Going Concern

Analysis: If Your Accounting Firm Was a College Football Team

Daniel Braddock
September 7, 2011

Pack up your white pants and seersucker suits – Labor Day has come and gone which means only one (actually important) thing: college football is back. You NFL loving freaks can have your Sundays of Hollywood-produced sport; I believe the good Lord created Sundays solely as a recovery day for college football fans. Well, for that and drunk brunches, of course.

It is no secret that good ol’ Caleb is a vehement Husker fan,he only reason he’s given me the green light to churn out a post comparing your respective accounting firms to the likes of fried-butter-eating college football fanatics.

I can only pray that my effort will inspire the semi-regular infusion of sport, accounting, and bantering commenters around here, so I give you the “Accounting Firms If They Were A College Football Program” top nine rankings. Grab your body paint and come along for the tailgate.

Firm: Deloitte
Team: Oklahoma Sooners
First Take: Both are always in title contention but seem to shit the bed come Pay Day. Deloitte raises are on par with the Sooners’ BCS bowl record under Coach Bob Stoops (2-8).
Keep it in the Family: During Hurricane Irene, Deloitte encouraged employees to bunk up together, obviously a practice long in use in Oklahoma.
Sputter, Sputter: Sooner alum Blake Griffin jumped over a KIA at last year’s NBA slam dunk contest. A certain Deloitte consultant also prefers a certain overused and washed out mode of transportation…

Firm: PwC
Team: Oregon Ducks
First Take: They’re in the news for legit (raises, hurry-up offense) and controversial (fireside chats, BCS infractions) more often than you’d like. Also, their team colors are atrocious.
Hotties Everywhere: PDubs has Ireland. The Ducks have these ladies.
Just Pick One Already: PwC doesn’t churn out new logo/uniform re-designs as often as the Ducks but both cause a stir when they do. Whether the changes for either team result in better winnings has yet to be seen.

Firm: Ernst & Young
Team: Ohio State Buckeyes
First Take: You hate going up against them, but even if they do win, you’re thankful you’re not affiliated with their alumni.
Compliance? What Compliance? Former coach Jim Tressell thought it best to let a tattoos-for-autographs program run its course. E&Y is apparently doing the same with this minor Sino-Forest sitch.
Questionable Mascots: The poisonous nuts of the Midwest are no match for the Black & Yellow guy.

Firm: KPMG
Team: Notre Dame Fighting Irish
First Take: Still talking about that big win in 1983. An exodus of leadership. The general public has gone from loathing them to just feeling bad for them. Give it up, you’re no longer the powerhouse you (thought you) once were.
Johnny Be Good. The Chairman is also a proud ND alum. Need we say more?
Empty Promises: We’re going to win it all! We’re going to hire thousands!

Firm: Grant Thornton
Team: Northwestern Wildcats
First Take: As hard you they try to be tough, they’re still nerds dressed in purple.
Off-the-Mark Advertising: GT – the lack of aligned teeth took some bite out of your full-page WSJ ad. And Dan Persa for Heisman – really? Your mom for Heisman.

Firm: Rothstein Kass
Team: Boise State Broncos
First Take: First it was a feel-good story but their continued rise through the ranks is pissing off the traditionalists.
The-Anybody-But-The-Other-Guy- Vote: Whether it was Boise’s ridiculously fantastic win over Oklahoma years ago in the Fiesta Bowl or RK’s dominance in the Going Concern March Madness pool, oftentimes their fan support stemmed from us just hating their competition more.

Firm: McGladrey
Team: Missouri Tigers
Only Take: You’re supposed to be on this list; we know you belong on this list; we don’t know what you’ve done to deserve being on this list.

Firm: BDO
Team: Penn State Nittany Lions
First Take: Your parents would have been pleased if you went there but better options awaited you.
Race to the Retirement Home: JoePa is 84 and coaching from the press box. Rumor has it Jack Weisbaum calls the shots from his personal tanning bed.

