Author: Caleb Newquist

Founding editor, Going Concern.

John Kerry May Be Having Buyer’s Remorse re: $7 Million Yacht

Because people keep asking about it.


If pesky Boston reporters weren’t enough, the Wall St. Journal’s report is taking this to new hyperbolic levels with the headline: “John Kerry – A One-Man ‘Benedict Arnold’ Corporation”:

[T]here’s a smell of hypocrisy. In addition to sailing around the tax issue, Mr. Kerry chose to build his boat in New Zealand at a time when Bay State boat builders are having trouble keeping their work force employed. “I’m confident that anything constructed in New Zealand could be constructed here in the state,” Gregory Egan, who owns the Crosby Yacht Yard in Osterville, told the Boston Herald. Others noted that the Isabel was specially designed to be piloted without a crew — letting Mr. Kerry scrimp on employment costs and payroll taxes.

Jesus. A rich senator, married to a ketchup heiress, buys an expensive boat, does some not-so-fancy tax avoidance and all of a sudden he’s equated to, arguably, the most notorious traitor in the history of the United States? Yeah, that’s pretty much the same thing.

John Kerry – A One-Man ‘Benedict Arnold’ Corporation [WSJ]
Sen. Kerry Sails Around the Tax Issue [TaxProf Blog]

Earlier: John Kerry Saves $500k in Taxes By Dropping Anchor in Rhode Island

UPDATE: JK’s spokeswoman has said he will pay the tax if Mass. determines that he owes it.

Local Man’s Brief Big 4 Experience, Stick-Shift Driving Abilities, Lead to Niche Accounting Firm

John Finn worked at KPMG in the early to mid-90s. He got into the field because he loved accounting. John discovered what many Big 4 types discover which is the job “involved more travel and schmoozing than it did accounting.” Since he wasn’t feeling it, he jumped ship in ’95, moved to New York and decided to get into showbiz. He landed his first gig doing the books for a film called Sleeping Together and since he could drive a standard transmission, he got to buzz around in the equiptment truck.

It turns out, that John’s marginal experience (three years) in Big 4 turned out to be way – WAY – more than most “accountants” in the movie business:

While he began his solo career with only three years of accounting experience under his belt — none of it in film accounting — inexperience turned out not to be an issue in the industry. “What I found out was that most of my peers were not trained as accountants,” he says. “They were failed screenwriters who really wanted to be in the business. I had a leg up on them because accounting was second nature to me. If you polled the accountants in the business, I would say that nearly half don’t have accounting degrees.”

Word must have gotten around about a real-life accountant doing the books for movie projects and in 1998, he founded JFA, Inc. to handle the expanding empire. That empire also includes IndiePay, a payroll software company that he founded to deal with the ‘archaic’ bookkeeping that was rampant in the industry.

On top of all this, John is in a band, Pispoure’, and wrote a song about how much he loves accounting. The song plays on a loop over at JFA’s website and before you assume that this another accountant failing miserably to exhibit any musical ability, it should be noted that he’s actually a decent songwriter. Anyone that comes up the lyric, “In order to get laid, you must impress our filing clerk,” is a natural talent in our book.

Leaving Big Accounting Firm for Hollywood [The Street.com]

Accounting News Roundup: BP’s Ugly 2nd Quarter; Bernanke Backs Extending Some Tax Cuts; Back-to-school Sales Tax Holidays | 07.27.10

BP replaces CEO and posts $17 billion quarterly loss [Reuters]
“Oil giant BP Plc launched a plan to repair its battered image in the United States on Tuesday, ditching itsxecutive and promising to slim down by trebling an asset sale target to $30 billion.

However, the company, the target of public anger over its Gulf of Mexico oil spill, tempted further ire by denying it needed cultural change and offsetting the costs of the spill, including expected fines, against its taxes.

The tax move will cost the U.S. taxpayer almost $10 billion.”

