Accounting News Roundup: ‘Special Skills in Accounting’ and Rent Expense Puzzles | 05.02.18

Stop Coddling the Super-Rich [NYT]
While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors. These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us spotted owls or some other endangered species. It’s nice to have friends in high places.

PwC admits JP Morgan audit failings [Accountancy Age]
PwC has admitted a formal complaint over its audit of JP Morgan Securities (JPMSL) for the seven years to 31 December 2008. Accountancy and Actuarial Disciplinary Board chief Cameron Scott welcomed the firm’s “responsible” position, saying: “Those that accept mistakes can learn lessons from them.” PwC failed to report that JPMSL’s Futures and Options business did not segregate client money, in contravention of rules set out by the Financial Services Authority.

Google to Acquire Motorola Mobility for $12.5 Billion [Bloomberg]
Motorola shareholders will get $40 a share in cash, the companies said in a statement today. That’s 63 percent more than Motorola Mobility’s closing price on the New York Stock Exchange on Aug. 12. Both boards have approved the deal. Google, whose Android software runs mobile phones made by Motorola Mobility and companies such as Samsung Electronics Co., gains patents it needs to compete against Apple Inc.’s iPhone.

SEC Reviews S&P Math, Possible Leak of Rating [Bloomberg]
The Securities and Exchange Commission is scrutinizing the method Standard & Poor’s used to cut the U.S.’s credit rating and whether the firm properly protected the confidential decision, according to a person with direct knowledge of the matter. SEC inspectors are examining S&P’s policies for conducting such analyses and whether those procedures were followed when the New York-based firm downgraded the U.S.’s credit rating Aug. 5, said the person, who declined to be identified because the inquiry isn’t public.

What do young professionals want? [CPA Success]
Other than money, of course.

Accountant allegedly stole $241K from law firm[NF]
For two-and-a-half years, an accountant was allegedly using a prominent law firm’s bank account she controlled to allegedly pay her personal bills and even write herself double paychecks. Sharon Lynne Samples, 48, was booked July 31 and charged with taking $241,722 from the law offices of Lipscomb, Johnson, Sleister, Dailey and Smith, LLP, according to a Cumming Police incident report.

Bernie Madoff ditched by his wife of 52 years as she seeks reconciliation with son [Daily Mail]
The wife of Bernard Madoff has severed ties with the disgraced Wall Street financier and not seen him for more than six months, it has been revealed. Ruth Madoff, who has been married to the convicted fraudster for 52 years, has shunned her high school sweetheart as she allegedly seeks reconciliation with her son.

Deloitte Appoints Eric Openshaw to Lead U.S. Technology, Media and Telecommunications Practice [Deloitte]
In his new role, Openshaw will drive industry strategy, research, service development and delivery to the organization’s core [Technology, Media and Telecommunications] clients. Openshaw succeeds Phil Asmundson, who continues to lead Deloitte’s U.S. Media & Entertainment and Telecommunications as well as the Global Telecommunications sectors.

KPMG appoints Michael Andrew as global chairman based in HK [Reuters]
Accounting giant KPMG has appointed Michael Andrew as global chairman to be based in Hong Kong, the firm said on Thursday. Andrew, a 27-year veteran at the accounting firm, was previously chairman of KPMG Asia Pacific and Australia, KPMG said in a statement. He replaces Tim Flynn, who will retire at the end of September.

Oil CEOs on the Hot Seat [WSJ]
With gas prices above $4 a gallon in much of the country, Democrats and Republicans are ether to cut tax credits for oil companies enjoying a banner profit year. Senate Democrats plan to grill the CEOs of Exxon Mobil Corp., Chevron Corp., ConocoPhillips and the U.S. units of BP PLC and Royal Dutch Shell PLC about the taxes they pay at a Finance Committee hearing on Thursday. Republicans, who have criticized the Obama administration for not acting faster to approve more offshore drilling, won passage of a House bill Wednesday that would require decisions to be made about offshore-drilling permits within 60 days.

Next Up, a Crackdown on Outside-Expert Firms [DealBook]
With the government securing a conviction against Raj Rajaratnam of the Galleon Group on Wednesday, federal prosecutors will shift their focus to expert networks — the intricate web of money managers, corporate executives and consultants at the center of another wave of insider trading cases.

