Category: News

The National Society of Accountants Has a Bone to Pick with the AICPA

A couple weeks back the AICPA gave its members the go-ahead to Crtl+C, Crtl+V its letter to the IRS about how certain parts of the proposed tax preparer regulations were a load of crap.

We just assumed that everyone in the accounting biz was on the same page here but boy we’re we wrong. The National Society of Accountants sent this letter to Treasury honcho Geithner stating that they don’t want any tax preparers exempted from obtaining a PTIN (among other complaints):

NSA Letter Regarding CPA Firm Exemption


What’s especially interesting is that the AICPA is not named in this letter once, however they are named specifically in the NSA’s press release:

Now, at the 11th hour, just before the registration process is scheduled to begin, some – including the American Institute of CPAs – are demanding that staff members of ‘CPA firms’ be exempted from the registration requirements. This flies in the face of why this registration program was set up. The point of the new regulations is to ensure that all tax preparers are accountable for their work in preparing returns, and that should include anyone who paid to prepare all or substantially all of a return, no matter where they may work.

The basic tenet here is that big firms will get away with letting the underlings preparing the returns not be held accountable for their (apparently) shoddy work. The NSA’s position is that if every single legit tax professional is registered then they can track down the shitty ones and the IRS can act accordingly. The NSA claims that the “loophole” proposed by the AICPA will let these amateurs skate the testing and registration requirements and thus won’t be serving taxpayers one iota.

On the one hand you might have been totally against the tax preparer regulations from the start but now that they’re unavoidable, the AICPA’s request for exemptions in some cases may burn the unlucky bunch that wouldn’t get to enjoy waiver.

An Accountant’s Labor Day Weekend Reading | 09.03.10

~ Calling it a day people. We’ll be back Tuesday to help you cope with the post-holiday depression.

Why the SEC Won’t Flip the IFRS Switch [CFO]
We approve of prognostication in all its forms.

Bernanke Says He Failed to See Financial Flaws [NYT]
About as close to a “myo get from the Beard.

Montvale: Police Blotter, Sept. 2 [NorthJersey.com]
More car trouble associated with KPMG. This time it was a stolen Beamer. With an iPod inside!

Who is short selling Medifast stock? [Fraud Files Blog]
A show of hands, please.

H&R Block Surges as Chief Says Firm Can Handle Mortgage Refunds [Bloomberg]
“Concern about potential losses tied to buybacks of home loans ‘is not based on fact,’ and reserves to protect the company against claims ‘are adequate,’ Chief Executive Officer Alan Bennett said yesterday during a conference call about fiscal first-quarter earnings. The call included repeated queries about claims, which have totaled more than $680 million.

‘There’s nothing that we’re seeing anywhere that would lead to the kind of phone calls we just listened to other than speculators that, in my mind, have probably sold our stock short and then stirred this up,’ Bennett said in an interview after the call. Mortgage buyback claims ‘are getting better,’ he said.”

The Truth About SAS 70 [CFO]
They’re worthless. Well, not completely.


I.R.S. Looks at Finances of Planned Parenthood [NYT]
“The criminal division of the Internal Revenue Service is looking into the finances of Planned Parenthood Golden Gate, while the organization has brought in forensic accountants to evaluate its books.

The local nonprofit became Golden Gate Community Health on Friday, as the national Planned Parenthood organization stripped the Bay Area clinics of their affiliation, citing financial and administrative problems.”

Paul Hogan cleared to return to U.S. [CBC]
Mick is safe.

Peter Orszag Goes From the Obama White House to the New York Times [Daily Intel]
“Apparently, what that Times opinion section needs is another liberal-leaning economist to cheerlead for progressive economic policies from the White House — or one who provides another visible tie between the two institutions.”

Under the hood [NYP]
Tim Geithner gets the giggles and might have Tourette’s; Larry Summers called the shots on GM/Chrysler fiasco and NEWSFLASH: Rahm Emanuel says “fuck” a lot.

Dave & Buster’s, Inc. Appoints KPMG LLP as Independent Auditor [Business Wire]
D&B didn’t waste any time announcing their new auditors. As of now, there is no filing.

