Author: Caleb Newquist

Founding editor, Going Concern.

Accounting News Roundup: Obama Opposes Deal on Tax Cuts for Wealthy; Former Advatech CFO Sentenced; Citrin Cooperman One of Inc. Magazine’s Fastest-Growing | 09.08.10

Obama Against a Compromise on Extension of Bush Tax Cuts [NYT]
“President Obama on Wednesday will make clear that he opposes any compromise that would extend the Bush-era tax cuts for the wealthy beyond this year, officials said, adding a populist twist to an election-season economic package that is otherwise designed to entice support from big businesses and their Republican allies.

Mr. Obama’s opposition to allowing the high-end tax cuts to remain in place for even another year or two would be the signal many Congressional Democrats have been awaiting as they prepare for a showdown with Republicans on the issue and ends speculation that thee open to an extension. Democrats say only the president can rally wavering lawmakers who, amid the party’s weakened poll numbers, feel increasingly vulnerable to Republican attacks if they let the top rates lapse at the end of this year as scheduled.”

Oracle CEO Rails Against H-P For Mark Hurd Lawsuit [Dow Jones]
Were the HP board membersnot aware that Larry Ellison does what he wants? Oh and that’s he’s filthy rich and will buy all of their homes and their families’ homes and burn them to the ground if you dare cross him?

“Oracle Corp. (ORCL) Chief Executive Larry Ellison issued on Tuesday a strongly worded criticism of Hewlett-Packard Co. (HPQ) and its lawsuit against H-P’s former Chief Executive Mark Hurd, suggesting that Oracle might discontinue its 25-year partnership with H-P.

‘Oracle has long viewed H-P as an important partner,’ said Oracle CEO Larry Ellison in a statement. ‘The H-P board is acting with utter disregard for that partnership, our joint customers, and their own shareholders and employees. The H-P Board is making it virtually impossible for Oracle and H-P to continue to cooperate and work together in the IT marketplace.’ “

Six Flags Entertainment Corporation Announces John Duffey to Join Company as Chief Financial Officer and Lance Balk to Serve as General Counsel [PR Newswire]
Despite rumors that Duffey is scared to death of roller coasters, he assumes the big chair.

Former Advatech CFO Sentenced To 51 Months In Prison [Dow Jones]
“Richard Margulies, 59, was convicted of a June 2008 scheme that involved hiring two individuals to make “manipulative” purchases in the company’s stock in exchange for illegal kickbacks. He provided the two with shareholder lists, confidential information and non-public press releases to help slowly drive up the share price.

Soon after, Margulies was investigated by the Securities and Exchange Commission. He was indicted in December 2008 on charges that included conspiracy and securities fraud. Margulies pleaded guilty.

The court found he intended to cause $2.5 million to $7 million in losses as a result of his actions.”


Deloitte Becomes a Thomson Reuters Certified Implementer [PR Newswire]
Apparently this is BFD.

BP Takes Some Blame in Gulf Disaster [WSJ]
“The report finds BP facing a tricky balancing act. The British company risks exposing itself to greater legal liability if it assumes a large part of the blame for the disaster, but if it doesn’t do this it likely would be accused of evading responsibility. Meanwhile, parceling out blame to other companies involved in the well risks drawing blowback from them. BP officials and legal analysts say the company is trying to be careful to avoid letting the findings devolve into more mud-slinging.”

Citrin Cooperman Ranked Among Inc. Magazine’s Fastest-growing Private Companies [PR Log]
“According to Inc., Citrin Cooperman was the 148th fastest growing firm in the magazine’s broad “financial services” category, which includes accounting firms, brokerages, lending services and technology firms serving the financial industry.”

Local Man Assumes Tagging of Racial Slurs on Building Is Related to an IRS Audit

Because what else could it be?

Police are trying to figure out who sprayed racial slurs in the parking lot of a Hall County building that includes offices for the Internal Revenue Service. The messages invoking the Ku Klux Klan, and obscenities directed at African-Americans were discovered by employees as they arrived to work.


Odds aren’t that bad; approximately 1 in 6. Still doesn’t explain why invoking the Klan was necessary.

