Category: News

China MediaExpress CFO Keeps Things Vague in Resignation Letter

Jacky Lam’s resignation was effective on Sunday but his letter to the CCME Board was dated Tuesday, making us wonder if he slept on it for 48 hours just be sure he was doing the right thing.

March 15, 2011

The Board of Directors
China MediaExpress Holdings, Inc.
22/F Wuyi Building
33 Dongjie Street
Fuzhou, China

Dear Sirs,

As I informed the Board on Sunday, I have resigned as a Director and as the Chief Financial Officer of China MediaExpress Holding, Inc. (the “Company”), effective as of March 13, 2011. I have resigned because of information that I have learned in the past few days, and because the Chairman and CEO did not respond to these matters in a manner that I believed to be appropriate.

Thank you for your kind attention and I wish the Company success in the future.

Yours sincerely,

Jacky Lam

Of course the “information that I have learned” could have been Roddy Boyd’s post from last Friday or the video of the sleeping staff posted Sunday or something else entirely. As far as the CEO’s inaction – should he have filled one of the broom closets with Red Bull? Maybe kept more of something else that apparently keeps people awake but otherwise uninterested in other humans? We’re not exactly sure on either of these questions but we’d love to hear theories.

As for the “Best. Period. End of Statement.” – they did their part too.

8-K [SEC via ZH]

Problem of the Day: Non-smoking, Cheapskate, Immature Newbie Is Cramping My Commute

Since everyone’s distracted by brackets and projectile vomiting in the street, I thought I’d pull another “problem” from our Twisted British Sister site:

So a new ‘man’ (18) started last week and I got chatting to him in the car park as he was loitering waiting for the office to open. It turns out he lives vaguely near me and I, in passing, said that if he was ever stuck trying to get to work (e.g. from rain, hail, wind or snow) he should let me know and I could always swing by and fetch him.


I know – an 18 year-old co-worker? Just go with it:

On Monday he asked if I could bring him to work. Being soft I said ok and gave him a lift. Then home. Then Tuesday to work and back. Yesterday he got in and said ‘Oh, I’ve been thinking, I should pay you for these lifts’. Resigned to my fate as being soft and letting him keep getting lifts I consoled myself thinking ‘Oh well, my petrol is £45 a week, at least he will cut my commuting costs’. I gave him a lift home and he said ‘Is this alright for a weeks worth?’ and gave me a pile of shrapnel. I counted it when I got home and it was £7.91.

I can’t smoke with him in the car as he coughs. I don’t like to have music on as I feel obliged to force conversation. He is 18 and therefore annoying to talk to.

I want him out of my car, but he is nice and I am nice, so how do I do it? If I pushed him out on the dual carriage way would the police take a dim view?

Nothing WORSE than a non-smoker and a cheapskate, amiright? Suggestions for this chap are now welcome (if you’re still sober enough to type, that is).

WFT Principal Accounting Officer Leaving Company After $500 Million WTF

Sorry that we’re a little tardy on this news but you just knew someone was going down for this.

Apparently the mortification suffered by Weatherford International CFO Andrew Becnel was enough for him to keep his job. Principal Accounting Officer Charles Geer, on the other hand, wasn’t so lucky:

The Geneva-based company also disclosed the departure of Principal Accounting Officer Charles E. Geer, whose resignation comes two weeks after Weatherford disclosed tax-accounting errors that forced it to revise previous results by $500 million.

Weatherford said in a securities filings that Mr. Geer, whose resignation is effective Friday, is leaving to “pursue another career opportunity.”

It’s awfully nice of the company to keep things so professional after the material weaknesses under Geer’s watch will result in restatements for three years of filings.

Weatherford Cuts Earnings View; Top Accountant Exits [WSJ]

Report: Nearly 20% of Financial Statement Users Think the Auditor’s Report Is Worthless

Last December, the PCAOB announced that they were going to kick around some ideas for a new and improved audit model. See, you may have heard about a few financial institutions that, it turned out, weren’t in such great shape. Funny thing – all these companies had clean audit opinions. This got people asking pretty awkward questions out loud like, “Are Auditors Irrelevant?” and making statements such as, “Get rid of [them]” AND “They add no value.”

The PCAOB listened to all this gnashing of teeth for about a year (or maybe their entire existence) and they came to the conclusion that some conversations needed to be had and even some changes might be appropriate. What exactly does that mean? Well, it sounds like we’ll hear some suggetions next Thursday when the next Standing Advisory Group meeting is held but in the meantime, the PCAOB’s Investor Advisory Group was plenty busy today, making several presentations that included some very interesting findings.


The first is “Improving the Auditor’s Report” that was prepared by Joseph Carcello of the University of Tennessee, Norman Harrison of Breeden Capital, Gus Sauter of Vanguard and Ann Yerger of the Council of Institutional Investors. Some items worth noting:

• 45% of respondents believe that the current audit report does not provide valuable information that is integral to understanding financial statements while 23% of respondents believe the current audit report provides valuable information.

