Category: ANR

Jobless Claims in U.S. Fall to Lowest Level Since July 2008 [Bloomberg]
Initial U.S. jobless claims fell last week to the lowest level since July 2008, a sign that the labor market is improving heading into 2011. First-time filings for unemployment insurance decreased by 34,000 to 388,000 in the week ended Dec. 25, compared with the median forecast of 415,000 in a Bloomberg News survey, Labor Department figures showed today in Washington. There were no special factors behind the drop, an official at the agency said as the data were released.

Xzibit no longer enjoying a pimped lifestyle [Tax Watchdog]
Pimp My Ride getting cancelled was a serious blow.

Better information, better decision-making [WaPo]
A new comptroller general for Congress to ignore.

Glassdoor.com Reveals Top 25 Oddball Interview Questions of 2010 [PR Newswire]
From Deloitte, “How many ridges [are there] around a quarter?”

Don’t Try This, Governor Brantstad (or Governor Culver) [Tax Update Blog]
Looney excuse of the day for not paying taxes.

Tattoos, body piercings, and accounting firms [AW]
Will sleeves soon be allowed year-round at the Big 4?

Eight questions for planning to grow in 2011 [CPA Success]
Tom Hood. Doing his thing.

Looking into the Crystal Ball for Tax Policy in 2011 [Tax Foundation]
Because President Obama and the Congress extended the Bush era tax cuts, taxpayers will wake up on January 1st without the hangover of higher taxes. There will be no increase in tax rates, the marriage penalty relief will remain, the child credit will be the same, and the lower rates on dividends and capital gains will all be the same.

Going for the auditors [The Economist]
The Economist finally gets into the act, “One possible outcome is a settlement in which E&Y agrees to co-operate with the prosecutors in cases they may bring against Lehman’s former executives. If so, the fines and sanctions suffered by the auditing firm and its partners may be stiff but not ruinous. After all, no one wants to cause the fall of another big accounting firm.”

Groupon Seeks to Sell Shares [WSJ]
Flying high with cash and confidence after snubbing Google Inc.’s reported $6 billion purchase offer, daily deals company Groupon Inc. has set its sights on raising nearly $1 billion in private funds. The Chicago-based company has filed a certificate with the State of Delaware, where it is incorporated, seeking authorization to sell up to 30.1 million preferred shares of stock at $31.59 per share, or a little more than $950 million.

Digimarc changes auditor after clash [Portland Business Journal]
Grant Thornton fired for KPMG. Have we heard this story before?

PE Outlook: KPMG’s Hessing On Private Equity’s Changing Seasons [Private Equity Beat/WSJ]
Things are looking up!

Tax Reform Won’t Happen in 2011 (or 2012) [TaxVox]
And everyone seemed so serious about it pre-November.

Dodging Repatriation Tax Lets U.S. Companies Bring Home Cash [Bloomberg]
At the White House on Dec. 15, business executives asked President Obama for a tax holiday that would help them tap more than $1 trillion of offshore earnings, much of it sitting in island tax havens. The money — including hundreds of billions in profits that U.S. companies attribute to overseas subsidiaries to avoid taxes — is supposed to be taxed at up to 35 percent when it’s brought home, or “repatriated.” Executives including John T. Chambers of Cisco Systems Inc. say a tax break would return a flood of cash and boost the economy.

Ernst & Young’s Liability For Lehman Larger Than Claimed [Forbes]
Don’t forget the 10-Q’s in 2008! “EY’s claim of an arbitrary cutoff for responsibility for the audit after the 2007 10-K is intended to fool the casual reader of media reports. Lehman remained an EY client until the bankruptcy in September 2008. This period included two more 10-Qs.”

Woman in disbelief that pastor broke into her home [Salon]
The tithe in the offering plate obviously wasn’t cutting it.

GAO will be able to audit Fed [On the Money/The Hill]
Somebody has an opinion on this, “The GAO under the Dodd-Frank financial reform bill is now required to audit the Federal Reserve’s emergency lending program instituted in the wake of the financial crisis.”

