Going Concern

IRS Stops Short of Requiring Tax Preparers to Go Through a Full Rectal Exam to Pass Suitability Check

Caleb Newquist
September 23, 2011

But fingerprints, on the other hand, those will be necessary.

Certain tax return preparers who must pass a suitability check will have to provide their fingerprints so that a Federal Bureau of Investigation database search can be conducted. Generally, the fingerprint requirement will affect those preparers who currently have provisional PTINs.

Under the current proposed regulations, any participant in the PTIN, acceptance agent, or authorized e-file provider programs who resides and is employed outside of the U.S. will not have to be fingerprinted to participate in these programs. Those preparers, however, must comply with all the other elements of the suitability check. In addition, the Treasury Department and the IRS are continuing to study which additional requirements should apply to people outside the U.S. Any additional requirements will be set forth in future guidance.

Attorneys, CPAs, enrolled agents, enrolled retirement plan agent and enrolled actuaries also are expected to be exempt from the fingerprinting requirement at this time. However, they are still required to answer all the suitability questions on the PTIN application, such as whether they have been convicted of a felony in the previous 10 years. Individuals participating in the PTIN, acceptance agent, or authorized e-file provider programs also are required to meet any other requirements of the programs in which they are participating.

If you’re weren’t sufficiently annoyed with the IRS’s new oversight regulations. This might do the trick.

IRS to Begin Fingerprinting Tax Preparers [AT]

Deloitte

Deloitte’s Recent Promotion Awards Fail to Impress One New Senior Associate

Caleb Newquist
September 23, 2011

A “New Senior” passed along this little tip this morning:

Over the last couple of weeks Deloitte has been sending out Promotion “Awards.” I find it funny they think two years of service is worth only a $100 applause award. Honestly getting only $100 is more insulting than getting nothing at all.

On a day where Barry Salzberg is doing a happy dance in the hallways, our friend must have felt compelled to share the news of generosity. If you’re a recipient of a crisp new hundo, share your story in the comments and email us with any other cheery tidbits on the first day of autumn.

What’s Your Motivation for Leaving a Mid-tier Accounting Firm for a Job with Big 4?

Adrienne Gonzalez
September 23, 2011

Contributor note: if you have a question for the Going Concern audience at large (including the useless dbags) or our team of accounting drop outs and degenerates, please get in touch.

Here’s a tip if you guys are thinking about submitting a question: it helps to know your motivation if you are asking for our advice. It’s difficult to tell you what you should do without knowing why you’re trying to do it, unless you’re asking us an obvious question like “should I take X position to make way more money?” because in that situation we obviously assume you’re in it for the money. There’s nothing wrong with that.

That said, this indentured servSo let’s commence to helping.

I’m currently working for a large mid-size firm as a Staff II and will become a Senior I next year on a relatively large public client. However, I’ve been debating whether or not I should follow up on opportunities to work at a Big 4 firm if it means I have to wait an additional 2 years to become a Senior I?

I know from my friends currently working in the Big 4 firm that new hires work for 3 years at the staff level before being promoted to Senior I. In addition, I may also slip one level from Staff II back to Staff I when I change firms. I’d essentially be 2 years behind my peers as a result of going to the Big 4 so I don’t know if making this switch would help or hurt my career. Is it really worth losing that much time in order to get the Big 4 name on my resume? Should I wait until next year in hopes that I could be recruited as a Staff III instead?

Surely I’m not the only one struggling with this decision, does anyone else have experience with this problem?

Thanks and Best Regards,
-Staff II(?) Auditor

Well, Would-Be Staff II, as you are probably already aware, the Big 4 item on your résumé is going to blow any of that mid-tier nonsense you’ve got going now out of the water (don’t get butthurt, mid-tier-ers. It’s not personal). The actual practical application of what you’re learning at a mid-tier firm versus what you might learn at the Big 4 is irrelevant here; it’s all about marketing yourself, and you’re better equipped to do that with bragging rights slapped all over your work experience. You’re pretty much only going to get those rights from the Big 4.

