Going Concern

Accounting News Roundup: Britain Suspects Big 4 Restrict Audit Competition; Hedge Accounting Joust; Kyl Is Cool with Closing Loopholes | 05.17.11

Caleb Newquist
May 17, 2011

UK watchdog suspects auditors restrict competition [Reuters]
Britain’s Office of Fair Trading said problems in the audit market meet the conditions for a referral to the country’s main Competition Commission watchdog. The watchdog said it had “reached the provisional view that there are reasonable grounds for suspecting that there are features of the market that restrict, distort or prevent competition in the UK.

New York Investigates Banks’ Role in Fiscal Crisis [NYT]
The New York attorney general has requested information and docus from three major Wall Street banks about their mortgage securities operations during the credit boom, indicating the existence of a new investigation into practices that contributed to billions in mortgage losses.

Judge Jails IMF Chief in Sexual-Assault Case [WSJ]
International Monetary Fund chief Dominique Strauss-Kahn was ordered held without bail Monday after Manhattan prosecutors charged him with seven counts stemming from allegations he sexually assaulted a hotel housekeeper—a decision that sends one of the towering figures of international finance and French politics to a jail cell on New York’s Rikers Island.

LinkedIn Boosts IPO Price to Raise $405.7 Million [Bloomberg]
LinkedIn Corp., the networking website for professionals, increased the price range for its initial public offering, lifting the company’s potential valuation to as much as $4.25 billion. The company is selling shares at $42 to $45 each, according to a filing today with the Securities and Exchange Commission. The shares had been offered for $32 to $35 apiece. At the new top end of the range, LinkedIn would raise $405.7 million, about 29 percent more than previously sought.

A Brief Exchange with an IASB Member on Hedge Accounting [Accounting Onion]
You might read this “brief exchange” and conclude that “accounting joust” may be more appropriate.

Bienvenue! French Audit Firm Mazars Arrives In U.S. [Forbes]
Francine takes a look at WeiserMazars as a potential player in the U.S. and is probably taking advantage of “French” as a hot SEO term.

Honda CFO: Earnings Likely To Take Hit From Quake, Strong Yen [Dow Jones]
Honda Motor Co.’s […] earnings are likely to suffer in the fiscal year that started in April due to the negative impact of the March 11 earthquake on the company’s production capacity and persistent yen strength against the dollar, the company’s chief financial officer said Tuesday.

Sen. Kyl: Close Tax Loopholes But Don’t Collect More Money [WSJ]
Sen. Jon Kyl, the No. 2 Senate Republican, went to the Senate floor today to make clear that he is for closing tax loopholes, but he doesn’t want any net increase in tax collections. “I would be very much in favor of taking a look at these tax expenditures, various subsidies, for example, to different groups to see whether we could reduce some of those subsidies and thereby reduce tax rates in a revenue-neutral manner,” he said Monday.

IRS Not Too Forthcoming with the Success of Wealth Squad

Caleb Newquist
May 17, 2011

Remember the “Wealth Squad“? They’re the jolly bunch of IRS examiners that focus their audit efforts on the richest of richies because it’s become clear that wealthy people are incapable of being honest on their tax returns (plus, poor people don’t have any money).

This elite group was formed in 2009 and based on the IRS’s count, they’ve been some busy little taxbusters:

According to the agency, audit rates among taxpayers who reported $10 million or more in income in 2010 jumped to 18% from 10% in 2009. Among taxpayers who reported $5 million to $10 million in income, nearly 12% were audited, compared with 6% in 2008.

Seems like a nice little ramp up in activity which means a boost to the Treasury’s piggy bank, right? If that’s the case, the Service isn’t exactly thumping their chests about it:

The IRS has refused to report how much money the “wealth squad” has brought in. This isn’t so difficult. Britain, which set up a similar “rich squad” around the same time, has announced that its squad netted £162 million ($ 263 million) in 2010-11, up from £82 million the year before. Those amounts are on top of the taxes already paid by the rich who are being targeted.

