Category: ANR

Accounting News Roundup: Finance Bill Passes Senate, Reconciliation with House Next; Dubai World Reaches Deal with Majority of Creditors; ParenteBeard Announces Emerging Growth Business Practice | 05.21.10

Senate Passes Finance Bill [WSJ]
All this fun Wall St. has been having – drawing populist rage, testifying before Congress – will be ending soon, sayeth Majority Leader Harry Reid (D-NV), “When this bill becomes law, the joyride on Wall Street will come to a screeching halt.” The Senate bill still has to be reconciled in with the House version before being sent to the President; the goal is to have the combined bill completed by the end of June.

Dubai creditors agree $14.4bn deal [Accountancy Age]
Deloitte’s restructuring magician, Aidan Burkett, has pulled a rabbit out of his hat for Dubai World. DW has come to an agreement with 60% of its creditors, that will see the conglomerate repay $14.4 billion, in two tranches, over thirteen years.


Opportunities Abound in Tax and Accounting [FINS]
As the economy recovers, the accounting firms have more opportunities in the tax and advisory areas while in the governmental world, the Federal Reserve, FBI and FDIC are looking for accounting professionals. Options are good.

John Burton, a Columbia Dean, Dies at 77 [NYT]
Mr Burton was the first chief accountant of the SEC where he “stiffened the requirements for financial reporting by companies and lobbied accounting firms to take greater responsibility for the accuracy and clarity of the financial records under their review.”

And regarding the accountant’s “undervalued” role in society (largely unchanged today), Mr Burton wrote that accountants had only themselves to blame:

Mr. Burton wrote an essay for The New York Times in which he argued that, yes, accountants were undervalued in society, but that in many ways they were themselves to blame for a lack of creativity and for not seizing opportunities to influence business trends and political decisions.

“Accountants are not primarily record keepers and checkers,” he wrote in the essay, titled “Where Are the Angry Young C.P.A.’s?,” “but measurers of economic and social phenomena whose measurements can significantly influence the allocation decisions of our society.”

ParenteBeard Launches Emerging Growth Business Services Practice [ParenteBeard PR]
Mid Atlantic firm ParenteBeard’s new Emerging Growth Business Services Practice will serve clients in various growth stages utilizing the firm’s resources in “audit and accounting, small business, tax, international tax, SEC and business advisory [services].”

Accounting News Roundup: Strange Letter Disrupts Ernst & Young’s Iraq Plans; Allen Stanford Is the Worst; Debunking a Tax Preparer Regs Conspiracy Theorist; Medifast Gets the Bird | 05.20.10

Mysterious letter rattles E&Y’s Iraq ambitions [Accountancy Age]
Ernst & Young has been trying to get its audit on in Iraq shortly after Saddam Hussein’s party ended in 2004. The firm has been providing services there, however not yet been approved to perform auditing services. E&Y has been claiming that it was making headway, “on the verge of obtaining an accounting license” but now a letter from somewhere within the dense Iraqi bureaucracy seems to have delayed those plans.

It came as a shock when the firm learned of a letter sent to the Iraqi Supreme Court, the Central Bank of Iraq, the Commission of Integritygistrar and the Iraqi Banks Union, among other senior institutions, from the Iraq Union of Accountants and Auditors, which claimed the firm had been banned.

“It has been decided to forbid the accreditation of any financial statements audited by Ernst & Young (E&Y) company and forbid its operations in accountancy and auditing for governmental and private sectors in Iraq,” the letter stated.

The letter, in Arabic and signed by the Union Secretary Dr Rafed Obaid Al Nawwas, said the union reserved the right to go to “legal authorities to stop non-Iraqis from conducting audit and accountancy in Iraq”.

So in case you missed it, E&Y did not actually receive this purported letter but heard of it second-hand and then responded that the Iraq Union of Accountants and Auditors has no authority on the matter, since it’s just an “association of Iraqi accountants.” So it sounds like the AICPA of Iraq basically tried to tell the Iraqi version of the SEC, PCAOB, et al. that E&Y was not fit to be in country (if you’ve got another idea, by all means).

Iraq’s chief accounting regulator claims to not knowing about the letter and that E&Y is “just about to obtain its license” so this may be a nuisance more than anything else.

How Stanford is worse than Madoff [Fortune]
Mostly because CDs are the basic financial instrument that is usually held by little old ladies and other common folk. Not Kevin Bacon.

