Going Concern

This Trick May Give CPA Candidates a Sneak Peek at Whether They Passed the Final Section of Their Exam

Adrienne Gonzalez
September 12, 2011

Maybe we shouldn’t publish this, lest TPTB catch on and close this loophole but as it’s soon to be CPA exam score release season, we figured it might be helpful to share this little trick to get your score early.

Note, word is it only works if you are on your last section and testing in a NASBA state. It doesn’t work all the time and will really only give you your score a day or so earlier than you would have actually received it from your state.

So if you’re waiting for a score now, don’t bother, it doesn’t work until the AICPA releases scores to NASBA, which is supposed to be within a 7-10 day period beginning the third week of September for this quarter.

To try it, follow these simple steps:

1. Go to the CPA exam section of NASBA’s website and select Ohio regardless of which state you are testing in.

2. Choose Apply Now under the “Re-applying for the Uniform CPA Examination” tab.

3. You will be asked if you have an Ohio jurisdiction ID. Choose no and it will ask you if you have a Social Security number. Choose yes.

4. Follow the rest of the prompts, plug in the information it asks you for and if you get the following message, congratulations, the loophole worked and you passed:

We are sorry. Our system shows that you have already passed all parts of the Uniform CPA Examination. If you have questions, please call your Coordinator at the number given below. Please call the number below.

800-CPA-EXAM
615-880-4250

Some have stated that the loophole also works if you’ve failed. If you get in and see the exam section you are checking on not grayed out, that means it’s allowing you to get a new NTS which obviously means you did not pass.

Bottom line: maybe it works, maybe it doesn’t. If you’re driving yourself insane refreshing your score page waiting for an answer, maybe it wouldn’t hurt to try at the end of the month but you’re really only getting the news a few hours earlier than you would have if you just waited.

Accounting News Roundup: SarbOx’s Clawbacks Disappoint;Tax Credits Boost Video Game Industry; Ex-E&Y Partner’s Conviction Sticks | 09.12.11

Caleb Newquist
September 12, 2011

Clawbacks Without Claws [NYT]
Under the Sarbanes-Oxley Act of 2002, the Securities and Exchange Commission was encouraged to hit executives where it hurts — in the wallet — if they certified financial results that turned out to be, in a word, bogus. SarbOx was supposed to keep managers honest. They would have to hand back incentive pay like bonuses, even if they didn’t fudge the accounts themselves. That, anyway, was the idea.

At 9/11 ceremonies, tearful storytelling and still-vivid memories [WaPo]
The anniversary of the attacks — the first since the killing in May of Osama bin Laden — unfolded through tearful storytelling and still-vivid memories. Political and religious leaders urged the nation to recall the spirit of common purpose that defined that day and its immediate aftermath but which has faded amid the acrimonious debate over America’s response to the attacks and the effect that response has had on the nation’s politics, finances and values.

How to Make Business Want to Invest Again [NYT]
According to a 2008 study by the Organization for Economic Cooperation and Development, “Corporate taxes are found to be most harmful for growth.” Tax reform that reduced the burden on capital income and shifted it toward consumption would improve prospects for long-run growth and, in so doing, encourage greater investment today. Yet it would be overly optimistic to think that any single public policy, by itself, could lead to the kind of robust investment spending seen in previous recoveries. Myriad government actions influence the expected future profitability of capital. These include not only policies concerning taxation but also those concerning trade and regulation.

Capital gains tax rates benefiting wealthy feed growing gap between rich and poor [WaPo]
For the very richest Americans, low tax rates on capital gains are better than any Christmas gift. As a result of a pair of rate cuts, first under President Bill Clinton and then under Bush, most of the richest Americans pay lower overall tax rates than middle-class Americans do. And this is one reason the gap between the wealthy and the rest of the country is widening dramatically.

