Author: Caleb Newquist

Founding editor, Going Concern.

Partner Shows Amazing Restraint After Former Colleague Calls Him a Thief and a Liar

Sometimes when there is a dispute among partners of an accounting firm, things can get a little ugly. Sure there’s the sleeping with the other’s spouse/pool boy problems that crop up from time to time but that’s nothing compared to a situation when there’s actually a business reputation, financial considerations and possible federal criminal charges at stake.

Such is the case involving a former tax director at TCBA Watson Rice LLP with the firm’s managing partner. Patrick Largie tasked with preparing the firm’s 2009 tax return and when he got to the “Other Deductions” (line 20, for those of you scoring at home) he noticed a suspicious $1.8 million figure. After investigating further, he determined the amount was ‘inaccurate and false’ that could possibly bring “an IRS investigation and possible criminal charges.” As a result, he brought it to managing partner Bennie Hadnott’s attention. Hadnott didn’t feel it was anything worth raising a fuss over and demanded that Largie sign the return and go on his merry way.

Largie refused and was promptly fired. And yes, of course he sued. But Bennie Hadnott is treating the lawsuit much like he treated the $1.8 million Other Deductions – it’s NBD:

Hadnott labeled the claims “a nuisance lawsuit” and said the dispute was going into mediation on February 4.

“You get those filed all the time,” he said. “You can’t control what people go out there and do. We filed an answer to that, but there was no merit to it. He got mad because he was terminated with cause. People get emotional and go out there and try to sue the whole world, which he did. You have no control over people going out there and filing actions like that.”

So, despite his former colleague sullying the fine TCBA Watson Rice name and also accusing him of misappropriating $500k through bogus loans, Hadnott won’t have it, is taking the high road even though he could make Largie’s life difficult:

Hadnott hinted that Largie’s lawsuit came in retaliation after the firm learned of his actions and dismissed him, but he declined to elaborate on the firm’s claims. “I can really prosecute him for smearing our name, but we are just trying to be cool about it,” he said. “We don’t want to drag him through the mud.”

Other than the part where you make him look like a perfectionist, litigious, asshole crybaby, his name should be just fine.

Partner Sues Firm over Termination [AT]

Deloitte: Thanks to the Internet, Americans Are More or Less Obsessed with TV All the Time

One big concern: once Charlie Sheen continues his epic run (does anyone believe that rehab is going to take?) will the masses be able to survive without Two and a Half Men? Personally, I’ll manage but what about all those American Families that depend on this show to complete that void in their lives every week?

In a media environment saturated with new and evolving online entertainment platforms, TV continues to be king. Released today, Deloitte’s fifth edition “State of the Media Democracy” survey reveals that 71 percent of Americans still rate watching TV on any device among their favorite media activities.

The survey results indicate that live viewing on a home TV system continues to be the most common method among individuals for watching their favorite programming, and supporting the notion that traditional television advertising continues to be a viable model. In addition, 86 percent of Americans stated that TV advertising still has the most impact on their buying decisions.

Deloitte’s State of the Media Democracy survey assesses media consumption preferences of nearly 2,000 consumers, ages 14 to 75 years old in the United States, revealing significant trends including the power of TV when supplemented by the Internet, a dramatic rise in smartphone adoption, the steady popularity of print magazines, and the emergence of cloud computing as a potential consumer entertainment storage and access solution.

And guess what? Not only are people watching more TV, they’re talking about it more. But not face-to-face: Americans can’t be bothered with leaving the confines of their homes or take their eyes off their computers long enough to manage human interaction and thanks to social media, they don’t have to!

Deloitte’s survey indicates that the Internet, mobile and social media channels are enhancing the overall television viewer experience, driving people to watch first-run programs and live events during their initial broadcast. The survey also reveals that nearly three-quarters of American consumers are multitasking while watching TV. According to the research, 42 percent are online, 29 percent are talking on cellphones or mobile devices, and 26 percent are sending instant messages or text messages.