That isn’t to say you can’t gain valuable experience from your current employer, so it comes down to what you want to do career-wise and in what time frame you would like to accomplish it. Have you passed the CPA exam already? Are you itching to get out of public altogether? It’s pretty hard to try and push you in the right direction without knowing what that direction is. What do you want out of your career? Money? Prestige? Experience?

Why did you start mid-tier in the first place? Are you happy where you are? Do you enjoy the work and feel fulfilled? What is it you think Big 4 can offer that you aren’t getting at your current firm?

If I were you, I would wait it out, gain additional experience, keep those Big 4 contacts and try to make the jump when you have a little more leverage. The more secure you get in your skill set, the better equipped you’ll be to leverage that experience into a more ideal gig with a Big 4 instead of starting at bottom a level above the clueless interns.

I would also have a candid conversation with whomever you’ve been speaking to at the Big 4 about your concerns. Don’t come off as a money-grubbing, work-averse dick but definitely express an interest in being involved with work on par with what you’ve been doing with your firm, not taking a step back. Feel free to embellish whatever paperwork you’ve been assembling up until this point into a full-blown PCAOB-compliant masterpiece.

I’m sure any number of mid-tier grunts who read this site religiously can talk you out of making the jump, and for good reason, while others will tell you to jump now and worry about how quick you ascend the Big 4 ladder later. A smaller firm allows you a better chance at truly learning your trade instead of simply going through the motions and checking boxes; think of mid-tier as stripping at the pole as opposed to mopping up the floors. You probably won’t put stripping at the pole on your resume but you’ll be gaining practical experience you can segue into a better opportunity.

I’m not clear on the opportunity you’re after here. Can you clarify?

Accounting News Roundup: Deloitte’s Big Number; E&Y Resigns from SinoTech; Big Tax Bust in KC | 09.23.11

Caleb Newquist
September 23, 2011

Deloitte reports record 2011 revenue of $28.8 billion [Reuters]
Deloitte’s member firms worldwide reported a record $28.8 billion in revenue, up 8.4 percent from 2010. In local currency terms, not accounting for fluctuations in the value of the dollar, revenue grew 7.7 percent for the fiscal year that ended May 31, 2011. Deloitte will likely post similar growth in fiscal 2012, despite a challenging economic picture, the firm’s global chief executive, Barry Salzberg, said on Thursday. “Our first quarter (fiscal 2012) results are very much in line with what we’ve achieved in the prior year,” Salzberg said in an interview.

[AT]
On Thursday, the AICPA released a sampling of comments in support of creating a separate standard-setting board for privately held companies, and said that 99 percent of the 2,800 comments received so far support the establishment of an independent standard-setter. The Institute has organized a letter-writing campaign urging the Financial Accounting Foundation, which oversees FASB and the Governmental Accounting Standards Board, to create a separate board for private company standards […]. The FAF has set up a trustee working group to review the recommendations of a report released in January by a Blue-Ribbon Panel on Standard Setting for Private Companies, which backed the creation of a separate board under the oversight of the FAF. The working group is expected to release its proposals by early October[…].

SinoTech Says Ernst & Young China Arm Resigns As Auditor [Dow Jones]
-Nasdaq-listed SinoTech Energy Ltd. […] said Friday that Ernst & Young’s China unit has resigned as the company’s auditor, citing concerns over a SinoTech financial transaction with SinoTech’s chairman. The Chinese oil-field service provider said in a statement that Chief Financial Officer BoXun Zhang has resigned. It added that Jing Liu has resigned as chairwoman of the company’s audit committee.

Candor by SEC Cheered in House [WSJ]
Securities and Exchange Commission Chairman Mary Schapiro said Thursday she had apologized to the other members of the commission for not informing them that the agency’s former top attorney had a potential conflict in the agency’s investigation of the Bernard Madoff Ponzi scheme. Her remarks, at a joint hearing hosted by the House Financial Services and House Oversight subcommittees, came as some Democratic lawmakers dismissed the idea that the SEC’s former general counsel, David Becker, committed criminal acts.

