Author: Caleb Newquist

Founding editor, Going Concern.

A Multitude of Big 4 Auditors Can Confirm This

[J]ust because a person has the initials CPA after his/her name does not mean that he/she knows his/her arse from a hole in the ground when it comes to preparing 1040s.


That comes courtesy of the Wandering Tax Pro, Robert D. Flach. It got the attention of Joe Kristan, who came to the defense of CPAs everywhere but did admit that some CPAs have no business being near tax forms:

[Robert] then spends his next 10 paragraphs elaborating on our shortcomings. And that’s fine, to a point. Not all CPAs are qualified tax preparers. By the same token, not every lawyer is capable of defending you on a murder charge. But the guy you want by your side when the state wants to send you to the chair is definitely going to be a lawyer. And while not all CPAs should be your tax advisor, many of the best tax advisors are CPAs.

Case in point: many relatives and clueless friends of auditors still ask said auditors to prepare their tax returns. In most cases, a) this is a HUGE mistake and b) they don’t want to help you anyway.

Man Who Claimed $23 Worth of Vegetables Triggered an IRS Audit, Explains His Rationale

A couple of weeks ago, we brought you the tale of Don Dunklee, who claimed that he was audited by the IRS for a paltry $23 in vegetables from his garden. At the time, w Mr Dunklee could have come to such a strange conclusion, considering that it’s pretty obvious the IRS’s efforts at closing the tax gap would be spent in better places than the organic vegetable farmer dynamic.

And as it happens from time to time, the subject of our post reached out to us directly (Big 4 CEOs should take a hint) to explain the situation further.


You see, Don – who is a bit of inventor but not when it comes to stories about tax audits – farms as a hobby and a woman who accepted some vegetables from him stuffed a wad of cash in his pocket that he reluctantly accepted:

I work off farm for Walgreens as does my wife. We reported our entire incomes from our employer as well as the $23, and used only the standard deductions provided by the IRS as we do not have enough “expenses” to write off deductions. The $23 was a lady looking at starting her own organic farm who I refused money from. She insisted to the point she would have been offended had I not kept the money she shoved in my pocket. I kept the cash out of respect to her and reported it as additional farm income. I have a 23 acre farm that I have been building for 27 years with the infrastructure so I can have a farm business when I retire in a few years. People visit my farm to see my off grid solar/wind system, my solar charged electric scooter [Ed. note: see above], and my organic vegetable production. I give away any vegetables anyone wants as I grow much more than I can harvest for myself, in part to learn how to produce enough to make a small retirement income later on, and I like to show off my veggies/farm/lifestyle.

Then Don informed us that he fell victim to the Geithner tax malady:

I do my own taxes. I tried TurboTax for the first time (won’t again) and the $23 was reported, rightly so, as farm income. (investigator suggested I can make up to $400.00 and should consider reporting on the other income line rather than farm income during the end of our interview when she agreed our taxes were correct and made no changes). TurboTax created a form F, farm income for the $23, reported. I claimed no expenses for growing, as I do not have a true farm business.

Then Don gets to the crux of the argument behind his belief that the audit was not “random”:

Farming is my passion/hobby. Had our audit been a true random audit I believe we would have had a general agent and general tax officer doing the audit with questions and info requested related to all of my employment reported. I believe this was a targeted audit as the title of the investigator was “small business and self employed” which does not fit the nature of my return. Her questioning was often off topic from the particulars of my return (fishing?). I would not have a problem if the IRS would be honest and say something to the effect, “we would like to audit your return as we see some irregularities we need clarified.” This might help build trust in the IRS. Knowing they have powers that some consider above or outside of the law in how they deal with taxpayers I was worried. The entire process is intimidating. I do not like feeling like a criminal for being honest. I could not afford legal help, which their literature suggested, further intimidating information they provide creates the impression one is in trouble. I hope this helps clear it up a bit for you.

Giving this a little more thought, we aren’t really surprised since the IRS has shown the willingness to shake down taxpayers for a sum that wouldn’t buy you a Hershey bar in a Mad Men episode. Don told us that he doesn’t have any ill will towards the IRS but he wonders if sometimes they can be a tad misguided, “I do have a lot of respect for the IRS and their mandated task, however I wonder if their very task generates a lot of problems.”

