When accounting goes unaccounted for
Former Deloitte vice chairman get 21 months for insider trading [CT]
The Plot to Destroy America's Beer [BBW]
Italy's Berlusconi Convicted in Fraud Case [WSJ]
Man Claiming Facebook Ownership Arrested on Fraud Charges [DealBook]
IRS Pays $38 Million in Whistleblower Case [WSJ]
Citi Chairman Is Said to Have Planned Chief’s Exit Over Months [NYT]
Missouri Considers Quintupling Its Cigarette Tax [Tax Foundation]
A China Fraud Dissected: Part 1 Milton Webster, AgFeed Audit Committee Member and Whistleblower [Re:The […]
Purgatory for MF Global Customers [WSJ]
More than two weeks after MF Global filed for Chapter 11, some 33,000 customers are stuck in a sort of purgatory, with no access to their cash until a trustee liquidating the securities firm says they can get it. Late Tuesday night, the office of the trustee, James Giddens, in an apparent response to customer outcries, said he had sought court permission for a transfer of about 60% of the cash in about 21,000 customer accounts still frozen, or some $520 million. If he gains court approval, the statement said, distributions could be made within days. Earlier in the day, owledged customer “frustration” and sought court approval to expedite a claims process. A spokesman for the trustee said this week it is possible customers won’t get all their money back, due to the apparent shortfall at MF Global.
Olympus seeks to reassure lenders [FT]
Olympus is seeking to reassure its lenders that it has sufficient cash flow to repay its loans, in an effort to ensure continued financial support as it faces investigations into a cover-up of large losses related to past securities investments. Lenders including Japan’s three leading banks – Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho – and country’s largest life assurer, Nippon Life, met with Olympus on Wednesday.
UK’s SFO launches formal Olympus probe [Reuters]
Britain’s Serious Fraud Office (SFO) has launched a formal investigation into more than $1.0 billion of obscure payments and acquisitions made by Japan’s Olympus Corp., a source familiar with the matter said.[…] Olympus’s former chief executive Michael Woodford, a Briton who fled Japan around a month ago after blowing the cover on around $1.3 billion in unexplained fees and non-core acquisitions, promptly handed reams of documents to the agency.
Paterno Passed On Home to His Wife for $1 [NYT]
Lawrence A. Frolik, a law professor at the University of Pittsburgh who specializes in elder law, said that he had “never heard” of a husband selling his share of a house for $1 to his spouse for tax or government assistance purposes. “I can’t see any tax advantages,” Frolik said. “If someone told me that, my reaction would be, ‘Are they hoping to shield assets in case if there’s personal liability?’ ” He added, “It sounds like an attempt to avoid personal liability in having assets in his wife’s name.”
Daugerdas Judge Grants Hearing on Juror Conduct in Tax Case [Bloomberg]
U.S. District Judge William Pauley in Manhattan said today he will hold an evidentiary hearing on the conduct of Catherine Conrad, Juror No. 1 in the 10-week trial. He didn’t set a date. The defendants claim Conrad hid details of her background from the court, including a law degree, at least four arrests and the fact that she was serving a sentence of probation for shoplifting. The jury, including Conrad, convicted [Paul] Daugerdas in May on more than 20 criminal counts, including conspiracy, tax evasion and attempting to impede the Internal Revenue Service. The jury also returned guilty verdicts for Denis Field, the former chief executive officer at accounting firm BDO Seidman LLP; Donna Guerin, a Jenkens & Gilchrist lawyer; and David Parse, a former accountant for Deutsche Bank AG (DBK) unit Alex. Brown.
H&R Block drops TaxACT acquisition plan after antitrust opposition [KCBJ]
H&R Block Inc. has dropped its $287.5 million plan to buy the maker of TaxACT tax preparation software. In a Tuesday filing with the Securities and Exchange Commission, the Kansas City-based tax preparer (NYSE: HRB) said involved parties had agreed to terminate the merger agreement, effective Monday.
Volcker upbeat on “reasonable” reform bill [Reuters]
Former Fed Chair Paul Volcker took note of the FASB and IASB’s divergence on fair value and he’s not too thrilled about it, “[Volcker]…said that U.S. and international accounting standard setters must reach an agreement on how banks value the loans on their books.”
So from Big Paul’s POV, there is no option other than to get your shit together on this even though the two boards seem to be moving in the exact opposite direction. Oh, and could you do that ASAP? Reuters quoted him “What appeared to be two organizations converging … now looks like a collision. I hope they can come together by the end of the year.”
Is Internal Audit Irrelevant? [Norman Marks on Governance, Risk Management and Internal Audit]
The question about the relevancy of the Big 4’s audit business (at least for public companies) has been questioned but now the role of internal auditors is in question. Norman Marks cites a recent presentation at the IIA’s International Conference in Atlanta:
One of his points was that internal auditors have been humiliated – because nobody has held them to blame to any degree for the collapse of the banking sector, the failures in corporate governance and risk management, and the tremendous loss in value of investors’ shareholdings all over the world.
Richard pointed out that the Walker report (in the UK) on the causes of the banking crisis didn’t even mention internal audit. We are irrelevant.
Mr Marks takes exception with this, saying that internal auditors do deserve some blame and that if the NYSE and others get around to issuing some requirements around the function of internal audit, the recognition will come with it.
U.S. Faces ‘Severe’ AIG Losses, Says Panel [WSJ]
Even though the bailout of AIG probably prevented us from bartering over food in a barren wasteland with cars on fire everywhere, taxpayers ‘remain at risk for severe losses.’ A Congressional Oversight Panel also stated that the U.S. Government will continue to be a “significant shareholder through 2012.” The Beard is more optimistic however, saying “AIG, I believe, will repay.”