H&R Block Shares Drop as U.S. Decision Scuttles HSBC Tax-Refund Loan Deal [Bloomberg]
H&R Block Inc. fell almost 10 percent after saying U.S. regulators blocked funding for its tax-refund loans and that alternative products mahe 2011 season. The Office of the Comptroller of the Currency told HSBC Holdings Plc not to make refund-anticipation loans, according to a statement H&R Block released after business hours on Dec. 24. The order scuttled a deal the two companies reached after H&R Block, the biggest U.S. tax preparer, sued to force HSBC to offer the loans under a contract that was set to expire in 2013.

“Texodus” Is Now A Thing According to IRS, NY Post [Gothamist]
All those New Yorkers are moving to…Texas?

Oscar Nomination Ballots Mailed Monday to 5,755 Academy Members [Hollywood Reporter]
FYI for any Academy voters – PwC will not be counting any ballots returned after 5 PT on January 14th, so you best not fuck with the protocols.

What Took California So Long to Release CPA Exam Scores? [JDA]
Di-rectly from the mouth of a hipster chick CPA exam maven, “If you’re a CPA exam candidate in California who sat the last testing window of 2010, you might still be waiting for your score. If this is your first exam, get used to it. If you’ve been around the block at least once, you are probably used to the waiting game but wondering what the hell is taking so long. Comments from the Peanut Gallery are that candidates have never had to wait this long for their scores, with the Board pretty quiet on what’s holding things up. Since they won’t tell you, I will.”

Stranded Travelers Face `Long’ Wait After Winter Storm [Bloomberg]
Passengers stranded when airlines canceled more than 6,000 flights amid a winter storm in the eastern U.S. may face lengthy waits to rebook their trips as carriers move aircraft and search for seats on crowded planes. “It’s a mess,” Jay Sorensen, president of consultant Ideaworks and a former airline marketing executive, said yesterday. “It takes a long time for this to sort out. With every day of cancellations, the problem just compounds itself.”

Long Finger Linked to Cancer Risk, Study Finds [WSJ]
Rejoice if your your pointer is longer than your ring finger.

Val Kilmer facing ‘Heat’ from feds [Tax Watchdog]
Ice Man is getting his tail ridden by the IRS.

Riverside to drop auditors after problems in Bell [AP/SFC]
Mayer Hoffman McCann’s association with Bell isn’t helping their business in California.

AMD Shifts GlobalFoundries Accounting Method [DJ]
For those of you interested in the technical stuff.

~ Attention GC faithful, please let it be known that we’ll be on an abbreviated publishing schedule this week, with roundups, periodic updates and the occasional ranty rant from Adrienne. We still want to hear from you this week, so if anything worthy of these pages crops up, such as last-minute inventory assignments, holiday party pictures or Andrew Cuomo showing up at 5 Times Square demanding a snowball fight, email us the details.

Khodorkovsky Found Guilty of Oil Theft, Lawyers Say [Bloomberg]
A Moscow judge found Mikhail Khodorkovsky, the jailed former head of Yukos Oil Co., guilty of embezzling crude, adding to a 2005 conviction, in a trial that has raised European concerns about the rule of law in Russia. Khodorkovsky and his former business partner Platon Lebedev, already serving eight-year sentences for fraud and tax evasion, may be sentenced this week or after Jan. 10 when Russia’s New Year holidays end, their lawyers said. The men face six more years in prison, the defense team has said.

Northeast airports, roads shut down by blizzard [MSNBC]
Commuters and long-distance travelers across the Northeast faced snow drifts, stranded and crashed vehicles, as well as hundreds of canceled flights on Monday as a blizzard put a brutal end to the Christmas holiday weekend. New York City was especially hard hit. All three international airports have been closed since Sunday, forcing the cancellation of some 2,000 flights. Stranded travelers got cots and blankets but some said they were not allowed to retrieve their checked luggage and had no extra clothing or toiletries.

Rapper Trick Daddy took ‘Thug Holiday’ from IRS [Tax Watchdog]
“I’m a Thug” probably won’t work as an excuse for owing $157k.

Taking It Back – Santa [The Summa]
A video where Santa saves the accounting world. If you really use your imagination, that is.