Not sure if the IRS is into self-reflection but that’s why we have TIGTA, s’pose. Thanks to Don for reaching out to us and now that his solar-powered scooter is getting a little more exposure, KPMG (and other firms looking to reduce their carbon footprint) may have a decent alternative to the sherpas.

KPMG’s Latest “Green Initiative” Has One Employee Demanding Sherpas

[caption id="attachment_24110" align="alignright" width="150" caption="Clearly a KPMG auditor; all the supplies are blue."][/caption]

As many of you are aware, schlepping around a laptop, supplies and God knows what else is standard operating procedure for many Big 4 employees. If you work in New York, this annoyance is compounded by the fact that you have to coordinate all this stuff in an awkward balancing act in order to walk (at least partially) to your desired location. Even if your engagement budget allows you to take a cab, the annoyance factor is high.

Unfortunately, this has now been made worse (never mind the slick sidewalks for two), according to a tipster who has a beef with the New York office of KPMG’s latest attempt to save the planet:

I don’t know why this set me off the way it did, but this really made me very angry so I thought I’d send it in to you to post for open internet mockery. Now in addition to carrying around a laptop, printers, the new second monitors, binders etc all over the city, KPMG expects me to strap a MUG to myself and heaven forfend I use a “Guest Mug” because then how will I compete in this swell “Original Mug Contest”?

I’m 115 pounds, I don’t have the body mass to deal with what is gradually turning into some sort of fully equipped mountain climbing expedition. KPMG needs to start handing out sherpas. Immediately after this email went out, about three different conversations involving stockpiling paper cups in various drawers started around me. What is 500K cups anyways, about half a tree? My free cup of crummy coffee in my paper cup that requires next to no effort to get is the high point of my day, so screw you KPMG Green Initiative.

Here’s the email describing the initiative (sorry for the disjointed look, we had to clip it twice) that caused our tipster to fly off the handle.

So not only does insufficient auditing space have their unforeseen repercussions, the quantity of stuff that auditors are asked to drag with them is reaching critical mass. No lives appear to be in danger yet but one has to wonder where the breaking point is. Your concerns and reactions are welcome at this time.

Accounting News Roundup: A&F Worker Outlook Improves; LarsonAllen Joins the M&A Game; Big 4 Work-Life Redux | 01.18.11

Mergis Group A&F Worker Confidence Rises; Nearly Half of A&F Workers Looking to Make a Job Change [PR Newswire]
The Accounting and Finance Employee Confidence Index, a measure of overall confidence among U.S. accounting and finance workers, edged up 2.2 points to 56.1 in the fourth quarter of 2010, according to a recent survey commissioned by The Mergis Group®, the professional placement division of SFN Group, Inc. The survey, conducted by Harris Interactive®, indicates that an increased population of the workforce believes it is likely they will make a job change in the next 12 months.

Toward a 21st-Century Regulatory System [WSJ]
The President wants to get rid of regulations across the spectrum of government “that conflict, that are not worth the cost, or that are just plain dumb.”

Swiss bank UBS to change much-mocked dress code [AP]
Red undies may now be allowed!

Kennewick accounting firm Hansen NvO sells to LarsonAllen [TCH]
LarsonAllen gets into the M&A act.


For Work-Life Balance, Be an Accountant [The Juggle/WSJ]
The Journal picks up the Times’s story on work-life balance. Or lack thereof.

Rothstein Kass Issues New White Paper on Fair Value Accounting [PR Newswire]
International professional services firm Rothstein Kass today announced that the company has published a new reference manual pertaining to Financial Accounting Standards Board Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (ASC 820).

Accounting News Roundup: Grant Thornton Names New Chief Legal Officer; A Reminder for the PCAOB; Repo Loopholes Remain | 01.17.11

~ We’ll be taking it easy today to observe Martin Luther King, Jr. Day. We’ll be back to a full slate tomorrow.

