There are demons in his flock!
Pastor Calls Flock Devils, Demons: MyFoxHOUSTON.com
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A report in Bloomberg apparently thinks so. From the ‘Berg: HSBC Holdings Plc (HSBA), Europe’s biggest lender, was warned twice by auditors that entrusting as much as $8 billion in client funds to Bernard Madoff opened it up to “fraud and operational risks.” KPMG LLP told the London-based bank about the risks in 2006 and 2008 reports. The firm was hired to review how Madoff invested and accounted for the funds, for which HSBC served as custodian. KPMG reported 25 such risks in 2006, and in 2008 found 28, according to copies of the reports obtained by Bloomberg News. Okay l there for two before everyone gets too excited. Let’s just get one thing straight right off the bat – KPMG probably leaked these reports to Bloomberg (I only say probably because I don’t know for an absolute fact but – COME ON – who else?). Secondly, even though the report says “warned twice by auditors” this was not an audit performed by KPMG; it was “[a] review how Madoff invested and accounted for the funds.” What exactly that entails isn’t clear; possibly agreed-upon procedures? Anyway, here’s what the story says were in the two reports: In the list of risks in KPMG’s report, number 2 was that “BLM embezzles client funds,” using the initials as shorthand for Bernard L. Madoff. To prevent it, KPMG recommended in both 2006 and 2008 that HSBC “establish a process to monitor monthly statements” and reconcile them with contributions from clients. […] The 2006 report listed fraud risk number 5 as “client cash is diverted for personal gain” and risk number 18 as “trade is a sham in order to divert client cash.” It went on to say there were concerns “Madoff LLC falsely reports buy/sell trades without actually executing in order to earn commissions” and “BLM falsifies accounting records which are provided to HSBC.” KPMG reviewed samples of trades and account statements for both its 2006 and 2008 reports to test the risks and detected no discrepancies, the reports said. Even so, the firm suggested HSBC “consider undertaking a periodic review which includes tracing a sample of client trades back to the bulk order.” After reading that you might think that KPMG hit a home run but what if the “risk factors” listed are just standard boilerplate risks that are included in every single one of these reports? If that’s the case, then KPMG was slapping in the applicable information as it related to BLM, handed it over and collected a nice fee. Maybe KPMG was all over this but there’s no way to know because A) Bloomberg didn’t republish the reports in full; B) Other KPMG teams close to Madoff are getting their asses sued which means they either ignored the risks or couldn’t get a hold of these two reports and C) HSBC throws KPMG under the bus, essentially saying that they were duped by Berns: HSBC confirmed hiring KPMG in 2005 and 2008 to review Madoff’s firm, adding it now believed Madoff had tricked the auditors. “It appears from U.S. government filings that Madoff and his employees foiled these reviews by, among other things, providing forged documentation to KPMG,” the bank said in an e- mailed statement. “KPMG did not conclude in either of its reports that a fraud was being committed by Madoff,” HSBC said. “HSBC did not know that a fraud was being committed and lost $1 billion of its own assets as a victim.” So did KPMG warn HSBC or not? This Bloomberg story seems to think so but there are is a lot of evidence that KPMG was just as clueless as as everyone else who didn’t walk – or run away screaming, arms flailing – away from Madoff. HSBC Was Told About Madoff ‘Fraud Risks’ in Two KPMG Reports [Bloomberg] The NPR funding debate is a litmus test of how serious Congress in general and Republicans in particular are about spending cuts. If Congress can’t even cut NPR it is a sign that deficits are here to stay and . . .dare I say it . . .tax hikes will be necessary. Or perhaps you don’t care that your children will be paying big chunks of their diminished incomes to the Chinese. [Martin Sullivan/Tax.com] Welcome to the massive-hangover-creeping-up-on-you-yet? edition of Accounting Career Emergencies. In today’s edition, a future “Big 6” associate wants to know if temping for local CPA firms is kosher prior to starting at her full-time employer or if this sort of thing is frowned upon. Trying to get a handle on Twitter? Need help writing an intriguingly vague farewell letter? Annoyed by a co-worker? Email us at advice@goingconcern.com and if I manage to sober up, I’ll respond in due time. Back to our problem du jour: Hi GC! So here is the situation: I graduated in December with a Masters and I have a job at a “Big 6” firm that doesn’t start until next October. And while I would love to do what the recruiter