Going Concern

CPA Exam

AICPA Has Released FAR Scores to NASBA for the Jan/Feb Testing Window

Caleb Newquist
March 23, 2011

Rejoice! Despair! Whatever.

According to the NASBA Twitter feed, they’ll have scores for 32 states up with a few others taking 24-48 hours to appear.

Earlier:
The AICPA’s Note to Pissed Off CPA Exam Candidates on Scoring

In Order to Avoid Sales Tax on Food in Wyoming It’s Best to Refuse Napkins, Resist the Urge to Heat Pastries

Caleb Newquist
March 23, 2011

Today over the Tax Foundation’s Tax Policy Blog, we get a little taste of how fun defining something like “food” can be. Now, if you’re like some people we know, there is lots of stuff at the grocery that definitely should not be consumed by human beings but in order to avoid raucous debate, it gets the food label. Wyoming is one of the 37 states that partially or wholly exempt groceries from sales tax but just because something is a grocery store, that doesn’t necessarily mean it won’t be taxed. Sigh.

Under Wyoming’s new law, food is defined as “substances whether in liquid, concentrated, solid, frozen, dried, or dehydrated form that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value.” This does not include booze, tobacco or “prepared foods.” And yes, exactly what items are included in “prepared foods” is where things get a little confusing.

What is a prepared food? Here’s how the new law defines it:

• Food sold in a heated state or heated by the seller; or

• Two or more food ingredients mixed or combined by the seller for sale as a single item; or

• Food sold with eating utensils provided by the seller including plates, knives, forks, spoons, glasses, cups, napkins, or straws. A container or package used to transport the food is not an eating utensil.

”Prepared food” does not include:

• Food that is only cut, repackaged, or pasteurized by the seller;

• Eggs, fish, meat, poultry, or foods containing raw animal foods and which are required or recommended to be cooked by the consumer to prevent food-borne illness;

• Food sold by a seller whose proper primary North American Industry Classification System (NAICS) classification is manufacturing in sector 311, except subsector 3118 dealing with bakeries; [Ed. note: This is my personal favorite]

• Food sold in an unheated state by weight or volume as a single item; or

• Bakery items including bread, rolls, buns, biscuits, bagels, croissants, pastries, donuts, danishes, cakes, tortes, pies, tarts, muffins, bars, cookies, tortillas, and other bakery goods unless the item is sold as prepared food.

This isn’t nearly as confusing at Washington state’s attempt to define candy (Kit-Kat doesn’t qualify) but it’s about as windy as…well, Wyoming.

Wyoming Redefines Food: Don’t Overprepare Your Danishes [Tax Foundation]

Audit
PCAOB

Who’s Ready for Changes to the Auditor’s Report?

Caleb Newquist
March 22, 2011

“We heard from investors that they want more information in the auditor’s report. Investor dissatisfaction with the current auditor’s reporting model should concern other constituents as well, including preparers, auditors and regulators,” said PCAOB Chairman James R. Doty. “Today’s report from our own staff, based on their discussions with a broad audience, will be vital to the Board’s effort to develop a meaningful proposal for change in a concept release. Our intention is to expose such a release as early as this summer.” [PCAOB]

News

Lindsay Lohan Probably Costing California Taxpayers Millions Albeit Less Than Real Fiscal Problems

Caleb Newquist
March 22, 2011

You may have heard that California is having some budget issues. Sure there’s this Wisconsin business and all that but seriously folks, Californ-I-A is really in the fiscal shithouse. There are a number of reasons for this, most of which we won’t get into here but it should be noted that ill-behaved celebrities haven’t been receiving their fair share of blame in the press.

Luckily we have the real America’s news network going to great lengths to inform us about Lindsay Lohan’s role in fiscal catastrophe:

Factoring in all the court dates, court postponements (like when she was partying in Cannes and couldn’t get back to the U.S for a hearing), arraignments, judge and prosecutor fees, jail visits (she has had three stints in the slammer – 84 minutes, two weeks and one evening before posting bail, mug shots (four and counting), probation officers, random drug testing resources, SCRAM bracelets (these generally cost over $100 to install and have a daily fee of about $18) and LAPD security to and from court, how much is Lohan costing the taxpayer?

“It has been four years, and we’re talking about quite a few county law enforcement professionals, so it is probably safe to say several million dollars,” California-based civil law trial attorney David Wohl told FOX411’s Pop Tarts.

And given that Lohan has thus far refused to enter into a plea deal regarding the theft incident, her current theft case could potentially go to trial, costing Californians much more.