Senators seek end to prisoners’ bogus tax refunds [WSJ]
Sens. Charles Schumer of New York, Sherrod Brown of Ohio, Amy Klobuchar of Minnesota and Sen. Bill Nelson of Florida said the Federal Bureau of Prisons and the Internal Revenue Service have failed to cooperate and comply with a 2008 law aimed at stopping the practice in federal and state prisons nationwide. Prisoners use their own names or the names of friends and associates to submit false claims to receive and cash refund checks. “It is outrageous to think that convicted felons areayers from a jail cell,” Schumer told The Associated Press. He said the federal agencies’ “failure to share information has not only allowed this fraud to continue to occur, but has allowed it to more than double since 2004.”

Latest career move ‘was a no-lose choice’ [WaPo]
Deloitte alum and current LaSalle Hotel Properties Bruce Riggins participated in the Post’s “New at the Top” series.

The Robot in the Next Cubicle [BBW]
At just five feet tall and 86 pounds, the HRP-4 may be the office grunt of tomorrow. The humanoid robot, developed by Tokyo-based Kawada Industries and Japan’s National Institute of Advanced Industrial Sciences and Technology, is programmed to deliver mail, pour coffee, and recognize its co-workers’ faces. On Jan. 28, Kawada will begin selling it to research institutions and universities around the world for about $350,000. While that price may seem steep, consider that the HRP-4 doesn’t goof around on Facebook, spend hours tweaking its fantasy football roster, or require a lunch break. Noriyuki Kanehira, the robotic systems manager at Kawada, believes the HRP-4 could easily take on a “secretarial role…in the near future.” Sooner or later, he says, “humanoid robots can move [into] the office field.”

Ken Cunningham Named Grant Thornton LLP Chief Legal Officer [Business Wire]
Ken Cunningham has been named the new Grant Thornton LLP Chief Legal Officer effective February 1, 2011. Ken succeeds Peggy Zagel as Chief Legal Officer, who will be retiring from the firm July 31, 2011. “We are pleased to have an individual of Ken’s ability leading this critical function at the firm,” said Grant Thornton LLP CEO Stephen Chipman. “Ken is an outstanding legal thinker and an exceptional colleague, and we are confident that he will continue to be an enormous asset to Grant Thornton as the firm sets out on our bold five-year strategy for growth serving dynamic organizations around the globe.”

Deloitte: Choir to perform in festival [Big 4]
John Kerr, Talent partner at Deloitte was understandably thrilled. “Having a Deloitte Choir is a real asset,” he said. “It creates new networks within our firm, and builds relationships with our clients. Our choir members clearly love participating. Deloitte’s reputation rests on quality and excellence. I’d say winning the Office Choir of the Year is a great new way to signal just how far that emphasis on great performance goes at Deloitte.”

Dear PCAOB Board: Your Job Is To Serve And Protect Investors [RTA]
Francine McKenna refreshes your memory.


The FASB’s Proposed Repo Accounting: Loopholes Still Abound? [Accounting Onion]
The short answer is: Yes. Tom Selling has the long answer over at his blog.

Donald Trump & the Deadbeats [Tax Watchdog]
A sordid tax history for many of the the new Trump celebrity contestants.

Filing Your Tax Return is a Snap with New Turbo Tax App [Tax Docket]
Memo to Tim Geithner.

Deloitte Is Moving to 30 Rock

We’re still waiting for Jim Quigley’s tweet to confirm but it appears, based on an internal email sent to Going Concern, that Deloitte will be consolidating its offices to 30 Rockefeller Center.

Here’s our tipster’s email:

[I]t appears that they will be going public with this in the next couple of days. D&T is consolidating its three New York offices into 12 floors of Rock Center. The sublease from Merrill Lynch at 2 WFC is up next year and apparently [Bank of America] wanted to raise rents on them. The consensus is that there is just too much space that isn’t getting used and that consolidating the offices would be a more efficient use of the space.

