Category: News

RSM McGladrey Can Explain the Disappointing Year

H&R Block announced its earnings for fiscal 2010 yesterday which included the details for the fka RSM McGladrey. The company’s press release basically says that times are tough but RSM had some good reasons for that.


For starters, the small tiff with M&P sort of put a damper on things and a nasty goodwill write-off:

RSM McGladrey reported fiscal 2010 pretax income of $58.7 million, down nearly 39 percent from $96.1 million in the prior year. Revenues declined 4.2 percent to $860.3 million, primarily due to the impact of the overall weak economic environment, which continues to pressure billable rates and hours within the industry. Profitability was negatively impacted by costs associated with previously resolved arbitration proceedings involving McGladrey & Pullen and other costs of litigation totaling $14.5 million in the aggregate, as well as a $15.0 million goodwill impairment charge at our capital markets business unit.

A 39% drop in profits could explain the nationwide layoffs at McGladrey that we reported on earlier this month. It’s a good thing they didn’t have the ginormous golf cake in this year’s numbers, otherwise the results would have been worse.

But if you ignore all that, things were essentially flat and everyone knows that flat is the new up!

Excluding these charges, pretax income would have been approximately $88 million and pretax margin for the segment would have been 10.3 percent, essentially flat with the prior year. The shortfall in revenues was partially mitigated by cost reduction efforts throughout the year. These efforts included headcount reductions to reflect lower client demand, as well as other non-client facing cost reduction initiatives.

OH! There’s the layoffs and they’re citing “lower client demand.” Thoughts on that, anyone?

H&R Block Reports Fiscal 2010 Financial Results [Market Wire]

Koss Sues Grant Thornton, Blames Firm’s Assignment of Newbie Auditors

Well! You might have thought that Koss would just handle this Sue Sachdeva situation like gentlemen headphonesmiths but you would have thought wrong!

Koss is suing S-squared and Grant Thornton for their respective roles in the alleged embezzlement of $31 million from the Brew Town company.

While it sounds like , that won’t protect her or Chipman & Co. from the wrath of Koss. But one thing is for sure, despite the lawsuits and whatnot, this is not the company’s fault. Just ask Koss’ attorney Michael Avenatti, “I’m confident the company will be exonerated.”


Why? Because Grant Thornton threw a few young associates on the engagement, that’s why!

Koss hired one of the best accounting firms in the world, Grant Thornton, and should have been able to rely on Thornton’s audits to uncover wrongdoing, Avenatti said. The suit against the auditing firm says auditors assigned to Koss were not properly trained.

The lawsuit lists hundreds of checks that Sachdeva ordered drawn on company accounts to pay for her personal expenses. She disguised the recipients — upscale retailers such as Neiman Marcus, Saks Fifth Avenue and Marshall Fields — by using just the initials. But the suit says Grant Thornton could have ascertained the true identity of the recipients by inspecting the reverse side of the checks, which showed the full name.

Forget the fact that the CEO was also vice chairman, chief operating officer, president and chief financial officer. Oh, and he sat on the audit committee at another company. Apparently Koss wanted GT partners auditing those cash accounts rather than implement anything that even closely resembles an internal control system.

Grant Thornton, meanwhile, is still sticking to the boilerplate statement as reported in the Milwaukee Journal-Sentinel, “We remain confident that we have met all of our professional obligations and that our work complied with professional standards.”

Sigh. Of course no one wants to be responsible, so let’s decide for them. Let’s get a show of hands:

It’s worth mentioning that the lawsuit comes just a few short days before Koss’ tardy restated financials are due. If the company doesn’t cough them up, the Nasdaq will banish them like they’ve got lice.

Koss sues former executive, auditor over alleged embezzlement [Milwaukee Journal-Sentinel]

Grant Thornton Sheds Another Office – Albuquerque Sold to Moss Adams

GT follows up with the news of its disposal of its Honolulu office last month, the closure of its Madison, WI location in April and Greensboro, NC earlier this year with this latest sale of its Albuquerque, New Mexico digs.

According to the Moss Adams press release Chipman & Co. wanted out of the Land of Enchantment after “evaluating its strategic direction”:

ALBUQUERQUE, N. Mex. (June 24, 2010)—Moss Adams LLP and Grant Thornton LLP announce the planned acquisition of Grant Thornton’s Albuquerque practice by Moss Adams on July 31, 2010. In evaluating its strategic direction, Grant Thornton senior leadership determined it will exit the New Mexico market.

