Author: Caleb Newquist

Founding editor, Going Concern.

Accounting Porn Does Not Involve a Guy Coming By to Fix the Cable

AG profiled Professor David Albrecht last week, which was an honor and a privilege for everyone involved. The Professor’s contributions to the accounting blogosphere are invaluable. Staying consistent with his priceless musings, his latest post asks an important question: “What Is Accounting Pornography?”

Now since we’re sure the professor wants us to think hard about this question, we’ll kindly oblige him.


Done.

As you might expect, this question has nothing to do with your particular taste in ladyboyx.com or whatever else the SEC staff might have turned you on to. No, this is more of the strange reading and/or viewing material that you might just enjoy a little too much (e.g. Lat’s proclivity for the Harvard Law faculty directory).

Okay, here are a few answers that come to mind:

• Any internal report that you stumble across that details upcoming layoffs.

• For Sam Antar and the rest of you sleuthy types, the notes to Overstock.com’s financial statements.

• For the weirdos, it could be watching Big 4 CEOs’ banal talking points with a snowy backdrop. Or the thought of Jim Turley in his Timberlands.

• For the sickos, nightmare CPA exam stories that end in a grade of 74.

If there’s something else that gets you off (Ben Bernanke testimony doesn’t count, AG) feel free to share. Just try to keep it relatively clean. In the meantime, we’ll be flipping through the Enron script.

What Is Accounting Pornography? [The Summa]

Grant Thornton Was Not Impressed with the SEC’s Waffling on IFRS

We really weren’t expecting much of a reaction from accounting firms on the SEC’s conclusion that there’s no rush on the IFRS issue. The Commission statement that it supports “a single set of high quality accounting standards” was good enough for PricewaterhouseCoopers, who issued a press release the day of the announcement.


The press release sounds eerily similar to the SEC’s statement with a quote from Bob Moritz thrown in for good measure:

“PricewaterhouseCoopers continues to support the goal of moving toward a single set of high quality global accounting standards,” said PricewaterhouseCoopers LLP U.S. Chairman and Senior Partner Bob Moritz. “We believe that IFRS is in the best interest of stakeholders, including investors both here and globally. We are, therefore, encouraged by these statements from the SEC.”

So PwC is encouraged by the recent development. This isn’t shocking. P. Dubs will be on board because they don’t strike us a bunch that will rock the boat. Presumably, any a hint of discontent from the Firm could potenitally jeopardize their ubiquitous magazine list presence.

On the other hand, we were surprised to see this Tweet from Emily Chasan of Reuters that pointed us to the Grant Thornton press release that came out today.

GT was NOT IMPRESSED with the SEC’s latest commitment to non-commitment, “like many in this country and elsewhere, we were hoping that the SEC would announce a mandatory date for switching to IFRS by U.S. public companies. Instead, the Commission reaffirmed that it expected to decide in 2011, provided resolution of certain issues.”

Now in case you’re questioning GT’s sincerity in this matter, they make their case for why this feet dragging is unacceptable:

Whether the U.S. races or crawls toward IFRS could mean the difference between staying in front or falling behind. The rest of the world is moving forward, boldly. Major economies like Japan, China and India have already chosen IFRS. It is unrealistic — and risky — to think that we can stand outside looking in forever. If we don’t want our influence and opportunities stripped away, we must make sure that we keep a seat at the table.

This is probably as insubordinate as you can expect an accounting firm to get over an issue that is “largely academic” but it is refreshing to see a little public honesty out of GT.

Grant Thornton LLP statement regarding SEC and IFRS Roadmap [Press Release]
PricewaterhouseCoopers States Support for SEC Move Toward Single Set of High Quality Accounting Standards [Press Release]

Are Accountants at a Higher Risk of Experiencing Workplace Violence During Busy Season?

Seems like logical conclusion, right? Okay, it’s not the post office but yeesh, have you noticed the bitter Bob in the cubicle next to you? Is he approaching the breaking point? Busy season sucks after all and who knows when he’ll eventually crack:


Is our suggestion that accountants might be more likely to snap a little overblown? Maybe. But read this description from AccountingWEB before you blow us off:

You are sitting at your desk on a sunny Thursday afternoon. Your company is experiencing some hard times, and there have been layoffs company wide. A co-worker has been part of the layoffs, and is very distraught. The co-worker may have known layoffs were eminent, and thought it would never happen to them. All of a sudden, the co-worker pulls out a gun and starts shooting up the office!

