Category: ANR

Accounting News Roundup: Deloitte ‘Encyclopedia’ to Join IASB; South Carolina’s $60 Million Accounting Snafu; CFO Job Market No Longer ‘Totally Dead’ | 04.16.10

Deloitte’s Paul Pacter Appointed to IASB [Web CPA]
Paul “Financial Reporting Encyclopedia” Pacter will resign his part-time position at Deloitte to take a seat on the IASB. Since 2000, he has been on Deloitte’s IFRS leadership team and has worked as the Director for small and medium sized entities for the IASB.

Sir David Tweedie said in a statement that “Paul is a walking encyclopedia on global financial reporting. He served as the determined leader of the development of the IFRS for SMEs, is an expert in both IFRS and U.S. GAAP, and in his spare time has run one of the most popular financial reporting Web sites on the Internet. He will bring a global perspective and immense energy to the board.”


Nearly $60 million accounting error means state budget cut [Charleston Business Journal]
Relative to other states that shall remain nameless, South Carolina’s problems aren’t really a BFD but somehow $60 million being “erroneously…counted as part of the state’s general fund,” as opposed to being earmarked for specific appropriations is still not good.

As a result of this little booboo, $60 million in budget cuts must be found with less than three months until the end of the state’s fiscal year. Such a short time frame could presumably lead to some desperate slash and burn methods. And here we thought the subversive organization legislation would have been a huge revenue stream for the Palmetto State.

Is There a Pulse in the CFO Market? [CFO]
Apparently the CFO job market is no longer ‘totally dead’ as it was from December 2008 to October 2009 and since some are feeling ‘overworked and under appreciated’ (just like you!) there promises to be a bit of a CFO exodus.

Accounting News Roundup: The Psychology of Cheating on Your Taxes; The Silver Lining in Sarbanes-Oxley; Is It Time to Go Solo? | 04.15.10

Happy Tax Day! It was a breeze right? Hopefully you tax pros have wrapped everything up and the extensions are out the door so you can enjoy a relatively easy day. And if you’re in DC, don’t forget to get yourself a Blizzard.

Why we cheat on our taxes [MSNBC]
Sorry rich folks but it’s mostly your fault that people cheat on their taxes. Yes, that’s right. Once again, the wealthy need to explain themselves with their richy rich ways. Never mind that the complexity of the Internal Revenue Code that encourages the 1040 malfeasance, it’s the perception that the wealthy are all cheating on their taxes (that’s how they got rich after all) so the little guy needs to do whatever it takes to get his.

While the country’s federal tax code is considered progressive, some people feel that it grants the wealthy many loopholes — something that further perpetuates the resentment among those who believe the tax burden can sometimes fall unjustly on those who are least able to afford it.

“Many wealthy people earn income, such as capital gains, that is taxed at lower levels than regular income,” Callahan said. “So, in some cases, a wealthy guy sitting by his pool, living off his stock portfolio is paying a lower tax rate than the guy cleaning his pool. Tax evasion scams by the wealthy are so often revealed, and so there’s the perception that the rich cheat heavily on their taxes. There’s truth to that perception, which is what keeps it alive.”

While the attempt at the psychology behind cheating is a worthy exercise, the facts remain that the wealthy are paying more than their fair share of taxes. Or just ask them, they’ll tell you.

Something to Like about Sarbox [CFO Blog]
Forget Section 404. A less debatable benefit from SOx is Section 403 which “shortened the time between when officers and directors make a change in their stock holdings and when they report it through a Form 4 filing, from within 10 days at the end of the calendar month to just 2 business days.”

Harvard Professor Francois Brochet reviewed more than 50,000 filings from 1997 to 2006 and argues that, not only does Section 403 allow investors to react to insider trades more quickly (which prevents bigger drops in stock prices on suspected bad news, he argues), it allows smaller companies to trumpet their company’s prowess even if they’re not widely covered by analysts. Oh, and the cost is virtually nil compared to 404 compliance.

Hanging Your Own Shingle: Starting a CPA Business [FINS]
Now that today marks the end of another tax season/busy season is it time for you to move on or is it time for you to be the boss?

A recent survey of CFOs indicates that most companies are in no rush to hire and with layoffs coming and/or your post-busy season burn out raging, you’re probably weighing your options. FINS reports that “Roughly three-quarters of the country’s 44,000 tax businesses are one-person shops, according to the American Institute of Certified Public Accountants (AICPA). And almost half of tax accountants work in companies with fewer than 10 employees,” so there’s plenty of people already on their own. Plus, there’s no sign of the tax code getting any simpler, so more and more taxpayers will be needing a professional to help them.

Accounting News Roundup: Bank America Lands a CFO; FASB, IASB Can’t Guarantee Convergence; Maine to Tax Medical Marijuana | 04.14.10

Bank of America Names an Outsider as CFO [WSJ]
Charles Noski will be the new Bank of America CFO, effective May 11th. He most recently was the CFO at Northrup Grumman, which he left in 2005 and prior to that held the same position at AT&T. He has also served as a advisor to Blackstone Group and is currently a director at Morgan Stanley and Microsoft. It is reported that he will give up his director seat at competitor Morgan Stanley. Noski began his career at Haskins & Sells (now Deloitte) for seventeen years and was a partner.

This ends BofA’s quest to land a CFO after former finance bigwig Joe Price moved into a new role under new CEO Brain Moynihan back in January.


IASB says “no guarantee” of full US accounting convergence [Accountancy Age]
The FASB and IASB, try as they might, have announced that they simply cannot guarantee that they will pull off 100% unadulterated convergence. The two boards have struggled to get their cerebral minds together on a number of “important technical issues” and are holding out for the possibility that they may not resolve any of their remaining differences.

The two boards issued a statement which warned, “Although our recent experiences with joint meetings show that we have been able to resolve differences on several projects, there is no guarantee we will be able to resolve all, or any, of our differences on this project.” The two cite “different imperatives that pushed our development timetables out of alignment,” in the struggle for converging the two sets of rules. While the FASB and IASB are warning that accounting rule convergence may be impossible, the statement indicates that the two still aim to finalize their work by the mid-2011 deadline.

Medical pot users to pay sales tax [Bangor Daily News via Tax Policy Blog]
The Pine Tree State will taxing its medical green that is sold at state-sanctioned dispensaries. The Maine Revenue Service had argued that since marijuana is currently issued for medicinal purposes, that the it should be treated as a prescription drug and thus, not taxed. However, since a prescription isn’t necessary to obtain medical marijuana, Maine lawmakers disagreed and ultimately decided to administer a levy on the sale of state-issued grass.

Accounting News Roundup: More Dodgy Accounting from Lehman Brothers; Deloitte Announces $100 Million Investment in China; Less Than 100% of Tea Partiers Believe They are Overtaxed | 04.13.10

Lehman Channeled Risks Through ‘Alter Ego’ Firm [NYT]
That alter-ego firm is Hudson Capital and the Times reports that while HC “appeared to be an independent business, it was deeply entwined with Lehman,” citing a Board of Directors controlled by the bank, Lehman’s 25% ownership, and many former LEH employees working at HC. Hudson reportedly provided LEH with financing “while preventing ‘headline risk’,” but the relationship was designed specifically to maximize the utility of Hudson “without jeopardizing the off-balance sheet accounting treatment,” according to memo cited by the Times.


Deloitte To Spend More Money In China For Business Expansion [Dow Jones]
Deloitte is investing $100 million in China over the next three to five years, hiring 1,000 to 2,000 new employees per year, per Global CEO Jim Quigley and Deloitte China CEO Christopher Lu. This follows a five-year, $150 million investment by the firm announced in 2004.

Quigely told Dow Jones, “When I have made my investment decisions as the CEO of Deloitte, the market where we are investing the most is in China. We’ve now expanded. So another $100 million is coming this direction as we continue to want to grow our business here, and take advantage of the opportunities available to serve China companies and to serve companies outside of China who want to invest here.”

66% Say America Is Overtaxed [Rasmussen via TaxProf]
If you needed a poll that shows that Americans hate taxes in order to convince you, Rasumussen is all over it. 66% of people surveyed believe Amecians are overtaxed, as opposed to 25% who disagree. The issue is severely divided politically with 81% of Republicans believing they are overtaxed as opposed to Democrats who were split on the issue. 73% of those surveyed that did not affiliate with either party believe they are overtaxed while 96% of the Tea Party movement believe they are overtaxed.

Accounting News Roundup: IRS Criticized for Fewer Large Corporate Audits; PCAOB Has No Confidence in Auditors; New York State Looks Forward to UBS Windfall | 04.12.10

• IRS audits fewer corporate taxpayers: critic [Reuters]
According to a Syracuse University research group, Transactional Records Access Clearinghouse (“TRAC”), the IRS is doing fewer audits of large corporations, using the Service’s own data to report its conclusions. TRAC looked at “number of hours spent on cases that had been closed in any given year,” saying the the IRS has cut the audit hours of companies with $250 million+ in assets by a third.

Accounting News Roundup: Charlie Rangel Has a Primary Challenger; Does Your Salary Define You?; PCAOB Wants Auditors to Consider Big Weird Transactions | 04.08.10

• Rangel Challenged by a Historic Foe [WSJ]
Someone finally realized that Charlie Rangel’s constituents in New York’s 15th District have maybe had enough of Chuck and his “pay taxes as I wrote them, not as I pay them” ways. Rangs will be challenged in the primary by New York State Assemblyman Adam Clayton Powell IV, according to the Journal. Not only does Mr Powell have an upper hand in the ad campaign department but there’s a bit of history here.


Powell Number III, sire of IV, was defeated by ChaRang back in 1970 amid his own ethical trubs. ACP 4th Edition insisted to that this had nothing to do with sweet, sweet revenge, “It has nothing to do with revenge or anything like that. Anyone with that record in public service would be interested in higher office.”

It won’t be easy for ACP4 however. He was flicked away by Rangs in a primary challenge back in 1994 and was recently convicted of “driving while impaired,” which actually seems worse than hogging rent-controlled apartments, since that could result in, you know, someone getting killed.

• My Paycheck, My Self? [FINS]
Does your salary define you as a human being? Or, at the very least, does it feel that way? Master pay czar Ken Feinberg had to snoop around some people that pull down some hefty scratch and he found out that the human psyche can easily be affected by their pay stub.

• PCAOB Issues Staff Audit Practice Alert on Auditor Considerations of Significant Unusual Transactions [PCAOB]
Don’t worry about the plain old vanilla transactions auditors, the PCAOB needs you to be on the lookout for significant unusual transactions. What that entails, we don’t really know but we’ll assume that means any transaction, and the PCAOB means any transaction, that looks remotely out of the ordinary, has a funny name (that may or may not include a “105”), requires smokey-filled room approval etc., definitely give it a second look. Or a third.

Accounting News Roundup: ICAI Claims Big 4 Is ‘Bending Laws’; There Is No FASB, IRS Conspiracy; Aggressive IRS Blamed for More Americans Severing Ties | 04.06.10

• ‘Big four audit firms bending laws in India’ [Times of India]
A committee of the Institute of Chartered Accountants in India that is investigating the Satyam fraud is claiming that the Big 4 is “circumventing laws while providing auditing services in the country.” According to the Times of India, the committee has claimed that the firms have been granted permission to provide consulting services but not “taxation services, auditing, accounting and book keeping services and legal services.” The firms are able to provide these services through affiliate firms like Price Waterhouse Bangalore vis-à-vis Lovelock & Lewes who were responsible for the Satyam audit.

The committee states that “Indian firms and [multi-national accounting firms] are defacto the same entities providing the assurance, management and related services and as such their operations are designed to circumvent the provisions of the Chartered Accountants Act, 1949,” and that information sought from some local firms has not been provided to determine if they have partnered with the Big 4.


• Debunking the FIN 48 Conspiracy Theory [CFO Blog]
When the IRS proposed its latest rule for disclosing uncertain tax provisions it debunked a theory concocted by some that the FASB was in cahoots with the Service to provide treasure maps for companies that take aggressive tax positions. It was thought that when the FASB was developing FIN 48 (aka Topic 740) in 2006 that they were siding with the IRS in requesting companies to report specific information about those positions.

Not the most interesting conspiracy theory we’ve ever heard but a conspiracy theory nonetheless. Anyhoo, FIN 48 requires less detail about the uncertain positions than the new IRS proposal, thus, debunking the conspiracy, at least in former FASB member Edward Trott, “I think FIN 48 accomplished exactly what was intended…The IRS’s proposed rule makes it clear that [FASB] was able to provide information to investors without providing a gold mine of information to the IRS.” You can go back to your illuminati theories now.

• More Americans Give Up Citizenship As IRS Gets Aggressive Overseas [Dow Jones via TaxProf Blog]
Just over 500 people renounced their citizenship or permanent status in the fourth quarter of 2009. The report, citing public records, states the figure is more than all of 2007 and double of 2008. Mostly people are creeped out by future tax increases and more regulation, including the requirements to report details of foreign bank accounts.

While that does drive some people out of the US of A, the IRS claims that there has been a push to get some out who have already surrendered their passports, “The IRS says some of the swelling of numbers of expatriations towards the end of 2009 occurred because the agency made a push to notify people that had already surrendered their passport, but had not completed the process by submitting the IRS form. Until that form is received by the IRS, these people are still subject to U.S. tax.” Or in other words, “GTFO and stay out.”

Accounting News Roundup: EU Threatens Convergence; IRS Is Not Hiring 16,500 Agents to Enforce Mandatory Healthcare; Charges Look Unlikely in AIG Probe | 04.05.10

• Accounting convergence threatened by EU drive [FT]
Somewhat of a bombshell was dropped over the weekend when an EU politician suggested that funding for the IASB could be subject to its willingness to buckle to political pressure, according to the Financial Times. Michel Barnier, the EU’s new internal market commissioner would like ‘issuers – more banks and more companies – and more prudential regulators represented on the governing board [of the IASB],’ and suggested that it was too early to determine if the IASB’s scant budget of $6.5 million would be increased.

The FT reports that the EU pols “believe prudential regulators should be morovernance so that accounting can be used as a tool for financial stability,” despite the feeling of other countries (e.g. U.S. and Japan) that accounting rules “should not be the subject of regulatory intervention but should focus on providing an accurate snapshot of a company’s value.”


This difference in opinion on what the purpose of accounting is could disrupt the convergence process which won’t do much to impress the G20 chaps who demanded some progress on the global accounting sitch.

• IRS Expansion [Factcheck.org via TaxProf Blog]
Those 16,500 new IRS agents you keep hearing about, or is 17,000? Whatever it is, Factcheck.org was posed the question about this small army of tax enforcers that will be marching into your home, heavily armed and stealing your freedom by forcing you to buy healthcare that you don’t want.

Are you prepared for this shock? Turns out, it’s not true:

This wildly inaccurate claim started as an inflated, partisan assertion that 16,500 new IRS employees might be required to administer the new law. That devolved quickly into a claim, made by some Republican lawmakers, that 16,500 IRS “agents” would be required. Republican Rep. Ron Paul of Texas even claimed in a televised interview that all 16,500 would be carrying guns. None of those claims is true.

The IRS’ main job under the new law isn’t to enforce penalties. Its first task is to inform many small-business owners of a new tax credit that the new law grants them — starting this year — which will pay up to 35 percent of the employer’s contribution toward their workers’ health insurance. And in 2014 the IRS will also be administering additional subsidies — in the form of refundable tax credits — to help millions of low- and middle-income individuals buy health insurance.

Plus, Doug Shulman testified before the House Ways & Means Committee that the Service will not be auditing individuals, rather, “insurance companies will issue forms [some possibilities here] certifying that individuals have coverage that meets the federal mandate, similar to a form that lenders use to verify the amount of interest someone has paid on their home mortgage. ‘We expect to get a simple form, that we won’t look behind, that says this person has acceptable health coverage,’ Shulman said.” So maybe this is what Anthony Weiner was trying to explain to Bill O’Reilly?

• Federal Prosecutors Leaning Against Charges in AIG Probe [WSJ]
If you were thinking that it would only be a matter of time before Joe Cassano was charged with pushing the financial apocalypse button, you’re about to be severely disappointed. The Journal is reporting — citing “people familiar with the matter” eight times or so — that the former head of the AIG Financial Products unit is not likely to be charged by the Department of Justice for deceiving PricewaterhouseCoopers about AIG’s exposure to credit default swaps.

The DOJ was initially under the impression that Cassano had not informed PwC about an adjustment that AIG had made to make the losses from the CDS look just horrendous as opposed to catastrophic. When PwC came back with a material weakness on AIG’s internal controls, they abandoned the adjustment. The DOJ’s investigation turned up some notes of a PwC auditor that show that Cassano had told the firm about the adjustment thus, covering his ass. The Feds haven’t officially made up their minds about charging Cassano but this element was considered a “central issue.”

Accounting News Roundup: Former Dell Staff Facing SEC Action Related to Accounting; Herz, Tweedie to Present on Global Issues at GWU; NASBA Taking Back Some March Scores? | 04.02.10

We’ll be posting on a lighter schedule today. Hopefully many of you are enjoying a long weekend.

• Dell says several former staff may face SEC action [Reuters]
Some former Dell employees are facing possible SEC actions related to the company’s accounting. The Commission started its inquiry back in 2005 and Dell disclosed that the U.S. Attorney for the Southern District of New York had subpoenaed documents shortly after in 2006. This all led to the Accounting Code of Conduct that the Company implemented last fall. The company stated that it believes ‘monetary penalties’ will be part of the settlement but otherwise they’re keeping a lid on it.

• FASB Chairman Robert H. Herz and IASB Chairman Sir David Tweedie to Discuss Global Accounting Issues at The George Washington University [FASB]
Herz and Tweeds will be at G Dubs on Wednesday, April 7th kicking around global accounting issues. “Greater Global Transparency in Financial Reporting: Lighting the Path for Investors” starts at 6 pm and is free and open to the public, so you best get there early before the groupies overrun the joint.


• NASBA Takes Back (Some) Passing CPA Exam Scores for March [JDA]
In what could amount to the worst April Fool’s joke in history, Adrienne is reporting over at JDA that NASBA is taking back some of the scores for March after extending the test dates in the third month:

[F]rom a reliable source within the Big 87654 that test-takers outside of the blizzard-affected areas have actually gotten their scores taken away and thrown out. Yes, that means all of you who put it off until the very last minute and rescheduled for the March extension are pretty much screwed unless you also got snowed in on top of it. Yes, those of you who paid for and passed the exam in March.

Huh. We’re checking into this. We’ll get back to you if we learn more.

Accounting News Roundup: KPMG Dodges Madoff Feeder Fund Lawsuit; SEC May Disclose More Details in Settled Lawsuits; Tax Code? Now There’s an App for That | 04.01.10

• KPMG wins dismissal of Madoff feeder fund lawsuit [Reuters]
A class action lawsuit brought against KPMG by Meridian Horizon Fund, L.P. and other investors in Tremont Partners was dismissed yesterday in New York. Tremont had more than half of its assets were Berns andKPMG audited Tremont funds in 2006 and 2007.

Judge Thomas Griesa ruled that the plaintiffs’ case did not show that KPMG had any intent to deceive the investors in Tremont. Emily Chasan reports that Judge Griesa wrote, “Merely alleging that the auditor had access to the information by which it could have discovered the fraud is not sufficient,” and that the firm would have had to botch the engagements so badly that it would have amounted to “no audit at all.” He did not rule out the possibility of Meridian re-filing their lawsuit in the future.


• SEC may require more details of wrongdoing to be disclosed in settlements [WaPo]
The SEC is thinking about disclosing more details in their civil action settlements; a move that would do away with the quick and dirty “neither admitted nor denied the charges.” This could result in a more transparent process where violations of the law are — God forbid — disclosed in detail.

Securities lawyers said a more detailed public record of cases could make defendants less likely to settle and make it easier for shareholders to file class-action lawsuits piggybacking on the SEC’s claims. It could also lead to embarrassment for executives if the agency publicized their roles in violating securities law, even if they are not personally charged.

God knows we can’t have executives embarrassed.

• The Tax Code and Regs for Your iPhone [TaxProf Blog]
Who wants to schlep around the physical tax code?

Accounting News Roundup: Tax Freedom Day Is Nigh; Does the U.S. Government Need a Going Concern Opinion?; Google CFO Does Okay for Himself | 03.31.10

• Tax Freedom Day 2010 Is April 9; Historically Massive Deficits Promise Later Tax Freedom in the Future [Tax Policy Blog]
This year April 9th marks, Tax Freedom Day. That’s 99 days of work for you to pay all your federal, state and local taxes for 2010. This is only one day later than last year but two weeks earlier than 2007, according to the Tax Policy Blog. However, TPB notes that the earlier tax freedom isn’t really much to get excited about.

Tax Freedom Day does not count the deficit even though deficits must eventually be financed. Since 1948, when Tax Freedom Day was first calculated, the difference between what governments are spending and what they’re collecting has never been as great as during 2009 and 2010. If Americans were required to pay for all government spending this year, including the $1.3 trillion federal budget deficit, they would be working until May 17 before they had earned enough to pay their taxes—an additional 38 days of work.

• Expressing a Going Concern Doubt on the United States Government, Not According to GAAP [JDA]
Speaking of deficits, what does the U.S. Government’s deficit look like on a GAAP basis? Somewhere in the nabe of $4 trillion. But before you get all huffy about spendy Democrats, this is true bipartisanship at work. The deficit that includes social security and medicare was $11 trillion in 2004 and was all over the map throughout the aughts. Anyone thought of giving the U.S. a GCO?? AG notes that it’s a bit of problem when the government can’t even make things look rosy, “[W]hen even the government accounting makes things look bad (see: pensions), you really know you’ve got a problem on your hands.”

• Google’s Schmidt Got $245,322; CFO Paid $24.7 Million [Bloomberg BusinessWeek]
The $24.7 million in total comp that Patrick Pichette received for ’09 was up from $7.63 million in ’08, the year he joined the company. Most of this year’s haul was from $10.9 mil in stock awards and $10.8 in stock options. His salary was only a measly $450k.

Accounting News Roundup: Treasurer Is Not a Disclosure-Worthy Position at Overstock.com; SEC Investigating Repurchase Accounting; Deloitte Considers Camping at World Financial Center | 03.30.10

• Another Key Departure at Overstock.com: It Went Unreported, Too [White Collar Fraud]
Criminal-turned-forensic sleuth Sam Antar is reporting on his blog that SEC problem child Overstock.com had another key employee depart the company but this time, the Company failed to report it publicly. Gary Weiss was tipped off about the departure of Richard Paongo, the former Treasurer at OSTK, in an anonymous post that was confirmed on Mr Paongo’s LinkedIn profile.

It appears that Mr Paongo’s departure occurred around the same time as ex-CFO David Chidester’s which was reported to the SEC.


Sam notes the requirements of an 8-K disclosure:

If the registrant’s principal executive officer, president, principal financial officer, principal accounting officer, principal operating officer, or any person performing similar functions, or any named executive officer, retires, resigns or is terminated from that position, or if a director retires, resigns, is removed, or refuses to stand for re-election (except in circumstances described in paragraph (a) of this Item 5.02), disclose the fact that the event has occurred and the date of the event.

So maybe OSTK figured that Paongo’s was worth sharing with investors? Sam says, “Apparently, it’s Overstock.com’s position that none of the above applies to Rich Paongo. However, Paongo’s departure from Overstock.con [sic or maybe not?] can be viewed as a material event requiring disclosure amid an expanding SEC investigation and given Paongo’s role at the company.”

Whether or not Paongo’s departure qualifies as a disclosable event might be arguable but the timing of his departure is certainly noted. In semi-related news, Overstock still has a couple of days before the 10-K extension runs out, so we’re likely to hear more out of SLC.

• S.E.C. Looks at Wall St. Accounting [NYT]
With Repo 105 on everyone’s brain, the SEC figured it should snoop around and see who else is using the repurchase agreements. Bank of America and JP Morgan have already admitted that they use repurchase agreements but Mary Schapiro remains coy about what companies are getting the crook-eye.

• Deloitte eyes sticking with World Financial Center [Crain’s New York]
Deloitte is in the market for about 600,000 square feet to house some its New York employees and one possibility is that the firm will set up camp at World Financial Center where it is currently the largest tenant. The firm is also reportedly considering 825 Eighth Ave.

Crain’s reports that Casa de Salzberg was looking for 1 million square feet last year, considering possible locales at 11 Times Square and 277 Park Ave. Deloitte insists that it was never looking for 1 million square feet and will be perfectly happy to cram the employees from the current two non-WFC locations into one place.