Author: Caleb Newquist

Founding editor, Going Concern.

Proof That an Accountant Can Love Golf Too Much

Golf is probably the furthest thing from most of your minds right now because a) it’s somewhere between 0 and 20 degrees Fahrenheit outside or b) you hate golf. For the latter, you can continue reading in so you may engage in laughing and pointing. For the former, despite it being the offseason in most parts of this fair land, a report from the Manchester Evening News should cause you to temper down your love for a good walk nice spin in a cart spoiled.

A golf fanatic accountant who stole thousands from his employers and then funnelled it into his ailing club has been jailed. David Beech, 59, showed a ‘bizarre misplaced sense of loyalty’, when he siphoned over £70,000 from his bosses into struggling Oldham Golf Club, where he was treasurer.

But Beech, of Holly Grove, Chadderton, was rumbled when a company auditor went through the books. He pleaded guilty straight away and repaid £51,262 of the cash back although £19,300 was still unaccounted for, Sheffield Crown Court heard. At court it also emerged he received an 18-month suspended sentence 23 years ago for stealing from another employer. Defending, Robert Smith said Beech had demonstrated a “bizarre, strange, misplaced sense of loyalty” to the golf club. “It had a negative impact on the club in that they were under a false impression as to their own finances,” he said

Typical reaction of the members:

Deloitte Global CEO Jim Quigley Is Tweeting

There goes the Twittersphere.

Jim Quigley has broken the Big 4 CEO cherry on Twitter (to our knowledge) and he decided to do it in honor of the World Economic Forum (aka: The annual CEO ego strokefest) in Davos, Switzerland that gets underway in less than two weeks. Above is Quig’s one and only tweet so far and it’s very CEO-ish. We’re not expecting anything of the Kaplan variety but cripes man, add some color. May we recommend our series of “Doing it Wrong” Twitter posts from our resident expert?

Anyhoo, here’s the video from the tweet:

Thoughts on the performance are welcome. And JQ should know that we know Twitter can have a slight learning curve, so we’ll save you the trouble: you can follow Going Concern here. Oh, and Adrienne will be writing a review, so tweet to impress.

[via TS]

Accounting News Roundup: AllianceBernstein CFO Bolts; An Audit with Value; BDO Knows Kosovo | 01.13.11

AllianceBernstein’s CFO Howard to Leave After Less Than a Year [BBW]
AllianceBerstein Holding LP, a New York-based asset-management firm, said Chief Financial Officer John Howard will leave the company in February after less than a year on the job. Howard will return to his former employer, Greenwich, Connecticut-based AQR Capital Management, in his previous role as chief operating officer, AllianceBernstein said today in a statement. AQR runs one of the world’s biggest hedge funds.

BlackBerry Playbook: awesome fail [AccMan]
Once again, Dennis Howlett fails to show any restraint. We’re so thankful for that.

Bankers’ bumper bonuses are the ‘mistake’ of flawed accounting rules [Telegraph]
The House of Lords Economic Affairs Committee, which is investigating the role of auditors in the financial crisis, was told that the controversial International Financial Accounting Standards (IFRS) had allowed banks to hide risks so that profits and bonuses were inflated. The devastating assessment of the accounting rules was articulated for the first time by some of Britain’s biggest institutional investors. Iain Richards, of Aviva Investors, told the Lords that the IFRS system of auditing the banks had had “a material cost to the taxpayer and to shareholders” because “as a result dividend distributions have been made and bonuses have been paid that were imprudent.”

Acela Bob, Meet Acela Jim: Kelley Drye Managing Partner Conducts Confidential Conversation on Packed Train [ATL]
FYI for the loud talkers.

Tsingtao hopes to ditch foreign auditors [FT]
So a brewing company is going to fire its Hong Kong (i.e. foreign auditors) in exchange for a mainland (i.e. pinkos) auditor.

Audits Add Shine to Firms [WSJ]
When do audits really have value? When they’re done for small businesses, “Based on data from more than 10,000 closely held companies—about half of which have less than 500 employees—a study by the University of Chicago Booth School of Business found audited businesses save an average of $6,900 for every $1 million in outstanding debt every year as a result of lower interest rates, which were more than half a percentage point below rates paid by nonaudited businesses. For a loan of $3.3 million, the average size of loans analyzed in the study, the savings was about $23,000.”


PwC Announces Top Ten Questions for Audit Committees Credit Quality Disclosures, Loss Contingencies, Whistleblower Bounty Program and Tax Reform Top List [PR Newswire]
Jesus, that’s a mouthful. And we love rambling headlines.

BDO expands into Kosovo [Accountancy Age]
Your dream international rotation is now a reality.

