Going Concern

CPA Exam

Note: Puke Is Not Among Prohibited Items at Prometric

Adrienne Gonzalez
June 2, 2011

As many of you know, we try to stay up on the haps in the land of MCQ and TBSs by playing Twitter detective, stalking the CPAnet forums and, of course, reading CPA exam candidate blogs. One of our favorites has always been Sleep on CPA due to her positive attitude and willingness to share her experience in its rawest form, disasters and all.

So we couldn’t pass up the chance to share her BEC experience with you all when we read it. Remember the candidate who got into it with Prometric over gum-chewing? That was nothing compared to this:

As it was not month end, I was the only one who was sitting for CPA Exam. I watched another exam guy who was debating rules with the staff over his exam code not working and there was no one who could help him with that. After answering all his questions a staff member came to me and collected my ID and NTS. I removed my items and locked them and went in. Then I was told to remove scarf. She checked my ID and asked me to sign in and then she asked me to go back and lock my NTS after I entered my launch code on the paper booklet. Then I told her about my nausea and asked her how should I proceed in case I want to throw up. She looked at me as if I was asking some thing illegal. She said, as you are not a candidate with special needs I cannot allow you to sit in a special needs room. I asked,” Can I leave the room If I have some emergency? She said “you can throw up beside you, we will clean later.“

I really had no reaction on my face when she said that. I asked, Do we have any waste basket inside? She said, No we don’t keep waste baskets inside. There is nothing we can do about it. She discussed with another lady and said, We cannot provide you the room with special needs, you should sit in the same room and there is nothing we can do. You can only take breaks in between your test-lets. After appearing in this exam more times than I passed.. Excuse me I know Prometric rules..

I prayed God and with all the prayers of my friends and family members, I felt better and the whole exam went well. I was little tired but that’s OK.

It goes without saying that we’re glad Rose didn’t actually hoark all over the floor and actually, we’re kind of surprised this is the first we’re hearing a story like this. Maybe most of you do the responsible thing and puke in the parking lot or in your locker, lest you compromise the security of the CPA exam by eating your homework books ahead of time and barfing out time value of money charts during your exam.

We are all for reasonable security measures but really?! Shouldn’t there at least be a designated puke bucket that Prometric staff can sign in and out?

Do you have a bizarre CPA exam story to share? Need advice on which part to take? Feeling like you need to vent? Get in touch, I’m here to hold back your hair.

Career Center

Should a Big 4 Associate Leave the Cush Life in Bermuda for an Opportunity in a New City?

Daniel Braddock
June 2, 2011

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

Dear Caleb,

I really need some advice with a career decision I have to make. I currently work for one of the Big 4 offices at the staff level in Bermuda and have been offered the opportunity to move to a bigger office in a major city in America. While I am excited at the opportunity to move to a new city and experience everything there is to do there, I am hesitant about the increased workload that would entail. Here in Bermuda we work about 60 hr weeks for two months during busy season and then work around 40 hr weeks for the rest if the year. In addition, because of the no income tax in Bermuda, this new job would actually mean a pay cut. So is the prospect of a new city and new experiences worth being overworked and underpaid?

– Undecided

Dear Undecided,

Ahh, Bermuda – beautiful place.

Your situation is not unique by any means. I have spoken with a number of people within Big 4 audit groups that are stationed in Bermuda and are being “encouraged” to return to the States via internal transfers. This has been due mainly to the loss of offshore work on the asset management industry. Seeing how the firms are all on hiring sprees, it’s not surprising that leadership is looking to capitalize on your generous work/life balance for the sake of the Greater Good.

The main difference that I sense in your case is that you refer to the transfer to “a new city” and not “home.” Either you are originally from one area in the US and were offered a transfer to a new city, or you are native to Bermuda and this would in fact move you away from your established roots. If it’s the former, consider asking to move to closer to “home”? Would you even want that? If you’re from Bermuda, then you have more to details to weigh.

You also raise two red flags that damn near every commenter on this site will tell you ARE major concerns: more hours for less money. If we polled the audience for their responses to your question of “is the prospect of a new city and new experiences worth being overworked and underpaid” – the response would be a resounding “no.” After all, you’re listing the two main reasons people leave public accounting. But you’re still young in your career. Think about your long term plans – where do you want to be in 5, 10, 20 years? Not firm-wise, but geographically. What is the long term career potential if you stay in Bermuda? Do you want a career in public? What city does your firm want to ship you to?

