Author: Caleb Newquist

Founding editor, Going Concern.

Grant Thornton’s Valentine to Employees Did Not Consist of Heart Candy

It’s the middle of February and many of you are somewhere between completely exhausted and death warmed up. This is not lost on blogger extraordinaire Steve Chipman. SC’s weekly info session has been crucial to your survival (even though it’s not meant for all of you). Knowing that his soothing words will only get you so far, he’s taken a different approach this week.

Since it was St. Val’s on Sunday, Chip figured he would mark the day for lovers by boosting your spirits by using the words of GTers less CEO-y than himself.

Today I’d like to offer some inspiration to help us push through busy season. The last year and a half have required so much more from everyone that it’s hard to imagine we can work even harder, but it’s evident that we are everywhere I look.

So what keeps us going? That’s what I was looking for when I reviewed the “I am Grant Thornton” interviews we conducted last fall. We asked a variety of people in different roles, in different offices and at different levels if they felt they made a difference, and, if so, how.

It is hard to imagine that you can work harder, isn’t it? Your spreadsheets are bleeding through your monitors, you’ve ingested far more MSG than is recommended, and your cube farm neighbor (who ordinarily smells funny) is looking hot .

And we weren’t aware of this “I am G to the T” exercise but it sounds stupendous. Who knew your personal experiences would be used at this most crucial time of year? Bet you would have really put some thought into if if you had known your words could possibly have been immortalized on Steve-o’s blog.

Here are some carefully selected examples from SC’s list and our thoughts on each:

“When a client calls me and says, “Can I pick your brain?” it’s so great because (1) they recognize I have a brain” – We agree that it’s nice when your client recognizes that you are of the same species.

“I had a client tell me recently, and I’m quoting, ‘We hire Grant Thornton because you get [stuff] done.’” – That’s Stephen’s edit. This is a family blog, people.

“I make a difference every day because I work here.” – And because my mother said so.

“Every day is a great achievement.” – We agree. Crawling out of bed is tough.

“How do I make a difference? . . . You know, I’m happy.” – God, you’re one of those happy people.

“I’ve worked at the big firms. We are not bigger by any means, but it’s a question of caliber. I knew it from my first day on the job here. We’re just a different caliber of firm.” – We’re not size queens at GT.

Steve-o’s send-off has us begging for more and also causes us to wonder A) who is this homecoming queen? and B) is Chip a Bass or a Tenor?

I’m also proud to say that among our great people are a former homecoming queen and a professional make-up artist. Of equal wonder, one of you found the most surprising thing about coming to Grant Thornton was “that all the partners have great singing voices.”

There’s more where that came from, but this is the firm’s Valentine to you.

Thanks for you!
Stephen

You could do back-to-back busy season now, couldn’t you?

Accounting News Roundup: IASC Chair Says Convergence Is Still Happening; Walgreens to Buy Duane Reade; Church Accountant Gets Jail Time | 02.17.10

• Convergence plan will ‘facilitate’ possible IFRS adoption [FT]
Apparently the FT piece in yesterday’s Roundup on the IASB throwing its hands up over convergence with the FASB was DEAD WRONG. That is, if you ask the Gerrit Zalm, the Chairman of the Trustees of IASC Foundation. He wrote a letter to the FT telling them that they’re mistaken and that the International Accounting Mavens are super proud of the work they’ve done with the FASB and that they’re pretty sure that Bob Herz and Co. will eventually come around:

I was surprised to read your interpretation of recent enhancements to the governance of the International Accounting Standards Committee (IASC) Foundation (“IASB softens stance on convergence”, February 16), and in particular your assertion that a constitutional emphasis on adoption of International Financial Reporting Standards (IFRS) represents a weakening of the trustees’ support for the ongoing work to converge global accounting standards.

Nothing could be further from the truth. The trustees of the IASC Foundation strongly support the work plan that the International Accounting Standards Board has established with the US Financial Accounting Standards Board, which will reduce the differences between, and improve, IFRS and US standards. By reducing differences and thereby reducing any cost of transition, convergence will “promote and facilitate” the possible adoption of IFRS.

