Going Concern

Thankfully, Dillard’s Disputes with Audit Firms Haven’t Resulted in Anyone Disappearing into Thin Air

Caleb Newquist
October 14, 2011

Your mother’s third favorite department store, Dillard’s, has fired PwC as their auditor over a dispute related to the timing of a “tax benefit related to its new real estate investment trust.” The Little Rock-based company replaced P. Dubs with KPMG (who will take every chance they can get to stick it to Team Autumn). Basically the two didn’t see eye on this matter (here’s the 8-K that explains it), Dillard’s asked the IRS for their opinion, who said the treatment was kosher and next thing you know, the audit committee was on the hunt for a replacement.

Anyway, this isn’t really news until you consider the fact that PwC had only become Dillard’s auditor in 2009. Deloitte had been the auditor of the company for 20 years and in many auditor-client relationships, that’s just the honeymoon phase. So that seems a little odd. And couple that with the most recent firing of PwC and you’ve got to wonder what’s the scoop is over at DDS. But all that pales in comparison to this:

In 2008, [Dillard’s] had a dispute with CDI Contractors LLC’s chief financial officer [Ed. note: Link is broken], John Glasgow.

At the time, Dillard’s owned half of CDI. It has since bought the half that it didn’t own.

Glasgow objected the way Dillard’s CFO James Freeman was conducting an audit of CDI. Glasgow disappeared during the dispute and was declared dead [Ed. note: Ditto] more than three years later, although no trace of him has been found.

After Glasgow’s disappearance, Dillard’s restated earnings for several previous years, blaming an accounting error by CDI.

The last thing we want to see are pictures of auditors on milk cartons.

Dillard’s Fires PWC After Accounting Dispute, Hires KPMG As Auditor [AB]

Anxious Accounting Student Needs Advice for a PwC “Superday”

Daniel Braddock
October 13, 2011

Ed. note: Have a question for the career advice brain trust? Email us at advice@goingconcern.com.

Caleb,

I’m an avid reader of Going Concern and I was wondering if you could help ease my anxiety on my Superday coming up fairly soon. I’m currently a senior in a master’s program and I am looking for an internship this Winter. I’ve interviewed with all Big 4 and only managed to score a second round with PwC for a Northeast location. I do have a couple back up offers but really want PwC. Do you have any tips or other insights on these superdays? I often read that the majority of people attending superdays get an offer but I don’t wident. Any insights you can provide would be greatly appreciated.

Thanks,
Anxious Student

Dear Anxious,

I’ll do my best to give you some honest insight on Superdays, although I don’t know if it will quiet your fears.

Your biggest competition at the Superday will be yourself and your choice to pursue a winter internship (presumably tax?). Everyone knows that the summer internship programs are the bees’ knees: barely 40 hours a week; summer outings; awesome schwag. Winter internships, on the other hand, have been traditionally limited in numbers but extensive in experience. This is changing a bit this year, as firms are looking for a small uptick in winter interns to help offset the turnover in staff. The firms’ practices have higher standards for the students they hire for this time of year because they’ll be doing actual work (relative to the summer class). But should you land one of the spots on the winter intern bench, you’ll be poised to rake in a lot of overtime $$$. So, what do you need to do at the Superday to best position yourself for one of the internship spots? Keep your cool. Keep your confidence.

Be flexible. Winter interns are oftentimes from local universities, since many students balance a light credit schedule while putting in long hours at 300 Madison Avenue (or 345 Park, or…okay you get it). If you’re in this position, oversell your availability to work. Think you’re taking 15 credits? Say your’e taking 12. Available on weekends? You bet! They’re looking to hire workhorses, not show ponies. If you’re taking the semester off, that’s great; make sure the recruiter knows this. Talk about your willingness to work long hours and do “what’s best for the team” even if that means working weekends. The goal is to land an offer, not sound like someone with a grasp on reality. “Work the entire month of February and sleep under my desk?!?! Sign me up!!!”