IRS Oversight Board Releases Latest Taxpayer Attitude Survey Results [JofA]
87% say it’s not acceptable AT ALL to cheat on your taxes, which is a 6% increase from 2003. When you consider the tax policy positions of who was president then and who is president now, it doesn’t make a damn bit of sense.

Amsterdam’s Hookers Are Pretty Much Okay with Finally Having to Pay Taxes

Which doesn’t come as much of a surprise since the Dutch aren’t the rabid purtian, anti-tax type that exist in some countries.

“It’s a good thing that they’re doing this,” said Samantha, a statuesque blond Dutchwoman in a white leather dress who offers her services from behind one of the hundreds of red-curtained windows in the heart of the city’s ancient center. “It’s a job like any other and we should pay taxes,” she said.

Plus! Since these audits will be as boring as expected, there may be an opportunity to drum up a little business:

Prostitutes were told they would be audited in typically bureaucratic fashion, with a notice addressed “to landlords and window prostitutes in Amsterdam” published last week in the city’s main newspaper. “Agents of the Tax Service will walk through various elements of your business administration with you, such as prices, staffing, agendas and calendars,” the notice said. “The facts will be used at a later date in reviewing your returns.”

Or as a short, stocky, bald man once said, “I want details and I want them right now!”

Unfounded Rumor of the Day: Grant Thornton and Moss Adams in Merger Talks

This week we learned that Dixon Hughes and Goodman & Co. would be wedded in CPA firm bliss on March 1st. We’ve also seen a couple of smaller mergers announced this week in the tri-state area: Rosen Seymour Shapss Martin & Company LLP and Kahn, Hoffman & Hochman, LLP formed Kahn Hoffman & Hochman and Morrison, Brown, Argiz & Farra, LLC and ERE, LLP.

But eheard a rumor that trumps all of these:

The new rumor is that Grant Thornton and Moss Adams are merging. I have it on good authority (an industry consultant and the MP of a California firm).


Okay, so not exactly rock solid but intriguing enough for us to ask around. So far, Grant Thornton spokeswoman Kristi Grgeta has not returned our emails or voicemails and Moss Adams has declined to comment at this time. We’re poking around with other sources but still waiting to hear back.

So for now, let’s just go with the hypothetical. If GT and Moss were to combine, it would make them the 5th largest firm in the U.S., narrowly edging out McGladrey, with about $1.5 billion in revenues, going by Accounting Today’s most recent figures. Currently they are 6th (GT) and 11th (MA) on the AT100 list and 6th (MA) and 23rd (GT) on Vault’s flagship ranking. Their combined forces would have nearly 800 partners and over 7,100 total employees, if you assume no layoffs.

While all that might serve Stephen Chipman’s desire more dynamic clients (and perhaps more blogging fodder?), it would certainly require a few more hand-written notes. Not only that but GT already has a presence in every major market that Moss Adams does unless they’re looking to mine the Eugene, Oregon market for LOSERS and have reconsidered their divestment in Albuquerque. Also culturally, this seems like a strange fit as GT strikes us as pretty buttoned-down while Moss Adams is more laid back but maybe we’ve got that wrong. You tell us.

Regardless, Grant Thornton has voiced interest in merger possibilities and picked up Huron Consulting’s Disputes & Investigations practice last year, so who knows!? Both firms just closed the books on 2010 and maybe they’re laying some groundwork?

So, what do the GT and MA people make of this? Hell, anyone can chime in, we’re just finding this particular rumor pret-tay interesting. Some things make sense and some don’t, so we’ll leave it to you to hash out. And of course, if any of this sounds familiar because, you know, you heard something in a meeting about this very topic, email us. We’ll update you with anything we hear.

Accounting News Roundup: Demand Media Ballparks IPO; Can Accounting Networks Rival the Big 4?; Are You Willing to Swing the Axe? | 01.12.11

US Supreme Court Upholds IRS Tax On Medical Residents [Dow Jones]
The U.S. Supreme Court on Tuesday upheld an Internal Revenue Service requirement that medical residents pay Social Security taxes. The ruling would appear to settle a long fight between the IRS and teaching hospitals including Mayo Clinic, and deprives the hospitals of millions they had hoped not to have to pay the government in the future.

Analysis: Goldman’s accounting still hazy, investors say [Reuters]
Goldman Sachs Group Inc is partially pulling back the curtain on a balance sheet some have criticized as opaque, but the change is unlikely to provide all the answers some investors want. On Tuesday, the investment bank — after a review initiated by Chief Executive Lloyd Blankfein at the company’s 2010 annual meeting — released a 63-page report with 39 recommendations from its business committee for improving transparency for investors.

Demand Media Gives Price Range for I.P.O. [DealBook]
Much to the chagrin of some, Demand appears to be moving towards an offering, “Demand Media, the controversial online content publisher, disclosed on Wednesday that it hopes to raise a maximum of $138 million in its planned initial public offering. In an amended prospectus filed with the Securities and Exchange Commission, Demand’s set the price range for its I.P.O. at $14 to $16 per share.”