Regards,

“Anonymous Tipster”

And here’s the internal email:

The only attention we’ve really paid to the Deloitte commercial real estate story is that they were threatening to leave the City altogether last summer but DWB debunked that theory sufficiently. This not only marks a major move for Deloitte but it also is a major new tenant at 30 Rockefeller Center. But why is so much sprawling cube farm space available at 30 Rock? Is this a result of Comcast’s purchase of NBC Universal from General Electric or is Jack Donaghy holding a fire sale? We don’t know the real estate business well enough to give it an educated guess so if you’ve got other theories, leave them below. We left a message with Deloitte but Christ, it’s after 9 pm on Friday, so we’ll back to you Monday.

You’d Be Wrong If You Thought the Ernst & Young Golden Globe Auditors Were Taking a Back Seat to Other Award Show Auditors

Because, really, is team of Ernst & Young and Ricky Gervais versus PwC, James Franco and Anne Hathaway even a debate?

If you feel strongly about it we’ll hear you out but it’ll take some convincing.

The winners of the 68th annual Golden Globe® Awards will remain a secret until they are revealed January 16 to millions of viewers around the world, thanks to the efforts of Ernst & Young LLP, a leader in assurance, tax, transaction, advisory services and strategic growth markets. The Hollywood Foreign Press Association has relied on Ernst & Young for the past 38 years to conduct the ballot tabulation process of the Golden Globes® with security, integrity and reliability.

And just in case you’re concerned about Ernst & Young’s “security, integrity and reliability” because of you know who, the protocols have been laid out in detail:

• Winners are known only to three senior Ernst & Young executives in advance of the telecast;

• Ernst & Young is also responsible for qualifying voting members of the Hollywood Foreign Press Association, confirming that their credentials are current and meet the standards set forth by the Hollywood Foreign Press Association;

• Ernst & Young controls the entire voting process beginning with the nomination ballots, and maintains control of the ballots until the telecast is over;

• Results are triple-checked to eliminate any margin of error; and

• Winner envelopes are assembled by Ernst & Young and are maintained exclusively under Ernst & Young’s control until they are handed directly to each celebrity presenter moments before they appear on-stage.

KPMG University?

Well, sort of.

If you’re thinking something similar to Deloitte’s sprawling campus down in Texas, then you’d be mistaken. The British firm has decided to recruit “school leavers, not university graduates” and will sponsor them to get accounting degrees, reports the FT:

From next year, KPMG will take in 75 school leavers, and then meet the cost of a four-year accountancy degree from Durham university and an accountancy qualification. Trainees on the six-year scheme will start on up to £20,000 a year. In 2012-13, the maximum university tuition fee, now £3,290, will rise to £9,000. At the same time, subsidies are being withdrawn from the sector and rules loosened to allow new entrants into the market and innovation in course design. As a consequence, such schemes could become more attractive to universities.

You could reason that this is a good thing because of the money it will save the students but our concern lies with their university experience. Or, the lack thereof:

KPMG said it could eventually take “in excess of 400” of these trainees a year, more than half its intake. The scheme is therefore expected to replace much of its traditional graduate recruitment. KPMG trainees will not join a conventional degree course. They will, instead, attend special classes to allow them to spend most of their time working at one of the company’s offices.

So, maybe we’re misinterpreting the Queen’s English but that sure sounds like recruits spending their college days sporting business casual, undermining interns/new associates for gofer duties and nothing to do with binge drinking, drug experimentation, gaining the freshman 15 (50?) or sinking themselves into debt. Is nothing sacred?

KPMG to fund young recruits’ degrees [FT]

Accounting News Roundup: Talking Corporate Tax Reform; PwC’s Audit Committee Questions; Swipe That Refund | 01.14.11

Groupon Talks IPO [WSJ]
Investment bankers have been making proposals to online deals site Groupon Inc. about a proposed initial public offering for the past week through an informal “bake-off,” people familiar with the matter said. Groupon, which turned down a $6 billion takeover offer from Google Inc. last year and said it would raise $950 million in funding, has been planning its public debut for later this year, these people said. An IPO is likely “sooner rather than later,” and most likely to be this fall, one of the people familiar with the matter said.

E&Y named most gay-friendly accountancy firmAccountancy Age]
E&Y ranked third on the UK national list of 100; Deloitte came in at 90. PwC and KPMG were MIA.