Now, then. General advice for Superdays:

You’re always being watched. Think that the teambuilding event is trivial? Think again. The recruiters will be watching how you interact with the team members. One comment of “this is the dumbest thing I’ve ever done” will get you dinged. Sit down, shut up, and BE REALLY EXCITED TO PLAY WITH MARKERS.

Careful with the booze. Every firm’s 2nd round interview program is different, but be sure to take it easy if there is booze involved. Take a page out of my BFF Patti Stanger’s book: keep it to two drinks. You’ll loosen up, it’ll taste GREAT after the long day, but you won’t get too loose lipped. Just because the evening’s atmosphere is casual, doesn’t mean the office managing partner should know what you’re getting your boyfriend for Christmas.

Shoot for the middle of the fairway. Every in-office interview program has the same cast of characters. The Funny Guy. The Guy Who Thinks He’s Funny But Isn’t. The Girl Who’s Skirt is Questionably Short. The Guy Who is Wearing His Father’s Suit. The Sit in the Corner Special. The Candidate with Too Much School Pride. The Leader Who Doesn’t Know How to Be a Team Player.

Umm, yeah. Don’t be any of those.

Easy on the cellphones. Silence it, turn it off, and only look at it on breaks. Nothing pisses off an over-the-hill recruiter more than watching a room full of Millennials texting and tweeting over their morning fruit salads.

Good luck.

Deloitte

Chinese Gold Company ‘Respects’ Deloitte’s Decision to Kick Them to the Curb

Caleb Newquist
October 13, 2011

Your auditor-of-a-Chinese-company-resignation news du jour:

Deloitte Touche Tohmatsu Ltd , the world’s largest accounting and consulting firm, has resigned as auditors of Hong Kong-listed Real Gold Mining , more than four months after the Inner Mongolian miner was reported to have filed conflicting accouting [sic] reports.

Real Gold, which halted trading in its shares on May 27. is under investigation by the Securities and Futures Commission for corporate governance breaches. The miner’s announcement to the Hong Kong stock exchange late on Thursday said it was looking for a replacement for Deloitte, which resigned on October 12.

“The company is disappointed that Deloitte has decided to resign at this time but respects its decision,” the firm said.

Deloitte resigns as auditors of China gold firm [Reuters]

Will JK Harris and TaxMasters Join the Tax Lady in the Late-Night-Tax-Problem-Solver Body Count?

Joe Kristan
October 13, 2011

“Pennies on the dollar” may be a great pitch on cable television, but it’s not a surefire business plan. Desperate taxpayers who have paid money up front to JK Harris to resolve their tax debts at a discount are joining the IRS as potential “pennies on the dollar” creditors now that this leader in the tax settlement industry is filing for bankruptcy protection.

This is the second major blow this year to cable TV ad revenues. Earlier this year “Tax Lady” Roni Deutch gave up her law license in the face of charges that she took fees up front to resolve tax debts and failed to follow through.

Tax nerds see the late night ads when we get home and wonder how these outfits manage to get such great deals out of the IRS when getting the Service to actually forgive tax debts is like pulling teeth from a grumpy rhino for the rest of us.

TaxMasters now stands as the biggest remaining player in the TV tax settlement business, but they have their own problems. They were de-listed last month from the OTC Bulletin Board to the pink sheets for failing to file their 10-Q due August 15. The last reported trade for Taxs.pk is at 13 cents. They have also been sued by the Minnesota Attorney General for allegedly deceptive practices. ABC News reported on the suit:

The Minnesota attorney general says many of the company’s employees are skilled tele-marketers who have little knowledge of the complicated tax issues faced by people who have fallen behind in filing their returns or making tax payments. “When you call, you think you’re talking to a tax professional,” said Swanson. “You’re really talking to just a salesperson who’s trying to get you to sign up.”

So maybe the secret is that the late night settlement outfits are staffed by telemarketers who just happen to be awesome at selling pennies-on-the-dollar deals to the IRS. If that’s true, though, they seem to be having a lot of trouble turning what would truly be a remarkable and valuable skill into profits.