Unenrolled Tax Preparer: Preparer Regulation is a CPA Plot to Put Me Out of Business [Tax Lawyer’s Blog]
Naturally, there are some unlicensed tax preparers that are taking the IRS’ proposed regulations a little personally. Peter Pappas at TLB tells us about one unlicensed preparer who did some bellyaching to the Service. This sage of taxes challenges anyone to question his expertise:

1. “I prepare my returns accurately and would challenge anyone to find errors.“

2. “I have seen numerous returns prepared by CPAs and other similar preparers that were incorrect. [the man strives for perfection]”

3. “I am willing to take some courses or some certification, but to become an enrolled agent or CPA would cause an undo burden on my business. [i.e. require me to work more than 8 hours a day]”

And that’s just a sampling. Mr Pappas kindly debunks all of these (and more):

1. “A self-serving declaration by an unenrolled tax preparer that the returns he prepares are 100% accurate is about as valuable as an NBA player announcing that nobody can guard him.”

2. “This is utterly irrelevant and, if anything, an argument for more regulation, not less…[This] is dumber than texting while driving.”

3. “Becoming an enrolled [preparer] would force Mr. Jamieson to make expenditures of time and money he does not wish to make, therefore, because he is not prepared to make those sacrifices he believes that people who have made them should get no benefit from it whatsoever.”

Barry Minkow Gives Medifast the Middle Finger [White Collar Fraud]
At this point we’re assuming it’s only the figurative bird, by way of a report that states that Medifast’s business model is effectively a multi-level marketing scheme.

Accounting News Roundup: FASB, IASB May Be Overachieving on Convergence; PwC Wants Your Fat; Who’s Betting on Legal Internet Gambling? | 05.19.10

FEI Implores FASB, IASB to Slow Down [Compliance Week]
Financial Executives International is concerned that the FASB and IASB have gotten a little too ambitious in their convergence efforts and has written a letter to the Boards’ respective Chairmen that basically says, “Easy, tiger.”

Everyone knows that those knowitalls at the G-20 were insisting the accounting rule mavens to make convergence happen by next summer but FEI is trying to take pragmatic approach to this:

Arnold Hanish, chairman of FEI’s Committee on Corporate Reporting, said in his letter to the two boards the group is concerned about the “unprecedented volume as well as the complexity of proposed standards” that the two boards are developing. The committee fears the vast scope and aggressive timeline for the proposals will not allow adequate analysis of how the rules will work, which will lead to implementation problems and amendments further down the line.

In other words, this isn’t quantum mechanics, but it’s not Fisher Price either. Mr Hanish did his best to remind Bob Herz and Sir David Tweedie just how overambitious this little project is:

Our member companies are extremely concerned with the 10+ Exposure Drafts (EDs) that are in final stages and will be released for public comment through the third quarter of 2010. During any single period in time in its 38-year history, the FASB has had no more than 3 or 4 significant EDs out for public comment.

FEI doesn’t seem convinced that this unprecedented overachieving by Herz and Tweeds is going to result in the “one set of high quality standards.” They would prefer that hte Boards get this right the first time so they don’t have to slap the proverbial duct tape all over the efforts later.

Cabbies, Accountants Look to Chip-Fat Fuel on Cost, Environment [Bloomberg]
PricewaterhouseCoopers’ London office is trying to do its best for the environment by using local chip-fat converted into biodiesel to supplement its energy needs:

PwC is seeking local sources for 45,000 liters of biodiesel to meet one quarter of its monthly office fuel needs, said Jon Barnes, head of building and facilities services at the firm.

“I’m trying to locally source used chip fat from restaurants,” he said. “It’s a pretty pointless exercise of using biofuel if it’s been all round the world on a ship.”

Sounds like a bang-up idea but P. Dubs is always looking for an angle, “Having a renewable source for some of PwC’s office’s energy needs could help the company sell its services to clients wanting to do the same.”

House Holds Hearing Today on Tax and Internet Gambling [TaxProf Blog]
The House Ways & Means Committee is holding a hearing today to kick around the possibility of legalizing Internet gambling here in the US of A (and taxing it, of course). It kicks off at 9:30 am ET and with any luck, you’ll be legally losing your mortgage payments for the 2010 football season.