The building on Oak Street in Gainesville is home to nearly a half-dozen businesses, including an IRS office. Police told Channel 2’s Diana Davis they had no evidence linking the slurs to one person working in the building.

One employee speculated that the vandals may have a beef with the IRS. “Probably someone was being audited and they were frustrated with the situation and process they were going through. More than likely this is the result of that,” said Christian Saslo.

Racial Slurs Found Outside IRS Office [WSBTV]

A Whole Mess of People Aren’t Impressed with PwC’s Offer to Buy Diamond M&T’s Stock

PwC isn’t necessarily to blame, mind you, at least not yet. As it stands, Faruqi & Faruqi are investigating Diamond’s Board of Directors for accepting the $12.50 offer that PwC made last month.

F&F cites “at least one financial analyst values Diamond’ common stock at $14.00 per share,” hence, gypping investors. This is just the latest in a long line of investigations that were announced since the deal was announced. HOWEVER!


As far as we can tell only one actual lawsuit has been filed, in Delaware and it also notes that the deal was structured “that bars other bidders from making an offer” and includes a $9 million termination fee.

Faruqi & Faruqi, LLP, a leading national securities firm headquartered in New York City, is investigating the Board of Directors of Diamond Management & Technology Consultants, Inc. (?Diamond? or the ?Company?) (NasdaqGS: DTPI) for potential breaches of fiduciary duties in connection with their conduct related to the sale of the Company to PricewaterhouseCoopers LLP (?PricewaterhouseCoopers?). The proposed transaction offers Diamond shareholders to only receive $12.50 in cash for each share they own. According to Thomson/First Call, at least one financial analyst values Diamond’ common stock at $14.00 per share.

Whether the Diamond’ Board of Directors breached their fiduciary duties to Diamond’ stockholders by failing to conduct an adequate and fair sales process to sell the Company prior to agreeing to this proposed transaction, whether the proposed transaction undervalues Diamond shares and by how much this proposed transaction undervalues the Company to the detriment of Diamond shareholders are the key focus of this investigation.

Faruqi & Faruqi, LLP is a national law firm which represents investors and individuals in class action litigation. The firm is focused on providing exemplary legal services in complex litigation in the areas of securities, shareholder, antitrust and consumer litigation, through all phases of litigation. The firm has an experienced trial team which has achieved significant victories on behalf of the firm’s clients.

Faruqi & Faruqi, LLP Announces Investigation Related to the Acquisition of Diamond Management & Technology Consultants, Inc [Business Wire]
PWC, Diamond Management Sued Over $378 Million Buyout [Bloomberg BusinessWeek]

Who Would’ve Guessed Al Sharpton Knew Nothing About Accounting?

Presumably everyone but if you guessed that the Rev had the good sense to hire a crack-squad of debit & credit mavens to keep everything at National Action Network tip-top, you’d be sorely mistaken.

An accounting firm hired by Al Sharpton’s National Action Network found the civil-rights group in such financial disarray that it flunked its record-keeping — and may not even survive, The Post has learned.

The scathing critique was spelled out in a hard-hitting internal audit of NAN’s books, a copy of which was obtained by The Post.

“The organization has suffered recurring decreases in net assets — and has been dependent upon advances from related parties and the nonpayment of payroll tax obligations — to maintain continuity,” the firm KBL concluded in an April 2 audit of NAN’s 2008 financial records, the most recent available.

The audit, which was submitted to NAN’s board of directors, warned, “These circumstances create substantial doubt about the organization’s ability to continue.”

KBL said it was “unable to form an opinion” on the accuracy of NAN’s financial figures “because of inadequacies in the organization’s accounting records.”

Audit finds Sharpton’s nonprofit on brink [NYP]

The National Society of Accountants Has a Bone to Pick with the AICPA

A couple weeks back the AICPA gave its members the go-ahead to Crtl+C, Crtl+V its letter to the IRS about how certain parts of the proposed tax preparer regulations were a load of crap.

