Author: Caleb Newquist

Founding editor, Going Concern.

(UPDATE) Ex-Grant Thornton Partner Gabriel Azedo Arrested in Spain

~ Updated includes statement from Grant Thornton International in final paragraph.

The South China Morning Post is reporting that former Grant Thornton partner, Gabriel Azedo was arrested in Spain, citing “people with knowledge of his detention.”

Gaby was on the lam for over year and has allegedly stolen HK$91 million (around USD$11.7 million) from those close to him, although one of his alleged victims doesn’t see this as a half glass full situation:

Yesterday one of his alleged creditors, racehorse owner Archie da Silva, said: “I don’t know whether to be happy or not. Just because he has been arrested doesn’t mean we will get our money back. It could be a very tedious process to get him back to Hong Kong.”

Arch’s concerns about bureaucratic nightmare that is extradition seem to be well-founded, as the article explains that getting Gaby back to Hong Kong really isn’t going to be easy:

“There is no bilateral agreement between Hong Kong and Spain but a transfer under multilateral treaties the two jurisdictions are signatories to, or under provisions in Spanish domestic law, are two areas that can be looked at,” the person said.

However, it is likely extradition could involve a lengthy legal and diplomatic process because Hong Kong has no Surrender of Fugitive Offenders Agreement with Spain.

Another officer linked to the case said: “It’s really up to Spanish authorities to decide whether to hand over the man to us. They could ignore our request as there is no legal obligation for them to hand over Azedo.”

We contacted Grant Thornton International to see if they wanted to comment but have yet to hear back. It goes without saying that this story is pretty strange/intriguing so, we’ll continue to follow the developments.

UPDATE, circa 10:45 am ET: A Grant Thornton International spokeswoman provided us with the following statement regarding the matter:

“We understand from media reports that Gabriel Azedo has been arrested in Spain and that he may be the subject of extradition proceedings to Hong Kong. He was a member of the global leadership board of Grant Thornton International until his dismissal in October 2009. Immediately following his disappearance, Ms. Angela Gardner, a close relative of Mr. Azedo, filed a lawsuit in Hong Kong against Grant Thornton International Ltd but this was subsequently dismissed by the Hong Kong court.

While the situation is highly regrettable for the individuals concerned, this is now a matter for them and for the Hong Kong courts.”

Reminder: Going Concern Reader Survey (Fall 2010)

Against my will, TPTB have forced me to remind you that it is imperative that you take our Fall 2010 Survey if you haven’t already.

It’s also been impressed upon me to also re-mention that we are offering you the chance to win a $500 gift card and it also makes you a good American.

Kindly follow this link to take our survey. As always, your time (billable or not) and participation are appreciated.

Thanks!

Accounting News Roundup: Deficit Reduction Part II; Eloquence Beats the Truth in Interviews; AICPA Still Begging for 1099 Repealment | 11.17.10

Another Deficit Plan Targets Taxes [WSJ]
A panel of Democrats, Republicans, economists and other experts is set to say Wedne overhaul of the U.S. tax code is the best way to address the nation’s fiscal problems—a new and likely controversial idea aimed at tackling the growing deficit.

The report, co-authored by Democratic budget veteran Alice Rivlin and former Sen. Pete Domenici (R., N.M.), follows a separate proposal last week by the two chairmen of President Barack Obama’s deficit commission. The many similarities between the two offer a window into the types of proposals that might win backing as Washington launches into what is likely to be a protracted debate on deficit cutting.

Pretty Good for Government Work [NYT]
A “Grateful Nephew” sends a thank you note to his uncle, “Uncle Sam, you delivered. People will second-guess your specific decisions; you can always count on that. But just as there is a fog of war, there is a fog of panic — and, overall, your actions were remarkably effective.”

Facebook’s messaging: would you like a rectal probe with that? [AccMan]
Dennis Howlett reacts to the reactionary.

Eloquence in an Interview Is Better Than Accuracy, Says Study [FINS]
If you’re stumped by a question in an interview, fake it. That’s the advice coming out of a new study from Harvard.

You’ll have a better chance of making a good impression if you respond eloquently and slightly irrelevantly than if you answer truthfully but with a dozen “uhs” and “ums” thrown in, according to the study.

Politicking Hinders U.S. Recovery [CFO Blog]
Sayeth Zanny Minton-Beddoes, an economics editor at the…Economist.

AICPA Urges Repeal of Expanded 1099 Reporting Requirements [JofA]
The House and the Senate each got their own letter.

City Could Extend No. 7 to New Jersey [WSJ]
Hizzoner is exploring the idea.


Shorter Agenda for Convergence [CFO]
Chief financial officers and controllers can breathe a little easier now that accounting rule makers have decided to scale back their aggressive schedule and focus on completing five priority projects by next year. The announcement was made on Monday by Leslie Seidman, acting chairman of the Financial Accounting Standards Board, at a financial-reporting conference sponsored by Financial Executives International. She was reiterating decisions made by the board earlier this month.

Do all your audit activities add value? [Marks on Governance/IIA]
Well?