Let’s open it up to the Peanut Gallery: has anyone been in this situation before?

PS – If you do transfer to the States, please sneak me a bottle of cologne from your local perfumery. Amazing stuff!

News

Department of Justice Would Treat Goldman Sachs Slightly Better Than Arthur Andersen

Caleb Newquist
June 1, 2011

That is, the DOJ wouldn’t indict Goldman on criminal charges like they did Andersen. Which, you may recall, didn’t turn out so well for A^2.

DealBook reports the musings of Sanford Bernstein analyst Brad Hintz:

If an alleged violation is identified during a Goldman investigation, we expect a reasoned response from the Justice Department. In a worst case environment, we would expect a “too big to fail” bank such as Goldman to be offered a Deferred Prosecution Agreement, pay a significant fine and submit to a Federal monitor in lieu of a criminal charge. Consequently, we do not believe that Goldman investors face an “Arthur Andersen” risk.

No ‘Arthur Andersen’ Risk to Goldman, Analyst Says [DealBook]

Kentucky Taxpayers to Partially Fund the Experience of Being on a Gigantic Boat with Animals Crapping Everywhere

Caleb Newquist
June 1, 2011

Oh, dear.

Kentucky’s state tourism board approved up to $43 million in tax incentives for the construction of Ark Encounter, a creationist theme park.

The tax rebates, which could subsidize up to 25% of the $150 million project, were granted under the Kentucky Tourism Development Act. The state government’s website says that the act “allows eligible tourism attractions a rebate of sales tax up to 25% of project capitol [sic] costs over a 10 year period,” provided that projects have a positive economic impact.

Ark Encounter will include Noah’s Ark, the Tower of Babel, an ancient walled city, and other Biblical renditions. A Christian organization called “Genesis in America” heads the project that is scheduled to break ground in August and open in the spring of 2014.

Taxpayers To Build the Ark: Kentucky Grants Creationist Theme Park $43M in Tax Incentives [Time via Tax Foundation]

Tax
Video

Rich-hating Legislation of the Day: The Ending Taxpayer Subsidies for Yachts Act

Caleb Newquist
June 1, 2011

Sorry for being a little to the game on this one but everyone seems to still be in their meat-induced comas and this type of proposed legislation has left us wondering: IS NOTHING SACRED? If the affluent in our society can’t write off the mortgage interest on their second home that also happens to be boat, haven’t the terrorists won?

The Ending Taxpayer Subsidies for Yachts Act was introduced by Rep. Mike Quigley (D-IL) with co-sponsors Reps Tim Walz (D-MN) and Gary Peters (D-MI):

“There’s absolutely no reason why taxpayers should subsidize luxury yachts,” said Quigley. “As we work to address our budget challenges, closing this frivolous tax loophole is a no-brainer.”

“We’re going to have to make some hard decisions to tackle our national debt, but this isn’t one of them,” said Walz. “Closing this tax loophole restores the Mortgage Interest Deduction to its original purpose; helping middle class families realize the American Dream through homeownership.”

Currently, taxpayers are allowed to deduct mortgage interest for up to two homes from their tax returns. Yachts equipped with bedding, toilet facilities, and a kitchen qualify even if they aren’t used as a primary residence. The Ending Taxpayer Subsidies for Yachts Act would limit the tax deduction to only those who use their boats as a primary residence.

“We need to get the deficit under control, and that means simplifying the tax code and eliminating special interest tax giveaways like the Yacht Loophole,” added Peters. “Homeownership is part of the American Dream and we should encourage it, but yacht owners don’t need any special handouts, especially in the middle of a budget crisis.”

Also, it’s our understanding that the Reps will use the following footage to make a case for their bill:

[via DMWT]

Dumb: Michigan Representative Introduces Legislation That Would Force Prisoners to Pay Sales Tax

Caleb Newquist
June 1, 2011

Today in awful tax policy proposals, Michigan Represenative Anthony Forlini (R) has introduced legislation that would force prisoners to pay sales tax on goods they buy inside the joint. Rep. Forlini says the proposal “is common sense,” and he can’t imagine why any average Joe would think differently, “The average person […] cannot believe that they are paying sales taxes for schools and local municipalities, yet the inmates are not contributing to this. We’re losing about a million dollars a year because of the law. It doesn’t make any sense to me, and I don’t think it makes any sense to the taxpayers out there either.”