Accounting News Roundup: Bidz.com’s Financial Reporting Could Have Some Issues; Tax Planning Stays One Step Ahead Financial Reform; Accountant Denied Bail in Terror Case | 05.18.10

Can We Trust Bidz.com’s Financial Reporting? [White Collar Fraud]
We won’t tell you what to think but you should know that Bidz reported “material weaknesses in internal control over financial reporting” specifically those controls over “management oversight and anti-fraud controls specifically in processing of financial transactions, vendor review and payment processing,” in its most recent 10-K and 10-Q As an investor in Bidz, this should make you queasy. Unless, of course, you’re not concerned with such matters.


Sam Antar probably doesn’t care either way but he does put something out there, “Bidz.com cannot effectively prevent anyone from robbing the company blind and cannot prevent material errors in paying its vendors. Yet, the company wants you to believe that its financial reports contain no material errors and comply with GAAP.” But if you’re not sketched out by such things, then by all means, invest away.

But wait, in case that doesn’t earn your skepticism, the SEC began its investigation last year after Sam pointed out inventory irregularities at the company. Shortly thereafter, the Commission expanded its investigation into “the Company’s co-op marketing contributions and minimum gross profit guarantees.” If that wasn’t enough, the company’s auditors, Stonefield Josephson, were cited by the PCAOB for “significant deficiencies in a smaller sample of one of four audits reviewed.” So, again, if you can get over all that, this is probably a fine company to have your money invested in.

Bobbing as the Taxman Weaves [DealBook]
As Congress continues to dispel its wisdom on financial reform, it’s has become the natural order of things for any regulation to be circumvented prior to the passage of any bill.

In the case of carried interest, an incentive paid to hedge and private equity fund managers out of gains on the funds’ investments, Congress would like to tax these incentives at the ordinary rate (soon to be 39.6%). Currently, carried interest is taxed at the capital gains rate of 15%. DealBook reports that, despite threats by House to penalize those who use creative tax strategies that later fail, the maneuvering has not slowed:

The House of Representatives, aware that some titans of finance were already charting a course around any proposed change to their tax status, included a special provision in its version of the new legislation levying a 40 percent penalty for executives who invoked a loophole to cut their tax bill but were later ruled to have been wrong in doing so.

Still, that hasn’t stopped them from trying.

One of the latest machinations being whispered about in the industry goes like this: Private equity executives would sell their “carried interest” to a third party and then use the cash they received to invest directly in the deal so that any increase in value would be a capital gain.

It’s not clear whether this will work or not but it sure seems like fun.

Accountant held without bail in NYC in terror case [AP]
Sabirhan Hasanoff, a former PwC Senior Manager, was denied bail yesterday for his role in an alleged conspiracy that supported al-Qaida. He pleaded not guilty to the charges against him.

Accounting News Roundup: KPMG Considering Credit Rating Business (Not Seriously Though); You Can Stop Worrying About SaaS Security; Brief Tax Stories Are Possible | 05.17.10

KPMG and PwC eye rating move [FT]
KPMG has casually kicked around the idea of getting into the rating agency business according to the FT who quotes John Griffith Jones, the firm’s UK Chair, as saying the firm was “‘passively considering it” and that “it is something that we talk about as a plausible thing to do. It is effectively something we would be proficient at doing.”

The FT also seems to think that the PwC is toying with the idea although it’s even more tepid than KPMG, “Richard Sexton, UK head of assurance at PwC, said it continually looked for areas to grow its business from its ‘core skills that include assurance, opinions and underpinning public trust.'”


And yes, the skeptics are duly noted, as Jones said, “We are aware that people think we have conflicts of interest already. It probably makes it impractical. But if the world wanted another strong ratings player, there you are. Maybe the debate could be started off.”

In other words, we’re just thinking out loud.

Can we please get over the security issue? [AccMan]
As we’ve been touching on SaaS recently, some of you may be wondering about the issue of security. This issue rightly irks Dennis Howlett, as he points out, “We’ve had online banking for years. We have numerous other online services such as GMail. Does anyone think twice about using those?”

Further, would a company that was providing SaaS – whether for accounting, CRM, or ERP, payroll whatevs – that was having security issues really have a business? “SaaS accounting HAS to be secure. Why? Almost all services currently on offer are on a pay as you go basis. If the provider screws up then they’re dead in the water. Why would a provider be stupid enough NOT to build enterprise grade (and better) security into their platform?”