Northern Rock CFO Banned And Fined GBP320,000 Over Bad Loans [Dow Jones]
“David Jones, the former chief financial officer of Northern Rock PLC, was Tuesday fined GBP320,000 and barred from working in finance after the Financial Services Authority found he misled investors about the bank’s bad loans in the lead-up to the bank’s eventual collapse.

Jones most recently was CFO at Northern Rock Asset Management PLC, the “bad bank” of the nationalized lender after a restructuring of its operations. He left the company in April because of the FSA investigation, a week after two former colleagues were fined and banned for their roles in making the bank’s 2006 bad-loan figures appear better than they were.”

Where will those next gen clients come from? [AccMan]
And what will ask of their professional service providers? Right now, Gen X and Millenials don’t compromise much of the client base but that will change quickly when Baby Boomers start retiring en masse. What these new business owners will ask of their service providers is not quite clear. Similar to the demands currently placed on employers, service providers will have to be flexible and innovative.

Bernanke Says Tax-Cut Extension Maintains Stimulus [Bloomberg]
“Federal Reserve Chairman Ben S. Bernanke said extending at least some of the tax cuts set to expire this year would help strengthen a U.S. economy still in need of stimulus and urged offsetting the move with increased revenue or lower spending.

‘In the short term I would believe that we ought to maintain a reasonable degree of fiscal support, stimulus for the economy,’ Bernanke said yesterday under questioning from the House Financial Services Committee’s senior Republican. ‘There are many ways to do that. This is one way.’ “


Accounting firm Kaufman Rossin & Co. settles case for $9.6M [Miami Herald]
Kaufman Rossin was the auditor of the two Palm Beach funds that invested over a billion dollars with convicted Ponzi Schemer Tom Petters.

And in case you forgot, convicted forensic accountant and suit lover Lew Freeman was the Chief Restructuring Officer for the Palm Beach funds. Quite the cesspool.

How Low Self-Esteem Can Cost You The Job [Forbes]
Are you a low talker? No one is suggesting that you don’t know what you’re talking about but the perception could be that you don’t and in turn, It could be affecting your career.

Lords to probe audit market [Accountancy Age]
“A recent report from the FRC and FSA criticised the role of auditors during the crisis saying they had failed to tackle management bias.

The Lords investigation will look at basic questions such as wether Big Four dominance increases the price of audit and whether the market needs to be opened up.”

Oracle’s Ellison: Pay King [WSJ]
$1.84 billion over the last ten years is not too shabby.

Sales tax holidays 2010 [Don’t Mess with Taxes]
Kay Bell has a rundown of the sixteen states that are having sales tax holidays right before the kids go back to school.

Are Face Tattoos a Dealbreaker at PwC?

“I’m guessing that if Mike Tyson walked into a job interview for a financial analyst position at PricewaterhouseCoopers with his half-face tribal tattoo, he probably wouldn’t be asked back for a second interview.”

~ Brie Reynolds, over at Ology, is making the assumption that the baddest man on the planet wouldn’t be able to provide the PwC Experience.

Deloitte Survey: Once this Ship Turns Around, People Are Going to Start Jumping

Deloitte’s 2010 Ethics & Workplace Survey tells us what most of you have been thinking since 2007 (if you haven’t been laid off that is), that you are GTFO of your current job. Everyone is just sitting tight until the economy to turns around.

While that might not exactly be a newsflash, the reasons for the anxious ship jumpers is primarily due to lack of trust and communication from their companies. Deloitte knows a little bit about this since the firm admitted to handling its own communication regarding layoffs “poorly.”

According to Deloitte LLP’s fourth annual Ethics & Workplace Survey, one-third of employed Americans plan to look for a new job when the economy gets better. Of this group of respondents, 48 percent cite a loss of trust in their employer and 46 percent say that a lack of transparent communication from their company’s leadership are their reasons for looking for new employment at the end of the recession. Additionally, 65 percent of Fortune 1000 executives who are concerned employees will be job hunting in the coming months believe trust will be a factor in a potential increase in voluntary turnover.

