Going Concern

CPA Exam

Here’s Your CPA Exam Scores Open Thread for the October/November Testing Window

Caleb Newquist
December 8, 2011

All that hard work has either really paid off or was the biggest waste of time in your life.

David Cay Johnston: President Obama Has Out-Norquisted Grover Norquist

Caleb Newquist
December 8, 2011

Granddaddy of tax gazetteers, David Cay Johnston, is poking at Grover Norquist again, this time over the quagmire that the Republicans find themselves in over President Obama’s payroll tax cut proposal. The very proposal that could make Obama the biggest Grinch of 2011. Ruined holidays aside, DCJ points out that if the Republicans shoot this down, they do so at the behest of what seems to be a very popular idea:

[N]umerous opinion polls show overwhelming public support for continuing tax cuts for workers and for raising taxes on millionaires. That has left Republican leaders no choice but to silently cry uncle and agree to the president’s request to extend and possibly expand the payroll tax cut.

The reason that Republicans aren’t so hot on the payroll tax cut is that it’s “temporary.” They’d rather see “permanent” tax cuts enacted, although those “permanent” tax cuts are never “permanent.” The “permanent” Bush tax cuts, for example, had to be “extended” last year because they were about to “expire” which basically makes them “temporary.” The payroll tax cut was originally enacted last year with the Bush tax cuts but as Paul Ryan says, it’s supposed to be like a holiday, which is to say, “We lived through it and we’ll just move on with our lives and never to speak of it again.” DCJ writes that this means Obama has beat the Republicans at their own game:

Having outsmarted Norquist, Obama gets to run for a second term as the champion of at least a $100 billion tax cut. Obama can even say that if Republicans had had their way, working people’s taxes would have gone up while taxes on billionaires would have gone down. And he gets to tell small business owners that, but for Republicans, their taxes would have gone down too.

This is a marketing fiasco for Republicans to rival the Ford Edsel and New Coke. Already more than 40 congressional Republicans have taken steps to distance themselves from Norquist, who scowls at the mere mention of what could have been his, but is now Obama’s, very popular tax cut.

In other words: Whose shorties are snagged now?

Republicans paint themselves into a tax-cut corner [DCJ/Reuters]

President Obama Just Might Ruin His Family Christmas for the Payroll Tax Cut

Caleb Newquist
December 8, 2011

That’s what Harry Reid is saying anyway. I’m not a parent, so I’m not exactly sure how a man would explain to his daughters that they’ll have to spend Christmas on the beach without Dad but he can always Skype in from the West Wing, or he could take the Paul Ryan approach. [Reuters]

EY
KPMG

It Sounds Like KPMG Is ThisClose to Jumping Ernst & Young in Revenues

Caleb Newquist
December 7, 2011

Not sure how we missed this story but thanks to the random commenter who brought it to our attention. New KPMG Global Chairman Michael Andrew was recently interviewed by The Australian and it sounds like KPMG had a pretty kickass fiscal 2011.

We’re still waiting for the official revenue numbers (I’m guessing they’ll be out next week) but Drew kinda spilled the beans already:

New KPMG global chairman Michael Andrew revealed to The Weekend Australian yesterday that the company had recorded a 10.1 per cent increase in revenue in the past financial year, to $22.7 billion. The numbers are due to be released officially later this month.

“If we had not had the Japanese earthquake, I suspect we would have gone past Ernst & Young. Japan is a good market for us. We had really good growth in the Americas and really good growth in tax,” he said yesterday.

FUCKING JAPAN AND YOUR EPIC NATURAL DISASTER! You just cost one of the premier professional services firms on EARTH the chance to leave a rival in the dust. Since there was enormous death and destruction, I guess everyone at the firm will let this go but they’re trying really hard not to throw out some pro forma numbers just for the sake of argument. ANYWAY, for those of you scoring at home, the $22.7 bil puts the House of Klynveld slightly behind E&Y who racked up $22.9 billion for FY ’11. It will also make for the second straight year of a bumper crop of Omaha Steaks for the employees at the firm.

But despite earthquakes and actual hard numbers, Mike is calling it like he sees it:

“We are basically equal No 3. There is still a big gap to PwC and Deloitte, which have been buying large consulting practices in the systems implementation area.”

In other words, if all things were equal, KPMG would probably be the largest firm. They’re just keeping their heads about it.

KPMG grows to match rival Ernst & Young [The Australian]

Announcements

Some Holiday Housekeeping

Caleb Newquist
December 7, 2011

It’s the Holiday Season and that means two things: 1) Big Surprises; 2) Big Disappointments. With that in mind, I’m here to share with you, first, a surprise.