House approves spending measure opposed by Senate; shutdown possible [WaPo]
Washington lurched toward another potential government shutdown crisis Friday, as the House approved a Republican-authored short-term funding measure designed to keep government running through Nov. 18 that Democrats in the Senate immediately vowed to reject. In an after-midnight roll call, House Republican leaders persuaded conservatives early Friday morning to support a stop-gap bill nearly identical to one they had rejected just 30 hours earlier.

Obama Takes Aim at Tax ‘Targets,’ Fires Blanks [Bloomberg]
Two weeks ago, President Barack Obama unveiled his $447 billion plan to put Americans back to work. Eleven days later, he told us how he’d pay for it: $1.5 trillion in tax increases over 10 years and $3 trillion in spending cuts — on top of the $1 trillion already agreed to in last month’s Budget Control Act. He outlined the principles of a comprehensive tax reform that would lower rates, broaden the base, cut “inefficient and unfair” tax breaks, encourage job creation and reduce the deficit. In other words, every economist’s dream.

Meg Whitman Is Named Hewlett-Packard Chief [NYT]
Hewlett-Packard replaced its embattled chief executive on Thursday with the former eBay chief executive Meg Whitman, saying that the company’s strategy to transform its business was sound, but that it needed new leadership to carry out the plan. The upheaval at H.P. came after several weeks of mounting concerns among board members, senior executives and investors about how the former chief, Léo Apotheker, had handled a major strategy shift at the company announced last month, according to interviews with several people briefed on the board’s discussions.

14 indicted in massive tax refund scam [KCS]
A three-year scheme that allegedly tried to defraud the Internal Revenue Service out of millions in inflated tax refunds unraveled Thursday in Kansas City as authorities announced charges against 14 defendants from around the country. U.S. Attorney Beth Phillips described it as the largest false tax claims case ever prosecuted in Missouri. “Kansas City was the hub of a nationwide conspiracy that attempted to receive nearly $100 million in fraudulent tax refunds,” Phillips said.

Obama’s Buffett Rule: Keep Your Eye on Capital Gains [TaxVox]
President Obama didn’t quite get around to saying so when he rolled out his latest deficit reduction plan on Monday, but his Buffett Rule—that no one making more than $1 million should pay a lower tax rate than those in the middle-class—is mostly about investment income.

Let This Be a Lesson to All Billionaires That Give the Thumbs-up to a ‘Rule’ with Their Name Attached to It

Caleb Newquist
September 23, 2011

The GOP is making a concerted effort to pressure billionaire investment guru Warren Buffett to release his tax returns to the public. Republicans say Buffett — the public face of Obama’s proposed “Buffett rule” to increase taxes on the wealthy — needs to reveal his finances if his views on tax rates are going to serve as the basis for Obama administration policy. “Will Warren Buffett release his tax returns so we can see why he should be the standard for tax policy?” Sen. John Cornyn (R-Texas) questioned in a tweet Thursday. “If he’s going to be the gold standard, so to speak, in terms of what our tax policy should be, yeah, let’s look at it [his tax returns],” Cornyn told ABC News. [OTM/The Hill]

And I’d Have Gotten Away with It if It Weren’t for Those Blasted Accountants!

Joe Kristan
September 22, 2011

If you can get away with tax cheating, is it malpractice for your CPA to make you stop?

A Massachusetts CPA firm found out a new client was using a lame old trick. The S corporation had paid out $1 million to its owner over the years without putting it on a W-2 or treating it as a distribution from the company. Instead, the company every year booked it as a “loan” to the owners – a loan with no note, no interest rate, no security, and no repayments.

This is a time-dishonored way for people who carelessly suck cash out of a corporation to try to avoid the tax consequences – though it is less common in S corporations. It normally fails if the IRS figures it out.

