Please ensure Javascript is enabled for purposes of website accessibility

Friday Footnotes: Fines, Fines, Fines; Team Deloitte Going For Gold; Party’s Over For One Fraudster | 8.2.19

Posted on by Going Concern News Desk

Is Your Accountant a Wimp? [Entrepreneur] SLANDEROUS.

Audit regulator fines PwC Mexico $100,000 for violating independence rules [MW] According to the Public Company Accounting Oversight Board, at least six of its partners had personal financial relationships with Banco Santander Mexico when PwC’s Mexico firm contracted to be the bank’s auditor for FY 2016.

KPMG U.K. fines top $16M in 2019 amid industry crackdown [AT] “We regret that aspects of our work did not meet the standards expected by our regulator,” KPMG said in a statement. “We have cooperated with the FRC over the last four years to bring this investigation to a close and we are committed to bringing these historical cases to a swift conclusion.”

Deloitte announces ‘Team Deloitte’ for 2020 Olympics and Paralympics [Consulting.us] The sponsored athletes exemplify Deloitte’s values of “leadership, drive, integrity, and commitment to excellence,” according to a release from the consultancy.

Former Brixmor Property Executives Charged With Accounting Fraud [WSJ] The former chief executive officer of shopping-center owner Brixmor Property Group Inc. and his finance chief were charged with accounting fraud for allegedly manipulating a widely used metric of profitability.

Main Line accountant found guilty of strangling girlfriend [Phoenixvillenews.com] The jury hearing the case involving John Michael Swirsding in Common Pleas Judge William P. Mahon’s courtroom deliberated a little over five hours before returning with the verdict Wednesday, finding him guilty of felony strangulation, simple assault, and terroristic threats.

Men Play Key Role in Helping Women Advance at PwC [SHRM] Oof.

The party appears over for the Flying Lady — a ‘Playpen’ yacht with a stripper pole — after its owner is charged in a multimillion-dollar fraud scheme [Chicago Tribune] According to the charges, Izsak fraudulently obtained $360,000 in financing for the yacht by falsifying his income, submitting bogus tax returns and lying about the status of home equity loans he’d taken out on his home on Chicago’s Near West Side.

Related Posts

Accountants Behaving Badly: Train Station Turd, College Crook, Fake CPA’s Fraud

Plus, a New South Wales accountant got jail time for stealing moola from clients, and […]

Overstock.com to Restate Financial Statements; Reassures Profitability for 2009

Well, then. This all very awkward for Pat Byrne and Co.

In an 8-K filed late yesterday Overstock.com announced that it would be restating the consolidated financial statements contained in its 2008 annual report, and the those contained in the Company’s last three 10-Q’s: period ended March 31, 2009; June 30, 2009; and September 30, 2009 (unreviewed!).

It goes without saying that those financial statements can no longer be relied upon.


The restatement is a result of errors that Overstock fired Grant Thornton for last year that led to a bit of a cat fight between the firm — who is not mentioned in the filing — and humble servant Patrick Byrne.

The Big O also admitted that it “incorrectly amortized the expense related to restricted stock units based on the actual three year vesting schedule rather than a three year straight line amortization and applied an outdated forfeiture rate in calculating its expense under the plans.” While they were at it, they threw a bunch of other corrections that were “[not] material either individually or in the aggregate,” as the saying goes.

The Company is still mulling over the numbers with both PwC and KPMG so there’s a chance that they could change but as of now, $1.9 million of income is going back to 2008 from 2009 and an increase in expense of $350k in 2008 and $900k in 2009.

But wait! The filing reminds us that “Patrick Byrne, the Company’s Chief Executive Officer, had stated to The New York Observer, ‘that the company is about to report its first annual profit.’ The Company continues to believe that it will report positive net income for fiscal 2009.” Whew! See shareholders? More commitment from your servant.

Sam Antar has been following this story from the very beginning and he is not shy about being vindicated:

Today’s news is a complete vindication of my analysis of Overstock.com’s financial reports and shows that the company willfully engaged in a financial reporting manipulation scheme. The company is restating its financial reports to correct GAAP violations, exactly as I have recommended in this blog. To date, every single initial financial report issued by Overstock.com throughout the company’s entire existence has violated GAAP or some other SEC disclosure rule. The company now has the dubious distinction of having to restate its financial reports three times in the last three years to fix GAAP violations.

We shot Sam an email last night and he simply told us, “I am going out for a glass of fine wine.”

So while this appears to wrap up the SEC’s Division of Corporation Finance investigation, one little problem that still remains is that the SEC’s Enforcement Division has not wrapped up its probe of the company. Yeah; so there’s that. Considering the the track record of the SEC, we’d typically give a company a 50/50 shot of coming out of a probe by the Enforcement Division unscathed but in the case of Overstock, we’ll be going with Schape’s crew.

Deloitte Report: 475 Reprimands for Internal Noncompliance in 2009

How’s your Thursday morning going Sons and Daughters of Deloitte? Busy? Swamped, you say? Thought so. Well, whatever it is, it can wait.

YES. IT. CAN.

Barry Salzberg needs your full and undivided attention to an important matter today: compliance with internal policies, specifically independence and ethics. During the throes of busy season, you adherence to these important values must not waiver.

Are you trading in client stock in your Scottrade account? Ghost-ticking workpapers? Ramming meaningless numbers into that tax return? Stop it right now. Bar knows that sometimes you can’t just help yourselves, so he dropped a little reminder into your inbox this morning (we were told) with the subject “A must-read for everyone”.

Today, we have an important challenge that we simply cannot ignore. Our level of compliance with our internal policies – specifically our independence and time reporting policies – is not where we need it to be.

Please take a few minutes to read Beyond the Numbers: Our Independence, Ethics & Compliance Imperative from Mike Zychinski, our Chief Ethics and Compliance Officer. The report, which I consider to be a must-read for everyone, addresses concerns from our regulators, what we are doing as an organization to address them, and what you can do to meet your individual compliance requirements.

When it comes to issues of compliance, we must meet the expectations of our clients and regulators. What’s more, we must fulfill our own high expectations of ourselves. Thank you for taking a few minutes to read the report and for your focus on meeting your individual compliance requirements.

Regards,

Barry Salzberg
CEO
Deloitte LLP

Bolding is ours. After this email, a 2,100 (give or take) word report follows from Chieftain of Ethics Mike Zychinski. Despite the high standard that Deloitte holds you to — higher than the SEC, PCAOB, and the AICPA, we might add — this happend, “Based on our own reviews and that of the PCAOB, we believe compliance with our independence policies is not what it should be, and the PCAOB has, in fact, questioned our commitment to adhere to our own policies. This is clearly not acceptable.”

Our contributor Francine McKenna reminded us that Deloitte didn’t think too much of the PCAOB’s report from last year, “They [are] the same firm that famously responded to the PCAOB’s latest inspection report, ‘How dare you second guess us?‘”

Based on the following list of reprimands, perhaps the PCAOB has a leg to stand on?

Four hundred seventy-five total reprimands were issued for noncompliance issues, including:

31 reprimands for independence-related violations of SEC or AICPA rules
174 reprimands for noncompliance with Deloitte independence policy
218 reprimands for failure to meet mandatory training requirements
45 reprimands for CPE noncompliance
7 reprimands for noncompliance with Deloitte CPA Licensing policy

Is 475 a lot or a little? An improvement from last year or is it worse? We’re not really sure. We haven’t received any comment from Deloitte and their Transparency Report doesn’t have more details. But since Barry Salzberg never seems to be satisified with anything, we’re guessing you can do better.