Tomorrow, barring any unforeseen sabotage by internal detractors, we’ll be launching a redesigned look and feel for Going Concern. We’ve been sporting our current layout for quite awhile and the feeling amongst us (and many of you that participated in our fall survey) was that we need to update things a bit. After quite a bit of yelling and few instances of people stomping around the room like 3 year-olds, we’ve got something we’re all (more or less) happy with.

Personally, I wanted to spring the revamped website on you like your parents divorce at the Thanksgiving table but I was convinced to share the news with you a day before for the sake of goodwill, transparency and all that crap. Along with the redesign, there will be some upcoming promotions and other new stuff that will undoubtedly change your lives forever.

Now, after an initial freak out, I’m sure you’ll have plenty of questions, which you are invited to share in the comments or by emailing us. But I will save you the trouble of asking the obvious – Yes, we will be maintaing the same commenting format, so you’ll be able to protect your true identities with cleverly devised Internet personas.

Oh right, the disappointments. If you’re devastated by this news and tomorrow your vision is completely shattered by the eyesore in front of you, we invite your feedback and suggestions for what will make your experience less sucky.

You may now shriek with glee.

PCAOB

PCAOB Reminds Auditors That It’s Still Ugly Out There

Adrienne Gonzalez
December 7, 2011

Just when you thought the economy was looking up, out peeks the PCAOB with a friendly reminder to the auditors out there that current economic conditions warrant a tad more due care than usual.

Kids, allow us to introduce you to Staff Audit Practice Alert No. 9.

The Public Company Accounting Oversight Board today published a Staff Audit Practice Alert to assist auditors in identifying matters related to the current economic environment that might affect the risk of material misstatement in financial statements and, therefore, require additional audit attention.

“Today’s volatile economic environment may affect companies’ operations and financial reporting, which has implications for audits,” said PCAOB Chairman James R. Doty. “The alert reminds auditors of their responsibilities under these conditions.”

Staff Audit Practice Alert No. 9: Assessing and Responding to Risk in the Current Economic Environment, updates Staff Audit Practice Alert No. 3, which was issued in December 2008, in light of current global economic conditions and recent enhancements to PCAOB standards.

Many of the matters discussed in Practice Alert No. 3, Audit Considerations in the Current Economic Environment — including fair value measurements, accounting estimates, going concern, and financial statement disclosures — continue to be critical in audits of 2011 financial statements. Certain of the PCAOB standards referenced in that alert regarding assessment of, and response to, risk, however, were superseded in 2010 with the Board’s adoption of eight new risk assessment standards (Auditing Standard Nos. 8-15).

“This practice alert discusses issues posed by the current economic situation and highlights certain requirements in the new risk assessment standards. Auditors should be alert to the new requirements contained in the risk assessment standards and how those requirements relate to audits performed in the current economic climate,” said Martin F. Baumann, PCAOB Chief Auditor and Director of Professional Standards.

We know you guys cannot wait to read this one, so by all means, knock yourselves out.

If you’re too busy to take the three minutes to read it, I’ll sum it up thusly: we’re doomed, so maybe SALY isn’t such a good idea after all.

So glad we’re all clear on that. Now, back to the JIT for all of you…

Accounting News Roundup: Olympus Culture ‘Rotten to the Core’; NYC Schools Ex-CFO’s Email Use; Your Florida Tax Scam Du Jour | 12.07.11

Caleb Newquist
December 7, 2011

The Culture Was Corrupt at Olympus, Panel Finds [NYT]
An outside panel appointed by Olympus to investigate its financial scandal issued a harsh report Tuesday, calling the company’s recently departed management “rotten to the core.” The panel, led by a former Japanese Supreme Court judge, also details the roles it claims were played by three former Nomura bankers in arranging a cover-up, and it says Olympus paid the bankers for their efforts. It also criticizes Olympus’s auditors, KPMG AZSA and Ernst & Young ShinNihon, for failing to expose fraud at the company.

PCAOB Warns of Audit Concerns introng> [AT]
The alert aims to help auditors identify matters that require additional attention. “Today’s volatile economic environment may affect companies’ operations and financial reporting, which has implications for audits,” said PCAOB chairman James R. Doty in a statement. “The alert reminds auditors of their responsibilities under these conditions.”

