Author: Caleb Newquist

Founding editor, Going Concern.

Sir David Tweedie’s Accounting Rock Star Status Is Safe Despite His Failure to Converge Standards

In case you forgot, Sir David Tweedie is retiring next week as the head of the IASB. It’s been quite a run for Tweeds and good money says his friends at the Board will send him off in style worthy of a knighted Scotsman (read: getting him blind drunk and some hooliganism). He’s had many accomplishments in his time running the IASB but there’s one goal that will ultimately elude him when he hangs up the eyeshade. That is the dream of converged accounting standards. It certainly has been a noble quest worthy of his accounting “rock star” status but you can’t help but imagine that you might happen across SDT in a pub muttering to himself over a pint about “the one that got away.”

Sir David’s biggest project has been convergence of IASB’s rules with those of America’s Financial Accounting Standards Board (FASB). The two had set a June deadline, timed to coincide with Sir David’s retirement, to iron out their differences. That won’t be met.

Just because he won’t reach his ultimate goal that doesn’t mean Tweeds hasn’t tried. Or been BEEN INFINITELY FUCKING PATIENT with the Yanks.

But you can’t do it all. So now the task of accounting rule copulation will now fall to Dutchman Hans Hoogevorst but if Sir David is feeling a little like a failure, he should know that there are people out there still think he’s pretty badass since he got the SEC to come to the table:

Sir David should not be too disappointed that convergence is not complete. That the process has come as far as it has—and that America’s Securities and Exchange Commission might decide later this year to adopt IASB’s standards—is something no one could have predicted ten years ago, says Nigel Sleigh-Johnson of the Institute of Chartered Accountants of England and Wales.

So enjoy your retirement, oh knighted one. Your double-entry immortality is secure.

The balladeer of the balance-sheet [The Economist]

IRS Database Security Could Use a Tuneup

Some of the 2,200 databases that the IRS uses to manage and process taxpayer data are not configured securely, are running out-of-date software, and no longer receive security patches.

Nor has the IRS fully implemented its plans to complete vulnerability scans of its databases — although the IRS spent more than $1.1 million in software licenses and support costs for a database vulnerability scanning and compliance assessment tool, it did not fully implement it. TIGTA used database vulnerability assessment software to conduct remote scans of the primary databases for 13 applications supporting critical tax administration business processes. Its review found high and medium risk vulnerabilities, as classified by the scanning tool in each of the 13 databases. [TIGTA via TaxProf]

Accounting News Roundup: Koss’ Suit Against Grant Thornton Will Proceed; Number of Women CFOs Doesn’t Budge; Senators Ask IRS to Clarify Rules for Same-sex Couples | 06.23.11

Koss suit against former auditor to proceed [MJS]
Koss Corp.’s lawsuit against the company’s former auditor, Grant Thornton, will move forward in Cook County, Ill., according to a ruling from a judge in Chicago this week. Koss accuses Grant Thornton of gross negligence for not uncovering the $34 million embezzlement by its former vice president of finance. Sujata “Sue” Sachdeva is serving an 11-year sentence in federal prison for the crime, which came to light in December 2009 when American Express notified Koss of the fraud.

New York’s Schumer Gives ‘Newfound Life’ to Tax Holiday Sought by Apple [Bloomberg]
The lobbying campaign by Apple Inc. (AAPL), Pfizer Inc. (PFE) and Duke Energy Corp. (DUK) to allow companies to bring overseas profits to the U.S. at a low tax rate gained new traction after Senator Charles Schumer of New York signaled that Democrats might back the idea. The Senate’s No. 3 Democrat said yesterday that his caucus is exploring the potential of using the short-term revenue a repatriation holiday would generate to fund an infrastructure bank. The focus on infrastructure, he said, would “guarantee” job creation and address a key line of Democratic opposition.

Women CFOs: Still at 9% [CFO]
As of June 1, there were 45 female finance chiefs in the Fortune 500. That’s just one more than in 2010 and 2009, for a percentage of 9%.

Challenges in Chasing Fraud [WSJ]
Some legal experts said the SEC’s struggles reflect the difficulty of going after specific individuals and companies when so many more made decisions that backfired into catastrophic losses during the financial crisis. Corporate executives argue that the crisis was caused by good-faith moves that went sour rather than by the desire to short-change investors. Some lawyers say that the agency’s enforcement lawyers haven’t done enough to prove that high-ranking executives bore the ultimate responsibility for the most controversial mortgage-bond deals.

CFOs Say Corporate Cash Levels Are Appropriate [CFOJ]
“People have cash because there is a strategy,” said Suresh Senapaty, CFO at Wipro. He added that CFOs know cash has one of the lowest returns on investment for shareholders. “There are good reasons why they have it — otherwise they’re not doing their job as CFOs,” he said during a group discussion at The Wall Street Journal’s annual CFO forum held in Washington, D.C. Tuesday.

