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Speaker of the House John Boehner Isn’t Sure Why You Would Bring Up ‘Random Person’ Grover Norquist

And this after GGN said such nice things about the Speaker.

Thursday, when NBC News’ Luke Russert asked Boehner if Norquist makes a positive impact on the party, Boehner thought it over for five seconds, The Washington Post’s Felicia Sonmez reports, before responding, “Our focus here is on jobs. We’re doing everything I can to get our economy going, to get people back to work. It’s not often I’m asked about some random person.”

I’m not sure how a person could bounce back from such an outright snub but it appears the Godfather of Tax Policy is taking it in stride and standing by his man.

[via AtlanticWire]

Bloomberg: PwC to Receive CFTC Subpoena UPDATE – Yeah, They Got It Yesterday

Don’t an expect an apology from PwC, like some firms.


PwC declined to comment.

UPDATE: Can you believe that they didn’t bother to call us? BBW reports:

The Commodity Futures Trading Commission sent the subpoena seeking information about $633 million missing from customer accounts, said the person, who spoke on condition of anonymity because the matter isn’t public. The subpoena was received yesterday, the person said.

[@BloombergTV, Earlier]

KPMG Is Sorry for Not Sorting Through This Giant Charlie Foxtrot (aka MF Global) a Little Faster

Initially the House of Klynveld wasn’t worried about any MF Global clients getting their money back. Then yesterday we learned that plenty of people were pretty cranky, including one trader who thought the firm’s efforts so far were hilarious. Now, after a number of cranky phone calls and thousands of sternly-worded emails, KPMG is apologi[z]ing for all the “disruption” since they’ve been appointed as the administrator of MF Global:

“We are working with the companies’ staff to transfer client positions wherever possible. Where exchanges and counterparties have defaulted the company under their own rules, we have worked closely with them to try to optimise the outcome,” said Richard Fleming, UK head of restructuring at KPMG. “We understand the frustration among clients and market participants at the disruption that is currently being experienced and are sorry for the inconvenience this is causing. In relation to client assets and monies held by the company we are actively working to reconcile holdings and accounts in order to enable assets to be released as soon as possible.”

So, c’mon guys; I know it’s been over 72 hours but please bear with them.

KPMG apologises over MF Global disruption [FT]

PwC’s MF Global Audit Team Really Could Have Used This Artificial Intelligence a Few Days Ago

Or maybe months ago. Or years ago. Unfortunately this news just came out today:

Free iPhone 4S at PwC! Well, for some people anyway – Email went out this morning that if your current contract is up for renewal, you can switch your service to AT&T (keeping your existing #) and receive a FREE iPhone 4S 16GB. Only question remains is what will Siri’s bill rate be?

Obviously the opportunity here is to delegate some of the more important intern duties to Siri such as where the team will get takeout, advice on how to fix the copier, among others.

BREAKING: Stress Affects Accountants’ Mental Health

Yep! And apparently there’s new evidence “suggesting” as much:

The Chartered Accountants’ Benevolent Association is logging rising numbers of calls from professionals who appear to be developing mental health issues, or believe they are at risk of doing so. Interim operations team manager Helena Coxshall said the evidence is not conclusive as the helpline does not offer medical diagnosis, but highlighted rising numbers of calls in the second half of 2011. “These are coming from people who feel that they are heading towards a potential breakdown and we also see it from people who call us regarding other issues, but appear to be showing symptoms of mental illness of which they may be unaware,” she continued.

So take care out there, masters of the double-entry system. The last thing we want to see is any of you cracking up.

Accountants’ mental health ‘hit by stress’ [Accountancy Age]

IRS to Allow Deduction of Medical Expenses for Those Diagnosed with Gender Identity Disorder

When nature makes a mistake, it can be expensive to repair. Rhiannon O’Donnabhain long suspected that nature had mistakenly assigned him to the wrong team, and after growing up male, fathering three children, and getting divorced, looked into fixing that. A diagnosis of Gender Identity Disorder (GID) was reached, and the process began.


There was a lot involved. The Tax Court says the process included:

– 20 weekly individual therapy sessions.
– Hormone therapy
– facial surgery
– genital surgical sex reassignment
– breast augmentation surgery

This process continued under the watchful (but not free) observation of a therapist.

Now female, O’Donnabhain deducted $21,741 in medical expenses related to the reassignment on her 2001 return. The IRS objected, but the Tax Court upheld her medical deductions for all but the breast augmentation (they said that was cosmetic, not medical).

The expert testimony also establishes that given (1) the risks, pain, and extensive rehabilitation associated with sex reassignment surgery, (2) the stigma encountered by persons who change their gender role and appearance in society, and (3) the expert-backed but commonsense point that the desire of a genetic male to have his genitals removed requires an explanation beyond mere dissatisfaction with appearance (such as GID or psychosis), petitioner would not have undergone hormone therapy and sex reassignment surgery except in an effort to alleviate the distress and suffering attendant to GID. Respondent’s contention that petitioner undertook the surgery and hormone treatments to improve appearance is at best a superficial characterization of the circumstances that is thoroughly rebutted by the medical evidence.