suggested and go on a trip or hang out with my friends and do nothing for the next 6+ months, I need to pay rent/student loans/eat. HR at the Firm told me I could do whatever I wanted except work in public accounting so I have been temping. Fine. Except that the only jobs that are currently available in my area are helping out a local CPA firm with tax returns. I explained to the temp agency recruiter that I can’t work in public but then we both came to the conclusion that since my timecards, paychecks, etc. all come from the temp agency, not the CPA that I am technically not working in public accounting. Does this sound kosher? Or like my friend who calls herself a vegetarian but still eats bacon? Thanks a bunch! Dear Need to pay rent! (Rent’s too damn high) (‘Cause everything is RENT!), First off, in what year are you living? There hasn’t been a “Big 6” since BJs got a President impeached (I know, I still can’t believe it either). I’ll forgive your dated terminology and get to your problem at hand. This is an interesting little loophole you’ve found and personally I feel as though you have a legitimate argument that you are complying with your future firm’s policy. The likely intention of said policy was to prevent you from landing a gig with a competitor and thus poaching you before you even start with them. As a temp, you’re simply bounding around to whomever needs the help. There’s very little risk of you joining one of these firms you’re temping for because you have a job waiting for you. Everyone involved – you, the temp firm, the temp placement agency – is aware of this. Getting your future firm involved will only cause headaches for you. However, if you’re the anxious type that will start having nightmares about a mean ol’ partner breaking into your apartment to rifle through your records looking for any sign of your betrayal, you will run this past your future firm just to be sure but I personally don’t think it’s necessary. Temp it up! Anyone else been in this pickle? Chime in. Libya Ceasefire Announced After U.N. Approves Intervention [Reuters] Frantic Repairs Go On at Plant as Japan Raises Severity of Crisis [NYT] H&R Block Chairman Breeden Stepping Down to Focus on Hedge Fund [Bloomberg] April 1 Deadline Fast Approaching for Illinois CPA Society Scholarships [PR Newswire] Deloitte Fired For Kabul Bank But PwC Missed Fraud [Forbes] Tax-Writer Camp’s Push for Lower Rates Forces Deduction Choice [Bloomberg] Charlie Sheen’s Oprah Tax Problem [TaxProf Blog] Texas Legislature Looks to Soda Tax to Fill Budget Gap [Tax Foundation] Jacky Lam’s resignation was effective on Sunday but his letter to the CCME Board was dated Tuesday, making us wonder if he slept on it for 48 hours just be sure he was doing the right thing. March 15, 2011 The Board of Directors Dear Sirs, As I informed the Board on Sunday, I have resigned as a Director and as the Chief Financial Officer of China MediaExpress Holding, Inc. (the “Company”), effective as of March 13, 2011. I have resigned because of information that I have learned in the past few days, and because the Chairman and CEO did not respond to these matters in a manner that I believed to be appropriate. Thank you for your kind attention and I wish the Company success in the future. Yours sincerely, Jacky Lam Of course the “information that I have learned” could have been Roddy Boyd’s post from last Friday or the video of the sleeping staff posted Sunday or something else entirely. As far as the CEO’s inaction – should he have filled one of the broom closets with Red Bull? Maybe kept more of something else that apparently keeps people awake but otherwise uninterested in other humans? We’re not exactly sure on either of these questions but we’d love to hear theories. As for the “Best. Period. End of Statement.” – they did their part too. The AICPA and the London-based Chartered Institute of Management Accountants (CIMA) are proposing forming a joint venture to develop and promote a new global management accounting designation. The joint venture is designed to give management accounting a higher profile in the United States, advance the science of management accounting worldwide, and promote the U.S. CPA designation as a worldwide standard of professional excellence in accounting, according to a press release from the organizations. [JofA] Important lesson for any Big 4, et al. Twitter captains out there: A Chrysler contractor who posted an obscene tweet on the Chrysler brand’s official account says he’s sorry his four-letter flub has cost 20 people their jobs. Scott Bartosiewicz’s Twitter posting from last week read: “I find it ironic that Detroit is known as the (hash)motorcity and yet no one here knows how to (expletive) drive.” It was meant to appear on his personal account, but Bartosiewicz mistakenly sent it to the Chrysler brand’s feed while he was stuck