Category: News

Surprisingly, Glenn Beck Doesn’t Understand How the 1099 Requirement Works

Everyone agrees that the 1099 requirement in the healthcare overhaul sucks. It’s so unpopular that Max Baucus has taken it upon himself to ride in on the Senate chamber on a horse clad in shining armor with an amendment that will repeal the requirement pronto and single-handedly save small businesses everywhere.

But in the meantime, area man-cum-national fruitcake Glenn Beck thought he needed to warn all the eBay junkies out there that if don’t hock their stuff this year, they’ll be subject to the requirement next year:


Of course this is bullshit. Despite what GB might think about the national media, if this were in fact true, every outlet on the planet would have reported it already. The headlines would have screamed “WAR ON EBAY” and Meg Whitman could have campaigned on that (but probably still would’ve lost).

Anyhooo, just for good measure, The Hill’s Healthwatch also points out that Beck’s “exemption” claim is also false:

Beck also told his viewers on Tuesday’s show that “at least 111 companies have been declared exempt from having to use Obamacare.” In fact, the firms he refers to have been granted a one-year waiver from the requirement that their annual limit on coverage be at least $750,000.

“Exempt” versus “a one-year waiver.” Yeah, that’s almost the same thing.

A Walmart Sticker Leads to California Lawsuit Against Overstock.com

~ UPDATE includes link and quote from Overstock.com’s press release responding to the suit.

Gary Weiss is all over the $15 million lawsuit brought by seven California counties against Overstock.com today, noting that this could be a helluva problem for our fave SLC problem-child:

The counties had offered to settle with Overstock for as little as $7.5 million, but Overstock refused. No wonder: if the company had coughed up such a substantial amount of cash, it probably would have been driven into bankruptcy.

The suit came out of some alleged false comparative advertising claims (e.g. think Crazy Eddie commercials) including this one that got investigators on the case:

It was a Cottonwood man’s complaints about the firm that persuaded prosecutors to investigate the matter, said Erin Dervin, a Shasta County deputy district attorney.

In 2007, Mark Ecenbarger bought a patio set for $449 on Overstock. The website claimed the list price other companies were charging for the set was $999.99.

But when the furniture was delivered, there was a Walmart sticker on the side of the box showing the set was really worth $247.

Naturally, Overstock is saying that this one big misunderstanding and that isn’t how they do business. The prosecutors aren’t convinced:

The suit claims Overstock often outright makes up its list prices and compare-at prices based on arbitrary markups over the firm’s cost for the product. In many cases, Overstock entirely fabricated a fictitious comparison price and then claimed it was discounting that price, even when it was the only seller of the product, prosecutors allege.

You would think that such a troublesome lawsuit would cause havoc on the company’s stock price, wouldn’t you? Nope. Gary explains:

The reason for that is simple: fraud is already incorporated into the share price. This company is under SEC investigation for systematically cooking its books. Why should consumers be treated any differently than shareholders?

UPDATE: Full statement from Overstock is available although Patrick Byrne is MIA:

“Overstock.com stands by all our advertising practices, including providing comparison values which we thoroughly explain on our site. We have been singled out for standard industry practices, which we look forward to demonstrating in court,” said Jonathan Johnson, President of Overstock.com.

Apple’s New Audit Committee Chairman Is a Rocket Scientist

No, a for-real rocket scientist.

Apple Inc. named former Northrop Grumman Corp. Chief Executive Officer Ron Sugar as a director, adding an aerospace-technology expert to a board that includes leaders in retail, cosmetics, software and politics.

Sugar, 62, will serve as the board’s audit and finance committee chairman, Cupertino, California-based Apple said today in a statement. Sugar headed Northrop, the third-largest U.S. military contractor, from 2003 until last year, helping the company consolidate $26 billion in acquisitions.

Okay, accounting/auditing isn’t the most mind-bending of trades, so why does Steve Jobs feel the need to appoint someone who has spent most of their careers putting things into space as their audit and finance chairs? We’re sure Mr. Sugar is an extremely smart man – c’mon, A ROCKET SCIENTIST! – and is obviously good with numbers but doesn’t this level of irrelevant expertise seem a tad ridiculous? Just wondering out loud.

Is Accounting Rule Anarchy a Good Idea?

John Carney comments on Sheila Bair’s bellyaching about mark-to-market today by simply wondering why there has to be a debate at all. That is, couldn’t accounting rules just be served up – presumably buffet style – and the banks would choose which treatment they like best and then regulators could judge their health based on their choices:

Here’s what I don’t get: why do we need one set of accounting standards at all? To put it differently, why should banking regulators feel obliged to judge the safety and soundness of financial institutions according to any measure that they do not like? If Bair doesn’t think fair value is appropriate to the banking sector, can’t she just ignore fair value when judging whether banks satisfy regulatory requirements?