Perhaps even more importantly, 61 percent of U.S. consumers now maintain a social networking site, where constant streams of updates and discussion forums have made delaying awareness of live TV outcomes a near impossibility.

“Consumers are not only watching television, they are talking about it, and those conversations are frequently taking place in real-time online and via IM/texting,” said Phil Asmundson, vice chairman and technology, media and telecommunications industry leader, Deloitte LLP. “By embracing the Internet as a platform that encourages audiences to participate in discussions about their favorite programs, television is maintaining its hold on the American public. People want to be part of the real-time conversation and they are embracing both platforms in a complementary fashion.

Because discussing the train wreck that is Sammi and Ronnie in real time is crucial to the human experience. Carry on.

How Long Should an Accountant Wait to Start an Embezzlement Scheme After Landing a New Job?

For Michelle Lynn Shelton, who is accused of taking $760k of her employer’s money, the answer is “NOT LONG!”

Detectives launched their investigation in December after another accountant, who was filling in while Shelton was away from work, discovered the apparent transfer of a large amount of money between two personal bank accounts, police said. Police said the company conducted an audit and contacted police. Shelton started working for the company in June 2007 and the evidence suggested she began diverting funds two months later, police said.

Report: IRS Is Better at Junking Computers From Previous Decades

It appears that the IRS prompted this report from the Treasury Inspector General of Tax Administration after a previous report stated that improvements were needed in the replacing the Service’s dinosaur technology.

Employees have to be pleased that can now obtain better equipment to do their jobs, although three years to determine how to point out an Apple II or an IBM running DOS does seem like a long time.

The Internal Revenue Service (IRS) has significantly improved its ability to identify and replace aging computers, according to a report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).

The IRS purchases new computers to replace aging equipment through its Sustaining Infrastructure Program. A November 2007 TIGTA report recommended several improvements to the IRS’s processes for replacing computer hardware that has reached or surpassed its useful life. TIGTA conducted the review at the IRS’s request.

TIGTA’s new report found that the IRS has implemented a process for identifying, reviewing, prioritizing, and making decisions on funding the replacement of aged computer hardware and is developing the capability to associate information technology problems with the aged hardware that caused the problem. The improved capability could result in as much as $12.3 million in cost savings and $16.4 million in revenue collection increases, according to the report.

“Taxpayers and IRS employees rely heavily on the information technology infrastructure to ensure satisfaction of tax liabilities, quick resolution of issues, and the security of confidential taxpayer information,” said J. Russell George, the Treasury Inspector General for Tax Administration. “The IRS is to be commended for these improvements,” he added.

Accounting News Roundup: State Tax Collections Are…Up?; BDO on the Hook for $91M in Florida Suit; GT Announces Regional Leader, OMPs | 02.01.11

Taxes Boost State Coffers [WSJ]
State tax revenue grew at the fastest rate in nearly five years during the fourth quarter, as the steadily improving economy and higher taxes in some states propelled strong growth in income- and sales-tax collections. But most states still face budget cuts this year, as collections remain below pre-recession peaks and states are no longer able to fall back on stimulus funds from the federal government to fill budget gaps. State tax collections increased 6.9% in 41 states that have reported their revenue, according to a report to be released Tuesday by the Nelson A. Rockefeller Int at the State University of New York.

$91M awarded in Batchelor case [Miami Herald]
A Circuit Court jury in Miami decided on Monday that the accounting firm BDO Seidman should pay the late philanthropist/aviation pioneer George Batchelor’s estate and foundation $91 million for “fraudulently” concealing false information about a company in which Batchelor had invested. The award consists of $55 million in punitive and $36 million in compensatory damages. Steven Thomas of the Venice, Calif., firm Thomas, Alexander & Forrester, is lead Batchelor attorney. He said he thought that the punitive damage award was so hefty because “BDO, right up to the end, denied it had a public duty — and public is literally their middle name: CPA.”

