Category: News

Accounting News Roundup: SEC Delay on IFRS Irks Some; Client Opinions of Big 4 Audits Not So Hot in UK; IRS Asks for $21M to Answer More Phones | 02.25.10

• U.S. delay on global accounting leaves world waiting [Reuters]
The head of financial reporting at the ICAEW is not impressed with the SEC’s plan to string everyone along on IFRS. Although we’re sure Dr. Nigel Sleigh-Johnson is bright guy, we’re not sure what the good doctor was expecting from, you know, the SEC.

Dr. Johnson complains that ‘the world [has] been awaiting clear signals from the Securities and Exchange Commission as to how and when it is going to start the process of completing the convergence to International Financial Reporting Standards,’ which is probably true. Think about it. If 110 countries have jumped on the IFRS ship, they sure as hell would want the US of A on that ship too because that way, if this turns out to be the worst idea in the history of double-entry accounting, then at least the U.S. went along with it too.


• Big Four audits are off the pace [Accountancy Age]
As a group, the Big 4 didn’t fare to well in the inaugural “Accountancy Age Finance 360 survey of client opinions” which asked participants to give their “views on the service they received from their last audit provider”.

Out of twelve firms, PricewaterhouseCoopers ranked the highest at #5, KPMG #9, Deloitte #10, and Ernst & Young brought up the rear at #12. The Age reports that “[E&Y] Staff were described as ‘pretty dire’, short on technical knowledge, confidence and even decent written English. Negative comments outnumbered the positive two to one.” Comments on KPMG and Deloitte were a little better:

While KPMG won plaudits for technical skills, it was let down by perception of its added value, with one FD claiming “very little feedback on potential improvements” their money.

Deloitte also struggled to prove it added value, while clients felt the firm’s audits were “mechanical” and an exercise in “box-ticking”.

One FD felt Deloitte was “more concerned with gathering enough evidence to stand up in court with a defence if there were ever a negligence case”.

All the firms not happy with their ranking essentially said that they were “committed to the highest standards of work” or something like that. You know the drill.

The tops firms in the survey were all included two Global 6 candidates: Mazars at #1 and Grant Thornton at #3 with Horwath Clark Whitehill taking the silver.

• IRS Commissioner Requests Additional $21m So IRS Will Not Answer Taxpayer Phone Calls 25% of the Time [TaxProf Blog]
Doug Shulman asked the House Appropriations Subcommittee on Financial Services and General Government for $21 million to improve the customer service. Apparently this would result in a 4% jump in calls answered. That sounds like magical government math if we have ever heard it.

Ohio Man Fighting the IRS May Not Be Done Bulldozing

Great news everyone! There’s a chance that more bulldozer fun will be had in Ohio, courtesy of Terry “Dozer” Hoskins.

Having demolished his house in less than two hours and knowing that it was only a matter of time before the bank came after his business property, he’s giving serious thought to renting another dozer and finishing this thing once and for all. Small town bank and IRS be damned.


Hey, we’re all for it. If you can a dozer for $500 why not introduce a little more chaos in your life? And don’t worry, the man is a professional and is always mindful of safety, “‘You have to know what you’re doing before doing something like this’ to avoid being hurt, Hoskins said of destroying his house. ‘I’ve run heavy equipment for years.'”

Believe it or not, Dozer’s wife wasn’t thrilled with the whole razing of the house, “Also not happy about the destruction of their house was his wife, Hoskins said. They are now living in one of the buildings on the commercial property.” He must have concluded that since he had already declared bankruptcy and destroyed one piece of property, floating the idea of flattening the business property couldn’t piss off the Mrs. too much more.

Question Hoskins decision-making skills if you like but it’s good to see a man taking pride in his work, “I don’t regret one bit of it.”

Home razer might take business next [Cincinnati Enquirer via TaxProf]

Bad News: Forensic Accountants Are Crooks Too

Allegedly of course! Despite our best wishes for a forensic accountants to be fraud-busting crusaders that pursue truth, justice and all that crap, this corner of the profession is not immune from shiesty characters.

Lewis Freeman, “Miami’s go-to forensic accountant”, has been charged with embezzling $2.6 million from his clients. The Miami Herald is reporting that Lew has pleaded not guilty but is planning to change his plea to guilty “within a few weeks” while his attorneys try to negotiate a lighter sentence. The Herald also reports that two other employees of his firm, including the CFO, will be charged as co-conspirators in the case.


When you think about it, this really exposes Freeman as not being a very smart guy, just smarter than the people he was ripping off. As criminal mastermind Sam Antar told us in an email, “Lewis Freeman may have been considered ‘Miami’s go-to forensic accountant’ but he was not a very bright guy. He simply took old money from his client’s trust accounts and replenished it with new money. As a forensic accountant, he should have known that ultimately such Ponzi schemes end up collapsing over time.”

Despite this, Freeman was able to carry on the scheme for approximately a decade, swindling up to 250 victims.

Wondering what this latest development meant in terms of fraud involving forensic accountants, Sam told us, “Forensic accountants turned white collar criminals present a real challenge for law enforcement, since they (excluding Lewis Freeman) are far more sophisticated in their knowledge of anti-fraud measures and are more innovative in exploiting weaknesses in internal controls than the common white collar criminal.”

And don’t worry, they’re out there, “Freeman is probably not the only forensic accountant turned Ponzi schemer out there. The smarter and more sophisticated one’s have not been caught yet,” Sam said. Got it. Suspect everyone.

We first mentioned Lewis Freeman last fall when his firm was under investigation by the FBI and that his firm briefly served as the Chief Restructuring Officer for the Palm Beach Funds that were part of the Tom Petters orgy of fraud.