Sound familiar? Of course! We imagine that someone throwing their 10-key at your head is more likely scenario but violence is violence. The article cites OSHA stating that 2 million people are victims of workplace violence every year but what’s even more exciting/troubling is the BLS survey that “70% of workplaces don’t have any type of violence prevention program in place.”

The solution? Training of course! AccountingWEB breaks it down like this:

• “Train managers and supervisors on how to detect the early warning signs of potential violence” – In other words, you know that guy who says ALOUD he’s thinking about punching the next person that asks him a stupid question? You should probably should have a word with him.

• “Tell employees that the firm wants to know about any threats or incidences, and that they are extremely serious about handling these problems.” – Naturally it helps if your company follows through on “serious about handling these problems” part. In other words, the guy swinging the sledge around should be tarred and feathered and then fired in front of the entire company. The proceedings should be broadcast internally for those that can’t attend in person. It’s simply not enough to fire the person. Public humiliation is imperative so people get the picture that this shit won’t be tolerated.

• “Implement a zero tolerance policy in the handbook relating to workplace violence” – And by zero tolerance, we’re talking no noogies, wedgies, open handed slaps, arm slugs, bloody knuckle contests or even berating someone to the point that they develop an eating disorder.

Violence in the Workplace: Are You Next? [AccountingWEB]

Accounting News Roundup: KPMG Survey: Half of Execs Want Option to Adopt IFRS Early; PW India Plea Rejected on Satyam; Two-thirds of States Have Raised Taxes Since Recession Began | 03.09.10

• Half of US execs want to use IFRS early-survey [Reuters]
KPMG surveyed some shot-callers and lo and behold, half of them are ready to get down with International Financial Reporting Standards before the SEC’s target date of 2015. That’s if the SEC is even down with the whole idea.

KPMG’s surveyed also discovered that executives would like the SEC to be a little more transparent with their plans re: IFRS. You know, other than more meetings.

“Many U.S. companies with subsidiaries around the world are already using IFRS for statutory reporting,” said Janice Patrisso, partner and national IFRS leader at KPMG. “For them, having the option to synchronize it all up front at the U.S. company is a positive.”
…
Patrisso said companies with international subsidiaries that have already made conversions to IFRS were looking at the way those units had chosen to use the rules. They are also preparing for changes U.S. and international accounting rulemakers are making to converge the two sets of rules.

It’s nice to see some pushback to the SEC’s waffling. Despite where you fall on the IFRS debate, most people would agree that allowing businesses to make their own decisions about what financial reporting method to use (as long as it is consistent and high quality). Especially since the AICPA recognized the IASB as an official standard setter, thus giving private companies the go-ahead on IFRS, shouldn’t public companies be allowed the same freedom?

While the SEC spends the next five years trying to figure out what all this means, some businesses already see where this is going and don’t want to waste time. The SEC isn’t so enthused.

• PW plea on Satyam probe rejected [Business Standard]
Pricewatherhouse India really wants everyone to forget about Satyam. Their latest plea to the Securities regulator in India, the Securities and Exchanges Board of India (SEBI) has been rejected BUT apparently the firm is going to try making their case again. Sigh.

Don’t get any illusions about this case making any progress, “The next step is for ICAI’s disciplinary committee to send notices to the PW auditors charged by law enforcement agencies in the fraud case…this could happen only after the auditors, under judicial remand, are in a position to argue their case before the committee.” And we complain about the bureaucracy here.

• CBPP: 33 States Have Raised Taxes by $32 Billion/Year [TaxProf Blog]
You may have noticed a state fiscal crises here or there in the last couple of years and by God, they’re trying to do something about it. Unfortunately, the most common solution, according to the Center on Budget and Policy Priorities, is the raising of taxes. Thirty-three out of 50 states have taken a number of measures from eliminating tax exemptions and broadening tax bases to good old fashioned higher sales, income, or property tax rates.

Quote of the Day: March Madness Pools Are an Important Busy Season Distraction | 03.08.10

“This year of all years, the importance of camaraderie and bringing employees together is greater than ever. If people are talking about March Madness, they’re not talking about the state of the business, or the pay cuts, or the layoffs, or things like that”

~ Jonathan Shapiro, partner at labor and employment firm Fisher & Phillips, on why betting pools and even game-watching are good morale boosters.