We just assumed that everyone in the accounting biz was on the same page here but boy we’re we wrong. The National Society of Accountants sent this letter to Treasury honcho Geithner stating that they don’t want any tax preparers exempted from obtaining a PTIN (among other complaints):

NSA Letter Regarding CPA Firm Exemption


What’s especially interesting is that the AICPA is not named in this letter once, however they are named specifically in the NSA’s press release:

Now, at the 11th hour, just before the registration process is scheduled to begin, some – including the American Institute of CPAs – are demanding that staff members of ‘CPA firms’ be exempted from the registration requirements. This flies in the face of why this registration program was set up. The point of the new regulations is to ensure that all tax preparers are accountable for their work in preparing returns, and that should include anyone who paid to prepare all or substantially all of a return, no matter where they may work.

The basic tenet here is that big firms will get away with letting the underlings preparing the returns not be held accountable for their (apparently) shoddy work. The NSA’s position is that if every single legit tax professional is registered then they can track down the shitty ones and the IRS can act accordingly. The NSA claims that the “loophole” proposed by the AICPA will let these amateurs skate the testing and registration requirements and thus won’t be serving taxpayers one iota.

On the one hand you might have been totally against the tax preparer regulations from the start but now that they’re unavoidable, the AICPA’s request for exemptions in some cases may burn the unlucky bunch that wouldn’t get to enjoy waiver.

Do The Big 4 Use Intermediate Accounting as a ‘Weed-Out’ Course?

Back from the meat sweat-infused Labor(less?) Day Weekend with the latest edition of “help me get my career out of the crapper,” a young accounting student is concerned that their “C” in Intermediate Accounting will derail their Big 4 dreams of fame and fortune.

Have a question about your career? Need advice on how to handle the client contact who just happens to be a complete lunatic? Undecided on whether or not you should eat the frozen pizza that isn’t yours when you’re working at 1 am? Email us at advice@goingconcern.com and we’ll get you back on the crooked and wide.

Back to our latest grade–obsessed recruit:

I’m currently a Senior at ASU, graduating in May 2011 and plan on enrolling in the MTAX program at ASU that Fall. I currently have a 3.52 G.P.A., but ended up with a C in Intermediate Financial Accounting (For the record, I took an accelerated 5-week course and was also working full-time). I have heard that many firms (mostly Big 4) use this course as a “weed out” of candidates. I have maintained all A’s in my other accounting courses but am worried that this C will turn off recruiters. If I plan on going into Tax, will this pose a problem? Any recommendations to counter potential problems?


Here’s the deal with grades people – they shouldn’t be a dealbreaker. There are tons of fine candidates out there who weren’t as naturally talented in the academic sense of double-entry accounting but have a lot more intangibles to offer.

Unfortunately, the current reality is that most Big 4 partners and those in recruiting are of the mindset that looking at a candidate’s grades is most efficient way to identify the best candidates. Is that bullshit? In the editor’s opinion, yes. Do you have to deal with it, anyway? Yes. Is impossible to have a low-ish GPA (between 3.0 – 3.5) and still land a gig with Big 4? No, but be prepared to sell hard why your lower GPA isn’t an issue.

In this case, while the “C” in Intermediate Accounting may rise an eyebrow or a brief mention from someone on the recruiting team, it is not the ‘weed out’ course that you are picturing in your head. Your 3.52 GPA is good enough that the Big 4 will give you a serious look and if you received “A” grades in your other classes, the “C” will look like an outlier that a partner may ask you about briefly, “What happened there?” in an attempt to be funny. You’ll give him/her the story and that will likely be the end of it.

Plus, since it sounds like you’re most interested in joining a Tax Practice, this shouldn’t be an issue at all. They’ll look at your Grad School grades and the classes you took in the program to decide where you’ll best fit into their practice. They likely won’t give your “C” in Intermediate a second look.

Accounting News Roundup: Obama to Propose Tax Break to Encourage Investment; PwC Entanglement in Yukos Continues; The Big 4 and Subprime Auditing | 09.07.10

Obama to Push Tax Break [WSJ]
“President Barack Obama, in one of his most dramatic gestures to business, will propose that companies be allowed to more quickly write off 100% of their new investment in plants and equipment through 2011.

