Category: News

Don’t Let Anyone Tell You That Some People Aren’t Passionate About Governmental Accounting

As you may have heard, many states in our union have budget troubles; one of the biggest problems being underfunded pensions. Reuters reports that estimates put the gap in the range of $700 to $3 trillion. Despite the range being akin to saying, “I’m somewhere between Ohio and Nevada” the shortfall has gotten a whole host of people bent out of shape. It’s gotten so bad that Bill Gates has chimed in, evoking Enron for crying out loud (and here we thought that was only for journalists who cover accounting once every decade).

All this has the GASB to going back to the drawing board as David Bean, the GASB’S Director of research and technical activities, announced that the more disclosures will be proposed this summer. There are plenty of areas that up for debate but Mr. Bean mentioned that certain topics get especially contentious, apparently to the point that it comes to blows.

“Where the fistfights occur is with the discount rate,” Bean said about returns on pension funds’ investments, which affect how well a government can cover those liabilities. The board would require governments to disclose their long-term expected rate of return on plan investments as determined by actuaries, Bean said. “This is the actual expected rate of return as recommended by the actuaries,” he said. “We’re going to make very clear this is not a number that is pulled out of the air. This is based on solid science.”

It’s pretty clear that this problem will only get worse. If you were suddenly told that you had to use science rather than a dartboard, wouldn’t you want to punch someone’s lights out?

U.S. wants states to reveal more about pension funding [Reuters]

And the Coolest Accounting Firm Is…

After four rounds of bracket magic including a back and forth championship match-up, we have our very first winner of the Going Concern March Madness: Coolest Accounting Firm competition. Let’s look at the final bracket.


For those of you that haven’t been refreshing the page for the last 48+ hours, Rothstein Kass pulled their final upset, this time of West Coast rival Moss Adams. Along the way RK dismantled the biggest of the Big 4, Deloitte, McGladrey and BDO.

You may think that such a run of upsets was the result of the double-entry stars perfectly aligning themselves but RK Co-CEO and Managing Principal Steve Kass explained it differently, “Many will look at results and call Rothstein Kass a ‘Cinderella story,’ or characterize our victory as an upset. Though we embraced the underdog role, we knew that our low seeding was more likely a function of strength of schedule. The fierce competition we encountered during the season prepared us for the rigors of the tournament, while quality of our recent recruiting classes left us confident that we could make a run at the title,” Mr. Kass said. “As thrilled as we are by our success, however, there will be no champagne sprayed in locker room celebrations, nor ticker tape parades through the halls of our offices. Over the years, we’ve observed that the more time you spend reflecting on how cool you are, the less time you have free to do cool things. Notwithstanding, winning was pretty cool!”

So it sounds like it’s back to business as usual for RK. Undoubtedly, this victory will catapult them up Vault’s prestige rankings making for a much more difficult tournament next year but for now they get to enjoy the spoils of a champion (which, in this case, is nothing – our publisher wouldn’t spring for a trophy but he’d love to hear from you about it). So congrats to Rothstein Kass on a great run and to the rest of the firms out there – get better.

Oh, and anyone expecting a “One Shining Moment” montage needs to slap themselves across the face right now. And then again.

Confidential to The New York Times: GE’s 2010 Tax Return Isn’t Finished Yet

Remember that New York Times story that put the universe on notice that General Electric made truckloads of money and ended up with a $3.2 billion “tax benefit”? It also mentioned that their tax department is known as the “best tax law firm” and is staffed with a small army of former Treasury whiz-kids and turbo-tax nerds to legally minimize the company’s tax obligation. The story got all sorts of people worked up from Jon Stewart to Henry Blodget and it whipped up a small amount of hysteria amongst the masses who had the courage to read an esoteric tax article that went on for more than one page.

Today a new report from ProPublica (a rebuttal of sorts, since they got scooped by the Times) is “Setting The Record Straight on GE’s Taxes“:

Did GE get a $3.2 billion tax refund? No.

Did GE pay U.S. income taxes in 2010? Yes, it paid estimated taxes for 2010, and also made payments for previous years. Think of it as your having paid withholding taxes on your salary in 2010, and sending the IRS a check on April 15, 2010, covering your balance owed for 2009.

Will GE ultimately pay U.S. income taxes for 2010? After much to-ing and fro-ing — the company says it hasn’t completed its 2010 tax return — GE now says that it will pay tax.

