Category: News

The Miami Heat Bail Out Tim Hardaway

They aren’t exactly the U.S. Treasury and don’t foresee any populist outrage but Miami Heat Limited Partnership did Tim a fave and bought his 7,500 square foot manse for $1.985 million, according to Tax Watchdog Robert Snell:

The Miami Heat, one of the NBA’s hottest teams, bailed out former star Tim Hardaway, whose namesake son plays for the University of Michigan basketball team, by buying his Miami mansion and clearing up a $120,000 federal tax debt.

Hardaway, 44, ran into tax trouble in June despite being paid more than $46.6 million during his NBA career. The IRS filed a tax lien against his property and the bill listed his 7,542-square-foot mansion in suburban Miami.

For whatever reason, Tim is still crashing there but the Heat are trying to flip the pad for $2.5 mil, so if you’re in the market for 5bed/5.5bath with a full basketball court, make them an offer.

Accountant Helps Truth or Consequences, New Mexico Live Up to Its Name

As you might expect, it doesn’t have a happy ending.

Police say a Pueblo accountant suspected of setting fire to his ex-wife’s home committed suicide during a brief standoff with authorities outside of Truth or Consequences, N.M.

Pueblo Police Sgt. Mark Duran says 50-year-old Myron Todd Thomas immediately became a suspect in an arson fire early Tuesday at his ex-wife’s home. Police issued an alert to law enforcement in New Mexico and elsewhere.

Sierra County (New Mexico) sheriff’s deputies and New Mexico police contacted Thomas north of Truth or Consequences, about 380 miles south of Pueblo Tuesday afternoon.

How Will the Senate Screw Up the 1099 Repeal Bill This Time?

The upper chamber is making yet another run at repealing the 1099 requirement that was part of the healthcare overhaul despite miserable failures in the past.


The Hill reports that the new bill has 52 co-sponsors which lead you to believe that this time, repeal will be a cinch:

Senators reintroduced bills that would eliminate the 1099 requirement for businesses to report annual purchases of at least $600 from each vendor. Most Democrats, including the Obama administration, support repealing the provision, but lawmakers have clashed over how to offset the $19 billion in lost revenue.

A bill introduced Tuesday by Sens. Mike Johanns (R-Neb.) and Joe Manchin (D-W. Va.) authorizes the Office of Management and Budget to identify unobligated federal funds to cover the cost of repeal.

“It’s a bad policy; it hurts businesses and it should be repealed, enough said,” Johanns said in a conference call with reporters.

The measure has 52 co-sponsors including 12 Democrats: Sens. Mark Begich (Alaska), Michael Bennet (Colo.), Maria Cantwell (Wash.), Kay Hagan (N.C.), Amy Klobuchar (Minn.), Manchin, Ben Nelson (Neb.), Mark Pryor (Ark.), Debbie Stabenow (Mich.), Jon Tester (Mont.), Mark Udall (Colo.), Mark Warner (Va.).

With such an overwhelming show of bipartisan support the only issue now is who will get the credit for saving small business as we know it?

Both parties have seized on the 1099 requirement to score political points. Republicans are posing repeal of 1099 as part of their promise to chip away at the reform law, while Democrats are touting it as a sign of their willingness to improve the current law.

Just for the sake of spiteful mischief, we’re hoping this goes nowhere (any and all theories on how they manage to do that are encouraged). Stay tuned!

Senators introduce bipartisan 1099 repeal bill [On the Money/The Hill]

Someone Would Like to Qualify Plante & Moran’s Fortune Ranking

From the mailbag:

The firm would be a great place for a new hire and/or intern. They offer competitive starting salaries along with a great support system and culture. I don’t know exactly how Fortune determines their ranking. If they surveyed newer staff and partners, they are going to look great every time, which seems to be the case.

There are some serious compensation issues for managers. How does a base of [70k-ish] sound (with potential bonus up to a staggering 8%)? How about a [marginal raise] over a 2.5 year period while [being promoted] that same time frame? The partner:staff ratio is so upside down that it is no wonder why they try and keep managers’ salaries so low. Some of the senior partners are a joke to try and rationalize with. I did my best, but couldn’t convince them what market salary was for a manager. I told them good luck.

Earlier:
The Fortune 100 Best Companies to Work For: Plante & Moran #26 (2011)

A Mountain of Hate Mail Gets FASB to Backtrack on Fair Value

If the drinks at Davos weren’t already free, we’re pretty sure Stephen Schwarzman would be buying.