The proposal, to be laid out Wednesday in a speech in Cleveland, tops a raft of announcements, from a proposed expansion of the research and experimentation tax credit to $50 billion in additional spending on roads, railways and runways.

Companies can now deduct new investment expenses, but over a longer period of time—three to 20 years. The proposed change, which would let companies ks meant to give companies who may be hesitant to invest an incentive to expand, acting as a spur to the overall economy.”

Oil Tycoon Says PWC Caved to Pressure [WSJ]
“Defense lawyers for jailed Russian oil tycoon Mikhail Khodorkovsky are turning their legal guns on one of their client’s former allies: auditor PricewaterhouseCoopers.

The attorneys for Mr. Khodorkovsky—once the main shareholder and chief executive of petroleum producer OAO Yukos and now on trial for allegedly embezzling tens of billions of dollars from the company—say PWC acted improperly when it withdrew its seal of approval from ten years of Yukos’s financial statements.

Mr. Khodorkovsky’s legal team contends that PWC, which served as Yukos’s auditor and adviser for years, withdrew its audit opinions in order to protect its own business interests in Russia and to shield its partners from possible jail time—not because of any real questions about the reliability of Yukos’s books.”

The Five Best and Worst Things About Telecommuting: The Finance Edition [FINS]
Being able to slob around in your sweats all day isn’t really conducive to a positive day.

PwC boss Ian Powell’s salary up to £3.6m despite partner profits slump [Accountancy Age]
“PwC partners voted to increase Ian Powell’s wages have increased to £3.6m despite partners’ average profits falling to £759,000.

Powell earned £3.3m last year.

Asked whether he believed he had earned his wages, Powell stressed that it was the senior PwC executives who set his remuneration.

‘It’s the partners that decide what I earn and I’m exteremely grateful to them for that.’ “


Barclays Names Diamond CEO, Pledges to Retain Universal Model [Bloomberg]
“Robert Diamond, the architect of Barclays Plc’s investment banking expansion, was appointed chief executive officer and pledged to boost the bank’s consumer unit.

Diamond, 59, will become deputy CEO next month before John Varley, 54, steps down at the end of March, the lender said in a statement today. He will move to London from New York and receive as much as 11.48 million pounds ($18 million) in salary and bonuses as CEO.

Chairman Marcus Agius today defended the bank’s universal model, where it acts as both a consumer and an investment bank, as a U.K. government commission considers forcing lenders to separate the businesses. Barclays, the U.K.’s third-biggest bank, is trying to cut the proportion of pretax profit generated by its investment bank to a third, down from two-thirds in the first half of this year.”

PwC opens Mongolian office [Accountancy Age]
“PwC has set up shop in Mongolia where it hopes to take advantage of a burgeoning natural resources market, the Big Four auditor said in a statement today.

The new audit office, in the capital Ulaanbaatar, will provide assurance, advisory and tax services to companies operating in the country which is credited as the first nation to use paper money.”

Guest Post: Subprime Auditing – The Fox In The Chicken Coop [Re: The Auditors]
“We all remember the story of The Three Little Pigs. This story is about the 4 Big Pigs, more commonly referred to as the Big 4. These are the four gigantic international accounting firms that have a virtual monopoly of the auditing industry – PricewaterhouseCoopers, KPMG, Deloitte, and Ernst & Young. They rule the roost and conduct themselves in a manner that ignores their responsibility to the citizens of our great country.”

An Accountant’s Labor Day Weekend Reading | 09.03.10

~ Calling it a day people. We’ll be back Tuesday to help you cope with the post-holiday depression.

Why the SEC Won’t Flip the IFRS Switch [CFO]
We approve of prognostication in all its forms.

Bernanke Says He Failed to See Financial Flaws [NYT]
About as close to a “myo get from the Beard.

Montvale: Police Blotter, Sept. 2 [NorthJersey.com]
More car trouble associated with KPMG. This time it was a stolen Beamer. With an iPod inside!

Who is short selling Medifast stock? [Fraud Files Blog]
A show of hands, please.

