Category: ANR

• Obama Offers $3.8 Trillion Budget With Focus on Boosting Jobs [Bloomberg]
The $3.8 trillion budget calls for an additional $100 billion in stimulus spending and would increase the federal deficit to $1.6 trillion. “The $1.6 trillion deficit forecast for the current year represents 10.6 percent of the U.S. gross domestic product, making it the biggest by that measure since World War II, according to administration figures.”

The most impressive part is that the WH blew all the other forecasts out of the water, “The White House deficit projection exceeds other forecasts. The Congressional Budget Office has forecast this year’s shortfall at $1.35 trillion. The median of 39 analysts survey by Bloomberg News is for $1.37 trillion this year and $1.10 trillion next year.” Look! We’re going to dig the hole way deeper than anyone thinks!

As we mentioned last week, the spending freezes that will dig us out of said hole that were proposed last week would aim to cut that deficit to less than $1.3 trillion in 2011 and $828 billion in 2012; just in time for the election.

• Leaders in Davos Admit Drop in Trust [DealBook]
After all the chocolate, blondes, and awkward interviews, the other thing that is pretty obvious is that no one knows what the hell is going to happen, “the one certainty seemed to be continued uncertainty.” It’s nice to be confident about something.

Plus, everyone pretty much agrees that if you’ve got even a sliver of power in government or business, you are not to be trusted. Ordinarily this wouldn’t be a news flash, what with the near financial apocalypse and all but Tim Flynn said we were moving towards the green light of trust. Is this not the case? Did TF just figure, “I’m out of here, I’ll just say whatever I feel like.”? One can’t help but wonder if he’s shooting from the hip a little bit. Oh well; all in all, good times. Good Davos times. See you next year (right?)!

• The Top Five Tax Accounting Blogs [FINS]
For those of you that are inclined towards the tax side of the house, FINS presents its top five picks for wonky tax goodness that you should be reading if you’re not already. TaxProf Blog, The Tax Policy Blog and Don’t Mess with Taxes are three that we are intimately familiar and a couple we just discovered: Tax Watch and A Taxing Matter.

• IASB plans no fair value changes for EU-chairman [Reuters]
Sir David Tweedie has put his foot down again, so listen up. The IASB is not going to bend over backwards for you, the EU, or the FASB when it comes to fair value, get it? The world is at stake here. You non-knights out there need to just BTFU and let the man do his job. Tweeds told reporters in Brazil that the EU can stick it, “‘We cannot always allow Europe to tell us what to do. This is global. We are the IASB, not the European accounting standard board'” Got it?

You too, FASB. SDT said that he won’t converge accounting standards at ‘all costs,’ because he knows not everybody likes to place nice and seems to be okay with that. The man has short-timer’s so he doesn’t really care what you do. Have a nice life, Bob Herz.

• Woman charged with posing as IRS agent [San Francisco Chronicle via The Tax Lawyer’s Blog]
Sheryl Lynn Vertoch had been staying at the Inn Marin Hotel in Novato, California for over seven years telling the staff there that she was an IRS agent. Among her many adventures working in fantasyland, were testifying in the Enron case and being only one of six IRS agents that could investigate large public companies.

This all sounded good enough for the staff at Inn Marin, until Ms. Vertoch couldn’t pay her bill starting in 2008. The story was the IRS was getting stingy and wasn’t going to pay her until her current investigation was over. The owner of the hotel — finally fed up with an apologetic IRS — phoned the cheapskates up to complain because this was an outrage to hang this hardworking federal employee out to dry.

The IRS blew Vertoch’s “cover” and she’s now been arrested for impersonating a federal employee and she’s got a $55,000 hotel bill to deal with.

• Trump says he’ll jump at StuyTown takeover [NYP]
The Post is reporting that Stuy Town may become Trump Town, although it’s not entirely clear where we’ll see the iconic Trump name on the equally iconic brick buildings. The Donald joins many other high profile investors interested in the property including Wilbur Ross and WinnCompanies. One thing is for sure, whoever comes out top in this thing will certainly have no trouble following the Tishman/BlackRock fiasco.

• Tax Portions of President Obama’s State of the Union Speech [TaxProf Blog]
The POTUS gave his first State of the Union address last night and he talked about a lot of things over his 70 minute chat. Luckily if you didn’t manage to watch, listen, or were simply screaming at the TV during the whole thing, Paul Caron summed up the tax portions for you, “Let me repeat: We cut taxes. We cut taxes for 95 percent of working families. We cut taxes for small businesses. We cut taxes for first-time homebuyers. We cut taxes for parents trying to care for their children. We cut taxes for 8 million Americans paying for college.”

Whoa, what was that part about small businesses? ” I am also proposing a new small business tax credit — one that will go to over one million small businesses who hire new workers or raise wages. While we’re at it, let’s also eliminate all capital gains taxes on small business investment; and provide a tax incentive for all businesses, large and small, to invest in new plants and equipment.”

Is he talking about — GASP — bonus depreciation? And eliminating capital gains taxes? Maybe! Regardless, the President has his work cut out for him since he’s dealing with an angry populous and negotiating with some resistant players across the aisle (who would likely propose the same ideas).