From the Journal’s man on the accounting beat, Michael Rapoport:

Accounting rule makers took a key step Tuesday to reverse a proposal that would have required banks to value their loans based on the ups and downs of the market. The Financial Accounting Standards Board agreed that companies could continue to carry a variety of financial assets and liabilities at amortized cost, an adjusted version of their original cost, as they do now. That would reverse a proposal the board introduced last May that would have required bank loans and other financial assets to be carried at “fair value,” based on market prices.

What happened, you ask? What caused the FASB to fold like a cheap lawn chair? Remember all those nastygrams that were sent to Bob Herz? It sounds like the FASB took those personally:

FASB indicated the overwhelmingly negative reaction to its proposal, from companies and investors alike, played a big role in prompting the board to change its mind. The board received more than 2,800 comment letters on its fair-value proposal, most of them opposed to the move, and heard more opposition at a series of public roundtables before it began reconsideration of its proposal for fair-value changes.

So the bankers win this round. Oh, wait…they win every round.

Accounting Board Backs Off ‘Mark to Market’ Push [WSJ]

The Fed’s Financial Accounting Is a Beautiful Thing

Controllers, don’t you wish you had this sort of authority? Imagine writing your own financial accounting handbook (forget GAAP, it doesn’t apply here!), plugging your financial statements with all the footnotes you want and rewriting the rules in the middle of the reporting season just because you feel like it and, maybe in this case, because it will paint a rosier picture of your financial condition.

Wouldn’t it be great if we could do this with our checking accounts? You could just take the money that is owed to others (let’s call “bills” “negative liabilities” instead, even though in strictly technical terms a negative liability would be an asset, which we know bills are not) and change its name, give it a new presentation and VOILA! Instant solvency!

On January 6th, they tried to sneak a little change in presentation that, for now, doesn’t really matter but might when interest rates skyrocket and they are no longer handing out huge amounts of “profits” to the Treasury. Read:

Effective January 1, 2011, as a result of the accounting policy change, on a daily basis each Federal Reserve Bank will adjust the balance in its surplus account to equate surplus with capital paid-in and, in addition, will adjust its liability for the distribution of residual earnings to the U.S. Treasury. Previously these adjustments were made only at year-end. Adjusting the surplus account balance and the liability for the distribution of residual earnings to the U.S. Treasury is consistent with the existing requirement for daily accrual of many other items that appear in the Board’s H.4.1 statistical release. The liability for the distribution of residual earnings to the U.S. Treasury will be reported as “Interest on Federal Reserve notes due to U.S. Treasury” on table 10. Previously, the amount necessary to equate surplus with capital paid-in and the amount of the liability for the distribution of residual earnings to the U.S. Treasury were included in “Other capital accounts” in table 9 and in “Other capital” in table 10.

So instead of counting up the amazing Fed profits to the Treasury every year like they’ve done for as long as we can remember (and lately with lots of huge fanfare and fireworks, including the last record $78.4 billion), they’ll be readjusting the numbers on a weekly basis. Why they feel this is appropriate is beyond my analytical ability but should anyone have some insight, I’d love to hear it.

In the meantime, I guess it is reassuring to know that accounting tricks or not, the Fed can’t possibly be insolvent.

John Boehner Would Prefer If Some People Took Their Bellyaching About the 1099 Requirement Elsewhere

It seems that everyone and their dog is staking a claim as the biggest enemy of the 1099 requirement that was part of the healthcare reform law that passed last year. The latest self-proclaimed champions of small business are a few Senate Democrats who wish John Boehner would quit sitting on his orange hands and get a bill moving in the House, because let’s face it, the repeal passed by the House is going nowhere fast.


The Speaker is not deterred however, and his spokesman would like to remind the Ds in the S, that they can S a D and should bring it up with someone else:

Michael Steel, a spokesman for Boehner, said the speaker also supports eliminating the 1099 requirement, but “it is far from the only job-destroying provision in Washington Democrats’ law.”

“Now that the House has passed a law to repeal it, the best course would be for the Senate to do the same, and I hope these senators are pressing Senate Majority Leader Reid to do just that,” said Steel.

Earlier:
Vastly Unpopular 1099 Requirement Survives Thanks to the Reliable Dysfunction of the U.S. Senate

Here’s What Happens When 150 Maryland CPAs Storm the State Capitol

What do you get when you cross 150 CPAs with the state capitol? You get the Maryland Association of CPAs’ CPA Day and, lucky me, I got to be there when a record number of MACPA members stormed Annapolis, Maryland (on Inauguration Day, none-the-less) and brought their passion (and the sun) with them.