MILLIONS! It’s been a while since your humble editor had to make any materiality calculations but taking a quick look around, California’s budget deficit is currently in the nabe of $25 billion. So apparently if LiLo was shipped off to the Dakotas, Wyoming, or some other state that was in a less dire financial situation, things in Cali would be plumb-dandy? Strange thing however, there doesn’t appear to be an “elimination of celebrities that are a burden on society” on the L.A. Times’s budget balancer.

Perhaps Fox is onto something here? Jerry Brown would probably appreciate the other help. Pro bono of course.

Experts: Court-Prone Lindsay Lohan Costing Taxpayers Millions [Fox News via Jezebel]

Big 4

Going Concern March Madness Upset Alert: 3 of the Big 4 Under Pressure

Caleb Newquist
March 22, 2011

We’ve got lots of Cinderellas in our midst friends. With 12 hours of voting to go in the first-ever Going Concern March Madness: Coolest Accounting Firm (“GCMMCAF”) bracket, Ernst & Young, Deloitte and KPMG are all in danger of being upset by BKD, Rothstein Kass and Crowe Horwath respectively.

As you no doubt noticed, #1 seed PwC is cruising along in their match-up with Reznick Group but aside from that, how is it that we could have such a dancity accounting firm bracket dance? Glad you asked because the consummate GC commenter, Another exKPMGer, has a theory:

I would wager serious money the cause for this is that the people who work for the other 3 firms, for the most part, didn’t vote for their own firm because they know their jobs are bullshit and want to give no sign of submission to their firm. Whereas the folks from PwC couldn’t click on themselves fast enough to prove how awesome they are. I hear they’re installing mirrors in every cubicle with the words etched at the bottom “PwC is AWESOME” so that you can stare at yourself all day and think about the awesomeness that you’re a part of.

There doesn’t appear to be any empirical evidence to support the theory at this time but supporters and debunkers are welcome to comment at the validity of this statement. And of course if you haven’t voted, jump over to the original post and get on this.

Wife of Man Who Received Tax Refund Without Filing Tax Return Under the Impression the IRS Was Letting This One Go

Caleb Newquist
March 22, 2011

Typically if you receive a $6,000 tax refund check in the mail, it’s something you’ve been expecting.

Such was not the case for James King who had a check cut to him back in February but unfortunately it’s due to case of identity theft. Right now the IRS can’t make heads or tails of the situation and despite the mix-up/criminal activity, Mr King’s wife figured that this was opportunity:

“She was ready to spend it,” King said of his wife with a laugh. “She was ready to go cash it and spend it. She had a to-do list right from the get-go.”

Man gets income tax refund without filing a return [TBO]

CPA Exam

Conquering the CPA Exam, One Step at a Time

Adrienne Gonzalez
March 22, 2011

One of our favorite sources of CPA exam info, This Way to CPA, has put together a very helpful list of suggestions for candidates trying to conquer the CPA exam. Just a few of the tips (many of which we have shared with you here previously):

Know your strengths. Confidence is good, but so is honesty. Know where you’re good – and where you need to improve. From there, you can design a study plan that works harder for you.

Write out a plan. What are you going to study, how are you going to study, and when? Maybe it’s all in your head, but it can’t hurt to write it all out to make sure you stick to the plan.

Use the free stuff. You can spend a lot of money getting ready for the exam. Which is perfectly fine. But don’t overlook the totally free tutorials, sample exams and other tools provided by the AICPA. After all, we make the test.

Our favorite was “get a lucky charm or something,” which shows us that the AICPA is not above superstition. That probably should be taken as an admission that the exam is part crapshoot, part dedication but we’ll save postulating on that for another day.

For where to find the “free stuff,” check out our previous comments on the topic and get to clicking.

Head to This Way to CPA for the rest of the tips but remember that all candidates are not created equal. Some can do better with a study buddy or the support of like-minded individuals while others prefer to isolate and be miserable (or make others miserable with their miserableness).

Some of these tips may or may not apply to your personal needs, which can only be determined by you and not any CPA Review Swamis out there or random folk on the Internet who have never stared into your bitter little 10-key-pounding heart. So my first suggestion would be to look long and hard at your own personal needs before you go looking for ways to improve your experience and succeed.

Accounting News Roundup: Tax-plagued McCaskill Will ‘Sell the damn plane’; Deloitte Sued Over China MediaExpress; KPMG Names New Head in Memphis | 03.22.11

Caleb Newquist
March 22, 2011

U.S. Warplane Crashes in Libya; Pilots Safe [WSJ]
A U.S. warplane crashed in a field in northeast Libya Tuesday, but the two crew members ejected safely, U.S. military officials. The U.S. F-15 Eagle was the first to warplane to crash since the start of military operations on Saturday, and officials said they didn’t believe the crash was caused by enemy fire.