Rich Tax Breaks Bolster Makers of Video Games [NYT]
The United States government offers tax incentives to companies pursuing medical breakthroughs, urban redevelopment and alternatives to fossil fuels. It also provides tax breaks for a company whose hit video game this year was the gory Dead Space 2, which challenges players to advance through an apocalyptic battlefield by killing space zombies. Those tax incentives — a collection of deductions, write-offs and credits mostly devised for other industries in other eras — now make video game production one of the most highly subsidized businesses in the United States, says Calvin H. Johnson, who has worked at the Treasury Department and is now a tax professor at the University of Texas at Austin.

Westchester accountant pleads to tax charge in NYC [AP]
A Westchester County accountant has pleaded guilty to securities fraud, admitting cheating a dozen investors of more than $2 million. Laurence Brown entered the plea in federal court in Manhattan on Thursday. The 64-year-old Katonah, N.Y., resident faces up to 70 years in prison at a Nov. 17 sentencing. Prosecutors said Brown and a business partner carried out the fraud from 2008 to June 2010 by promising that investors’ money would be spent to upgrade a natural gas pipeline in Tennessee.

Ex-E&Y partner’s insider trading conviction upheld [Reuters]
A U.S. court upheld an insider trading conviction of a former partner at accounting firm Ernst & Young LLP, even though the trial judge failed to instruct jurors on a valid defense he had to securities fraud charges. The 2nd U.S. Circuit Court of Appeals in New York on Friday said the defendant James Gansman did not deserve a new trial because he was not prejudiced by the slightly different jury charge given by his trial judge. It also turned aside several other issues raised in the appeal.

‘We Need More Dogs. We Don’t Need No Cats’ [TaxProf]
I have no idea why the TaxProf posted this but I’m glad he did.

Audit
PCAOB

Audit Partners Are About to Get Famous

Caleb Newquist
September 10, 2011

But probably not in ways they would prefer:

In a recently updated standard-setting agenda, PCAOB Chief Auditor Marty Baumann says the board is working on the proposal to address concerns about audit transparency. The board published a concept release in July 2009 that asked for feedback on whether the engagement partner should be required to sign the audit report. Based on feedback to that release and subsequent discussions with the board’s advisory groups, the PCAOB is preparing a new requirement for audit firms to say in their audit reports which engagement partner at the firm supervised the audit and who from outside the audit firm participated in the audit.

PCAOB Plans Rulemaking on Identifying Auditors [CW]

Deloitte
SEC

Deloitte All of a Sudden Caught in an Awkward Three-way with SEC, Chinese Regulators

Caleb Newquist
September 10, 2011

“This is one of the biggest battlegrounds in the transnational regulation of accounting firms,” said Paul Gillis, a visiting professor of accounting at Peking University’s Guanghua School of Management. “Deloitte is between a rock and a hard place. This is a major escalation.” [WSJ, Earlier]

The Serious Questions

Clearly Avoiding the “Sexy” Route, Young CPA Needs Help with Ideas for “Accounting Police” Halloween Costume

Caleb Newquist
September 9, 2011

Now that it’s September, people start getting anxious about their Halloween costumes. Regardless of the two months of football, a World Series, and God knows how many GOP Presidential candidate debates, many will agonize over just what outfit they will wear for approximately 2-3 hours, knowing full well that vomit could end up on it. These days Halloween costumes, for better or worse, focus on the “sexy.” The sexy Little Bo Peep. The sexy priest. This year, I’m really hoping to see the sexy Angry Birds. Anyway, a reader is stumped on how best to approach a recent light bulb moment she had for this year’s outfit:

Hi Caleb,

I am hoping some creative CPAs who read your blog can help me out. A month ago, during one of my trainings, a partner came in and spoke to us about how we should not be seen by our clients as the “accounting police.” Immediately, a lightbulb went off in my head and I thought “HALLOWEEN COSTUME!”, but I have no idea how to pull this off so people will understand it! Any ideas out there?