Also, part of the ProPublica report clarifies that the whole “financial reporting vs. tax reporting” thing:

GE’s 2010 financial statements reported a $3.25 billion U.S. “current tax benefit,” which is where the Times, which declined comment, got its $3.2 billion “tax benefit” number. But a company’s “current tax” number has nothing to do with what it actually pays in taxes for a given year. “Current tax benefit” and “current tax expense” are so-called financial reporting numbers, used to calculate the profits a company reports to shareholders.

In other words, the Times left out the tricky stuff or maybe just didn’t a bang-up job explaining the tricky stuff. But framing the shrewd tax planning and lobbyists working for a giant corporation is far more provocative than book-tax differences and defining deferred tax assets. Relevancy be damned!

Setting The Record Straight on GE’s Taxes [ProPublica]
Also see: GE and the power of iterative journalism [Felix Salmon/Reuters]

The AICPA Wants Your Thoughts on What the Future Holds for CPAs

Now is your chance to tell the AICPA exactly where you think the industry is headed in the future. CPAs don’t get many chances to be this candid about their chosen profession, so please make it count.

CPA Horizons 2025, coined “the profession’s effort to anticipate and plan for the future,” is a short survey that seeks to get professionals’ opinions on where the industry is going and the challenges it faces to get there. Participants are faced with the following directive:

Growing global competition, rapid technological development and increasing regulation are impacting the CPA profession today and will continue to in the coming years. As a result of the changing environment, how can the profession remain competitive? Will services being requested of the profession change? Will the profession’s core values, core services and core competencies remain the same or need to change to allow the profession to continue to best serve its clients and employers?

CPA Horizons 2025 is about your future and the future of your profession. It’s about forging a path to ensure both remain competitive in a rapidly changing world. Your participation in this profession-wide endeavor is vital in helping shape our collective future.

We are soliciting the thoughts of thousands of CPA’s along with other voices via this interactive survey, online discussion forums, in person forums and direct outreach to AICPA committee members, leaders in the profession and beyond. We ask for 15 minutes to help map out the next 15 years. Your 15 minutes will be on a limited # of questions that is a subset of a larger group of questions which will serve to identify what is on the Horizon impacting the profession. Your participation is important. What may the future hold? Help tell us.

Beyond answering simply yes or no questions based on pre-determined criteria, you will have the opportunity to write in your answers regarding trends, opportunities and challenges facing the profession. You will also get an entire box to fill in what you think the profession should do to remain relevant, a huge opportunity for those of you who feel the current food chain just isn’t doing it for you.

And then you get to watch a video. Frankly I’ve got to say this video was pretty depressing, showing how the U.S. is falling behind in the global scheme of things, continuously getting spanked by India and China when it comes to science, math and the economy. Ouch.

Take the survey here.

The Waning Days of Tax Season Are Wearing Thin on at Least One Accountant

Michael Grossbach is taking it out on the help.

Michael Grossbach, 32, surrendered himself to police when he learned of his impending arrest for allegedly assaulting his office assistant on March 5, police said.

“Apparently there was an argument and he lunged at her, grabbing her hand forcefully,” said Sergeant Michael Buck of Irvington Police. “There were injuries, but nothing serious.”

Sergeant Michael Foley arrested the Garrison resident for having illegal physical contact with his 31-year-old employee at his accounting firm at 106 North Broadway. The defendant was charged with assault in the third degree, a misdemeanor. According to police, if convicted he is facing anything from a fine to one year in prison.

Irvington Accountant Charged with Assaulting His Assistant [RP]

Marcum Has Some Doubts About American Apparel’s Ability to Continue Selling Gold Lamé Leggings

Bad news for Dov Charney’s hipster retail paradise as Marcum – who replaced Deloitte last summer – has issued its auditor’s opinion with the language that no one likes to see.


But before we get to that, if you take a quick glance at the balance sheet you’ll see that the company barely has enough money to keep the lights on as their working capital is a measly $3 million (current assets of $216 million, current liabilities of $213 million). This shockingly bad number is mostly due to the $138 million in revolving credit facilities the company has included in its current liabilities. The company is also shows an accumulated deficit of over $73 million in its equity section. APP also bled over $32 million in cash from operations, according to its cash flow statement. All this bad news has lots of people talking about bankruptcy and that doesn’t touch the thirteen (that’s Gawker’s count, I only saw twelve) ongoing lawsuits against the company. Plus there’s the subpoena the company received from the U.S. Attorney General for SDNY last August over their auditor switcheroo.