Will Obama Call for Tax Reform in the State of the Union? [TaxVox]
If you don’t hear a peep from the President on this issue in the next couple weeks, writes Howard Gleckman, you can forget anything meaningful happening before 2013.

Accounting networks could take on the Big Four [Accountancy Age]
Guy Jubb, head of corporate governance at Standard Life, told a Lords inquiry into the audit market that eight was a “comfortable number” of competition from which clients should be able to choose an auditor from. Other major accounting networks, which are effectively loose associations of firms across the globe, could be organised to take on the Big Four in running the audits of the biggest companies.


Would You Be the Axe-Man? Sign or Decline [FINS]
Would you fire subordinate to get your dream job? That is, would you sit across from them and give them the Trump treatment yourself?

MetLife Seeks Treasurer After Moving Steven Goulart to Investment Position [Bloomberg]
Get your résumé in now.

Illinois Legislature Considering a Slightly Less Huge Tax Increase

Last Friday, we were surprised to learn that those little anti-tax scamps over at Americans for Tax Reform have a sense of humor when they sarcastically gave the Illinois legislature credit for keeping the state’s proposed income tax increase below 80%.

Well, with today’s report that the IL pols have reconsidered their stance on that proposal, Grover Norquist and Co. are probably tickled pink:

The Illinois legislature moved a step closer Tuesday to passing its first tax-rate increase in nearly two decades to dig the state out of a $13 billion budget hole despite steep opposition from Republicans.

Tuesday afternoon, the House Revenue and Finance committee passed a scaled back version of a tax-increase proposal that was struck last week by leaders of the Democratically controlled legislature and Illinois Gov. Pat Quinn, also a Democrat.

Under the current version of the bill, the individual income-tax rate would jump to 5%, from the current 3%, a 67% increase. That is more conservative than last week’s proposed 5.25% rate, a 75% increase.

No reaction from ATR yet but we’re hoping for more GOP comedy relief.

Illinois House Panel Passes Tax Increase [WSJ]

St. Joe’s Accounting for Real Estate Impairment to Get the ‘Informal’ SEC Inquiry Treatment

If Greenlight Capital founder David Einhorn takes issue with your accounting policies, we don’t suggest laughing it off. We could talk about Lehman Brothers but it’s probably not necessary.

The most recent company that Einhorn has pegged for sketchy reporting is The St. Joe Company, who, after acting all amused about DE shorting the company’s stock, has now received a, what we imagine to be, very nice letter from the SEC launching an “informal inquiry” about the company’s practices concerning real estate impairment. The company shared the news with the world yesterday in this 8-K:

The Securities and Exchange Commission (the “SEC”) has notified The St. Joe Company (“St. Joe”) that it is conducting an informal inquiry into St. Joe’s policies and practices concerning impairment of investment in real estate assets. St. Joe intends to cooperate fully with the SEC in connection with the informal inquiry. The notification from the SEC does not indicate any allegations of wrongdoing, and an inquiry is not an indication of any violations of federal securities laws.

Despite St. Joe’s “nothing is fucked” position, Team Greenlight insists that things remain fishy:

“St. Joe’s valuation practices remain open to question,” Jonathan Doorley, a spokesman for Greenlight Capital, said today. “It is hard to understand how the company invested hundreds of millions of dollars during the real estate bubble and hasn’t seen fit to take a material writedown.”

Ideas welcome from those that want to line up against or with Einhorn & Co. Especially anyone that’s on the KPMG audit team.

St. Joe Reports Informal SEC Inquiry of Accounting for Land Impairments [Bloomberg]

Minnesota Governor Tim Pawlenty Has the Perfect Catalyst for Tax Reform

And Doug Shulman will not like it. Or Charlie Rangel. OR Tim Geithner.

The rumored Presidential hopeful simply would like to see the members of Congress pick up a copy of TurboTax from their local OfficeMax™, grab their W-2s and 1099s and crank out their own 1040.

“No help of an accountant, a lawyer or a tax specialist,” he said in an interview on ABC’s “Good Morning America.”

“And if they can’t do it, we give them a certification they can go get some help. But I’d like every one of those individuals to have to do their own taxes every year and live with the mindless burdens we put on the American people.”

And before you get all “what’s good for the goose” on TP, he’s got a tax-form anecdote for you:

Pawlenty lamented that he recently filled out a W-9 that had four pages of instructions for a half-page form.

Now, hold it right there. Filling out a W-9 doesn’t exactly qualify as “preparing a tax return.” If you want to dive into the nitty gritty of any of these forms, then we’ll listen to your beef but don’t waste our time with “four pages of instructions for a half-page form.” That’s child’s play.