Kim Nunley, the Grant Thornton office managing partner, will join Moss Adams as a partner along with many of the client service staff and employees. Wayne Brown, Moss Adams Albuquerque office managing partner, will continue to provide local leadership. He said, “I have known and respected Kim for many years and look forward to working closely with her. She is highly regarded within the profession and the Albuquerque community.”

This acquisition demonstrates Moss Adams commitment to the Southwest and overall firm growth. According to Chris Schmidt, Moss Adams president, “Moss Adams is focused on growth and the Grant Thornton practice blends well with our Albuquerque industry group specialization in areas such as financial institutions, credit unions, employee benefit plans, technology/life sciences, and manufacturing companies.”

Moss Adams is the largest accounting and consulting firm in New Mexico and the 11th largest firm in the United States. With more than 1,700 employees and 230 partners, the firm serves its clients from 21 offices in Washington, Oregon, California, Arizona, and New Mexico.

Our email to a Grant Thornton spokeswoman was not immediately returned.

A Few Senators Would Like Billionaires to Pitch in with the Deficit Problem

The latest act in the ongoing circus known as the estate tax debate has three “liberal” senators – Bernard Sanders (I-VT), Tom Harkin (D-IA), and Sheldon Whitehouse (D-RI) – calling for billionaires to help close the $13 trillion some-odd federal deficit that these über-rich people ate.

Forbes reports that the Messrs. Sanders, Harkin and Whitehouse sent a letter to their fellow Senators laying out their case, “According to Forbes Magazine, there are only 403 billionaires in the U.S. with a collective net worth of $1.3 trillion. Clearly, the heirs to these multibillion fortunes should be paying a higher estate tax rate than others.”

The champs of the bill also go to the trouble of singling out Dan L. Duncan whose family stands to inherit his $9 billion fortune tax free. It’s a good thing those staffers pointed out that article in the Times to their respective Senators!


Anyhoo, TaxProf summarizes the details of the “Responsible Estate Estate Tax Act”:

• Exempts the first $3.5 million of an estate from federal taxation ($7 million for couples), the same exemption that existed in 2009. Doing this would mean that 99.75% of all estates would be exempted from the federal estate tax in 2011 alone.

• Includes a progressive rate structure so that the super wealthy pay more. Under our bill, the rate for the value of the estate above $3.5 million and below $10 million would be 45%, the same as the 2009 level. The rate on the value of estates above $10 million and below $50 million would be 50%, and the rate on the value of estates above $50 million would be 55%.

• Includes a billionaire’s surtax of 10%. Our bill also imposes a 10% surtax on the value of an estate above $500 million ($1 billion for couples). According to Forbes Magazine, there are only 403 billionaires in the United States with a collective net worth of $1.3 trillion. Clearly, the heirs to these multi-billion fortunes should be paying a higher estate tax rate than others.

• Closes all of the Estate and Gift Tax Loopholes requested in President Obama’s Fiscal Year 2011 budget. These loophole closers include requiring consistent valuation for transfer and income tax purposes; a modification of rules on valuation discounts; and a required 10-year minimum term for Grantor Retained Annuity Trusts (GRATS). OMB has estimated that closing these loopholes that benefit the super-wealthy, would raise at least $23.7 billion in revenue over 10 years.

• Protects family farmers by allowing them to lower the value of their farmland by up to $3 million for estate tax purposes. Under current law, the value of farmland can be reduced up to $1 million for estate tax purposes under § 2032(a) (Special Use Valuation). Our bill increases this level to $3 million and indexes it to inflation.

• Benefits farmers and other landowners by providing estate tax relief for conservation easements. Our bill provides tax relief to farmers and other landowners by amending estate tax rules for conservation easements through an increase in the maximum exclusion amount to $2 million and increasing the base percentage to 60%.

Nice work on those last two Senator Harkin; you couldn’t be more obvious.

In case you didn’t catch it in there, the estate tax on the billionaires will be 55% PLUS! an additional 10% surtax. Sounds crazy right? Congress royally fucks things up by letting the estate tax expire in the first place and then has the stones to throw the double whammy on the rich because of it. Had they simply extended the estate tax (which seems to be a popular solution, btw) this political pigskin wouldn’t even be an issue.