H&R Block Surges as Chief Says Firm Can Handle Mortgage Refunds [Bloomberg]
“Concern about potential losses tied to buybacks of home loans ‘is not based on fact,’ and reserves to protect the company against claims ‘are adequate,’ Chief Executive Officer Alan Bennett said yesterday during a conference call about fiscal first-quarter earnings. The call included repeated queries about claims, which have totaled more than $680 million.

‘There’s nothing that we’re seeing anywhere that would lead to the kind of phone calls we just listened to other than speculators that, in my mind, have probably sold our stock short and then stirred this up,’ Bennett said in an interview after the call. Mortgage buyback claims ‘are getting better,’ he said.”

The Truth About SAS 70 [CFO]
They’re worthless. Well, not completely.


I.R.S. Looks at Finances of Planned Parenthood [NYT]
“The criminal division of the Internal Revenue Service is looking into the finances of Planned Parenthood Golden Gate, while the organization has brought in forensic accountants to evaluate its books.

The local nonprofit became Golden Gate Community Health on Friday, as the national Planned Parenthood organization stripped the Bay Area clinics of their affiliation, citing financial and administrative problems.”

Paul Hogan cleared to return to U.S. [CBC]
Mick is safe.

Peter Orszag Goes From the Obama White House to the New York Times [Daily Intel]
“Apparently, what that Times opinion section needs is another liberal-leaning economist to cheerlead for progressive economic policies from the White House — or one who provides another visible tie between the two institutions.”

Under the hood [NYP]
Tim Geithner gets the giggles and might have Tourette’s; Larry Summers called the shots on GM/Chrysler fiasco and NEWSFLASH: Rahm Emanuel says “fuck” a lot.

Dave & Buster’s, Inc. Appoints KPMG LLP as Independent Auditor [Business Wire]
D&B didn’t waste any time announcing their new auditors. As of now, there is no filing.

Louisiana Is Exempting Virtually All Deadly Weapons (and Accessories!) from Sales Tax This Weekend

At midnight this morning, a sales tax holiday began in the Bayou State on anything covered under the Second Amendment and a whole bunch of other stuff too.

Louisiana even went to the trouble of slapping together a 30-second ad:


Shockingly, American flags were completely omitted from this ad, which leads us to believe that there isn’t any political motive here, although this is only the second “Second Amendment Sales Tax Holiday.” You can safely assume that prior to 2009, Louisianians were not in fear of their freedom being taken away from them but since arackbay bamaoay started running things, people are arming themselves to the teeth for the impending roundup of gun snatching by the Feds.

For reference, here’s a list of everything that will be tax free but it boils down to this:

• Accessories designed to be used for hunting.
• Shotguns, rifles, pistols, revolvers or other handguns.
• Ammunition intended to be fired from a gun or firearm.
• Animal feed for consumption by game which can be legally hunted.
• Apparel such as safety gear, camouflage clothing, jackets, hats, gloves, mittens, face masks and thermal underwear for use while hunting.
• Off-road vehicles such as all terrain vehicles designed for hunting.

Not listed above but included in the exemption are “Knives that are manufactured and marketed as being primarily for use in hunting,” in case you’re one of those cold-blooded types that prefer killing with your bare hands. This does not include the amazing Ginsu Knife™ or other kitchen miracle blades.

Also not exempt are hunting dogs (taxed?) nor are “toy guns [Ed. note: wait, guns aren’t toys?] and vessels or off road vehicles utilized as children’s toys.” Additionally, “golf carts, bikes, motorcycles, tractors, or motor vehicles which may be legally driven on highways,” aren’t eligible.

So load up people. Hunting season is right around the corner. Although, for the sake of peace, try to leave the Democrats alone.

2010 Second Amendment Weekend Sales Tax Holiday is Sept. 3rd, 4th, & 5th [LA Dept. of Rev. via Don’t Mess with Taxes]

Accounting News Roundup: Golden a Leading Candidate to Become Next FASB Chair; Europe Gives PCAOB the Go-Ahead for Inspections; Accountant Busted for Scalping U.S. Open Tickets | 09.03.10

Numbers Cop: FASB Staffer a Leading Candidate for Board [WSJ]
“The foundation that oversees the Financial Accounting Standards Board is considering Russell Golden, the board’s technical director, for the board post, these people said, although they cautioned that no final decision has been made. The chairman’s position would remain unfilled, they said, noting that the search process for a new chairman is at an early stage.

