.3 trillion budget deficit. “They need to grow up and get together,” John Church, a retired Midland retailer, said of Congress.

The Case Against a Payroll Tax Cut [Economix/NYT]
It’s rare for Republicans to find a tax cut they don’t support, but last week The New York Times reported on just such an exotic creature. Many leading Republicans, it seems, are extremely cool to the idea of extending the temporary cut in the Social Security tax that took effect on Jan. 1 and expires on Dec. 31. It has lowered employees’ share of the payroll tax to 4.2 percent, from 6.2 percent.

Auditor in China case makes case for Janus [Thomson Reuters]
In the latest twist in a four-year-old shareholder lawsuit alleging a $132 million accounting fraud at China Expert Company, PKF New York, one of the company’s former auditors, contends that a recent Supreme Court ruling should shield it from litigation. In a brief filed Friday in Manhattan federal court, PKF New York cites the Supreme Court’s June ruling in Janus Capital Group v. First Derivative Traders. Judge Alvin Hellerstein this month already granted PKF New York’s motion for a rehearing on a previous motion to dismiss (more on that later), citing the Janus ruling; on Friday PKF filed a detailed brief laying out just why it believes that Janus protects it from the shareholders’ accusations.

Fraud trial of Teaneck accountant ends in deadlock [NJ/The Record]
Andrew Muhlstock, 58, was spared a jury decision following a three-week trial in Trenton federal court, despite a guilty verdict returned against an owner of Total Time Solutions, which handled payroll and tax withholding for New Jersey companies.

Grant Thornton advertises its goal to run with the bulls [Crain’s]
The new work departs from earlier humorous campaigns to more aggressively support CEO Stephen Chipman’s charge to pursue “dynamic” companies that have ambitious growth plans, whether a Fortune 100 firm or a small company. The ad campaign asserts what wins, what doesn’t and that these firms know what wins, and that’s why they chose Grant Thornton. “It’s not about the size of the firm. It’s, do they have game on and are they really attacking the market?” said Tricia Conahan, chief marketing and sales officer of the city’s largest Chicago-based accounting firm.

BDO Canada acquires KPMG’s consumer insolvency wing [G&M]
BDO Canada Ltd. has acquired KPMG’s consumer insolvency practice for an undisclosed price, making it one of the country’s largest providers of such bankruptcy and credit counselling services. The integrated services — which offer trustees in consumer bankruptcy, proposal administrators and credit counsellors — began operating under the BDO Canada Ltd. name effective last Friday.

PwC Appoints Niloufar Molavi as U.S. Energy Leader [PwC]
The firm’s (now) former Chief Diversity Officer.

PwC US Appoints Tom Archer as U.S. Technology Sector Leader [PwC]
Succeeding Rob Gittings.

Commuters in Line for Long Rides [WSJ]
Some trains would run, officials said late Sunday. New York’s subways would be largely operating, with the exception of some express trains and lines in the Rockaways. Officials warned that trains would likely be less frequent and more crowded. But many trains from the suburbs won’t be running—stranding hundreds of commuters who use them to get to work. Metro-North Railroad and New Jersey Transit were going to remain almost completely shut down.

Irene Forecasters Missed Storm’s Intensity While Correctly Predicting Path [Bloomberg]
Forecasters overestimated the strength of Hurricane Irene even as they accurately predicted the direction and timing of the storm’s destructive path along the U.S. East Coast. “This was one of their better forecasts,” Hans Graber, a professor of marine physics at the University of Miami, said in a telephone interview. “Definitely, it helped to save lives.”

Hundreds of thousands still without power in D.C. region [WaPo]
Pleasant weather allowed utility companies to repair thousands of power outages Sunday, but hundreds of thousands of homes and businesses in the D.C. region were still in the dark by the evening, more than 24 hours after Hurricane Irene first brought heavy winds and rain to the area.

Irene Adds to a Bad Year for Insurance Industry [NYT]
The total damage inflicted by Hurricane Irene may reach $7 billion by the time the storm dissipates in the coming days, making one of the insurance industry’s worst years even tougher, according to an early estimate by the Kinetic Analysis Corporation in Silver Spring, Md. Most of the loss will very likely come from property in New York and New Jersey, according to industry experts. Although Irene had diminished to a tropical storm by the time it reached New York early Sunday, those two states have the most valuable coastal property on the Atlantic Coast.

Yes, the rich do pay higher taxes [Tax Update]
Confirmed.

Frequency of Accounting Reports [Grumpy Old Accountants]
From the Grumpies: “As is well known, we currently produce financial statements every three months and one of these reports is audited by an independent auditor. Some would like to pick up the pace and perhaps even supply data on a daily basis.”

Hurricane Irene Pushes IRS To Extend Tax Deadline [Dow Jones]
Hurricane Irene hammered the East Coast of the U.S., causing death and destruction, but at least one group of people is getting some relief thanks to the storm: Taxpayers who have money stashed in bank accounts overseas will get more time to apply to an IRS amnesty program. The IRS said Friday it would move the deadline for the program, known as the Offshore Voluntary Disclosure Initiative, or OVDI, to Sept. 9, “due to the potential impact of Hurricane Irene.” The deadline had been Aug. 31.

Tax Haven’s Tax Haven Pays a Price for Success [WSJ]
Zug’s history of rock-bottom tax rates, for individuals and corporations alike, has brought it an A-list of multinational businesses. Luxury shops abound, government coffers are flush, and there are so many jobs that employers sometimes have a hard time finding people to fill them.