As Investigation Concludes, Allegations Against KB Home Remain Anyone’s Guess

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

Finally some good news for KB Home.

The homebuilder said the Securities and Exchange Commission has concluded its investigation into the company’s accounting and disclosures and does not plan to recommend any enforcement action. The letter from the regulator concludes the SEC’s investigation, which began in October 2009.

“We are pleased to announce that the SEC has concluded its investigation,” said Jeffrey Mezger, president and chief executive officer of KB Home, in a statement.

There are no details about the nature of the allegations.


Same was true in October 2009 when the company first announced in its quarterly report that the staff of the SEC notified the company that a formal order of investigation had been issued regarding possible accounting and disclosure issues. At the time, it stressed that the probe should not be construed as an indication by the SEC that there has been any violation of the federal securities laws.

And this is exactly how it turned out.

What were the allegations? What prompted the SEC to look into the matter? Was it a disgruntled whistle-blower?

The answers would be instructive to other companies that could wind up as targets of SEC probes. Guess we’ll never know.

The good news here is that the SEC informed the company that the investigation was closed. Sounds basic, right?

Believe it or not until a few years ago the regulator did not often communicate to companies under investigation that the probe was completed and that no further action would be taken, leaving the company hanging and suspicion hovering for all potential customers and investors to speculate.

Their attitude at the time was that as a policy, the Commission does not disclose the existence of an investigation in the first place, so it typically won’t announce that one has ended.

KB Home, however, is no stranger to controversy.

The company was embroiled in the options backdating scandal. In April, former chief executive officer Bruce Karatz was convicted by a federal jury of four felony counts, including two counts of mail fraud, one count of lying to company accountants and one count of making false statements in reports to the Securities and Exchange Commission. He was acquitted on 16 other charges.

In September 2008, Karatz agreed to pay $7.2 million to settle civil charges for his role in the stock-option backdating scheme that benefitted himself and other KB Home officers and employees.

Last November, a Texas homeowner filed a class-action lawsuit today against KB Home, Countrywide Financial and LandSafe Appraisal Services, claiming the three conspired to rig housing prices in Texas and Colorado, costing home purchasers millions of dollars and pushing homeowners into dangerous loans.

Earlier, a lawsuit filed against the same parties alleged they fraudulently inflated sales prices of KB homes in Arizona and Nevada.

Ernst & Young Loses a Special Houseguest

Or a loudmouth neighbor depending on your political preference. Either way you look at it, 5 Times Square won’t be the same.

Giuliani Partners, the consulting business formed by the former mayor shortly after he left City Hall, has vacated the flagship office it had on a floor of the Ernst & Young offices in Times Square for nine years, consolidating space with the ex-candidate’s law practice, sources confirm.

Giuliani Partners closes Times Square office [Maggie Haberman/Politico]

Sir David Tweedie Would Appreciate It If You Quit Complaining About the New Accounting Standards

This means you PricewaterhouseCoopers. You’re acting like this convergence/IFRS adoption is just happening too fast, well, Tweeds isn’t having it.

As for you companies out there that actually have to keep their books in tiptop shape, Sir Tweeds isn’t so amused by your bellyaching either. And for the love of God, would everyone quit playing dumb:

“Let’s look at what we’ve got out there at the moment – leases, revenue recognition and insurance. If you’re not an insurance company you’ve got two. Big deal,” he said.

“I’m not terribly sympathetic. It’s not as thought these have sprung out of no where, we’ve been working on these, they’ve seen the drafts coming, they know what we’re doing.

Furthermore, maybe if you got some of your people on this instead of writing a comment letter every two seconds, this wouldn’t seem like such monumental task.

“It’s tough, but goodness it’s tough for us too. We can’t keep getting all this advice. We always get conflicting advice. ‘You must have these done by June 2011, but don’t give them to us all at once’,” he said.

Tweedie “not terribly sympathetic” to concerns of standard-overload [Accountancy Age]

Did an Accountant with a Penchant for Sex Chats with Underage Girls Rip Off a Wealthy Heiress?