Just make sure to do you due diligence before pulling the trigger on anything. And don’t just rely on a SAS 70.

Who Knew? There’s an IFRS News Widget for Mac Users [CPA Trendlines]
For anyone that needs up to the second IFRS news on their Mac. Download here.

Hemingway and Tax [TaxProf Blog]
If you can make a tax story out of six words then you’ve got other talents (besides taxes) that need to be explored. Tax Prof put out the call for some brief tax tales. A few submissions:

“Deduct it. Fight Later. Then Settle.”
“Let’s do a delayed three-way.”
“I work. I file. I pay.”

Swiss banker turned whistleblower ended up with a prison sentence [WaPo]
Whistleblower Bradley Birkenfeld handed UBS to the DOJ and all he got was a nice 40 month prison sentence out of it.

Accounting News Roundup: Adelphia’s Rigases Get Second Chance in Tax Fraud Case; Grant Thornton Purchases Avalion Consulting | 05.14.10

Adelphia’s Rigases Win New Hearing in Tax-Fraud Case [Bloomberg]
John and Timothy Rigas are both doing time for their convictions in the Adelphia fraud but the their conviction in New York doesn’t seem to have satisfied the Keystone State. The two mean have been indicted on several tax-related charges in PA. Despite the prosecutorial zealousness, the federal appeals court in Philly ruled that prosecutors must allow the Rigases to present evidence that they are getting the double jeopardy treatment, as the tax charges are directly related to their crimes at Adelphia.


FASB Codifies SEC Announcement on Foreign Currency [Compliance Week]
Occurrences in Venezuela are capable of affecting the FASB’s agenda as Compliance Week reports that this recent guidance, “focuses on foreign currency issues related to investments or operations in Venezuela.” So, if you’ve got clients or do business in Hugo Land, you should probably check out Accounting Standards Update No. 2010-19.

Sage: Paul Walker CEO’s successor [AccMan]
“Let’s be honest – Sage is in the crapper,” sayeth Dennis Howlett.

Grant Thornton LLP purchases assets of Dallas-based firm Avalion Consulting LLC [GT Press Release]
Grant Thornton’s purchase of the group, “comprises two partners; Avalion’s IT consulting staff; and its IT and governance, risk and compliance (GRC) intellectual property, including Avalion’s patented GRC software solution – ComplianceSet®.”

ComplianceSet is a SaaS solution that “serves as the technical foundation for a process-based approach” for governance, risk and compliance; SOx, internal audit, and enterprise risk management.

Accounting News Roundup: PwC Has an Iceland Problem; Chief Audit Execs as the Bad News Messengers; Would IFRS Result in More Shareholder Litigation? | 05.13.10

How Dangerous is the Two-Billion Dollar Suit Against PwC Over Iceland’s Glitnir Bank? The Answer is Blowin’ in the Wind [Re: Balance]
In terms of a European financial laughingstock, prior to Greece, there was Iceland. Glitnir Bank (or what’s left of it) is suing its former chairman, CEO, other directors, and PricewaterhouseCoopers for their implosion last year.

For PwC’s part, one might think that since the lawsuit is in a country no one really pays much attention to, that it’s a bit of a joke. Well, that would not be so:

PwC faces a real lawsuit (for the complaint, here), in a real court – Manhattan’s New York Supreme – brought on behalf of the bank’s creditors and advised by Steptoe & Johnson and Slaughter & May – real lawyers who know their billions from their millions. Nor, any more than any of the other Big Four accounting firms, does PwC have the resources to absorb a ten-figure litigation blow (here).

Prosecutors Ask if 8 Banks Duped Rating Agencies [NYT]
Goldman Sachs, Morgan Stanley, UBS, Citigroup, Credit Suisse, Deutsche Bank, Crédit Agricole and Merrill Lynch come on down!

When the CAE is the bearer of bad news – and gets shot in the process [Marks on Governance]
What’s that saying about messengers? Chief Audit Executives (“CAE”) are often bad news messengers and talk about a thankless job. As Norman Marks tells us about one person that shared with three tricky situations with past employers:

In each of these situations I firmly believed that something that the organization was doing was highly unethical and/or not in the best interest of the organization, placing it at risk. Two of the organizations actually admitted that what was being done was in direct violation of the organization’s policies and in one situation state employment laws. In one situation I had my exit meeting with HR, and in the other two organizations only with the CAE.

