Author: Caleb Newquist

Founding editor, Going Concern.

Nicolas Cage Must Not Have Heard About the Fiscal Crisis in California

We really thought we had heard the last of Nicolas Cage and his tax problems. The man has eight films at various points in production including the next editions of both the National Treasure and Ghost Rider franchises.

With that kind of cinematic lineup, you’d think the State of California would give him the thumbs up and say, “Oh, it’s cool Nic. Just cut us a check as soon as you have the cash. NO worries.”


Then we remembered that this is California, home to the budget projection experts that misfired on their tax revenues by $3 billion, so you bet your repossessed-mansion ass they’ll take that $3.8 mil.

National Treasure’ actor Nicolas Cage owes another $3.8 million [Tax Watchdog]

John Veihmeyer Wins One for the Gipper

[caption id="attachment_10529" align="alignright" width="150" caption="But how does he feel about Charlie Weis getting fired?"][/caption]

A few weeks back we presented the BusinessWeek ranking of accounting programs that found Notre Dame at the top. At first we just figured Touchdown Jesus had something to do with it but now we have reason to speculate that a divine carpenter had nothing to do with it.

Since KPMG Chairman-elect John Veihmeyer was recently named alumnus of the year by Notre Dame’s accounting department, some people might assume that JVeih did a little lobbying of the BusinessWeek folks in order to earn the top spot and perhaps this is South Bend’s thank you for the kind words.


Whether this back-scratching theory has any weight to it is up for a debate but what we know for sure is that some lucky Irish students/future Klynveldians got to hear JV speak recently at Notre Dame Stadium and some inspiring words were shared:

During his remarks, Veihmeyer used his own educational roots and career experiences to remind students what a unique opportunity they have had at Notre Dame and how it will benefit them on the road ahead. His audience listened in rapt attention. While the average college student would have paid just to have dinner in Notre Dame Stadium, these students knew that getting career advice from the Alumnus of the Year and CEO and future Chairman of a Big Four Accounting Firm was priceless.

From the sounds of it, the speech was the KPMG equivalent of this:

Porn-Extortion Plot Didn’t Turn Out Too Well for Ex-Deloitte Partner

This story goes back before GC’s time so we’ll give you some background: Steven Klig was a hotshot tax partner at Deloitte until he was arrested for extorting an ex-lover back in January 2009.

Since most tax partners we know have to beat off the ladies with a stick in each hand, this seems unbelievable but apparently, Klig didn’t have the typical IRC wonky charm and was a little miffed that a lover wasn’t interested in him any more.


His frustration reached critical levels which resulted in emails to the lover, who he tracked down on the web and claimed that he had a DVD of them getting down. Lucky for us, the Post just so happened to get its hands on a copy of the email back in January ’09:

“Just to give you a head’s up. I’ve been doing a little editing on our video. Mostly some blurring of myself so that I won’t be recognized,” he wrote in one e-mail, according to the criminal complaint. You, on the other hand, can be seen very clearly having the time of your life being f—ed by me.”

Despite the good times, the woman went to the FBI after Klig emailed her husband trying to get a hold of her email address. An agent posing as the woman responded to Klig:

[A]sking what he wanted and pleading, “I want to keep my family out of this.”

He allegedly responded, “I don’t need money. What I really want is something new to look at.”

Klig then allegedly detailed his preferences for the “first installment” as: “(1) fully clothed; (2) without your shirt; (3) without your shirt and pants (in just a bra and panties); (4) without the bra and (5) fully nude.”

And the best part? He sent some of these emails while he was on vacation. At Disney World. With his wife and kids. Can’t you see it? You’re walking around Epcot, surrounded by shrieking children, grown adults dressed as princesses, talking animals, and overgrown dwarves; what a perfect opportunity to extort some porn out of an uncooperative ex-lover!

According to the Post, Klig pleaded guilty to lesser charge in order to avoid serious time although the judge indicated he could face up to a year in prison where he may or may not have the time of his life.

Tax lawyer pleads guilty in porno-extort scheme [NYP]

Accounting Going Green? The Move to Integrated Reporting

Transparency is fast becoming the most important tool corporations can use. Not long ago, management determined what was relevant and stakeholders were notified on a need-to-know basis. Now the tables have turned and stakeholders have the ability to demand information of all types and if companies are not willing to provide it, those stakeholders now have the resources to discover (or in some cases, uncover) it for themselves.