• SEC Issues Interpretive Guidance on Disclosure Related to Business or Legal Developments Regarding Climate Change [SEC.gov]
Don’t worry, this doesn’t mean that companies will get all Al Gore on you with Climate Change talk but they will have to expand on the existing disclosures. Mary Schapiro isn’t interested in their opinion on the matter anyway; she’d rather that issuers just explain the impact of certain areas that may require disclosure. Pesky regulation, treaties with foreign countries, impacts on their business, you get the idea. Filings aren’t complex enough anyway.

• PwC Chairman Nally Says CEOs Are `Cautiously Optimistic’ [Bloomberg]
Looks a little cold over there in Toblerone land but Dennis looks like he’s enjoying himself. He also isn’t surprised that people aren’t as freaked out as, say, a year ago but dang it, things are still a little hairy.

• Open Letter to KPMG: The Ties That Bind Overstock.com and Patrick Byrne With Deep Capture LLC [White Collar Fraud]
Patrick Byrne’s indirect stalking of his critics on Facebook through the Deep Capture website has now been brought to the attention of KPMG, courtesy of Sam Antar:

You must investigate Overstock.com’s (NASDAQ: OSTK) relationship with Deep Capture LLC as part of your continuing audit of the company and take steps to require management to make disclosures under Statement of Financial Accounting Standards No. 57 (SFAS No. 57) governing “Related Party Disclosures.”

At the direction of Overstock.com CEO Patrick Byrne, the company has used Deep Capture’s resources, such as its web site, as a conduit to intimidate, harass, threaten, smear, and pre-text company critics. For example, Deep Capture Managing Partner Judd Bagley violated Facebook’s Statement of Rights and Responsibilities and deceptively posed as “Larry Bergman” in an effort to gather personal information and spy on Overstock.com ‘s and Patrick Byrne’s critics, including me (See Item 3 Safety and Item 4 Registration and Security).

Altogether, Judd Bagley posted on DeepCapture.com the names of 7,483 “Facebook friends” of Patrick Byrne’s critics and that list included spouses, minor children, and other people that have nothing to do with Overstock.com, Patrick Byrne, or Byrne’s delusional short selling conspiracy theories.

• IRS Plans New Disclosures on Uncertain Tax Positions [Compliance Week]
The IRS, in a surprise move, is now requesting more information from corporate taxpayers when they take uncertain tax positions. Now before you start belly-aching, Doug Shulman would like everyone to know that he could have been a lot harder on you:

“We could have asked for more – a lot more – but chose not to,” Shulman said. “We believe we have crafted a proposal that gives us the information we need to do our job without trying to get in the heads of taxpayers as to the strengths and weaknesses of their positions.”

That almost sounds like an apology, Doug. Are you getting soft on us?

Building a Blog Following [Blogging Suits]
Yours truly did his best to give some advice to the budding accounting bloggers out there over at Blogging Suits:

Despite the reaction of strangers, the content and purpose of your blog is yours to decide and there are certain techniques that can be utilized that will keep your readers engaged and coming back (no matter how “boring” a subject might seem):

• Blog regularly – For any blog to be successful, regular content is paramount. I’m not suggesting that you dedicate your entire day to posting but you should commit to posting to at least twice a week. Long periods without posting will turn readers off and they’ll assume that you’re not serious about keeping them informed.

Don’t get excited, no one is expecting you to keep the schedule we do here at GC. Besides, we have taskmasters walking around that shock us every 20 minutes to keep us going.

• Flat-pack accounting [The Economist via TaxProf Blog]
Oh the Swedes. They’re pretty clever with the flat-packed furniture but the entity structure is a whole other matter. The Economist reports that IKEA’s profits are largely sheltered from taxes by virtue of its holding company, which just happens to be organized as a foundation. The foundation’s stated purpose is to more or less educate you on matching the drapes with the paint you chose for the living room:

If Stichting Ingka Foundation has net worth of at least $36 billion it would be th charity. Its value easily exceeds the $26.9 billion shown in the latest published accounts of the Bill & Melinda Gates Foundation, which is commonly awarded that accolade.
Measured by good works, however, the Gates Foundation wins hands down. It devotes most of its resources to curing the diseases of the world’s poor. By contrast the Kamprad billions are dedicated to “innovation in the field of architectural and interior design”. The articles of association of Stichting Ingka Foundation, a public record in the Netherlands, state that this object cannot be amended. Even a Dutch court can make only minor changes to the stichting’s aims.
The Kamprad foundations compare poorly with the Gates Foundation in other ways, too. The American charity operates transparently, publishing, for instance, details of every grant it makes. But Dutch foundations are very loosely regulated and are subject to little or no third-party oversight. They are not, for instance, legally obliged to publish their accounts.

This allows IKEA to pay as little as 3.5% tax on its profits. Ragnar Danneskjöld would be proud.
• Obama to Call for Three-Year Freeze on Some Federal Spending [Bloomberg]
In case you’re unaware, the POTUS is giving a big speech tomorrow evening where he’ll talk about, amongst other things, a three-year spending freeze for domestic programs to get the deficit under control.