Olympus auditors trashed by investigators [Accountancy Age]
KPMG’s unqualified audit report in March 2009 was “inappropriate” and relied too heavily on outside experts’ opinion of Olympus accounting, the committee concluded. Ernst & Young was appointed auditor later that year and the investigation criticised the firm for allowing a questionable consulting fee to be treated as goodwill. “Even when we account for the fact that they [had] just assumed their position as auditor and they lacked knowledge of the past events, we cannot conclude this was appropriate,” the committee said.

Schools’ Ex-CFO Is Fined [WSJ]
The former chief financial officer for New York City schools has been fined $6,500 for using his city email account to line up his next job and manage his personal real-estate investments. An investigation earlier this year found that George Raab, who was responsible for handling the department’s roughly $20 billion operating budget, had started planning his “exit strategy” from the Department of Education less than a year after he started in October 2008.

IRS Backs Off On Penalties Against Billionaire Leon Cooperman [Forbes]
As detailed in a U.S. Tax Court settlement filing, Cooperman still is required to pay nearly $14 million plus interest to cover what the IRS said was a non-tax deductible contribution. But Cooperman, who said he had acted in good faith when he followed bad advice from tax advisers, doesn’t have to pay the $5 million the IRS originally demanded in accuracy-related penalties. His bill now for penalties: a mere $29,191.

South Florida residents in $120M tax fraud bust [SFBJ]
They are accused of filing more than 380 false tax returns for 180 clients from 30 states. They requested more than $120 million in fraudulent tax refunds. Most of the tax returns were filed for the 2008 tax year, and the forms reported personal debt obligations as both income and federal tax withholding. Holding seminars in Florida and Tennessee, the defendants told prospective clients about a “redemption theory” where they could ask the IRS for refunds to cover their outstanding personal debt, according to federal authorities. The clients paid $750 for the preparation of the tax return and agreed to share 10 percent of their tax refund with the defendants.

FASB, IASB Chiefs Agree New Convergence Model is Needed [JofA]
The heads of the U.S. and international accounting boards that have been working to resolve standards differences agree that their current convergence process should be replaced by one that is more manageable and effective. FASB Chair Leslie Seidman said Tuesday at the AICPA National Conference on Current SEC and PCAOB Developments that side-by-side convergence is not the optimal model in the long run. Hans Hoogervorst, chair of the International Accounting Standards Board (IASB), spoke immediately after Seidman at the conference in Washington and echoed her sentiment.

News

Grover Norquist Thinks This Donald Trump Debate Is a Dynamite Idea

Caleb Newquist

December 7, 2011

Perhaps you’ve heard that oafish hair transplant recipient Donald Trump is going to moderate a GOP debate. Shockingly, a number people aren’t taking this idea too seriously and for good reason! The man is rich. And busy. And important. Plus, he has young kids at home. You know how kids are. How could he possibly squeeze such an important event into his schedule? Seems impossible. Oh, and then there’s the part where he’s an egomaniac that pretended he was thinking about running for President while maintaining that the President was born on Mars or some damn place. That too.

But you know who thinks this whole Donald Debate is fabulous idea? Yep:

I am assured that Donald Trump will be a fair-minded moderator and joined by serious journalists. This contrasts with several debates that have already occurred which have been moderated by hostile members of the left wing media. I strongly urge all GOP candidates to attend this debate.

At this time we’ll presume that being MIA from the debate will not equate a violation of the Taxpayer Protection Pledge but Mittens is skipping this circus, GGN’s choice may be easy.

[via ATR]

Career Center

Future Associate Wants to Know What to Expect From His Firm (That We Can’t Say, Definitively, Is CliftonLarsonAllen) That Is Merging

Daniel Braddock

December 7, 2011

Ed. note: Are you in the throes of holiday cheer but deep in the belly of career jeer? Email us at advice@goingconcern.com, we’ll lend you an ear.

Hey GC,

I’ll try to keep this short and to the point.

I’ll be starting my career soon with a firm that will be merging with another. Should I be wary of anything that could change on my end?

Thanks!

The first question to cross my mind was “what firms are merging?” Caleb suggested that our contributor could be from CliftonLarsonAllen, covered on Going Concern last month. Poor Gunderson. But yes, mergers (MERGERS!) can be fun/daunting/HR headaches/swag gold mines. Below are a few things to expect.

Client Coddling: Priority #1 in any merger is for the partners to assure their clients’ confidence in the new, stronger firm. Employee cross-over from one firm to the other’s engagements can be expected on the lower levels, but expect partners to remain active on their respective clients.