Adding transparency to corporate reporting still seems to be a work in progress. As the SEC s ruminates over IFRS and its impact on financial reporting, corporate sustainability and responsibility reporting is fast becoming one of the popular ways for companies to give stakeholders a snapshot of its social, environmental, risk, and ce.


The problem from a practical perspective is that it’s difficult to consume all information in an efficient manner. That’s where the idea of integrated reporting comes in. Simply, it combines the the traditional financial report along with the non-financial information presented in the corporate responsibility, social responsibilty or ESG report.

One Report, Integrated Reporting for a Sustainable Strategy is a book written by Robert G. Eccles, senior lecturer of Business Administration at Harvard University and Michael P. Krzus, a public policy and external affairs partner with Grant Thornton.

We had the pleasure of speaking with Mr Krzus recently about One Report, covering topics like what kind of data it consists of, how it will change corporate reporting, and what the future holds. This is part one of a two part interview. Check back for part two tomorrow.

Going Concern: How can you best summarize what integrated reporting is, how it will be different and how it will improve corporate reporting.

Michael Krzus: On it’s face it’s a very simple idea – the notion of an integrated report really involves the combination of the traditional financial or corporate report and combining it with corporate sustainability, responsibility or ESG report and combing them into a single package. However, that doesn’t mean that companies will staple together two reports, each one about 150 pages long, that results in one report that’s 300 pages long.

If you look at one of the companies we talk about in the book, United Technologies here in the U.S. and Danish company Novo Nordisk, each of their integrated reports perhaps have 115-120 pages and what both have a very robust website. Just because something may not be deemed material for the integrated report, there is still a lot of information that both of those companies, as well as others, present in very easy-to-navigate websites. So one of the things that we’re seeing is that integrated reporting is really helping develop very advanced websites.

Similarly, I was working on a couple of presentations on the German chemical company BASF has a page on their website that will allow you to link to 200 different global social media outlets including the likes of Facebook and Twitter. So we’re really starting to see that kind of engagement develop from companies that are embracing integrated reporting as well.

Companies are using the idea of an integrated report to better understand their own internal concepts of materiality and by engaging with their stakeholders and understanding what they think is material or what their material risk exposures are. It’s a disservice to the broad stakeholder community that some mainstream analysts don’t give consideration to some of the environmental or social risks that exist.

From the perspective of the socially responsible investor or perhaps a non-governmental organization that follows a very narrow or very critical mission, they may not understand the trade-offs that these company have made. We think that the idea of a single integrated report will help broaden the perspective and help them make an informed decision.

GC: Considering a traditional corporate responsibility report, how the data change? Similarly, will the data change from the two separate reports combining into a single report?

MK: There are relationships between financial and non-financial performers and vice versa. Companies need to better explain what those relationships are.

One example is BMW. On one hand, water is a relatively small cost that goes into an automobile but in terms of water as a resource, it is an increasingly scarce resource in certain parts of the world. BMW has decided to make huge investments in reusing water and they actually have a plant in Austria that doesn’t bring fresh water to the plant, they just continually reuse it. The benefit, as it turns out, is because of their focus and because they’re a few steps ahead of other automobile manufacturers, they’ve got a cost advantage. Making that kind of discussion clear, it’s not just about cutting CO2 emissions, but also process improvements that enable companies to produce more at a lesser cost.

I think the other difference that you’ll see in the new reports is that the mainstream analysis will be giving more consideration to ESG issues. The traditional analyst has several companies that they’re following and these companies have different sectors in an annual report, corporate responsibility report, and many others. It’s extremely difficult to consume that many reports. My co-author and I interviewed an analyst once who brought in a stack of about 60 reports because some of the companies that she followed were issuing financial, environmental, and responsibility reports all separately, and she said “there’s no way.” So I think the integrated report will help that.

A couple more examples: last September Bloomberg launched a product that involves making global reporting initiatives that available on their Bloomberg terminals and CalPers’ board has undertaken a project to integrate ESG factors into their analysis better and in turn, push that down that to their asset managers. So we are starting to see some movement. That relationship between financial and non-financial performance and making things easier for the analysts to consider non-financial information will be the two biggest changes that will come about as result of wider adoption of integrated reporting.

GC: And CalPers is not a lightweight. If you see someone like someone like that setting an example, there are other companies or large holders of assets that will follow their lead.

MK: CalPers is not a lightweight at all. We’ve developed a good working relationship with a couple of people at CalPers and they are taking the idea of integrated reporting very, very seriously.