AIG Secures New Credit Lines to Replace Fed Funding [WSJ]
American International Group Inc., which is preparing to repay its aid from the U.S. government, said it has obtained $4.3 billion in new credit lines from commercial banks to replace its funding from the Federal Reserve Bank of New York. The government-controlled insurer said it has established $3 billion in new bank credit facilities, split between a 364-day line and a three-year facility, under which banks have agreed to make loans to AIG. In addition, AIG’s property and casualty insurance subsidiary, Chartis Inc., entered into a one-year, $1.3 billion letter of credit facility.

If You Are Buying Fake Goods In London, It’s a Real Ripoff, Says KPMG [Big Four Blog]
Just London?

Role of Auditors in Crisis Gets Look [WSJ]
Until this week when civil-fraud charges were brought against Ernst & Young LLP for its role in the collapse of Lehman Brothers Holdings Inc., auditors had largely side-stepped blame for the financial crisis.

Yet auditors had to pass judgment on some of the practices that caused the big losses that led to government bailouts. The case against Ernst highlights the roles accounting firms played and raises questions about whether reforms enacted after the last financial crisis went far enough.

Ernst & Young’s jujitsu defense [Colin Barr/Fortune]
The Ernst & Young statement suggests the firm will argue that it can’t be prosecuted under the Martin Act because Lehman, not E&Y, was the outfit actually producing the financial reports, and because it was Lehman, not E&Y, that was peddling billions of dollars of securities just months before its implosion. In this view, E&Y was just a gatekeeper hired to vouch for Lehman’s books, something it will claim it did well within the confines of the law. This strikes lawyers who are familiar with the law as an eminently reasonable approach, if not exactly a surefire recipe for success.

Crocs CFO resigns; shares slip [Reuters]
And the rubber shoes remain.

Monsanto names Courduroux to CFO post [Bloomberg]
And the bizarro food products remain.

Clifton Gunderson Acquires LA Forensic Practice [AT]
CG acquires Durkin Forensic with the deal effective January 1.

Paul Basso Joins PwC’s Risk Assurance Services Practice [PR Newswire]
PwC US today announced that Paul Basso has joined the firm as a partner in the Internal Audit Services practice. Basso joins PwC from Ernst & Young, where he was a principal leading the US Insurance Process and Controls practice. He will be based in Boston and will serve clients in the Northeast, which includes the firm’s offices in Boston, Hartford, Conn. and Albany, N.Y.

BDO signs firm partnership deal in Japan [Accountancy Age]
Toyo & Co and BDO’s existing firm Sanyu & Co will merge to form BDO Japan KK, the new member firm. Sanyu & Co was established in 1986 and joined BDO in 1996, while Toyo & Co was founded in 1971. The combined firm is expected to generate a fee income of €61m (£51.9m) for the year ending 2010.

Entrepreneurs Ask Santa for Loans, Lower Taxes [WSJ]
Loaded quote from the Journal, “Mark W. Smith, a founding partner of New York law firm Smith Valliere PLLC, has just one wish: lower taxes. ‘I lose half of my profits every year to taxes,’ he says. ‘They’re way too high and they’re hurting the growth of my business.’ “

Deutsche Punished On Bogus Shelters [WSJ]
Deutsche Bank AG agreed Tuesday to pay $553.6 million and admitted criminal wrongdoing to settle a long-running probe over fraudulent tax shelters that allowed clients to avoid paying billions of dollars in U.S. taxes.

Under a nonprosecution agreement with the U.S. Attorney’s office in Manhattan and the Internal Revenue Service, the German bank won’t be prosecuted for its participation in about 15 tax shelters involving more than 2,100 customers between 1996 and 2002, including shelters marketed by accounting firm KPMG LLP and defunct law firm Jenkens & Gilchrist PC.

Have audit rules been subtly rewritten? Three questions for the Big 4 [AccMan]
More questions after the revelation of the ‘secret talks’ in the UK.

Grant Thornton LLP elects one new member to Partnership Board [GT]
At Grant Thornton LLP’s Annual Partners Meeting in November, the partners and principals elected San Jose-based Jacqueline Akerblom, Audit partner, national managing partner of Women’s Initiatives and West Region North International Business Center director, to the Partnership Board.

