Author: Caleb Newquist

Founding editor, Going Concern.

Accounting News Roundup: Obama’s Budget Proposal; Davos Wraps Up; FINS’ Top Tax Blogs

• Obama Offers $3.8 Trillion Budget With Focus on Boosting Jobs [Bloomberg]
The $3.8 trillion budget calls for an additional $100 billion in stimulus spending and would increase the federal deficit to $1.6 trillion. “The $1.6 trillion deficit forecast for the current year represents 10.6 percent of the U.S. gross domestic product, making it the biggest by that measure since World War II, according to administration figures.”

The most impressive part is that the WH blew all the other forecasts out of the water, “The White House deficit projection exceeds other forecasts. The Congressional Budget Office has forecast this year’s shortfall at $1.35 trillion. The median of 39 analysts survey by Bloomberg News is for $1.37 trillion this year and $1.10 trillion next year.” Look! We’re going to dig the hole way deeper than anyone thinks!

As we mentioned last week, the spending freezes that will dig us out of said hole that were proposed last week would aim to cut that deficit to less than $1.3 trillion in 2011 and $828 billion in 2012; just in time for the election.


• Leaders in Davos Admit Drop in Trust [DealBook]
After all the chocolate, blondes, and awkward interviews, the other thing that is pretty obvious is that no one knows what the hell is going to happen, “the one certainty seemed to be continued uncertainty.” It’s nice to be confident about something.

Plus, everyone pretty much agrees that if you’ve got even a sliver of power in government or business, you are not to be trusted. Ordinarily this wouldn’t be a news flash, what with the near financial apocalypse and all but Tim Flynn said we were moving towards the green light of trust. Is this not the case? Did TF just figure, “I’m out of here, I’ll just say whatever I feel like.”? One can’t help but wonder if he’s shooting from the hip a little bit. Oh well; all in all, good times. Good Davos times. See you next year (right?)!

• The Top Five Tax Accounting Blogs [FINS]
For those of you that are inclined towards the tax side of the house, FINS presents its top five picks for wonky tax goodness that you should be reading if you’re not already. TaxProf Blog, The Tax Policy Blog and Don’t Mess with Taxes are three that we are intimately familiar and a couple we just discovered: Tax Watch and A Taxing Matter.

Big 4 at Davos: Jim Quigley is Long Dubai

He’s not really sure how much is debt (Jim, it’s a metric asston) is being restructured but Quigs believes that Dubai will come out of it a-okay.

Black holes aside, Quigs also wants to see global accounting standards which puts him firmly in the camp with the other half of Jim-squared and Knight of Accounting David Tweedie.

We’re not sure when this interview was done but could someone get JQ a cup of coffee or something? The guy seems a little stiff. Plus, no red light/green light of trust from Fox Business? They have got to start getting more creative over there.

The IRS Is Making “Thousands” of Visits to CPAs During Tax Season

Apparently the IRS is not one for timing. Earlier this month the Service announced that if you get paid to crank out 1040s, your life as you know it is more or less over. Well, at least a little more inconvenient. Okay, it’s hella-inconvenient.

Back when the new regulations were announced the Service let it be known that since it can’t get these new regulations implemented for 2010, it was still stepping up its efforts for getting all up in tax preparers’ shit.


The first step being to be to send 10,000 letters to paid preparers nationwide letting them know that they need to be on their A-game. The letters were intended for, “preparers…with large volumes of specific tax returns where the IRS typically sees frequent errors,” and that they should be “vigilant” for errors related to “Schedule C income and expenses, Schedule A deductions, the Earned Income Tax Credit and the First Time Homebuyer Credit.”

Well then. That should cover about EVERY TAX PREPARER IN THE COUNTRY.

Anyway, the IRS is following up the 10,000 “Dear Joe Kristan” letters with phone calls to set up sit-downs with “thousands” of preparers. According to William Stromsem, who wrote a piece over at CPA2Biz, these are “urgent” calls:

In at least one case, the IRS called a practitioner at home and spoke with the spouse by name, asking for a response within three hours and then calling back before that time was up. Another practitioner, who was unable to schedule a meeting during a busy time was threatened with having the refusal passed up the line to a supervisor.

The piece goes to tell us that the visits will be performed in the coming weeks and months and may last up to 3 hours. Does anyone see a problem with this yet?

These chats are designed to be friendly reminders of all the pitfalls out there in tax preparer land; not a compliance visit (but they will remind you of the penalties that can be assessed for any malfeasance). Regardless of the pleasant intentions, the timing has irked CPAs to no end and we can’t say that we blame them. Hope no one is expecting an apology. And one more thing, we’d like to know how the Commish’s CPA feels about this whole thing. Just for fun; he should get a letter.