Pawlenty: No tax help for Congress [Politico via MinnPost]

Swiss Village Insists Law That Allows for Killing of Dogs for Unpaid Tax ‘Isn’t About a Mass Execution of Dogs’

Someone call the State Department and cut off all ties with the Toblerone cobblers until this get rectified.

Reconvilier — population 2,245 humans, 280 dogs — plans to put fido on notice if its owner doesn’t pay the annual $50 tax. Local official Pierre-Alain Nemitz says the move is part of an effort to reclaim hundreds of thousands of dollars in unpaid taxes.

Why, you ask? Apparently because the town had exhausted all other possible methods of collection back before World War I and there’s no point in trying anything else.

He says a law from 1904 allows the village to kill dogs if its owner does not pay the canine charge. Nemitz told the AP on Monday that authorities have received death threats since news of the plan got out. “This isn’t about a mass execution of dogs,” Nemitz said. “It’s meant to put pressure on people who don’t cooperate.”

Swiss village: pay your dog tax or fido gets it [MSNBC]

Accounting News Roundup: PwC Alum Will Be FASB Technical Director; Accounting Firms Excited for Cross-Atlantic Probing; AMD CFO Gets Unexpected Promotion | 01.12.11

SEC Inspector General Probes Khuzami’s Role in Citi Settlement [Bloomberg]
The U.S. Securities and Exchange Commission’s internal watchdog is reviewing an allegation that Robert Khuzami, the agency’s top enforcement official, gave preferential treatment to Citigroup Inc. executives in the agency’s $75 million settlement with the firm in July. Inspector General H. David Kotz opened the probe after a request from U.S. Senator Charles Grassley, an Iowa Republican, who forwarded an unsigned letter making the allegation. Khuzami told his staff to soften claims against two executives after conferring with a lawyer reprecording to the letter.

U.S. accounting board names technical director [Reuters]
The board that sets accounting rules for U.S. companies said it has named a former PricewaterhouseCoopers LLP partner as technical director to oversee staff work on new accounting standards. Susan Cosper will start at the Financial Accounting Standards Board on Feb 1. She succeeds Russell Golden, who was named to the board in September, FASB said in a statement on Monday.

Goldman Opens Up to Mollify Its Critics [WSJ]
In a 63-page report released Tuesday, Goldman says that for the first time in its 142-year-history, it will start disclosing how much revenue comes from the firm’s own trading and investing. The reporting change, which comes after an eight-month review and a bruising lawsuit against the firm by the Securities and Exchange Commission, will begin with Goldman’s fourth-quarter results later this month. The firm’s power and motives have been repeatedly questioned since the financial crisis erupted, in part because Goldman weathered the mess far better than most banks and securities firms.

Rosen Seymour Shapss Martin & Co. expands operations through merger [AW]
It was a busy merger Monday.

Accounting and Consulting Firms Morrison, Brown, Argiz & Farra, LLC And ERE, LLP Join Forces [MBAF]
Annnndd it continues.

Top six firms welcome US and UK audit co-operation [Accountancy Age]
International chiefs of PwC, Deloitte, Ernst & Young, KPMG, BDO and Grant Thornton, have produced a joint statement in which they say the agreement between the watchdogs will aid market confidence in the auditors’ work. Yesterday the US Public Company Accounting Oversight Board (PCAOB) and Professional Oversight Board (POB) in the UK agreed that they will co-operate in regulating audit firms.

The Audit Model Is Broken — “Re:Balance” Has Its Third Birthday — And The Message Hasn’t Changed [Re:Balance]
Happy Birthday to Re:Balance.

Amateur Fraud Fighters Who Do the SEC’s Job For Them Can’t Be SEC Whistleblowers, Sorry [JDA]
The Sam Antars of the world aren’t eligible for the glitz and glamour that so many SEC whistleblowers enjoy.


AT&T Preps iPhone Plan [WSJ]
On Tuesday, Verizon Wireless is expected to announce that it is getting the Apple Inc. phone around the end of the month, people familiar with the matter have said, ending AT&T’s three-and-a-half-year exclusive run with the iconic device. The announcement will kick off a battle as the two carriers fight to lure defectors and win over new customers. AT&T is expected to run new ads that will highlight what the carrier says are the iPhone’s greater speed and better functioning on its network, a person familiar with the matter said.

AMD CEO resigns, CFO named interim chief [Reuters]
Advanced Micro Devices Inc Inc’s chief executive resigned on Monday as the world’s No. 2 maker of PC microprocessor chips said it was seeking a new CEO to boost the company’s growth, sending shares down nearly 4 percent in after-hours trading. AMD said the resignation of Dirk Meyer was the result of a “mutual agreement” with the board of directors and that Chief Financial Officer Thomas Seifert will become interim CEO, effective immediately, as the company looks for a permanent replacement.