Conventional wisdom tells us that if the IRS were to release these numbers, it would probably make for some nice political fodder and so the Administration is telling them to keep a lid on the results. If you thought the soundbites about new 16,500 IRS agents were bad, imagine if the IRS actually reported how much more money it got rich people to fork over. On the other hand, it could be that the Service is juking the numbers and the Squad has been a complete failure. Either way, it seems that the IRS wouldn’t gain much by shouting these stats from the rooftops.

Is the IRS’s ‘Wealth Squad’ Working? [WSJ]

Tax Lady Roni Deutch Says She Had to Be ‘Dead or in a Mental Hospital’ for the California Bar to Help Her Clients

Caleb Newquist
May 16, 2011

Now that Tax Lady Roni Deutch has been forced to abdicate her royal tax credentials due to pressure from the State Bar of California and the fact that she’s completely broke, one has to wonder, “what will happen to all those people that watched late-night TV and called TLRD for help?” That’s a good question! Roni would sure like to know, since the California Bar said she had to lose her marbles or be six feet under for them to help out. Based on the press conference from last week, she doesn’t seem to be dead (far from it, in fact) but committable? You be the judge:

[via DMWT]

CFOs

Any Budding CFOs Who Had Dreams of Being an Astronaut Should Get Their Résumés in Order

Caleb Newquist
May 16, 2011

Virgin Galactic is racing to be the first company to launch a commercial space flight and since these sort of things usually need someone that’s good with numbers, the company is CFO shopping:

Virgin Galactic, a leader in the race to launch commercial space flights, is looking to hire the first CFO in a brand-new industry sector. “It’s a historic thing,” says George Whitesides, the former NASA chief of staff who is the company’s chief executive. “The executives here are thinking back to the early days of aviation, when companies like American Airlines were getting started. For the right person, it would be tremendously exciting.”

Naturally, this particular job isn’t for just any ol’ finance and accounting sage. You need experience in aerospace, raising both private and public money, and a little exuberance might be nice:

The right person will have strong experience in raising funds from private-equity investors and public offerings, ideally some prior experience or relationship with the aerospace industry, and a hint of merriment.

Virgin Galactic wants a CFO who “fits the Virgin brand,” which means someone who is hard-working but also dynamic and able to integrate work and fun, à la company founder and committed thrill-seeker Richard Branson. Yes, this will not only be the first CFO in a new sector, but quite possibly the first one to rocket into space.

So for you buttoned-up types, just keep moving along. Virgin will be needing for someone who won’t be ashamed by wearing adult diapers and projectile vomiting in front of the billionaire boss.

Virgin Territory for One Lucky CFO [CFO]

Career Center

Can a McGladrey Associate Let Their Former Classmate Know That They Don’t Have What It Takes?

Caleb Newquist
May 16, 2011

Welcome to the botched-BJ edition of Accounting Career Emergencies. In today’s edition, a first year at McGladrey doesn’t feel comfortable recommending his former college classmate for any openings at his firm. How does one handle breaking the news to the interested party that they don’t have what it takes?

Ever have trouble controlling yourself in an appropriate manner? Are you getting the sense that you’re being set up to fail? Ever feel like you’ve got enemies all around you? Email us at advice@goingconcern.com and we’ll try to get you out of a bad situation.

Meanwhile, back in the land of punch and cake:

Hi there,

I’m a first-year at McGladrey. For the second time in the past month a former college classmate of mine has requested that I recommend him to the powers that be at our firm for any openings we may have.

I don’t think that either of these people would fit into a major public accounting firm either socially or in terms of talent. What is the appropriate etiquitte for this situation? I doubt I’m the only one.