It’s an interesting question. Why does the FDIC care what fair value says when determining bank health? Analysts use and refer to non-GAAP data all the time, so what difference does it make if regulators rationalize their analysis on similar non-GAAP measures?

After explaining that, despite the complaints of a certain billionaire (among others), transparency is actually a good thing, Carney floats an idea:

My truly radical proposal is that we should probably do away with this argument altogether by allowing banks—and every other company for that matter—to choose which accounting standards they want to use. If amortized cost is truly a better standard, banks using that will surely be rewarded by higher stock prices and cheaper access to credit. On the other hand, if fair value is appropriate, the market will reward that. Why not let banks choose and bear the costs of their choice?

While we’re with John in spirit (especially for the banks, they run things after all), the BSDs in the accounting will never let this fly. The idea of letting individual companies determine what accounting rules to follow is enough to cause Big 4 partners to set themselves on fire in the middle of Union Square in protest.

However, if you’ve got thoughts on we could put this thing in motion, it might be kind of fun to see how it works out.

The AICPA Teaches Congress What “Burdensome” Really Means

On July 19, the AICPA sent a letter to the House and Senate condemning new 1099 reporting requirements (said requirements being carefully hidden inside The Patient Protection and Affordable Care Act a.k.a. Obamacare) as burdensome and annoying. Apparently the AICPA must feel quite strongly about this matter as it is now November and they have sent a very similar letter to Congress, perhaps to show them just how burdensome extra paperwork can really be.


The House letter may be found here.

The AICPA doesn’t like that rental property owners could now be required to keep extensive records and bother with tax issues in typically tax-free January, among other things:

This would be the first time that individual taxpayers owning rental property who are not “engaged in a trade or business,” would be required to provide Forms 1099-MISC. For example, many individuals, who own a vacation property that is rented part of the year to help defray their costs, would be subject to the provisions of the SBJA. We are concerned that (1) keeping records to track expenses by provider, (2) obtaining tax identification numbers and other information from providers of property and services, and (3) providing Forms 1099-MISC during January, a month when taxpayers would not normally be focused on tax issues, would be extremely burdensome. Additionally, the AICPA questions the need for sending information forms to certain providers of services, such as utility companies.

Thankfully the AICPA has everyone’s back and feels as though business owners should be allowed to focus on growing their businesses instead of worrying over filling out massive amounts of paperwork. We’ve got to appreciate that attitude as any other professional organization might salivate over the idea of plenty of billable hours to go around as CPAs line up to hook up business owners with the right paperwork but not the AICPA, who said “businesses do not need the added cost of more regulatory requirements at a time when their efforts must be focused on profitability and sustainability.” Word!

We look forward to the next round of angry letters from the AICPA on this matter and hope that they don’t find fighting Congress too burdensome.

(UPDATE) Ex-Grant Thornton Partner Gabriel Azedo Arrested in Spain

~ Updated includes statement from Grant Thornton International in final paragraph.

The South China Morning Post is reporting that former Grant Thornton partner, Gabriel Azedo was arrested in Spain, citing “people with knowledge of his detention.”

Gaby was on the lam for over year and has allegedly stolen HK$91 million (around USD$11.7 million) from those close to him, although one of his alleged victims doesn’t see this as a half glass full situation:

Yesterday one of his alleged creditors, racehorse owner Archie da Silva, said: “I don’t know whether to be happy or not. Just because he has been arrested doesn’t mean we will get our money back. It could be a very tedious process to get him back to Hong Kong.”

Arch’s concerns about bureaucratic nightmare that is extradition seem to be well-founded, as the article explains that getting Gaby back to Hong Kong really isn’t going to be easy:

“There is no bilateral agreement between Hong Kong and Spain but a transfer under multilateral treaties the two jurisdictions are signatories to, or under provisions in Spanish domestic law, are two areas that can be looked at,” the person said.

However, it is likely extradition could involve a lengthy legal and diplomatic process because Hong Kong has no Surrender of Fugitive Offenders Agreement with Spain.

Another officer linked to the case said: “It’s really up to Spanish authorities to decide whether to hand over the man to us. They could ignore our request as there is no legal obligation for them to hand over Azedo.”

We contacted Grant Thornton International to see if they wanted to comment but have yet to hear back. It goes without saying that this story is pretty strange/intriguing so, we’ll continue to follow the developments.