in traffic on Interstate 696. The error resulted in the 28-year-old Ferndale resident’s dismissal and contributed to Chrysler’s decision not to renew its contract with Bartosiewicz’s employer, New Media Strategies, a Virginia-based marketing firm that now is putting about 20 local employees out of work. It’ll be a miracle if this guy sees this year’s Final Four. Since everyone’s distracted by brackets and projectile vomiting in the street, I thought I’d pull another “problem” from our Twisted British Sister site: So a new ‘man’ (18) started last week and I got chatting to him in the car park as he was loitering waiting for the office to open. It turns out he lives vaguely near me and I, in passing, said that if he was ever stuck trying to get to work (e.g. from rain, hail, wind or snow) he should let me know and I could always swing by and fetch him. On Monday he asked if I could bring him to work. Being soft I said ok and gave him a lift. Then home. Then Tuesday to work and back. Yesterday he got in and said ‘Oh, I’ve been thinking, I should pay you for these lifts’. Resigned to my fate as being soft and letting him keep getting lifts I consoled myself thinking ‘Oh well, my petrol is £45 a week, at least he will cut my commuting costs’. I gave him a lift home and he said ‘Is this alright for a weeks worth?’ and gave me a pile of shrapnel. I counted it when I got home and it was £7.91. I can’t smoke with him in the car as he coughs. I don’t like to have music on as I feel obliged to force conversation. He is 18 and therefore annoying to talk to. I want him out of my car, but he is nice and I am nice, so how do I do it? If I pushed him out on the dual carriage way would the police take a dim view? Nothing WORSE than a non-smoker and a cheapskate, amiright? Suggestions for this chap are now welcome (if you’re still sober enough to type, that is). Sorry that we’re a little tardy on this news but you just knew someone was going down for this. Apparently the mortification suffered by Weatherford International CFO Andrew Becnel was enough for him to keep his job. Principal Accounting Officer Charles Geer, on the other hand, wasn’t so lucky: The Geneva-based company also disclosed the departure of Principal Accounting Officer Charles E. Geer, whose resignation comes two weeks after Weatherford disclosed tax-accounting errors that forced it to revise previous results by $500 million. Weatherford said in a securities filings that Mr. Geer, whose resignation is effective Friday, is leaving to “pursue another career opportunity.” It’s awfully nice of the company to keep things so professional after the material weaknesses under Geer’s watch will result in restatements for three years of filings. As if the combination of March Madness and St. Patrick weren’t enough, this slide from yesterday’s Investor Advisory Group meeting should drive many to drink. The presentation was prepared by The Working Group on Lessons Learned from the Financial Crisis of the IAG and includes past comments from critics like Francine McKenna and Jonathan Weil on the expectations gap between auditors and basically everyone else. But don’t worry, it also presents the audit profession’s defense of itself including past statements from the Center for Audit Quality and PwC’s Richard Sexton the head of audit it the UK, who said this: Now, one could come to the conclusion that Mr Sexton works for his clients first and not investors but you might not agree with that. Now before all the Big 4 auditors get in a huff, the presentation has some criticisms of the PCAOB as well, specifically on the report the Board issued in September 2010: If you can manage to stop drinking your breakfast for two, check out the full presentation below and discuss. Tax Plan Aims for 25% Cap [WSJ] Moral for CEOs Is Choose Your Fraud Carefully [Jonathan Weil/Bloomberg] A Long, Painful Reckoning [WSJ] The Ten Worst Things to Put on Your Resume [FINS] Accountants gone bad… [AW] Congress Deliberates on Taxes and Abortions [AT] How do tax forms get their names? [MSN]Did KPMG Really Warn HSBC About Madoff Fraud Risks?
Memo to Congress: Cutting Funding for NPR Should Be NBD
Can I Temp for a Local CPA Firm Prior to Starting My Full-time Job?
Signed,
Need to pay rent! (Rent’s too damn high) (‘Cause everything is RENT!)Accounting News Roundup: H&R Block Chair Stepping Down; Deloitte Miami Names New OMP; Texas Weighs Soda Tax | 03.18.11
Libya declared a ceasefire in the country to protect civilians and comply with a United Nations resolution passed overnight, Libyan Foreign Minister Moussa Koussa said on Friday. “We decided on an immediate ceasefire and on an immediate stop to all military operations,” he told reporters. “(Libya) takes great interest in protecting civilians,” he said, adding that the country would also protect all foreigners and foreign assets in Libya.
