Author: Caleb Newquist

Founding editor, Going Concern.

The IRS Asks Applicants: “How Much Ya Bench?”

Actually they ask you a lot questions but as FINS tells us today, there are far more interesting qualifications to join Doug Shulman’s brigade than, say, one of the Big 4.

For example, if you’re the ripe old age of 38 and you’ve never served in law enforcement, you’re out. Sorry but this is the Criminal Investigation Division and we don’t need your old college intramural energies acting up on raid where someone might get killed.

That being said, just because you happen to be in the “prime” of your life, that doesn’t mean you get a free pass. The Service does require that you be in “prime physical condition” and your slow, uncoordinated ass will be tested on it.


Here’s the lowdown:

If any of this is confusing (we know some of you haven’t exercised in you life) jump over the website where there are videos demonstrating the vertical jump, bench press, situps, The Illinois Agility Run, and simply running. Again, the Service appears to be under the impression that plenty of you only break a sweat when you eat, hence the videos. Feel free to apply but only after checking with your doctor.

IRS Hiring Special Agents for Criminal Investigation Division [FINS]

Latest Grant Thornton Business Optimism Index Reaffirms That No One Has Any Idea What Is Going to Happen Next

Complete and utter meltdown to the point where are all fighting over chicken skins and muffin stumps? The next asset bubble to get us back to our mall-hopping weekends? It’s anybody’s guess really.

Grant Thornton LLP’s Business Optimism Index, based on a quarterly survey of U.S. business leaders, decreased significantly to 58.4 in August from a recent high of 67.6 in May. Business leaders are again becoming pessimistic, with only one-third (34%) expecting the U.S. economy to improve in the next six months, down significantly from 63% in May. The hiring outlook has also dimmed; only 38% of business leaders report that their companies will ramp up hiring in the next six months.


So the one thing we can count on is that unemployment will be hovering above 9% until at least the next presidential election. Got it.

Grant Thornton LLP Business Optimism Index drops 10 points [GT]

(UPDATE) Dick Bové: The KPMG Citi Team Is ‘An Exceptional Acceptable Group of Auditors’

And you know he’s not messin’ because that’s what he told Charlie Gasparino and God knows you best not lie to the Fox Business Network’s ace reporter. Sure Bové didn’t actually say “KPMG” (hell, he’s probably never heard the name) but he’s giving credit to auditors which is about as unheard of as Tiger Woods using Trojans with hookers.

Bové may have mentioned some other things about Mike Mayo, Citi, Deferred Tax Assets so on and so forth but we’re sure you’re not worried about that.


Btw, if you need to get caught up on just who Dick Bové is, go here. Courtesy of FBN:

On Citi’s apparent cold shoulder towards analyst Mike Mayo:
“It’s totally wrong. Mike Mayo is a brilliant analyst. He’s been in this business for a long period of time and does a superb job of following the industry. To say he can’t come in and speak to the company in my view is absolutely and totally incorrect.”

On whether Mike Mayo’s accusations against Citigroup’s risk management lapses are accurate:
“Absolutely. In September of 2008, Citigroup was effectively bankrupt. The reason why it was bankrupt was the reason that Mike cites. It was that the risk management procedures had completely broken down and it was not effectively managing its portfolio. Mike is right on that comment.”

On why we should believe Citi on its accounting reports:
“We don’t have to take Citigroup’s answer to Mike Mayo. We can take a look at the fact that this company is audited by an exceptional group of auditors. They are regulated by a large number of bank regulators…and they actually are being audited for their tax issues right now by the IRS. All three of these groups agree with the public statements of Citigroup concerning DTAs.”

“What is the basis for saying that these three groups which have seen the numbers don’t know what they are talking about, whereas people that have not seen the numbers, do know what they are talking about.”

On whether Citi has been given a clean bill of health by the SEC, IRS and the Fed:
“We do have an audited financial statement which is not questioning the DTAs. We do have bank regulators who could have memorandums of understating with Citigroup if they believed there was a problem. Citi is estimated to earn by Mike Mayo $9 billion this year. Next year he estimates the company to show a 33 percent increase in earnings to $12 billion. If there is a DTA problem, why is there a belief that the company can jump its earnings by 33 percent from 2010 to 2011?”

We’ve been assured by the wonderful people at Fox that we will have video of this momentous (and perhaps unprecedented) occasion just as soon as it’s available.

UPDATE: AS WE SUSPECTED! Not only was the initial report mis-transcribed, check out Dick’s reaction to Gasparino’s question, “It’s KPMG I believe, correct?” around the 2:37 mark:

Pretty obvious that the dude has never heard of KPMG in his life.