The bright side is we can’t foresee any scenario where the image of accountants gets worse.

Miami’s ‘go-to’ forensic accountant pleads not guilty to fraud [Miami Herald]

Even More Tax-Related Violence: Wife Shoots at Refund Hogging Husband

As we still tread in the wake of the Joe Stack attack on the IRS, it seems that bizarro things are happening all over this great land of ours and many of them have to do with taxes and/or the IRS. Jailbirds requesting fraudulent refunds and receiving them, IRS-inspired bulldozing of houses and now we’ve learned about a woman who tried to kill her husband who wouldn’t share their tax refund money.

And like Joe, Bulldozer Terry and the Florida inmates, the woman is pretty satisfied with her actions:

Investigators say the woman then went into the city of St. Louis and threw the gun in a sewer. Police contacted the woman a short time later and she turned herself in. Police say she didn’t seem sorry.


“She felt more than justified. She cooperated very well, with the reasoning why she fired the shots, as well as recovering the gun. She said she didn’t want a child to find the gun in the sewer,” says Daniel O’Conner, the Assistant Chief of Police for Pine Lawn.

This lady can’t be all bad; she was thinking about the kids when she threw that gun in the river. There’s no indication that the husband in this little caper was just a greedy SOB or if his not-so-good sharing skills were justified due to a spendy Mrs.

Regardless, it’s seems that every hour brings another story that strengthens the argument that taxes are the cause of all the strife and violence in this country. We should have taken the IRS shotgun shopping spree as a sign.

[h/t TaxProf and Tax Update]

Crowe Horwath Files Creditor Claim Against Michael Jackson Estate

How’s this for weird: accounting firm Crowe Horwath has filed a creditor claim against the estate of Michael Jackson, claiming that they handled his “business affairs until the day he died,” according to TMZ.

The claim is for about three weeks of work, from June 4, 2009 to June 29th (DOD) and the total bill reported is $38,495.

Since this was the weirdest thing we’ve read in the past hour, we called up Crowe to find out their side since TMZ didn’t seem to bother. They’re currently checking into it and will hopefully get back to us. Stay tuned…

We Worked for Michael Jackson Til He Died [TMZ]

Sarbanes-Oxley’s Latest Unintended Consequence: Even Worse Postal Service

I never believed Sarbanes-Oxley could even be blamed for shrinking media distribution but the impossible has happened and CPA Trendlines shares the Compliance Week article that enlightens us on this latest unintended SOX consequence:

The Clovis News Journal—paper of record for Clovis, population 37,200—says that it cand no longer deliver newspapers to its subscribers. The reason? Sarbanes-Oxley.

“Due to the federal Sarbanes-Oxley Act and its required implementation locally by the U.S. Postal Service, the Portales and Clovis post offices no longer can provide same-day mailed service of the Portales News-Tribune and the Clovis News Journal,” according to the News Journal website.


News Journal’s circulation director tells Compliance Week that the issue could be due to a “misinterpretation” of SOX rules by the local Post Office, who swears it is simply complying with the Postal Accountability and Enhancement Act of 2006.

Section 404 strikes again!

It appears as though the USPS also misinterpreted pension accounting rules, leading to it overpaying some $75 billion to the Postal Service’s Civil Service Retirement System pension (so says the USPS Inspector General). What the hell is going on over there? Is that SOX’s fault too? I love blaming Sarbanes-Oxley for stuff too but let’s be reasonable here, these guys are a mess.

By March 2010, the USPS will be “locking down” its tech systems for six months as it struggles to comply with only the worst bits of SOX for the sake of, uh, efficiency? Intelligent Mail has already proven to be a burden in a climate where more of us email than use stamps, online bill pay is the norm and publicly-traded bad boys like UPS and FedEx dominate market share. They already know their way around SOX and have the capital to handle it if they need a few compliance artists around. The USPS? Not so lucky.

Perhaps the local Post Office is confused and Clovis News Journal’s 410 print delivery subscribers will get their papers at last. If not, is it really appropriate to blame SOX? Sure, why not, if not this I’m sure we can find something else to peg to it if the need arises.

Making mailers sign off like auditors on a piece of mail? Oh now that’s tedious. Yay SOX!

Five Questions with the Jr. Deputy Accountant

You’re probably not aware of this but the Jr. Deputy Accountant (aka Adrienne Gonzalez) has been working outside her normal confines of the Bay Area this week in an undisclosed location.

While her current location is a mystery, what’s not up for debate is her ability to opine (frequently with too many words) on all things Federal Reserve, church accounting or the CPA Exam.

Besides her daily chores at GC, JDA has been published at a plethora of other blogs including Goldman Sachs 666 and BankFailFriday
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Why do you blog?
For the same reason people play Grand Theft Auto; it helps to have a productive outlet for my frustration with our regulatory and banking system. That and I’m an attention whore.


What are your three must-read accounting blogs and one must-read non-accounting blog?
I love Krupo.ca, Skeptical CPA, and The Summa. For non-accounting, I’d have to say either Lew Rockwell or Daily Reckoning for my daily dose of doom and gloom. I’m obviously a miserable bastard.

If someone had to read just one post of yours which one would it be?
I’m partial to my recent “Fed Year in Review” but with almost 2000 posts, how the hell am I supposed to pick favorites? “You Want to Audit the Fed But Why?” is also a favorite of mine.

Accountants are…
Awesome because they pay my bills.

The biggest issue facing accountants today is…
Globalization. It’s the vampire lurking outside of accounting’s window whispering “let me in” and too few accountants are focused on the impact. IFRS adoption in the United States is a perfect example of what happens when we bow to global expectations in financial reporting and accounting. I of course don’t believe we need to bow to anyone.