In case you’ve misremembered, whistleblowers usually have a rough go of it, as Norman states, “All CAEs recognize that this is a risk, and in my experience they all accept it with full knowledge that their career at their company may effectively end with the delivery of the bad news.”

GAAP’s Lawsuit Buffer [CFO]
Some might argue that U.S. GAAP has a very distinct advantage over a more principles-based accounting system – lower litigation risk.

Of course companies could document the hell out of their “principles-based” conclusions to mitigate this risk but shareholders would likely still question their cockamamie reasoning. Now a recent study entitled “Rules-Based Accounting Standards and Litigation” is suggesting “that companies that violate rules-based standards have a lower likelihood of getting sued than those that are accused of violating more-principles-based standards,” giving the pro-U.S. GAAP contingent more to stand on.

The authors did admit that it’s difficult to conclude that principles-based would absolutely, 100% lead to more litigation due to our “unique litigation system” and the fact that we live in a sue-happy paradise.

Accounting News Roundup: Why Did Power Integrations Fire Their CFO?; Spain Making ‘Sweeping Austerity Measures’; GM May Want GMAC Back | 05.12.10

Power Integrations fires chief financial officer [AP]
Not to worry Power Integrations investors, Bill Roeschlein’s firing “was not related to financial statements or regulatory issues,” according to the company. However, he is currently the “subject of a felony domestic assault criminal complaint filed in Missouri,” which he denies and naturally he will “defend himself vigorously.” Unfortunately, that might cut into the job search.

Spain joins euro zone austerity bandwagon [Reuters]
Spain has agreed to “sweeping austerity measures,” cutting civil service pay 5% and freezing it for 2011. The country will also cut approximately 13,000 public sector jobs.


Minority Owner Sues Cuban, Calls Mavericks ‘Insolvent’ [NYT]
Ross Perot, Jr. is suing SEC target Mark Cuban, accusing him of turning the Dallas Mavericks into a financial catastrophe. The Times reports, “Perot is seeking damages, the naming of a receiver to take over the team and the appointment of a forensic accountant to investigate its finances. Perot said that Cuban’s actions had diminished the value of his investment in the team and violated his and other minority owners’ rights.”

Cuban, as you might expect, isn’t impressed with Charts Boy, Jr.’s loserness. He wrote in an email to the Dallas Morning News, “There is no risk of insolvency. Everyone always has been and will be paid on time. Being in business with Ross Perot is one of the worst experiences of my business life. He could care less about Mavs fans. He could care less about winning.”

Failed Bomber’s Resume Fail [FINS]
Faisal Shazad’s resumé sucks.

Is G.M. Looking to Buy Back GMAC? [AP]
Sources say that GM is interested in buying back GMAC (now known as Ally Financial) “so they can offer more competitive lease and loan deals.” The U.S. Government currently owns 56% of GMAC and 61% of GM, who plans to announce its first quarter earnings next week.

Accounting News Roundup: In Defense of Sherrod Brown; Former H&R Block CFO Gets the Parachute; Intuit Snatches Up Medfusion for $91 Mil | 05.11.10

Sen. Sherrod Brown Prods SEC/FASB to Fix Accounting Standards [The Summa]
This is Professor Albrecht’s take on Senator Brown’s amendment SA 3853 to the S. 3217: Restoring American Financial Stability Act of 2010. The Professor is less concerned about this particular attempt at financial accounting legislation, reasoning that the SEC and the FASB have had plenty of opportunities to fix these issues (e.g. repurchase accounting) and have passed them up.

Given the severity of the problems, and the inability of today’s standard setters to gird their loins and solve the problems, is it appropriate for Congress to pass a law directing the SEC and its standard setter to produce a desired outcome? Absolutely. Accounting standard setting is an inherently political process, as I explained in my popular essay, “Economic Consequences and the Political Nature of Accounting Standard Setting.” Because the SEC has passed on its legislative charge to establish accounting standards that adjudicate between competing economic interests, and because the private standard setters follow their own political agendas when preparing accounting standards, it behooves Congress to step in when things get too far out of whack with national priorities. Such is the case here.