Firm: CBIZ/Mayer Hoffman McCann
Team: University Buffalo Bulls
Only Take: You think you’re a big deal, but really everyone uses you as an exhibition punching bag.

How’d we do? What team best parodies your firm? Share it in the comments below.

Study: Progressive Taxation More Likely to Put a Smile on Your Face

Caleb Newquist
September 7, 2011

[R]esearchers analyzed the relationship between tax progressivity and personal well-being in 54 nations surveyed by the Gallup Organization in 2007—a total of 59,634 respondents. Well-being was expressed in people’s assessments of their overall life quality, from “worst” to “best possible life,” on a scale of 1 to 10; and in whether they enjoyed positive daily experiences (such as smiling, being treated with respect, and eating good food) or suffered negative ones, including sadness, worry, and shame. Finally, the analysis looked at the participants’ satisfaction with their nation’s public goods, from schools to clean air. […] On average, residents of the nations with the most progressive taxation evaluated their own lives as closer to “the best possible.” They also reported having more satisfying experiences and fewer discomfiting ones than respondents living in nations with less progressive taxes. [via TaxProf]

Uncategorized

Brand New CPA Has a Serious Dilemma

Caleb Newquist
September 7, 2011

From the mailbag:

Does GC have any suggestions of where to get a frame for my brand-new CPA wall certificate? I searched the site, but if you’ve covered this before I must have missed it.

I appreciate the feedback! Thanks!

Perhaps our reader is referring to this post we did back in July where the reader was impatiently waiting for his certificates so he could decorate his cubicle walls.

Obviously we have a completely different issue here but it’s no less important. So let’s throw a few ideas out there:

1. Make like a Son of Nazareth and build the thing yourself.

2. Hand the certificate over to your young son/daughter/niece/nephew along with a box of Crayolas and hope for the best.

3. Two words: Dumpster diving.

4. Your ideas.

Confirmed: New PwC Senior Associates Can Look Forward to Fireside Chats with Partners and a Pacific Ocean Backdrop

Caleb Newquist
September 7, 2011

Last month we reported some details about the Milestone Award for PwC’s new class of Senior Associates. At the time we weren’t able to definitively confirm the details but we’re happy to report now that yes, your four day adventure will be happening at Terranea Resort and YES, there will be fireside chats and other social activities to keep you occupied.

“Fitness activities” may not appeal to everyone but with any luck the “signature adventure” won’t involve any physical exertion. ANYWAY, enjoy your getaway, new PwC SAs! Be sure to take lots of pictures and share them with us.

Accounting News Roundup: Changes Coming at Yahoo, BofA; The Same Ol’ Tax Relief; Begging Saves Ex-Duane Reade CFO | 09.07.11

Caleb Newquist
September 7, 2011

Yahoo Ousts Bartz as CEO [WSJ]
Independent directors did a study of Yahoo’s assets and performance in the past two weeks and concluded the company wasn’t performing as well as it could, said a person familiar with the matter. The review came after nearly a year of board discussions about Yahoo’s flagging performance, and the independent directors ultimately decided a change at the top was the only way to turn things around, according to two people familiar with the matter. One of these people said Yahoo is open to selling itself to the right bidder. The board named Chief Financial Officer Tim Morsehile it searches for a replacement for Ms. Bartz.

BofA Shakes Up Senior Ranks [WSJ]
The bank installed David Darnell and Thomas Montag as co-chief operating officers. It also ousted wealth-management head Sallie Krawcheck and consumer banking head Joe Price, and removed Barbara Desoer, who has been running the bank’s mortgage business, from Mr. Moynihan’s list of direct reports.

Carlyle files for $100m initial public offering [FT]
Carlyle Group has formally fired the starting gun on its plans to go public, with the private equity group filing registration documents for an initial public offering as early as the first half of 2012. The move follows the listing of competitor Apollo Global on the New York Stock Exchange in March, and will test the willingness of investors to back a sector that has a poor stock market record.