Attention Dallas Cowboys Fans: You Have Another Shot at Season Tickets Courtesy of the IRS

Tomorrow morning at 9 am Dallas time, bring your biggest suitcase filled with consecutively numbered hundos so you can watch Romo disappoint the faithful for yet another season:

The Internal Revenue Service plans to auction the six-seat package Tuesday, with bidding starting at about $185,000.

It’s the first time in at least five years that a season ticket package for any professional sports team has been auctioned to settle a debt, said Clay Sanford, an IRS spokesman in Dallas.

Sanford said the agency’s privacy rules prevented him from identifying the ticket holder. But a document relating to the auction shows the federal government is owed $4.5 million.

Technically, the IRS is auctioning off two contracts offering licenses, or “options,” for six seats. Included in the package are 2010 season tickets for the six seats and parking for the 10 home games.

The licenses grant the holder the right to buy season tickets for a given seat for 30 years. Licenses for those seats sell for $50,000 each, said Cowboys spokesman Brett Daniels.

That would be $300,000 for the six licenses up for bid.

All of the seats are in section C110 between the 40 and 50 yard lines on the lower level, the first level up from the field. The auction includes parking for the 2010 season.

We should tell you that you’ll also have to pay an additional $70,000 “still due on the contracts and to cover transfer fees.”

IRS auctioning off Dallas Cowboys seat package [DMN]

When Should a Big 4 Auditor Mention That They Are More Interested in Tax?

Today in “Help me if you can” a soon-to-be Big 4 auditor wants to know when to broach the subject of…not wanting to be a Big 4 auditor. Rather, the young grasshopper would prefer to switch to tax, pronto.

Have a question about your career, how best to decorate your cubicle or how you can show your face again after your latest embarrassment at the most recent happy hour? Email us at advice@goingconcern.com and we’ll put you on the path to success or marginal respectability.

As for today:

I am starting in the audit department of a a Big 4 firm in a major market next month. I’m thrilled to have the opportunity, however I’m not too interested in audit. If I want to switch over to tax, how do I go about doing that without giving a poor impression of me? Is this a common enough request that it shouldn’t be a problem? Is it better to bring it up sooner rather than later? Do I bring it up with my recruiter before I start? I’m concerned that if I wait too long to bring this up I’ll end up wasting a year (and a promotion) before being able to switch to tax.


First of all, congrats on not opening your mouth during the recruiting process. Interviewing for an audit position but admitting that you’re really interested in tax would have been akin to handing your interviewer a 3×5 with “DON’T HIRE ME” written in your own blood. Braddock’s response to this question was, “Then why are you here for audit? Why didn’t you apply for tax?” which is valid. So if you don’t want to give a bad impression of yourself, don’t bother discussing it with the recruiter. You’re already hired, there’s no sense admitting that you pulled a fast one on them.

In a previous post, we discussed how difficult it can be to get into a Big 4 tax practice. In your case, since you’re already inside a Big 4 firm and claim to being in a “major market” the path will be a little bit easier. That being said, we’re wondering why you’re in such as rush.

The best thing you can do is hang out in audit for awhile, meet some people and see how it goes. You were hired for audit, so you might as well give it a shot and build your network within the practice before changing your career path when it hasn’t even started.

Once you’re working it won’t be long before you’ll be asked to document some of your career goals. When you’re discussing these goals with your performance counselor (or whatever they’re called these days) discuss your interest in tax but try not to make it sound like the audit practice has been the worst experience of your life (even if it has). Since you’re in a larger office, it’s likely your counselor knows someone (or knows someone who knows someone) who has done a rotation or transfer to tax. These people will be able to talk to you about their experiences: the pros, the cons, the whathaveyous. Also, because you are in a larger office, your request isn’t that unusual and the office may even hold an informational session about rotations to other practices.

Your concern about the timing is valid (i.e. waiting too long). If you complete one year in audit and you are still jonesing for tax forms, you can safely express your interest about a rotation to the tax practice If you wait too long, you are correct – you may end up wasting an additional year and possibly a promotion.

So summing up – do some time in audit and get your feet under you; you never know, you may discover that you – gasp – enjoy it. When it comes to discussing your career goals, mention your interest in tax and find other professionals who have been through the process so you have an idea about what it’s like. Good luck.

Accounting News Roundup: Ex-Dell Accountants Sued by SEC; Mosque Organizer Owes Back Taxes; Tax Reform Panel Disappoints | 08.30.10

SEC sues ex-Dell accountants over fraud [Reuters]
“The U.S. Securities and Exchanges Commission on Friday sued two former top accountants of Dell Inc for manipulating financial statements to meet Wall Street earnings targets between 2001 to 2003.