Talks on Corporate-Tax Revisions Set to Start [WSJ]
The drive to revamp corporate tax rules kicks off in earnest on Friday, when Treasury Secretary Timothy Geithner sits down with executives of more than a dozen major U.S. companies. One likely focus of the discussions will be finding ways to use an overhaul to encourage more investment in the U.S. “We have to create stronger incentives for investment in the United States, both by American and by foreign companies,” Mr. Geithner said in a speech this week.

For Same-Sex Couples, a Tax Victory That Doesn’t Feel Like One [NYT]
A decision in May by the Internal Revenue Service that was hailed as a step toward equality for same-sex couples has instead become a headache for tens of thousands of gay and lesbian families in California. Same-sex couples who are registered domestic partners — or who married during the brief legal window — are facing a new, more complicated tax status, one that has raised a litany of expensive concerns. Many of these families will now have to pay for professional help to file by April 15.

PwC provides top 10 questions for audit committees [AW]
PwC US’s Center for Board Governance has announced its annual list of questions and insights to help audit committees oversee their companies’ 2010 year-end financial reporting process. Topics covered include: accounting and disclosure matters, the impacts of the proposed SEC rule for a whistleblower bounty program, antitrust and anticorruption compliance, tax reform, and ongoing standard setting, and regulatory matters, among others.

IRS to Offer Tax Refunds on Visa Debit Cards [TaxProf Blog]
Spend away!

Former ’30 Rock’ accountant charged with embezzling from NBC [NYP]
Matthew Rudolph was awaiting arraignment in criminal court Thursday on 22 counts of grand larceny, falsifying business records and possession of a forged instrument. Queens district attorney Richard Brown says Rudolph forged two checks made out to himself and used his company credit card for personal use, stealing a total of about $14,000.

AT&T Takes $17 Billion Charge for Pension Change [Bloomberg]
The company will deduct $2.7 billion, or 28 cents a share, in non-cash expenses in the fourth quarter, Dallas-based AT&T said in a regulatory filing today. AT&T is changing how it recognizes gains and losses for funds that pay for pension and other post-retirement benefits. “Investors shouldn’t lose sight of the real economics just because of the accounting,” said Craig Moffett, an analyst at Sanford C. Bernstein & Co. who rates AT&T shares “neutral” and doesn’t own them. “The real economics are based on the size of the liability regardless of how it’s accounted for, and this is a massive liability.”

Ways and Means schedules first tax reform hearing [On the Money/The Hill]
January 20th. 9 am. Be there.

Moss Adams CEO Denies Grant Thornton Merger Rumor in Email to Partners

In reaction to our post yesterday about the rumor of Grant Thornton and Moss Adams being united in wedded CPA firm bliss, Moss Adams Chairman and CEO sent an email to MA partners yesterday afternoon. The email, sent to us earlier today, let the partners know that no one is out of the loop, “[L]et me start by assuring you that you did not miss a partner call, a partner memo or any other such communication dealing with this.”


Mr Anderson also wrote that he has spoken to Grant Thornton, “Since we last had the all partner webinar, there have been no substantive discussions with GT – I say no substantive discussions because I have been at an AICPA major firms meeting where I not only had casual discussions with the GT leadership team, but I had similar discussions with the leadership of most of the 30-50 largest CPA firms in the country, exclusive of the Big 4.”

So you can interpret things like, “no substantive discussions with GT” and “casual discussion with the GT leadership team” how you like but Mr Anderson made himself a little clearer near the end of the email, “I can absolutely assure you that while we have had discussions with a large number of firms (of all sizes) over the past 12 months […] there are currently no negotiations under way with any firm regarding merger. But I can also tell you that I and other [Executive Committee] members will be talking to some west coast firms over the next several weeks.”

Moss Adams has not responded to our most recent request for comment. Grant Thornton sent back our carrier pigeon with it’s head cut off (very Chicago), which is the closest thing resembling a response that we’ve ever received from the firm. We’ll keep you updated.