Tax Code Has Upside-Down Rewards for Good Behavior [Bloomberg]
If the committee wants to bring about constructive tax reform that is a bit less ambitious, however, here’s an idea: Change the tax breaks that are meant to encourage people to do good things — such as save for retirement, buy real estate, get health insurance or give to charity — into flat-rate credits that aren’t affected by the taxpayer’s income. After all, it makes no sense, in terms of economic efficiency or simple fairness, to have the size of such incentives depend on earnings.

Old Tax Relief Seen as Anchor in Obama Plan [NYT]
The centerpiece of the job creation package that President Obama plans to announce on Thursday — payroll tax relief for workers and perhaps their employers — is neither his first policy choice nor that of many economists. But it is the one that they figure has the best chance of getting Republicans’ support. Mr. Obama has signaled that he will propose to extend for another year a reduction of two percentage points in the 6.2 percent Social Security payroll tax that employees pay, which means about $1,000 more for the average household. And he is considering a proposal to expand the tax relief to employers’ share.

A Banker Explains Why Some Small Businesses Have Trouble Getting Credit [You’re the Boss/NYT]
In case you’ve been wondering.

Ex-Duane Reade CFO Tennant Sentenced to Probation in Securities-Fraud Case [Bloomberg]
“Please don’t send me to jail,” Tennant said today to U.S. District Judge Deborah Batts, who granted his request at a hearing in federal court in Manhattan. Tennant told Batts he had cooperated in the investigation and suffered from the “long, painful, humbling experience” of the prosecution.

Deloitte Names Elizabeth Krentzman Asset Management Services U.S. Mutual Fund Leader [Deloitte]
This newly-created position is another strategic step in the three-year expansion of Deloitte’s asset management services practice led by asset management services leader Cary Stier.

News

Is Groupon Getting Cold Feet?

Caleb Newquist
September 7, 2011

Maybe! The Wall St. Journal reports that the “site isn’t cancelling its initial public offering […] but is reassessing the timing for an IPO on a week by week basis,” because some people have gotten spooked by this big, scary economy. Okay, things are actually pretty frightening out there but Bloomberg’s sources say that the company also “needs time to address regulators’ questions, including possible revisions to a controversial accounting method used in its filing.” But all this – or insolvency, for that matter – isn’t any cause for concern since this just like a couple postponing a wedding. They just need more time. [WSJ, Bloomberg]

Somewhere in Mitt Romney’s 59-point Economic Plan, There’s Something About Tax Reform

Caleb Newquist
September 6, 2011

That’s right boys and girls. Our economy is such a jumbled clusterfuck that Presidential Ken Doll Mitt Romney and his team had to lay out 59 specific proposals to get this thing turned around. In a USA Today op-ed, Mittens laid out a little preview of this plan and it includes – YEP! – cutting taxes and ultimately overhauling the tax code:

Marginal income tax rates and tax rates on savings and investment must be kept low. Further, taxes on interest, dividends and capital gains for middle-income taxpayers should be eliminated. Our corporate tax rate is among the world’s highest. It leaves U.S. firms at a competitive disadvantage and induces them to park their profits abroad, benefiting the rest of the world at our expense. I will fix these problems with permanent solutions. Ultimately, I will press for a total overhaul of our overly complex and inefficient system of taxation.

Romney seems to be following Jon Huntsman’s lead but for fortunately for Mittens, Huntmsan’s plan wasn’t bulleted and no one heard the speech.

Romney: My plan to turn around the U.S. economy [UST]

TaxSlayer.com Is the New Corporate Sponsor of The Gator Bowl

Caleb Newquist
September 6, 2011

You may have heard that the college football season over the weekend, which means tax professionals’ mandatory Saturdays will be a little more unbearable and your football crazed significant other will not be seen nor heard from (with the exception of deafening bodily functions) until January.