So we have “accounting” and “police.” Not exactly a lot to work with here but we’ll throw a few ideas out there to get things rolling:

1. Ask four of your friends to join you and go as the letters P-C-A-O-B. Of course, you won’t actually do anything.

2. Simply dress up as police officer and walk around the whole night counting things, not unlike The Count (in fact, I suggest you do the laugh). “What the hell are you supposed to be?” some dope will say. You’ll respond, “A counting police.”

3. Get another idea.

Your suggestions are now welcome.

Leaving Your Accounting Firm? Here’s Your To-Do List Before Your Last Day

Daniel Braddock
September 9, 2011

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

Happy Friday, folks. Even though Summer Fridays are a thing of the past, we have much to be thankful for. College football on the tube. Ya’ll are getting laid, apparently. And we have some great questions coming into GC.com, like this one here:

I’m ready to leave the Big 4 for industry but want to make sure I don’t m��make the jump. Is there a GC cheat sheet on things to take care of (and take with you) during the 2 week lame duck period after I give my notice? (e.g. contact info, CPE profile, etc.)

I’d love to hear GC readers’ thoughts.

Thanks.

Caleb and I scratched our brains on this one and realized that no – we’ve never really covered this topic. I know some if not all offices allow employees to take care of loose ends during the two week downtime but wouldn’t you rather be prepared to turn everything over on the same day? What I want to do here is cover the basics from the angle that you want to be able to put in your notice and walk out the door the same way. You fill in the details in the comments section below, as I’m sure I’ve missed some of the finer points. Share your horror stories and little victories alike.

1. A. Back up your personal computer files – Technically your work computer is reserved solely for work files and functions but for many of you it is a secondary (even primary) personal computer. I’ve seen laptops turned in with the likes of iTunes libraries, photo albums, tax returns and personal financial tracking files just hanging around in plain sight. You don’t know when HR or your partner will demand to seize your computer (I’ve even seen partners’ commuters seized with no access granted to the files for weeks), so make sure you back everything up onto your own USB drive.

1. B. Delete your personal computer files – Once everything is backed up (make sure the files open on another computer), delete everything personal that’s on the computer. Don’t forget to empty the trash can, too.

2. Get a new wireless plan – If you’re wielding a firm-purchased phone, you’ll be needing to turn that over as well. Take the initiative to get a new phone and have the contacts from your current (firm) phone transferred to your new (personal) device. Every carrier is different, but some will let you buy the new phone without having to activate it immediately, thus giving you the option to walk in there later (presumably, after you’ve dropped the bomb on leadership) and transfer the number over. If you prefer a clean slate and want a new number, so be it.

Also, remember to delete your recent call log, Blackberry Messenger conversations, texting history, sensitive contacts (*cough* your recruiter *cough*), etc. Granted if they really want go through an archive they will, but that really only happens if suspicious/illegal activity is suspected.

3. Organize your client work – This can be a very mundane and verbose task however necessary it may be. The goal here is to make things as easy as possible for your colleagues. Use separate USB drives for different managers and partners. Give everyone an update “open items” list for your active engagements. Make it so organized that a new person to the team would able to seamlessly come on board, read your notes, and pick up where you left off.

Chances are good that you like your co-workers, as one of the most common hesitations staff members have when leaving public accounting is, “I would feel bad leaving my co-workers swamped with my work.” Here’s the deal: they survive. I mean, think about it – how many times has a coworker left before you? Sure, the first few days can be a slow go, but they’re out-of-sight-and-mind within a week. Work is divvied up and completed.

4. Link in with people – I covered this back in June.

5. Mentally prepare yourself – Accounting firms are hit the hardest with employee turnover around this time of year so you need to expect your employer to put up a bit of a fight. Better clients, better work life balance, rotation to another group, verbal praise and affection. (Where was that love when you were working 7:30a to 11:30p during busy season?) You need to prepare for the pressure to be there to turn down your other offer on the spot. There’s nothing wrong with hearing out what your firm can put on the table, but you are under no obligation to turn around and be back on Team PwC or Kamp KPMG during the same meeting you put in your resignation.