[caption id="attachment_16785" align="alignright" width="260" caption="He's a pervert, dude"][/caption]

Maybe! That’s what the Manhattan’s DA office would like to know.

In a story that Dick Wolf is certain to get ahold of, an accountant – who is admitted perv – and a lawyer are being “probed” for their management of a wealthy heiress’s fortune.

You see, Irving Kamsler – the accountant – apparently got bored managing multi-millions for copper heiress Huguette Clark and got to poking around on the Internet. He ended up pleading guilty in 2008 and was sentenced to probation, “for engaging in sexual Web chats with detectives whom he believed were girls as young as 13 and sending porn to one of them,” (plot-line twist!).


Presumably Kamsler was out of hobbies and he refocused his energy on managing the money of Ms. Clark.

Kamsler, along with Clark’s attorney, Wallace Bock, have been overlooking the heiress’s fortune for years but now the Manhattan District Attorney’s office was curious why the “elderly eccentric” had spent ‘forever’ (according to one aide) at Beth Israel hospital.

This all came about after MSNBC got to wondering aloud about Huguette’s whereabouts. More or less asking, “Why on Earth is she in a dingy hospital (have you been to Beth Israel?) and not in her 42-room 5th Ave. apartment or sprawling estates in Santa Barbara or Connecticut?”

The DA’s probe into whether Kamsler and Bock were properly managing Clark’s money is ongoing but if you’re going by Kamsler’s looks alone, you can easily conclude that they’ve got every reason to be suspicious.

Empty mansions are legacy of mystery heiress Huguette Clark [MSNBC]
‘Princess’ of Beth Israel [NYP]

Accounting News Roundup: IRS Drops Civil Suit Against UBS; PwC’s Diamond Deal; Roni Deutch Is Disappointed in Jerry Brown | 08.27.10

I.R.S. to Drop Suit Against UBS Over Tax Havens [DealBook]
UBS is finally dropping those 4,450 names it owes the IRS and skates past the civil charges.

3PAR Accepts Revised Dell Takeover Bid [WSJ]
“3PAR Inc. on Friday accepted an increased, $1.8 billion takeover offer from Dell Inc., a day after Hewlett-Packard Co. raised its offer in a bidding war for the data-storage company.

Dell’s revised offer matches H-P’s Thursday bid of $27 a share for 3PAR, whose software helps companies manage and store data more efficiently.

The fight over 3PAR illustrates how important it has become for tech companies to dominate the emerging technology known as cloud computing, in which data are managed and accessed over the Internet. Dell and H-P both sell storage products and see 3PAR’s assets as important additions to their portfolios as large technology companies seek to serve all the needs of corporate-technology departments.”

When Litigation Kills the Accounting Profession-Don’t Say You Weren’t Warned! [FEI Blog]
Jim Peterson of Re:Balane guest posted over at FEI Blog where he discussed his speciality – risk surrounding the Big 4.

PricewaterhouseCoopers Trying To Buy Consulting Revenue Again With Diamond Deal [Re:The Auditors]
Francine McKenna discusses PwC’s recently announced purchase of Diamond Management & Technology including whether some of Diamond’s consultants bailed early to avoid becoming a cog in the another public accounting firm, “Did some of the employees bail out before they were signed on as sterile strategists for an ineffective firm struggling under the weight of consulting ‘leadership’ with audit-shaped heads? I know for sure that there were significant groups of BearingPoint consultants that would have rather masticated glass shards than work for a public accounting firm again.”


Official Statement [Roni Deutch: The Tax Lady Blog]
Roni Deutch says Jerry Brown, California’s Attorney General-cum-Democratic nominee for Governor, is playing election year politics. Seems plausible.

Finance Execs React to Herz’s Retirement [CFO]
No one is panicking.

SEC vows more actions over crisis [FT]
The FT is finally getting to the story about the SEC bringing more actions, changing the culture with new teams, yada, yada, yada. Except not everyone is buying it, “[S]everal judges have questioned the SEC’s deals with Citigroup and Bank of America, and some plaintiffs’ lawyers believe the regulator has been too soft.