Thanks

Dear Natalie Fanboy,

I’d be really interested to hear why you think your former classmate wouldn’t fit in “socially or in terms of talent.” Do they still have trouble getting through Goodnight Moon? Does he/she have terrible body odor? Do their social skills border somewhere between “Did you look in the mirror before you left the house?” and “We can’t take you anywhere!”? These details would prove helpful.

I’ll move on. Most firms have an automated method of submitting referrals and I’d be shocked if McGladrey didn’t have something similar. If Mickey G’s does have a such a process, just throw your classmate’s résumé into the machine and it will get sorted out one way or another. If your suspicions are correct (i.e. your friend has no chance) then it’s likely nothing will happen.

If McGladrey doesn’t have such protocols in place and it is based on the ol’ résumé handoff, then A) Tell McG HR to get their shit together and B) simply explain to your friend what it’s like to work there before they start claiming this is their dream job. Is a career at McGladrey really what this person wants or did they recently come to the conclusion that clocking hours on PS3 won’t get them too far in life and they’ve go to do something?

The other thing you can do is impress upon your friend that you’re a first year associate and they barely let you have lunch, let alone recommend former classmates to TPTB at the firm. That is, the odds of anything happening are slim. If your he/she persists, explain what the expectations are (i.e. hours for the pay, other things that make it less-than desirable) and that people fail left and right. Basically, let this Mickey G wannabe know what kind of situation they’d be getting themselves into. This will allow you to indirectly present the reasons you don’t think this person might not fit in without explicitly pointing out their shortcomings.

Now, if they still are begging you to take their résumé, I don’t know why you wouldn’t just pass it along and see what happens. Hell, if they were to get hired, you might even get a bonus out of it. You got something against money?

News

GSI Group: Internal Controls Won’t Be an Issue Going Forward

Caleb Newquist
May 16, 2011

GSI Group Inc. (GSIG) said it reached a settlement with the U.S. Securities and Exchange Commission by consenting to a cease and desist order related to accusations that it improperly recognized revenue on certain transactions at its semiconductor business from at least 2004 through June 2008, partly because of insufficient internal controls. The SEC alleged that as a result, the supplier of precision technology and semiconductor systems had overstated revenue by 0.7% in 2004, 1.4% in 2005, 17% in 2006 and 5% in 2007 and by 13% and 5.6% in the first and second quarters of 2008. The company said it agreed to the settlement without admitting or denying the SEC finding and wasn’t charged with fraud or required to pay any penalties. “GSI fully cooperated with the SEC in its two year investigation and has undertaken a number of corrective actions and internal control enhancements,” said Chief Executive John Roush. [Dow Jones]

Marlee Matlin Can Add ‘Constitutionally Challenged’ to Her List of Disabilities

Adrienne Gonzalez
May 16, 2011

Academy-Award winning actress Marlee Matlin admits to People mag that she owes $50,000 to the IRS and isn’t at all embarrassed by this fact. ”I’m paying it back. I’m not shying away from it and I’m certainly not ashamed of it,” Matlin told the magazine. “It doesn’t mean I’m a bad person. It’s reality. It’s the reality that a lot of people in America are facing.” You tell ’em, girl!

The Celebrity Apprentice “star” (we use that term loosely, not being a huge fan of D-lister reality shows featuring hot messes such as Gary Busey and Lil’ Jon) tells People celebrity isn’t all it’s cracked up to be and, in fact, it’s her four kids and modest middle class life in the ‘burbs that is to blame. “Living modestly in a suburban neighborhood while trying to support four children through private school is not extravagant or living large,” Matlin said. “My husband is a Los Angeles area police officer and between the two of us we have always made ends meet in the past — and we will in this circumstance as well.”

To adjust to their new life as (probably accidental) tax protesters, the Matlin clan plans to make some important financial adjustments, like putting their poor children into public school. “At the end of the day, it’s about the best interests of the children,” she said. “Transitioning out of a private school environment will certainly relieve some of the financial pressures but hopefully this will not compromise the kids.”