Also, remember: you can always go back. Not sometimes. Not usually. ALWAYS. The only thing more valuable to a public accounting firm than its employees are employees that return with private experience.

6. Copy down contact information – There are people you will want to stay in contact with as your careers progress. This should be a no-brainer.

7. One last thing – There’s that colleague with whom you have some tension. Maybe they’re seeing someone, maybe they’re not. Screw the coulda-shoulda-woulda’s and say something before you leave. Be bold.

Deloitte
SEC

SEC Not Amused By Deloitte’s Failure to Produce Documents Related to Company That Held Their Audit Workpapers Hostage

Caleb Newquist
September 9, 2011

Remember Longtop Financial Technologies? Deloitte resigned as auditors of the Chinese company back in May after LFT took some actions that were, shall we say, unusual for an audit client. Among them, “interference by certain members of Longtop management in DTT’s audit process; and […] the unlawful detention of DTT’s audit files.” And there may be some financial statement fraud going on, to boot. What’s even slightly weirder is Deloitte’s resignt to Longtop’s Audit Committee that laid out the specifics:

[A]s a result of intervention by the Company’s officials including the Chief Operating Officer, the confirmation process was stopped amid serious and troubling new developments including: calls to banks by the Company asserting that Deloitte was not their auditor; seizure by the Company’s staff of second round bank confirmation documentation on bank premises; threats to stop our staff leaving the Company premises unless they allowed the Company to retain our audit files then on the premises; and then seizure by the Company of certain of our working papers.

Right. The auditors-almost-taken-hostage situation. Quite a doozy, this one. Based on the history between Deloitte and Longtop, one would think that Green Dot would jump at any chance to exact a little revenge on these shady bastards. NOPE!

From the crack squad at the SEC:

The Securities and Exchange Commission today filed a subpoena enforcement action against Deloitte Touche Tohmatsu CPA Ltd. for failing to produce documents related to the SEC’s investigation into possible fraud by the Shanghai-based public accounting firm’s longtime client Longtop Financial Technologies Limited.

According to the SEC’s application and supporting papers filed in U.S. District Court for the District of Columbia, the SEC issued a subpoena on May 27, 2011, and D&T Shanghai was required to produce documents by July 8, 2011. Although D&T Shanghai is in possession of vast amounts of documents responsive to the subpoena, it has not produced any documents to the SEC to date. As a result, the Commission is unable to gain access to information that is critical to an investigation that has been authorized for the protection of public investors.

“Compliance with an SEC subpoena is not an option, it is a legal obligation,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “The ability of the SEC to conduct swift and thorough investigations requires that subpoena recipients promptly comply with that legal obligation. Subpoena recipients who refuse to comply should expect serious legal consequences.”

Maybe the email/hand-written letter sent by carrier pigeon (whatever method of communication the Commission is using these days) got lost OR maybe no one at Deloitte Shanghai was in the translating mood that day but it seems slightly strange that Deloitte would just blow this off especially since Longtop screwed them 70 ways to Sunday. Of course these documents could show that Deloitte was really a bunch of pansies and we’re letting LFT run the show until the gross negligence got to the point that they simply couldn’t ignore it anymore. It’s anybody’s guess, really.

UPDATE: The Journal reports that Deloitte claims to be “caught in the middle of conflicting demands by two government regulators,” which could be seen as extremely convenient.

SEC Files Subpoena Enforcement Action Against Deloitte & Touche in Shanghai [SEC]
Court Filing [SEC]
Also see: S.E.C. Asks Court to Force a Release of Papers From China [NYT]

CPA Exam

Is the AICPA Allowing Duplicate Questions to Slip into the CPA Exam?