We’re Not Convinced That CFOs Mean What They Say When They Switch Audit Firms for No Apparent Reason

Today in boilerplate press releases, MedAssets dropped BDO as its auditor for the bigger and bluer KPMG and the CFO punted on giving a real reason as to why.

“We are very fortunate to have had the pleasure of working with BDO Seidman for many years, including during the period of time covering our initial public offering in 2007,” said Neil Hunn, Executive Vice President and Chief Financial Officer, MedAssets. “BDO has been a tremendous business partner for us and instrumental in our success. MedAssets has experienced tremendous growth, especially over the last few years, and we expect this trend to continue. As such, we feel that KPMG is best suited to serve our Company and stockholders in the future. We look forward to our new relationship with KPMG.”

So if we were translate this statement, basically it sounds like MedAssets wants a big firm because the business is growing like gangbusters and they simply can’t be held back by a second-tier firm like BDO.

Or maybe we’ve got it dead wrong. Maybe MedAssets is spooked about BDO’s chances in the Banco Espirito appeal. Maybe KPMG’s Atlanta office is desperate for work and lowballed the audit fee. Feel free to share your own speculation but we’re sure as hell not buying the statement that a firm (in this case, BDO) ‘has been a tremendous business partner’ and ‘instrumental in our success’ and just gets up and dropped because ‘tremendous growth’ is expected to continue. Is BDO really that incapable of continuing to serve the company?

Basically, we are asking for more honest language in SEC filings and press releases.

MedAssets Engages KPMG as Auditor [Press Release]
8-K [SEC.gov]

Reason #10,308 to Not Engage in Dubioius Accounting Practices

So! Thinking about getting a little aggressive with the accounting? Forget aggressive, let’s just say you need to make your numbers next quarter come hell or high water? Maybe there are some pesky internal controls that you would really, really like to get around. For the good of the company of course.

Do whatcha gotta do but before you do, consider the sentence of Charles McCall, the former chairman of McKesson Corp. first. If, after reading his story, you decide it’s still worth the risk, then proceed with your plans.

A former chairman of San Francisco-based McKesson Corp. has been sentenced in federal court to 10 years in prison for securities fraud in an accounting scheme that cost shareholders $8.6 billion in 1999.

Charles McCall, 65, of Delray Beach, Fla., was given the prison term by U.S. District Judge William Alsup in San Francisco on Friday.

McCall was convicted by a jury in Alsup’s court in November of four counts of securities fraud and one count of circumventing the company’s internal accounting controls.
…
Prosecutors said that in the fraud, HBO & Co. and McKesson HBOC inflated revenues by backdating software sales and concealing side letters that would have allowed buyers to cancel proposed purchases that the company had counted as revenue.

This poor bastard got sentenced to 10 years (at 65, he’ll be lucky if manages to serve the full sentence) and he probably doesn’t know a internal control from his ass, other than at one time, he thought it was enough of a hindrance that he’d just ignore it altogether. If anyone has an extra copy of COSO laying around, kindly send it his way. He’ll have time to get caught up on the idea.

Ex-McKesson chairman gets 10 year sentence [SF Chronicle]

Tax Amnesty Programs: A Gold Mine for States or Bad Policy?

More news out of the land of Quakers, as Pennsylvania has announced a tax amnesty program for delinquent taxpayers. The program allows tax deadbeats to pay their back taxes but all the penalties and half of the interest will be waived. Pennsylvania’s will begin on April 26th and be open for 54 days.

The AP reports that the state could generate an additional $190 million in revenues for the state which, like pretty every state, is in a dire need of revenues.


For those that participate in the amnesty program, they’ll have to be on good behavior going forward, “participants who fall into delinquency again within two years may be required to pay the full penalties and interest that had been waived. Also, once the amnesty period ends, a special, ‘nonparticipation penalty’ of 5 percent will be levied against delinquent taxes, penalties, and interest not paid in full.”

Participants will also not be eligible for future amnesty programs. Sounds like a novel idea right?

Well, maybe not.

Our resident tax guru, Joe Kristan, is not a fan of tax amnesty programs saying, “they become an expectation and they make chumps of compliant taxpayers.”

Joe’s home state of Iowa passed a tax amnesty program back in 2007 and his sentiments haven’t changed since then, “[Iowa is] adding more loopholes targeted tax incentives to its tax law while doing nothing to lower rates or broaden the tax base.”