‘There’s no real difference now to what it was like before Mary Schapiro became chairman,’ said Jacob Zamansky, a lawyer for investors and longtime SEC critic.”

Boeing Postpones Dreamliner Delivery Until 2011 [WSJ]
You’ll have to come up with a different Christmas gift for the boss this year.

Here’s Why Facebook Should Buy ING Direct

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

It was revealed this week that Facebook is valued by its private shareholders at over $33 billion, more than Ebay, Yahoo and Dell. For a private company with little more than a year of revenue this is extraordinary.

When the company goes public it will have a hard job living up to this valuation without a significant increase in revenue streams.

One option may be for it to do a transformational transaction prior to its listing. In this way it could incorporate a pumped up revenue stream into its high IPO valuation. One such deal could be for it to buy ING Direct US, the largest online bank in the country.


Under the terms of the Dutch government bail out, ING has to sell ING Direct in the US and Canada by 2012. They will have no shortage of bidders from the financial world, but could it make sense for a non-bank to actually buy the company? And if so, what about Facebook?

Half a billion people now live their online lives through Facebook. It has huge brand value and customer loyalty. For it to generate revenue streams it needs to do more than just offer up ads and sell games.

To get from being a social network site to a commercial network site it needs to drive business, and one of the biggest impediments to online retail business is payments. By owning a bank-and thus a payment platform–Facebook could make it very easy to transact online.

Clearly there would be lots of legal hurdles for such a deal to happen, not least because regulators do not like non-banks owning banks. More specifically, Facebook has had difficulties in the past respecting people’s privacy.

But by allying the huge number of people on the site with an easy to use payments and banking business, Facebook could revolutionize its business and the way that 500 million conduct personal commercial activities on the web.

It could also learn from the clever people at ING Direct about how to protect customer data. It may be a long shot, but the two companies could complement each other very well.

Layoff Watch ’10: Rothstein Kass Making Pre-Labor Day Cuts

From the mailbag:

Thought you’d be interested in hearing that today RK had a few last minute “transitions” or as most know them “lay offs”, these happened in the FS practice in New Jersey about 6 weeks after the official “transition date” in which upper management stated that the “transitions” were over for the year and everyone was safe and could get back to work and not worry. Today we lost 1 supervisor, 1 pending manager and 1 manager all having started their careers home grown at the firm.

Performance reasons were quoted but no one seemed to have a clue it was coming and a pretty big bummer day. Rumor has it that it’s not yet over as some others were not in the office today, doesn’t help the extremely negative morale issue going on at this firm with doom and gloom expectations of raises coming post labor day.

Would love to see some more RK news hit the site from time to time if you get it, not really sure where the firm is heading, up or down and would be great to see what others think??? FS practice is getting demolished in NY and NJ appears to be getting more antsy with every move that management makes.

A voicemail and email to Rothstein Kass spokesman Robert Solomon were not immediately returned.

If you’ve got more info on cuts or other news at RK, get in touch.

Citigroup Blackballs Analyst Claiming the Bank’s DTAs Should Be Written Down

Fox Business Network’s ace news-breaker Charlie Gasparino reports that Citigroup’s management team, including CEO Vikram Pandit and CFO John Gerspach will not meet with CLSA banking analyst Mike Mayo since he’s been telling investors that the big C should be writing down their $50 billion in deferred tax assets.

Carlito reports that Mayo states that this refusal to write down the DTAs amounts to “cooking the books by inflating its earnings through an accounting gimmick.”

Simple question from Mayo via CG, “I’d like to know why all my competitors get meetings with Pandit and the key people there and I don’t.” It’s not like the guy is one of the top banking analysts in the entire world. It’s not like Citigroup has a solid track record of transparent financial reporting. Or did everyone forget that C has the U.S. Treasury as its backstop?

The KPMG audit team can weigh in on this at any time. Or just email us the details.

Analyst: Citigroup is Cooking the Books [FBN]