Crash Courses in Firm Lingo: Here come the HR tutorials. Acronyms – the lifeblood to any public accounting firm – will have to be efficiently combined. More so, understanding what “the other guys” do is very important from a sales perspective. Understanding the merger’s strengths will not only be beneficial in making current employees confident and comfortable with the merger, but they will be prepared to answer the inevitable client question of, “why did you merge with THEM?”

IT/HR headaches: “Who do I call for computer questions?” “Who is my HR contact?” “Are we UPS or FedEx now?” “How do we submit T&E?” There are bound to be efficiencies in the day-to-day operations of the newly merged. But, inefficiencies in the short term will hopefully lead to long-term improvements.

SWAG: Let’s end this dance on a good note. HR should be ordering up all kinds of stylish pens, travel sized 10 keys, and XXL hoodless sweatshirts. Most of the goodies will be slated to hit cover the desks of clients to keep them in the loop of Gunderson’s departure from the picture. However, look out for your office’s HR professional at the holiday party (i.e. – get them wasted) and see if they’ll hook you up with some of the leftovers.

KPMG

Here’s Your KPMG Town Hall Open Thread

Caleb Newquist

December 7, 2011

We’ve got it on good authority that the KPMG town hall is happening circa now although I am definitely not present for the event.

That being said, since we’re aware of the proceedings, it seems fair to allow the same opportunity for Klynveldians as we gave to the mini-BoMos. So if you’re hearing things from John Veihmeyer that you like, don’t like, or you’ve ideas of the names Johnny V. would mistakenly call me other than “Colin” feel free to sound off below.

CPA Exam

CPA Exam Stumper: When Does the 18 Month Window Actually Start?

Adrienne Gonzalez

December 6, 2011

I want to be clear with you guys that though it may feel like I pull most of my CPA exam advice out of my ass, there are usually reasons behind whatever I suggest, and the methods are proven. Despite me never having personally proven them myself (no need).

Sometimes, there are questions I don’t have the answer to. Maybe I could Google this but as anyone who has ever tried to Google CPA exam information ever can tell you, it isn’t always easy to aggregate the answers in a singular place in a way that makes sense to an average human being. Forget about decoding the psychometric scoring system, it’s enough to try and understand why your ths hard as your first two.

So for once, I need you guys to answer this for me. You have NTSs, you have 18-month windows closing in on your asses and you are all around the country so the results should be fairly varied across the jurisdictions.

Here’s the question (via the CPAnet forums):

Can someone please help me?

There is so much conflicting information about the starting date of the 18 month testing window.

I passed AUDIT on May 3rd.2010. Conclusion after reading many blogs is I can take my last section by the End OF November 2011.

IS THIS CORRECT?

18 MONTHS WILL BE November 3rd but it rounds to the end of the month.

Please confirm as soon as possible… Thank you so much for your help.

Now, here comes the obligatory procrastination rant. Why the fuck are you waiting until October 27, 2011 (as per the timestamp on the CPAnet post) to ask this question when you had a full 16 months or so to figure this out? Even if you got your Audit score at the last date possible, you still had at least a year and a handful of months to gather this intel. Also, even if you have until the end of the month instead of the 3rd, you’d really be doing yourself a disservice by waiting until the very last day possible. Why? Things happen. Prometric closes on you and leaves a note. You get the stomach flu. Your girlfriend starts hassling you about your relationship the night before and you oversleep your appointment the next morning.

Now, all of this is moot, it being December 6th. Whether this guy had until the 3rd or the 30th, it’s passed. But maybe there are a few of you out there scrambling for this information a week before your 18 month window closes who this will be useful for a month or 6 or 12 from now.

As far as I’m aware, the 18 months means you have 18 months from the date you sit for and pass your first part. That means exactly 18 months from the day you sat for the first exam part that you passed, regardless of the date you received your score (hopefully this is better with the AICPA’s scoring improvements – those of you rolling over into your second 18 month window know how excruciating it used to be). I have heard that in some states it is the last testing day of the month in which your 18 month window ends, regardless of day of the month but as we know, “hearing” something is not reliable enough to use to actually pass the exam.

According to these folks on the Another71 forum, it can vary wildly from state to state. One candidate claims an expiration date from the approximate date scores were received while another says they received exactly 18 months from the date they sat for the first passed exam.

Which is it? I have no idea and I’m fine admitting that. Help me?