The CPAs told the client that the “loan” should be reclassed as “wages” on the 2002 return to clean it up. The client owner was not excited, and talked to a lawyer to see if there was another way. After the first lawyer failed to satisfy, she talked to a second lawyer, who agreed with the CPA. The client reluctantly filed an amended return, and the owner found herself with a $500,000 tax lien.

At a national firm where I once worked, an audit partner would go from one tax person to another until he found one who told him what he wanted to hear. The client here took that approach, eventually finding a practitioner willing to prepare the 2002 return the old way. That was enough to get the client to file another amended return claiming a refund and to sue the old CPA for malpractice. That might have been a bad decision, in light of this reaction from the astonished judge:

It is surprising that Plaintiffs had the temerity to bring this lawsuit. The complaint was clearly filed too late. The record, mainly as a result of Plaintiffs’ failure to file long-overdue tax returns, is utterly insufficient to demonstrate damages. Most importantly, it is clear that Plaintiffs for many years enjoyed over $1,000,000 in income without paying any taxes on it, and they accomplished this by filing a tax return that improperly characterized the monies they received as a loan. It is close to ludicrous to claim that, by advising Plaintiffs to amend the 2002 tax return to conform with what the law and good accounting practice required, Defendants were being negligent. On the contrary, they were serving their clients ethically and well.

The judge also implied that the client might have been unwise in calling attention to the matter by filing the suit:

As a result of behaving professionally, Defendants have found themselves slapped with this expensive lawsuit. That undeserved headache, at least, is now over. The court can only hope that the IRS and the state authorities will make sure that Plaintiffs now proceed to do what everyone who enjoys the privilege of living in our beloved country is required to do: pay their fair share of taxes.

In other words: come and get ‘em, IRS!

In a world full of charlatans, it can be tough out there for CPAs who try to do the right thing. When you do, it’s nice to know at least one judge has your back.

Cite: RTR Technologies, Inc., Rosalie Berger, and Craig Berger v. Carlton Helming and Helming & Co., PC., ED-Mass., No. 09-cv-30189-MAP.

A Bright Student Would Never Leave Their Backpack at an IRS Office Unattended

Caleb Newquist
September 22, 2011

A suspicious backpack was found at an IRS office Ocala, Florida yesterday that resulted in the 100 employees being evacuated from the building and also business in the surrounding area. In this day and age of misplaced IRS hating, authorities always approach these situations with caution and swiftly destroyed the pack after viewing the X-rays noting notebooks and “an electronic device with wires.” The contents turned out to be nothing more than someone’s psychology textbook, notebooks and a tape recorder, among other school-y items. This will be the best excuse that psych prof will ever hear. [Ocala]

Happy 100th Birthday PwC Los Angeles!

Caleb Newquist
September 22, 2011

Things sure have changed quite a bit since 1911 when it was just Price Waterhouse (what do we think the logo looked like?) and no one gave a shit whether working moms had a great place to work. Possibly in an effort to make up for those less diverse-sensitive years, the firm is celebrating their century in L.A. with “100 Years of Service, 100 Ways of Giving Back.”

P. Dubbersteins will spend a few hours sitting in god-awful traffic on their way to two dozen community organizations to do various nice things. And in case you feel compelled to share your story, the firm will let you do that too.

PwC has also built an intranet site with the theme, “What’s your LA story?” to generate excitement and internal buzz about the anniversary. It provides a centralized resource of information about the campaign and serves as another vehicle for the firm’s LA partners and staff to review and sign up for projects. A unique feature of the site is a page allowing people to share personal stories of how they have helped in the community, fostering a feeling of shared commitment and inspiring others to participate.

Sharing stories about how you’ve made a difference in your community is cool and all but I’m sure many current and former PwC L.A. employees have tales from the last 100 years that are just as interesting but fall within a different narrative. Maybe there was a partner at the Oscars who somehow ended up in the arms of Sophia Loren or maybe he got bombed with Jack Nicholson at the Vanity Fair party only to be found later, naked and passed out on the side of Mulholland Drive.