Here’s a Friendly Reminder to Tune into “Let’s Talk CPA Exam” Tonight

Caleb Newquist
October 13, 2011

This is just a friendly reminder that I’ll appearing on the Yaeger CPA Review weekly radio show to talk about the CPA exam. This particular chat will focus on balancing your study life and work life (i.e. you have no life). If you’re having trouble pulling it together, you can call in and I’ll motivate you like some sort of CPA exam drill sergeant.

Of course if you don’t have questions about that, you can simply call in to gripe about NASBA, BEC, or whatever else grinds your gears about this whole process.

Click here if you’d like an email reminder for this week’s show. Adrienne has promised to call in simply to heckle me so it should be pretty fun.

UPDATE: If you missed it last night, here’s last night’s show for your listening enjoyment:

Listen to internet radio with Yaeger on Blog Talk Radio

IFRS

Retired IASB Member Calls IFRS Compliance “A Must” for G20 Nations

Adrienne Gonzalez
October 13, 2011

Now, let’s keep in mind he said this at an “IFRS and Emerging Market” meeting in Lagos, and meant it in regards to African companies.

Retired IASB board member Bob Garnett said for any country seeking membership of G20, becoming IFRS compliant is a must. He also said African companies will need to work together in regional groups to have more weight as they will not gain necessary influence on their own because they do not have the IFRS track record yet.

The pre-workshop meeting at which Garnett made these comments was organized by Ernst and Young (“a leading voice in IFRS converstion,” according to Nigerian publication The Nation).

Remember it was only days ago that the IASB’s fearless fish-loving leader Hans Hoogervorst was in Boston assuring U.S. regulators they’d have a say in IFRS rules if they’d just hurry up and adopt already. No mention was made about kicking us out of G20 if we don’t embrace IFRS fully and soon.

Anyone else smelling the distinct aroma of desperation?

Also last week at the Boston conference, AICPA CEO Barry Melancon said the SEC should allow U.S. companies to use IFRS if they want “to level the playing field with their international competitors.”

IFRS cheerleading sessions are taking place all around the world at this point, and it’s only a matter of time before the SEC will finally be forced to commit to a plan and adopt. Or else?

Accounting News Roundup: JP Morgan’s Accounting Hocus Pocus; Breaking the Buffett Rule; IRS Poking Around Google’s Offshore Profits | 10.13.11

Caleb Newquist
October 13, 2011

Buffett’s Son Defends Occupy Wall Street [Bloomberg]
“I think it takes that to make things happen sometimes,” Howard Buffett, 56, said of the demonstrations in an interview yesterday in Des Moines, Iowa. Over the past 15 years, “we saw large corporations really screw people.”

Oversight board proposes plan to make accountants more accountable [WaPo]
Auditors are supposed shareholders, but from Enron and WorldCom to the Wall Street meltdown of 2008, they have often been criticized for not barking. They are hired and paid by the companies they audit, and policymakers have struggled for decades to strengthen incentives for them to stand up to corporate management when appropriate.

With Just Three 9s, Cain Refigured Math for Taxes [NYT]
Mr. Cain, a former pizza chain chief executive, wanted a proposal to jolt the economy and give his candidacy some definition. “I said, ‘The first fundamental, guys, is we have to throw out the tax code,’ ” Mr. Cain said Wednesday in an interview. “How do we come up with a bolder plan?” he pressed two of his close advisers. From that exchange emerged the plan that Mr. Cain calls 9-9-9: a flat 9 percent individual income tax rate, a 9 percent corporate tax rate and a 9 percent national sales tax. He has uttered the triple digits repeatedly, metronome-like, in speeches and debates, until they have acquired the catchy power of a brand.

JPMorgan Earnings Fall Less Than Expected on Accounting Change [Bloomberg]
JPMorgan would have reported a loss for its investment bank without the debt-valuation adjustment, which added 29 cents a share, under U.S. accounting rules allowed when the market value of a company’s liabilities declines. Chief Executive Officer Jamie Dimon, 55, said in the statement that the gain “does not relate to the underlying operations of the company,” which suffered from a 13 percent decline in investment-banking revenue from the prior quarter.