The Environmental Protection Agency and the Commerce, Interior and Justice Departments are among the executive branch agencies subject to the freeze, officials said, while the Defense Department, Department of Homeland Security, Veterans Affairs and unspecified international affairs programs would be exempt.

With the DoD and DHS exempt from the freeze, one would think that GOP types would be pleased with this idea. Not so.

A spokesman for House Republican leader John Boehner of Ohio was critical of Obama’s plan. “Given Washington Democrats’ unprecedented spending binge, this is like announcing you’re going on a diet after winning a pie-eating contest,” the spokesman, Michael Steel, said yesterday.

Wait a minute. Wouldn’t going on a diet right after the pie-eating contest be the perfect time?
• How Many Ways Can You Say Goodbye to a Job? [WSJ]
The temptation to go out in a blaze of glory by virtue of a BodySuit man type stunt is only for the boldest of souls. The Journal has plenty of advice on how to bow out gracefully, despite the temptation to use all your vacation, return to work and then give notice.

Some 60% of workers say they intend to leave their jobs when the economy improves, according to a survey by Right Management, a talent and career-management consulting firm in Philadelphia. It might be tempting to give the boss an earful if you land a new job in the coming months. But the way you quit can have a long term impact on your career.

Taking your fancy Swingline isn’t such a good idea either.

• Obama signs H.R. 4462 making Haiti donations deductible on 2009 tax returns [AccountingWEB]
The bad legislation officially becomes law with the POTUS’ signature. The new law applies only to cash contributions and you still have to provide documentation to substantiate your claim. For those of that donated by text message, your phone bill that shows the donation will suffice.
• Open Letter to KPMG: A Warning About Overstock.com, Your New Audit Client [White Collar Fraud]
There’s no doubt that the new audit team has a difficult task on its hands, taking Overstock.com as a new client. Sam Antar sent KPMG an open letter giving the firm some advice:

I believe that you should cut your potential exposure and resign. Some clients are simply not worth the risk. Since I don’t believe that you will resign, I feel that I owe you some advice just for old time’s sake to avoid another audit meltdown similar to what happened at Crazy Eddie.

However, I have my doubts that any firm can properly audit Overstock.com given its apparent lack of effective internal controls, its management integrity issues, and its continued willingness to violate GAAP and SEC disclosure rules.

There’s no way to be certain how all this will work out. Maybe KPMG will solve all of Overstock’s problems and everything will be fine and dandy. Regardless, we’ll be watching.
• At SEC, a Scholar Who Saw It Coming [WSJ]
Henry Hu will head the new Division of Risk, Strategy and Financial Innovation at the SEC. Mary Schapiro found this latest member of the Commission’s dream team in a somewhat unorthodox fashion:

In a Wall Street Journal opinion article in April 2009–which Ms. Schapiro says prompted the job offer from the SEC–Mr. Hu suggested Goldman Sachs Group Inc. used a kind of derivative called a credit default swap to turn itself into an empty creditor of AIG. He wrote that this may have encouraged Goldman to push for extra collateral from AIG, even when that threatened AIG’s existence.

The Journal reports that Mr. Hu wrote an article in 1993 warning about derivatives so while there would be an urge to chide the SEC for ignoring warning signs but we’re used to that.

• How to find the “best and brightest” [CPA Success]
This may be a better topic for the friendly HR professional but figuring out who these future accounting rock stars are before they show up on their first day is “more art than science”, as Tom Hood notes.
Popular to some old-school thought, GPA does not always indicate who’s going to dominate in the real world and “soft skills” — besides being a terrible term — are in more demand than ever.
• Help The The American Red Cross of Greater Chicago Help Haiti [Re: The Auditors]
The American Red Cross of Greater Chicago is having a drive today and since Francine’s friend is the CFO, we’ll be glad pass around the news:

One of my oldest and dearest friends, Guillermo Becerra, is the CFO of the American Red Cross of Greater Chicago. I asked him how I could help him, and the Red Cross, during what must be an incredibly busy time post-Haiti earthquake.

“The Chicagoland community will come together on Thursday, January 21 to give to the American Red Cross as we help the people of Haiti recover from the catastrophic earthquake that devastated their country last week.
The Chicago Helps Haiti media relief drive begins at 5 a.m. and lasts until 11 p.m. Nearly every TV and radio station in our area will be promoting this fundraising effort throughout the day. You can help too, by giving via phone or online, and sharing your thoughts here, on Facebook or Twitter, and by asking others to give.
To give from 5 a.m. to 11 p.m. CALL 1 (877) 565-5000 or visit www.chicagoredcross.org/haiti

Plus, we’re guessing that if you give, your 2009 tax return isn’t much of a concern.
• If Your Password Is 123456, Just Make It HackMe [NYT]
The Times is concerned that you have a shitty password which puts you at a huge risk of being hacked by someone sitting in their parents’ basement.

Imperva found that nearly 1 percent of the 32 million people it studied had used “123456” as a password. The second-most-popular password was “12345.” Others in the top 20 included “qwerty,” “abc123” and “princess.”

You know who you are, ye with stupid passwords. Also, don’t even think of changing it to “654321” because that drops in at #19.