But Joe, being the silver lining-type, also notes, “those of us who charge for tax work by the hour, it truly helps our economic development during an otherwise slow time of year.” So tax pros will take those new clients despite the bad policy that encouraged them.

Regardless of the bump in off-season revenues, the Tax Policy Blog (who Joe cites) noted that these programs are of little value if reform doesn’t accompany it, “if lawmakers decide to implement tax amnesty programs, they should be accompanied by fundamental tax reform that makes the tax code simpler and easier to comply with.”

So it appears that tax amnesty is nothing more than a duct tape solution from a policy stand point but it certainly makes good pandering fodder in an election year.

Pa. will offer tax amnesty [AP via Philadelphia Inquirer]

PICPA: You Need a CPA to Get Your Breathlessly Judgmental Friend to Shut Up

The latest edition of CPA video marketing, courtesy of the Pennsylvania Institute of CPAs takes another reality TV angle, parodying the show “What Not to Wear”. While our suggestion to incorporate Lady Gaga or the cast of Jersey Shore seems to have been overlooked for the time being, we’ve been assured by the PICPA VP of Communications that our suggestions are being considered. We won’t push the issue, as there may be better ideas.

Like perhaps, “It’s Always Sunny in Philadelphia”??? It’s a natural fit, amiright?

Sorry. We’re done submitting ideas. Here’s the latest:


Our tepid enthusiasm for this particular video is probably due to the fact that we’ve never seen “What Not to Wear” although we did love the “Breathlessly Judgmental Friend”. Seriously, doesn’t everyone have a breathlessly judgmental friend that you just want to punch in face?

While this parody wasn’t our favorite, we understand that there are CPAs in the Keystone State that probably enjoy this particular spin and it still beats anything we’ve seen from an accounting firm. Keep up the good work Team PICPA.

More PICPA Videos:
Latest PICPA Video: CPAs Are Like Snuggies
Pennsylvania CPAs Insist Accountants Are Funny in New Videos. Which Are Funny

Suge Knight Really Needs a 2Pac Comeback to Get Him Out of This Tax Lien

Suge Knight may be the heir apparent to Nicolas Cage for the King of celebrity tax trouble. There have been several minor liens thrown in here and there and Nas’ $3+ million tax lien was certainly impressive but Suge’s looks like a solid leader for the crown right now.

We should note that for the purposes of celebrity tax issues, Joe Francis does not qualify since he’s technically a “douche” and not a “celebrity”. Also, since the $33 million-ish lien just up and disappeared (we’re assuming that Lucifer is somehow involved) he’s off the hook.

Anyhoo, so being tardy on taxes seems to be a common occurrence but Suge seems to be going for the tardiest of the tardy. He has managed to avoid paying a tax lien, originally filed in 2003, for his 1996 tax return. TMZ is reporting that the lien was re-filed in January and that he owes $6,578,696.31.


TMZ is also reporting that in child support papers filed by Suge’s baby mama, it was revealed that his net income is only $1,207 so paying this lien is going to need some kind of resurrected 2Pac comeback somethingorother.

The blog Baller Status also reports that last month “several personal items he had tucked away in storage were auctioned off to the highest bidder after he failed to pay the storage fees. Belongings such as furniture, TVs, and even a large photo of himself with the late Tupac Shakur were sold.”

So whenever you’re feeling a little down about your own dire personal financial situation or think about your crappy pay, just remember that you could be Suge Knight.

Suge Knight — Old School Tax Lien [TMZ]

The Job Outlook Is Good for Accountants…But More Competitive

With one major deadline passed and two more coming up next week, some of you might be thinking about your employment options. It’s a common occurrence post-busy season to reflect on the past three-ish months, contact a recruiter and explore your options.

idea of what kinds of jobs might be attracting accountants in the year ahead so we got in touch with recruiter Adam Klitzke, Managing Partner of Emerson Search, LLC in Denver, Colorado.

Adam told us that he thinks that “2010 and…2011 are years where there is a “hot” background or skill set,” as opposed to a hot position (e.g. financial reporting, IFRS, or technical accounting). “[D]uring the previous 3 months, we haven’t seen the same job come up twice, but we have seen clients targeting the same type of candidate.“


So what does a hot “background or skill set” look like? Adam shared four primary characteristics that recruiters are currently looking for:

• 4-7 years of experience, the majority of which has been spent at a Big 4 firm.

• Experience with clients that comply with SEC regulation.

• Has experience supervising staff.

• Has obtained their CPA license.