Buffett Builds His Tax-the-Rich Case [WSJ]
The biggest mystery is the nearly $23 million gap between Mr. Buffett’s adjusted gross income and his taxable income. Without having his tax return it is impossible to know the reason for the gap for sure, tax experts say. One possibility for the gap is that he made large charitable contributions, itemized deductions that are subtracted from adjusted gross income. Another possible element is interest expense. Mr. Buffett is known for not selling investments but rather borrowing money against them. To the extent that he has investment income, any interest paid on such loans would be deductible.

‘Buffett Rule’ May Be Broken by 25% of Millionaire Taxpayers, Study Finds [Bloomberg]
Preferential treatment of investment income and the reduced impact of payroll taxes on high earners lets about 94,500 millionaires pay taxes at a lower rate than 10.4 million “moderate-income taxpayers,” representing about 10 percent of those making less than $100,000 a year, according to the report by the non-partisan Congressional Research Service dated Oct. 7. The findings put the U.S. tax system in conflict with the so-called Buffett Rule, which says households making more than $1 million annually shouldn’t pay a smaller share of their income in taxes than middle class families, says the report, which analyzed 2006 Internal Revenue Service data.

IRS Auditing How Google Shifted Profits Offshore to Avoid Taxes [BBW]
The agency is bringing more than typical scrutiny to how the company valued software rights and other intellectual property it licensed abroad, said the person, who requested anonymity because the audit isn’t public. The IRS has requested information from Google about its offshore deals after three acquisitions, including its $1.65 billion purchase of YouTube, the person said. The transfer overseas of these kinds of rights rights has enabled Google to attribute earnings to foreign units that pay lower taxes, Bloomberg News reported a year ago.

No. 1 Financial-Strength Ranking Spells Doom [Bloomberg]
Jonathan Weil: “Less than three months ago the European Banking Authority said Dexia SA (DEXB) had passed its so- called stress test with ease. The French-Belgian lender’s July 15 news release carried this headline: “2011 EU-wide Stress Test Results: No Need for Dexia to Raise Additional Capital.” Then last weekend, 86 days after getting its clean bill of health, Dexia took a government bailout to avoid collapsing. Nobody was surprised this happened. Nor should anyone have been.”

IFRS
SEC

Non-U.S. Survey: IFRS Is Getting More Popular

Caleb Newquist
October 13, 2011

Global Reporting Standards are gaining popularity among investors and finance executives, according to a new report by ACCA. Around 170 senior executives and investors were questioned. More than 40% said international financial reporting standards improve access to capital, while around 25% believe the global standards have lowered capital costs. ACCA chief executive Helen Brand said: “Growing support amongst CFOs and investors for [IFRS] must be considered carefully” by US regulator the SEC as it debates converging US GAAP with international standards. “We believe a positive answer from the SEC would give a tremendous boost to the cause of financial reporting and more importantly the world economy.” [Accountancy Age, Earlier]

Herman Cain’s Economics Advisor Was Trained in the Arts of Debits and Credits

Caleb Newquist
October 12, 2011

As we mentioned, former Pizza Godfather and current GOP Presidential candidate Herman Cain’s 9-9-9 tax plan hasn’t impressed a lot of people. Bruce Bartlett called it “a distributional monstrosity” and that it “stands out as exceptionally ill conceived.” When Bloomberg’s Julianna Goldman told Cain that the ‘Berg found that his plan wasn’t revenue neutral, Cain simply said, “that analysis is […] incorrect.” Despite the haters, Cain’s plan seems to have captivated the media psyche, it has helped boost him in the polls and he says that it will be delivered in 30 minutes or less (i.e. “[it] will pass”).

Who is the mastermind behind this plan? Is it a young economics policy wonk? Is it a Ivy League economist known the world-over? Is it one of Cain’s former delivery boys who came up with the plan after sharing a jay with an extra friendly customer? NOPE! It’s Rich Lowrie. Rich Lowrie of Cleveland? No? He went to Case Western Reserve University and got an accounting degree. Still nothing?

