Author: Caleb Newquist

Founding editor, Going Concern.

Social Media Poses Enough of a Risk to Overstock.com That They Disclosed It in Their 10-K

It’s been quite some time since we picked up the Overstock beat but Gary Weiss picked up something in the company’s recently filed 10-K yesterday that makes us wonder if the company was shooting for irony or if they’ve given up on blaming the “shorts” turning instead to “social media,” which, similar to the anti-short campaign would allow them to encompass a number of villains without naming anyone directly.


From “Note 1A: Risk Factors” section of the company’s notes to the financial statements:

There has been a marked increase in use of social media platforms and similar devices, including weblogs (blogs), social media websites, and other forms of Internet-based communications which allow individuals access to a broad audience of consumers and other interested persons. Consumers value readily available information concerning retailers, manufacturers, and their goods and services and often act on such information without further investigation, authentication and without regard to its accuracy. The availability of information on social media platforms and devices is virtually immediate as is its impact. Social media platforms and devices immediately publish the content their subscribers and participants post, often without filters or checks on accuracy of the content posted. The opportunity for dissemination of information, including inaccurate information, is seemingly limitless and readily available. Information concerning the Company may be posted on such platforms and devices at any time. Information posted may be adverse to our interests, it may be inaccurate, and may harm our performance, prospects or business. The harm may be immediate without affording us an opportunity for redress or correction. Such platforms also could be used for dissemination of trade secret information, compromise of valuable company assets all of which could harm our business, prospects, financial condition and results of operations.

As Gary points out, this disclosure is especially rich since Patrick Byrne had a goon using Facebook to stalk critics like Gary, Sam Antar, Barry Ritholtz among others which of course was disseminated in various social media outlets. Newsflash to Overstock’s risk managers: when people are being pursued by creeps on the Internet, they complain about to EVERYONE THEY KNOW.

One could easily argue that Segway accidents at the office pose just as great of a risk to key employees – and thus a disclosable item – but perhaps that’s covered under their D&O policy? It still seems plausible that disclosure would still be warranted. Additionally, the risk of a good snowfall might cause some of Salt Lake City-based company’s employees to call in sick to enjoy the fresh pow could have resulted in a late filing which is certainly something the SEC would want to know. We know KPMG has a crack squad of auditors all over this engagement but it’s conceivable that they overlooked some other risks. If you’ve got ideas on what those might be, let us know below.

Which Accounting Firm Has a High-Ranking Partner Whose Hooker Habit Got Him in a Bit of Trouble?

Actually, there might be a few of them but we’re talking about a very specific instance. A partner with a hectic international travel schedule got taken to the cleaners by his wife after she discovered that he was keeping company on the side while on his business trips, including the aforementioned hookers. And as luck would have it, some of the court documents found their way into our inbox. We’ve clipped some of the juicy parts for you:


It should be noted that this particular situation took place a number of years ago and proceedings were still being wrapped up fairly recently. Now, the hookers angle is especially salacious (which we like) but what does a situation like this say about the pressure that many globetrotting partners are under? The firms demand a lot from their top leaders and a lifestyle of high pressure and international travel can wear on a person. If whores on the cheap happen to be in close proximity to your hotel…well, it’s not inconceivable that some partners may want to blow off some steam. Landing an exotic piece of tail to help you cope with the stress while traveling on business may be a lot of fun but if you have a wife and kids and home, that’s where things get can complicated, and in this case expensive, as the following indicates:

And we didn’t even mention the possibility of the spreading around the clap. No one wins there.

Accounting News Roundup: EC Impatient with U.S. IFRS Foot Dragging; British Expats Have a Week to Get Back to Libya; MBAs Can’t Right | 03.07.11

Brussels pushes US on accounting [FT]
The European Commission has tried to bolster the US’s uncertain commitment to global accounting standards by suggesting that it could lose international influence if it does not sign up. Brussels’s impatience with the long-standing attempt to create a single language for financial reporting comes amid criticism of the rules being written for the project.