SOMEHOW it doesn’t make sense to David Brunori:

So if you are doing 25 to life in Jackson (which I think is the state penitentiary) and you buy some toothpaste from the commissary you would pay the sales tax. I have questions for Rep. Forlini. What the heck motivated you to propose this legislation? Are there not more pressing issues facing the state of Michigan? Are you motivated by sound tax policy? Are you just mad because bad guys are buying stuff tax free when you have to pay sales tax?

Honestly, Michigan. Have your CPA governor bitch slap this guy.

State Rep. Anthony Forlini: Make inmates pay Michigan sales tax [MLive via David Frunori]

CPA Exam

Poli Sci Major Needs Help Picking a CPA Exam Starting Point

Adrienne Gonzalez
June 1, 2011

We swear we don’t mind answering the same question over and over and over, so if you have a question for us, please don’t hesitate to pound it out and get it to us.

Here’s our latest CPA exam quandary from the mailbag:

Hi Adrienne

I am just beginning to study for the CPA exams. I am in an MBA program and I will graduate in December. I was not an accounting major (poli sci) so I have also been taking the necessary required accounting classes in order to sit for the CPA exams, hopefully in January. I am taking an MBA-level auditing class in the Fall. I just finished a corporate income tax class this Spring, so I am a little confused as to which exam I should focus on now and take first, in January: REG as a lot of tax info is still fresh in my head or Auditing, as it will be most fresh by January?

Let’s all keep in mind that the CPA exam is not a test of your ability to be a good accountant, nor is it at all representative of the depth of your knowledge but the breadth. In other words, it’s a huge inch-tall puddle as opposed to a small, 9-ft deep pool. Your job is to jump across the puddle without getting your ankles wet, ya with me?

If it’s going to help your confidence, you can start with the section that will be easiest for you – in your case, that may be whatever you studied last. Keep in mind, however, that what you study in college and what you see on the CPA exam may not necessarily align. The CPA exam changes twice a year and with CBT-e changes, the AICPA Board of Examiners is now testing material that you are expected to know as a new CPA but may not have covered in school. Professors tend to favor the same material year after year, so unless your school is incredibly progressive and you’ve been learning IFRS (unlikely), it may not matter what you studied most recently.

That being said, I always tell candidates to start with the part that will be hardest for them simply because your 18 month timeframe starts from the time you sit for and pass your first part.

Here’s the deal: any review course will give you what you need to fill in the blanks in your education, even if you go the self-study route and pick up a set of CPA review textbooks from Amazon. In my professional experience, those who don’t have as rigorous an accounting background actually do better on the CPA exam as they come into it fresh instead of relying on what they were just taught in their accounting program that is no longer relevant for CPA exam purposes.

You’ll be fine either way, just pick one, study, and pass. It really is that simple. Or so I hear.

Accounting News Roundup: Corporate Tax Studies Take Sides; The Tax Lady’s Tax Lien; This Is Your Brain on Cellphones | 06.01.11

Caleb Newquist
June 1, 2011

Studies Fuel Dueling Views on U.S. Corporate Taxes [WSJ]
While Congress duels over whether U.S. companies should pay more in taxes, a pair of reports provided fodder for each side of the debate this week.

Sherron Watkins and Harvey Pitt on SEC’s Whistleblower Rules [CFO Journal]
Pitt said that paying up to 20% of penalties collected for a securities-law violation to the person who provided the information that led to the case would “undermine corporate governance.” Employees seeking “lottery-like” returns will inundate the SEC with marginal claims, he warned. “There will be two gems within those 10,000 or 20,000 complaints but whether the SEC will be able to pick those two out is a different question.”

Satyam case: HC rejects auditors plea on disciplinary action [Business Standard]
PricewaterhouseCoopers auditors, Subramani Gopalakrishnan and Srinivas Talluri, accused in the Rs 14,000-crore Satyam accounting fraud, today received a jolt as the Delhi High Court today rejected their pleas against the disciplinary proceedings initiated by the Institute of Chartered Accountants of India (ICAI). A Bench of Chief Justice Dipak Misra and Justice Sanjiv Khanna dismissed the petitions filed by the two auditors, who had sought a stay on disciplinary proceedings initiated by the ICAI for their alleged involvement in the Satyam accounting fraud.