Yes, hopefully it will not. Let the record reflect AG is a product of public school and we all know how horribly I turned out; someone pray for those kids.

Despite these hardships, Matlin seems upbeat and not at all worried about what this means for her reputation (let’s hope the IRS didn’t put her in the non-TIGTA-friendly “Tax Terrorist” category). “I’m not broke. Like everybody else, I owe money. My family is healthy and happy.”

Marlee Matlin Is Paying $50,000 in Back Taxes [People]

Accounting News Roundup: Boehner Hopes Obama Is ‘Serious’…Except About Tax Hikes; What’s the Definition of ‘Rich’?; No More Tax Lady | 05.16.11

Caleb Newquist
May 16, 2011

Police Seek Evidence From I.M.F. Chief on Sex Attack [NYT]
Dominique Strauss-Kahn, the leader of the International Monetary Fund, spent most of Sunday at the Manhattan Special Victims Unit in East Harlem as prosecutors sought additional evidence, including possible DNA evidence on his skin or beneath his fingernails, to bolster allegations that he had sexually assaulted a maid in a $3,000-a-night suite at a Midtown hotel, officials said.

IMF in Wake of Scandal Turns to Lipsky [Bloomberg]
The International Monetary Fund turned to John Lipsky when it was ordered to develop an early- warning system to prevent a repeat of the 2008 financial meltdown. Now, the IMF is calling on him to guide it through its own crisis.

Boehner questions Obama’s commitment to tackling debt, deficit [The Hill]
On dealing with major spending issues, including entitlement programs, Boehner invited the president to “lock arms and we’ll jump out of the boat together. “I’m serious about dealing with this, and I hope he’s just as serious,” he said. As both parties haggle over raising the $14.3 trillion debt limit, Boehner insisted that everything was up for discussion — except tax hikes.

The Very Rich Really Are Different [TaxVox]
“Let me tell you about the very rich. They are different from you and me,” wrote F. Scott Fitzgerald. He wasn’t talking about taxes (the laws were very different back in 1926) but his assertion certainly applies to the way the wealthy fare under today’s tax law.

Gingrich Blasts House GOP’s Medicare Plan [WSJ]
White House hopeful Newt Gingrich called the House Republican plan for Medicare “right-wing social engineering,” injecting a discordant GOP voice into the party’s efforts to reshape both entitlements and the broader budget debate. In the same interview Sunday, on NBC’s “Meet the Press,” Mr. Gingrich backed a requirement that all Americans buy health insurance, complicating a Republican line of attack on President Barack Obama’s health law.

Gingrich businesses owed unpaid state taxes [AP]
They’re all caught up now.

How did $250,000 become the tax definition of rich? [DMWT]
Obama’s economic team was in a competitive game of darts during the campaign.

A Small, Dubious Company Gets A Moment In The Sun For No Discernable Reason [TFI]
Roddy Boyd’s latest focuses on Kingtone Wirelessinfo Solution Holding Ltd. and their hocus-pocus ride to this morning’s opening bell at the Nasdaq.

California Bar Confirms Disciplinary Proceedings Against ‘Tax Lady’ Roni Deutch [TaxProf Blog]
Roni throws in the towel.

E&Y fails to halt Anglo Irish investigation [Accountancy Age]
Ernst & Young in Ireland has failed in a bid to halt an investigation into its work as auditor of Anglo Irish Bank. The High Court in Ireland ruled on Friday that the firm had no grounds for a judicial review of a probe ordered by the country’s Chartered Accountants Regulatory Board (CARB).

News

Two San Jose State Accounting Students Killed in Bizarre Murder-Suicide

Adrienne Gonzalez
May 14, 2011

Cindy Caliguiran, 25 and Kyle Williams, 26, both accounting majors at San Jose State University in Northern California, were gunned down by Caliguiran’s 54-year-old engineer husband on Tuesday.