The $8,000 Credit Cost Some Home Buyers Much More [WSJ]
If you missed out on the $8,000 tax credit for first-time homebuyers that expired just over a year ago, you might be better off for it. Numbers released Monday suggest typical recipients have lost twice as much to falling house prices as they gained from the incentive.

Democrats Embrace U.S. Tax Increase Versus Medicare Cut in Debt Talks [Bloomberg]
Democrats in Congress are gaining new confidence in promoting tax increases to reduce the national debt by presenting them as the alternative to Republicans’ proposed cuts in Medicare health-care coverage for the elderly. Democratic leaders are avoiding any call for tax increases on the middle class, a key voting bloc, and limiting their proposals to those that would affect wealthy individuals, oil and gas companies, and businesses accused of sending jobs overseas.

Google’s Mysterious Retroactive Charge [CFO Journal]
Google’s surprise $500 million charge against first-quarter earnings for an ongoing government investigation related to online advertising raises an interesting question: Why is Google applying the charge retroactively to the first quarter?

H&R Block Tax Services sues Arizona franchisee [KCBJ]
The division of H&R Block Inc. (NYSE: HRB) claims in U.S. District Court in Kansas City that Phoenix-based XL Wealth Management LLC signed an agreement on July 20, 2010, to open franchise locations in Arizona in preparation for the height of the 2011 tax season. But according to the lawsuit, that’s as far as things got in H&R Block’s relationship with XL Wealth Management. Despite H&R Block’s agreement to provide $550,000 in startup money and the company’s subsequent visits to Arizona to check on XL’s progress, the franchise locations never opened.

Obama’s Proposal to Simplify Tax Code Complicated by a Mix of Tax Breaks [Bloomberg]
President Barack Obama laid the groundwork for reducing the corporate tax rate and simplifying the tax code in his State of the Union address. He also erected a political hurdle to these efforts as they could lead to higher rates for millions of businesses. Obama said in the Jan. 25 speech that he wants to rid a “rigged” tax code of “loopholes” that allow some corporations to pay less than others, and would use the savings to reduce the top 35 percent corporate rate, one of the world’s highest. He also called for “millionaires to give up their tax break” after an extension of Bush-era tax cuts expires in 2013.

Blue-Ribbon Panel: Just Tweak GAAP for Now [CFO]
The blue-ribbon panel charged with addressing generally accepted accounting principles for private companies presented its recommendations to the Financial Accounting Foundation on Wednesday, in the form of a 70-page report the FAF is slated to consider at its next meeting in February. At its core, the report urges the FAF to create a separate board to modify existing GAAP for the needs of private for-profit companies, allowing for “differences, where warranted, in measurement, recognition, and presentation, and not just disclosure” between public and private companies. However, it stops short of asking for a radical departure from current norms. “At least in the near term, the system should focus on making exceptions and modifications to U.S. GAAP,” the report reads, “rather than move toward a separate, self-contained GAAP for private companies or a wholesale reorganization of GAAP.”

University of Texas at Dallas team takes top honors in AICPA competition [AW]
The students from the University of Texas took first place this past weekend in a national case competition sponsored by the AICPA that focused on enhancing sustainability practices at a business. For winning the AICPA Accounting Competition January 21, the team from Texas, which called itself Eco Consulting LLC, was awarded $10,000. Eco Consulting was comprised of students Dariel Dato-on, Diane Henry, Jinson Jose, and Jennifer Rauschuber. The students were advised by director of undergraduate accounting John Barden, CPA.

‘I’m like a mayor of a medium-sized city’: An interview with IRS Commissioner Douglas Shulman [The Federal Coach/WaPo]
Like Wasilla?

KPMG advisory recruiters talk hiring [Vault]
This explains the flurry of emails from experienced hire recruiters.

Stewart CEO Leaves To Be Missionary After Differences With Chairman [Dow Jones]
Now who’s doing God’s work?

Lawsuit alleges San Carlos bookkeeper embezzled $4.8 million [SJMN]
The guilt finally got to Georgia Engelhart, who spent the last 30 years stealing the money from Don and Carole Tanklage’s company. She admitted to the embezzlement in a letter to the couple.