The regulator said in its suit, filed at the U.S. District Court of the District of Columbia, that former Chief Accounting Officer Robert Davis, and former Assistant Controller Randall Imhoff had maintained a number of ‘cookie jar’ reserves — an improper accounting method in a bid to cover shortfalls in Dell’s operating results.

The SEC said the improper accounting led to Dell having to restate all its financial statements from 20g>Mosque big owes 224G tax [NYP]
“Sharif El-Gamal, the leading organizer behind the mosque and community center near Ground Zero, owes $224,270.77 in back property tax on the site, city records show.

El-Gamal’s company, 45 Park Place Partners, failed to pay its half-yearly bills in January and July, according to the city Finance Department.

The delinquency is a possible violation of El-Gamal’s lease with Con Edison, which owns half of the proposed building site on Park Place. El-Gamal owns the other half but must pay taxes on the entire parcel.”

States See Pickup in Tax Revenue [WSJ]
“Overall tax revenue increased 2.2% in 47 states that have reported their receipts for the three months ended June 30, compared with the same period a year ago, according to a report to be released Monday by the Nelson A. Rockefeller Institute of Government at the State University of New York.

This marks the second quarter in a row of recovering tax collections—and follows five quarters of declines in revenue that hammered local-government budgets. The latest figures are still a mixed bag: Some states continue to see declining revenue, but those were offset by states that saw increases.”

KPMG Accounting Malpractice Verdict Affirmed but $38 Million Damage Award Vacated [Law.com]
Is this what you call a lose/win?

Relax! Iowa Is Funding Hollywood Again [Tax Update Blog]
That is a relief. But Joe Kristan reminds us how things went the first time around, “The film program collapsed in scandal last fall, and the film office director and two filmmakers face criminal charges. Iowa is on the hook for $200 million for credits already committed — about $66 per Iowan. “


An S.B.A. Loan Program Goes Quietly [You’re the Boss/NYT]
The Small Business Administration’s America’s Recovery Capital Loan program (“ARC”) is being shut down just after a year in operation. At the outset, the 10,000 that were going to made available was thought to be too small. As of August 20th, the program had made less than 8,300 loans and it will be lucky if it reaches 9,000 by the time it expires next month.

Starting a new school year [Accounting Professor]
Fans of Professor David Albrecht has started a new blog; this is the first post.

Obama’s Tax Reform Panel: A Missed Opportunity [TaxVox]
“The paper, approved by the panel this afternoon, is filled with lots of useful information about our flawed tax system but leads nowhere. There are no recommendations. No revenue estimates. And no ownership by President Obama, even though he picked the panel’s members and staffed it with White House aides.

As a result, this report is a huge missed opportunity. Obama might have used this exercise to jump-start a debate over fundamental tax reform. Instead, the report does nothing to fill the policy vacuum that is being filled by an argument over what to do about the decade-old Bush tax cuts.”

Ex-KPMG Senior Manager Convicted of Selling Tax Shelters Is 50% Less Poorer Today

A win is a win and the U.S. Second Circuit Court of Appeals handed one to John Larson, one of three defendants sentenced last year for selling illegal tax shelters. The Court “found Larson’s [$6 million] fine too high, citing a lack of jury findings to support a fine above $3 million. It returned that part of the case to the lower court to recalculate any fine.”


That’s more or less where the good news ends. The court did uphold the convictions of Larson and his two co-defendants – ex-KPMG Partner Robert Pfaff and ex-Brown & Wood partner Raymond Ruble. Larson was sentenced to a 10 year prison term last year. Pfaff received 8 years and Ruble 6-1/2 years.

Appeals court upholds KPMG tax shelter convictions [Reuters]

Deloitte’s New San Francisco Office Will Be Cooler Than Yours

Sayeth San Fran managing partner Mark Edmunds.


He told the SF Business Times, “The cool factor will be very high,” so maybe we’re taking his statement slightly out of context. Presumably, “high cool factor” not only means that there won’t be tight security on bathrooms and they’ll allow pictures in your respective cube but it sounds as though there will be a faux-Starbucks available and a theater so you can listen to Barry Salzberg talk about diversity in surround sound.

The new office — nine floors in San Francisco’s newest office tower — represents not only a change in address, but an evolving philosophical transformation in how Deloitte serves its clients. Instead of private sanctuaries where partners retreat to pore over financial statements, the new environment will be all about collaborative spaces, Starbucks-like cafes and enclaves with the latest video conferencing technology. There will be a theater-style “learning center” that can hold groups of up to 200.

Deloitte recalculates headquarters [SF Business Times (partial subscription required)]