Now the IRS has changed its mind. In an Action on Decision published yesterday the IRS said that they will follow the Tax Court’s decision and will allow gender reassignment costs as a medical deduction for diagnosed GID.

Unfortunately, there still is no known medical fix for Accountants Personality Disorder. Medicine remains helpless to treat the many rock stars trapped in CPA personalities.

Accounting News Roundup: Deloitte Banking on Asia; New Partners at WeiserMazars; MI: Corporate Tax Rate | 11.03.11

Euro’s Leaders Question Greek Membership [Bloomberg]
Led by Germany and France, Europe’s economic and political anchors, the euro’s guardians yesterday cut off financial aid for Greece until an early December vote determines whether it deserves a fresh batch of loans needed to stave off default. “The referendum will revolve around nothing less than the question: does Greece want to stay in the euro, yes or no?” German Chancellor Angela Merkel told reporters after crisis talks hours before a Group of 20 summit set to begin today in Cannes, France. French President Nicolas Sarkozy said Prime Minister George Papandren’t get a “single cent” of assistance if voters reject the plan.

MF Global accused over fund transfers [FT]
CME Group, the US exchange operator and supervisor of MF Global’s futures brokerage business, has accused the failed broker-dealer of moving customer funds “in a manner that may have been designed to avoid detection”. MF Global left a $633m shortfall in what are supposed to be protected customer funds, the Commodity Futures Trading Commission said on Wednesday. The disclosure came as lawyers for MF Global’s bankruptcy trustee raced to arrange the transfer of thousands of commodities accounts before the law requires their liquidation.

Deloitte Plans More Asia Growth [WSJ]
Barry Salzberg, global chief executive officer of the international network of accounting, consulting and auditing firms, said in an interview with The Wall Street Journal last week in Singapore that Deloitte’s work force grew by 12,000 last year, and that he expects a similar pace of hiring in the fiscal year ending next May. Deloitte has also said it expects by 2015 to increase the total to 250,000 people, from 182,000 today.

Investors Punish Diamond for Delay [WSJ]
Investors reacted harshly Wednesday to questions about accounting at Diamond Foods Inc. that forced the snack maker to delay its $2.35 billion acquisition of Pringles into next year. The company’s stock fell 18% to $52.79 a share, a level that, if sustained, would make the deal $150 million more expensive than it would have been before Diamond announced the delay. Late Tuesday, Diamond said it would investigate allegations sent to the chairman of the board’s audit committee, Edward A. Blechschmidt, regarding Diamond’s accounting for certain crop payments to walnut growers.

WeiserMazars LLP Promotes Three Senior Managers to Partner in New York City and Lake Success, N.Y. Offices [WM]
Seth Cohen, Guillaume Wadoux and Roberto Viceconte have earned seats at the adults table.

IRS Acquiesces in O’Donnabhain: Gender Reassignment Surgery Is a Deductible Medical Expense [TaxProf]
The court held that because hormone therapy and sex reassignment surgery treat the taxpayer’s disease they are medical care, and the expenses for that medical care are deductible under § 213.

Frantic trading before MF Global UK failure – KPMG [Reuters]
KPMG also said it was working closely with company staff to transfer client positions, and that it had already closed out substantial positions. “Since our appointment we have received thousands of e-mails, telephone calls and letters from clients and related parties with highly complex requests,” Richard Fleming, UK head of restructuring, said in the release.


How Should Auditors Handle China’s State Secrets Law? [WSJ]
In the case of KPMG, it’s decided to issue a “qualified opinion of scope limitation” – essentially not being able to sign off on a company’s books – for its client, Hong Kong-listed China High Precision Automation Group Ltd.

Mission Impossible: Cutting the Corporate Tax Rate to 25 Percent [TaxVox]
It has been an article of faith among most congressional Republicans and many Democrats that the corporate tax rate should be cut from today’s top level of 35 percent to 25 percent—or even less. And backers of the idea breezily suggest this could be paid for by scaling back some corporate tax breaks. But a new report released today by the congressional Joint Committee on Taxation concludes it can’t be done.

KPMG Has Traders in Stitches

One anonymous independent trading client of MF Global said “It’s a joke. I don’t know what’s happening to my positions and when I’ve tried to contact KPMG all I’ve been told is that I can send an email to which I get an automated reply.” [FN, Earlier]

Intern Needs Help Breaking the News of “The Decision” to Leave His Current Big 4 Firm for a Rival

Ed. note: Need advice on your career, the CPA exam or how to best enforce your firm’s dress code? Email the career advice brain trust at advice@goingconcern.com for answers.

Dear GC,

This past summer I worked as an intern with a Big 4 firm. Learned a lot, some decent people, long hours. Still felt relatively miserable considering most of the people I worked with were wound pretty tight. Fast forward to now, and I am considering “taking my talents to south beach” by switching to a different Big 4 firm. Yes, there is an immaterial amount of additional money on the table, so my decision comes down to (1) a more interesting client base and (2) a more exciting and open culture among the happier employees at the new firm.

To me “the Decision” has been made. How do I tell the firm I interned with (and accepted an offer with) that I won’t be coming to the party next year? Am I at risk of being “that guy?” Can you put me in contact with a cable network willing to run a one-hour special so I don’t have to tell them directly?