So instead of getting all worked up over the FASB doing its own thing, just sit tight and let the IASB work its magic and we’ll have converged standards before you know it. The whole process is like herding cats on acid, so everyone just cool it.


• Walgreen to Acquire Drugstore Chain Duane Reade [WSJ]
Don’t worry, the Journal is reporting that “nearly ubiquitous” (the “nearly” isn’t necessary) chain will still retain its name in the $1 billion deal. Confusion avoided.

• Former church accountant sentenced to 17 months for theft [Springfield News-Sun]
Have we weeded out all the accountants that steal yet? Diane Maddy stole over $300,000 from her church from January 2003 to December 2006 and in August of 2008 and 2009.

Besides, “WTF lady, who steals from a church?” what caused her to take a break for 18 months and then another break for 12 months? Maybe walking out of a house of worship with huge grips of cash caused her to think twice (three times!)?

Listen up accountants who are thinking it: don’t steal. Just because you have access to money doesn’t make it yours. How many “accountant pleads guilty to theft” stories do we have to read? Now we have church accountants stealing? This is the bottom people.

Breaking: Professor Explains Tax Theory, Accused of Being a Communist

Our favorite TaxProf that we never had was quoted in a Wall St. Journal explaining how not only the winnings of Olympic athletes are taxable but also how the fair value of their medals could theoretically be taxable.

Someone read this and took immediate action:

Whether or not TaxProf Caron has a picture of V.I. Lenin in his office is not known but based on where he stands in comparison to our contributor Joe Kristan, we’d say the writer of the letter is misguided. Or Glenn Beck.

Pennsylvania CPAs Insist Accountants Are Funny in New Videos. Which Are Funny

The Pennsylvania Institute of CPAs is tired of everyone thinking that accountants are humorless, soulless, number crunching (did we mention green eyeshade wearing?) nerds, so they decided do something about it.

The PICPA has developed two videos to show everyone that not only are CPAs important business advisors, they can be creative and yes, funny. Despite where you fall on the comedic spectrum (Brian Regan, Chris Rock, Lewis Black, Larry the Cable Guy, Seinfeld, whatevs) you’ve got to admit that this is by far the best attempt at plugging the services that CPAs can provide out there. It doesn’t go the emotional route like Grant Thornton’s campaign or just miss the mark completely like BDO. This is purely for comedic value and it’s refreshing.

Granted, the PICPA is a professional association and not a firm so we aren’t expecting any firm to go with a Big Foot parody or 80s drug ads but let’s keep this angle fresh in our minds, shall we, accounting firms?

Koss Investors Lining Up for Litigation; Will Grant Thornton Join the Party?

Investors in Koss Corporation are lining up in the pending litigation against the company and a press release from law firm Carney Williams, announced this morning that those interested in as lead plaintiff have until March 12th to make their desires known.

Form the press release, “The Company and certain key executives are alleged to have violated federal securities laws by issuing false financial statements and failing to maintain adequate internal and financial controls.”

Many, like Tracy Coenen, have argued that the internal controls are management’s responsibility and Grant Thornton was not engaged to audit these controls but does that mean that GT will dodge these investor lawsuits?


We spoke with Randy Pulliam, a partner at Carney Williams on the case if he expected Grant Thornton to be named in the litigation, “the lead plaintff will ultimately decide as to who will be named in the litigation, including the accountants.”

There’s nearly a month until the deadline so it’s far too early to tell who will decide whether Grant Thornton needs to be included but we’ll go on record saying that we’d be shocked(!) if GT manages to get forgotten in this whole matter. Regardless of your feelings on the firm’s responsibility (i.e. GT should have discovered the fraud or not) the fact that Sue Sachdeva is accused of embezzling $31 million over a period of five years while Grant Thornton was auditing Koss will not be lost on the investors or their attorneys.