When you think about it, if CalPers goes to their asset managers and says we want you to integrate ESG into your traditional analysis and here’s the way we want you to come up with it. I think that’s going to have a ripple effect across other pension fund managers and assets managers other than those at CalPers.

GC: What would you say are the biggest benefits that stakeholders will get out of integrated reporting?

MK: I think the biggest benefit is actually going to be better engagement with companies they want information about. In my opinion, a company cannot undertake an integrated reporting project without really listening to the stakeholders. For a company to understand the perspectives, not that they’ll all be material, but that they’ll be willing to engage in that dialogue.

And it may not be in ways that companies are not comfortable with whether it’s Twitter or Facebook or something else, I think that process of stakeholder engagement is going to be mutually beneficial. The companies will better understand who’s out there and what they’re expectations are. And from the user perspective, it they will have a better understanding about what some of the tradeoffs are, as well as what some of the reporting implications might be. Overall, I think it will create a better overall understanding for both groups.

And by having more robust information, it’s going to allow for better decision making. I see that as a benefit on both sides. From the investor side, they’re going to have a much better understanding of the some the risks a company faces. An investor has to consider a lot of intangibles when making a decision. Whether its the business risks to climate change or the innovation process. If that kind of information is made available, it’s going to allow investors to make better decisions and who the winners and the losers are.

GC: Is there any risk that stakeholders might have too much information?

MK: Frankly, yes but I think in some ways it’s an overblown risk because when Bob and I looked at some of the oldest integrated reporters, you clearly see an evolution. A great example is BASF. Because of the diversity of their operations and the nature of the chemical business, there’s a lot of relevant information, especially about risk and materiality of certain exposures. About a year ago I spent half a day with their reporting team looking at both the financial and sustainability side. They do a very good job of looking in the mirror. One of the first comments was that the integrated report was still too long; that they needed to do a better job of getting their arms around materiality and again, the dialogue with the stakeholders helped them do that.

Over time as companies engage their stakeholder through various technologies, they will reduce the report down to a very information rich package. So yes, there’s a risk for too much information but I don’t think that will stop anyone.

Don’t forget to check back here tomorrow for part 2!

Accounting News Roundup: Grant Thornton Moves DC Office; CPAs Are Less Clueless on IFRS; The IRS Wins Twice | 05.25.10

Grant Thornton moves D.C. office [Washington Business Journal]
GT DC is moving from its cushy confines of 19,450-square-feet at 1900 M St. NW to 15,190-square-feet at 1250 Connecticut Ave. NW.

Mary Moore Hamrick, the company’s national managing principal of public policy thinks this move is crucial saying, “Grant Thornton’s public policy group is taking a more proactive role in shaping the dialogue on accounting issues. This move will support the public policy group’s expansion as we seek to do our part in restoring confidence in the capital markets.” Better feng shui probably.


AICPA Survey Shows US CPAs Gaining in Awareness of International Financial Reporting Standards [AICPA Press Release]
CPAs are less clueless on IFRS, sayeth the AICPA:

The latest AICPA tracking survey shows a sustained shift toward greater awareness of International Financial Reporting Standards (IFRS) among U.S. accountants. Nearly half, 47 percent, of CPAs in the survey conducted April 20 to May 7 said that they already have basic knowledge of IFRS, an advancement from 39 percent who had basic knowledge in October 2008. At the same time, there has been a continuing decline in the number of CPAs who say they have no knowledge of IFRS; 16 percent in the latest survey, down from 30 percent in October 2008.

U.S. Supreme Court upholds IRS power in tax case [Reuters]
Those super secret corporate legal documents that discuss contingent liabilities? The IRS may be able to request them whenever they like, as the Supreme Court upheld a First Circuit ruling by denying certiorarit in the case.

In U.S. v. Textron, Inc., the company claimed that such documentation was privileged. The First Circuit disagreed:

[I]n its ruling against Textron, set a new test, under which every party in commercial litigation whose opponents file financial statements with contingent liabilities for litigation will be able to obtain documents detailing such exposure, according to Douglas Stransky, an attorney at Sullivan and Worchester in Boston who represents corporate clients.

“The First Circuit’s decision has eviscerated the work product protection that exists to protect exactly the type of attorney analysis that was present in this case,” he said. “It’s surprising that the Supreme Court did not recognize this.”