UPDATE, circa 10:45 am ET: A Grant Thornton International spokeswoman provided us with the following statement regarding the matter:

“We understand from media reports that Gabriel Azedo has been arrested in Spain and that he may be the subject of extradition proceedings to Hong Kong. He was a member of the global leadership board of Grant Thornton International until his dismissal in October 2009. Immediately following his disappearance, Ms. Angela Gardner, a close relative of Mr. Azedo, filed a lawsuit in Hong Kong against Grant Thornton International Ltd but this was subsequently dismissed by the Hong Kong court.

While the situation is highly regrettable for the individuals concerned, this is now a matter for them and for the Hong Kong courts.”

Here’s What Charlie Rangel Missed at His Ethics Trial

He really should have stuck around. He won on a couple of ’em, which is probably better than most people were expecting.

 


Of course Chuck isn’t going quietly:

How can anyone have confidence in the decision of the Ethics Subcommittee when I was deprived of due process rights, right to counsel and was not even in the room? I can only hope that the full Committee will treat me more fairly, and take into account my entire 40 years of service to the Congress before making any decisions on sanctions.

[…]

The Committee’s findings are even more difficult to understand in view of yesterday’s declaration by the Committee’s chief counsel, Blake Chisam, that there was no evidence of corruption or personal gain in his findings.

From here forward, it is my hope that the full Ethics Committee will take into consideration the opinion of its chief counsel as well as the statement by Rep. Bobby Scott, a member of its investigatory subcommittee who said that any failings in my conduct were the result of “good faith mistakes” and were caused by “sloppy and careless recordkeeping, but were not criminal or corrupt.”

Earlier:
Charlie Rangel Has Heard Enough

Clifton Gunderson Plays Hardball with KPMG, Other Audit Firms By Pitching a Low Ball

Meanwhile, back in the world of where people actually do work – a friend of GC sent us the following:

I heard an amazing price war story from a very reputable source. Thought you would enjoy.

A KPMG audit client in the Virginia Beach area went out to bid. KPMG bid approx $85K, a regional firm bid mid-60K, another firm approximately 40K, and Clifton Gunderson undercut everyone by bidding $19K on the audit. 19K! How in the hell is that possible? This is a prime example of what is happening out there.

Don’t know if this is SOP at Clifton but that price has to make for some horrendous realization or it’s simply staffed by an entry-level associate and a partner. Other theories on how they plan to pull this off without completely losing their shirts are welcome.

To Keep People From Nodding Off, Stephen Schwarzman Reminded Everyone How Much He Hates Mark-to-Market Accounting

The Blackstone Group co-founder, chairman and CEO is in Seoul hobnobbing with various other titans of industry, finance and politics for the G-20 Business Summit and as you might expect, things can get a little drab.

Dark suits, heavy lunches, important people trying to one-up each other’s stories and so on and so forth can really get tiresome so in order to “keep people awake,” SS brought up a topic near and dear to his heart:

[I]n the United States, we eliminated mark-to-market accounting in 1937, and why did we do that? We completely bankrupted our system before, and for some reason, somebody who liked something called transparency decided to have mark-to-market accounting come back, around the turn of the last century. So it in no way surprises me that we had a catastrophic collapse as a result of implementing mark-to-market accounting.

Not exactly sure who “somebody” is but one guy has retired and another is on his way out, so this could be Schwarzman’s reminder to the outgoing MTM cheerleaders that he hasn’t changed his stance that the whole thing just sucks.

A/P Clerk Would Like to Know How to Best Use $30k to Get a Job with a Big 4 Firm

From the mailbag:

I have been working as a Accounts Payable for 3 years. I don’t want to waste your time of explaining my disadvantages. One of my advantages is money. I have a large savings. I would like to give $30,000 to anyone who get me a job in Big 4. I am not talking about [a] bribe. I wish to know how to use advantages [sic].

Just don’t sit there, give the man some suggestions. All options are on the table. Bonus points for creativity.

CFOs: We’ll Adopt IFRS Just as Soon as You Finish Your Little Convergence Exercise

Actually it’s about half of CFOs with that attitude, according to Grant Thornton’s latest survey. They’re ballparking it around 5-7 years while nearly a quarter of the responders think we need to get on this ASAP.

Stephen Chipman, is keeping the faith even though, people aren’t as enthusiastic as he:

“While there is movement toward greater acceptance of International Financial Reporting Standards based on our previous surveys, it is clear that there is still much work to be done in educating the U.S. financial community on the benefits of IFRS,” said Grant Thornton LLP CEO Stephen Chipman.

“We have been, and continue to be, staunch supporters of the ongoing movement toward one set of high-quality, globally accepted accounting standards. As dynamic businesses continue to expand their international footprint, it is increasingly sub-optimal to be using different reporting standards, which sometimes increase costs while decreasing comparability. Just as international business has benefited over the last 30-odd years from the increased shared use of English, so too will global companies reap the benefits of one financial reporting language.”