Herman Cain says his much-touted 9-9-9 plan is the product of extensive testing and thinking, but the only man he cited as involved with its research — Rich Lowrie of Cleveland — is not a trained economist.

Instead, Lowrie — who’s the only economic adviser Cain has been willing to mention by name — is a wealth manager for a division of Wells Fargo and according to his LinkedIn page holds an accountancy degree from Case Western Reserve University. Lowrie also spent three years on the advisory board of the conservative third-party group Americans For Prosperity.

Now that we’re clear about the credentials behind one of the masterminds behind 9-9-9, don’t you feel better about it?

Herman Cain’s economic adviser is not an economist [Politico]

Warren Buffett Takes a Burlesque Approach to Releasing Tax Return Info

Caleb Newquist
October 12, 2011

The Oracle of O proves to be a master tease artist:

In a letter to Republican Rep. Tim Huelskamp Tuesday, Buffett revealed that his adjusted gross income last year was $62,855,038 and that his taxable income was $39,814,784.

Buffett said he paid $15,300 in payroll taxes. Buffett also said his federal income tax bill came to $6,923,494, or 17.4% of his taxable income — two points he revealed in a New York Times op-ed in August urging Congress to tax the wealthy more.

In another act of twirling his pasties, WB repeated his challenge to all his fellow “ultra-rich” peers to whip out their tax returns. Not sure if the OWS gang has jumped on this band wagon yet but it’s worth putting out there.

Buffett made $62,855,038 last year [CNN via Felix Salmon]

News

Occupy Wall Street “Accountant”: Occupy Wall Street Finance Committee Working on Creating a Committee That Will Deal with Finances

Caleb Newquist
October 12, 2011

Earlier Adrienne mentioned that many of you, while not literally Occupying Wall Street, are taking it to the man by shuffling to and from your cube farms every day, only to go through the motions filled to the brim with spite. Despite this silent protest that consists of wrinkled slacks, scuffed shoes and pizza with meat on it, there is still a tremendous demand for some good accountants downtown.

Yesterday, we did OWS a favor by hanging a wanted sign in the proverbial window. So far the group’s chief treasurer is 21 year-old Victoria Sobel who is depending on everything from “a large cooking pot covered in cardboard and duct tape” to “a yellow messenger bag” and the occasional Good Samaritan CPA who has already told Ms Sobel that she needs to do some “delegating.” However, if you think these basic methodologies will serve the protesters well and that it sounds like they’ve got things under control, you may want to reconsider. Brooklyn Ink talked to one of the “unofficial” accountants, Peter Dutro, who made it sound like the finance committee isn’t as robust as they might need:

The Ink: How much have you received overall so far?
Dutro: We have a little over $100,000.
The Ink: And where does the money go?
Dutro: Food is our biggest expense. We spend roughly $1,000 every day.
The Ink: Are there any plans for the future and what you will do with the money?
Dutro: There is a lot of thinking about long-term sustainability in the minds of a lot of people. We haven’t made any decisions. We are trying to figure out a way to have a body that deals with financial decisions.

Looking for a leadership opportunity? This could be your chance.

Meet OWS’s (Unofficial) Brooklyn Accountant [Brooklyn Ink]

You’re Not Alone If You Think Herman Cain’s 9-9-9 Tax Plan Is a Gimmick

Caleb Newquist
October 12, 2011

At a minimum, the Cain plan is a distributional monstrosity. The poor would pay more while the rich would have their taxes cut, with no guarantee that economic growth will increase and good reason to believe that the budget deficit will increase. Even allowing for the poorly thought through promises routinely made on the campaign trail, Mr. Cain’s tax plan stands out as exceptionally ill conceived. [NYT via TaxProf]

Careers

Big 4

News

Technology

Practice Management

Site Search

Twitter Feed

Get the Accounting News Roundup

Quick Reads

Sponsored Content

Get the Accounting News Roundup

Remote Accounting & Tax Director

Senior Accountant / Client Account Manager (CAS & Tax)

Remote Tax Senior

Remote Accounting & Tax Director

Senior Accountant / Client Account Manager (CAS & Tax)

Remote Tax Senior