So. The question of the day is, are you leaving your firm or company as soon as this economy takes off? You have to admit, you could waiting awhile. Of course since it’s compensation season for the major accounting firms, it may not even come to that.

The IRS Is Giving Small Nonprofits One Final Chance to File Their 990s

Remember the IRS’ failed outreach to small nonprofits back in the spring? Yeah, the May 17th deadline threw a lot small NFPs for a loop and they up and missed the filing deadline completely.

IRS Commish Doug Shulman figured that, despite the unprecedented outreach, the whole snafu was his bad and that nonprofits shouldn’t worry their pretty little heads about missing the deadline, the Service will still take your 990, tardiness notwithstanding.

But that can’t go on forever now, can it? Accordingly, the IRS set a new deadline today to file the 990s and it’s set for a much more memorable October 15th.

WASHINGTON — Small nonprofit organizations at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008 and 2009 can preserve their status by filing returns by Oct. 15, 2010, under a one-time relief program, the Internal Revenue Service announced today.

The IRS today posted on a special page of IRS.gov the names and last-known addresses of these at-risk organizations, along with guidance about how to come back into compliance. The organizations on the list have return due dates between May 17 and Oct. 15, 2010, but the IRS has no record that they filed the required returns for any of the past three years.

“We are doing everything we can to help organizations comply with the law and keep their valuable tax exemption,” IRS Commissioner Doug Shulman said. “So if you do not have your filings up to date, now’s the time to take action and get back on track.”

It’s simple people. If your gross receipts are under $25,000, get yourself a 990-N (e-Postcard), fill it out and you’re done. If you have receipts up to $500k, you’ll have to fill out either Form 990 or 990-EZ which will probably take you all of 15 minutes.

Get it? No more blowing this off. OCTOBER 15TH is the drop dead date. After that, Shulman & Co. will be busting down the doors to inform you that you’re no longer tax exempt. And trust us, you don’t want to deal with that.

IRS Offers One-Time Special Filing Relief Program for Small Charities; Oct. 15 Due Date to Preserve Tax-Exempt Status [IRS]

Who Should the Next PCAOB Members Be?

Since the PCAOB is here to stay, the SEC figured it was probably best that they get some people sit on this thing to, ya know, help protect the investors, the public at large, so on and so forth.

The problem, as it appears to us, is that Mary Schapiro and the gang are plumb out of ideas for nominations. Accordingly, they’re out there looking for help from some of the best and beardest, including the Beard, acting PCAOB chair Dan Goelzer, AICPA President and CEO Barry Melancon and a few other noted notables.


However! Just because Mary Schapiro sent these people personal letters begging for some ideas, that doesn’t mean she won’t listen to yours. You can fire any names you have in mind to Board-recommendations@sec.gov. The Commission appreciates the help.

The SEC does point out that the appointees need to be “prominent individuals of integrity and reputation who have a demonstrated commitment to the interests of investors and the public, and an understanding of the responsibilities for and nature of the financial disclosures required of issuers under the securities laws and the obligations of accountants with respect to the preparation and issuance of audit reports with respect to such disclosures,” but we feel that’s subject to interpretation.

Hopefully the noms will include a few wild cards that could stir things up a bit. Sam Antar comes to mind, although the criminal record could be a bit of a problem. Francine might be up for it? We haven’t asked her yet, just throwing it out there. More suggestions welcome.

Spotlight on PCAOB Nomination Process [SEC]

Compensation Watch ’10: KPMG Puts Some Ballpark Figures Out There

Since it’s Monday in late July (and many people probably had one old fashioned too many last night) we figured this day would have gotten off to a slow start. Well, we’re in luck! KPMG comes roaring out of the gate today with a little compensation update from none othercall me Rudy” Veihmeyer and Henry Keizer.

