Category: News

One Accountant Was Enough to Discuss Lehman’s Accounting on CNBC

Maybe it’s because everyone is still working like crazy and couldn’t get away for a TV appearance. Maybe Jim Turley couldn’t find decent footwear but how CNBC managed to get only ONE accounting expert in on this panel to talk about the Ernst & Young, Dick Fuld, et al. Sarbanes-Oxley and the Repo 105 is beyond our comprehension. Throw in four journalists and a “fellow” and you’ve got yourself quite the free-wheeling discussion on the double-entry system.


Personally, “[N]ot technically violating the rules, that’s why the auditors could kind of sign off on it even though it was incredibly misleading and deceptive,” was our favorite line.

But the poor accounting expert seemed to be a nervous wreck. Aren’t wet bars standard?

Five Questions with Tracy Coenen

If you’re currently engaged in fraudulent activity at your company, eventually you’re going to find yourself in Tracy Coenen’s Fraud Files Blog. She has published two books on the subject, Expert Fraud Investigation: A Step-by-Step Guide and Essentials of Corporate Fraud and more than a 100 articles in industry publications.

When she’s not writing about all things fraud, Tracy runs Sequence, Inc., providing forensic accounting and fraud examination services. The Sue Sachdeva/Koss fiasco happened in her backyard of Milwaukee and she’s been all over it, providing fine quotes on the matter.


Why do you blog?
Somebody has to expose the frauds and scams!

Why should you accountants read your blog?
Because I have interesting insights and I’m not afraid to state my very strong opinions.

Who is your favorite blogger?
Mike Masnick at Techdirt

Best thing about blogging for accountants?
There is a wide open market for accounting bloggers to be thought leaders (and to market themselves) because so few accounting and finance professionals are blogging about their profession.

The biggest issue facing accountants today is…
Truly understanding how fraud happens and how to find and prevent it.

Three Ways That Patrick Byrne Can Apologize to Sam Antar

As you’re probably aware (if not, check the links below), it hasn’t been the friendliest of exchanges between criminal CFO/forensic accounting sleuth Sam Antar and Overstock.com CEO Patrick Byrne. Sam being Sam, he recently reached out to Patrick Byrne to see if he would be interested in a mea culpa:

From: Sam E. Antar
Sent: Monday, March 08, 2010 11:02 PM
To: Patrick M. Byrne
Subject: Overstock.com Restatement
Importance: High

Hi Patrick:

Will you finally admit that I was correct when I reported in my blog that Overstock.com violated GAAP by using a phony gain contingency in light of the company’s recently announced restatement?

You owe me a public apology.

Regards,

Sam


Our understanding is that Pat hasn’t responded to Sam’s request for an apology yet (we’re hopeful!) so Team GC thought we’d offer some suggestions to Dr Byrne should he decide to take the high road and apologize to Sam. Having been in this situation more than once myself, I can honestly say sometimes you’ve just got to suck it up, buy some flowers, and admit that you’re an ass but totally repentant.

Overstock.com gift cards – Nothing says I’m sorry like free stuff that the aggrieved party can pick themselves. Bonus, the overhead on Byrne’s own inventory must be low. You know, because it’s his, not because there is any monkey business going down on OSTK’s financials.

An SEC Gift Shop Goodie Basket – I busted Sam in an SEC baseball hat at Stanford last week so wouldn’t it be cute if Byrne got him a whole basket full of fun regulatory shwag? Awww, what a precious moment it would be watching Sam pull out DoJ beer cozies and a color-changing SIGTARP coffee mug. Who doesn’t love tchotchkes? PB can’t go wrong! I’d even throw in a pair of NY Fed Pistol Team patches for that added touch of flair.

Cupcakes – Come on, no one can resist cupcakes, not even Sam E. Antar’s hardened criminal ass. You know, might as well send some to the GCHQ while he’s at it, we’ve been putting up with this Overstock shit for months too. Hopefully even Patrick Byrne knows when it comes to cupcakes, it’s best to invest in high quality, over-priced boutique cupcakes. Even my cheap ass knows that.