The Housing Crisis Didn’t Stop the Fannie Mae CFO From Keeping Everyone in Stitches

“Since joining Fannie Mae in 2008, David has worked diligently and successfully to help Fannie Mae respond to the housing finance crisis while developing strategies to enhance the finance function and prepare our company for the future. We will miss David’s intellect, energy, and good humor.”

~ Fannie Mae CEO Michael Williams in an email to employees announcing the resignation of CFO David Johnson.

Sue Sachdeva’s Defense Team Provides Hysterical Argument for a Lighter Prison Sentence

Koss embezzlement mastermind Sue Sachdeva will receive her prison sentence tomorrow for ripping the headphone cobbler off to the tune of $34 million. Yesterday, the government’s sentencing memorandum (full document after the jump) was released and the prosecution and defense each made their arguments for a heavier/lighter prison sentence.

Naturally, the prosecution is seeking the maximum sentence, as is Koss CEO Michael Koss, who wrote a letter to the court with his thoughts:

“She stole from the hardworking employees of the company and their families, and ultimately the stockholders of the company,” Koss wrote. “They are the true victims of her crimes.”

Yes! The shareholders! Including the Koss family members who 67% owned of the stock ! Especially the ones who held five executive positions at once!

But never mind that for two. Tracy Coenen breaks down the defense’s argument for S-squared to receive a lighter sentence and it’s a hoot:

They argued that Sue Sachdeva should get a lighter sentence because:

a. she’s been a law-abiding citizen until now

b. the fraud was “simple”

c. and poor, poor Sue has a “compulsive shopping disorder”

Jump over to Tracy’s post for more analysis but our take on these three reasons are as follows:

A. “Until now,” as in “right up to the moment she pleaded guilty”? If so, that sorta ignores a scam that went on for over a decade.

B. Again, so simple that it went on for over ten years? You’re really making the Koss management look like a bunch of idiots…Wait, maybe they’re on to something here.

C. Please. Show us someone who wasn’t addicted to shopping in the 90s and 00s.

Sentencing Memo

IRS Commish: Gird Your Loins, Offshore Bank Havens

Yesterday we mentioned that the IRS’s new Global High Wealth Industry Group was putting the screws to the rich via “Audits from Hell.” Today, the Service announced that they were withdrawing the federal court summons against UBS since the Swiss Bank provide 4,000 more names of American clients who had parked funds offshore.

With the announcement, IRS Commish Doug Shulman put those 4k lucky ducks on notice that they should prepare for their personal audit inferno:

The IRS on Tuesday withdrew its Miami federal court summons seeking identities of suspected U.S. tax dodgers at UBS after receiving more than 4,000 names as required under an August 2009 agreement that also included the Swiss government. Each of those people expect what Shulman called a “full-blown audit” and many are likely to be charged criminally.

But that’s not all! Clearly, not satisfied with the example made of UBS, the Commish made a promise to everyone that the Service’s offshore bank raids were just getting started.

This is the close of what I call the first chapter,” IRS chief Doug Shulman told The Associated Press in a telephone interview. “We are actively pursuing a number of other banks and promoters and advisers.”

Shulman declined to get into specifics about ongoing offshore tax investigations, but said: “It’s not just about Switzerland, this is about multiple countries and multiple institutions.”

Here’s What Charlie Rangel Missed at His Ethics Trial

He really should have stuck around. He won on a couple of ’em, which is probably better than most people were expecting.

 


Of course Chuck isn’t going quietly:

How can anyone have confidence in the decision of the Ethics Subcommittee when I was deprived of due process rights, right to counsel and was not even in the room? I can only hope that the full Committee will treat me more fairly, and take into account my entire 40 years of service to the Congress before making any decisions on sanctions.

[…]

The Committee’s findings are even more difficult to understand in view of yesterday’s declaration by the Committee’s chief counsel, Blake Chisam, that there was no evidence of corruption or personal gain in his findings.

From here forward, it is my hope that the full Ethics Committee will take into consideration the opinion of its chief counsel as well as the statement by Rep. Bobby Scott, a member of its investigatory subcommittee who said that any failings in my conduct were the result of “good faith mistakes” and were caused by “sloppy and careless recordkeeping, but were not criminal or corrupt.”

Earlier:
Charlie Rangel Has Heard Enough

Top 10 Tax Changes to Know Now

In March 2010, the President approved two huge pieces of tax legislation: the Hiring Incentives to Restore Employment Act and the Patient Protection and Affordable Care Act. Numerous tax provisions from these two bills take effect over the next several years. Will you be able to identify the tax changes that may impact your clients’ tax returns? Here’s a quick list of the things you will want to be familiar with.


1. Tax timeline in the health care reform act—when each provision takes effect. These are major tax changes spread over the next 8 years!

2. The additional Medicare Tax on unearned income and wages found in the new Health Bill (the hottest tax topic of the year)

3. How the Gillet case affects the tax return of a same-sex couple. Is filing “Married Filing Joint” permitted?

4. The 5 tests for qualifying a child as a dependent and who can claim the child after a divorce.

5. The new rules for basis reporting starting in 2011 (Form 1099-B).

6. Cancellation of debt (and exceptions to COD Income (Section 108).

7. The myriad adjustments to gross income such as health savings accounts and prepaid tuition accounts.

8. Changes to itemized deductions including the new charitable contribution rules, the home mortgage rules and medical expenses.