But guess what? There are people behind this thing lock, stock and barrel. For one, the United for a Fair Economy (“UFE”) more or less says that this legislation is the catalyst to fixing everything, “The Sanders-Harkin-Whitehouse Responsible Estate Tax Act is an important step on the road to an economic recovery that benefits all Americans.”

Well, not all Americans.

California Accountant Had Some Ambitious Career Goals

Many of you probably consider yourself to be ambitious. You have aspirations of riches and success in the field of accounting that the likes of Arthur Andersen dared not dream of. You’re a game changer. The profession won’t be the same after you’re done with it.

But Yasith Chhun of Long Beach, CA could not be satisfied with simple pleasures like titles such as Partner or CFO and fabulous wealth simply would not be enough. His life goals were far more lofty than a simple title, salary or home with a three-car garage on a golf course. This was about a revolution!

A California accountant was sentenced to life in prison Tuesday in Los Angeles for orchestrating a failed attempt to overthrow the Cambodian government in 2000.

Yasith Chhun, of Long Beach, was found guilty in 2008 of three counts of conspiracy and one count of engaging in a military expedition against a nation with which the United States is at peace.

Chhun is a U.S. citizen of Cambodian descent who helped lead a handful of rebel fighters in an attack of government buildings in the country’s capital of Phnom Penh. Three of the fighters were killed, and several police and military officers were injured.

Prosecutors said Chhun planned the coup over two years, traveled to the region to assemble a rebel force and held fundraisers for the operation.

So unless you’re willing to engage in guerrilla tactics in order to topple an entire nation that’s friendly with the U.S., we don’t ever want to hear about your career path.

Calif. man in attempted Cambodian coup gets prison [AP]

Gulf Coast Workers Not Really Down with Taxes on Their BP Payments

Wait! You mean we have to pay taxes if we receive cash? When the hell did this happen? What if you’re part of the “self-reliant nonconformists who don’t pay much heed to everyday rules and regulations” community? Does that earn you a pass?

The AP reported on some workers on the Gulf Coast who are simply not aware of the notion of income taxes and would very much like to keep it that way:

Out-of-work Gulf Coast shrimper Todd Pellegal spent his first $2,500 check from BP quickly, paying off bills and buying groceries for his family.

He never even considered putting some of it away for taxes.

Now he’s among the people up and down the Gulf Coast reeling from the oil spill disaster who are surprised — and frustrated — to find out the Internal Revenue Service may take a chunk of the payments BP PLC is providing to help them stay afloat.

Many were already angry about how long the oil giant took to cut the checks. So when they got the money — generally about a few thousand dollars each so far — they spent it fast.

“If they’re going to pay you a lump sum, like for a year, then bam, take the taxes out of the check,” said Pellegal, of Boothville, La. “But a little bit at a time, they shouldn’t.”

Right, because withholding taxes from a paycheck isn’t how it works for every other person in the country who pays income taxes. Whoever heard of “net pay”?? But don’t bother suggesting planning for such a phenomenon as being paid by check:

“They should do a projection of their taxable income and determine if there is going to be a tax liability and have enough to cover that,” said Crystal Faulkner, a partner in the Cincinnati-based accounting firm of Cooney Faulkner & Stevens LLC.

That doesn’t sit well with Cherie Edwards, who is now only working one day a week at her job booking charter fishing trips at Zeke’s Landing in Orange Beach, Ala. The lost hours due to the oil spill are costing her about $270 week.

She said she got her claim number from BP on Thursday and plans to file an application in the coming day. So far, she said, no one has mentioned to her about a potential tax liability.

“I haven’t even thought about taxes. Wow. That makes me mad,” said Edwards, who has one child in college and another in high school. “I’m already losing money, and now I’ve got to figure out how to hold back money to pay taxes?”

Jesus lady, you’re right. Getting used to the $0 tax liability and then all of a sudden learning that you are required by law to pay them would piss off just about anyone.

IRS May Tax Payments to Gulf Coast Victims [AP via Tax Lawyer’s Blog]

Some Crooked Accountants Need to Try Harder

Regardless of how easy it is for accountants to steal money (access, signatory responsibilities and such) one would think that if you intended on getting away with it that you might go to a wee bit of trouble to cover your tracks. Shamelessly making photocopies for personal matters is one thing, cutting checks to yourself are entirely another:

Between October 2, 2003 and September 20, 2007, [Todd Newman], a Certified Public Accountant with offices in Yonkers and New York City, was the Secretary/Treasurer and a signatory on the payroll of B. Schoenberg and Company, a recycler of plastics and engineering resins located in Yorktown Heights, N.Y.