Earlier:
Winners and Losers in the Overstock Restatement
Even Earlier:
Is Patrick Byrne’s Facebook Friends List Motivated by a Farmville Obsession?

Is Stephen Chipman Preparing to Embrace Twitter?

We hope! Our speculation is fueled by a line from SC’s most recent post:

“Because I’ve heard it said that brevity is not my strong suit, I will try to explain it in 50 words.”

Whether Steve-o realizes it or not, at 50 words, he still needs to improve his brevity. But it’s a start and we’re hoping that he’ll get eventually embrace Twitter. We’re envisioning pithy Tweets followed by clever hashtags like #GTrocks or #Big4sucks or #isecretlyheartsuesachdeva.


The fact the whole brevity topic came up makes us curious. We only made mention of it once, ages ago, so we’re certain that he isn’t referring to our commentary (which we’re sure he reads religiously).

Anyhoo, Even-Stephen was referring to the difference between the Grant Thornton Senior Leadership Team and the Partnership Board. Disappointing everyone, he ended up using 51 words and 258 characters:

The SLT is the equivalent of executive management, and the Partnership Board is the governing body of the firm. The SLT is appointed by the CEO and approved by the PB. The CEO is appointed by the PB. The SLT reports to the CEO, and the CEO reports to the PB.

That’s followed up by Stephen getting back to his windy ways, describing what every member of the SLT does (you can get the gist from their titles).

So while we’re encouraged by Chip’s effort at getting to the point, he still has some work to do. Just sign up and go for it man. Plus we’d be interested to know who Steve-o would follow. Going Concern is a given but does he go intellectual and follow Taleb and Roubini? Or slum it with the rubes and follow Kim Kardashian, Courtney Love and Kanye?

Stephen, just get on Twitter.

Accounting Porn Does Not Involve a Guy Coming By to Fix the Cable

AG profiled Professor David Albrecht last week, which was an honor and a privilege for everyone involved. The Professor’s contributions to the accounting blogosphere are invaluable. Staying consistent with his priceless musings, his latest post asks an important question: “What Is Accounting Pornography?”

Now since we’re sure the professor wants us to think hard about this question, we’ll kindly oblige him.


Done.

As you might expect, this question has nothing to do with your particular taste in ladyboyx.com or whatever else the SEC staff might have turned you on to. No, this is more of the strange reading and/or viewing material that you might just enjoy a little too much (e.g. Lat’s proclivity for the Harvard Law faculty directory).

Okay, here are a few answers that come to mind:

• Any internal report that you stumble across that details upcoming layoffs.

• For Sam Antar and the rest of you sleuthy types, the notes to Overstock.com’s financial statements.

• For the weirdos, it could be watching Big 4 CEOs’ banal talking points with a snowy backdrop. Or the thought of Jim Turley in his Timberlands.

• For the sickos, nightmare CPA exam stories that end in a grade of 74.

If there’s something else that gets you off (Ben Bernanke testimony doesn’t count, AG) feel free to share. Just try to keep it relatively clean. In the meantime, we’ll be flipping through the Enron script.

What Is Accounting Pornography? [The Summa]

Are Accountants at a Higher Risk of Experiencing Workplace Violence During Busy Season?

Seems like logical conclusion, right? Okay, it’s not the post office but yeesh, have you noticed the bitter Bob in the cubicle next to you? Is he approaching the breaking point? Busy season sucks after all and who knows when he’ll eventually crack:


Is our suggestion that accountants might be more likely to snap a little overblown? Maybe. But read this description from AccountingWEB before you blow us off:

You are sitting at your desk on a sunny Thursday afternoon. Your company is experiencing some hard times, and there have been layoffs company wide. A co-worker has been part of the layoffs, and is very distraught. The co-worker may have known layoffs were eminent, and thought it would never happen to them. All of a sudden, the co-worker pulls out a gun and starts shooting up the office!