In other words, s— or get off the pot, FASB and SEC. The argument is a fine one, however, if legislation of accounting has to force the FASB’s into action, where does it end? When FAS 157 was being decried as the cause of all our problems, Barney Frank called in Bob Herz, scared the living bejeesus out of him, and got the result he wanted. Is that preferable to this situation? That depends. At the very least, the Sherrod Brown method susceptible to the influences of others while the B. Frank method skips the voting and signing stuff altogether (which has proven tricky in the past).

Former H&R Block CFO gets $620,000 cash in severance [KCBJ]
Becky Shulman (no relation to the Commish, as far as we can tell) is getting $620k for walking away from H&RB along with automatic vesting of 148,725 outstanding stock options. There’s no indication that she is eligible for lifetime complimentary tax prep service.

Intuit to buy Medfusion in $91M deal [SV/SJ Business Journal]
Intuit, owner of QuickBooks, Mint.com, Quicken, etc. has now added Medfusion to its stable, expanding its SaaS holdings. The deal is scheduled to close this July, the 4th Quarter of the company’s fiscal year. CEO Brad Smith, from the press release:

“This transaction expands our software-as-a-service offerings with a solution currently used by more than 30,000 healthcare providers, the vast majority of whom are essentially small businesses. The combination of Medfusion’s industry-leading patient-provider communication solutions and Intuit’s expertise in creating innovative solutions that improve the financial lives of small businesses and consumers, will help us create new solutions that make the clinical, administrative and financial side of healthcare easier for everyone.”

(UPDATE) Accounting News Roundup: Europe’s $1 Trillion Deal; PwC Gets Some Action in Dubai; The Longest Auditor-Client Relationships | 05.10.10

EU Crafts $962 Billion Show of Force to Halt Euro Crisis [Bloomberg]
With the Euro under pressure, the European Central Bank has hatched a plan to “offer financial assistance worth as much as 750 billion euros ($962 billion) to countries under attack from speculators.” EU countries are chipping in 440 billion in loans, the EU’s budget throws in 60 billion, and 250 billion from the International Monetary Fund.

The funds will be available to those countries that experience a financial crisis similar to Greece. Portugal and Spain have debt to GDP ratios of 8.5% and 9.8% respectively, exceeding the EU’s mandated limit of 3%. package approved last week, receiving 110 billion euros “after agreeing to unprecedented austerity measures,” triggering riots in the country.


Dubai Holding Hires Debt Advisers [WSJ]
Dubai Holding Commercial Operations Group, a part of Dubai Holding (not to be confused with fellow Dubai conglomerate Dubai World) has hired PricewaterhouseCoopers to help them with a teenie debt restructuring project. DH’s debt issues come about after Dubai World is still working to restructure the $14 billion in outstanding debt that it has with its creditors after a slight panic late last year.

UPDATE: KPMG and Deloitte are getting in on the fun as well, as the Financial Times reports that they have been engaged to advise Dubai Group and Dubai International Capital, respectively.

You Complete My Audit [CFO]
Had your auditor for awhile? If you want to crack the top 100 of longest auditor-client relationship, you’d have to be putting up with the same firm for over 50 years. According to the CFO’s analysis of Audit Analytics data, the longest auditor-client relationship belongs to Deloitte and Proctor & Gamble who have been together since 1890. PricewaterhouseCoopers’ longest relationship is with Goodyear Tire & Rubber, starting in 1898; Ernst & Young with Manulife Financial, 1905; KPMG and General Electric go back to 1909.

Of the 100 companies that have stuck with their auditors the longest, 97 of those companies were with Big 4 firms:
• PricewaterhouseCoopers – 34
• E&Y – 25
• Deloitte – 24
• KPMG – 14

Straight Talk about Brutality of White Collar Crime from a Convicted Felon [White Collar Fraud]
GC friend and forensic sleuth Sam Antar recently had some a two part interview produced that from his recent speaking presentations at Stanford Law and Business Schools. Part one is below and you can see part two over at WCF.

Accounting News Roundup: Times Square Gets Back to the Grind After Bomb Scare; Down with the Corporate Income Tax; The Politics of Spending | 05.07.10

Times Square Goes Back to Work After Bomb Scare [FINS]
FINS checked in with several companies who have locations in the Times Square area to see if things are back to normal after last weekend’s failed bombing. Most companies are officially mum on the issue including our favorite TS resident, Ernst & Young, who was quoted as to have, “reached out [to their employees] on an informal basis.”