Despite the “Horror Stories,” an Eight-year Tax Vet Wants to Know How to Jump to the Big 4

Welcome to a special Thursday the Thirteenth edition of Accounting Career Emergencies. In today’s edition, a tax veteran who has spent their career working in smaller firms is looking to make a move to a Big 4 firm since they “can be even more flexible with schedules.” The problem is, our aspirant is having trouble getting any of the firms’ attention.

Want to know if you’re stuck in a dead-end job? Looking for some good press? Need help writing a farewell email? Email us at advice@goingconcern.com and we’ll help you keep your valediction out of these pages.

Returning to the Big 4 wannabe:

Dear Caleb,

I am a tax senior who has eight busy season and a CPA license under their belt. I have always worked for the smaller firms because of all of the horror stories I have heard regarding the Big 4. Lately, I have realized that I really don’t work that much less than they do and sometimes the Big 4 can be even more flexible with schedules because of the size of the workforce. (If you are one of several, there is not a lot of room to move stuff around.)

The problem is I have never been through the recruiting process with the Big 4 and don’t know where to begin to try and move into an experienced position. I have applied on the website but have not had any responses. Any thoughts?

Sincerely,
Lost in Transition

Dear LiT,

So the Times convinced you, eh? It’s a good paper (is that still the correct terminology?), we’ll admit but even the Gray Lady can find itself wandering into uncharted waters. ANYWAY, this problem you have – no communicado so far from the Four Horsemen; we can help.

Our first suggestion is to work with a professional recruiter that has placed others with the Big 4. A good one will be able to take one look at your résumé and flat out tell you if you’ve got what it takes to get in the door. Then it’s up to you nail the interview(s). Done and done.

The other thing you can do – if you prefer to avoid the recruiter – is to use LinkedIn to find who the experienced-hire Big 4 recruiters are in your market and contact them directly. You could get started by looking at some recent posts that have emails from recruiters that are floating around this here site but we realize that may be a longshot.

So off you go, Big 4 hopeful. We hope you hit the work-life balance jackpot.

The Tax Policy Debate Just a Got a Tad Less Sophisticated

Tax policy is one of the most complex issues in the political discourse, regardless of the simplicity behind the rhetoric used by our public officials. And thanks to this “straight talk,” it has become one of the most polarizing topics in politics. But now that a man has been arrested for trying to engage Congressman Jim McDermott (D-WA) in debate (after drinking of course) on the issue using colorful language (or you might call it “expletive-laced threats”), the discussion has hit a new intellectual low.


Here’s the voicemail Charles Turner Habermann of Palm Springs, CA left for Congressman McDermott, From the National Law Journal by way of Above the Law:

“Uh, I, I, I’d like to remind you McDermott that if you read the constitution all the money belongs to the people. None of it belongs to Government Okay! So, if Jim McDermott says they’re spending money on a tax cut, he’s a piece of human dog shit, okay. He’s a piece of human filth. He’s a liar, he’s a communist, he’s a piece of fucking garbage. Thomas Jefferson, James Madison, or George Washington, Alexander Hamilton, if any of them had ever met uh, uh Jim McDermott, they would blow his brains out. They’d shoot him, in the head. They’d kill him because he’s a piece of, of, of disgusting garbage.”He later says: “And you let that fucking scum bag know, that if he ever fucks around with my money, ever the fuck again, I’ll fucking kill him, okay. I’ll round them up, I’ll kill them, I’ll kill his friends, I’ll kill his family, I will kill everybody he fucking knows.”

In the second message, he says, “Your congressman, Jim McDermott is a piece of garbage. And I’ll tell you something right now, garbage belongs in the trash that’s exactly where he’s gonna end up.”

Then there’s this:

“As for his motivation for leaving the voicemail message, Habermann said he was calling politicians to let them know that what they were doing and saying regarding spending taxpayer’s money was wrong,” the complaint says. “He said he was trying to scare them before they spent money that didn’t belong to them.”

He also said he never intended to hurt anyone and that he was too afraid of losing his $3 million trust fund to commit a crime.

Yep, this guy’s a tax policy wonk, all right.

Arrest in California in death threats against congressman [National Law Journal via ATL]