He stole in excess of $1,900,000.00 (1.9 million dollars) from his employer by writing checks to himself.

Newman also failed to file Personal Income Tax returns with the State of New York for the years 2005, 2006 and 2007, for a total tax liability of $133,158.

Christ man! Set up a phony LLC, open some bank accounts, get a P.O. Box. Something.

Bonus and Compensation Watch ’10: Grant Thornton Delivers the Goods

Grant Thornton has been on strict radio silence lately which makes us wonder if Stephen Chipman had given up on blogging or if they had simply given everyone the summer off.

The blog remains a mystery but we do have some news on GT bonuses (the jury was out for awhile) and merit increases and it seems to be good news but extremely short on details and extremely long on Chipman prose:

Leadership announcement
Additional guidance on bonuses and compensation

On our last all-employee call, I told you that I was optimistic that the firm would award bonuses this year. I am pleased to share with you that we are now in a position to say with certainty that we will be paying bonuses for 2010.

As you know, the overall level of bonuses is dependent on our financial results at year end. We are currently working on this modeling based on our economic forecasts and will have the final numbers next month. However, I can let you know that we plan to pay the bonuses in the mid-September timeframe.

Similar to our merit increases, our bonus payments are based on our pay-for-performance philosophy, where we strive to recognize and reward individuals commensurate with performance. We’ve held this philosophy for a number of years, but could have done better executing on it. You reminded us of this in our Voice Your Experience pulse survey, and we are striving to do better. This year — and even more so going forward — we will be giving larger merit increases and bonuses to our top-rated performers to ensure greater differentiation.

Merit increases should be finalized in the next couple of weeks and your local office will begin communicating with you in early July. New compensation is effective on August 1. The increases are based on extensive market information for each of our practices and your individual contributions.

As we work to differentiate our firm through providing consistently distinctive client service, we will continue to move towards a model that rewards each of our people relative to their contributions to the success of the firm.

I’m excited about our direction as a world-class firm that truly makes a difference, and hope you are too. Thank you for all that you have done, and continue to do, for Grant Thornton.

Stephen

So whether or not this puts your anxiety to rest is another matter. Discuss and keep us updated in the coming weeks.

“Faceless” Tax Worker Turns Out to Be a Hottie…Oh and She Saved a Man’s Life

Tax workers of any stripe – federal or state – get hated on. Given. Buzzwords of disdain like “faceless bureaucrats,” “lazy government employees,” “good-for-nothing-except-for-sucking-up-government-resources freedom haters” and so on and so forth get thrown around with reckless abandon.

However, if you knew that your state department of revenue public servants looked like Natalie Brown (right) and just so happened to be responsible for saving a taxpayer’s life, then maybe Tea Partiers and their derivatives would exercise a little more restraint.

Unless of course they’re also against hotties and random acts of kindness.

When [Earl] Phillips called the state Department of Revenue last month to get answers about his state income tax bill, the faceless Frankfort bureaucrat who called him back saved his life.

Now Phillips thinks Department of Revenue employee Natalie Brown — who dialed 911 when Phillips had a heart attack during that May 26th phone call — should receive more than a simple thank you.
[…]
Phillips, an Adair County construction worker, received a tax notice in late May with Brown’s name and phone number

When Brown returned the call he’d placed, she noticed that Phillips, 60, seemed out of sorts.

“I noticed he was breathing really heavily,” Brown said Friday. “I could tell something was wrong.”

At this point, you might expect to read that the government employee placed the phone down to ask their supervisor to get permission to call the on-site nurse (in accordance with the proper protocols). At which point, another co-worker would pop in, suggest they take a break for coffee and a bun and dying taxpayer would be left on the hook.

But nothing of the sort happened! Natalie Brown was on this, knowing that any delay could mean life or death and certainly less future revenue for the state of Kentucky.

Brown verified she had the correct address for Phillips — which was on his tax forms — and called Adair County 911.

Shortly after that, emergency crews arrived and took Phillips, who was home alone, to a local hospital. He was later transferred to a Louisville hospital, where doctors put a stent, or tube, in his heart. He had a 90 percent blockage in one of his arteries, Phillips said.

