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Here Are Two CPAs That Are Perfect Examples of Setting a Bad Example

Posted on by Caleb Newquist

There are plenty of professional mentors out there for young accountants to look up to. Men and women of intelligence, integrity, work ethic, nice shoes, all that good stuff. After taking a look at this SEC Administrative Release, you can easily conclude that group does NOT include R. Jeffrey Rooks and another anonymous "accounting partner":

The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against R. Jeffrey Rooks (“Respondent” or “Rooks”) pursuant to Rule 102(e)(3)(i) of the Commission’s Rules of Practice. […] The Commission’s complaint alleged, among other things, that Rooks traded in the securities of Chattem, Inc., while in possession of material, non-public information that had been tipped to him from an accounting partner who misappropriated the information from an accounting client, while further knowing that the information was obtained in breach of a duty of trust in confidence that the accounting partner owed to the accounting client.
Don't be like these people.
 
[via SEC]

 

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New Orleans Hornets’ Audited Financial Statements Leaked

While the House of Klynveld is enjoying their town hall circa now, we’ll share you the latest scoop from Deadspin, who has published the audited (courtesy of KPMG) financial statements of the NBA’s New Orleans Hornets.

We’ve skimmed the financials, noting some interesting items here:

• In 2009, the franchise paid $115,000 for their audit, an additional $10,000 for “accounting issues” and $35,000 for tax compliance services.

• The team has a partners’ deficit of over $80 million thanks, in part to $111.5 million in long-term debt at June 30, 2009.

• The team did have operating income of over $5.8 million for the fiscal year ended June 30, 2009, however, paying nearly $9 million in interest (among other things) swung them to a much narrower net income of $1.8 million.

• Net cash from operating activities were a negative $7.4 million for the FYE June 30, 2008 but improved to a negative $1.5 million for FYE June 30, 2009. The team’s cash balance at June 30, 2009 was a mere $650k.

• George Shinn, the team’s owner, owes the franchise approximately $5 million from “various advances” but has also loaned the team over $8.3 million.

• The franchise has various investment associated with the NBA that have negative equity including: NBA Joint Venture; WNBA Holdings, LLC; NBDL Holdings, LLC

• The team has principal payments of approximately $115 million coming due through 2014.

• Guaranteed contracts to players through the 2013-2014 season amount to $247.5 million.

• “Revenue assistance” from the NBA (team is eligible if it has both an actual loss and a pro forma loss) for the FYE June 30, 2009 was $3.4 million.

Whew! So as you can see, the franchise isn’t in the best of shape. Our analysis is just a scratch on the surface so if you’ve got some time, crunch some numbers and share your findings with the group below.

Earlier:
Who Leaked the MLB Financial Statements?

Sir David Tweedie Confirms Your Accounting Firm Mafia Suspicions

As you probably remember, head knight of the double-entry accounting round table, Sir David Tweedie, is retiring in a few months to be replaced by this guy. Until then, however, the wily Scotsman will be running the show and he’s still pitching IFRS as if the life of the financial reporting universe depended on it. Just like Bob Herz, he’s in this thing until the very end.

CFO has a brief Q&A with SDT and despite the USA’s pussyfooting around the issue, he manages to rush to our defense at the suggestion of haters that the IASB should give us the “throw the bums out” treatment:

Some critics grumble that if the United States does not adopt IFRS, it should be ousted from the IASB and the board of trustees. What’s your opinion?

I get quite angry at some of the comments we get insisting that the United States be ousted. People say that America would have to come around because the U.S. share of global-market capitalization is falling all the time. The complaint is, “We’re not having [the United States] tell us what to do if they don’t use international standards.” I can understand that, and you can have international standards without the United States. But you can’t have global standards without the United States. So there is more work to be done on that issue.

So in other words, suck it world! You can keep your international standards. We’ve got a knighted Scotsman who even said you’ll make due without us. Call it whatever you like, just don’t call it “global” without us. Because you can’t spell “global” without “A”… which stands for…er….”America.” BASTARDS.

[BREATHE] Never mind that. The most interesting bit is that Tweeds appears to blow the lid of the Big 4 omertá:

What’s been your experience with professional judgment? Many U.S. practitioners say a heavy reliance on judgment won’t work in America’s litigious environment.

As a technical partner at KPMG, I was always being asked to evaluate situations that were outside of issued guidance. It’s the same in the United States — you get questions you’ve never thought about before, and there’s nothing in the standards addressing it. So you kick it around with the client, the client partners, and other senior partners in the firm. You come up with a position.

[My approach was to] ring up Deloitte, for example, and say, “Have you had one of these [situations]?” There is sort of a technical-partner mafia that gets together and says, “Yeah, we had one of these.” So, in a way, the profession fixes the problems.

So whether this is happening under the nose of the brass or with their full and unmitigated support can’t be determined, although we won’t be surprised if the old man ends up “retiring” early.

Tweedie Takes a Bow [CFO]

Five Questions with MACPA’s Bill Sheridan

If you don’t know the MACPA and their quality content machine Bill Sheridan, you’re probably not in accounting, have never used Twitter, and most definitely wouldn’t have any clue what Second Life is. When it comes to social media, the Maryland Association of CPAs was on it long before a certain cable company figured it out and Bill has been just one of the organization’s main “faces” as far back as I can remember.

Bill speaks of using CPA Success as a tool to reach the MACPA’s members in ways they never thought they could and speaks as someone who truly enjoys what he does for a living. He likes posts he’s written in airports (who doesn’t love travel blogging? *cough*) while his co-blogger Tom Hood (I believe you all are familiar with his work as MACPA CEO and CPA) prefers tackling the topic of leadership. Whatever your accounting poison, CPA Success covers it all.

Bill was hard to pin down but finally found a moment to get to our five questions, enjoy.


Why do you blog?
It’s yet another way of connecting with our members. Our blog allows us to present news and analyses much more quickly than we ever could before. It allows us to communicate with members in ways we never had before. We’ve had an opportunity to carve out a niche as a thought leader in the CPA space that we never could have established without blogging.

A good accountant is…
A good CPA is a trusted advisor, strategic thinker and confidant, someone who sees beyond the numbers and helps companies grow and clients understand how their finances impact their personal and professional lives. And at all times, honest and ethical.

A good blogger is…
… observant, and a good story-teller.

What is the biggest benefit you’ve gotten from starting your blog?
Notoriety. But the biggest benefit is this: CPAs have really worked hard to carve out a place for themselves in the social arena. When we first started playing around with this stuff three years ago, there weren’t a lot of accounting and finance folks in there with us; it seemed like we were working in a void. Since then, though CPAs have really taken the social bull by the horns. They’re blogging, they’re using things like Twitter and LinkedIn and Facebook, and they’re figuring out to put these tools to use in ways that benefit their businesses and their clients. It’s been fun and extremely rewarding to see CPAs make the leap and work with them to figure all of this out.

The biggest issue facing accountants today is…
… complexity. The profession is facing numerous legislative and regulatory changes these days, and that’s in addition to the many changes in accounting standards and other technical rules that have been enacted recently. Keeping up with all of these changes is a monumental task for CPAs, who are busy enough simply serving their clients.