Sound familiar? Of course! We imagine that someone throwing their 10-key at your head is more likely scenario but violence is violence. The article cites OSHA stating that 2 million people are victims of workplace violence every year but what’s even more exciting/troubling is the BLS survey that “70% of workplaces don’t have any type of violence prevention program in place.”

The solution? Training of course! AccountingWEB breaks it down like this:

• “Train managers and supervisors on how to detect the early warning signs of potential violence” – In other words, you know that guy who says ALOUD he’s thinking about punching the next person that asks him a stupid question? You should probably should have a word with him.

• “Tell employees that the firm wants to know about any threats or incidences, and that they are extremely serious about handling these problems.” – Naturally it helps if your company follows through on “serious about handling these problems” part. In other words, the guy swinging the sledge around should be tarred and feathered and then fired in front of the entire company. The proceedings should be broadcast internally for those that can’t attend in person. It’s simply not enough to fire the person. Public humiliation is imperative so people get the picture that this shit won’t be tolerated.

• “Implement a zero tolerance policy in the handbook relating to workplace violence” – And by zero tolerance, we’re talking no noogies, wedgies, open handed slaps, arm slugs, bloody knuckle contests or even berating someone to the point that they develop an eating disorder.

Violence in the Workplace: Are You Next? [AccountingWEB]

The Purpose of PricewaterhouseCoopers’ New HR Service in India Isn’t Entirely Clear

PwC has launched a new HR service in India and one can only speculate as to the inspiration behind staging the move there (I’ll give you a hint: it starts with Satyam and ends in fraud) but let’s take a look at the official spiel before we rush to judgment.


India’s Financial Express:

Global audit firm, PricewaterhouseCoopers, announced the launch of its human resources service ‘Saratoga’ in India along with India Human Capital Effectiveness survey (HCE), a top company official said.

“Saratoga is the most extensive database of HR metrics available globally. We are launching it in India and we have already got an immense response from Indian companies,” PricewaterhouseCoopers’ Partner and Global HRM network leader, Richard Phelps, told PTI here.

On the surface, Saratoga looks like little more than an inventory count of companies’ human capital, which means something when you have to keep a leash on a bunch of customer service guys with fake first names (how else would you keep track of them?).

See, PwC cares. They care that JP Morgan outsources call center jobs to India – I know this because I’m a Chase customer (leave me alone) and have had the misfortune of dialing in. Meanwhile, JPM’s off-shore hiring spree continues and someone’s got to handle all that “human capital”, why not PwC?

I don’t care that some guy in India has a job, I care that he calls himself Patrick and pretends to have a bizarre hybrid Texas/New Jersey accent. Is there going to be a check box on these PwC Saratoga metrics for guys who fake 50s-style American first names from Indian call centers?

I’m not bitter. It’s good that PwC cares about the global community and wants to reach out to facilitate cheap labor for its audit clients like JP Morgan (for the record I use BofA too and they have the decency to hire air-headed middle-state chicks named Kelly and Sarah).

Could you imagine what would happen if the Fed stepped in and barred PwC from auditing anything that’s moving here in the US? Hell, it happened in India.

Good luck with that human capital census or, uh, whatever it is, PwC. I mean that.

Accounting News Roundup: Japan Adopting International Fair Value; GAO Not Down with PCOAB Risk Standards; Oscar Gift Bags = $91k Income | 03.08.10

• Japan embraces new fair value rule [Financial Times via Accountancy Age]
Here’s a novel idea: making a decision on IFRS! Japan’s Financial Services Agency will be allowing companies to adopt the international version of the new fair value rule developed by the IASB, starting Wednesday. Since the world’s second largest economy is opting to pull the trigger on IFRS it may throw the G20’s request/demand for the world to get all kumbaya when it comes to accounting rules.