Thank you.

-Raymone James

LeBron Raymone,

First, congratulations on one-upping your entry level status in such a dire market. It sounds as though your decision is a done deal so cutting the cord with your personal version of Cleveland shouldn’t be hard to do.

Being that it’s already November, you need to reach out to the firm you’re breaking away from immediately. They’re in the middle of interview season anyway, and knowing that they have an additional spot in their budget now rather than later is important (and fair to their process). Reach out to the recruiter that was your point of contact within the firm (and probably the one that presented you with the original offer). Leave them a voicemail at work stressing the need to speak about a “time sensitive issue” and follow up with an email stating the same. Should you not hear back from them in 48 hours, follow up with another call. If it’s another empty voicemail, follow up with another email (forward the original) and state then that you will not be starting with them after graduation. Explain the situation (using the “it’s not you, it’s me” angle usually works), and thank them for the positive intern experience.

In fairness to them you should try to speak to them live on the phone; however you’re not obligated to make a dozen attempts to reach them. Everyone has email in their pocket these days and it’s reasonable to expect a response in two business days.

And why are you worried about being ‘that guy?’ If by that you mean ‘the guy who left for better money, clients, and culture,’ I’d bet it’s safe to say many of us wouldn’t mind being that guy (or lady) too.

Good luck.

German Finance Minister Says No One Needs to Be Thrown Under the Bus for ‘Annoying’ 55 Billion Euro Glitch

Yesterday we learned that officials in the German government were a little surprised that a 55 billion euro accounting error wasn’t discovered by a “certified audit.” They’ve been quite the laughingstock in the German press, so they done their damnedest to find someone to throw under der bus. Well, today German finance minister Wolfgang Schaeuble basically put everyone at ease – there’s no one to blame!

The Finance Ministry knew “with certainty” on Oct. 13 that an accounting error had occurred after receiving notifications on Oct. 4, Schaeuble said at a press conference in Berlin today, adding the error is “annoying” because its magnitude can unsettle the public. “Here raves the lake and wants to have its victim,” Schaeuble said, citing from Friedrich Schiller’s drama William Tell. “That’s not my understanding” of how the biggest accounting error in Germany’s post-World War II history should be sanctioned, he said.

So rest easy, PwC. You’re off the hook for this one.

Schaeuble Says 55.5 Billion Euro Accounting Error Was a Glitch [Bloomberg]

How Much Trouble Is PwC Looking at for All This MF Global Business?

As has been reported, MF Global may have done some commingling of client money with its own which is a big no-no. This means the Feds are now on the case, which means typically cool-as-a-cumcumber cucumber Jon Corzine could be sweating a bit. MF Global’s auditor, PwC, on the other hand, has it made in the shade (at least somewhat). Why? How? Alison Frankel over at Reuters tells us:

[E]ven if it turns out that MF Global was illicitly dipping into customer accounts, if that commingling of funds helped keep the business afloat, PwC is protected by in pari delicto.


If you’ve never heard of in pari delicto, that’s the obscure doctrine that says a bankruptcy trustee that’s representing the corporation can’t go after another party for stunts pulled by said corporation. In other words, if MF Global commingled funds, if (probably more like “when”) the trustee attempts to recover funds from PwC, the firm will be protected. Francine McKenna has been writing about in pari delicto since early 2010 saying that it’s “like a pair of needle nosed pliers by audit firm defense lawyers to diffuse a bomb” and last year’s ruling for KPMG in Kirschner v. KPMG and the favorable ruling for PwC in Teachers’ Retirement System of Louisiana v. PricewaterhouseCoopers LLP reaffirmed that sentiment. PwC probably isn’t sweating this.

But what about PwC’s audit opinion on MF’s financial statements? The Grumpies pondered the idea of what might constitute grounds for P. Dubs to issue a going concern opinion for MFG:

Might that include four years (2008-2011) of massive losses, as occurred at MF Global? Might that include severely negative free cash flows for three of the last four years? Might that include an exposure to European sovereign debt that will lead to greater future losses? Might that include several downgrades in the credit ratings?

Say you’ve got a broker-dealer client that has no European sovereign debt exposure and isn’t covered by a ratings agency. You simply have massive losses for four straight years and negative free cash flow for three out of the last four and few signs that things are turning around. Do you think there’s any doubt about this business’s ability to continue as a going concern? What about substantial doubt? Throw in the Eurotrash debt and junky bond ratings again and where do you stand now? Yikes.

But PwC was cool with it. We probably know the why (money and client retention, natch). But how? Love to hear some opinions on that. No matter the answer, our lawyer friends will do well by it all.

BDO Knows the Alamo

The most interesting accounting firm CEO would like to welcome the gang at Carneiro, Chumney & Co. to the club. “The addition of the partners and other professionals formerly with Carneiro, Chumney & Co. provides BDO with a fantastic presence in the important San Antonio market. Combined with our existing practices in Austin, Dallas and Houston, Captain Jack said. With this move, all San Antonioa-area professional recruiters are officially on notice that your leads at Carneiro now have incentive to rat you out. [BDO]