“This is a five year class period so many investors are eligible to participate,” Mr. Pulliam told us. Plenty of investors out there would like to see someone make things right. Grant Thornton seems like a decent candidate especially since their pockets are far deeper than Koss’. So if you asked us to put a wild-ass guess on the odds of Grant Thornton being named in the lawsuit, we’d put it somewhere in the nabe of 10-1. Not Mine that Bird territory but not Secretariat either.

We left a message at Koss and dropped an email to Grant Thornton seeking comment and neither have gotten back to us at this time. We’ll continue to update you on the developments, shopping addictions and otherwise.

Shoeboxed: Saving Accountants One Nightmare Client at a Time

Last week we briefly mentioned Shoeboxed.com and how they can make all your shoebox receipt toting clients disappear. Not only that but it may save some of your more aggressive employees the trouble of explaining why they punched out the deadbeat who showed up with their receipts on April 15th.

We were fortunate enough to spend a some time with Stacy Chudwin, the Company’s Director of Communications, to learn more about the Durham, North Carolina Company.

Stacy told us that the Company got its start by servicing small businesses who wanted to avoid the hassle of tracking expenses by keeping a mind-numbing amount of receipts around, “Businesses can simply compile all their receipts, send them to us and we scan, enter the data and categorize them.”


Now the Company offers an “Accounting Professional Plan” which allows CPAs to do the exact same thing for those clients who aren’t so organized with their bookkeeping, “CPAs can either have their clients send us the receipts directly or they can send the us shoebox that gets dropped off on their desk and we’ll take care of the rest,” Stacy said.

Once all the data entry is finished you can access the information via your business’ account and for CPAs, you can create sub-accounts for each individual client. These reports can then be exported to a number of applications including QuickBooks, Quicken, Excel, and others.

The Company has also developed a free iPhone app that will extract all the information from a photo of the receipt. So for you Holiday Inn jockeys out there, you don’t have to stuff all your receipts in your suitcase and try to decipher everything you spent two weeks later.

“So far all of the feedback from our clients and users of the mobile apps have been great, however everyone wants more features both in their accounts and for the app,” Stacy told us.

Stacy also maintains the Shoeboxed Blog that is updated a few times a month that has areas for “Small Businesses”, “Taxes”, “Budgeting” and “Shoeboxed.com Resources”. She also informed us that they have a very active Twitter account, “We like to use Twitter to make announcements, to highlight recent press, and to retweet some positive feedback from followers, but we will also respond one-on-one if a user has an issue and reaches out to us via Twitter.”

If you’re not hip to the whole Twitter thing the Company has online customer support and a toll free number for all your questions.

The Company has several different plans for both businesses and accountants and both come with 30 day trials. So if you’ve more nightmare clients thatn you can count, what are you waiting for? Thanks to Shoeboxed, now you can add more clients instead of wanting to physically attack them.

Accounting News Roundup: Is the IASB Giving Up on the FASB?; Wake Forest Grads Crush the CPA Exam; NFL Looking at Rams Buyer’s BDO Tax Shelter Connection | 02.16.10

• IASB softens stance on convergence [FT]
We’re not jumping to any conclusions but yesterday the IASB made the statement that it “would no longer pursue convergence with its US peer as ‘an objective in itself'”. Now we’re not entirely sure what “an objective in itself” means but it kinda, sorta sounds like “to hell with you FASB, we’ve got our own plans.”

This revelation was part of “constitution review” in order for the IASB “to justify its public accountability” to its critics. In this review the IASB seemed to be changing its tone on just what convergence is:

In a review of its constitution published on Monday the IASB’s oversight board addressed this concern over the convergence project and said it would “emphasise that convergence is a strategy aimed at promoting and facilitating the adoption of IFRS, but it is not an objective by itself”.

So just spreading the good word about IFRS without any stated objective? Does that sound about right? It sounds a little like financial reporting evangelism.


• Wake graduates get highest passing rates on CPA exam [Winston Salem-Journal]
This is in no way presented to make you feel bad about yourself. Here are the 2008 (the most recent data available) passing rates at WF: 93% on FAR; 87.5% on Audit; 83.22% on regulation; 93.7% on BEC. The overall passing rate was 89.7%. The University has had the highest scores five years running.