Or maybe you just recall some inter-office exploits that were especially memorable. The point is, PwC L.A., this is a time for reflection. So if you got memories (fond or not so much) about your time there, feel free to share them below.

Career Fairs: The Do’s and Don’ts of Emailing Recruiters

Daniel Braddock
September 22, 2011

127. That is the number of unread emails in my inbox at this very moment (Wednesday @ 2:28pm). Two meetings, a list of high priority to-do’s, and a number of phone calls to return when I hit my desk before 8:00a this morning. What’s the point? We professionals are busy creatures and as much as we appreciate the thoughtfulness of a “thank you” email when we meet you at a Career Fair, we don’t want to hear about your interest in IFRS issues. In an effort to build off the advice in the comments of Monday’s post, here are some things to keep in mind before hitting send on your thank you email to us.

Do: Keep it short, but personal. When we attend a career fair, we can meet upwards of 200 students in an afternoon. Even if 25% send emails, that’s 50 interspersed amongst our regular business inbox. Keep it short, to the point, but also relevant so it doesn’t seem like you sent the same message to every firm. Tip: reference something professional the two of you spoke about, reference to the recruiter what professional you met, or thank them for the invite to an event later in the week; something to make the connection to your brief in-person encounter.

Don’t: Regurgitate your cover letter. It’s a “thank you” email, not an opportunity to over-sell your candidacy.

Do: Triple check your grammar. Nothing takes you out of the running faster than a misspelled name or the incorrect verb tense in a sentence. Sure, accountants are notoriously bad with spelling and grammar, but leave the misspellings to the managers. When you sign off, go with “sincerely” or “regards” followed by your name.

Don’t: Make us feel old. Mr./Miss/Ms./Mrs. are all off the table. We are not our parents, capisce? More importantly, you need to put yourself on the same level as us. You want to be treated as the adult you are, so speak to us as equals. This goes for everyone up and down the hierarchy (first-year professionals to partners). We’re all on the same level when it comes to addressing us in emails.

Do: Capitalize. keep the lowercase sentences to yourself. and your texting buddies. okay? okay.

Don’t: Attach your résumé. Submit through the website like the recruiter mentioned 32 times.

Do: Keep it light. Remember – we enjoy spending time on campus and interacting with the future of our firms. We had a great time meeting you – remind us of that.

Don’t: Get offended if you do not receive a response. Oftentimes the professionals will just forward the emails to the recruiter to keep track of. You wouldn’t expect a “you’re welcome” note if you were mailing a thank you note, would you?

CPA Exam

What to Do If You’re Stumped on One Section of the CPA Exam

Adrienne Gonzalez
September 22, 2011

I’m assuming not all of you are going to have great news as CPA exam scores trickle out, so maybe the following reader question can help you, too.

Adrienne,

Hi I’m looking for some advice regarding the Audit section. I have passed FAR, BEC, and Regulation thus far. However, I can’t wrap my brain around auditing.

The first time I took audit I got a 73 and I felt like I did not know any of the material. This was with three weeks of studying with Becker.

The second time I took audit, I got a 71 and I felt like I knew everything. This was with one month of studying with Becker and the computer Becker Final Review.

I just started working and I’m trying to determine the correct approach for studying audit again. I feel that it would be a waste to watch all of the Becker videos again unless I’m just absolutely confused on a section.

I plan on purchasing another study tool for more problems, etc, but I’m not sure which one to buy. I’m torn between the Gleim, Wiley, and Yaeger CRAM. The reasoning I have to purchase another tool is that I have a familiarity with the Becker questions already since I have tried them all twice.

Do you have any advice?

I absolutely have some advice, having seen a good chunk of our CPA review students go through this for a variety of reasons, none of which was related to the quality of the material or even the material itself.