From the Mercury News:

Waiting with a gun on the fifth floor of the campus garage was her husband — a Silicon Valley engineer more than twice her age. A classmate heard the screams — then gunfire — reverberate through the concrete parking structure.

Within minutes, police found Cindy Caliguiran and Williams dead, shot repeatedly, in the front seat of her black 2005 Mercedes. Napoleon “Nappy” Caliguiran lay next to the car, mortally wounded from a self-inflicted gunshot.

On Thursday, shocked students and faculty members learned the identities of the first San Jose State students ever killed on campus — both honor students, both married, one with a job at a major accounting firm waiting.

But the campus community was still trying to comprehend why the 54-year-old native of the Philippines tracked down his bride of three years Tuesday night about 8:30 with a gun registered in his name.

All reports are Caliguiran and Williams were not romantically involved. Williams had been married for two years and was headed to PwC after graduation, while Caliguiran had been married to her nutjob husband, Napoleon “Nappy” Caliguiran (described as a “soft character” by his former brother-in-law), for three. Based on reports, you might conclude that he was jealous of his much younger wife’s friend:

The Caliguirans lived on the fourth floor of the Élan Village apartment complex in North San Jose. A downstairs neighbor who didn’t want to be identified said that although he never met the couple, about two weeks ago they were so loud upstairs that he called security. He was awakened by heavy stomping upstairs, he said. When asked whether the couple was fighting, he said, “something like that.”

SJSU shooting: 3 who died ID’d as student, 25; her husband, 54; another student, 26 [SJMN]

Newt Gingrich Has Some Imaginary Tax Policy Proposals for His Imaginary Presidency

Caleb Newquist
May 13, 2011

To trigger job growth, Gingrich proposed to cut the U.S. corporate tax rate from 35 percent to 12.5 percent, a deeper cut than some other Republican politicians have offered. He would extend income tax cuts that expire in 2013, which were the subject of a pitched battle late last year when President Barack Obama tried to let tax reductions for wealthier Americans expire. And he would completely eliminate the capital gains tax on stock profits. Gingrich, proposed that the country move toward an optional flat tax for Americans of 15 percent, and strengthen the dollar by returning to “Reagan-era monetary policies,” and reform the Federal Reserve to promote transparency. [Reuters]

News

Brazilian Accountant Wins the Right to Watch Porn, Masturbate at Work

Caleb Newquist
May 13, 2011

A least one accountant at the SEC is getting his lawyer on the phone as we speak.

PerezHilton:

Ana Catarian Bezerra, a 36-year-old Brazilian accountant who suffers from a chemical imbalance that triggers severe anxiety and hypersexuality, has won the right to masturbate and watch porn at work!

Since she knew the only way to cure her anxiety was to masturbate, she knew she needed help, explaining:

“I got so bad I would to masturbate up to forty seven-times a day. That’s when I asked for help, I knew it wasn’t normal.”

After getting some medical attention and a prescription “cocktail” of tranquilizers, NOW she only masturbates a few eight times a day. Still A LOT of masturbation, but A LOT LESS than before.

Due to her orgasmic medical condition, she took her employer to court in order to be allowed to masturbate on the clock and WON.

Brazilian Woman Wins Right To Masturbate At Work [Guanabee via PH]

KPMG

KPMG Lands More Audit Work From Bridgewater Associates

Caleb Newquist
May 13, 2011

Big win for the KPMG audit practice in New York as we’ve confirmed that the Asset Management group has won more audit work from the Westport, Connecticut hedge fund.

This week Institutional Investor compiled the largest 25 Hedge Funds and Bridgewater was at the top with $58.9 billion in hedge fund assets. Our source, someone familiar with matter, was impressed, “Huge win for them considering they’re typically fighting for 3rd in those major bids.” It’s our understanding that KPMG had some work from BW but adding more engagements will make for a prestigious addition to their client roster. Congrats to KPMG and the team that made it happen.

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