January, of course, is bowl season when the best teams in the land compete for bragging rights as champions of various BCS bowls. It also allows a few dozen mediocre teams to play equally mediocre teams for no particular reason. One of these bowls is the Gator Bowl. Sure it might be the 6th oldest bowl and sure, it has been played on New Year’s Day since 1996 but that doesn’t make it any more meaningful. It will feature teams from the SEC and The Big 10 that will be a threat for their respective conference championships for 2 to 3 weeks. In short, the Gator Bowl has a long tradition of fielding third-rate football teams.

So it makes perfect sense for TaxSlayer.com, tax prep company with a long tradition of third-rate service, to sponsor the Gator Bowl:

The Evans, Ga.-based company announced a multi-year partnership Thursday with the Gator Bowl Association and the fact that it was named a new “title sponsor” of the bowl, starting with the 2012 Gator Bowl in Jacksonville, Fla., on Jan. 2.[…] TaxSlayer may not have the same name recognition as TurboTax or TaxAct, but it comes out of a tax prep business that dates back 40 years.

And in case you’re not convinced that TaxSlayer.com isn’t doing everything they can to get their name out there, they also sponsor Dale Earnhardt, Jr., which will make them a household name in no time. In the South, anyway.

[via AT]

That Tax Shelter Seemed Like a Really Good Idea at the Time

Joe Kristan
September 6, 2011

It helps to be really smart if you want to talk yourself into something really stupid. That’s how a lot of bad tax shelters happen. Let’s call this one the “Dumb-Ass Deduction Distressed Asset-Debt” (“DAD^2” or “DAD-squared”) shelter.

The ingredients:
• A bunch of near-worthless consumer receivables from a struggling Brazilian department store chain.
• A whip-smart Chicago tax lawyer, John E. Rogers.
• A bunch of LLC partnerships for tax-motivated investors.
• Some cash.

The Brazilians contribute their receivables – purportedly with a big built-in loss – to a partnership. This partnership contributes the debt to other LLCs. Shortly afterwards the first LLC buys out the Brazilians, who are desperate for cash, leaving the crappy receivables behind. The investor partnerships then write off the debts as bad debt deductions, giving big tax losses to the investors.

It can’t fail, right? Well, aside from the obvious problems, like:

– The tax law presumes that if a partner (think Brazilians here) contributes stuff to a partnership, and then gets cash back in redemption of the interest within two years, then it wasn’t really a tax-free partnership contribution and distribution. Instead, the tax law presumes that the Brazilian sold the stuff for cash. The partnership was just a place to hide it for awhile.

– If the Brazilians hadn’t sold out, the tax law would have required them to get all of the losses. The tax law doesn’t let taxpayers shift gains or losses to others by joining a partnership. After all, that’s what S corporations are for.

The guy who put this thing together was smart, as people who put together sophisticated tax deals always are. The Tax Court spells it out:

Rogers is a member of the International Fiscal Association, an international tax group. He has also been a trustee of the Tax Foundation, a publicly supported foundation that researches tax policy issues and publishes papers. Rogers has worked with the Governments of Puerto Rico and Romania in developing programs implementing their industrial taxation programs. Rogers has written a number of publications, primarily on international tax matters, transfers of technology, the use of low-tax jurisdictions, and the compensation of executives outside the United States. In 1997 Rogers was invited to testify before the House Ways and Means Committee on fundamental international tax reform.

When a plan by someone who is that smart fails, it fails spectacularly. Tax Court Judge Wherry disallowed all of the bad debt deductions, and imposed penalties, pointing a finger at the lawyer-mastermind:

There has been no showing of reasonable cause or good faith on Rogers’ part in conceptualizing, designing, and executing the transactions. To the contrary, as we have detailed above, Rogers’ knowledge and experience should have put him on notice that the tax benefits sought by the form of the transactions would not be forthcoming…

I’m sure that, over drinks, Mr. Rogers would have me convinced that he was right. That’s why you should never buy a tax shelter until you sober up.