Driving in the dark at the crack of dawn to Annapolis, I had absolutely no idea what I was in for. I’d heard about previous CPA Day successes and knew the day involved legislators and CPAs swarming their offices but I had no idea the day would be so powerful, nor did I expect the passion I gathered from those in attendance.

For the day, I got to chase MACPA vice chair and association Legislative Executive Committee head Allen DeLeon, CPA. Al is partner at Gaithersburg’s DeLeon and Stang, a 2010 Accounting Today winner for best places to work, and yet another CPA touched by MACPA CEO Tom Hood’s powerful social media message.


As Tom so eloquently stated yesterday, the MACPA’s primary legislative mission is to protect the CPA license in the state of Maryland. Their secondary level of legislative influence means keeping an eye on tax policy in the state. The association has identified the following five issues for the 428th session of the Maryland General Assembly:

1. Pass 120/150 legislation. This legislation will allow students to sit for the CPA exam after completing the accounting requirements in an undergraduate program. They would be able to get their license upon completion of the 150 credit hours. This bill (HB 1137) passed the House and Senate committee last year but ran out of time before the end of the legislative session. See our prior post about this issue.

2. Stop sales tax on accounting, tax and consulting services. The real issue here is the compliance costs to CPA firms (and their clients), as intangible services are hard to identify where and when they are delivered to and from.

3. Exempt CPAs from proposed regulation of debt counselors. The CPAs education, examination and experience requirements, along with rigorous state licensing and oversight, make it unnecessary to include CPAs in this legislation. See our prior post here.

4. Stop the lawsuit tax. Efforts by the trial bar to liberalize tort law will be detrimental to CPAs and small businesses as the basis to argue suits would increase and liability would be linked to the entities with insurance. This means more suits and more settlements, effectively creating a lawsuit tax. This is bad legislation even in a good economy.

5. Pass “safe harbor” legislation. This is a technical correction necessary since the passage of mandatory peer review legislation in 2005. This will clarify the definition of “attest” and practicing certified public accountancy in Maryland law. This will allow non-licensed CPAs to prepare compilations for clients provided that they do not use AICPA SSARS language and state that they are not required to undergo peer review.

For Al’s part in yesterday’s event, we met with Senator Rob Garagiola, Senator Nancy King, Delegate Brian Feldman and Andrew Aleshire, aide to brand spanking new Delegate Aruna Miller. Having done this several years in a row, Al wasted no time bringing up the key issues with each legislator. We cruised between the House of Delegates and the Senate buildings (he’s done this so many times he even knows of the secret underground tunnel that connects them both) discussing taxes, the 120/150 rule, reviews and compilations and regulation of CPAs as debt counselors.

I was especially impressed by Senator King’s willingness to sit down with Al and discuss current issues, including a highly controversial (Tom Hood called it “dangerous”) 2 – 3% gross receipts tax, which the state is apparently considering in lieu of a sales tax hike. Al volunteered to give any proposed legislation a good once over as a politically-independent CPA, something young CPAs getting involved in legislative issues should take note of. While MACPA members came to Annapolis to push the association’s legislative agenda, it’s also important to remember that part of protecting the public interest also means protecting the profession from unnecessary or burdensome legislation.

Comments from first-time attendees included “I was surprised at how receptive everyone was” and one Rockville CPA noted that though CPAs had invaded state buildings, they did not get the sense that they were perceived as “a bunch of people coming to bother them.”

Barrett Young, one such first-timer in attendance yesterday, stated that he was surprised at how “normal” legislators were. The 27 year old Charles County CPA (who can be found blogging at CP…eh?) attended CPA Day after Tom Hood came to his area for a town hall on these issues and, like me, didn’t realize the full impact 150 CPAs would have in Annapolis that day. He came because he wanted to meet other CPAs in the state, not because he knew it would be a legislative day of action. But now that he’s attended one CPA Day, he is both informed and inspired to take action moving forward. “The MACPA keeps us focused on a bigger picture than our revenue sources,” he said.

Did yesterday change his view on these important issues? Absolutely. “I do have a big chance of running into my delegates at the store,” he said, “and now, I have the confidence to know that they are approachable – and interested – in my views on the profession. The MACPA knows what impacts us, and is doing a great job to remain nonpartisan. [They do not favor] a specific county, but protect our license as a whole.”