If you need to go cry in the bathroom, you may do so now.

• Rams buyer’s $85 million battle with IRS [Chicago Tribune]
Shahid Khan announced last week that he was buying 60% of the St. Louis Rams. Great news right? Ordinarily, yes but now the NFL is looking into his association with a BDO tax partner that was convicted of helping clients avoid taxes through shelters.

The IRS said in court papers that the Khans hired the Chicago-based BDO Seidman accounting firm and met with tax partner Robert Greisman. The Khans engaged in at least five questionable tax shelters, with names like Son-of-Boss and Dad, and paid BDO $8.5 million in fees, about 10 percent of the alleged tax savings, according to court documents.

Yet when the revenue agency questioned Khan about his returns, he was unable to identify what services BDO provided, an IRS agent said in court documents. In April 2007, the IRS made formal requests for information to Greisman and one of his partners in Michigan in connection with its investigation of the Khans.

Greisman pleaded guilty last July to conspiracy charges related to the creation of the shelters and BDO is currently being sued by Khan for negligence and malpractice. The NFL may have saved them themselves the trouble by letting Rush Limbaugh own part of the team…

Stephen Chipman Is Slightly Annoyed by the Non-Grant Thornton People Reading His Blog

We didn’t get the third installment of Stephen Chipman’s blog until late last week and apparently while the Grant Thornton CEO seems to be keeping up his promise to come at you once a week, he’s going to be a bit more reserved going forward.

Last week SC shared a few insights from his readers, however we warned that he wouldn’t be sharing the most intimate details (e.g. ragers in Atlanta):

“Because large portions of my blog are finding their way to external Web sites, I will answer some sensitive or strategic questions via internal e-mail and send my responses directly to the person who posed them.“


Well, shucks. We’re not sure what “external websites” SC is referring to but as far as our humble posts are concerned, we merely provide snapshots that certainly don’t qualify as “large portions”. If you guys are aware of someone reposting the posts in full, get in touch with us and we’ll let them know at GTHQ.

We’re also curious as to what will qualify as “sensitive or strategic questions”. Is SC getting prodded with nosy questions about Sue Sachdeva? If so, he could at least give us a diagnosis on her supposed shopaholic tendencies. That doesn’t seem too sensitive. It’s most certainly not strategic.

We’d also like to hear his thoughts on Grant Thornton being vindicated in the Overstock.com circus. Patrick Bryne said some pretty nasty things about Steve’s beloved firm. This is the perfect opportunity for Steve-o to throw it in Patsy’s face via an all-out blog-off. Does he take it? So far, no. Sensitive? Absolutely not. This is justice. Strategic? Not really. Chip must get enough satisfaction knowing that the firm clear of the whole thing and doesn’t see the need for gloating. We’ve got two words for that: MISSED. OPPORTUNITY.

Because of this new cautious approach, we don’t have any parties or white whales to share this week but SC did mention that he got a little face time with SEC Chief Accountant James Kroeker. And don’t think that just anyone was invited to this little sit-down, “I was honored to be included in this very small group, which also included the CEOs of two large competitors.”

Well! We’re assuming Chip is referring to two B-I-G-F-O-U-R competitors and only since only two of them were there, this is pretty H-U-G-E opportunity for Steve. SC won’t turn down a little glad-handing with the Chief Accountant, no sir. Unfortch, he didn’t really get into what was said at the meeting but we’re sure it was a stimulating convo: Olympic fever. St. Val’s gifts for the wives. Maybe some talk about the nonexistent SEC roadmap on IFRS? Here’s to hoping that he’ll open up more this week.

Accounting News Roundup: Earnings Management and ‘Quadrophobia’; Deloitte vs. PwC on Loan Losses; Joe Francis’ Tax Lien Dropped | 02.15.10

Happy President’s Day! As we mentioned on Friday, we’ll keep you company throughout the day but it will be a little lighter schedule than normal. Most of you are suffering from a Valentine’s Day/Chinese New Year/Olympic Fever hangover anyway.