MF Global appoints new CFO [Reuters]
Brokerage MF Global Holdings , led by former Goldman Sachs Chief Executive Jon Corzine, has appointed Henri Steenkamp to the post of Chief Financial Officer. Steenkamp, who is currently the firm’s chief accounting officer and global controller, will replace Randy MacDonald, who was recently appointed global head of the firm’s retail operations, the company said in a statement.

CFOs Reveal Second-Quarter Hiring Plans [PR Newswire]
Most (85 percent) chief financial officers (CFOs) interviewed for the Robert Half Financial Hiring Index said they expect to make no changes to their current staffing levels during the second quarter of 2011. Seven percent anticipate adding full-time accounting and finance professionals, while another 7 percent plan personnel reductions. The net 0 percent projection is down two points from the first-quarter 2011 forecast.

Taxman gives ex-pats a week’s notice to return to Libya [Accountancy Age]
HMRC has announced that the ex-pats will have one week after the country is deemed safe by the Foreign Office to return there without it affecting their status. Jonathan Kropman, a tax partner at law firm Berwin Leighton Paisner, said: “Given reports of widespread damage to property and infrastructure in Libya this seems unduly harsh.

Students Struggle for Words [WSJ]
While M.B.A. students’ quantitative skills are prized by employers, their writing and presentation skills have been a perennial complaint. Employers and writing coaches say business-school graduates tend to ramble, use pretentious vocabulary or pen too-casual emails.

Al Pacino — Targeted By IRS Over $188k Debt [TMZ]
A little fallout from the Ken Starr (the guy who just got sentenced) situation.

Grad Assistants May Starve After University of Illinois ‘Payroll Glitch’ Results in Back Taxes Owed

The irony being that UI is consistently one of the top accounting programs in the country. The Champaign News-Gazette has the scoop:

The University of Illinois failed to withhold taxes for hundreds of graduate assistants over seven years, resulting in thousands of dollars in back taxes owed to the Internal Revenue Service. The payroll “glitch” also means some graduate assistants will go without pay for the next few months to cover taxes owed on their tuition and service fee waivers. About 280 graduate assistants will be taxed for part of their 2011 tuition waivers starting this month, and 17 who owe more than their next few paychecks will get no pay for three months, officials said.

Seven years. Hopefully some of the grad assistants have some money saved but it sounds like more than a few of them will be having a helluva time with this. The Graduate Employees’ Organization director of communication, Natalie Uhl gets serious:

“For some of them, they have absolutely no way to pay rent next month, no way to buy food,” she said. Some students are planning to drop out of school, Uhl said. “They’ll essentially be paying to work for the school,” she said. “They’ll be receiving no money for the work that they do.”

Jesus. That’s worse than working for minimum wage at an accounting firm! The University, for their whole role in this, is saying “my bad” but rationalizes the lack of paying the GAs by keeping things no nonsense. This is the IRS we’re talking about, after all. They’ve got guns!

“We feel bad about the inconvenience. We understand that the additional withholding may create a hardship, and it’s unfortunate. We’re required by the law to take the withholding,” [UI spokesman Thomas Hardy] said.

UI didn’t withhold taxes for hundreds of grad assistants [CNG]

O Bank Restatements, Where Art Thou?

Because Jonathan Weil is wondering.

He noticed that Audit Analytics found that 699 SEC-registered companies filed restatements last year which was slightly higher than ’09. This was considerably less than the 1,566 restatements in ’06 but when it came to the number of banks that had restatements, he noticed something strange:

The figures for banks, in particular, look unnaturally low. Forty-four banks restated last year, one fewer than in 2009. Even more curious, there were 133 banks that issued corrections from 2008 through 2010. That was down from 169 banks during the previous three-year period, before the financial crisis took off in earnest, which makes no sense.