Navistar Sues Deloitte Proving No Statute of Limitations On Idiocy [Forbes]
Nearly one hundred years together. Down the drain.

‘Tax Lady’ Roni Deutch faces tax lien of nearly $183,000 [Modesto Bee]
Tax attorney Roni Lynn Deutch has been slapped with a nearly $183,000 federal tax lien, according to Internal Revenue Service filings, another sign of the Tax Lady’s financial woes. Deutch, who built a $25-million-a-year tax resolution law firm promising clients relief from the IRS, was hit with a lien of $182,722, filed May 9 in Placer County Superior Court.

KPMG Executive Poll: 39% Say Anti-Corruption Laws Disadvantage Them [WSJ]
A KPMG LLP poll of 214 executives in the U.S. and the U.K. showed that only 39% believed anti-corruption laws had hurt them competitively, and fewer than 20% though enforcement of such laws was “excessive.” The survey offered a glimpse into the C-Suite as the U.S. Chamber of Commerce intensifies efforts to amend the FCPA on the grounds that aggressive enforcement has held back U.S. business.

Cellphone Cancer Warning [WSJ]
Using a cellphone may increase the risk of a certain type of brain cancer, an international panel of experts said Tuesday, adding to a growing debate about whether a now nearly ubiquitous form of communication poses health risks. The experts said cellphone radio waves are “possibly carcinogenic,” classifying them in the same risk category as lead, chloroform and coffee. The classification from the World Health Organization’s International Agency for Research on Cancer could lead the United Nations health body to look again at its mobile-phone guidelines, the scientists said.

PwC’s Assurance Practice in the Middle East Now Opining on Whether Construction Workers Are Being Treated Like Human Beings

Caleb Newquist
May 31, 2011

It’s a slow day out there*, this first day back from Memorial Weekend so perhaps I’m making a mountain out of a molehill here but it seems that PwC might be stretching the definition of assurance services. Based on various obscure reports, the firm fka PricewaterhouseCoopers has been engaged by Tourism Development ‘&’ Investment Company (“TDIC”) “to monitor its contractors’ and subcontractors’ performance in the area of worker welfare on Saadiyat.”

“Saadiyat” is Saadiyat Island, a “mixed commercial, residential, and leisure project […] expected to be completed in 2020,” according to Wikipedia. This sort of project of course needs manpower, so presumably there will be plethora of construction workers coming from various parts of the world to earn some scratch. Anyhoo, it’s no secret that labor comes cheap in the Middle East and the treatment of workers isn’t the best. In an effort to get those pesky human rights types off their backs, TDIC has called on the most prestigious professional services firm in the world to assure everyone that worker welfare is just fine and dandy and there’s no cause for concern that these workers are living in squalor and being treated like stray dogs:

In stringently monitoring compliance, PwC will report to TDIC on key aspects of worker welfare, including holding of personal documents, illegal recruitment fees, payment of wages, health and safety, and working and living conditions. The results of the audit reports will be released in a comprehensive report to the public on an annual basis. During the reporting cycles, PwC will conduct formal and informal interviews with construction workers in their own language, as well as with the Contractors’ and Sub-Contractors. In gathering facts and reporting their findings, PwC will conduct scheduled and surprise site visits to check contractors’ compliance. They will also be conducting site visits to assess the living and working conditions of the workers.

Considering the fact that Abu Dhabi has an average temperature of 88 degrees Fahrenheit, it’s safe to assume that those “site visits” will be an interesting experience.

PwC to monitor Saadiyat Island contractors’ performance in area of worker welfare [WAM]

*Unless you’re glued to the train wreck in Columbus.

News

Study: Analysts Just as Illiterate as Investors When Reading Financial Reports

Caleb Newquist
May 31, 2011

Convoluted corporate financial reports are just as unreadable for professional stock analysts as they are for the average investor, according to a new study.