We could go on and on but you get the pic. Here’s the final paragraph from Marcum’s opinion in APP’s 10-K:

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred a substantial loss from operations and had negative cash flow from operations for the year ended December 31, 2010. As a result of noncompliance with certain loan covenants, debt with carrying value of approximately $138.0 million at December 31, 2010, could be declared immediately due and payable. Notwithstanding the foregoing, the Company has minimal availability for additional borrowings from its existing credit facilities, which could result in the Company not having sufficient liquidity or minimum cash levels to operate its business. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Obviously the bad news is that investors are really spooked but the good news is that there could be a serious fire sale on hoodies and t-shirts in our future. Silver lining!

Congress Continues to Successfully Drag Out the 1099 Repeal

If only somehow they could kill it completely, could we fully revel in the disfunction of the legislative branch:

What is clear is that nothing is certain with moving a 1099 repeal. The House passed a standalone measure on March 3 and the Senate tacked on an amendment to the Federal Aviation Administration (FAA) authorization bill, which passed the upper chamber, each with different offsets to cover the costs of the repeal.

The White House and House and Senate lawmakers across both parties back the elimination of the 1099 provision from the healthcare law but are at odds over how to make up for $22 billion in lost revenue as projected by the Joint Committee on Taxation.

Fate of 1099 repeal still up in the air [The Hill]

Earlier: How Will the Senate Screw Up the 1099 Repeal Bill This Time?
Even Earlier: Vastly Unpopular 1099 Requirement Survives Thanks to the Reliable Dysfunction of the U.S. Senate

Going Concern March Madness: Moss Adams, Rothstein Kass Battle for the Title of the Coolest Accounting Firm

Well, we’ve finally reached the championship match-up and it’s a battle of the coasts. , NJ-based Rothstein Kass will take on Seattle-based Moss Adams for what will no doubt be the crowning achievement for either firm’s busy season. Moss Adams disposed of their rumored dancing partner Grant Thornton while Rothstein dismantled McGladrey. Rehash over; let’s get to the bracket.


Will Rothstein be the ultimate Cinderella? Will Moss spoil the ball? Will Reznick Group mount a firm-wide attack on MA just out of spite? WTFK? But vote so we can wrap this up. If I have to look at another bracket in next 365 days it will be too soon. Poll is open until FRIDAY at 11:59 PT.

Johnson Jacobson Wilcox Ups the Bar on Good Times to Be Had During Tax Season

During tax season, many accounting firms attempt to provide their employees with “fun” things to do. Ordinarily a boss would rather you just qwitcherbitchin and do your job than take you to Dave & Busters or splurge for pizza but when employees are suffering from exhaustion, Excel-induced eyestrain and pants that grow tighter with each passing day, sometimes violence has ensued (or, at very least, passive-aggressiveness so frightening that it borders on assault). While we applaud the effort by firms to make things more pleasant, many of them suck at “fun.”

Las Vegas-based Johnson Jacobson Wilcox, for one, is trying to not suck in the fun department and it appears that they’ve been successful since they were named Best Accounting Firm to Work For in 2010 (15-49 employees) by Accounting Today.


JJW’s managing partner Gary Johnson realizes that most people are still hung up on the old accountant stereotypes and he’d like to debunk those (after rehashing them, of course), “Most people think of accounting firms and accountants as dull, without much of a personality — people with their heads down and green eyeshades on, who work all day long and don’t talk to too many people unless the phone rings. We’re just not like that. We like to have fun once in a while.”

In this particular case, fun includes a $500 clothing allowance for new hires, free lunch during tax season and a Wii bowling tournament.

Johnson Jacobson Wilcox runs a stress-busting Wii bowling tournament every tax season — 2011’s edition kicked off Monday — complete with a trophy. During the 24-employee firm’s busy season from mid-January to April 15, the company brings in free lunch for employees every day. The company also sends new hires an orientation binder complete with business cards two weeks before they start, and a $500 clothing allowance awaits them as soon as they walk through the door.

Obviously the $500 clothing allowance would come in handy for most of you (especially the fashion-handicapped types) but this bowling tournament – and the trophy – is what really got our attention. Of course the Wii hasn’t been around forever and prior to such technological miracles, JJW had actual bowling tournament every tax season. And fortunately for you all, we were able to obtain some footage of two JJW partners from the late 80s in an especially competitive match:

Trade journal chooses Las Vegas accountant best place to work in U.S. [LVRJ]

New Website Allows You to Rat Out That Tax Cheater in Your Life Without Fear of Being Identified

Do you happen to know for an absolute fact that a former co-worker was taking their threadbare clothes to the Salvation Army and claiming them as being in “good condition”? Does your ex-girlfriend/boyfriend exaggerate the expenses they incur from their side business? Does your neighbor’s six-year old underreport their lemonade stand profits? Are you looking for a way to get back at them without the fear of a confrontation? Good news! Taxsqueal.com will let you snitch on them anonymously and you don’t have to deal with any scary IRS forms.