IRS ‘10,000 Letters’ Program Angers CPAs [CPA2Biz]

Five Questions with Francine McKenna

Our contributor Francine McKenna takes her job very seriously. When we asked her to participate in our little exercise she insisted that all her answers be as long of some of her posts but we managed to explain to her that none of these questions would be related to the Big 4.

She backed down.

As you know, Francine is the and Founder and Managing Editor of Re: The Auditors and a furious Tweeter. Prior to launching RTA, Francine worked for more than twenty years working for in consulting and professional services here in the States and abroad.

• Why should you accountants read your blog?
Do they really have something more stimulating to do?


• If someone had to read just one post of yours which one would it be?
“Too Few To Fail Or Something More?” tells you everything you need to know about how the current regulatory regime works against the shareholder and for the perpetuation of the myth of the current audit firm business model. It’s my first post with original reporting, it’s where I coined the term “too few to fail,” and still one of my most popular.

• Who is your favorite blogger?
So many favorites now, but the guy that told me blogging could make me famous is Mr. Clublife, the guy who stands on the box at your favorite club in NYC.

• Best thing about blogging for accountants?
They are, for the most part, too introverted to complain or harass me too much.

• The biggest issue facing accountants/auditors today is…
They’ve, for the most part, forgotten that their client is the shareholder and that, as professionals, they owe their first professional duty to that client, not their firms, not their partners, not their colleagues and not the management of the companies they audit.

Tracking Charitable Donations? Now There’s a CPA-Developed App for That

In more non-iPad, Apple-related news, we learned earlier this week about iDonatedIt, an iPhone app developed by BMG CPAs in Lincoln, Nebraska. The app is designed to track all non-cash charitable contributions whether it be clothes, furniture or family members (okay maybe not the last one). This will allow you to track all of our donations to Goodwill, Salvation Army, etc. rather than receiving that crappy receipt they give you that has nothing on it.

Being interested in all things accountant-ish, we got in touch with BMG to find out how this bit of ingenuity came about.

We spoke with Todd Blome, a partner at BMG who came up with the idea and he told us that as soon as he got an iPhone he was thinking of ideas for apps that would be useful for his clients. Since Todd is the tech-savvy partner at BMG, (he heads up their IT consulting services) he started kicking around ideas right away and eventually landed on the idea for iDonatedIt.


Todd told us that the development was fairly simple and that there were only two test versions prior to releasing the app.

“So far we’ve 100% positive feedback on iDonatedIt,” Todd told us, “We’re definitely looking for suggestions for improvements or add-ons.” The one idea that has been floated to Todd was adding a tax savings tool to the app so that a user could determine how much tax savings would be created by the donations. “That will probably be in version two,” he told us.

iDonatedIt retails for $2.99 at the app store and as Todd noted, “a donation of one item pays for the app.” A version for the Droid is currently in the works as well.

Todd and the rest of of his team at BMG are kicking around a few more ideas for apps but he said they want to make sure iDonatedIt is working as good as possible before committing to another project. Check out the demonstration below and jump over the firm’s website or follow them on Twitter to give them your feedback.

Who Will Be the Next Chairman of KPMG?

Yesterday we told you the sad news that Tim Flynn will not be serving another term as Chairman of KPMG.

After taking the time to compose ourselves and realized that life will somehow go on, we had questions. Figuring you had some of your own, we’ll throw a few out there for some discussion. These will range from the obvious (i.e. headline) to the inane but they are all of equal importance:

• Why Tim? Why?

• Is the Davos trip the last hurrah and if so, what is doing to celebrate/reflect/mourn?

• If he’s not taking Tim Geithner’s job then what? Will T Fly defect to one of the other Big 4? Launch a blog? Ponzi scheme?

• How does Phil Mickelson feel about this and does this mean he will keep TF on the bag or is this an honor reserved only for the Chairman?

We may not have covered everything here so chime in with your questions or simply respond to those we’ve put out to the group. And please, if he happens to change his mind, notify us immediately.

Accounting News Roundup: IASB Chairman Won’t Converge at ‘All Costs’; Phony IRS Agent Racks Up $55k Hotel Bill; Stuy Town to Become “Trump Town”? | 01.29.10

• IASB plans no fair value changes for EU-chairman [Reuters]
Sir David Tweedie has put his foot down again, so listen up. The IASB is not going to bend over backwards for you, the EU, or the FASB when it comes to fair value, get it? The world is at stake here. You non-knights out there need to just BTFU and let the man do his job. Tweeds told reporters in Brazil that the EU can stick it, “‘We cannot always allow Europe to tell us what to do. This is global. We are the IASB, not the European accounting standard board'” Got it?