And by “informal” apparently that means “nothing” in some cases We checked with a couple of our own sources at E&Y and we were told that they had not received any communication at all. If there’s an email floating around out there, let us know but it sounds like any reassurance of safety was passed around on a post-it note.


A.I.G. Said to Dismiss Goldman [NYT]
Back in the game AIG! Thanks for the good times GS, Citigroup and Bank of America will take it from here. All it took was a little money for AIG to realize that they were in an abusive relationship.

Time to Junk the Corporate Tax [WSJ]
Michael Boskin argues for dumping the corporate income tax in an op-ed in yesterday’s Journal, citing several reasons that it sucks big time including double taxation, “Corporate income is taxed a second time at the personal level as dividends or those capital gains attributable to reinvestment of the retained earnings of the corporation. Between the new taxes in the health reform law and the expiration of the Bush tax cuts, these rates are soon set to explode.”

…And that stakeholders ultimately bear this cost, “the corporation is a legal entity; only people pay taxes. In a static economy with no international trade, the tax is likely borne by shareholders. The U.S. economy is neither static nor closed to trade, and taxes tend to be borne by the least mobile factor of production. Capital is much more mobile globally than labor, and the part of the corporate tax that is well above that of our lowest tax competitors will eventually be borne by workers.”

The Political Economy of Consumption: ‘Tis Better To Give, and Give, and Give [Tax Vox]
This sums up why America’s deficit problems and citizens personal debt problems will never be fixed:

Not to stereotype, but nations do have personalities. Italians eat. Russians drink. Americans spend. And when anything—or anyone—gets between us and our consumption, watch out.

Recessions make us grumpy in part because we can’t consume as much as we like. In the depths of the current downturn, the savings rate in the U.S. topped 5 percent. But retail sales have been rising since October, and the savings rate has fallen in half. I suspect Americans won’t really feel better until we drive our savings rate back to zero.

Accordingly, politicians have to pander to masses about “cutting taxes” and “reducing spending” when it’s very simple and popular to the do the former, while in reality it’s very difficult and unpopular to do the latter.

Accounting News Roundup: Will an International Audit Regulator Become a Reality?; GMAC Shopping for a CFO Candidate; FASB Sued for Antitrust Violations | 05.06.10

Audit chief welcomes debate on international regulator [Accountancy Age]
The idea of an international audit regulator is being kicked around in the EU with about as much seriousness as returning to the moon. That is, it’s absolutely something to be discussed but at this point nobody’s firing up the boosters just yet. IFRS has been proved to be, putting it lightly, a challenge but ever since the Lehman Brothers/E&Y fiasco, reform of the auditing business doesn’t seem far behind.

And while the idea is being entertained, the hurdles to an international regulator sound a little familiar:

Ian Powell, senior partner at PwC UK, said the establishment of an international regulator is “worthy of debate” but believes global consensus among nations may prove difficult.

“Most countries think their regulation is good and it is their system which should be applied – that is going to make it difficult to convince them to give up their system,” he said.

“If you talk to virtually any regulator in any country they do want to see more globalisation of regulation, but the big problem is there are certain political issues that are different in different countries.”

GMAC Said to Consider Ex-Citigroup Banker Yastine as Next CFO [Bloomberg Businessweek]
GMAC is hot on the trail for a new CFO after their last one bolted in March shortly after his TARP testimony. The ward of the state is said to be considering Barbara Yastine, who formerly was the CFO at both Credit Suisse’s and Citigroup’s investment banking groups.

FASB Defendant in Suit Alleging Antitrust Violations and Patent Misappropriation [Silicon Economics, Inc. Press Release]
Silicon Economics, Inc. is suing the FASB, alleging “antitrust violations and with willfully attempting to misappropriate patented technology,” according to the San Jose-based company’s press release.

The lawsuit concerns Silicon Economics’ EarningsPower Accounting™ (EPA™) – a patented method developed by the company to improve the accuracy, validity, and usefulness of financial statements. Silicon Economics recommended the merits of EPA to FASB in response to FASB’s request for public comment on the objectives of financial accounting (No. 1260-001, July 6, 2006). FASB claims that its website terms and conditions gave it ownership of Silicon Economics’ technology, even though such terms were not part of FASB’s invitation for public comment or otherwise disclosed to Silicon Economics.