ANR

Accounting News Roundup: Dems Making Another Run at Payroll Tax Cut; Audit Reform Turkey; Taking Our Tax Medicine | 12.06.11

Caleb Newquist

December 6, 2011

~ Colin, here: I’ve got some professional obligations to attend to today that will, unfortunately, keep me tied up so posting will be on the light side. Despite my absence, keep us apprised of any holiday spirit shenanigans going on out there and I’ll do my best to turn them around pronto.

Democrats Say They Will Try Again on Payroll Tax [NYT]
Senate Democrats said Monday that they would try for the fifth time in two months to raise taxes on top earners to pay for legislation that would reduce Social Security payroll taxes, as President Obama sought l Republicans on the defensive, asserting that their intransigence could cause a tax increase for tens of millions of American workers.

Olympus Faces Tokyo Delisting After Management Hid $1.7 Billion of Losses [Bloomberg]
Olympus Corp. risks being delisted even if it makes a Dec. 14 deadline to announce earnings, the Tokyo Stock Exchange said after the release of an independent report into false accounting by the Japanese camera maker. Senior management was “rotten to the core” and corrupted other layers of executives that touched it, according to the report of a panel probing Olympus’s schemes to cover up 135 billion yen ($1.7 billion) in losses and payments to advisers dating back decades. Failings by auditors and aid from banks in Europe and Singapore helped hide the losses, it said.

Corzine Rebuffed Internal Warnings on Risks [WSJ]
MF Global Holdings Ltd.’s executive in charge of controlling risks raised serious concerns several times last year to directors at the securities firm about the growing bet on European bonds by his boss, Jon S. Corzine, people familiar with the matter said. The board allowed the company’s exposure to troubled European sovereign debt to swell from about $1.5 billion in late 2010 to $6.3 billion shortly before MF Global tumbled into bankruptcy Oct. 31, these people said. The executive who challenged Mr. Corzine resigned in March.

Esprit Drops as CFO Departs Amid Revival Drive [Bloomberg]
Esprit Holdings Ltd. (330), the clothing retailer struggling to recover from a 98 percent profit slump, fell the most in more than two months in Hong Kong trading after Chief Financial Officer Chew Fook Aun quit. The biggest clothing retailer listed in Hong Kong fell 11 percent to HK$10.72 and the close of trading in the city, its biggest drop since Sept. 21. The stock is down 71 percent this year compared with an 18 percent drop for the benchmark Hang Seng Index. Chew’s resignation for personal reasons will take effect by June 1 as he is “unable to spend the required time in Europe,” the Hong Kong-based casual clothing chain said in a statement yesterday. Esprit, which on Sept. 15 said its brand had “lost its soul,” faces declining sales on the continent, where it made 79 percent of revenue.

Woman gets 18 months for claiming 20 nonexistent children to IRS [LAT]
A former Los Angeles resident drew an 18-month federal prison sentence Monday for filing fraudulent income tax returns involving 20 nonexistent children, all with the same birthday. Norma Coronel, 40, an illegal immigrant who now lives in Livermore, was ordered by U.S. District Judge Manuel Real to pay $302,186 in restitution to the Internal Revenue Service. In a plea agreement, Coronel admitted that she applied for and obtained Social Security numbers for at least 20 fictitious children in 2002. She claimed all the children had been born at a Los Angeles hospital on Dec. 11, 2002.

Audit Reform in the European Union — Michel Barnier Delivers A Holiday Turkey [Re:Balance]
Jim Peterson: “[Barnier’s] “final” proposal to re-engineer the structure and business model of the large accounting firms […] is much revised from the draft leaked in September, resembling the original no more than does turkey hash its original hormone-injected source – ‘fowl’ though they both are.”

The Cartoon that Killed Arthur Andersen [The Summa]
You’re a bad auditor, Charlie Brown.

I’m in a JIT: the Ernst & Young “I’m on a boat” parody video, explained [ACS]
Details that you may not have previously known.

Study Shows Auditors Slow to Adopt Hi-Tech Fraud Detection Strategies [CPAT]
The machines are scary.

Supermodel Christie Brinkley super sorry [Tax Watchdog]
Robert Snell’s scoop has an uptown girl all out of sorts.

New Auditors’ Reporting Model Proposal Set for Release in Q2 [JofA]
The PCAOB’s proposal for a new auditors’ reporting model should be completed by the second quarter of 2012, PCAOB Chairman James Doty said Monday. Speaking at the AICPA’s National Conference on Current SEC and PCAOB Developments in Washington, Doty gave an update on the PCAOB’s initiative on the form and content of the standard auditors’ report.

Pick Your Poison: VAT or Higher Income Tax Rates [TaxVox]
Yes, you have to.

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