Smith & Wesson Names Jeffrey D. Buchanan Chief Financial Officer [PR Newswire]
Smith & Wesson “a leader in the business of safety, security, protection, and sport,” names Jeffrey D. Buchanan as EVP, CFO and Treasurer (all positions require you to be strapped at all times).

Accounting Is a Sewer [JDA]
Sayeth perpetual accountant critic, Charlie Munger.

Christmas Gifts for that Special Tax Person [TaxProf Blog]
Three shopping days left.

CPAs in 49 states might meet experience requirement by working in industry [AW]
Michigan became the 49th state to accept industry experience for original CPA certification, leaving New Hampshire, Wyoming, and the U.S. Virgin Islands as jurisdictions that still do not accept industry experience.

Most state boards now accept experience gained by working in industry, government, and academia, as well as public accounting – a development that has received little attention in comparison with the movement to CPA mobility or changes in education requirements.

Audits of Bell were ‘rubber-stamp,’ state controller says [Los Angeles Times]
Seems to be going around.

Forensic Accounting and Al Qaeda [Freakonomics/NYT]
Getting to the bottom of the terrorist business.

New York Leads in Pursuit of Lehman [WSJ]
In 2001, the regulator of the nation’s biggest banks told its examiners to be on the lookout for firms whose regulatory filings made them look healthier than they really were. That followed guidelines issued in 1990 that said banks could face disciplinary action if their filings “have significant inaccuracies or are ‘window dressed.’ “

But as early as this week, it is the New York attorney general—not the Office of the Comptroller of the Currency, the bank regulator—who is expected to file a lawsuit alleging accounting firm Ernst & Young LLP allowed Wall Street broker Lehman Brothers Holdings to fake itsppear financially healthier.

Staff Audit Practice Alert No. 7 [PCAOB]
Knowing the PCAOB like we do, we’re expecting a major dump of auditor inspections and disciplinary orders on Friday around 3 pm.

Globalization, Regulation and Offshoring Push KPMG to Hire 250,000 over Five Years [FINS]
Julie Steinberg at FINS gets the lowdown from KPMG’s Global Head of People, Rachel Campbell.

SEC Fines Audit Firm, Bars Partner Over China Energy Fraud [Bloomberg]
The U.S. Securities and Exchange Commission fined a California audit firm and one of its partners $129,500 for “improper professional conduct” in connection with a Chinese energy company accused of accounting fraud.

Moore Stephens Wurth Frazer & Torbet LLP of Orange County “did not exercise professional skepticism and due professional care” in audits of China Energy Savings Technology Inc., the agency said in a statement today. Kerry Dean Yamagata, 53, the partner at Moore Stephens responsible for the audits, was barred from practicing as an independent accountant for at least two years, the SEC said.

Accounting Majors Score Lowest in Verbal and Writing Among All Grad Students [TaxProf Blog]
Get better, people.

Details of secret bank talks revealed [FT]
It gets more awkward for auditors in the UK.

Deloitte CEO: Better Career Preparation Starts in High School [Hire Education/WSJ]
Barry Salzberg gets academic in a blog post for the Journal.

BAE to be handed Tanzania fine on Tuesday [Reuters]
BAE Systems will be fined by a London court on Tuesday after pleading guilty to making accounting errors in Tanzania, bringing a six-year investigation into the company’s activities to an end.

The fine is expected to sign off a settlement agreed between Britain’s Serious Fraud Office (SFO) and BAE in February when the British defence firm entered into a plea bargain deal with the UK fraud watchdog.

How to Make Auditors More Accountable [Room for Debate/NYT]
For those of you looking to get all pointy-headed about this E&Y/Lehman debacle.

Groupon Hires Amazon Finance Executive Child as CFO to Help Raise Funding [Bloomberg]
Groupon Inc., owner of a daily coupon website with 40 million subscribers, named Jason Child chief financial officer as it considers raising more money to fund growth.

Child, 42, previously served as Amazon.com Inc.’s vice president of finance, overseeing its $14 billion international business, Groupon said today in a statement. He will relocate to Chicago, where Groupon is based.