NFL Commissioner and Union Chief Meet to Discuss Expiring Player Contract [Bloomberg]
The National Football League and its players’ union will meet the day before the Super Bowl, aiming to “intensify negotiations” on a new labor contract. The Feb. 5 bargaining session in the Dallas area is the first in a series of meetings scheduled for the next several weeks, the NFL and the NFL Players Association said yesterday in a joint statement. Also yesterday, the NFLPA said that CBS Corp. refused to air a commercial opposing a lockout by NFL owners. The ad was supposed to run on CBS College Sports Network’s coverage of a Feb. 5 college football all-star game that’s sponsored by the NFLPA.

Deloitte’s Troubles Bubble To Surface [RTA]
Francine McKenna gives Deloitte’s troubles a look.

FCIC Gives Accounting Standards a Free Pass (Along with Practically Everybody Else) [Accounting Onion]
The FCIC had a hard time assigning blame to anyone or anything.


Wayne Kaplan named Grant Thornton LLP Philadelphia Office Managing Partner; Rick Gebert to lead Southeast region [GT]
And Michael Bennett is the new OMP in Houston.

Corporate Tax Reform: Where’s the Beef? [TaxVox]
With only two years until the election, any kind of meaningful tax reform seems, dare we say, hopeless.

Jackson Hewitt Doesn’t Appreciate the Implication That They Suck at Preparing Tax Returns

Call it the discount 1040 wars (or something):

Jackson Hewitt Tax Service Inc sued H&R Block Inc to stop a new advertising campaign that it said misleads customers about tax refund loans and disparages Jackson Hewitt’s competence.


How disparaging? How about “two-thirds of the tax returns are wrong” disparaging:

According to the complaint, H&R Block falsely claimed that its “Second Look Review” program, which reviews past tax returns prepared by rivals, found that two-thirds of prior returns prepared by Jackson Hewitt contained mistakes.

“H&R Block’s 2 out of 3 claim necessarily implies the false claim that two out of three Jackson Hewitt customers who are entitled to refunds have been short-changed due to Jackson Hewitt errors or incompetence,” the complaint said.

Jackson Hewitt sues H&R Block over ads [MSNBC]

A ‘Controversial CFO’ Allegedly Called in Sick for Three Months to Get Married

Is “bridezilla” appropriate here?

The controversial chief financial officer (CFO) of Nkomazi municipality in Mpumalanga, Sheila Mabaso, allegedly submitted a sick note laying her off for three months – only to hold her wedding during that period. Mabaso might be charged with dishonesty after the Mpumalanga municipality discovered that the sick note booking her off for September, October and November was “actually meant for her to prepare for the wedding”. Though Sowetan could not establish who Mabaso got married to, it can reveal that she got married to a pastor from the North West and that the wedding took place in Nelspruit on September 25 last year. Mabaso apparently flew to Malaysia for the honeymoon but allegedly told the municipality she was going to see a specialist doctor.

We’ve never known a CFO to be “controversial” to the point that it goes into print so we Googled “controversial CFO” and it came up with less than 100 items (although Erin Callan did sneak in there). Although, if you read further, one would discover that Ms Mabaso is nothing if not a little sassy:

[She] told Ziwaphi, a local fortnightly newspaper, that getting married while sick was none of anybody’s business. “It’s true that I was sick for three months and I have a doctor’s note to prove it. If I got married in that period, it’s none of their business. Who said a person can’t get married when they are sick?” Mabaso was quoted as saying.

Which Big 4 Firm’s New Hires Aren’t Receiving Performance Ratings?

There are clues:

We hope you are settling into your new role and that things are going well!

The purpose of this email is to make you aware of some important information regarding the year end performance management process that applies to all new campus hires and all newly hired associates/administrative assistants for this year.

The firm recognizes that as a recent new hire, your primary focus is to transition into your role and responsibilities and build your network. It is important that you have the appropriate amount of time to learn about the firm and integrate fully before you are formally evaluated on your performance. Therefore, for this performance year, which ends June 30, 2011, you will not be assigned a performance rating.