The study, published in the current issue of the American Accounting Association journal Accounting Review, tested the readability of tens of thousands of company filings over 12 years and found that analysts’ earnings forecasts for firms with less readable reports “have greater dispersion, are less accurate, and are associated with greater overall analyst uncertainty.” Ironically, however, the syntactic and linguistic complexity of these reports generated greater demand from investors for analysts’ commentary and greater reliance on their forecasts. [AT]

PwC’s Calgary Office Takes a Don’t Hate, Congratulate Stance on Furlough Fridays

Caleb Newquist
May 31, 2011

More Big 4 news from the True North, as the Calgary office of PwC has been forced – due to ‘unique market conditions’ – to close the office five times over the summer to compete with the oil and gas companies that shut down every Friday.

Calgary Summer Office Closures

As we all know, recruiting and retaining our people is critical if we are to achieve our marketplace and firm goals. Calgary is one of the toughest markets in which to retain our people. The Calgary leadership believes that one of the key reasons is the extent of time off provided by companies in Calgary. Driven by the oil and gas companies, shutting down on Fridays in the summer is a practice followed by many companies in Calgary, including our clients.

For whatever reason, the email reads strangely apologetic, as if the leadership knows how much everyone loves working on Fridays and that they HAD NO CHOICE but to take these measures are absolutely necessary:

We believe that to be an employer of choice in Calgary we must respond to these unique market conditions with the result that, on Monday, May 30, Calgary will announce that the office will be closed on five Fridays over the course of the summer. Given the strategic importance of our Setting the Pace market segment priority, we think we must move in this direction, otherwise we will continue to be at a competitive disadvantage as we seek to grow the practice and attract and retain the people we need to do so. Going forward, we will assess the continuation of this policy in Calgary based on market conditions.

And finally, it was pointed out that everyone is aware that this is grossly unfair but A) it had to be done and B) everyone will be made right one way or another:

We also think it’s important to be transparent with you around this policy so that you understand the rationale. We appreciate that adopting these office shutdown days solely in the Calgary office gives them more benefits than the rest of the firm. Our view however is that we must adopt practices that are competitive and appropriate in each of our local markets and the Calgary market presents a unique situation.

We recognize that everyone is working hard and contributes to the firm’s success. That’s why we encourage everyone to take advantage of the various forms of flexibility available, particularly during our less busy times. These include Flexible Fridays, which will be announced next week for offices outside of Calgary, Flexible Time Away, our new Flexibility code and, of course, your vacation.

Yes, don’t forget that you could use five days of vacation as opposed to being given the non-option to stay home from work. That gets everyone back to Even Steven.

Comp Watch ’11: Happy New Year’s Eve Deloitte!

Caleb Newquist
May 31, 2011

It’s the final day of fiscal 2011 in GreenDotville and it seems fitting that we have a little comp discussion:

Word is coming out of the senior manager meeting last week that raises and bonuses are going to be “very good” this year. Of course, those are just rumors, and that’s what the firm said in 2009 when comp increases averaged less than 1% across the board. Other than the mid-year salary bump last fall, there have been no raises, bonuses, or any other incentives to keep slaving away since last summer.

As you may know, Deloitte moved to a decentralized audit planning approach this year, causing hundreds (if not thousands) of additional hours to be added to each engagement. With a shortage of seniors and managers as it is, it’s been close to a breaking point for everyone in the audit function. And, of course, it’s an internal mandate, so unlike the glut of work that came as a result of SOX, Uncle-D is unable to recover any of those costs from clients. Senior management is aware of the problem (Steve VanArsdell said it was the worst busy season he’s ever seen in his 36-year career), but as yet no solutions have been offered other than to say that “year 2” of the new approach should be easier.

Interestingly, the Ivory Tower here at D&T has been suspiciously quiet regarding comp and other issues. Consensus among the employees is that they’re panicked and haven’t yet figured out how to dig out of the hole that they dug for themselves over the past few years. They’ve moved up the timetable on the compensation and rating process by a couple of weeks, which means that we’ll be getting our raise and bonus information in early August instead of mid-August this year (to which, most employees have responded with, “BFD”). To most of us working here, it feels like it’s all going to be too little, too late to win back the loyalty of the current workforce here at Uncle D.

But hey, I hear PwC is hiring!

Our tipster sounds pretty glum for a NYE celebration, so if you can cheer him up with contrary rumors, please do so. Of course, you can always corroborate his suspicions if that’s what you’re hearing as well. And don’t forget to drop all your new leaders a good luck email. Everyone deserves a little thumbs-up on the first day in a new job.

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