Senators call on IRS to clear up rules for same-sex couples [MSNBC]
This week, eight Democratic U.S. senators sent a letter to IRS Commissioner Douglas Shulman, calling on the IRS to clear up confusion for same-sex couples who encounter problems trying to file accurate tax returns. […] In the letter, the senators noted that some state tax laws recognize same-sex marriages or domestic partnerships, even though the federal government does not. That’s creating confusion for couples who want to file accurate returns but are classified differently by state and federal tax regulators, they said. They asked the IRS to offer guidance.

The IRS’s Charity Purge [WSJ]
The Internal Revenue Service announced this month that 275,000 nonprofit groups—around 18% of the country’s tax-exempt organizations—have lost their federal exemptions because they failed to file Form 990s. The announcement was a long time in the making, but it’ll take even longer for the IRS to dig itself out of the administrative and policy mess that it represents.

Hong Kong’s Li Says Exchange Will Avoid Worst of China Accounting Scandals [Bloomberg]
The MSCI China Index of 147 stocks available to foreign investors is down 10 percent since reaching a five-month high on April 21. That compares with a 28 percent plunge by Chinese companies that went public through U.S. reverse mergers, in which a closely held company buys a publicly traded shell and retains the U.S. listing. While bearish bets on the MSCI China have climbed to a record, Li says companies listed in Hong Kong are subject to too much scrutiny to deceive the market for long.

Former KPMG Employee Now a Bean Slinger; May Have the Best Burrito in London

It’s my understanding that burritos are hard to come by in London. Apparently they just opened the first Chipotle there. For many of you, a life without burritos slapped together in 90 seconds (not including the wait on line) isn’t a life worth living. The Brits have managed to survive for a number of centuries without tortillas overstuffed with sour cream and free-range pork. And while Chipotle can certainly churn out a fine burrito, if you happen to find yourself in Spitalfields, East London you might check out Poncho No. 8. It was started by Nick Troen and Frank Yeung, Troen being the ex-Klynvedlian and Yeung a former equities trader at Goldman Sachs.

The friends spent the next three years living together, talking about going into business one day. After a brief separation — Troen worked for KPMG, the accountancy firm, and Innocent, the smoothie maker, before doing a masters, while Yeung worked for Goldman Sachs, the investment bank — they quit their jobs, moved back in together and four months ago launched a Mexican restaurant.

Although it is early days, Poncho No. 8 (Poncho Ocho), their pocket-sized restaurant in Spitalfields, East London, employs a staff of nine, sees 300 customers a day queue down the street for “gourmet” burritos and took £100,000 in its first quarter.

Troen and Yeung are unashamedly influenced by Innocent, the wildly successful fruit drink company also started by graduate friends. “It was always a company we admired. The branding and style had a big impact on us,” Troen says.

Poncho was a typical back of the envelope idea — “we looked at the numbers and thought ‘why has no one done this?’, ” Yeung says — brought to life via the same mix of ingenious, vaguely hippy branding and healthy ingredients. The restaurant features a green-painted “Guac Shack” while the website offers a “countdown to lunch” for bored office workers.

Starting a new Mexican wave [Times via BI]

Survey: CPA Combined with CMA Will Put More Money in Your Pocket

This survey was done by the Institute of Management Accountants, so of course the AICPA would encourage you to wait for the CGMA to get a dual certification but if you just can’t wait, then the CMA should work fine.

IMA’s Annual Salary Survey explores salary trends of accounting and finance professionals and reveals that certain industries are faring better than others. Public accounting ranked first in terms of average salary, at $125,488, and second in average total compensation, at $153,395, both in 2010 and 2009. The survey was mailed to respondents last December, and the results have just been released this month.

“The CMAs in this year’s study make a little more than the CPAs,” said Dennis Whitney, senior vice president of certification at the Institute of Certified Management Accountants. “For the younger professionals, it’s a little more per year. The number does seem to go up as you get older, but generally it’s a couple of thousand dollars. But the thing that’s the most dramatic is that people with both the CPA and the CMA fare the best.”

For those with both certifications, the difference can be not only $27,000, but $35,700.

“Dual certification is definitely worthwhile,” said Whitney. “It broadens your competencies. You have not only the financial accounting and auditing skills, but also the financial planning, analysis, and control skills and decision-making, which are very important today.”

Certified Accountants Earn $27,000 More [AT]
Earlier:
The Path to CFO: Is the CMA Credential Just as Important as the CPA?

Comp Watch ’11: Sit-downs at PwC Starting This Week

From the mailbag:

Any rumors on PwC comp going around yet? Partner discussions are supposed to start this week and go through next.

