Category: News

California Church Accountant Who May Have Stolen $2 Mil Pleads Not Guilty

For the very last time: just because you are a non-profit does not mean you can operate recklessly with minimal internal controls and/or no controls at all.

Case in point, this Fresno church accounting manager who may have stolen $2 million from the church she spent 13 years working for.


51 year-old Sandra Arreola pleaded not guilty last Friday to charges that she borrowed $2.1 million from church tithes and offerings and used the money for properties, bills, vacations and clothing. Pastor Mike Robertson of Visalia First Assembly of God Church says the church noticed about two years ago that something was fishy with Arreola’s accounting. “A few regularities began to surface while testing the payroll system. Additional discrepancies in the handling of contributions came to light as a result of a further internal investigation in conjunction with a forensic audit.”

Of course, had the church been in the practice of doing regular audits in the first place (or at least open to some really reasonable internal control suggestions), it wouldn’t have to call the cops on its trusted employee and send her to jail over $2 million. Robertson says the church’s insurance policy will recover some of that money but that’s not the point. The church has since installed security cameras “to prevent fraud” – not exactly the sort of proactive stance we support around here.

Church member Becky Maze had only nice things to say about our little crook, saying Arreola was “always willing to help” and “a lovely hostess. One of the things she was well-known for was liking to have a tea for the women, and making the little cookies and desserts — the froufrou kind of things.”

Froufrou isn’t cheap, you know. There’s your motive.

Sandy is a fan of “I GAVE IT TO GOD” on Facebook, which makes us wonder if that’s where she’ll tell us the money went when she’s grilled during her trial.

Just goes to show that the religious and God-fearing might be exempt when it comes to taxes but not when it comes to the temptation to take when motive, opportunity and/or rationalization are at work. Hallelujah!

Church accountant accused of embezzling more than $2 million [The Fresno Bee]

Let’s Watch President Obama Use a Ridiculous Number of Pens to Sign the Tax Cut Bill

Running late as usual. At least they aren’t using whiteboard markers. Since it’s Friday and we’ve got nothing better to do, we’ll be live-blogging below.


4:02: Starting in two minutes? You’re already 12 late Mr President. We realize you’re the President but some of us have holiday cheer to spread, get with it.

4:05: Filing in. Finally. Biden in the Hizzous. Cracks about a “big deal,” without the F-bomb, this time. Shout out to half-man, half-tortoise, Mitch McConnell. Bipartisanship lives!

4:08: The big guy is up. Applause. Biden is semi-beaming. BHO gives a shout out to the Veep. Biden grins like only Biden can. Love for McConnell and Dave Camp. Shot of Larry Summers is less than flattering. Did his mother teach him anything about sitting up straight? Yeesh. Bipartisanship, bipartisanship, bipartisanship. We get it. You managed to play nice, what do you want, reelection?

4:13: Al Sharpton? Golf clapping? Can someone explain why the Rev is at this thing?

More name-dropping. Nancy, T Geith, Boehner. Sigh.

4:17: John Hancock time. Hugs, handshakes, back slapping. OUT!

Who’s Going ‘Above and Beyond’ at McGladrey?

A few people, apparently.

The “prestigious 2010 McGladrey Achievement Awards” are only given once a year (we think) and while C.E. Andrews realizes everyone is doing their part, there are a few people that need special recognition, “While all of our employees are focused on the client, these award winners are being recognized as having gone ‘above and beyond’ to ensure client success.”

But enough with the boilerplate, on to the names:

This year’s winners include:

• Dalia Pearson (Ft. Lauderdale) was recognized as Employee of the Year for her can-do attitude and excellent customer service
• Michael Sher (Chicago) was recognized as Partner/Managing Director of the Year for his strong work ethic, industry expertise and his industry knowledge.
• Jennifer Murtha (Melbourne) was recognized as Career Advisor of the Year for developing talent, cultivating teams and relationships and helping to shape the firm’s future.

Individual and team awards were also presented for relationships, excellence, integrity and unity. Team awards included the Great Lakes Core Tax Team, Ohio Private Equity Growth Team, Building Trust Through Service Engagement Team, the Olympus Capital Audit Team and others.

Obviously this is stupendous news but what we’re curious about now is, what does extra-special people receive for such a prestigious honor? A year’s worth of bragging rights is a given but is there any money involved? As much punch and cake as their hearts desire? A lunch with your Mickey G’s-sponsored golfer of choice? We need answers. Or wild-ass guesses.

Someone in the Frazer Frost Marketing Department Didn’t Get the Memo RE: No Mas Frazer Frost

Last month we told you about the break up of Frazer Frost, a firm that was born out of the combination of Moore Stephens Wurth Frazer Torbet, LLP and Frost, PLLC. Turns out, the announcement made in November 2009 left out the part that it was just a ‘trial merger’ and after a year, they scrapped it for various reasons that included a) a ‘culture clash’ b) ‘issues in the Chinese reverse mortgage practice’ and c) well, those first two are pretty bad.