Hot, lifesaving, tax worker This has reality TV written all over it.

Tax worker helps save taxpayer’s life [Kentucky Herald-Leader via TaxProf]

Pennsylvania Lawmakers Invite Citizens to Get on This Fiscal Crisis Thing

Either some Pennsylvania lawmakers are out of ideas for closing the state’s budget gap or they’re sick of the belly aching from the Keystone citizens because they’ve decided to put out there for the ordinary Quakers to give their suggestions for fiscal improvement.

So far there has been approximately 750 suggestions that range from consolidating school districts, “El excess management positions. 15 school districts in one county equals 15 superintendents, health care plans, IT departments, administrative departments, maintenance depts and so on” to downsizing the size of the state legislature, “downsize our legislature, there has been several articles on our size compared to other states whith [sic] smaller legislatures and much larger populations.”

Of course there are less constructive ideas such as the idea of having one huge pee party from “Gary” in Mount Joy (our bolding):

URINALYSIS for everyone who receives their salary from Tax dollars. Every tax dollar that comes out of our pocket pays for every teacher in the state, every state trooper, every state university professor, every congressman. We as taxpayers need to know that our tax dollars are not being used to fund illegal/ illicit drug use. We should have a Urinalysis for Every Teacher, every Congressman, every State worker, Every Professor of the state universities. If that is implemented, you will notice a lot of retirements/resignations. Saving the tax payers loads of money as well as stimulating the workforce because of the jobs that will need to be filled. This Is not an invasion of privacy.

EVERYONE IS ON DOPE!

And then there’s “frank” from York, PA who isn’t buying this pollution nonsense:

get rid of state car inspections & emissions testting [sic] – all the garbage about the air is all made up. And if we are the only country doing so, it proves that the goverment are liars! Yea every knows thats true

“Joe Wehner” from Pittsburgh just feels like hating on the whole process, thankyouverymuch:

Like our government, this site is a joke! They only publish dumb democrat liberal views. GOD Forbid any views that work… They won’t publish views outside of their agenda to ruin America.

But we like we said, there are some decent suggestions.

Pennsylvania website takes taxpayers’ ideas to save money [Philadelphia Inquirer]

URINALYSIS for everyone who receives their salary from Tax dollars. Every tax dollar that comes out of our pocket pays for every teacher in the state, every state trooper, every state university professor, every congressman. We as taxpayers need to know that our tax dollars are not being used to fund illegal/ illicit drug use. We should have a Urinalysis for Every Teacher, every Congressman, every State worker, Every Professor of the state universities. If that is implemented, you will notice a lot of retirements/resignations. Saving the tax payers loads of money as well as stimulating the workforce because of the jobs that will need to be filled. This Is not an invasion of privacy.

EVERYONE IS ON DOPE!

And then there’s “frank” from York, PA who isn’t buying this pollution nonsense:

get rid of state car inspections & emissions testting [sic] – all the garbage about the air is all made up. And if we are the only country doing so, it proves that the goverment are liars! Yea every knows thats true

“Joe Wehner” from Pittsburgh just feels like hating on the whole process, thankyouverymuch:

Like our government, this site is a joke! They only publish dumb democrat liberal views. GOD Forbid any views that work… They won’t publish views outside of their agenda to ruin America.

But we like we said, there are some decent suggestions.

Pennsylvania website takes taxpayers’ ideas to save money [Philadelphia Inquirer]

Grant Thornton Survey: More Bank Execs Think the Economy Will Suck Less Eventually, Maybe

No! It’s true! Forty-five percent think things are going to be WAYYYY better in the next months, just in time for Christmaskuh!

That’s up from 24% in December ’09.

John Ziegelbauer, national managing partner of Grant Thornton’s Financial Institutions practice, testifies:

Bankers across the country are starting to become more optimistic about both the U.S. economy and their own local economy…Their optimism about the economy is spilling over into their own banks, with bankers reporting that they are also cautiously optimistic about the number of people they expect to hire in the coming months. Overall, it appears that bankers believe that the economy has finally turned a corner.

Except that 55% of those surveyed expect to be the same (i.e. sucks) or get worse and don’t forget, no one is hiring.

On with the jobless recovery!

Big jump in number of bank execs that expect the economy to improve in next six months [GT]