Auditors Face Fraud Charge [WSJ]
New York prosecutors are poised to file civil fraud charges against Ernst & Young for its alleged role in the collapse of Lehman Brothers, saying the Big Four accounting firm stood by while the investment bank misled investors about its financial health, people familiar with the matter said.

State Attorney General Andrew Cuomo is close to filing the case, which would mark the first time a major accounting firm was targeted for its role in the financial crisis. The suit stems from transactions Lehman allegedly carried out to make its risk appear lower than it actually was.

Petters’ schemes drew in $36 billion, report says [MST]
This makes for lots of paper cuts, “PwC said it obtained financial data that would fill more than 560,000 bankers boxes. It said it found 87 accounts in 21 different banks that were part of the investment scheme.”

IRS Agent Accused of Stealing Tax Refunds [NBCNY]
Fern Stephens, a revenue officer at the Internal Revenue Service, is being charged by the U.S. Attorney’s office for stealing more than $160,000 in unclaimed tax funds from 12 taxpayers, according to federal court documents.

Former ECB Member Padoa-Schioppa Dies [WSJ]
Since July, Mr. Padoa-Schioppa chaired the board of trustees of the IFRS Foundation, which oversees the International Accounting Standards Board and helped promulgate the move toward a single set of accounting rules used worldwide. Sir David Tweedie, the IASB’s chairman, said in a statement Sunday that Mr. Padoa-Schioppa “possessed a rare combination of intellect and vision, delivered with a wry smile. He was a friend and colleague and will be missed by many, many people.”

Icelandic Bank Fails in $2 Billion Bid to Sue Former Execs, Auditor in New York [The American Lawyer]
A judge refused to hear Glitnir Banki’s suit against PwC and former execs.

Estate Tax Will Return Next Year, but Few Will Pay It [NYT]
Almost no one will have to worry about paying the estate tax under the tax legislation just [signed into law]. By one estimate, from Alan Rothschild, the chairman of the American Bar Association’s real property, trust and estate law section, less than one-half of 1 percent of people who die in 2011 will be hit by the estate tax. In contrast, 10.5 percent paid the estate tax in 1977.

Congress Passes Tax Deal [WSJ]
How funny would it be if Obama vetoed this thing, just to psyche everyone out? “Congress passed the most far-reaching tax bill in a decade late Thursday, averting across-the-board tax increases, enacting new breaks for individuals and businesses and laying a marker for how Washington might work in an era of divided government.”

PwC Charitable Foundation Commits $500K to Feeding America [PR Newswire]
‘Tis the season, “The donation marks the third year in a row that PwC and the PwC Foundation are giving more than $1 million during the holiday season.”

Christmas Gifts for that Special Tax Person [TaxProf Blog]
Seven shopping days left.

Weathering the Storm: The Top Five Finance Cities Through the Crisis [FINS]
There’s one on the East Coast!

HAPPY BIRTHDAY TO US! [Tax Update Blog]
Our friend Joe Kristan’s firm, Roth & Co., is celebrating 20 years in the business and has plenty of pictures that prove it.

Accountant arrested for theft of $1,000 [The Mercury]
He must have really wanted an iPad (or something).

Church accountant accused of embezzling more than $2 million [Bellingham Herald]
This is slightly better. And by “better” we mean, “the thief was not as stupid.”

Deloitte contributes the thing it knows best: skills [WBJ]
“Donation and typical volunteer hours are also important but don’t necessary make the greatest difference down the road,” says Emily Rothberg, Southeast community involvement leader for the company, whose stated strategy with nonprofits is to work “with their leadership and staff to help address some of their critical challenges.”

House Democrats Set Vote on Estate Tax, Tax-Cut Extension Bill for Today [Bloomberg]
The U.S. House is poised to vote today on a compromise between President Barack Obama and Republicans to extend Bush-era tax cuts, with a dispute over the federal estate tax looming as the final hurdle.

The House will vote on a proposal to amend the compromise plan with a higher estate tax sought by Democrats — and which Senate Republicans say they will refuse to accept. If that amendment fails, the House will vote on final approval of the bill passed by the Senate yesterday, 81-19.