Cite: Superior Trading, LLC, 137 T.C. No. 6

Big 4 Hiring Watch: PwC Going on the Offensive in China

Caleb Newquist
September 6, 2011

You may remember that the Big 4 have BIG plans to go on a hiring binge here in the States and around the globe over the next few years. Just last year, Deloitte announced that they were adding 250,000 new employees over the next five years (although we were a bit skeptical as to what the final numbers would actually shake out). The latest in job creation PR, comes from PwC who has announced that they will be adding 15,000 new professionals in Hong Kong and China:

Accounting firm PricewaterhouseCoopers plans to hire 15,000 graduates and experienced professionals over the next five years in China and Hong Kong, it said Tuesday, as it capitalizes on growing business opportunities in the region, particularly mainland China.

The Big-Four firm said the new hires will be “across all lines of service,” adding it hopes to recruit more than 2,000 university graduates in the coming months in Hong Kong and China. The company is conducting campus recruitment in Hong Kong and three mainland Chinese cities this month.

Adding to this glowing news was Fitch Rating’s vote of confidence in the Big 4 who “should inspire confidence in terms of corporate governance” in Chinese companies. Right. Because it’s been clockwork so far.

PricewaterhouseCoopers: To Hire 15,000 In HK, Mainland Over Next 5 Years [Dow Jones]

Congresswoman Maxine Waters Has a Message for Banks Who Don’t Want to Shape Up

Caleb Newquist
September 6, 2011

“If they don’t come up with loan modifications and keep people in their homes that they’ve worked so hard for, we’re going to tax them out of business,” Waters said. [ABC via TaxProf]

CPA Exam

Making Time to Study for the CPA Exam

Adrienne Gonzalez
September 6, 2011

The number one complaint I would hear back in my CPA review days (besides moans and groans about me being a hard ass) was, without a doubt, “I don’t have time.” Not “I’m too busy,” but “I don’t have time.” Think about the difference between those two statements for a moment. One implies that you have too much going on to make time, while the other more clearly states that you simply cannot jam 25 hours into a 24 hour day.

What many people don’t realize is that you can make time, it’s just a matter of figuring out where it’s hiding in your life.

Cruising Facebook can easily turn into a three-hour stalk-fest if you’re not careful but what about the several, quick check-ins you might make in a single day? That time adds up. Do yourself a favor and shut down TweetDeck, close out your Facebook tab and keep your phone charging in the other room so you aren’t tempted with texts and social media. Don’t worry, you aren’t going to miss anything.

Are you making the most of every break you get during the work day? You might look at me like I just licked a frog and am tripping my non-existent balls off for saying that but you do get breaks, even if you’re getting worked like a dog. They allow you to go to the bathroom, right? Bring your phone in there and do a few MCQ on your favorite app while you’re sitting there. Trust me, no one is going to bring it up if you start spending 10 extra minutes in the restroom a day, no one wants to have that conversation.

What about mornings? I know, it’s horrible to even consider but you could potentially have hours to study that you are wasting with sleep. Start setting your alarm an hour early to get some studying in and do it every day; after 3 weeks, your internal clock will be used to it and it’ll hurt less.

Are there things you’re doing around your house that your wife/husband/girlfriend/boyfriend/kids/cat could just as easily do? Try asking them. Maybe you don’t need to make dinner every night or do as much laundry as you do. Hand off a few chores to other people (unless you don’t have any other people to hand them off to, in which case you might consider paying for a little help around the house if you can afford it) and you’ll free up enough hours over the course of a week to get through at least two modules.

To figure out where you can make time in your life for studying, sit down and account for every single hour of every single day for a week, from the time you get up until the time you get to sleep. I bet if you actually add up those 35 minute showers, time spent folding other peoples’ laundry and the 75 different 3 minute Facebook peeks you make, you’ll realize you have more time to study than you thought.

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