• 18% believe the auditor report is of no use to them at all.

• Two selected comments from the report: “The statement feels very binary. Either a qualified opinion or not. Not a lot of incremental information once a company gets an unqualified opinion.” and “The audit report is valuable both because of what it says, i.e., an opinion, and by virtue of what it does not say, i.e., an exception.”

• Examples of disclosures that users were asked about: Disclosure of risks (“77% believe auditor should disclose areas with greatest financial statement and audit risk and the audit work performed in those areas”); disclosure of audit hours (“51% believe the auditor should not be required to disclose hours spent on individual financial statement accounts”); materiality thresholds (“56% believe the auditor should disclose quantitative and qualitative materiality thresholds and considerations”); audit partner signature (“44% support requiring the audit partner to personally sign the audit opinion”).

There’s more where this came from so check out the full presentation for some interesting reading. We’ll have more tomorrow.

Are Audit Committees Really Independent of Management?

A reader – who is a partner at a Big 4 firm – sent this to me awhile ago and I dug it out this week:

Question for you. Why is it OK for audit committee members to be selected and paid by management? Why is it OK that they are paid in the stock of the Companies that they govern? Considering the fact that the SEC has such disdain for the slightest perception of a lack of independence on the part of the auditors that report “directly” to the Audit Committees, it is odd that the governing body can be owners of the company as well. [By the way, let’s be real, management hires the auditors. The audit committees just accept it.]


Time to jump in – These questions feel rhetorical but I’ll take a stab at answering them anyway. If you look at a brief history of audit committees, you’ll see that the idea goes back nearly as far as the Securities and Exchange Acts of ’33 and ’34, first being endorsed by the NYSE in 1939. The SEC first made the recommendation that public companies compose their audit committees of independent directors in 1972. That was followed by the NYSE’s requirement for audit committee members to be independent in 1977. What does all this mean? Basically, it appears that it’s okay that management selects and pays audit committee members because it’s always been done that way. Similarly, it’s okay to pay them in stock because companies have always issued shares to directors, regardless of their respective committees. As far as who “hires” the auditors, our source has a better frame of reference than I but this probably varies from company to company. While many companies have audit committees that have no problem throwing their weight around, there are others whose members probably couldn’t find cash on a balance sheet.

Anyway, our source has some ideas:

If the regulators want to create a TRUE independent structure, why not create an Audit Committee Oversight Board (or the ACOB), and pay these members in shares of a Mutual Fund that’s tied to the overall performance of the stock market? Audit Committee members should be overseen by the SEC – perhaps indirectly by this ACOB. Now – this would empower the Committees, empower the auditors even further, and empower the shareholders of Companies with the knowledge that the Audit Committees were truly independent of management. This would be a stunning show of real governance in corporate America. Wouldn’t this be a true step toward preventing further financial crashes in America? What do you and your readers think?

I like the progressive ideas presented but if there’s one thing I’ve learned from the massive amount of media I’ve consumed in the last 2+ years, it’s this – the ideal regulation and what it politically feasible are often miles apart and in the process of reconciling those differences, the final product is not at all what was intended. The SEC (who hasn’t exactly been on top of their game the last few years) is already fighting for every nickel and no amount of litigation releases will get representatives like Darrell Issa to back down from cutting their budget. Thus, a regulatory agency with shaky credibility has an uphill battle.

So would an Audit Committee Oversight Board, compensation changes and other reforms to the process be a “true step toward preventing further financial crashes”? Maybe. But as long as “fiscal responsibility” continues to be a political talking point, the SEC won’t have the ability to suggest reforms until we have another crisis and chances are, they’ll be the scapegoats…again.

Top 100 Accounting Firms List Looks Very Familiar

Mostly because the top twenty-five firms hardly changed.

1. Deloitte
2. PwC
3. E&Y
4. KPMG
5. McGladrey
6. Grant Thornton
7. BDO
8. CBIZ/MHM
9. Crowe Horwath
10. BKD
11. Moss Adams
12. Plante & Moran
13. EisnerAmper
14. Marcum
15. Clifton Gunderson
16. BTVK
17. J.H. Cohn
18. LarsonAllen
19. UHY Advisors
20. Dixon Hughes
21. Reznick Group
22. Rothstein Kass
23. ParenteBeard
24. Eide Bailly
25. WeiserMazars

The top twelve didn’t change at all and there was some shuffling amongst the firms after that, most notably Eisner and Amper whose merger catapulted them from 24 and 26 respectively to 13th on the list. Not much else to report on such a snoozer of a list but it’s worth mentioning that 45% of Deloitte’s revenues are not from assurance or tax services and this is the reason they are numero uno. Check out the entire list here.