“Fair value accounting…as unleashed one of the most divisive debates to have emerged from the credit crisis, threatening to disrupt a pledge by the G20 group of leading economies to create a single, global accounting system by mid next year,” reports the FT and judging by the SEC’s indecisiveness, they may be right. With this latest development, now leaders will be able to blame each other’s securities agencies for their particular actions that will likely lead to divergence.


The allowance of Japanese companies to adopt IFRS 9 could also give Knight of the Accounting Roundtable, Sir David Tweedie, even more leverage when dealing with countries around the world to adopt the IFRS.

Right or wrong, the Japanese are sending a signal that they are prepared to move forward while the SEC prepares to have more meetings.

• GAO Criticizes PCAOB Approach to Audit Risk [Web CPA]
The General Accountability Office, never shy to point out the faults of others (that’s kind of what they do, after all), isn’t so keen on the PCAOB’s latest “risk assessment” audit standards. This after the PCAOB originally proposed standards in 2008 and then revised and re-released them late last year.

The GAO feels that the ‘duplication and inconsistencies’ created by the PCAOB’s new standards would likely lead to…more billable hours! So, as you might imagine, some firms are on board:

PricewaterhouseCoopers told the PCAOB, “We fully support the board’s objective to update interim standards regarding risk assessment,”

And some, not so much:

McGladrey & Pullen…warned that “unnecessary differences between the board’s standards and those of other standard-setters increase the costs of performing all audits because firms must develop and maintain two, and even three, audit methodologies and training programs, with no corresponding benefit to audit quality.”

Personally, we’re skeptical of anything that has the unmitigated support of the biggest players in the industry but from a more practical standpoint, do auditors really need more rules to follow? And now this could add to the workload? Is that really necessary?

• Oscar Swag Bags to Result in $91k Income to Celebrity Presenters [TaxProf Blog]
Celebrities have enough tax trouble the way it is, how is giving them gifts going to make their tax returns easier? We’re guessing most of them have smart CPAs working for them that will suggest that they give it all to charity but we may be underestimating the temptation of free luxury swag.

Stephen Chipman Managed to Not Stop By Going Concern HQ While He Was in New York

This week in Stephen Chipman blog dissection, we learned that SC had another week full of travel, although he managed to resist the temptation to head back to Atlanta for the third straight week. It was typical back-slapping, glad-handing wily CEO shenanigans in Chi-town including a little chat with Assistant Secretary of State for East Asian and Pacific Affairs, Kurt Campbell. “Dr. Campbell recounted a wonderful story of his very first diplomatic event with Secretary Clinton at Blair House — entertaining a senior Chinese delegation.”

Yeah. He leaves you hanging. Our guess is that Hil was telling Bill jokes and/or doing armpit fart noises but it’s all a mystery because Stephen changes the subject entirely. C’mon man! You can’t do that!


Anyway it and then on to DC for a speech IFRS and why it’s on the road to nowhere in the US of A:

I had been invited to be the after-dinner speaker for the National Venture Capital Association (NVCA) Board of Directors meeting. Although I feared the impossible expectation of being a “rousing, after-dinner” speaker on the topic of International Financial Reporting Standards (IFRS), interest was high on the eve of the SEC’s highly anticipated announcement of plans to move forward with their Roadmap for IFRS adoption in the United States.

We’re continually impressed with Steve’s ability to throw in the dry humor, although we suggest dropping the unnecessary quotation marks. Definitely would read more deadpan. If you’re not familiar with the phenomenon of unnecessary quotation marks, you’re probably an abuser.

Moving on…

Chiparoo then trekked up to the City where he talked more about IFRS with the Center of Audit Quality, “The lively conversation focused on the SEC’s announcement regarding further clarification on their Roadmap.” And by that he means everyone there is pissed that the SEC is perfectly happy to drag this thing out.

Post-IFRS chat, SC met up with Ed Nusbaum and they did some MSM hopping, “I met up with Ed Nusbaum and Grant Thornton’s Director of Corporate Communications John Vita for a media tour. Ed is a veteran with the press, but press junkets are relatively new for me. We spoke to reporters at Bloomberg, Fox News, the Wall Street Journal and Thomson Reuters.”