Japanese engineers battled on Friday to cool spent fuel rods and restore electric power to pumps at the stricken Fukushima Daiichi Nuclear Power Station as new challenges seemed to accumulate by the hour, with steam billowing from one reactor and damage at another apparently making it difficult to lower temperatures.
H&R Block Inc. (HRB), the biggest U.S. tax preparer, said Richard C. Breeden will step down as chairman more than three years after the hedge-fund manager and former securities regulator seized control in a proxy fight. Breeden, 61, plans to leave at the end of the tax season on April 18, the Kansas City, Missouri-based company said yesterday in a statement. He intends to devote more time to his hedge fund, Breeden Capital Management, H&R Block said.
IL accounting wannabes pursuing an accounting degree with plans to become a CPA can apply for four different scholarships funded by the CPA Endowment Fund of Illinois.
Plenty of blame to go around!
Deloitte taps Miami native to head its Florida offices [SFBJ]
Peter T. Pruitt, Jr. is the new chief.
Representative Dave Camp’s call to lower U.S. corporate and individual tax rates to 25 percent would require Congress to make the type of difficult choices that have doomed tax overhaul plans for a quarter century. Camp, a Michigan Republican who heads the House Ways and Means Committee, this week said he wants to lower the top individual and corporate rates by 10 percentage points. His aim would be to collect revenue totaling 18 percent to 19 percent of gross domestic product, which is near the recent average.
Of course it has to do with WINNING.
Supposedly this will raise $2 billion for Texas, narrowing its budget deficit to $25 billion. Progress!China MediaExpress CFO Keeps Things Vague in Resignation Letter
China MediaExpress Holdings, Inc.
22/F Wuyi Building
33 Dongjie Street
Fuzhou, ChinaNew Management Accounting Designation Coming Your Way?
Doing It Wrong Twitter Case Study: The Idiot Who Accidentally Talks Sh*t on His Client’s Twitter Feed and Causes 20 People to Lose Their Jobs
Problem of the Day: Non-smoking, Cheapskate, Immature Newbie Is Cramping My Commute
I know – an 18 year-old co-worker? Just go with it:
WFT Principal Accounting Officer Leaving Company After $500 Million WTF
Chart of the Day (From Yesterday): Audit Failure Edition
After yesterday’s findings on the usefulness (or lack thereof) of the auditor’s report, we bring you “The Watchdog that Didn’t Bark … Again.” It’s not as caught up on surveys and whatnot, as it is just pointing out some of the well, failures by auditors during the financial crisis.
Accounting News Roundup: Choosing Fraud Wisely; What Not to Put on the Résumé; Tax Form Names Explained | 03.17.11
The chairman of the House Ways and Means Committee wants to cut the top U.S. tax rate to 25% for individuals and corporations, and cut or eliminate many popular deductions. The odds of quick action appear slender. But the move, from Rep. Dave Camp (R., Mich.), is significant as a marker in what will likely be a multiyear debate over revamping the tax code. The plan also provides Republicans with a position to pitch in the 2012 election, a campaign that promises to focus heavily on the economy and jobs.
Of all the stories to come out of the 2008 collapses of Fannie Mae and Freddie Mac, this one may be the most incredible: To this day, neither company has admitted that any of the numbers on its financial statements that year were wrong. It seems the Securities and Exchange Commission won’t be doing anything to challenge that pretense, either, and that this may be by design. The SEC for years has been bending over backward to avoid accusing major financial institutions of cooking their books, even when it’s obvious they did.
The number of dead and missing after Japan’s twin earthquake and tsunami stood late Wednesday, officially, at 12,920. In reality, Japanese widely agree, the toll of last week’s disaster is likely much higher. In Miyagi, a coastal prefecture that bore some of the tsunami’s worst destruction, officials estimate the toll there alone will be in the tens of thousands.
Your experience as a lifeguard in high school won’t do much good.
The latest batch of bad apples.
Stamping tax provisions into the “No Taxpayer Funding for Abortion Act” doesn’t make a lot of sense.
Some trivial information to distract your clients when they’re about to fire you.