Adrienne Gonzalez
September 9, 2011

According to one CPAnet forum user, they are. Here’s the note the candidate wrote to the AICPA:

I recently took FAR and noticed I got the same question more than once (exact same question and answer choices) in different testlets. The same instance happened in prior exams last quarter as well, more noticeably in the new content areas outlined in the CSO’s (i.e. duplicated IFRS questions/answers). According to other candidates who’ve taken the exam this year, they have been getting duplicate questions also, sometimes several duplicated questions. Are these duplicates graded and weighted equally, or is one thrown out since it’s a duplicate? It doesn’t seem fair if they are both graded and weighted if you get the question wrong, but could be great if you got them right (essentially getting a free pass on the repeated question since you knew the answer). If both are graded it could ‘jip’ the candidate out of a passing score if they were close to 75 because an alternate question wasn’t asked in place of the duplicate. I’d appreciate any guidance you can give me and perhaps post this situation in the FAQ area since I know multiple candidates have had the same anomaly during their exams.

And here is the AICPA’s response:

You stated that you received the same question more than once. Similar questions may be in the test; however, they are not identical. We have special coding and technology controls in place to ensure that questions are not repeated within a testlet. [Off topic bit about pretest questions that has nothing to do with this candidate’s issue removed]

The candidate went on to take issue with the AICPA’s use of “testlet,” insisting that repeat questions did not appear within the same testlet but within the same exam.

While the AICPA has agreed to look into this candidate’s issue, unfortunately there is no way for him (or her) to review his exam and confirm his suspicions. I’m assuming here that the candidate has not yet received his score for FAR, and even if he did, he would have two options: score and review appeal.

A score review is a waste of money that almost never results in a changed score, and involves an automated process that essentially confirms exam quality control procedures. Since the advent of the computerized exam in 2004, less than 1 percent of score reviews have changed a failing score in a candidate’s favor.

The second option, an appeal, could be completely useless or incredibly insightful, depending on how the candidate answered the questions he feels were duplicates. An appeal is a slightly more involved process but would allow the candidate to view the multiple choice test questions or objective simulation problems that he answered incorrectly together with his responses. Appeals are not available in all jurisdictions.

For all the time and effort the AICPA puts into administering the CPA exam, I’m going to guess that the candidate mistakenly believed very (read: VERY) similar questions to be exactly the same. Anyone studying for the exam knows that just one word can change a question completely.

Accounting News Roundup: Obama’s Speech; Thankful Fraudsters; Sandbags for the Email Flood | 09.09.11

Caleb Newquist
September 9, 2011

Obama’s Bid to Spur Growth [WSJ]
President Barack Obama called on Congress Thursday to pass a $447 billion package of spending initiatives and tax cuts to boost economic growth, in what might be the White House’s last chance to revive its political fortunes before the 2012 campaign kicks into high gear. More than half of Mr. Obama’s plan consists of payroll-tax cuts for employees and employers—an idea the White House hopes will appeal enough to Republican lawmakers—and is the policy that could have the best chance to pass.

Small Business Is Focus of Tax Cuts [WSJ]
[W]hile the payroll-tax cuts figure to appeal to Republican lawmakers, and House Majority Leader Eric Cantor spoke favorably about the idea Thursday, the cuts face some resistance. Many Republicans and even some small-business advocates are opposed to more temporary tax breaks. Some liberal Democrats are nervous about reducing the taxes that are paid to support Social Security, even though the administration promises its plan would have no impact on the program.

New Regulators for Investment Advisers Proposed in U.S. House [Bloomberg]
One or more self-regulatory organizations would oversee U.S.-registered retail investment advisers under a draft bill by Representative Spencer Bachus, the chairman of the House Financial Services Committee. A Financial Services subcommittee is scheduled to hold a Sept. 13 hearing on investment adviser oversight. The meeting follows a Securities and Exchange Commission report suggesting a self-regulatory organization as one option for fixing the SEC’s inability to inspect investment advisers at a sufficient pace. Critics of the SEC have blamed the agency for failing to uncover investment frauds including the Ponzi scheme of Bernard Madoff.