Audit, of all the sections, can sometimes be the one that requires your brain to be the most bulimic (meaning learn it and barf it out at Prometric), mostly if you have no educational experience in that area and no affinity for the material covered. Auditors are – as we all know – unique, so it requires a different sort of thinking to truly thrive in that area.

You have the right idea. If you score between 70 – 74 (especially twice), you already have an excellent command of the information, so watching lectures you’ve already watched is a waste of time and won’t help you understand the concepts any better unless, as you said, you’re really lost on a particular part. You’re also doing the right thing by considering a supplement that will provide you with new problems, as memorization is not only a waste of time but also a detriment on exam day.

I have heard good things about Gleim’s MCQ, and some have had success using those alone. Since you already have the foundation of a full review, a cram is also a good option. But keep in mind crams involve videos and I don’t think it’s the basics you’re struggling with, it’s the tedious details. Crams usually cover the most heavily-tested material, which is probably not your issue at all.

Your best bet at this point will probably be to do as many practice questions as you can leading up to your exam retake. You have hopefully scheduled it soon while the information is still fresh in your mind.

I leave it to our readers who have undoubtedly been in a situation similar to yours to take it from here and tell you which they used to get over the hump as it were. Good luck!

Accounting News Roundup: Obama’s Plan Gets the Editorial Treatment; DC Shutdown 2.0?; Poker Players Get Prickly After Ponzi Accusations | 09.22.11

Caleb Newquist
September 22, 2011

Taxes, the Deficit and the Economy [NYT]
Republicans want to close the entire budget gap by slashing government spending. The president’s balanced approach protects vital services and growth. It includes $245 billion in payroll tax cuts next year for workers and businesses to encourage hiring, investment and spending. It also includes money to invest in infrastructure and to aid struggling states. It only starts reducing the budget deficit in 2013, when the economy should be stronger. As is his wont, the president is still leaving too many details for Congress to decide.

The Spend Now, Tax Later Jobs Bi=”http://online.wsj.com/article/SB10001424053111904194604576583151431651920.html?grcc=88888&mod=WSJ_hps_sections_opinion” target=”_blank”>WSJ]
According to the Sept. 19 White House fact sheet, “The President calls on [the super committee] to undertake comprehensive tax reform, and lays out five principles for it to follow: 1) lower tax rates; 2) cut wasteful loopholes and tax breaks; 3) reduce the deficit by $1.5 trillion; 4) boost job creation and growth; and 5) comport with the “Buffett Rule” that people making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay.” But the administration’s tax plan violates these principles.

IRS Gives Employers a Break on Payrolls [WSJ]
Businesses that have been improperly labeling their employees as independent contractors got a surprise break Wednesday: A new Internal Revenue Service program will allow those businesses to reclassify workers and make only a small payment to cover past payroll taxes. The downside for such companies? Regulators say they are going to be more vigilant about misclassification of workers in the future.

US government shutdown looms again [FT]
The US government has been put at risk of a possible October 1 shutdown because of a partisan fight on Capitol Hill over disaster relief for victims of hurricane Irene and Democratic opposition to proposed cuts to subsidies for fuel-efficient cars. At the centre of the debacle lies the ongoing struggle between conservative Republicans and Democrats over how much the government ought to be spending and how programmes are paid for. In a move that shows the challenge facing Republican leaders in the House of Representatives, who are seeking to appear more conciliatory following this summer’s tough debate over an increase in the debt ceiling, lawmakers voted 230-195 against a bill to keep the US government funded temporarily.

Poker Site Fires Back at U.S. [WSJ]
The issues at Full Tilt should be likened to that of a problematic bank, rather than an illegal investment scheme, according to Jeff Ifrah, an attorney who represents the company in related litigation and is the personal attorney of Chief Executive Raymond Bitar. “A Ponzi scheme requires an investment vehicle in order to receive a certain rate of high return,” Mr. Ifrah said. “None of those things happened here.” Instead, he said, “maybe it was mismanaged.”

Colbert: The Buffett Rule [TaxProf]

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