“These candidates are not having any trouble landing interviews,” Adam told us. He added that in terms of your competition, there are far more bodies jockeying for a position, “in the current market we are seeing 5-10 candidates like this [with the ideal skill set] competing for the same job, whereas 3 years ago, a client would be lucky to see 2 candidates with this background.”

What if you don’t have the ideal skill set? Don’t worry, it’s not hopeless, “a second tier would look like someone with non-Big 4 public accounting experience coupled with industry experience (with a mid to large size public company – $200M+), supervisory experience, and a CPA license or an MBA,” Adam said.

Naturally, if your current background is lacking in these , it will be more difficult for a recruiter to help you land some interviews. Adam told us that while there are jobs out there for people with backgrounds that don’t fit the model above, those candidates typically find jobs without the services of a recruiter. If you’ve got bigger plans for yourself than that, it will be worth your time to pursue some or all of the points above.

The good news for those of you looking to make a move now is that you can expect to do well in terms of salary. As Adam told us, “Salary negotiations will be firm, but fair. Candidates will be able to negotiate an increase in pay and do NOT need to take a pay cut.”

Finally, another development he has seen has to do with the morale, “employee morale seems to be quite low and neither department heads or human resources are doing anything to combat that.” So, if you’re meeting with a recruiter it pays to be honest why your old employer didn’t give make you feel so good about yourself, “clients have asked us for ideas on how to improve morale and we have been able to help them as there are things a company can do other than increase salary to improve [that].”

Bottom line is that whatever your situation, it pays to be honest with recruiters about exactly what you are looking for. If you don’t like what you’re hearing from them, be honest and don’t settle for a position that you’re definitely not interested in pursuing. It may be a more competitive market but if you’ve got a strong background, you’ll have options.

Accounting News Roundup: Japan Adopting International Fair Value; GAO Not Down with PCOAB Risk Standards; Oscar Gift Bags = $91k Income | 03.08.10

• Japan embraces new fair value rule [Financial Times via Accountancy Age]
Here’s a novel idea: making a decision on IFRS! Japan’s Financial Services Agency will be allowing companies to adopt the international version of the new fair value rule developed by the IASB, starting Wednesday. Since the world’s second largest economy is opting to pull the trigger on IFRS it may throw the G20’s request/demand for the world to get all kumbaya when it comes to accounting rules.

“Fair value accounting…as unleashed one of the most divisive debates to have emerged from the credit crisis, threatening to disrupt a pledge by the G20 group of leading economies to create a single, global accounting system by mid next year,” reports the FT and judging by the SEC’s indecisiveness, they may be right. With this latest development, now leaders will be able to blame each other’s securities agencies for their particular actions that will likely lead to divergence.


The allowance of Japanese companies to adopt IFRS 9 could also give Knight of the Accounting Roundtable, Sir David Tweedie, even more leverage when dealing with countries around the world to adopt the IFRS.

Right or wrong, the Japanese are sending a signal that they are prepared to move forward while the SEC prepares to have more meetings.

• GAO Criticizes PCAOB Approach to Audit Risk [Web CPA]
The General Accountability Office, never shy to point out the faults of others (that’s kind of what they do, after all), isn’t so keen on the PCAOB’s latest “risk assessment” audit standards. This after the PCAOB originally proposed standards in 2008 and then revised and re-released them late last year.

The GAO feels that the ‘duplication and inconsistencies’ created by the PCAOB’s new standards would likely lead to…more billable hours! So, as you might imagine, some firms are on board:

PricewaterhouseCoopers told the PCAOB, “We fully support the board’s objective to update interim standards regarding risk assessment,”

And some, not so much:

McGladrey & Pullen…warned that “unnecessary differences between the board’s standards and those of other standard-setters increase the costs of performing all audits because firms must develop and maintain two, and even three, audit methodologies and training programs, with no corresponding benefit to audit quality.”

Personally, we’re skeptical of anything that has the unmitigated support of the biggest players in the industry but from a more practical standpoint, do auditors really need more rules to follow? And now this could add to the workload? Is that really necessary?

• Oscar Swag Bags to Result in $91k Income to Celebrity Presenters [TaxProf Blog]
Celebrities have enough tax trouble the way it is, how is giving them gifts going to make their tax returns easier? We’re guessing most of them have smart CPAs working for them that will suggest that they give it all to charity but we may be underestimating the temptation of free luxury swag.