A Question for Green Mountain Coffee Roasters [White Collar Fraud]
Specifically, Sam is asking CFO Francis Rathke to clear something up.

Mortgage-Bond Math Means Everyone Is a Winner in Duel Audit [Jonathan Weil/Bloomberg]
This feels more like a practical joke than a conspiracy, “There’s no reason to think MBIA Inc. and Bank of America Corp. are conspiring to make the Big Four accounting firm PricewaterhouseCoopers LLP look foolish. They couldn’t have done a better job, though, if they tried.

As the outside auditor for both companies, it’s PwC’s job to make sure each presents its financial results fairly. The strange part here is that MBIA and Bank of America have taken dueling accounting positions when it comes to some soured mortgage bonds that MBIA insured during the housing boom. PwC meanwhile is letting both companies’ approaches stand.”

Fixing the Broken Audit Model [The Summa]
Dave Albrecht has some ideas.

Schmalbeck: With Tax Vote, Congress Will Have Blood on its Hands [TaxProf Blog]
Unless Congress acts very quickly, there will be blood as the accidental estate tax “holiday” slouches toward expiration on December 31. Tax “holidays,” during which a tax is temporarily suspended, are questionable tax policy at best. But they are truly disastrous in the case of a tax that is triggered only by death. Estates that might be exposed to the tax can channel the incidence of the taxable event into the window of the tax holiday, but only through homicide or suicide (or the practical equivalents of “pulling the plug” on life support devices).

Altria Shuffles Executives, Names New Financial Chief [Dow Jones]
C-suite musical chairs at the smoke shop.

Have You Been Tempted to Cheat on Your Taxes? [You’re the Boss]
It’s a simple a question.

Poll on tax deal hints Obama still hasn’t sold public [WaPo]
“President Obama has aggressively sold the tax agreement he negotiated with congressional Republicans, arguing that it not only averts tax increases but will spur economic growth. So far, he hasn’t persuaded either congressional Democrats or the American people. The public, according to a Washington Post-ABC News poll, broadly supports the agreement. But when asked whether it will actually help the economy, 17 percent of people said it would hurt, while 43 percent said it would make no difference.”

Plus, there are too many football metaphors going around.

Despite Bipartisan Criticism, Tax-Reporting Mandate Lives On [Dow Jones]
A paperwork mandate on businesses that drew sharp criticism from lawmakers in both parties will remain on the books, at least until Congress takes another crack at repealing it next year. Part of the recently passed health-overhaul legislation, the provision requires businesses to report to the Internal Revenue Service payments to any vendor totaling more than $600 in a given year. It isn’t scheduled to take effect until 2012, so Congress still has time to modify or repeal it.

Soaring Hong Kong Rents Prompt Allianz, Accounting Firms to Shift Towers [Bloomberg]
PwC seems to be staying put while E&Y is pulling up the stakes.

Commuter tax benefit moving along as part of tax cuts extension bill [DMWT]
Under the Senate’s version of the tax cut bill, the pretax cap on employer-provided commuting benefits remains at $230, which is good since a Metrocard will likely cost that much in the next two years or so.

Christmas Gifts for that Special Tax Person [TaxProf Blog]
Especially any Schmidts.

AICPA: Revenue Recognition Proposal Impractical [JofA]
The AICPA’s Financial Reporting Executive Committee (FinREC) this week voiced extensive concerns with a joint FASB-IASB proposed standard on revenue recognition that is intended to apply across all industry sectors.

“We agree with the theoretical merit of many of the concepts included in the proposed standard,” FinREC said in its comment letter. “We also believe, however, that certain principles…may be neither practical nor operational for preparers and auditors to apply without undue cost.”

8,000 storm PwC for graduate appointments [Accountancy Age]
So much for overrated, “PwC has received up to 8,000 applications for graduate jobs and internships in 2011. A report on consultant-news.com reveals the firm has received an avalanche of applications from hopeful candidates who believe the job market is improving. PwC is recruiting for 1,600 roles, a record level for the firm.”

In Nevada prison O.J Simpson keeps tax break on South Florida home [Orlando Sentinel via TaxProf]
The Juice isn’t loose but he’s enjoying some good tax planning.