Settlement Said to Be Near for Fannie and Freddie [DealBook]
Regulators are nearing a settlement with Fannie Mae and Freddie Mac over whether the mortgage finance giants adequately disclosed their exposure to risky subprime loans, bringing to a close a three-year investigation. The proposed agreement with the Securities and Exchange Commission, under the terms being discussed, would include no monetary penalty or admission of fraud, according to several people briefed on the case. But a settlement would represent the most significant acknowledgement yet by the mortgage companies that they played a central role in the housing boom and bust.

Why White-Collar Criminals Should Thank President Obama and Congressional Republicans [WCF]
Reports a reformed white-collar criminal.

Friday is D-Day to voluntarily tell the IRS about your offshore assets [Reuters]
A friendly reminder.

U.S. Sees ‘Credible’ 9/11 Terror Threat [WSJ]
The U.S. has received specific and “credible” intelligence that al Qaeda militants in Pakistan may be pursuing a plot to carry out car or truck bombings in Washington and New York City, timed with the 10th anniversary of the Sept. 11 attacks, officials said. U.S. officials said they received the intelligence within the last 48 hours, and that they are taking it seriously because of its proximity to the 9/11 anniversary. As one sign of the importance with which it is being handled, President Barack Obama was briefed on the threat multiple times on Thursday, and directed U.S. intelligence officials to “take all necessary steps to ensure vigilance,” a White House official said.

5 Easy Steps to Stanch the E-Mail Flood [NYT]
Step 1: Admit that you have a problem.

Rick Santelli to Tom Friedman: ‘You’re idiotic’ [TDC]
The discourse remains civil.

Rumors

Grant Thornton Employee Curious If Fellow Accountants Are Sleeping with Partners, Propositioning Colleagues

Caleb Newquist
September 8, 2011

Let’s start off with a little anecdote:

I work at GT and recently a male associate began dating a newly named female partner. The associate has since put in their two week notice, most suspect due to his newfound sugar momma who’s divorced with 3 kids, or to give him more time with his other girl. It was recently revealed he not only likes older ladies but hit on a guy at national training offering up “favors.”

Apparently, at the training, the associate repeatedly asked another guy to go to his room with him during a game of pool. Since he was making no progress here, he flat out told his fellow pool player what acts he would like to provide.

Well! That’s quite a busy accountant. J��rying to sleep up the ladder and offering up “favors” that may or may not include a pool cue and/or an 8-ball gag. Sexual activity aside, our tipster is curious as to just how…curious some of you are:

I was wondering if you could start a thread/story about office romances and open it up for comments to see just how alternative some accountants/cpas are. I wonder if this sort of thing is normal, or if society is just changing quicker than I am noticing.

Wait, are you asking if sex is normal? Or if accountants having sex with each other is normal? OR if accountants swinging both ways or engaging in other adventurous activity is normal? I’ll save you the trouble and answer all these questions: “Duh,” “HELL YES,” and “It depends.”

It’s been widely discussed around these parts that a situation that includes: accountants, working long hours, after-work booze will inevitably lead to some accountant sex. Whether you care to engage in sex with another accountant is largely a question of convenience and/or if you’re really interested in someone who’s also an accountant.

As for adventurous activity, you probably all remember Annabel McClellan, a former Deloitte employee accused of insider trading, who prior to her legal troubles, was developing a mobile app called “My Nookie” that basically amounted to Facebook for swingers. There was also the blind item we ran earlier this year about a partner whose fondness of exotic hookers landed him in divorce court. Oh! And then there was the PwC partner in Houston who allegedly made a move on an associate at a happy hour. Can’t forget that one.

As for juggling a divorcée partner with another girl and then offering BJs to a colleague at national training – it’s really hard to say how widespread this type of behavior is. Most accountants barely have enough game (or time) to get one person in the sack, let alone juggle two and then try to explore their bi-curiosity. Plus, are you aware of any of your co-workers that are bisexual or bi-curious? From the phrasing of your question, I’m guessing no.