A spokesman for FASB declined to comment. Mr. Golden couldn’t be reached to comment.

The foundation has leaned toward an internal candidate because it would allow FASB to largely continue its work uninterruptedts at the end of the month. Mr. Golden already is involved with the board’s many projects.”

U.S. Companies Added 67,000 Jobs in August [Bloomberg]
“Companies in the U.S. added more jobs than forecast in August, easing concern the economy was falling back into recession.

Private payrolls that exclude government agencies climbed 67,000, after a revised 107,000 increase in July that was more than initially estimated, Labor Department figures in Washington showed today. The median estimate of economists surveyed by Bloomberg News called for a gain of 40,000. Overall employment fell 54,000 for a second month and the unemployment rate rose to 9.6 percent as more people entered the labor force.”

Tax-fraud conviction voided because judge didn’t stop trial to let defendant go to son’s deathbed [Los Angeles Times]
“A federal judge’s refusal to halt a businessman’s tax-fraud trial so he could be at his son’s deathbed was cause to overturn the businessman’s conviction, an appeals court has ruled.

U.S. District Judge Dale S. Fischer also prejudiced the case against Garth Kloehn by failing to inform the jury that he was absent for the final day of trial because his son had died, the appeals panel said. Fischer told the jury that Kloehn “has a right not to be here,” possibly leaving jurors with the impression he was showing a lack of respect for the court, the judges said.

Kloehn was the sole defense witness in his 2005 trial in downtown Los Angeles on charges of failing to report $1.2 million in income. He left the courtroom after testifying to catch a flight to Las Vegas to see his cancer-stricken son, leaving no one to rebut the prosecution’s final testimony. Kloehn arrived at the Las Vegas hospital one hour before 45-year-old Kevin Kloehn died.”

Transparency and the I.R.S. [NYT]
Someone – namely Christopher Bergin, the publisher of Tax Analysts – isn’t convinced that the IRS is serious about transparency. So much so, he wrote the Times and they seemed impressed so they published his letter.

Europe greenlights US audit inspections [Accountancy Age]
“S audit regulators will be able to inspect European firms after the European Commission cleared the way for access to confidential papers, in a move which could allow Lehman Brothers investigators to follow up leads in London.

The European Commission said it will now share internal working documents with audit watchdogs in the US and Australia. The move breaks an impasse which had emerged between US and EU authorities over the sharing of confidential internal audit inspection papers, retained by regulators when they inspect audit firms.”


Better accounting for small businesses [WaPo]
Another letter to the editor, this time pointing out that small businesses shouldn’t be complaining about issuing 1099s to vendors if they have any semblance of an accounting system.

Accountant arrested for scalping U.S. Open tickets had 339 spots to sell worth $10,000: Prosecutors [NYDN]
For some reason, Marvin Schaffer had 28 parking permits for Jets games.

Tom Boniface Joins PricewaterhouseCoopers LLP in New York as Co-Leader of Indirect Tax Practice [PR Newswire]
“PricewaterhouseCoopers (PwC) announced today that Tom Boniface has joined the firm as co-leader of PwC’s Indirect Tax practice, focusing on value added taxes (VAT) and based in the New York office.

Boniface is well versed in the various indirect tax regimes around the world, such as European VAT, Canadian and Australian GST, Brazilian ICMS and Japanese consumption tax. He brings over 15 years of experience serving U.S.-headquartered Fortune 100 and middle-market companies.

Boniface, who most recently led the consumption practice at another major accounting firm, has a B.S. in Accounting from the State University of New York at Oswego. He is a Certified Public Accountant in New York State.”

Tax Profs for the Ground Zero Mosque [TaxProf Blog]
“While the First Amendment is directed at government interference with speech, press and religion, it exists to guard against the danger that an angry and fearful majority will undermine those cherished rights. Thus even in the absence of government interference, it is incumbent upon us to stand with those seeking to exercise those rights in the face of heated public opposition. Unfortunately, with the notable exception of Mayor Michael Bloomberg, there have been few profiles in courage on this issue”