After all the discussion around PwC’s new compensation structure one may have thought that was enough to keep people talking for months. Fortunately, plenty of mini-BoMos out there are anxious about this year’s compensation adjustment and since the fiscal year ends next Thursday, it’s not a wonder. Sooo, if you’ve been (un)fortunate enough to have your little money chat let everyone know how it went. Don’t spare the details: office, level, practice, etc.

Accounting News Roundup: Camp Not Sold on Repatriation; Tax Reform Needs ‘All the Oxygen’ From DC; Former Marc Jacobs CFO Wants Pole Dancing, Porn Addressed | 06.22.11

FedEx Joins Ford in House Tax Chief’s Portfolio, Panel Witness Chairs [Bloomberg]
Since becoming chairman of the House Ways and Means Committee in January, Representative Dave Camp has invited executives from 13 publicly traded companies to testify on tax and trade policy. The chairman owned shares in six of them. Camp, a 57-year-old Michigan Republican, owned stocks and bonds issued by dozens of individual companies, according to his annual personal financial disclosure form, which was filed June 15 and covers the year ending Dec. 31, 2010.

Rep. Camp Wary of Repatriation Tax Holiday [CFOJ]
“We did repatriation a few years ago, and here we are with the same problem,” Camp said. He made similar complaints about other tax proposals, including an extension of the payroll tax holiday which is currently set to expire.

Geithner Says Corporate Tax Reform to Follow Deficit Talks [CFOJ]
“Our hope and our expectation is that after we get this deficit reduction done, we can move to corporate tax reform,” Secretary Geithner told the CFO Journal Conference in Washington D.C. Tuesday morning. He added that corporate tax reform would not be part of the deficit reduction negotiations, because dealing with the budget “requires all the oxygen there is in this town.”

Why Won’t the SEC Investigate Motorola … Again? [Accounting Onion]
Tom Selling digs in on the KPMG inspection report, “Why has the SEC apparently not followed up on the PCAOB’s findings? For one thing, the PCAOB inspection report provides highly credible evidence of very large accounting misstatement made by a high-profile registrant with the apparent complicity of its Big Four auditor. It doesn’t necessarily mean that the PCAOB is correct in its allegations as a matter of course, but someone should called to account by the SEC: if not Motorola and/or KPMG, then the PCAOB for a faulty inspection report.”

Say Anything: The Big 4 Defense Of Overtime Exemptions [Re:The Auditors]
Meanwhile Francine McKenna digs in more on Campbell v. PwC.

Fired Marc Jacobs Employee Demands Robert Duffy Personally Address Sexual-Misconduct Accusations [NYM]
Yes, the pole dancing. And the porn.

Former federal accountant sentenced for embezzling $1.4 million [LAT]
Kathy Stamps, 39, of Rancho Cucamonga, an accountant at the Angeles National Forest office in Arcadia, fabricated internal records to receive tax refunds, authorities say. From 2002 to 2004, Stamps received six checks from the U.S. Treasury totaling $1.4 million. She spent nearly $1.1 million on personal items ranging from cars and mortgage payments to jewelry and plastic surgery, authorities said.

Promotion Watch ’11: PwC Admits 136 New Partners

Last year, we learned about new partner promotions at the House of Moritz the first week of June. This year, we had to wait for a press release from the Denver office to get issued before we heard anything about it. Now, I’m not mad (although Adrienne probably is) just disappointed. If you forgot how to get in touch with us, it’s a simple as clicking email us or on our names in the margin. Regardless, we got on the horn and managed to get the whole scoop.


136 new partners admitted firm-wide, representing all PwC service lines.
–53 new partners in Assurance,
–50 in Tax,
–32 in Advisory and
–one in Internal Firm Services.

The new class of 136 is 53 more than last year, so that clears a few extra spots out of the parking lot at senior manager. The promotions bring the total count of partners in the States to over 2,300.

So a hearty congratulations to all the new PwC partners. No doubt you’ve worked and worked and worked for it. We just hope emotions were kept in check at any celebrations.

PCAOB Member Steven Harris Shares Some Thoughts on Auditors

For anyone that missed it earlier, the PCAOB issued a concept release today putting out some ideas for changes to the auditor’s report. The members of the Board also took the opportunity to say a few words and Mr. Harris saw an opportunity to point some things out:

The events of the last few years have been a case study of the inability of auditors to provide investors with any meaningful signal about increases in financial reporting risks when management assessments or estimates change dramatically, or when debates over significant accounting issues become difficult or contentious.

And he added the following for good measure:

Out of the ten largest bankruptcies during the financial crisis, only two had going concern opinions. During the year leading up to their bankruptcy filings, the market capitalization of the eight companies without going concern opinions declined from a collective $75.5 billion in the year prior to their respective bankruptcy filings to a collective market capitalization of just under $700 million at the time of their filing – a 99% loss in investor value.

[via PCAOB]