Let’s not forget that you’re working in a very conservative industry and those in the business that do like a little swing party or simply swing both ways would probably prefer to keep those activities on the DL. Luckily for all of you, GC is the type of place where you can speak about the all the fun you’re having freely.

So, then. If you’re the “alternative” type, as our tipster asks, please elaborate. Do you keep it purely outside the office? Do you look for similarly interested accountants at your firm? Are you open about it or is the culture at your firm a little behind the times? If you prefer not to comment, email us your story (with details!) and we’ll handle the rest.

News

Competitive Poaching Isn’t Just for Big 4 Firms; Dixon Hughes Goodman Picks Up an Aronson Senior Partner

Caleb Newquist
September 8, 2011

We’ve chronicled many cases of poaching in these pages, focusing mainly on PwC’s harvest of KPMG partners. You may have thought that this type of competition occurred between the top firms with the occasional outlier of an obscure firm catching a Big 4 fish. Not so! Accounting Today reports that a super-regional [?] firm also doesn’t mind mixing it up with its smaller rivals:

Lisa J. Cines, CPA, has joined super-regional firm Dixon Hughes Goodman LLP as managing partner of the firm’s Rockville office. Previously, Cines had spent almost 30 years with Top 100 Firm Aronson, including serving as managing officer from 2001 to 2010. Most recently she was partner-in-charge of business and corporate development.

Thirty years at a firm including nine years as a managing officer isn’t anything to sneeze at, so this jump from Rockville, MD-based Aronson – a firm with approximately $56 million in revenues – to DHG who has roughly $280 in revenues (both numbers based on the most recent stats) this late in one’s career makes us wonder. Perhaps you can read between the lines for us:

“Dixon Hughes Goodman represents the future of accounting – a firm with a commitment to market niches and depth within its areas of service,” she said. “I look forward to this new phase of my career with such a dynamic organization.”

Maybe pinstripes are a little too prevalent at Aronson? That’s the theory we’re going with at the moment. If you’ve got other ideas, let us know.

Cines Joins Dixon Hughes Goodman [AT]

KPMG

KPMG Can’t Get Rid of the Countrywide Rash

Caleb Newquist
September 8, 2011

As you probably remember, Countrywide Financial once owned a lot of shitty mortgages. This wasn’t clear to many of the company’s investors so when the things turned sour, lots of those investors lost boatloads of money and then Bank of America came in to pick up the scraps. KPMG was the auditor of Countrywide and the shareholders sued both companies because, gosh, that’s basically what happens when a bunch of money is lost for no good reason and you had a front row seat for the action. Accordingly, the two firms settled with CTW shareholders last year for $624 million. KPMG, for its part, chipped in $24 million. That’s rumored to be in the ballpark of what John Veihmeyer spends every year on Notre Dame gear, so the firm was probably thinking it got off pretty easy. Unfortunately, things are just getting started since other countries hadn’t had a chance to jump into the mix.

From Zero Hedge:

Norway’s Government Pension Fund, which is another name for its Sovereign Wealth Fund, has just announced it is suing Bank of America for mortgage fraud. Not only that but it is also going after Countrywide, obviously, but far more importantly, is also suing KPGM [sic], the auditor on the Countrywide transaction, and, drumroll, ole’ Agent Orange himself [That’s former Countrywide CEO Angelo Mozilo for those of you not up to speed].

So what, you say? Norway is just some Scandinavian wasteland with a lot of blondes and the occasional psychopath? Not the point!

[J]ust like the US lawsuit spigot opened ever so slowly at first, it is now gushing, and is absolutely certain that every company (ahem insolvent German banks) that ever bought a mortgage from Countrywide, Merrill and Bank of America will serve the local branch of the bank with a summons over the next month.

In other words, this little breakout may turn into a full-fledged epidemic.

Bank Of America’s Legal Woes Go Global After Norway’s Sovereign Wealth Fund Sues For Mortgage Fraud [ZH]
Also see:
The Fund suing large bank in the U.S. for fraud [DN.NO (Beware, the translation is brutal)]

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