9. Features and effective dates for the American Opportunity Tax Credit (Hope Credit) and the Lifetime Learning Credit.

10. The over 60 provisions that expire at the end of 2010; Ordinary income tax rates, capital gains rates, EIC, child tax credit, dependent care credit, limit on itemized deductions and exemptions, etc. will all revert to 2001 law.

Need help pulling all the information together? Get the details on these and other issues related to individual income taxes in Part 1 of CPE Link’s Federal Tax Update webcasts scheduled November-January. Course includes 120 page downloadable manual containing hyperlinks to applicable code sections.

BDO Culminates 100th Anniversary with a Two-Hour Disney Production on the History of the Firm

As you probably know, BDO has spent 2010 celebrating the firm’s 100th anniversary in the U.S. Throughout the year there has been various celebrations along with Jack Weisbaum’s successful run as Dos Equis dopplegänger.

The apex of the firm’s centennial is going on as we speak in Orlando, at the firm’s Centennial Partners Meeting where 700 some-odd partners, alums and their better halves are celebrating the big one hundo.


A brief word from the most interesting accounting CEO in the world:

“In 1910, there were a little more than 2000 certified public accountants (CPAs) in the United States, that’s approximately the same amount currently working at BDO. Today, there are hundreds of thousands CPAs, but just a handful of national firms that have been able to grow and prosper across the country and build networks with member firms around the world,” said Jack Weisbaum, CEO of BDO USA. “Our firm bears little physical resemblance to the firm Maximillian L. Seidman started a century ago, and it is sure to change drastically in the coming century. What will stay the same is our unwavering commitment to clients, our capacity to adapt to change and our ability to find opportunity in every challenge.”

In addition to the Weisbaum speech, last night attendees were treated the aforementioned two-hour Disney production about the history of the firm.

Entitled “Proud Past – Bold Future,” the firm’s story is told with an extensive cast and musical arrangements, interspersed with video interviews of BDO partners – from both past and present – as the firm’s progress is tracked over the past century.

A Disney production sounds nice but two hours? Beauty and the Beast was nominated for Best Picture and it only ran for 84 minutes. Not that you can fairly compare the 100 years of getting to know BDO to animated bestiality. There really is no comparison but we’re just hoping – for the sake of the audience – it was screened before the comfort food and booze.

Accounting News Roundup: Reminder – Padding the Expense Report Is Illegal; What Does the Twilight of a CPA’s Career Look Like?; 33 New Small Business Owners Coming to Congress | 11.16.10

GM Raises Sights for IPO [WSJ]
General Motors says it is raising the price range for its initial public offering of common stock to $32 to $33 per share. The new price range is about 14% higher than originally expected.

The share and price expansion are the result of strong investor demand for shares in the U.S. auto maker, which now is generating solid profits after shedding costs under a 2009 bankruptcy reorganization.

A Little Extra on the Road [NYT]
Corporate accountants have long known that otherwise law-abidinel expense fraud.

And while new software programs help detect fraud, businesses report that travel fraud increased in the last few years as the distressed economy put more financial pressure on both employees and employers.

“I don’t think people always take the view that falsifying expense claims is a criminal act,” said John Verver, vice president for services and product strategy at ACL Services, a provider of financial monitoring software and expertise.

IRS Throws in Towel on Closely Watched International Tax Case [TaxProf Blog]
Transfer pricing nerds will like this one.

Litigation Disclosure: What They Don’t Know Can Hurt You [Forbes]
Francine’s latest at Forbes discusses the progress on a new litigation standard. Or lack thereof, “Everyone – the lawyers, the auditors and company executives – has been fighting the Financial Accounting Standards Board’s (FASB) proposals for expanded disclosures over loss contingencies for more than two years. For shareholders, this means, everyone who is supposed to be working for you is fighting additional disclosures that would help you – the investor – know if a legal bomb was about to drop on your investment.”

Dudley Says QE2 Critics Don’t `Understand’ Fed’s Exit Plan [Bloomberg]
Federal Reserve Bank of New York President William Dudley said critics of the expansion of monetary stimulus are underestimating the central bank’s ability to raise interest rates when necessary.

“People do not understand clearly” that “we can have an enlarged balance sheet and not have a long-term inflation problem,” Dudley said in an interview with CNBC. “We are very confident of our ability to exit when the time comes.”


Jason Blumer: Don’t Believe the Lies [CPA Trendlines]
Blumer is thinking about the future, “It seems the end of a public accountant’s career is steeped in misery, being “worn out” and adverse to change. Not a very exciting picture for those entering universities deciding what to major in! Is this what the younger generation has to look forward to when they retire?”

Meet the New Small-Business Owners in Congress [You’re the Boss/NYT]
Last Tuesday’s elections will send 33 small-business owners and entrepreneurs to Washington, according to The Agenda’s exhaustive (and exhausting) search. All are Republicans. Two are women.

Jack Link wins national Ernst & Young award [MBJ]
The beef jerky company that does ads like this: