Category: ANR

Accounting News Roundup: CFOs, Staff Are Getting Worn Down by Guidance; Miami Forensic Accountant to Plead Guilty; Big 4 In Pari Delicto Defense Strategy | 03.10.10

• A Growing Contagion: Accounting Fatigue Syndrome [CFO Blog]
Anyone getting worn out from all the guidance that is coming from the alphabet soup of regulators? You’re not alone and there appears to be an epidemic, something that CFO Blog has deemed “Accounting Fatigue Syndrome.” The long/short of it is that things are only going to get more complex as FASB and IASB continue to converge their rules and guidance continues to come out of both rule making bodies.

“Like many finance executives, Terry Lillis, CFO of Principal Financial Group, is tired. The constant stream of guidance from regulators and accounting standard-setters — plus the expected inflow of more to come over the next few years — has created “huge accounting fatigue” among his finance staff”


What’s the solution to AFS? How about just getting out of the biz altogether? “While the panelists gave no hope to CFOs who wish the standard-setters would either slow down or cut back on their agenda, they did offer one tip for ending accounting fatigue. ‘If I were a CFO, the first thing I would do is look at my early-retirement provisions,’ quipped J. Edward Grossman, a Crowe Horwath partner.”

• High-profile Miami accountant Lew Freeman to plead guilty to fraud [Miami Herald]
A couple of weeks ago we told you about “go-to” forensic accountant turned swindler Lewis Freeman and his legal trouble.

Today he is expected to plead guilty in Miami to embezzling $2.6 million from his clients. Prosecutors have alleged that Freeman, “wrote 162 unauthorized checks to himself totaling about $6 million from the accounts of five failed businesses once under his company’s control, but put back about half of the money.” Freeman has been cooperating with investigators since his arrest but still may face 10 – 20 years in prison.

• In Pari Delicto: Are Auditors Equally At Fault In The Big Fraud Cases? [Re: the Auditors]
Francine tackles PwC and KPMG’s defense strategy involving in pari delicto to avoid their roles in fraud cases.

The way I see it, the in pari delicto doctrine is being used like a pair of needle nosed pliers by audit firm defense lawyers to diffuse a bomb – huge liability for some of the biggest frauds in history. The in pari delicto doctrine attempts to pull the auditors’ tails from the fire by excusing any of their guilty acts due to the approval of those acts by potentially equally guilty executives.

Accounting News Roundup: KPMG Survey: Half of Execs Want Option to Adopt IFRS Early; PW India Plea Rejected on Satyam; Two-thirds of States Have Raised Taxes Since Recession Began | 03.09.10

• Half of US execs want to use IFRS early-survey [Reuters]
KPMG surveyed some shot-callers and lo and behold, half of them are ready to get down with International Financial Reporting Standards before the SEC’s target date of 2015. That’s if the SEC is even down with the whole idea.

KPMG’s surveyed also discovered that executives would like the SEC to be a little more transparent with their plans re: IFRS. You know, other than more meetings.

“Many U.S. companies with subsidiaries around the world are already using IFRS for statutory reporting,” said Janice Patrisso, partner and national IFRS leader at KPMG. “For them, having the option to synchronize it all up front at the U.S. company is a positive.”
…
Patrisso said companies with international subsidiaries that have already made conversions to IFRS were looking at the way those units had chosen to use the rules. They are also preparing for changes U.S. and international accounting rulemakers are making to converge the two sets of rules.

It’s nice to see some pushback to the SEC’s waffling. Despite where you fall on the IFRS debate, most people would agree that allowing businesses to make their own decisions about what financial reporting method to use (as long as it is consistent and high quality). Especially since the AICPA recognized the IASB as an official standard setter, thus giving private companies the go-ahead on IFRS, shouldn’t public companies be allowed the same freedom?

While the SEC spends the next five years trying to figure out what all this means, some businesses already see where this is going and don’t want to waste time. The SEC isn’t so enthused.

• PW plea on Satyam probe rejected [Business Standard]
Pricewatherhouse India really wants everyone to forget about Satyam. Their latest plea to the Securities regulator in India, the Securities and Exchanges Board of India (SEBI) has been rejected BUT apparently the firm is going to try making their case again. Sigh.

Don’t get any illusions about this case making any progress, “The next step is for ICAI’s disciplinary committee to send notices to the PW auditors charged by law enforcement agencies in the fraud case…this could happen only after the auditors, under judicial remand, are in a position to argue their case before the committee.” And we complain about the bureaucracy here.

• CBPP: 33 States Have Raised Taxes by $32 Billion/Year [TaxProf Blog]
You may have noticed a state fiscal crises here or there in the last couple of years and by God, they’re trying to do something about it. Unfortunately, the most common solution, according to the Center on Budget and Policy Priorities, is the raising of taxes. Thirty-three out of 50 states have taken a number of measures from eliminating tax exemptions and broadening tax bases to good old fashioned higher sales, income, or property tax rates.

Accounting News Roundup: Alaska Union Criticizes Lost Data Deal with PwC; Levin Appointed to Ways & Means Chair; E&Y Received £35m in Audit Fees from BP | 03.05.10

• First things first: Don’t forget that it’s National Employee Appreciation Day 2010. [GC]

• Public employees union criticizes data loss deal [AP via CNBC]
Remember how PricewaterhouseCoopers lost the records of 77,000 Alaska public employees and retirees? PwC, trying to be a standup corporate citizen, took responsibility for the slip-up and promised those affected all kinds of stuff including identity theft protection, credit moty freezes. Hell, they said they would even reimburse any losses that occurred due to identity theft.

Shockingly, that wasn’t good enough for some people. The Alaska State Employees Association is pretty bent out of shape about the deal the state took and wants them to go back and get more. MORE. MORE!

Specifically, it wants the affected people to be automatically enrolled into the firm’s credit protection services, instead of being required to opt-in. The union also questioned why those services will only be available for a minimum of two years, though consequences of the data loss may pop up long after the services expire.

“We think that’s shortsighted to put a two-year period on it,” said union business manager Jim Duncan. “It doesn’t adequately protect our members or retirees.”

Alaska’s Department of Law is perfectly okay with the deal and if they could have gotten P. Dubs to give everyone lifetime guarantees, by God, they would have. But it wasn’t in the cards, “[Assistant attorney general Ed Sniffen] characterized it as a generous settlement that the Department of Law is pleased with. And unless new information indicates the parties weren’t negotiating in good faith, renegotiation is unlikely.”

Besides, if an employee becomes an identity theft victim, they can still sue PwC for damages. And that’s really what this country is all about; the ability to blame someone else and sue their ass.

• Levin To Chair Tax-Writing Ways And Means Panel [AP via NPR]
Representative Sander M. Levin (D-MI) will serve as the new Chair of the House Ways & Means Committee after Charlie Rangel gave up the Chairmanship under pressure for ethics violations.

Mr Levin represents the 12th district in Michigan and has served in Congress since 1982 and is the older brother of Senator Carl Levin (D-MI).

Levin takes the gavel after House Speaker Nancy Pelosi initially appointed Pete Stark of California. It’s entirely possible that Speaker Pelosi realized that Mr Stark might not be the most diplomatic member of the House; he has a history of just saying whatever comes to mind like:

• Calling Rep. Nancy Johnson (R-CT) a “whore for the insurance industry.”

• Arguing with Rep. Scott McInnis (R-CO): “You think you are big enough to make me, you little wimp. Come over here and make me, I dare you. You little fruitcake.”

• That former President George W. Bush was amused by soldiers getting their heads blown off in Iraq.

Among other things.

• BP pays E&Y £54m in fees [Accountancy Age]
Now before you start screaming about the money, you should know that the fees are actually down significantly from the last two years. In ’08 E&Y got £67m and £75m in ’07. Beyond Petroleum says they’re doing things more efficiently in the ‘audit process’ and reducing tax and other services. See? Tough times all around.

Accounting News Roundup: SEC Official Explains His Porn Habits; Private Companies May Embrace IFRS Quicker; New Bill Would Ax Tax Tardy Fed Employees | 03.04.10

• Porn Nightmare Never Ends for SEC Official [FINS]
Whatever your porn preferences, you’re probably not sharing them with complete strangers. If you are, the cloud of awkward around you has got to be so thick that you may as well have leprosy. However, if you have the unfortunate luck of getting caught viewing this art form at work, then you might be forced to discuss your preferences, how often you’re engaging in the activity, among other things:

[T]he really juicy stuff begins when he’s asked about accessing Web sites like tgirlhotspot.com and ladyboyx.com (warning, very NSFW): “Our records show that on Wednesday, August 13, 2008, beginning at 1:57 p.m., you made approximately 85 attempts…to access a Web site called tgirlhotspot.com. Do you have any recollection of attempting to access this site?”

The employee answers: “I do not personally have recollection of it, but it would not surprise me.” To which the inspector — and the reader — responds: “Okay. That’s fair.”

Seriously, who can remember every instance that they’ve visited ladyboyx.com? Does the guy have a photographic memory? Maybe on certain images but date, time, and spreadsheet you had open that you could quickly jump to in case someone came to close? That’s asking a little much.

• Should the U.S. Forget about Private-Company GAAP? [CFO Blog]
Now that the Blue Ribbon Panel for private company GAAP has been announced, it makes some people wonder if the non-SEC types will just ignore this whole song and dance the Commission is doing get with the IFRS program ASAP. Ahh, the advantages of being a private company…

Even though both the BRP and the SEC will release their musings on their respective topics in 2011, private companies already have options, “[T]he U.S. private sector has already set some IFRS wheels in motion. In 2008, AICPA recognized the IASB as an official standard-setter, which means U.S. auditors are allowed to issue opinions on private-company financial results filed using IFRS.”

It’s doubtful that IFRS reporting will spread like H1N1 among private companies but while the SEC twiddles the private sector seems to recognize where all this is ultimately going.

• Jason Chaffetz: Ax Hill staff tax cheats [Politico]
Since all the members of the House are up for reelection this year, everyone needs something solid to campaign on and apparently Jason Chaffetz (R-UT) has found his stump.

Chaffetz is introducing legislation that would extend an IRS policy — termination employees that haven’t paid their federal taxes — to all federal departments and agencies.

In 2008 alone, 447 House employees and 231 Senate workers didn’t pay their taxes, according to figures from the IRS, Office of Personnel Management and Department of Defense.

“We have over 600 staffers on Capitol Hill not paying their taxes. That’s just not acceptable,” Chaffetz said in an interview with POLITICO. “It’s disingenuous to take federal taxpayer dollars and not pay your full share of taxes. It’s wrong.”

Between to the two bodies in Congress, over $8 million are owed in taxes. We don’t have to remind anyone how little money this is grand scope of the federal government. But hey! Rep. Chaffetz has an election to win and by God, this could be the ticket. Some other notable delinquent federal employees include the Postal Service at $257 million; Dept. of Veteran Affairs at $131 million; Army and Navy owe $81 million and $61 million respectively.

But pointing out those people wouldn’t make for very good press.

(UPDATE) Accounting News Roundup: Rangel Says He’s Not Quitting as Ways & Means Chair; IRS Is Sitting on $1.3 Billion in Unclaimed Refunds; SEC Adding Muscle in New York | 03.03.10

• Rangel Loses Support in House [WSJ]
You can ignore what’s written below, except the part about rent-controlled apartments.

Charlie Rangel will not be quitting (temporarily sayeth Charlie Rangel) as the Chairman of the House Ways & Means Committee. If you (read: Republicans) want him out, you’ll have to vote him out. Bad news for Chuck is that the Republicans in the House and several of his fellow Democrats are poised to do just that, “As many as 30 House Democrats could join 178 House Republicans in voting to oust Mr. Rangel as head of the Ways and Means Committee…a substantially higher number than in previous votes on his removal.”

Never mess with people when it comes to rent-controlled apartments. They’ll turn on you like Judas.

In the meeting, Mr. Rangel refused to quit as chairman of the Ways and Means Committee and instead said he’d think overnight about the matter before deciding whether to step down or face an uncertain vote.

After the one-hour meeting broke, Mr. Rangel told reporters he would stay on.

“You bet your life,” he said. Pressed further, Mr. Rangel, raising his voice, said emphatically: “Yes, and I don’t lie to the press.”

There you have it. You want Rangs out? It’ll be over his dead body. Since he’s 79, it might just come to that.

• Taxpayers Have $1.3 Billion in Unclaimed Refunds [TaxProf Blog]
That’s just for 2006. California leads the charge with over $150 million, followed by Texas with $114 million, and Florida with $110 million. 1.4 million tax-hating Americans have until April 15th of this year to claim and then the money goes straight to Goldman Sachs.

• SEC to beef up its NYC office in 2010 [Reuters]
Here’s a possible gig for those of you that are still looking for work. The not-so-new but constantly improving (?!?) SEC is looking to hire a few good men and women for its New York office. Having got the scratch to put a few more hands on deck, the Commission is looking for 18 people for its enforcement team and 15 for its examination staff. There’s no indication that this will solve the SEC’s “idiots” problem but maybe you can at least land a job.

Accounting News Roundup: Substance at Utah IRS Building Was ‘Non-hazardous’; Goldman Sachs Discloses Its Bad Publicity Risk; Resort Where Tiger Gave Apology Files for Bankruptcy | 03.02.10

• Suspicious substance at IRS called non-hazardous [KSL5]
After everything that has happened lately that is IRS-related, somehow that white powdery substance showing up at an IRS building and three employees having seizures is one giant coinky-dink.


• Goldman Discloses a New Risk: Bad Publicity [DealBook]
Team Jehovah pushed the button on its 10-K yesterday and because they’re the type of company to keep everything on the up and up, they put it out there that when every media source calls you out each time you break wind, you have a entirely new problem:

“Press coverage and other public statements that assert some form of wrongdoing, regardless of the factual basis for the assertions being made, often results in some type of investigation by regulators, legislators and law enforcement officials, or in lawsuits.

…adverse publicity…can also have a negative impact on our reputation and on the morale and performance of our employees, which could adversely affect our businesses and results of operations.”

You don’t think the name calling and nuclear testicle jokes can affect the bottom line? Think again. PwC bought it. Shouldn’t you?

• Sawgrass Resort Linked to Tiger Woods Apology Files Bankruptcy [Bloomberg]
At present, avoiding any contact with Tiger seems to be prudent.

Accounting News Roundup: Is the ‘Era of Sloppy Accounting’ Over?; Rangel Running for Reelection; Supreme Court to Hear Skilling Appeal | 03.01.10

• Companies are making fewer accounting mistakes [USA Today]
“In another potential boost to investor confidence, the era of sloppy accounting appears to be ending,” declares USA Today. Okay but perfection is unattainable people, so until machines take over for you, keep at it. In the meantime, the results presented by Audit Analytics certainly indicate that things are going in the right direction.

We don’t want to be the party pooper here but if accounting is less sloppy, i.e. more sophisticated, doesn’t that mean that the methods for massaging the accounting are also more sophisticated? Just chew on that while you check the the findings.

The article lists three reasons for the improvement in reporting:

• There is steady and ongoing improvement. The number of companies with restatements and the number of restatements have declined in each of the past three years.

• Mistakes are getting caught sooner. Among the companies with restatements, errors covered a period of 476 days, or less than a year and a half. That’s down 7% from 2008 and well below the 716 days, or nearly two years, of problematic numbers restated in 2006.

• Restatements are less serious. Restatements reduced companies’ reported earnings by $4.6 million on average last year, down dramatically from the $7.2 million and $23.5 million hits in 2008 and 2006.

Even though it’s virtually impossible to eliminate restatements, we must admit that these are encouraging trends. Another thing to keep in mind is that accounting rules are becoming increasingly complex so it’s not like things will be on cruise control from here on out.

• Defiant Rep. Charles Rangel vows reelection bid despite uproar over alleged ethics violations [NYDN]
Ethics violations be damned! The 79-year-old announced over the weekend that he would be seeking reelection. It would be his 21st term in Congress, first winning election in 1970. Even if Rangs is able to do another victory dance, holding on to his Chairmanship of the Ways & Means will be a different matter entirely. PBO has already distanced himself from Chuck and some are saying that even Nancy Pelosi is getting creeped out a little too.

• Skilling Asks High Court for New Trial Minus ‘Tar and Feathers’ [Bloomberg BusinessWeek]
The Supreme Court will consider Jeff Skilling’s appeal today in the Enron scandal that he was convicted of four years ago. Skilling’s attorneys will argue that the trial should not have been held in Houston where it would have been “impossible” to get a fair trial.

Skilling’s appeal says the atmosphere in Houston when the trial began in January 2006 was one of hostility toward him, fed by unrelenting and “searing” media coverage. The appeal points to a Houston Chronicle column titled “Your Tar and Feathers Ready? Mine Are” and a local rap song, “Drop the S Off Skilling.”

The 12 jurors reflected that antipathy, Skilling contends. During pretrial questioning, three said they were “angry,” three said they had negative feelings toward Skilling or doubted his impartiality and one said that all CEOs were “greedy,” according to his appeal.

Skilling is currently doing far worse than tar and feathers (probably NBD in this day and age), serving a 24 year sentence in a Colorado prison. If the SCOTUS rules in his favor on the “jury-bias” issue Skilling would get a new trial which open old wounds and could create a media circus (we hope).

Accounting News Roundup: Rangel Chastised by Ethics Panel; Settlement Reached for Ex-Deloitte Exec on Insider Trading Charges; Madoff Auditor Sentencing Delayed | 02.26.10

• Panel Admonishes Rangel for Taking Trips as Gifts [NYT]
Charlie Rangel had a Congressional ethics committee rule that he “violated gift rules” when he accepted corporate-sponsored trips to the Caribbean. While that is certainly bad news for Rangs, the committee is far from finished with its investigation as they continue their inquiries about Chuck’s “fund-raising, his failure to pay federal taxes on rental income from a Dominican villa, and his use of four rent-stabilized apartments provided by a Manhattan real estate developer.”


Following typical political grandstanding protocol, Republicans are calling for CR to step down from his post as the Chairman of the House Ways & Means Comittee:

“In this time of great economic uncertainty, struggling middle-class Americans deserve better than to have a tax cheat chairing a powerful Congressional committee that directly impacts the financial livelihoods of millions of hard-working people,” said Ken Spain, the communications director of the National Republican Congressional Committee.

• Ex-Deloitte Exec Settles Insider Trading Charges [Web CPA]
John A. Foley, who “settle[d] the SEC’s charges without admitting or denying the allegations”, was trading on inside information on a number of Deloitte clients including rubber shoe factory Crocs, along with YRC Worldwide, Inc., Spectralink Corporation and SigmaTel, Inc.

The trades yielded Foely and his fellow cheaters just over $200k which would buy a helluva lot of ugly shoes.

• Madoff’s New City accountant’s sentencing put off until September [LoHud]
David Friehling, the worst auditor ever, was scheduled to be sentenced today for his little part in the Madoff Ponzi scheme has been delayed until September. Friehling’s continued cooperation was the reason for the delay in sentencing. Although he faces over 100 years in prison, Judge Alvin Hellerstein told DF that his cooperation will be noted when final sentencing is determined. Presumably, that will knock it down to well under a century of doing time.

Accounting News Roundup: Koss Sues AMEX for Sachdeva Spending Spree; IRS Worker’s Widow Sues Stack’s Widow; Twitter Feeds for Tax Pros | 02.24.10

• Koss sues American Express over Sachdeva purchases [MJS]
Headphone factory Koss is suing American Express (the whistleblower!) for not reporting alleged embezzler extraordinaire Sue Sachdeva sooner.

Koss alleges that AMEX knew about Suze paying her credit card with Koss funds in February 2008 but then did nothing about it until August 2009; a month when SS spent $3.5 million on high end threads.

Sue Sach was finally exposed last December after allegedly making off with $31 million. So more or less, Koss is suing AMEX for $20 million because Koss’ management was far too busy to pay attention to their own company. The good news is that a whistleblower that happens to be corporation gets about as much gratitude as a human whistleblower. Consistency!


• IRS worker’s widow sues Texas suicide pilot’s wife [AP via NYDN]
The widow of IRS employee Vernon Hunter is suing Sheryl Stack, widow of Joseph Stack, in order to determine if JS had a life insurance policy or other assets. The suit alleges that Mrs. Stack should have “should have warned others about her husband,” apparently because someone bitching about the IRS regularly flies a plane into a building.

• Four Twitter Feeds for Tax Pros [FINS]
FINS put together their top four Twitter feeds for tax professionals yesterday and lo and behold, we ended up on the list! Thanks to FINS for including us but a special thanks goes to people like Terry “Dozer” and wives that shoot at their greedy husbands. They make our jobs easier.

Accounting News Roundup: Bipartisan Tax Reform Bill to be Introduced; PCAOB Offers More Documentation Guidance; Iowa Congressman “Emphasizes” with Joe Stack | 02.23.10

• A Bipartisan Plan for Tax Fairness [WSJ]
Senator Ron Wyden (D-OR) and Judd Gregg (R-NH) co-wrote an op-ed to introduce their bill for tax reform: The Bipartisan Tax Fairness and Simplification Act of 2010.

The magic word! Bipartisanship! No one will argue against this bill with the magic word in there. Well, we’ll see. In the meantime they plugged all the things voters like to hear:

• Most taxpayers will be able to use a one-page 1040.

• In some cases the IRS will prepare the return for you; all the taxpayer will have to do is sign date and return.

• Reduce the six tax brackets to three: 15%, 25%, and 35%.

• Tripling the standard deduction.

• The first 35% of long-term capital gains income would be tax exempt.

• Flat corporate tax rate of 24%.

Sounds simpler, anyway.


• PCAOB Offers Guidance on AS7 Documentation [Compliance Week]
Don’t worry auditors, this is just a little guidance on Auditing Standard 7: Engagement Quality Review that was requested by the SEC. All it says is that if your engagement happens to be royally f—ed up (i.e. “significant engagement deficiency is identified”) then you have to include enough documentation so that some strange auditor, with some experience, can understand why your engagement is such a mess. Nothing extra but don’t leave out the gory details.

• Steve King To Conservatives: ‘Implode’ IRS Offices [Talking Points Memo]
Congressman Steve King (R-IA) is the winner of open-mouth-insert-foot (Joe Biden is awfully quiet these days) this week after saying that he “emphasized” with Joe Stack and that he encouraged listeners at the Conservative Political Action Conference to “implode” other IRS offices.

This may be blown out of proportion since no one typically gets hurt in an implosion but we don’t think the likes of Glenn Beck should be allowed near explosives of any kind.

Accounting News Roundup: Deloitte Consulting Is on a Hiring Spree; IFRS = Fool’s Errand?; Wesley Snipes Thoughts on IRS Plane Crash | 02.22.10

• Deloitte Consulting is Hiring [BusinessWeek]
According to BW, Deloitte is making 50 – 60 offers to experienced consultants a week, 800 new MBAs and undergrads have started with the firm in the last six months and 1,000 more offers will be made to 2010 graduates. That’s an impressive hiring spree from where we stand.

What’s not clear from the article is why the hiring is occurring at such a furious pace. You would think with the addition of 4,000 BearingPoint employees, hiring at the firm would be muted but apparently that’s not the case. The article cites DC’s utilization rate at 80%, so there’s plenty of work and DC is “inordinately high market share in mergers and acquisitions and other deals of more than $5 billion in value” and a new focus on “implementation” and “putting together strategy” for their clients.

While there’s no reason to doubt the hiring numbers, the article cites few specific examples of why the all the new blood is needed. If DC is unable to develop new business in a weak economy, the 80% utilization rate might be temporary.