Tom reminded those in attendance that making face-to-face contact with legislators allows CPAs in the state the opportunity to show lawmakers that we care enough to show up, shake hands and make our concerns known. For young CPAs like Barrett, it also gives the next generation of the industry a chance to see how powerful their profession really is. “I have a responsibility to see that the profession is greater than just me, my career, and my need to make an income. CPA Day does this by introducing me to older CPAs, and connecting me with peers from my own age group,” he told us. Who would pass up a chance like that?

“If we had two or three hundred of you, we could rule the state,” Tom joked to the audience.

Judging by the tangible buzz yesterday, I’d say Maryland CPAs are pretty close to ruling the state as is.

Once again, we have to congratulate the MACPA for a job well-done and I’m already looking forward to following along next year.

The Fortune 100 Best Companies to Work For: Plante & Moran #26 (2011)

Early January marks another edition of Fortune’s 100 Best Companies to Work For and unsurprisingly, accounting firms are littered all over it. If it were any other year, we could give a rat crap and would cover the list out of basic necessity. However, this year an interesting development has occurred – the highest ranking accounting firm is not a Big 4 firm. Now we realize that this may come as a surprise to you but P&M has been on the list for 13 straight years, topping out at 12 in 2006, so this is hardly a fluke.

Anyway, let’s get to the tape, shall we?


Plante & Moran – Previous rank: #66. Fortune informs us that good times have returned at P&M after a year off, “Employees cheered when the accounting firm reinstated its annual gathering, eliminated in 2009.” Also, the firm throws around busy season survival kits that include “aspirin, stress balls and candy.” No word if they help employees survive cranky spouses and kids but the line has to be drawn somewhere, s’pose.

Stats of note:
• New Jobs (1 year): -61
• % Job Growth (1 year): -4%
• % Voluntary Turnover: 9%
• No. of Job Openings at 1/13/2010: N/A
• Most common salaried job: Audit staff with average salary of $64,300
• % Minorities: 6%
• % Women: 54%

It’s interesting to note that the number of new jobs, % job growth and average salary are all down from last year, while % voluntary turnover is up and yet the firm jumped 40 spots in the ranking. Perhaps the leap is due to a HR policy change from last year: the firm now has a nondiscrimination policy that includes sexual orientation and offers partner benefits for same-sex couples. Regarding these issues last year, we said this:

The firm offers onsite child care during busy season but does not have a nondiscrimination policy that includes sexual orientation nor does it offer domestic partner benefits for same-sex couples.

We’re not saying the latter two reasons are why they fell from #12 but it might help them jump back into the top 50.

Not that we’d dream of taking any credit but could a positive change in human resources policy result in a forty spot jump, despite the salary and hiring stats being down? It certainly didn’t hurt. Discuss P&M’s minor upset and we’ll get to the rest of the firms in due course.

Earlier:
The Fortune 100 Best Companies to Work For: Plante & Moran #66

Accountant Sets Bar for Idiotic Embezzlement Schemes

The snatch and grab and burn technique isn’t the most sophisticated plan we’ve read about but we are talking about a man who is an accountant first (we’re guessing a very bad one) and an extremely dimwitted criminal second:

An accountant faces seven years in jail after a court convicted him yesterday of deliberately setting fire to Dh250,000 in cash and stealing a similar amount from the taxi company where he worked.


Why this particular accountant-cum-thief decided half the money wasn’t worth his trouble is unclear but what is CRYSTAL is that setting the remainder on fire was the equivalent of writing “I’M EMBEZZLING FUNDS” with a Sharpie™ across the cash ledger.

According to the arraignment sheet, prosecutors said [the accused] deliberately set fire to the money bag which contained Dh500,000. He burned Dh250,000 and stole the rest.

He was also charged with causing intentional damage and financial loss to the company. The company’s Indian manager testified that one of the employees informed him over the phone that the accounting office was on fire.

“I rushed to the company’s premises to check what happened. We had left nearly half a million dirhams in a money bag which we kept inside a wooden cupboard. The money was our drivers’ daily revenues. I discovered that half of the money got stolen and the remaining half was burned,” the manager told prosecutors.

But to be fair to our asshat accountant du jour, “a money bag which we kept inside a wooden cupboard” isn’t the most secure internal control procedure we’ve ever heard of. Let this be a lesson.

Nightmare Audit Rooms Have Their Consequences

The following post is republished from AccountingWEB, a source of accounting news, information, tips, tools, resources and insight — everything you need to help you prosper and enjoy the accounting profession.