Florida Keys inmate pleads guilty in IRS scam [Miami Herald]
Shawn Clarke, an inmate at a Florida prison, pleaded guilty to conspiracy yesterday as the ringleader to a tax fraud scam in which he requested bogus refunds from the IRS in the amount of $115,000. It wasn’t exactly a complicated scam, as the inmates and their family members submitted 1040EZ forms along with Form 4852 to request the refunds, all for around $5,000.

Clarke was convinced that this was the best idea ever, allegedly saying, “I’m through with the street crime. I’m strictly white collar from now on. I love the IRS.” He’s looking at an additional 10 years.

Lots of People in the South Have $0 Tax Liability

So those nonpayers you heard about throughout tax season? Proportionately, lots of them are in the south (don’t ask us why they used red/blue):


Purely by the numbers, California has the most with over six million taxpayers whose credits and deductions reduce their tax liability to zero. However, of the ten states that have the highest proportion of nonpayers, nine of them are in the south, including Texas and Florida, who have 4.2 and 3.4 million tax filers that had no tax liability respectively.

The total number of nonpayers in the south is approximately 13 million or 25% of the total 51 million, according tot he IRS’ data. So whatever the expression is that includes the combination of God loving the South and hating taxes, suddenly has more credence to it.

States Vary Widely in Number of Tax Filers with No Income Tax Liability [Tax Foundation]

Does It Matter That Deloitte Left the Rest of the Big 4 in the Dust on CNN Money’s MBA List?

Can we have a show of hands who takes a list of employers published by Time Warner seriously? Fine. To hell with you; for this particular exercise we’ll assume that the list is 100% accurate.

Here’s the breakdown for the Big 4 on the CNNMoney’s 100 Top MBA Employers, Where MBA students say they’d most like to work:

#12 – Deloitte
#44 – PricewaterhouseCoopers
#45 – Ernst & Young
#75 – KPMG


So Deloitte dominates when you look at the Big 4’s performance. To put it in a little bit of perspective, Deloitte ranks ahead of The Blackstone Group and Morgan Stanley while the rest of the Big 4 rank behind the State Department.

Is this possibly due to the fact that they are the only firm to keep their consulting (not Advisory) practice in-house? Do they simply do a better job of selling their firm? Or is it possibly because male-patterned baldness is not discriminated against in leadership positions?

Or maybe we’re making too much of this. All the firms have a spot on the list and Google beats everybody’s ass with extreme prejudice, so is this one of those “it’s just a thrill to be on the list” moments, which results in the fliers all over your office and in the halls of Career Services at B-schools?

But forget all that for a minute. What’s really surprising (or perhaps not) is that the expectation of MBA graduates whose preferred field is public accounting are expecting an average salary of $59,176 for their first job after graduation. That amount is less than those for academic research ($79,590), education/teaching ($76,138), government/public service ($77,943) and “Other” ($92,110). Oh, and it’s behind “Auditing/accounting/taxation (corporate)” at $64,841. The average salary for preferred fields is $90,990.

Five years after graduation, those same graduates expect to make $92,075. Again, dead last. The average salary being $157,324.

Whether this says more about the state of the accounting profession or the firms that court those seeking accounting focused MBAs, we’re not really sure.

But in the grand scheme of things, it might just say that Deloitte’s position on the list may be – gasp – meaningless.

100 Top MBA Employers [CNNMoney]

One Office Will Be Enjoying a Bonus Denim Day During KPMG’s Summer Blast

Last week we were notified that KPMG’s Summer Blast would soon be in full swing and that details would be forthcoming.

TPTB obviously sensed your anxiety about the details and we’re happy to report that we have the details via the Silicon Valley office. And KPMG SV seems pret-tay, pret-tay excited that two days out of your (presumably) five day week will be spent sporting only 50% of the biz casual uniform.

This Summer, Have a Blast on Us!

Our firm is slightly ahead of plan at this point in our fiscal year, and it’s due in large part to your hard work, teaming, and market development focus. Looking ahead, your continued commitment is critical as we push to meet our business objectives for the year.

In appreciation of your efforts, and to help you to recharge your batteries so we can meet the challenges ahead of us, we’re excited to announce KPMG’s Summer Blast!, a program of food, fun, and perks that lasts all summer long and features:

• A Summer BBQ gift that includes a selection of steaks, chicken breasts, sausage, burgers, and gourmet franks

• The return of Summer Weekend Jumpstart

• The introduction of firmwide Blue Jeans Fridays – Given our office already enjoys Blue Jeans Fridays, as part of Summer Blast, the Silicon Valley Office will also have Blue Jeans Mondays for the duration of Summer Blast!