Even though you will not receive a rating, you will participate fully in all other aspects of the performance process, such as getting feedback from individuals you work with and meeting with your counselor to discuss your feedback, progress, development and goals for the 2012 fiscal year. We are confident that even without a performance rating for this year, you can fully understand how you are doing by asking the right questions and having meaningful conversations with those you work with.

In the meantime, please make sure you are getting periodic feedback and staying in touch with your counselor. As the year end process approaches you can access helpful tools that will help you prepare for a variety of coaching conversations

Further, you can learn more about the Performance Management and Development process by clicking here.

If you would like to discuss this further please contact your counselor or your People Consultant. Thank you for your participation in this important process.

Take a stab in the comments and feel free to speculate as to the motivation and repercussions behind “all (wo)men are rated equal.”

What’s a Mom Over 40 to Do When She’s Ignored by the Big 4?

Welcome to the is-anyone-sick-of-snow edition of Accounting Career Emergencies. In today’s edition, a Mom of two is getting her career started after going back to school and has found the Big 4 to be less than interested in what she has to offer. She’s looking for some feedback and advice but we’re guessing it has nothing to do with this Tiger thingee.

Got the busy season blues? Need help making your next career move? Concerned that your boss is channeling Lucifer? Emailto:advice@goingconcern.com”>advice@goingconcern.com and we’ll say a prayer for you.

More from Mom:

Please help! I came back to college for an accounting degree at 40 after earning my first degree in a non-business field long ago. I have a 4.0 major GPA, and am at the very top of my class. I will have an undergraduate accounting degree soon and be done with the CPA exam a few months later. I have 2 kids who are 10 and 12.

My plan was to start with at least a couple years in public accounting, and go from there. It seems like you need to do that so that you don’t limit your options for later. I’ve been to one career fair and didn’t get a single interview. I intend to be committed when I go full time (45-50 hours a week) but don’t desire to work from 9 am until 10 pm 5 days a week all year, at least until my kids are out of the house. Working crazy hours for a 3 month season would be fine, but not all year. I lean toward tax but enjoy everything I’ve done in accounting. Despite all their talk about diversity, I haven’t seen any Big 4 firms remotely interested in anyone over 40 and I’m not sure that I would fit with the Big 4 culture anyhow. So the question is – what is your best advice for a smart mom over 40 who desires a job in accounting – regional/local public accounting, straight to industry, governmental? Would also love to hear some HONEST feedback about the work hours at regional and local public accounting firms. Thank you!

Smart mom over 40

Dear Smart Mom,

We’re not surprised to hear about you being stonewalled by the Big 4. You’re way past the impressionable stage and the large firms like their newbies young and clueless. Furthermore, when it comes to diversity, we don’t think age is really at the forefront of their ambitions. Your instincts are serving you well and a regional or local firm will be a better fit for you. We would advise against going into an in-house or government job at this point, as some time in public will help you determine what your interests are. We suggest finding a public accounting firm where you could engage directly with managers and partners that are closer to your age, as there will opportunities to bond over kids and other things you have in common, plus it will be a natural fit for a mentor/mentee relationship. You’ll learn more quickly and be given more responsibility sooner, which is probably of interest to you.

As far as hours are concerned, you’ll work plenty but it won’t be the epic busy seasons of Big 4 lore. You’ll likely work between 50-60 hours a week during the busiest time of year but obviously, this will vary from firm to firm. Also, small firms tend to be more creative when it comes to flexibility in order to accommodate their employees specific needs, so this will probably serve you better than a Big 4 or mid-tier experience. If all else fails, land a recruiter who can take your personal situation and set you up with a firm or company who will appreciate your situation but will also be a good cultural fit for you. Good luck.

Idaho Congressman Latest to Waste Everyone’s Time by Introducing a Bill That Would Terminate the Tax Code

Mike Simpson has represented Idaho’s 2nd Congressional District since 1999 and in that time he has cosponsored legislation that would abolish our beloved Internal Revenue Code. And even one time, in 2000, the House of Representatives managed to pass a bill that did exactly that by a vote of 229-187. It’s safe to say that, if similar legislation had been passed by the Senate and then followed up by the signature of the President, you would have heard about it. Since we haven’t heard any such news or seen any reports of this monumental legislative achievement, we can only assume that it has always been, and thus, always will be a failure and complete waste of everyone’s valuable time.