Here we had the greatest banking industry meltdown since the Great Depression. Hundreds of lenders failed. And yet the number of banks correcting accounting errors declined while the collapse was unfolding. There were no restatements by the likes of IndyMac, Washington Mutual or Lehman Brothers, for example. The obvious conclusion is the government has been giving lots of banks a free pass, as have their auditors.

Honesty for Banks Is Still Such a Lonely Word [Bloomberg]

Whoever Founded ‘National Employee Appreciation Day’ Probably Never Worked as an Accountant During Busy Season

That’s right team, March 4th marks National Employee Appreciation Day and if you happen to have a deadline today or just got Lumberged into working the weekend, you’re definitely not feeling appreciated.


Doubly ironic is the news from the latest list from Forbes that says that “Accounting” is the 6th Happiest Job in America. That is followed up by “Finance at #7 and “Legal” at #10. On the one hand, Forbes has these professions in the correct order – accountants are generally less miserable than those in finance or law but the fact that they appear in the top ten is laughable. Of course now that we have In a JIT, perhaps the happy ranking is slightly more believable.

Employee Appreciation Day 2011 [CBS]
In Pictures: The 10 Happiest Jobs In America [Forbes]

Latest Epic Video Out of Ernst & Young Includes Lots of Bleeps, Faux-Coffee Diss, Best Lyric Ever

It’s been increasingly obvious that Ernst & Young has the most talented video producers amongst the rank ‘n’ file Big 4 professionals. Last year we saw a video from the Las Vegas office (it was pulled) that was not the most impressive in terms of the talent presented but a Elvis impersonator made up for the rest of the group.

More recently from the Black and Yellow we’ve seen a farewell rock video and a mockumentary from across the pond (also pulled) that both demonstrate the sort of right-brained capabilities that exist within E&Y. Today, we bring you the latest in epic E&Y videos that brings voice to the frustration of being stuck in a JIT (“just-in-time”) cubicle.


So there’s a lot to digest here but I’ve got my favorite moments picked out:

1. I’m not sure who wears vests to the office these days but it’s fashion-forward and I like it.

2. Cursing right off the bat (and not letting up) score bigs points with Adrienne.

3. A Flavia diss is always apropriate.

4. Best lyric ever: I’M THE KING OF EY; ON A JET LIKE TURLEY; YOU’RE IN PUBLIC ACCOUNTING, NO YOU AIN’T LEAVIN’ EARLY

5. Kicking the roller was mean (but hilarious).

6. They should have known they were doomed when they wrote the lyric about a partner “seeing me now.”

7. Chuck Norris? Obama? Paddycake? Things really took a strange turn at the end.

The word from the tubes is that it’s been making the rounds inside and outside E&Y so we’re not exactly sure when this was made but our tipster was a little miffed about the possibility of these guys not having anything to do:

Here’s another video produced by auditors in the midst of busy season who somehow find time for this shit. This one comes courtesy of EY San Jose. Apparently it’s been making it’s rounds inside (and outside) of EY all day. HR must be thrilled at this use of company time (and property, from what it appears).

Apparently it never occurred to our tipster that this was a firm-sanctioned production since the Vegas vid went over so well. There’s only one way to find out so I left voicemails for both of these guys to try and get the behind-the-JIT story. So far I haven’t heard back from either of them but it’s still a little early out in San Jose. But whenever you can guys, email us.

Your thoughts on this latest bit of video ingenuity are welcome at this time.

Accounting News Roundup: Big 4 Diversity Rankings; NFL Players Are Calling Their Accountants Today; Choose Sleep Over Food | 03.04.11

House votes to rescind IRS reporting measure [Reuters]
The House of Representatives voted on Thursday to rescind an unpopular business tax reporting requirement in the year-old healthcare law, but the measure could be delayed by a dispute with Senate Democrats over how to pay for it. The House vote was 314-112, with 76 Democrats joining the majority Republicans despite concerns the method used to cover the cost of repealing the reporting requirements would weaken President Barack Obama’s healthcare overhaul.