Claire McCaskill failed to pay taxes on aircraft [Politico]
he Missouri Democrat has tried to be proactive in dealing with the matter. When contacted initially about the propriety of taxsements for the 89 flights, McCaskill voluntarily issued a check to the Treasury Department to cover the cost of the trips. Yet there remained questions about whether McCaskill and her husband had fully paid property taxes on the plane. McCaskill called a Monday press conference after POLITICO had been pressing her for several days over that issue. “I have convinced my husband to sell the damn plane,” McCaskill said. “I will never set foot on the plane again.”

Greenberg’s Starr Investments sues China MediaExpress [Reuters]
Starr Investments, a firm run by former AIG chief Maurice Greenberg, has sued China MediaExpress Holdings , saying it was fraudulently induced to invest about $13.5 million in the firm, court documents show. Starr has also sued China MediaExpress auditor Deloitte Touche Tohmatsu. The investment firm said the auditor had resigned as “it was no longer able to rely on the representations of the management.”

Charlie Sheen, out of work, faces tax issues [AW]
Taxes never kept anyone from winning! DUH.

Regulating Audit Firms: News and a Short Wishlist [Fraudbytes]
Dr. Mark Zimbleman has some ideas on how to take the heat off auditors including an idea on the litigation front, “if auditors were simply penalized for missing a fraud and no litigation process took place, they would be more vigilant. In other words, audit penalties would not be based on whether or not you could show you followed the required process, but whether or not you had the right outcome.”

Will Auditors Be Held Accountable? The PCAOB Has A Plan [Re:The Auditors]
Francine McKenna goes through last week’s recommendations from the IAG.

Barnes named to lead KPMG in Memphis [MBJ]
Greg Barnes takes the big chair from Matt Lusco.

Barry Bonds Steroids Perjury Trial to Open Before Jury of 8 Women, 4 Men [Bloomberg]
Barry Bonds’s perjury trial, to be heard by an eight-woman, four-man jury that includes a data center engineer at Amazon.com Inc. (AMZN), two nurses and a business college student, is scheduled for opening statements today. Bonds, 46, who holds Major League Baseball records for career and single-season home runs, faces four counts of perjury and one count of obstruction of justice for telling a 2003 grand jury he didn’t knowingly take performance-enhancing drugs. The trial in federal court in San Francisco is expected to last as long as four weeks.

News

BREAKING: Accountants Work Long Hours, Get Stressed During Tax Season

Caleb Newquist
March 22, 2011

Not only that but another shocking revelation is that they use caffeine to help them pull through this tough stretch.

They work 60-hour weeks this time of year, relying on pots of strong coffee and late-night dinners to help them calculate an endless swirl of numbers. Accountants are working feverishly to meet the deadline to file their clients’ tax returns this year even though they have extra time to do so.

Also, this just in – things get stressful because taxes are complicated:

The late nights can get intense, according to Carolyn Dolci, a tax partner in the Hackensack office of EisnerAmper. “It is busier than last year, partly because of the complexity of the tax code,” she said.

If you’re experiencing this phenomenon in your office, tell us your story in the comments below. Things will remain fluid for a few more weeks; we’ll keep you updated with any developments.

Accountants burning the candles at both ends [Star-Ledger]

Rich People in the U.S. Seem to Be Pulling Their Tax Weight Relative to Other Industrialized Countries

Caleb Newquist
March 22, 2011

The United States relied more on tax revenue from wealthy individuals and families than other industrialized countries during the middle of the last decade, the Tax Foundation said Monday. Citing data released in 2008 from the Organization for Economic Cooperation and Development, the nonpartisan group said that the ratio of what higher-income households paid in taxes compared to their share of market income was bigger here than in certain other countries. The richest 10 percent of American households paid a 45 percent share of the nation’s taxes in the mid-2000s, the OECD found, while having a 33.5 percent share of market income. That 1.35 ratio was higher than countries including Australia (1.29), Canada (1.22), France (1.1) and Poland (0.84). [The Hill]

Career Center

Regional CPA Firm Associate Concerned About Being Pigeonholed in Healthcare Industry

Caleb Newquist
March 21, 2011

Welcome to the my-bracket-is-decimated edition of Accounting Career Emergencies. In today’s edition, an associate at a regional CPA firm enjoys her valuation work but is concerned about getting pigeonholed into the healthcare industry. Is it possible for her to wiggle her way into another industry? What kind of careers can she find if she can’t get out?