The news? Well, the promotions bonuses have caused some belly aching so the boys thought they would give you a sneak peak at what you can expect come merit increase time:

Update on Our Plans for 2010 Compensation
A Message from John Veihmeyer and Henry Keizer
8:19 AM ET, July 26, 2010

In April, we told you that there would be compensation increases for the great majority of our people and, assuming KPMG meets its FY10 plan, higher bonuses than last year for EP performers, and bonuses for higher performing SP employees as well. Now, as we head into the fourth quarter, we would like to provide you with an update on this matter. As you view this information, please keep in mind that compensation increases are determined on an individual basis, and reflect each employee’s role, skills, performance, geography, and experience, among other factors.

· Merit and Promotion Increases – For employees who are not being promoted, we expect SP performers will receive merit increases that will range from the low to the mid-single digits; EP performers will receive increases up to the high-single digits and in rare cases double digits.

In addition to any merit increases, employees who have been promoted should expect to receive a promotion increase of approximately 5 percent, with one exception: newly promoted CSD Managers should expect to receive a promotion increase of approximately 10 percent.

· Variable Compensation – The FY10 pool for variable compensation will be more than double what it was last year. This means that EP-rated employees will generally receive bonuses that are significantly higher than those of last year. In addition, approximately the top half of our SP performers will also receive variable compensation awards.

Please keep in mind this information is preliminary. Final compensation decisions will be made based upon our full-year results, so the ranges above could be adjusted based upon our firm’s performance between now and September 30. But, consistent with our commitment to keeping the lines of communication open, we wanted to share with you our best current forecast about these important matters.

In line with our compensation philosophy and our focus on a high-performance culture, we remain committed to sharing the rewards of the firm’s financial performance with our employees and providing a competitive total compensation package that differentiates exceptional performers with superior rewards. As we have said before, the strong foundation we have built within the firm, as well as our near- and longer-term business prospects, make us very optimistic. But to finish this year strong and begin FY11 on a positive track, it is critical that we continue to drive a high-performance culture by doing our best work, providing the highest-quality service to our clients, growing our business, and operating efficiently.

Thanks again for your continued hard work and for all you do to help our firm succeed!

So now that you have that to chew on for your last Monday in July, feel free to discuss the “low to the mid-single digits” for the strong and “high-single digits and in rare cases double digits” for the exceptional. And if you’ve got thoughts on the variable comp pool, you can go there too, if you like. Keep us updated.

Accounting News Roundup: Geithner Is Ready to Let Tax Cuts Die; Hayward on His Way Out?; PwC Wants Glitnir Lawsuit Tossed | 07.26.10

No new recession, let tax cuts die: Geithner [Reuters]
“The economy is not likely to slip back into recession but letting tax cuts for tans expire is necessary to show commitment to cutting budget deficits, Treasury Secretary Timothy Geithner said on Sunday.

In appearances on several Sunday talk shows, Geithner said only 2 to 3 percent of Americans — those making $250,000 or more a year — will be affected when tax cuts enacted under former President George W. Bush end on schedule this year.”

BP Said to Prepare Dudley as CEO as Board Looks for Recovery [Bloomberg]
“BP Plc plans to name Robert Dudley to succeed Tony Hayward as chief executive officer as the board looks to recover the company’s position in the U.S., two people with knowledge of the matter said.

Dudley, the director of BP’s oil spill response unit, is ready to be announced as the company’s first American chief and to take the helm Oct. 1, one of the people said, asking not to be identified because a final decision hasn’t yet been made. The decision was reached in discussions with board members about how best to take BP forward and rebuild its U.S. position, the person said.”

Madoff Investors Brace for Lawsuits [WSJ]
“Irving Picard said he could wind up suing about half the estimated 2,000 individual investors he has called “net winners” from their dealings with Mr. Madoff. Such investors withdrew more from Mr. Madoff’s firm than the amount of principal they invested.