Ford Accounting Move May Add $13 Billion to Profit, Expert Says [BBW]
Ford Motor Co., after earning $9.3 billion in the last two years, may make an accounting change this year to reflect confidence in its recovery, a move one tax expert said could boost its 2011 profit as much as $13 billion. Ford in the second half may eliminate from its balance sheet a valuation allowance held against deferred tax assets, it said in a federal filing this week. The reserve was created in 2006 as Ford began four years of operating losses.

Employment Data Signal Economic Improvement [WSJ]
Nonfarm payrolls rose by 192,000 last month as private-sector employers added 222,000 jobs, the Labor Department said Friday in its survey of employers. The January number was revised to show an increase of 63,000 jobs from a previous estimate of 36,000. The unemployment rate, which is obtained from a separate household survey, fell to 8.9% last month, the first time it dipped below 9% since April 2009.

The DiversityInc Top 50 Companies for Diversity [DiversityInc]
PwC #3; E&Y #5; Deloitte #8; KPMG #29.

What NFL Players Are Asking Their Accountants Right Now [Esquire]
Pro football players may have to start unloading those extra cars.


Deloitte’s role as auditor to Aero Inventory under investigation [Telegraph]
The Accountancy and Actuarial Discipline Board (AADB) said on Thursday that it had opened an investigation into the “preparation, approval and audit” of Aero Inventory’s accounts in the years leading up to its collapse in late 2009. The enquiry will centre on Deloitte’s role as well as that of the company’s accountants.

Phil Isom Joins KPMG to Lead U.S. Corporate Finance Group [PR Newswire]
Mr Isom joins KPMG from “another Big Four accounting firm’s capital advisory group.”

Sleep is More Important than Food [HBR]
In case you’ve got a decision to make this weekend.

During the 1099 Repeal Debate, a Democrat More or Less Called a Bunch of Republicans Liars, Then Took it Back, and Then May Have Called Them Liars Again

The repeal of the 1099 reporting provision of the healthcare reform bill was finally passed by the House today but not before things got a little awkward when Represenative Earl Blumenauer (D-OR) “said Republican claims that the law is a government takeover of healthcare had been deemed ‘the 2010 political lie of the year.’ “

Now, on its surface, this seems like a little bit of tangential grandstanding by the man-child gentleman from Oregon but his colleague Dan Lungren (R-CA) didn’t appreciate the remark and was not about to let this slide:

Blumenauer seemed to gesture toward Lungren, who had just finished speaking, and said the Republican member called the healthcare law a government takeover.

Lungren did not directly say the law is a government takeover, but did criticize the laws in other ways.

After Blumenauer’s “lie of the year” comment, Lungren quickly interrupted to raise a point of order and ask whether Blumenauer should be allowed to say, or imply, that Lungren is a liar.

Blumenauer – not to be outdone – countered this challenge with one of his own:

Asked if he was demanding Blumenauer’s words be “taken down” — a challenge to their propriety — Lungren said no, but did ask the acting Speaker to warn members about referring to colleagues in this way.

The exchange continued: Blumenauer said he was simply citing a Politifact finding that Republican claims of a government healthcare takeover are the political lie of the year. Lungren then immediately asked that Blumenauer’s words be taken down.

Blumenauer, knowing he was beat, then capitulated (he’s a Democrat, after all), “Several minutes later, Blumenauer asked unanimous consent to strike his words,” and then thought better of it, “[he] repeated the Politifact citation again in his explanatory comments.”

“I’m not calling anybody a liar,” Blumenauer said. “What I intended to say … is that as we have repeated talking points about a government takeover of healthcare, this has been judged by an independent undertaking as the political lie of the year.”

It could probably go either way but someone seems to be getting called a liar in there somewhere.

