Justice Department probing Chinese accounting [Reuters]
The Justice Department is investigating accounting irregularities at Chinese companies listed on U.S. stock exchanges, said an official with the Securities and Exchange Commission, suggesting criminal charges may be brought in addition to civil proceedings. “There are parts of the Justice Department that are actively engaged in this area,” Robert Khuzami, director of enforcement at the SEC, said in an interview conducted on Tuesday and published on Thursday. A number of federal prosecutors around the United States were taking part in the investigation, he told Reuters, them.

FBI Probing Solyndra for Possible Accounting Fraud [Bloomberg]
Solyndra LLC, the solar-panel maker that filed for bankruptcy protection two months after executives extolled its prospects, is being investigated by the FBI for accounting fraud, an agency official said. The FBI is examining possible misrepresentations in financial statements submitted to the Energy Department, according to the official, who requested anonymity because the investigation is continuing. Disclosure of the fraud probe is likely to heighten Republican criticism of the Obama administration for its approval of a $535 million U.S. loan guarantee, which the company used to build a $733 million factory in Fremont, California, that opened in January.

Banks to Make Customers Pay Fee for Using Debit Cards [NYT]
Bank of America, the nation’s biggest bank, said on Thursday that it planned to start charging customers a $5 monthly fee when they used their debit cards for purchases. It was just one of several new charges expected to hit consumers as new regulations crimp banks’ profits. Wells Fargo and Chase are testing $3 monthly debit card fees. Regions Financial, based in Birmingham, Ala., plans to start charging a $4 fee next month, while SunTrust, another regional powerhouse, is charging a $5 fee. The round of new charges stems from a rule, which takes effect on Saturday, that limits the fees that banks can levy on merchants every time a consumer uses a debit card to make a purchase. The rule, known as the Durbin amendment, after its sponsor Senator Richard J. Durbin, is a crucial part of the Dodd-Frank financial overhaul law.

Canceled Flights in U.S. at 10-Year High [Bloomberg]
United Continental Holdings Inc. (UAL), Delta Air Lines Inc. (DAL) and other large carriers have scrubbed almost 104,000 flights this year through Sept. 21, or 2.36 percent of the scheduled total. A full-year rate at that level would be the highest since 2001, according to the U.S. Bureau of Transportation Statistics. The disruptions stem from a combination of foul weather in major markets such as New York and seating-capacity cutbacks to curb costs. When Hurricane Irene struck the East Coast in August, Cameron C. McCulloch faced a weeklong wait for a new ticket — so he drove the 3,000 miles from Seattle to Yale University to catch the start of classes. “There was too much uncertainty with the flights,” said McCulloch, 21, a Yale junior. “At least with driving I knew I’d be there on time and that I could control all the factors.”

You’re tax-exempt? That doesn’t always mean you’re tax-exempt [Tax Update]
Joe Kristan explains the riddle.

Obama’s Buffett Rule Backed by 63% of Investors [Bloomberg]
By a margin of 63 percent to 32 percent, respondents in a Bloomberg Global Poll approved of the president’s proposal, known as the “Buffett rule” in a nod to Warren Buffett, the chairman of Berkshire Hathaway Inc., who has said it is wrong that he pays a smaller share of his income in taxes than does his secretary.

Long Island Rail Road Expects ‘Near-Normal’ Morning Service [City Room/NYT]
Aka “typically awful.”

Pa. man frustrated with IRS sentenced for threat [HC]
64-year-old Leonard Mackey pleaded guilty on Thursday to threatening to use a weapon of mass destruction. Mackey says his frustration stemmed from a one-digit error in another person’s Social Security number. That led to a mistaken claim that his wife owed $80,000 to the IRS. On Feb. 28, Mackey told an agency worker in Bethlehem that he wanted to build a monument to the man who flew a plane into an IRS building in Texas last year.

FASB weighs ‘going concern’ self-test for US firms [Reuters]
U.S. accounting rulemakers are expected to revisit soon a 2008 proposal that would address the knotty issue of “going concern” warnings, seeking to better assure that alarms are sounded before companies fail. At issue are the standard warnings that auditors are required to include in annual reports when they have substantial doubt that a company will survive. With lucrative audit fees on the line, auditors have been accused of failing to flag going concern doubts, though some proposed changes could create new frictions between auditors and managers, some experts have said.

The best way to tackle the Big Four [FT]
Michel Barnier has shocked the Big Four accounting firms. The European Union internal market commissioner wants to ban them from operating as consultants as well as auditors, force them to work jointly with others, and set time limits on how long they can audit each company. It could be the biggest shake-up of accounting since the collapse of Enron laid low Arthur Andersen and led to the 2002 Sarbanes-Oxley Act. Yet it will not amount to much unless the industry’s looming disaster – the failure of another audit firm and contraction to a Big Three – can be avoided.

E&Y Says Greek Defau [Bloomberg]
“The euro zone sovereign-debt crisis shows no sign of abating,” E&Y said in an e-mailed report in London [Wednesday]. “A default on Greek government debt now seems unavoidable. The key question is when this default will occur and how it will be managed.”

To Ease the Crisis, Tax Financial Transactions [NYT]
Governments, both rich and poor, urgently need a way to calm speculation in the financial markets and to raise revenue. On Wednesday, the European Commission president, José Manuel Barroso, proposed a tax on financial transactions. Such a measure, already supported by the German chancellor, Angela Merkel, and the French president, Nicolas Sarkozy, is long overdue. Indeed, a tax of just 0.05 percent levied on each stock, bond, derivative or currency transaction would be aimed at financial institutions’ casino-style trading, which helped precipitate the economic crisis. Because these markets are so vast, the tax could raise hundreds of billions of dollars a year globally for cash-strapped governments and could increase development aid.