You too, FASB. SDT said that he won’t converge accounting standards at ‘all costs,’ because he knows not everybody likes to place nice and seems to be okay with that. The man has short-timer’s so he doesn’t really care what you do. Have a nice life, Bob Herz.


• Woman charged with posing as IRS agent [San Francisco Chronicle via The Tax Lawyer’s Blog]
Sheryl Lynn Vertoch had been staying at the Inn Marin Hotel in Novato, California for over seven years telling the staff there that she was an IRS agent. Among her many adventures working in fantasyland, were testifying in the Enron case and being only one of six IRS agents that could investigate large public companies.

This all sounded good enough for the staff at Inn Marin, until Ms. Vertoch couldn’t pay her bill starting in 2008. The story was the IRS was getting stingy and wasn’t going to pay her until her current investigation was over. The owner of the hotel — finally fed up with an apologetic IRS — phoned the cheapskates up to complain because this was an outrage to hang this hardworking federal employee out to dry.

The IRS blew Vertoch’s “cover” and she’s now been arrested for impersonating a federal employee and she’s got a $55,000 hotel bill to deal with.

• Trump says he’ll jump at StuyTown takeover [NYP]
The Post is reporting that Stuy Town may become Trump Town, although it’s not entirely clear where we’ll see the iconic Trump name on the equally iconic brick buildings. The Donald joins many other high profile investors interested in the property including Wilbur Ross and WinnCompanies. One thing is for sure, whoever comes out top in this thing will certainly have no trouble following the Tishman/BlackRock fiasco.

Koss VP Sue Sachdeva: Shopping Addict or Burgeoning Retail Queen?

It’s been a few days since we had read anything on embezzler of the year 2009, Sue Sachdeva. We figured the whole thing was on the fast track to getting resolved since her attorney started claiming that the woman has an addiction. Well today, we checked in over at Fraud Files Blog where Tracy Coenen has come up with a theory that blows the whole shop until you die argument out of the water

Since Sue had 461 different pairs of shoes that ranged from sizes 8 to 14 (!) and 34 fur coats, Tracy is thinking that S-squared didn’t have a shopping problem; she was simply working on achieving an entrepreneurial dream:

She couldn’t have worn that range of sizes, but that range would have been perfect for someone retailing the merchandise. I bet we’re going to hear soon that Sachdeva was selling this merchandise to domestic and overseas retailers at a fraction of their wholesale value.

It’s already a matter of record that SS was having garage sales at her desk, so Tracy’s logic makes sense. We’re now convinced Sue had bigger plans.

Obviously enamored with the idea of a Sachdeva Goodman’s, Suze may have gotten a little ahead of herself as Tracy notes, “[I]n late 2009 (which is fiscal 2010 for Koss) she got greedy and stole much more in a six month period than she ever had in one year.”

The indictment lists six wire transfers (total of nearly $3 mil) from Koss accounts directly to her personal AMEX accountant, so girl was definitely burning up the plastic. That’s not an addiction; that’s inventory. Besides, isn’t a shopping addiction a faux-addiction? The real tragedy here is that a dream was not reached and an accounting firm was fired. Neither makes us feel very good.

Tim Flynn Will Not Serve Another Term as Chairman of KPMG

Tim Geithner better be paying attention. This could be your successor.

As you may know, my five-year term as U.S. Chairman ends in June of this year. Late last week, I informed the Board and subsequently announced to the partners, that I have decided not to serve an additional three-year term as U.S. Chairman after my initial term ends this June, as permitted by the firm’s governance.

This decision was made after much thought and personal reflection. KPMG’s partnership agreement has a well-defined and time-tested set of protocols in place whereby the Board of Directors is expressly responsible for managing the succession process for Chairman. Over the next 60 days, the Board will execute that process, the planning for which began late last summer.


Our firm has an outstanding group of partners and an effective, seasoned leadership team that is focused on our partners and employees, our clients, and the marketplace.

You have my personal commitment that I and the entire leadership team will remain focused on these key priorities throughout the remainder of my Chairmanship.

Thanks for all you do every day for KPMG.

Chairman_Succession

Ernst & Young Shares the Glory of Its Fortune 100 Victory

Shockingly, many of you don’t get too excited where your firm falls on the F100BCTWF list. Well, in case you’ve forgotten, your firm cares. They care a lot and they want you to care too because dammit, this is important. Somebody over at E&Y got to thinking and decided that bribing you with pastries was the solution to get you Scrooges to appreciate the firm’s 12th year on the list aaannnd being the highest ranking accounting firm on this year’s list:

We’re guessing Jim Turley might be phoning someone in order to save him all the bearclaws, so you best get there early.