When accounting goes unaccounted for
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.
Okay people, after a crazy first round, we’re here to present round two of Going Concern March Madness: Coolest Accounting Firm. With all of the Big 4 sent home with their spreadsheets between their legs, the title is up for grabs, although it’s abundantly clear that Reznick Group isn’t taking this shit lightly (they did get their Indian office involved, after all).
With that setup, let’s check out the match-up href=”http://www.goingconcern.com/2011/03/going-concern-march-madness-the-coolest-accounting-firm-round-2/picture-8-11/” rel=”attachment wp-att-27437″>
As you can see, Grant Thornton is now the highest seed left making them the new favorite but judging by how things went in the last round, seeds are basically meaningless.
Voting will start tomorrow morning at 5 am PT tomorrow morning and will end at 11:59 pm PT (don’t ask, that’s just Vizu does) Friday night. Check back here tomorrow to start the voting but in the meantime, place your bets and discuss round 2 below. As always, check with your local bookmaker for actual odds.
UPDATE:
Since I have no plans to get up extra early, I’ve added the polls to the post but you won’t be able to starting voting until tomorrow morning. I realize that many of you will stay up all night and refresh until voting begins but I need my beauty sleep.
The comeback kids vs. the left coast kings (or queens).
Team purple vs. a murder of Crowes.
The most interesting accounting firm in the world (but the coolest?) takes on Arnold Rothstein’s firm…oh, wait…not really, that guy fixed baseball games.
Rounding out with Mickey G’s and BKD.
A reader – who is a partner at a Big 4 firm – sent this to me awhile ago and I dug it out this week:
Question for you. Why is it OK for audit committee members to be selected and paid by management? Why is it OK that they are paid in the stock of the Companies that they govern? Considering the fact that the SEC has such disdain for the slightest perception of a lack of independence on the part of the auditors that report “directly” to the Audit Committees, it is odd that the governing body can be owners of the company as well. [By the way, let’s be real, management hires the auditors. The audit committees just accept it.]
Time to jump in – These questions feel rhetorical but I’ll take a stab at answering them anyway. If you look at a brief history of audit committees, you’ll see that the idea goes back nearly as far as the Securities and Exchange Acts of ’33 and ’34, first being endorsed by the NYSE in 1939. The SEC first made the recommendation that public companies compose their audit committees of independent directors in 1972. That was followed by the NYSE’s requirement for audit committee members to be independent in 1977. What does all this mean? Basically, it appears that it’s okay that management selects and pays audit committee members because it’s always been done that way. Similarly, it’s okay to pay them in stock because companies have always issued shares to directors, regardless of their respective committees. As far as who “hires” the auditors, our source has a better frame of reference than I but this probably varies from company to company. While many companies have audit committees that have no problem throwing their weight around, there are others whose members probably couldn’t find cash on a balance sheet.
Anyway, our source has some ideas:
If the regulators want to create a TRUE independent structure, why not create an Audit Committee Oversight Board (or the ACOB), and pay these members in shares of a Mutual Fund that’s tied to the overall performance of the stock market? Audit Committee members should be overseen by the SEC – perhaps indirectly by this ACOB. Now – this would empower the Committees, empower the auditors even further, and empower the shareholders of Companies with the knowledge that the Audit Committees were truly independent of management. This would be a stunning show of real governance in corporate America. Wouldn’t this be a true step toward preventing further financial crashes in America? What do you and your readers think?
I like the progressive ideas presented but if there’s one thing I’ve learned from the massive amount of media I’ve consumed in the last 2+ years, it’s this – the ideal regulation and what it politically feasible are often miles apart and in the process of reconciling those differences, the final product is not at all what was intended. The SEC (who hasn’t exactly been on top of their game the last few years) is already fighting for every nickel and no amount of litigation releases will get representatives like Darrell Issa to back down from cutting their budget. Thus, a regulatory agency with shaky credibility has an uphill battle.
So would an Audit Committee Oversight Board, compensation changes and other reforms to the process be a “true step toward preventing further financial crashes”? Maybe. But as long as “fiscal responsibility” continues to be a political talking point, the SEC won’t have the ability to suggest reforms until we have another crisis and chances are, they’ll be the scapegoats…again.
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]