• The return of the Vacation Photo Challenge

To redeem your BBQ gift and see what all the fun is about, visit our Summer Blast Web site. And keep checking out the site in the coming months to see what’s hot this summer.

We hope this Summer Blast! helps you to enjoy and recharge this summer, so we can all pull together as a team, do our best work, and finish 2010 even stronger than we started it.

Have a great summer! And thanks again for everything you do for the firm, no matter the season.

Typically there is some sort of acknowledgment of the vegetarian/kosher crowd but this particular message glaringly omits it. We’re sure there’s an alternative but in the event that you non-meat eaters are SOL, please inform.

Speaking of meat, some Klynveldians had made it known that they’d prefer to buy their own flesh for consumption by way of a bonus or something like that. If you’re staying with that narrative, kindly elaborate further.

(UPDATE): We’ve now learned that if you want vegetarian and/or kosher options, you’ll have to ring up Omaha Steaks yourself. You vegetarians can expect an uncooperative customer service rep subsequent to your, “I don’t eat meat,” revelation.

New Mexico Didn’t Have Anyone That Could Tame the MacGruber Mullet

Tax credits for film productions may be the bane of Joe Kristan’s existence but that doesn’t mean they can’t be popular (Tax Policy blog reports that 44 states have them).

MacGruber was no exception, however the person in charge of the mane of hair on Will Forte’s head did not result in a “direct expenditure,” so that cost did not qualify for the “Movie Production Incentive.”


The Journal’s Speakeasy Blog learned that keeping a mullet in such pristine condition was not an easy task and apparently there wasn’t a single stylist in the Land of Enchantment qualified to handle it:

We made the movie in Albuquerque, so part of the [tax break] deal is that you’re supposed to use a largely New Mexican crew. But the [MacGruber] wig is an unruly little creation, so Betty Rogers, who’s the head of the hair department at SNL, came to make sure it was tamed every day. She is so good at what she does. So it was basically her and a bunch of great people from New Mexico.

Great people, maybe. Not so enchanting if they can’t handle a mullet.

‘MacGruber’: Star Will Forte on Wigs, Nudity and Tax Breaks [Speakeasy/WSJ]
‘MacGruber’ Talks Tax [Tax Docket]
Movie Production Incentives: Blockbuster Support for Lackluster Policy [Tax Foundation]

COSO Study Finds Accounting Frauds Getting Larger, Execs Named in Nearly 90% of Cases

If you could sum up the years of 1998 to 2007, how would you do it? Promising career crushed in a millisecond? A seemingly endless loop of awkward moments? Various forms of experimentation?

If you’re the Committee of Sponsoring Organization of the Treadway Commission (“COSO”) you’re more or lessway: Financial reporting fraud is getting bigger. Financial reporting fraud causes businesses to fail. CEOs and CFOs are usually the ones blamed.


If you’ve been paying attention at all, this probably doesn’t surprise you one iota but it is nice that COSO took it upon themselves to wrap it up in a nice little package entitled, Fraudulent Financial Reporting 1998-2007, An Analysis of U.S. Public Companies.

The report examined cases of alleged accounting fraud that were investigated by the SEC for the period. Some of the more interesting findings:

• Financial fraud affects companies of all sizes, with the median company having assets and revenues just under $100 million.

• The median fraud was $12.1 million. More than 30 of the fraud cases each involved misstatements/misappropriations of $500 million or more.

• The SEC named the CEO and/or CFO for involvement in 89 percent of the fraud cases. Within two years of the completion of the SEC investigation, about 20 percent of CEOs/CFOs had been indicted. Over 60 percent of those indicted were convicted.

• Revenue frauds accounted for over 60 percent of the cases.

• Twenty-six percent of the firms engaged in fraud changed auditors during the period examined compared to a 12 percent rate for no-fraud firms.

• Initial news in the press of an alleged fraud resulted in an average 16.7 percent abnormal stock price decline for the fraud company in the two days surrounding the announcement.

• Companies engaged in fraud often experienced bankruptcy, delisting from a stock exchange, or material asset sales at rates much higher than those experienced by no-fraud firms.

Lot of takeaways: bogus revenue is still popular, switching auditors is usually not a good sign (*ahem* Overstock.com), oh and if you cook the books, investors run away from you like a band of lepers.

Further, Compliance Week reports that the 347 cases reported is an increase from the 294 reported for the 1987-1997 period as well as tripling the average size of the fraud from $4.1 million to $12.05 million. The median assets and revenues of $100 million jumped from $16 million in the ’87/’97 range.