• The Holy Grail of Accounting Is a Fool’s Errand [The Summa]
Professor David Albrecht doesn’t mince words on the issue of International Financial Reporting Standards, “Let me say it again, so no one can possibly misunderstand: The United States quest to join in a single set of global accounting standards (either by convergence or by adoption of IFRS) is a fool’s errand–completely absurd, pointless and useless.”

Okay but in case you’re not inclined to take him at his word, he goes on to explain:

What makes this a fool’s errand is there exists no reason for it. No one has explained what benefits exist that outweigh the need for regulation on a country by country basis.

I understand that the partners of some of the largest auditing firms will get rich, as will certain regulators that facilitate the convergence (such as David Tweedie, Mary Schapiro and James Kroeker).

What I don’t understand is why a move to a more independent private accounting setting organization with increased reliance on large audit firms will produce more effective government regulation when such actions in the past have resulted in less effective government regulation.

It’s almost a certainty that the market would become more reliant on the largest firms if the U.S. moved to IFRS and firm failure is a big concern since some are already preparing for it. Maybe the U.S. regulators are making like the ostrich?

And since the Big 4 were pushing IFRS at Davos and the SEC seems to be going along with things (tepidly) maybe the Professor is onto something here?

• Snipes asks ‘What’s new?’ about IRS plane crash [AP via TaxProf]
Well, to our recollection, no one has flown a plane into an IRS facility to complain about tax law.

Accounting News Roundup: Chief Accountant ‘Cautiously Optimistic’ on Convergence; Grant Thornton Auditors Barred by PCAOB; PwC’s front row seat at AIG, Goldman Dispute | 02.19.10

• James L. Kroeker [Web CPA]
The Chief Accountant sat down for a Q&A with Web CPA to talk about the Tiger Woods press conference, the upcoming Oscars, and how his own “situation” is far more impressive than anything you’ve seen on Jersey Shore.

Actually, no he didn’t. He talked about what you’d expect him to talk about including the so-called SEC roadmap that we’ve been wondering about:

We’ve been turning our focus back to the proposed roadmap. The staff has spent innumerable hours over the late summer, throughout the fall, and now the beginning of this year turning our attentiomment letters. It’s not that the volume of comment letters is extraordinary, but the depth of thought is particularly impressive

So in other words, those of you that took the time to write the letters, it’s your fault the Commission is so far behind. Sounds to us like your 50 page, single-space masterpieces aren’t exactly breezy reading. But don’t worry, they’re muscling through.

When asked about the June 2011 convergence “deadline”, Kroeker said that he was “cautiously optimistic” that the FASB and IASB will get the lion share of the work done even though the IASB has been sending mixed signals lately. At least someone is confident.


• PCAOB Disciplines Grant Thornton Auditors [Compliance Week]
The PCAOB layed the smackdown on two Grant Thornton auditors this week for not questioning some the accounting policies of Imergent, Inc., a Salt Lake City tech company.

Partner Ray O. Westguard and manager Jennifer Nakao, were barred from practicing public company audit work for two years and one year respectively for their lack of auditorness.

According to the PCAOB, the two failed to question the revenue recognition policies and the allowance for doubtful accounts of Imergent, despite the fact that these two issues were addressed by the concurring review partner. Regardless of those concerns, the issues eventually led to an SEC investigation, the restatement of the financial statements for FY ’03 and ’04 and the firing of GT as the auditor. Maybe Grant Thornton should just avoid Salt Lake City clients altogether.

• A Prisoner’s Dilemma: AIG and Goldman Sachs Game Each Other And PwC [re:The Auditors]
Our contributor Francine McKenna describes PwC’s front row seat for the negotiations between AIG and Goldman Sachs while the two were attempting to sort out their differences:

Why did PwC decide to point the finger at AIG? Neither AIG nor Goldman Sachs had been willing to defect or betray each other thus far, per the prisoner’s dilemma, even to save them both. The dispute had been going on for more than a month, more than a quarter, more than a year. It may have been excusable for PwC to allow a mismatch in valuation on the same assets in two of their clients for a month or a quarter due to timing differences in access to information. But a serious, contentious mismatch for more than a year, through several 10Q’s, and now going on two 10K’s?

The rest over at RTA.