While it’s unfortunate when these things don’t work out, it would be assumed that everyone working at the firm would be acutely aware of the situation. A merger doesn’t exactly qualify as a “minor administrative issue” that gets overlooked. Nevertheless, a tipster sent us the following picture that appeared on page 48 of the December issue of Celebrate Arkansas.


Judging by this ad, you might get the impression that Frazer Frost was in fact still a firm and if one visits www.frazerfrost.com that’s when it gets hella-confusing:

Moore Stephens Wurth Frazer Torbet, LLP and Frost, PLLC are moving to resume operations as separate entities, as existed prior to their combination in January 2010. The combined firm, Frazer Frost, LLP, will continue to exist as a legal entity until the separation has been completed. It continues to be the policy of both firms not to comment publicly on client, personnel, or other internal matters.

Maybe we’re a little slow but if the two firms are “moving to resume operations as separate entities” but “The combined firm, Frazer Frost, LLP, will continue to exist as a legal entity until the separation has been completed,” we interpret that as “Frazer Frost is still technically a firm but in reality, it’s only a matter of time until we’re not.” It’s seems like a bad breakup where two people continue living together in a tense, awkward environment where way uglier shit gets said than during the actual break-up but they’re both stuck in this god-awful situation until somebody finds a new apartment.

Regardless, placing an ad in a periodical could be construed as misleading but that’s just us. If someone at the firm can explain it to us, we’ll be here. While we wait, if you’ve got thoughts on whether this ad is perfectly hunky dory or a little dubious, share below.

Do I Have To Wait To Get My Degree to Apply for the CPA Exam?

For today’s edition of “help me figure out my life even though the answers are pretty much freely available on Google and/or here on Going Concern”, we get a reader question about the CPA exam application process or, more specifically, how to get a jump on the process. Let’s go:

I am a college student I will have 150 credits in May 2010. Do I have to wait until I get my actual diploma before I can start the process of applying to sit for the test? I guess I’ve heard that it take up to 2 months to receive an NTS so I am worried that I will have to wait until August to actually take the CPA exam. Are there loopholes?


Well, dear reader, firstly if you are going to write in asking us a question like this, it really helps to know what state you will be applying in. All jurisdictions have their own rules and their own crap to sift through, so application timelines can vary wildly depending on where you are applying. I know for a fact you can bypass California’s 8 – 10 week application time by applying when you are not eligible to sit for the exam (like your last semester of college) and then just reapply when you ARE eligible as it will only take about a week to get a reapplication processed. If you call the exam unit in California, they might even give you this suggestion themselves. As for other states? Without knowing where you are it’s hard to tell you what to expect.

The general rule is that you must meet your state’s requirements before application. Some states allow you to apply when you are not eligible as long as you will meet their requirements within a set period of time (like 180 days). Call your state board to see if this is an option.

If you’re lucky enough to be in a 120 state, you can apply for the exam with 120 units and just have to reach 150 by the time you have passed all four parts of the exam.

Most states require your degree to have posted to your transcripts before you can apply for the exam. Again, there are always exceptions so your best bet is to talk to your state board directly and ask. Asking “are there any shortcuts to licensure?” won’t get you very far so try instead to ask if there is a way to apply for the exam before you are eligible to sit or if they have any suggestions for speeding up the process.

The best way to accomplish that is to make sure you have all your paperwork in order and, if available at your school, have your degree fast-tracked to appear on your transcripts as soon as possible. Your school may charge you a nominal fee for this service, but ask them if that’s a possibility if you’re trying to get this over with sooner rather than later.

KPMG Partner Doesn’t Understand Why People ‘Are Dropping Like Flies’

From the mailbag:

Hey Caleb,

Was with a [Midwest city] KPMG Advisory partner this weekend. She said that employees are dropping like flies because KPMG finally unveiled raises after 2 yrs without. Only EP’s were awarded (less than 5%). She said the numbers were in the double digits. What the hell did they expect?


If this sounds a little confusing, it was. We asked our tipster to clarify:

[A]re you saying that she’s under the impression that people are just now leaving because they are upset that they didn’t get raises for two years? And she’s surprised because the raises in the double digits when they were actually in the single digits?

And their response:

[S]he is surprised that so many are leaving especially given the unemployment rate in [midwest city] regardless of how long it’s been since raises were given. It’s not a secret that the other big four have not only given raises but as you report, awarded mid-yr bonus/raises as well.

We went back to some of this year’s KPMG comp threads and the 5% sounds a little suspect, as those rated as “exceptional” were pulling much better increases than that but then again, maybe there were some exceptions that weren’t reported. Also, it seems a little strange that a partner would be so clueless about raises but anything is possible, s’pose.

And as far as the gnashing of teeth because mid-year raises and bonuses are being handed out at other firms, keep in mind that KPMG isn’t even out of their first quarter yet. The rest of those firms have fiscal years that end prior to KPMG’s and they know how the first half of the year is shaping up. Expecting KPMG to start throwing money at people with less than three months in the books is a little ridiculous. At this point, the rumors around the idea of a mid-year surprise should keep you hopeful (but don’t go expecting anything).