With no place to work in the office of the housing authority of a major city, the audit team was provided tables and chairs in the hallway of a renovated apartment building that connected the swinging front door with the elevators. In the middle of winter in a city located on a bay, the wind swept into the hallway driving temperatures to near freezing. Clothed in parkas, scarves, wool hats and gloves, the audit team struggled through the engagement.

Auditing rural hospitals, CPA firm personnel were ordinarily assigned to a patient room for workspace since there was no room for them in the hospital office. This year there were no patient rooms available so they were assigned to the morgue! Steel tables and high stools were their accommodations. Formaldehyde, dead bodies draped in sheets and the medical examiner’s buzz saw greeted them each day.


The auditors of a plumbing contractor were assigned a dark, damp room in the basement for workspace. The room was two flights of stairs and several hundred yards from the accounting office.

Two auditors were assigned workspace at a desk adjacent to and facing the controller. The controller smoked, they didn’t.

I could relate more true stories on and I suspect you could add your experiences to this list of inadequate fieldwork workspace. Here are some obvious questions:

1. Did any of these scenarios increase time charges on the engagements?
2. Who had responsibility to correct or prevent these circumstances?
3. When should corrective action be taken?
4. What actions should have been taken?

Question 1: Of course time charges were increased! The auditors of the housing authority said the audit required almost twice the amount of time it should have. The hospital auditors lost numerous hours going for fresh air and to the restroom to vomit! Going back and forth to the accounting office wasted enormous amounts of time, although the team did lose weight. Not only was the health of the non-smokers impaired, they wasted time leaving the room to discuss audit issues and securing all working papers and electronic equipment every time they left the room.

Question 2: The in-charge accountants on these engagements had responsibility to run the fieldwork but their “stick” wasn’t big enough to get the managements to change their workspace. It was the engagement leaders’ responsibility to speak with managements to correct the situations.

Question 3: If the workspace could not be improved internally, a nearby motel room, a recreation vehicle parked outside a client’s facility or an electronic air filer could be remedies. The cost of these alternatives is likely far less than the unbillable wasted time.

Question 4: This is a planning activity! Proper workspace should be arranged by the engagement leader before the fieldwork begins. Engagement profits can be increased considerably by using foresight and arranging for proper workspace!

(UPDATE) Accounting Firm Merger Monday: Dixon Hughes, Goodman & Co. Combine to Form Dixon Hughes Goodman

~ Update includes Goodman & Co. quote in fourth paragraph.

Late last week we heard some rumbling about a merger between High Point, NC-based DIxon Hughes and Virginia Beach, VA-based Goodman & Co. and lo and behold, this morning the press teams from both firms have dropped us the press release announcing the merger and a link to this page that includes details on the merger, a letter to clients, a list of office locations and FAQs.


The combination, effective March 1, will make Dixon Hughes Goodman the 13th largest firm (by revenue) in the U.S. with a combined revenues of over $280 million. This places them one spot ahead of Baker Tilly Virchow Krause and behind directly behind Plante & Moran (this is going by Accounting Today‘s count). The combined firm of Dixon Hughes Goodman will have 30 offices (with HQ in Charlotte), in 11 states with 1,700 professionals. The firm’s leadership will consist of Thomas H. Wilson, Managing Partner of Goodman & Company, as the Deputy Chairman and Chief Operating Officer, Charles Edgar Sams, Jr., Chairman of Dixon Hughes, will continue to serve as Chairman and Kenneth M. Hughes, Chief Executive Officer of Dixon Hughes, will also remain in that position.

Both firms ranked very high in Vault’s Accounting 50, with Dixon Hughes coming in at #5 and Goodman & Co. landing at #15. Goodman ranked very high in some notable categories including #2 in compensation, #3 in business outlook and #1 in green initiatives.

The press release states that Goodman & Co. “retain all of its existing Virginia, Maryland and Washington, D.C. offices,” which we interpret as “no reductions in headcount” but we’re waiting to confirm and we’ve confirmed this with Goodman’s Gary Thomson who said, “we anticipate an increase in the near term as we take new industry specialties to our new markets.”

On a far more exciting note, Goodman & Co., by virtue of this merger, has broken into the Elvis-impersonation market, of which Dixon enjoys a sterling reputation.

Congrats to both firms on the merger and we wish them many happy years together. Obviously, the honeymoon will have to wait – busy season and all. We’ll keep you updated on any further developments.