Earlier:
Most Top Ten Accounting Firms Saw Lower Revenues, Headcount for 2009

Chief Audit Executives Like Sarbanes-Oxley…No, They Really Like It

A new survey of more than 300 chief audit executives (CAEs) by Grant Thornton LLP finds that while nearly half believe that the shifting regulatory landscape poses the greatest threat to their company, a vast majority (88%) do not believe that the Sarbanes-Oxley Act (SOX) should be repealed. Of those that believe SOX should be repealed, the cost of compliance is the main reason for doing so. “Since the passage of SOX, organizations have had to dedicate significant resources to comply with a host of new laws and regulations,” noted Warren Stippich, a Chicago-based partner and Grant Thornton’s national Governance, Risk and Compliance solution leader. “Based on discussions with various CAEs during the survey process, many believe that SOX brings a continued focus by management on financial and governance-related controls. However, CAEs believe that compliance audit processes are now well-defined and are currently exploring ways to contribute value creation to the organization well beyond compliance monitoring and reporting.” [GT]

What Are Your Questions for a Forensic Accounting Partner?

Afternoon, gang. As the busy season winds down, you might be thinking about your next career path. Lots of you have expressed interest in forensic accounting and fraud investigations and as luck would have it, I got introduced to Derek Royster, a partner with RGL Forensics in Charlotte, North Carolina. From his bio, Mr. Royster has been with RGL since 1997, having worked extensively with insurance companies and attorneys focusing the scope of his career on forensic accounting, the measurement of economic damages and litigation support. He has lots of letters behind his name and has provided testimony as a damage expert witness.


Mr. Royster has agreed to discuss his career and other aspects of a forensic accounting with GC but since you people are the ones with career decisions to make (whilst I just write about it) we thought it would be best to get your questions for Derek. So whatever you want to know about a career in forensics but were afraid to ask, this marks your opportunity to get the answers.

Leave your questions for Derek in comments below or (email them to us) and we’ll get the answers for you and post our discussion with him.

And Now…CPAs Acting Out a Scene from the Empire Strikes Back

Last year the Pennsylvania Institute of CPAs went on a video production bonanza that incorporated Snuggies, public service announcements from the 1980s and your breathlessly judgmental friends. As impressive as those videos were, putting a CPA spin on a climatic scene from the best film in the Star Wars series takes things to a whole new level.

The breathing at 0:39 and the subsequent scream are priceless, as is the cough at 0:55.

Nearly One in Four of Your Co-workers Is Not Down with March Madness Pools

Our friends at Vault put together a fun little survey on your gambling habits at work and, no surprise, nearly 75% of you participate in a March Madness pool. What about the remainder? Well, there are the puritanical types who probably leave Bible verses on your desk, “My office is awash in sinners. Some day a real rain will come and these cubicles will be cleansed.” But then there’s the jerks who are simply all business:

“The next time I see [colleagues using work time to focus on office pools], I’m going to put an anonymous note on all the bosses desks to make them aware” warns one respondent. (Presumably they fall into the 22 percent of respondents who disapprove of workplace betting altogether.)

If you know someone who is capable of this level of dickishness, the temptation to violently pinch them with a stapler remover is great, however we’d ask that you refrain from this until they actually make good on their threat. Of course if you impress upon them that there is a valid purpose for studying a bracket, maybe they’ll let it slide.

Vault 2011 Office Betting Survey

View more presentations from philstott.

Ohio Mistakenly Notified a Woman That She Was Due a $200 Million Tax Refund

Ohio, like many states, is in a bit of a budget pickle and perhaps this level of vigilance is part of the reason.

Denise Bossetti received a notice in the mail that indicated she was due $200 million but was skeptical (even with the letterhead).

Apparently 9,700 Ohioans received notices of inflated refunds and the Ohio Department of Taxation claims this is a new one and that “The problem has been fixed.” Probably a good idea.

Woman gets $200 million tax-return notice — but it was mistake [Sandusky Register via AT]

Here’s How This Year’s NCAA Men’s Basketball Tournament Would Shake Out If It Were Based on Accounting Research Production

It’s that time of year again where thousands of Americans spend countless hours of company time researching basketball teams and agonizing over which #12 seed will pull a minor upset only to have someone from marketing, who doesn’t know a damn thing about basketball, to win the pool. It also marks the time of year when the accounting faculty at BYU puts outs their own simulated version of the tournament, played out based on the productivity of accounting researchers over the last six years.


As you can see, a lot of similar schools are making a run again this year including Texas (last year’s simulated champion) and Michigan State. If you’re interested in what this year’s non-bracketed accounting rankings are, you can check them out on the campanion research page.

Games start on Thursday tomorrow (obviously I’m not in a pool) so if you’re having trouble filling out your bracket, this seems like a good place to start. You could do a helluva lot worse when it comes to strategy.