Okay, we’re a little hurt by this. Sure we work remotely but would it have killed you to stop by Steve and leave a note? GCHQ might not have the fancy confines of the WSJ or the ‘Berg but we’d make you guys comfortable as possible. Plus there’s always stimulating conversation. Or just simple call saying “Sorry we couldn’t make it. Next time!” just to get our hopes up.

While we’re still getting over this little slight, we’ll just mention that Steve’s blog, to our knowledge, doesn’t have a name. We’ll take the weekend to mull over this but in the meantime, if you’ve got suggestions, feel free to share.

Five Questions with Accounting Professor David Albrecht

You might know him as Professor Albrecht (at least I still call him that) or you may read The Summa and have no idea who the guy is.

JDA recently forced him to answer some questions to get to the man behind the adamantly anti-IFRS curtain we love so much and discovered he’s proud to be a dissenting voice in the argument over global accounting standards convergence and then some.

First of all, Prof Albrecht is way more old school than just about anyone. He was “blogging” on listservs before there was a such thing as a blog and Caleb and I were still playing 8-bit Super Mario Bros.


Alright, maybe we’d advanced to AOL by the time Professor Albrecht was set loose among hundreds of accounting professors from around the world, the point is he’s been around. The Summa is only about a year and a half old but if you’ve ever read an accounting blog, chances are you’ve seen his work.

Secondly, he’s got opinions and lots of them. Better yet, he enjoys being a teacher; spreading the knowledge both to his own students and the “students” around the world who read The Summa regularly. That means he’d be happy to teach you why he feels the way he does but won’t hold it against you if you feel differently. That’s an admirable quality, and only part of what makes him one of my favorite accounting bloggers.

He also takes interrogation well.

Why do you blog?
I believe that writing something down helps you put your thoughts in order. Writing actually helps me figure out what I think about something. I want to make a difference. Blogging about IFRS is a way of drawing attention to the “other” side of the issue, the one you don’t hear from the large accounting firms or the SEC or the IASB or the EU.

Why should you accountants read your blog?
To find out an accounting professor take on accounting/business/finance issues. I’ve been on an e-mail listserv with hundreds of accounting professors from around the world for 14 years in the thick of many discussions. I take what I learn from these discussions and bring them to The Summa.

If someone had to read just one post of yours which one would it be?
I’ve written dozens of posts on IFRS, and you want just one? Dave Albrecht–IFRS Critic

A good accountant is…
Someone who can tell left from right.

Best Accounting firm program we’ve never heard of…
The Concordia College (Moorhead, MN) accounting major.

Hotel Doesn’t Like Being Duped by a Phony IRS Agent; Manages a Nonviolent Response

About a month ago we briefly mentioned Sheryl Lynn Vertoch who had been “staying at the Inn Marin Hotel in Novato, California for over seven years telling the staff there that she was an IRS agent.” Her cover was blown, not by hotel pool boys turned crack-squad investigators, but by the hotel calling the IRS to complain about their lack of support for this public servant that worked on important cases such as Enron.

Probably feeling a tad sheepish, the hotel is firing back by suing SLV for the $55,175.25 that she owes the hotel.


The hotel, being very thorough of its records (but not necessarily multi-year guests) attached a 24 page invoice to show the charges that Vertoch racked up for “guest fees, expenses and pet charges” from January 21, 2008, to January 26, 2010.

Somehow the hotel’s management/owners/lawyers came to the conclusion that A) the actual IRS wasn’t the cause of the problem and B) the use of a plane, bulldozer or firearm were simply not the best course of action.

Personally, we’re shocked but at the same time relieved that there is a sliver of sanity left in this country.

Novato hotel wants IRS imposter to pay $55,000 tab [Mercury News]
Earlier:
Phony IRS Agent Racks Up $55k Hotel Bill