Lawmakers spar over ‘lie of the year’ in debate over healthcare provision [Floor Action/The Hill]

Bill Gates Has Less Than Flattering Things to Say About Government Accounting

“[R]eally, when you get down to it, the guys at Enron never would have done this. This is so blatant, so extreme,” Gates said of state governments’ accounting practices generally. “Is anyone paying attention to some of the things these guys do? They borrow money — they’re not supposed to, but they figure out a way — they make you pay more in withholding to help their cashflow out, they sell off the assets, they defer the payments, they sell off the revenues from tobacco.” [HuffPo]

Are Accountants in Denial About North Africa?

From February 9th to 24th, they may have been.

A CPA Outlook Index put together by the American Institute of Certified Public Accountants and the University of North Carolina rose to its highest level since the third quarter of 2007 — before the recession took hold. That was largely due to a big jump in optimism over the U.S. economy, but the 1168 accountants surveyed were also felt better about their own firms and expect stronger sales, profits, spending and hiring. The survey was conducted between Feb. 9 and 24 — a period that captures the resignation of Egypt’s Hosni Mubarak, growing unrest in Libya and rising energy prices. That offers evidence that, thus far, the tremors in the Middle East and North Africa haven’t seriously unsettled U.S. businesses.

Possibly related – CBS had just suspended Two and a Half Men on February 24th, thus, this survey may not accurately reflect the effect this loss has had on our nation.

Accountants Get More Optimistic [WSJ]

What Exit Opportunities Exist for a Big 4 Transaction Services Professional?

Welcome to the maybe-we-should-start-pointing-out-who-really-isn’t-winning edition of Accounting Career Emergencies. In today’s edition, a future advisory professional wants to know what kind of exit opportunities he’ll have when he’s had his fill of Big 4.

Need some career advice? Concerned that you’re being unfairly portrayed by someone? Have you recently found a mistake at work and aren’t handling it well? Email us at advice@goingconcern.com and we’ll, at very a tie score.

Onward:

I will be starting at a Big 4 firm in TS this fall. I have seen posts and comments on GC primarily about KPMG’s TS group, and commenters mention a “mass exodus” from TS.

I was interested to know what the exit opps are for people in TS? I have been searching around banking blogs and it seems that TS is not held in high regard in I-banking, so what offers are they receiving?

Sincerely,

Interested Viewer

Dear Interested Viewer,

The advisory space isn’t my strong suit but I’ll take a stab. You’re starting with a “Big 4” but then mention KPMG so I’m not exactly sure where you’re ending up so I’ll keep things fairly general. All of the Big 4 have various services within their TS practices including due diligence in various forms, restructuring, accounting advisory and valuation among others. A common exit opportunity for many in Big 4 TS people is to go to…wait for it…another Big 4 firm. None of these firms have a monopoly on the services offered so if you’ve heard good things about Deloitte as opposed to your living hell at PwC, you may jump at the opportunity to join a rival firm. And we know how the firms like to poach from each other, don’t we?

If that’s not of interest to you, the top consulting shops like McKinsey, Bain & Co., Boston Consulting et al. (check out Vault for their list of the top firms) are a possibility but in reality, not a very good one. These firms like their people with smarts – frightening smarts – and Ivy League degreed. If you’ve got both, you probably already work at one of the best firms. If you’re lucky enough to have one of those two, you might have a chance. If you’ve got neither, than you have virtually have no chance.

You mention I-Banking and again, the odds are against you here if you want to work at the top firms, for the same reasons as we mentioned above. Some more realistic options include due diligence, acquisitions or analysis work for a private equity or hedge fund shop or working in the finance group of a firm with M&A aspirations or that needs other complex transactional analysis.

The other option is that you work for awhile, get an MBA and then try to land the BSD job at McKinsey, Goldman or wherever. Of course hitting the big time after going to a prestigious B-school doesn’t mean your dreams of rainmaking are a lock, so it’s a big risk but obviously many have taken this road and made a decent run.

So, there you have it, Interested Viewer: some ideas, at the very least. Any Big 4 TS types out there with some first-hand accounts of the comings and goings are invited to weigh in at this time. I’ve got to get caught up on the #winning Twitter feed.