It’s been no secret that people have exiting the House of Klynveld (and other firms) – regardless of the unemployment situation – prior to the end of the year (as is typical this time of year). Frankly, people we talk to are pretty optimistic about the job situation for most Big 4 types looking for something new, so this partner may be even more clueless than we thought.

Whatever the case, only 17 shopping days until those left will likely settle for sitting tight through another busy season. If we’re way off base here (or right on the money), feel free to jump in.

(UPDATE 2) Bernie Sanders Didn’t Convince Too Many People (Pretty Much No One!)

~ Update includes clarification on vote tally and addition to first paragraph. ~ Update 2 includes finally vote tally.

Despite Friday’s epic speech by Bernie Sanders, the Senate passed elected to finish debate on the tax cut/unemployment compromise this afternoon to set up the final vote before it moves on to the House.


At 4:12 ET, the vote was 62-7 with Sanders, Patrick Leahy (D-VT), Russ Feingold (D-WI), Tom Udall (D-NM) (CSPAN originally showed Tom as voting “no” and has now disappeared), Jeff Bingaman (D-NM), Kirsten Gillabrand (D-NY) and Sherrod Brown (D-OH) voting “no.”

If you’ve got nothing better to do, you can watch the live feed here.

UPDATE, circa 5:00: Vote is 73-10 with John Ensign (R-NV), Mark Udall (D-CO), Kay Hagan, (D-NC), Carl Levin (D-MI) voting “no.”

UPDATE 2, circa 6:30: Finally vote of 83-15.

University Officials Not Impressed with Accounting Professor’s Demonstration of “First in, First Out”

Since many of you are current or former accounting students, you undoubtedly, at one time or another during your depraved days running around the quad, had the thought creep into your mind, “What would happen if Professor Johnson decided to drop trou in the middle of class while discussing accounting for bonds?”

Unfortunately for students at Kennesaw State University, they now know the answer to that question:

Raymond Devaughn Taylor, 57, is accused of taking off his clothes during a class he was teaching, according to an arrest warrant obtained by the AJC. […] Taylor, who worked in the business department on a contract basis, taught an accounting class during the fall semester on Tuesdays and Thursdays, according to the class schedule posted on the university’s website.

“He will not be teaching again at KSU,” interim Provost Ken Harmon told the AJC.

Now, why this particular professor thought that pulling a Brett Favre on the entire class was a good idea is not entirely clear, as this particular method of impressing a target of your lust many years your junior has an abysmal track record. But as we alluded in the headline, maybe this was a unique teaching method on display. Or then again, perhaps students were showing their lack of interest and rather than scream and yell, Taylor figured this would hold the student’s attention better. OR simply, in the words of Cosmo, “Maybe uh, it needed some air. You know sometimes they need air, they can’t breathe in there. It’s inhuman.”

The theories are endless, really. Yours are welcome below and for the love of everything good and uproariously hilarious, if you were in this class, email us immediately.

[h/t TaxProf and The Summa – neither of whom would ever do such a thing]

New Orleans Hornets’ Audited Financial Statements Leaked

While the House of Klynveld is enjoying their town hall circa now, we’ll share you the latest scoop from Deadspin, who has published the audited (courtesy of KPMG) financial statements of the NBA’s New Orleans Hornets.

We’ve skimmed the financials, noting some interesting items here:

• In 2009, the franchise paid $115,000 for their audit, an additional $10,000 for “accounting issues” and $35,000 for tax compliance services.

• The team has a partners’ deficit of over $80 million thanks, in part to $111.5 million in long-term debt at June 30, 2009.

• The team did have operating income of over $5.8 million for the fiscal year ended June 30, 2009, however, paying nearly $9 million in interest (among other things) swung them to a much narrower net income of $1.8 million.

• Net cash from operating activities were a negative $7.4 million for the FYE June 30, 2008 but improved to a negative $1.5 million for FYE June 30, 2009. The team’s cash balance at June 30, 2009 was a mere $650k.

• George Shinn, the team’s owner, owes the franchise approximately $5 million from “various advances” but has also loaned the team over $8.3 million.

• The franchise has various investment associated with the NBA that have negative equity including: NBA Joint Venture; WNBA Holdings, LLC; NBDL Holdings, LLC

• The team has principal payments of approximately $115 million coming due through 2014.

• Guaranteed contracts to players through the 2013-2014 season amount to $247.5 million.

• “Revenue assistance” from the NBA (team is eligible if it has both an actual loss and a pro forma loss) for the FYE June 30, 2009 was $3.4 million.

Whew! So as you can see, the franchise isn’t in the best of shape. Our analysis is just a scratch on the surface so if you’ve got some time, crunch some numbers and share your findings with the group below.

Earlier:
Who Leaked the MLB Financial Statements?

Just So You’re Aware: There Is a Zombie Accountant Video Game

And it has been described as “epic.”


Giving promotions to the white shirt and red tie wearing undead who can’t help but devour their co-workers for their own good? Sounds like a pretty realistic game.

Get to wasting some billable hours on the demo or full version by going to the Zombie Accountant page on Xbox’s website. And if you’re one of the few people that has a Windows phone, you can play it on the go.

You’re welcome.