While this suggests that frauds are getting bigger, occurring at larger companies and as a result, destroying more wealth, the successful criminal prosecution of the people in charge of the companies doesn’t appear to be keeping up.

COSO Chair David Landsittel said, “All parties involved in the financial reporting process need to continue to focus on ways to prevent, deter, and detect fraudulent financial reporting,” although if the CEO or CFO (who certify the financial statements) are involved in the fraud, this statement doesn’t mean much. Sam Antar doesn’t think so either, telling us,

[W]e needed a study to find out that financial fraud leads to bankruptcy? Where have these guys been?Until we move away from the process oriented “check the box and fill in the blanks” routine in audits and start understanding criminal behavior, there isn’t much any auditor can do to deter fraud. Former Speaker of the House of Representatives Tip O’Neill once said, “All politics is local.” Similarly, we need to learn that “All fraud is personal.”

And since the SEC names a CEO or CFO in 90% of these cases, yet only 20% of those cases actually result in indictment within two years, does this indicate that the naming of said CEO/CFO is largely a photo op for the SEC/DOJ et al? Even if 60% of those executives are convicted it appears that finding fraud is (relatively) easy part; successfully blaming someone in the court of law is something else entirely.

One of the authors of the study, Mark S. Beasley of North Carolina State University noted that there is work still be done, “We need to determine if there are certain board-related processes that strengthen the board’s oversight of risks affecting financial reporting.” This seems to indicate that there is some significant high-level processes that are still not in place that could keep tabs on the Andy Fastows of the world but for now, we still seem to be going with the honor system.

COSO Press Release [COSO]
Fraudulent Financial Reporting 1998-2007, An Analysis of U.S. Public Companies [COSO]
COSO Fraud Study Catalogs Latest Decade of Incidents [Compliance Week]

Accounting News Roundup: Cassano Dodges Criminal Charges; Mary Schapiro Acknowledges Some ‘Convergence Gaps’; IRS Audits of Colleges May Look at Coaches Salaries | 05.24.10

Crisis Probes Fail to Meet High Bar [WSJ]
Late on Friday, former AIG executive Joseph Cassano learned that he wouldn’t face criminal charges for his actions as the head of the company’s Financial Products division. According to the Journal, prosecutors did come close to filing criminal charges against Cassano and others but it was felt that the high burden of proof that “there was criminal intent behind executives’ decisions and that they intentionally misled investors” could not be met.

The government isn’t quite finished with Cassano, as he still may face civil charges from the SEC, which has a lower standard of proof.


The SEC’s Mary Schapiro on the Myths of GAAP/IFRS Convergence: The Lady Doth Protest Too Much [Re:Balance]
Jim Peterson took a closer look at Mary Schaprio’s speech at the annual conference of Chartered Financial Analysts where she mentioned IFRS but also convergence efforts between the IASB and the FASB. The SEC has maintained that convergence should be the initial goal for reporting standards.

Jim is concerned that the gap between the ultimate goal of convergence and the reality of some of the key issues at stake are no small feat:

There is, indeed, no more eloquent concession of the “convergence gap” than Schapiro’s own admission that “US GAAP and IFRS are currently not converged in a number of key areas,” including “the accounting for financial assets (the very types of securities at the center of the financial crisis), revenue recognition, consolidation principles, and leases.”

Any other problems, Madame Chairman? These on her list are so comprehensively grave that they will keep the international standards standoff alive until the end of time.

Which would put IFRS on a even longer track to adoption.

IRS audits of schools might delve into salaries of coaches [USAToday]
The IRS’ interest in the determination of the highest paid employees for colleges and universities has a few people worried. Not necessarily because anything is wrong but because the IRS is just a scary beast, “John D. Colombo, a University of Illinois law professor who has written about tax exemption and college athletics, says he doesn’t think the IRS action will fundamentally alter college athletics business. But he adds, ‘Audits are never comfortable. Just the IRS being there asking questions makes people nervous.'”

Primarily, the IRS is concerned over the business activities that higher education institutions engage in that aren’t “related to the schools’ primary purpose.” The interest in athletic coaches’ salaries is such that these individuals are often some of the highest paid employees of the school. The IRS is interested in how colleges and universities justify these salaries and to ensure that corporate sponsorships (not considered to be a business activity) are complying with certain rules so they are not considered advertising revenue.