Al Drucker – a former IRS agent – founded Taxsqueal because he thought there was lots of opportunity for Joe or Jane Whistleblower to do their part in closing the tax gap but were maybe hesitant because the idea of being on hold was too much to bear (that and the Big Brother thing):

He said the IRS once manned a toll-free telephone number, but callers to that number now are met with an automated message that directs them to the IRS website. Other potential callers are uneasy about contacting the government and worry they won’t stay anonymous.

Drucker’s idea: Develop a website in which informants can fill out an easy-to-use form written in plain English. TaxSqueal.com then forwards the information to the IRS and erases from its computer system information about the person making the allegation.

The catch is you have to be willing to do it as an act of patriotic duty or hateful spite as opposed to landing a tidy reward for narking out a tax scofflaw:

Whistleblowers would miss their chance to collect. But Drucker figures most people aren’t eligible for a reward anyway, because most of the cases that come into TaxSqueal.com are for less than $2 million.

What’s in it for whistleblowers? Not much. “This site is not designed for people seeking rewards,” Drucker said.

Sweet revenge awaits.

People can report tax cheats on new website [Daily Record via AT]

Man Who Found $9 Million Lotto Ticket While Preparing His Tax Return Thinks Everyone Should Get Some Perspective

Last Irvin Przyborski found a year-old lotto ticket while he was preparing his tax return and wouldn’t you know, it just so happened to be winner worth $9 million. As if winning the lotto wasn’t lucky enough, Irv managed to cash it in just a few days before it expired. Now you might think to yourself, “$9 million! What a lucky guy! He must be feeling extremely lucky and grateful!” but then you wouldn’t know Irv Przyborski.

Przyborski, reached Thursday afternoon and weary from the day’s constant media attention, was unimpressed with the development. “What’s the big deal? It’s not even worth putting in your paper,” Przyborski said outside his East Side home. “It’s like watching paint dry.” Despite his nonchalance, the 61-year-old retired truck driver admitted he would have been upset had he missed the deadline. Nevertheless, he said the prize was hardly life-changing and he had no grand plans for the money. “Look at the people who are out of work,” he said. “People with Ph.D.s can’t find work. There’s nothing joyful about winning money in a situation like this.”

This seems appropriate.

Under the wire and into the money — $9 million winner: ‘What’s the big deal?’ [CT]

Going Concern March Madness: The Coolest Accounting Firm – The Final 4 Sans Big 4

Now that we’ve reached the Final 4 without any Big 4 firms (all bounced in the first round), some of you may have lost interest in Going Concern March Madness: Coolest Accounting Firm. Well, that would make you a loser and anyway, we must press on! Face it, you’ll go for anything to distract you from the fact that you’re stuck inside whispering sweet nothings to Microsoft Excel while spring is slowly emerging outside. And it’s a pretty compelling Final Four anyway. Let’s take a look shall we?


So you’ll notice that we have the very interesting match-up between Moss Adams and Grant Thornton, the two firms that have subject of merger rumors (unfounded!) since January. Obviously the winner here will enjoy the upper hand in any future negotiations between the two firms, so anyone from either firm wishing to upset the leverage here would be wise to take a page from the Reznick Group strategy book.

Speaking of Reznick, we briefly mentioned the fact that their first round magic was nowhere to be found in round two. A tipster filled us in as to why:

I think the higher-ups were embarrassed by the public calling out and subsequent mockery in the comments, not a single other email went out about it – reminders about the competition or the beatdown they suffered at the hands of the commenters 🙂 Serious loss of billable hours that day too, everyone kept checking the site all day long for more comments, emailing and IMing each other about it.

So make a mental note – if your firm’s leadership has a thin skin and isn’t down with wasting a number of billable hours, the Reznick strategy may not be the way to go after all.

Moving on to the second match-up we have the perennial dark horse Rothstein Kass against McGladrey. Rothstein continues their hot streak in GCMMTCAF after their impressive performance in this year’s Vault rankings and McGladrey is…well, we’re pretty surprised to see McGladrey in the semi-finals, to be honest. Perhaps there are sweet incentives being offered internally but right now we haven’t been made aware of any such temptations. Anyway, McG has quietly made a run, so it makes for a decent showdown.

All right, enough with pleasantries. Let’s get to the voting. Polls close tomorrow night at 11:59 PT.

First up – GranMA

Cinderella vs. Mickey G’s.