No matter! Congressman Simpson will press on for this all-important goal and making another run at ending the tyranny once and for all:

Idaho Congressman Mike Simpson is an original cosponsor of H.R. 462, the Tax Code Termination Act. This legislation would abolish the Internal Revenue Code and call on Congress to fundamentally reform the federal tax system.

“Over the last few years there have been several proposals to curtail the Internal Revenue Service’s (IRS) intrusion into the American homes. These include proposals to implement a flat tax or a national sales tax,” said Simpson. “I believe the most effective course of action is to sunset the current complex and unfair federal tax code and replace it with a simple and fair alternative.”

[via State Column]

Accounting News Roundup: PwC Wants More Women; Audit Credibility (or Lack Thereof); Big 4 Are Offshore | 01.31.11

PricewaterhouseCoopers targets women [Telegraph]
PricewaterhouseCoopers will announce that it wants the present 14pc figure to rise significantly over the next decade. It is believed that the first target could be 20pc. Ian Powell, the chairman of PwC, also wants to set an “aspirational goal” of 40pc to 50pc of partners being women or from other under-represented groups, such as ethnic minorities.

The Path to Global Standards? [CFO]
[L]ast week Leslie Seidman laid out her “three highest priorities” through June 30. Remember that date., the Securities and Exchange Commission could reveal whether it intends to require all U.S. public companies to incorporate international financial reporting standards into the current U.S. financial reporting system. Speaking on a FASB Webcast, Seidman, who became the top U.S. accounting standard-setter on December 23, said the board’s main tasks for the first two quarters of 2011 are to achieve, along with the International Accounting Standards Board, melded standards in three areas: financial instruments, revenue recognition, and leasing.

Audit Credibility [The Summa]
From Professor Albrecht, ” ‘Do credible CPA audit firms add benefits to clients that exceed the audit costs?’ It’s an interesting question, I suppose, to narcissists (Big 4 auditors, government regulators and accounting professors) who believe that the world revolves around the audit function. It isn’t a question that floats my boat, for I’m concerned with a different question, ‘Credibility?’ Do credible CPA audit firms add net benefits to investors?”

Finance Chiefs Expand Roles [WSJ]
Long seen as the overseer of a company’s books, finance chiefs have been getting more deeply involved in business strategy, deciding where to invest capital and even looking at a company’s product mix. They’re also taking on new responsibilities: overseeing divisions like information technology, production, customer service and human resources. The change comes as companies put more emphasis on controlling costs, seeking input from finance chiefs as the companies try to manage revenue growth more closely during a tentative economic recovery.

In Financial Crisis Autopsy Auditors Nowhere To Be Found [Forbes]
The auditors who weren’t there.

Continuous auditing: putting theory into practice [IIA/Marks on Governance]
Internal auditing, 24/7.

How to Tax the Rich [WSJ]
Turning bad ideas into good.


Harmonised accounting rules to hit US banks [FT]
US banks could see their balance sheets balloon under new proposals from the accountancy rulemakers that would dramatically reduce their ability to net their derivatives exposure. The Financial Accounting Standard Board and its international counterpart are planning to establish a common approach to the presentation of financial assets and liabilities on company balance sheets.

Big four auditors ’embedded in tax haven world’ [Daily Mail]
The Big Four accountancy firms have come under attack for maintaining on average more than 20 offices each in offshore tax havens despite countries working together to crack down on tax avoidance. The four firms – PricewaterhouseCoopers, KPMG, Deloitte and Ernst & Young – have 81 offices in offshore tax havens, according to new research by Financial Mail. MP Chuka Ummuna, who earlier this month confronted Barclays chief executive Bob Diamond over the banks’ 300 offshore subsidiaries, said: ‘There’s a whole industry out there dedicated to helping people avoid tax that will increasingly come under the microscope.