‘The people who made money, who got more, have made money at the expense of the people who didn’t,’ said Mr. Picard, who has the power under federal bankruptcy provisions to pursue money withdrawn from Bernard L. Madoff Investment Securities LLC before it collapsed in December 2008 and redistribute the funds fairly among victims.

Mr. Picard must file any so-called clawback lawsuits by December, the two-year anniversary of Mr. Madoff’s arrest and the filing of regulatory proceedings against him. ‘We’re not going to wait until the last minute,’ Mr. Picard said.”


Change the world or go home [AccMan]
Dennis Howlett implores you that if you want your firm or business to really stand out then it’s going to take more than a catchy slogan or a boilerplate email to get people’s attention. You best recognize an opportunity when you see one.

“I’ve lost count the number of times I’ve said but it is worth repeating. When disruption like SaaS comes along, it represents an opportunity. From a professional standpoint it should mean that firms can further commoditize what they do by using accounting dashboards that show them the status of their clients’ activity. It is a short step to seeing how this might be integrated into fees, billing, customer satisfaction measurement and the like.”

If You’re Going To San Francisco…AAA Will Be There [FEI Financial Reporting Blog]
Edith Orenstein has the lowdown on this year’s American Accounting Association’s (AAA) annual meeting. This year’s event is in AG’s backyard (she loves giving directions, btw) from July 31 to August 4th and will feature Francine McKenna and Professor Albrecht on one of the panels.

Join Me For a Nice Little CPA Exam Chat on August 3rd! [JDA]
Speaking of Adrienne, she’ll be over at CPA Exam Club to take your questions on everyone’s favorite test on August 3rd. Yes, that’s one week from tomorrow.

PwC Demands Dismissal of Glitnir Lawsuit [Iceland Review]
PwC’s lawyers argue that Glitnir and the firm agreed to do any legal wrangling in Iceland if the poo hit the fan. Late last week they requested that the lawsuit in New York be tossed.

Saltzman Hamma firm details merger with RubinBrown [Denver Business Journal]
“Saltzman Hamma Nelson Massaro LLP, a century-old Denver accounting firm, is merging with St. Louis-based RubinBrown LLP to form what’s expected to be among the 50 largest accounting firms in the United States, principals were set to announce on July 23.

The new entity, which will operate as RubinBrown, will employ 375 people in offices in Denver, St. Louis and Kansas City, Mo. The merger will be effective Aug. 1.”

District Court Denies Charitable Deduction for Donation of Home to Fire Department [TaxProf Blog]
Just donate a car next time. It’s a far worse investment than a house.

IRS Proposes PTIN Fees [JofA]
$50 for your very own preparer tax identification number! Of course there’s also a ‘reasonable fee’ on top of that from “a third-party vendor that will administer the application and renewal process,” that gets thrown in for good measure.

My Life as a White-Collar Criminal [White Collar Fraud]
Sam Antar went on Canadian TV last week to talk about how much fun it is to be a crook. Except the whole possibility of prison part.

John Kerry Saves $500k in Taxes By Dropping Anchor in Rhode Island

Don’t any of you get the idea that John Kerry is docking his new $7 million yacht in Rhode Island to navigate around Massachusetts’ sales tax and the annual excise tax. That would be, in a word, ludicrous.


“Kerry spokesman David Wade said Friday the boat is being kept at Newport Shipyard not to evade taxes, but ‘for long-term maintenance, upkeep and charter purposes.’ “

And Rhode Island is the Ocean State, so it makes perfect sense. “Isabel” is a 76′ beaut that has “two cabins, a pilot house fitted with a wet bar and cold wine storage.” A pretty swell ride.

It’s difficult to say why the Mass. Senator wouldn’t park the vessel near home base but we’d be willing to hear some theories.

Mass. Sen. Kerry docks yacht in RI, saving $500K [AP]
Sen. John Kerry skips town on sails tax [Boston Herald via TaxProf]