Need career advice? Feeling betrayed by someone on your team? Trying to get some credit for past work that was previously unrecognized? Email us atice@goingconcern.com”>advice@goingconcern.com and we’ll be sure you get everything you have coming to you.

Back to the problem du jour:

Dear GC,

I am a recent graduate working at a regional CPA firm doing business valuation / healthcare consulting. I really like my job so far but I have some questions about my future potential. The office that I work for is mainly, if not 100%, involved in healthcare, and as such, with the current trend in healthcare laws, we do mostly physician practice acquisitions and fmv comp agreements. I have sat and passed all four parts of the CPA exam (now I just have to wait for the 2 years experience) and will soon be training to get a CVA/AVA certification (AVA until I am a licensed CPA).

I guess my question is what kind of job will I be able to get after this? The problem I have is that I love the concept of what I’m doing but I’m not entirely in love with healthcare. Also, because I value mostly physician practices, the majority of my valuations are adjusted net book value (which is the easiest of all methods for valuing) which means I might not ever get valuation experience on a level that would make me attractive to other valuation companies. If I stay here am I doomed to either try and beome a hospital CFO or if I’m lucky, try and become a partner? This being such a niche specialty, I guess I’m wondering if I’m just pigeonholing myself.

Regards,

SA

Dear SA,

Before I address your question specifically, you are aware that the Baby Boomers will slowly be populating hospitals, retirement communities, rehab centers and the such in the coming years, thus making healthcare one of the most lucrative industries in our fair land, aren’t you? Landing a CFO/Director of Finance gig at a hospital or being a partner with expertise in healthcare wouldn’t be that bad. Of course you can always jump to a bigger/smaller competitor that has a healthcare valuations practice as well.

But you’re “not entirely in love with healthcare,” so I’ll address your pigeonhole problem. Many people find themselves in similar situations and it usually happens when you haven’t made the vision of your career path explicitly known to a superior, mentor or performance counselor. It sounds like you’re a still a fairly new associate so you might be a bit anxious but I’ll go with it. If you’ve been working for less than a year, then you simply make it known that you’re interested in jumping into similar work but on different clients (e.g. financial services). If you’re between the one and two-year mark, hope isn’t lost but by now your managers have come to trust your work and they probably have plans for you. If you’re at two years-plus, then you best speak up now (why haven’t you asked already?). Your firm should be receptive to your wishes and you’ll be able to get some experience with new valuation methods and clients.

If your firm isn’t crazy about your idea, then it may be time to explore your options. It’s important to get some exposure to various industries and technical issues but do keep in mind it’s in your best interest to choose an industry at some point in your career (and the earlier the better) and you could do a lot worse than healthcare. If you choose the jack-of-all-trades route, your peers with more expertise will be favored by managers and partners in specific areas as opposed to someone with little or no exposure to their industry. So speak up in order to find new opportunities but keep in mind that healthcare may harken you back (for one reason or another) but you’ll have plenty of career options in a field that will be blowing up for years to come.

News

Is Madoff’s Auditor Spilling His Guts?

Caleb Newquist
March 21, 2011

Maybe! David Friehling was supposed to be sentenced last week but apparently it got pushed back again.

On November 3, 2009 Friehling pleaded guilty to various charges ranging from securities fraud to filing false reports to the SEC. He was to be sentenced for these crimes in February 2010 but because of his cooperation with the government, that was postponed until September 2010….that was then postponed until March 15, 2011….now that has been postponed until September 16, 2011. […] So what does a guy know who claims he did not know a lot? Is Friehling working with the Feds and Irving Picard (Madoff Trustee) on strong-arming Mets’ owners Saul Katz and Fred Wilpon? I doubt it. Can Friehling put a finger on one of the Bernard Madoff family members, who have yet to be charged criminally? Maybe.

Of course this could mean that Friehling also knows the location Jimmy Hoffa, the true identities of the participants in the Kenneday assassination and the Coke formula. Oh wait, everyone knows that one now. ANYWAY, the investigators may just be enjoying the anecdotes and would hate to see the poor guy shipped upstate. But most likely, he’s trying to save his ass from a sentence in FPMITAP like his #1 client received.

Giving Friehling the benefit of the doubt, he is cooperating to do the right thing now but he is also trying to get his sentence reduced in the process. With a fraud so large, I do not see how the Federal Sentencing Guidelines keep this guy in prison for less than 20 years.

Madoff Accountant — Now Auditing To Save His A#$ [Forbes/Walter Pavlo]

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