• For Some Firms, a Case of ‘Quadrophobia’ [WSJ]
Shout if you’ve heard this before: a study profiled by the Journal states that “many companies tweak quarterly earnings to meet investor expectations, and the “companies that adjust most often are more likely to restate earnings or be charged with accounting violations.”

So here’s another study on restatements and the companies that you . BFD right? Earnings management is rampant. What makes this particular study unique is the authors looked at the frequency of companies rounding their numbers up to meet expectations and discovered that the number 4 appears less frequently in general and especially in the earnings of companies that restate their financial statements. Naturally, they call it “quadrophobia”:

When they ran the earnings-per-share numbers down to a 10th of a cent, they found that the number “4” appeared less often in the 10ths place than any other digit, and significantly less often than would be expected by chance…

In theory, each digit should appear in the 10ths place 10% of the time. After reviewing nearly 489,000 quarterly results for 22,000 companies from 1980 to 2006, however, the authors found that “4” appeared in the 10ths place only 8.5% of the time. Both “2” and “3” also are underrepresented in the 10ths place; all other digits show up more frequently than expected by chance…

In their most intriguing finding, the authors found that companies that later restate earnings or are charged with accounting violations report significantly fewer 4s. The pattern “appears to be a leading indicator of a company that’s going to have an accounting issue,” Mr. Grundfest said.

So it’s safe to say that you can add Quadrophobic to Patrick Byrne’s list of potential ailments.

• Deloitte chief reignites accounting debate [FT]
Deloitte CEO Jim Quigley told the Financial Times that banks should “account for losses in two radically different ways to meet the opposing demands of politicians and accountants.” We’re not crazy about trying to please everyone but Quigs might have a good point here.

This would require banks to report two separate line items on their income statements, one for “incurred losses” and one for “expected losses”. Incurred losses report loan losses as they occur while “expected losses” would require banks to calculate an estimated loss provision over the lives of the loans.

PwC hates this idea saying it would ‘muddy the waters’. Richard Murphy thinks PwC is still living in fantasy land, “PWC is arguing against is anti-cyclical provisioning to ensure capital retention. To put it anothjer [sic] way, PWC wants pro-cyclical accounting that encoruages recklessness.”

Since the waters are already pretty f—ing muddy we’re not sure that it would do much harm. Users of financial statements already have a mind-numbing amount of information to dig through, one additional piece of information — a crucial piece in the case of bank financial statements, we might add — shouldn’t cause too much headache.

Joe Francis Off the Hook for $33 Million Tax Bill [TMZ]
Joe Francis’ IRS troubles seem to have magically disappeared, as TMZ reports that the IRS has dropped its $30+ million lien against the Douche of the Decade.

That eliminates one possible motive for the IRS shotgun shopping spree.

Comment of the Day | 02.12.10

We’ll dispense with quote of the day today in favor of the words from awwyea.

This is type of comment you should be striving for my friends.

We’ll be on a light posting schedule for the holiday on Monday. Have a great weekend and try to see your sweetheart on Sunday rather than sexting them (especially the PwC peeps).

Texas Stripper Tax Will Survive One More Valentine’s Day

If you’re a resident of the Lone Star State and you happen to frequent the peelers, you’re probably familiar with the $5 charge that you pay to enjoy a little bit of entertainment.

Well good news! The Texas Supreme Court has agreed to hear the case and determine if that $5 violates the First Amendment right to free expression and maybe this travesty can be put to bed once and for all.


The Texas Court of Appeals ruled the law was discriminatory against establishments that served alcohol since as Kay Bell explained then, “a play involving nudity did not trigger the tax…that meant that, had the law stood, the touring company of…Hair could have come to Texas.”

If you simply wanted to go to Treasures in Houston and have a beer and appreciate some artistic impression to Bon Jovi, Skid Row, Def Leppard, etc. then the tax applied. The $12 million that the state collected while the law was in effect is still being held in an account while they sort this out. What’s not clear is if that money will be returned to the patrons or simply given to employees of the clubs where the money was going to end up anyway.

Texas stripper ‘pole tax’ to get review [Don’t Mess With Taxes]