D.C. tax employee’s arrest followed years of warnings [WaPo]
[F]ederal prosecutors charged a D.C. tax office employee with stealing about $414,000 from the city coffers. Mary Ayers-Zander did it, charging papers state, by making fraudulent manual adjustments to legitimate taxpayers’ income tax withholding, resulting in payments to personal accounts she had set up. In other words, Ayers-Zander found a weakness in the system and exploited it, finding a way to enrich herself because the internal controls within the Office of Tax and Revenue were not up to par, according to court records.

Snoop Dogg tax debt goes up in smoke [TW]
Robert Snell’s celeb tax scoop du jour.

Mr. Buffett’s Tax Secrets [WSJ]
[T]he opportunity to educate the public would be even greater if Mr. Buffett would let everyone else in on his secrets of tax avoidance by releasing his tax returns. Going only by Mr. Buffett’s unverified claims, his federal taxes in 2010 amounted to 17.4% of his taxable income, probably because much of his income was from capital gains and dividends. It’s also likely that he took significant deductions for charitable donations. No doubt the millions of Americans who could end up paying more because of this claim would love to see the details.

Medicis, its auditor will pay $18 mil to settle suit [Arizona Republic]
Medicis Pharmaceutical Corp. and its auditing firm, Ernst & Young, have agreed to pay $18 million to settle a shareholder class-action lawsuit stemming from the pharmaceutical company’s financial statements. Scottsdale-based Medicis would pay $11 million and Ernst & Young would pay $7 million under terms of a settlement agreement filed last week in U.S. District Court in Phoenix.

The iPad Decision [JofA]
Ask one CPA, the managing partner of a 160-employee firm, what he thinks of using the iPad in his work, and he tells you “there’s no other way to practice right now.” Ask another, the IT head of a 400-employee firm, and he tells you that his iPad is no more useful than a paperweight.

Gov. Christie vs. ‘Jersey Shore’ [NYT]
Mr. Christie ventured beyond amateur TV criticism on Monday when he blocked a $420,000 tax credit that had been approved for the show’s production company by the state’s E��������������������Authority. With that move, he crossed a basic constitutional line, namely the First Amendment.

Accounting Firms Face ‘Big Impact’ From Draft EU Restrictions [Bloomberg]
Companies that are publicly traded “shall appoint at least two statutory auditors” under the measures, which are designed to improve trust in “the veracity of the financial statement,” according to a draft version of the proposals from the European Union’s executive arm obtained by Bloomberg News. “Many of these ideas aren’t new but we’ve never seen proposals that include all of these ideas at the same time,” Michael Izza, the chief executive of the Institute of Chartered Accountants of England and Wales, said in a telephone interview today. “They’ve been aggregated in one place and that’s where you get the big impact.”

Don’t Count On Europe To Reform Auditors And Accounting [Forbes]
Francine McKenna: “If coalminers operated with as little foresight and acknowledgment of mistakes as the auditors, more would be trapped below ground as a result of “accidents” that could have been averted. If you trusted a doctor with the kind of reasonable assurance approach the auditors claim is sufficient to protect the financial system and the level tolerance for mistakes and being “duped” they believe we should accept, you’d be dead.”

Barnier vows to break the big four [Independent]
“This isn’t about the Big Four versus Brussels. We know from our contacts and discussions with BIS [the Department for Business] and the CBI that they don’t support many of these more radical proposals because they don’t think they will increase quality or competition… [Mr Barnier] has set out his stall and that is the world of politics.”

As InterOil tumbles, actor Shia LaBeouf and John Thomas Financial CEO Thomas Belesis have egg on their faces [WCF]
Those Transformer residuals will come in handy.

Benefits Tax Hits Businesses Twice [WSJ]
State and federal taxes are rising for employers across the U.S. as states struggle to repay federal loans for unemployment benefits, including more than $1 billion in interest due Friday. The increases in state and federal unemployment-insurance taxes—paid primarily by businesses—are hitting as the recovery appears close to stalling, consumer confidence is low and unemployment remains high at 9.1%. These tax increases come on top of measures intended to tame government budgets, including other state tax increases and spending reductions as well as federal cuts.

Tax wars: the accidental billion-dollar break [FT]
The rule is known as “check-the-box.” It allows US companies to shift profits from operations in high-tax countries simply by marking an Internal Revenue Service form that transforms subsidiaries into what the agency calls a “disregarded entity”. Others have labelled them “tax nothings”. Check-the-box allows companies to avoid the normal 35 per cent US corporate tax on certain types of income. The Treasury Department estimates that annual revenue losses from check-the-box have hit almost $10bn. Other countries are also said to lose billions as income is shifted from other high tax jurisdictions to places with low or no taxes, although there is no official estimate.

Chaoda’s Chairman and CFO, Fidelity Manager Accused of Insider Trading [Bloomberg]
Chaoda Modern Agriculture Holdings Ltd. (682)’s Chairman Kwok Ho, Chief Financial Officer Andy Chan and Fidelity Management’s George Stairs were accused of insider trading by Hong Kong’s financial secretary. The government alleges Kwok and Chan told Stairs about a June 2009 share placement three days before it was publicly announced, according to a notice released by Hong Kong’s Market Misconduct Tribunal today. The portfolio manager at Fidelity Management & Research Company allegedly netted HK$1.98 million ($254,000) on behalf of the funds that he managed by selling 374,000 shares prior to the placement and then buying 630,000 shares at a lower price as part of the stock sale.

Auditor defense may have holes in Deloitte case [Reuters]
“It’s always difficult to believe that an auditor that’s been auditing for seven years or more during an alleged ongoing fraud had no red flags,” said Andrea Kim, a partner at Diamond McCarthy LLP in Houston.