Going Concern

Senators Introduce Bill That Would Require IRS to Produce 310 Million (or so) Receipts

Caleb Newquist
March 3, 2011

Plenty of horrendous ideas get introduced inside the hallowed walls of Congress but the latest submission from Bill Nelson (D-FL) and Scott Brown (R-MA) ranks right up there:

Sens. Bill Nelson (D-Fla.), chairman of the Senate Finance subcommittee on Fiscal Responsibility and Economic Growth, and Scott Brown (R-Mass.) introduced the measure Wednesday that would require the IRS to provide each taxpayer with an itemized list, similar to a grocery store receipt, that shows where their payroll and income taxes are spent. “Taxpayers have a right to know where their money goes, how much Uncle Sam is borrowing on their behalf, and what they get in return for it,” Nelson said.

Yeah, no problem. New responsibilities under healthcare reform, chasing offshore accounts, not to mention your everyday tax compliance and enforcement. This will be a piece of cake since the the Service’s budget is getting slashed.

Senators introduce bill that would provide detailed tax receipt [The Hill]

CFOs

Weatherford CFO Not Taking $500 Million Accounting Error Well; CEO Slightly More Upbeat

Caleb Newquist
March 3, 2011

~~WTF~~ WFT CFO Andrew Becnel needs a hug:

Weatherford International Ltd. Chief Financial Officer Andrew Becnel called a $500 million accounting error disclosed by the oilfield-service company late Tuesday an “embarrassment,” the damage of which is “impossible to quantify.”

But you know who’s taking this whole snafu in stride? CEO Bernard Duroc-Danner that’s who! BDD told investors on a conference call today that nothing is fucked and that this will all be yesterday’s news in no time:

Chief Executive Bernard Duroc-Danner said there is no risk of a U.S. government investigation or of any tax penalties or fines related to what he characterized as a mistake in calculating the tax rates on dividends moved from one subsidiary to another.

Geez. Give the SEC some credit wouldja? Just because they missed a few things here and there doesn’t mean they won’t ask any questions about your material weaknesses.

Weatherford Finance Chief Calls Accounting Error an ‘Embarrassment’ [WSJ]

WFT’s Material Weaknesses Led to Giant Tax WTF

Caleb Newquist
March 2, 2011

It’s bad enough that 3% of Weatherford International’s revenues come from Libya, Egypt, Tunisia, Yemen and Bahrain but the company also revealed in a their NT 10-K filed yesterday that they aren’t so good at staying top of their taxes:

The Company’s Annual Report on Form 10-K (the “Form 10-K”) for the year ended December 31, 2010 cannot be filed within the prescribed time period because the Company has identified a material weakness in internal controls over financial reporting for income taxes and requires additional time to perform additional testing on, and reconciliation, of the tax accounts to be included in the annual financial statements to be presented in the Form 10-K. The Company expects to file the Form 10-K on or before the 15th calendar day following the prescribed due date.

FuelFix has the gory details:

Oil field services firm Weatherford International goes by the stock ticker is WFT, but analyst reaction to the company reporting more than $500 million in tax errors is more likely drawing the reaction of “WTF?” from investors.

The company said it will have to restate its earnings going back to 2007 due to “material weaknesses” in its internal controls, namely:

1. inadequate staffing and technical expertise within the company related to taxes,
2. ineffective review and approval practices relating to taxes,
3. inadequate processes to effectively reconcile income tax accounts and
4. inadequate controls over the preparation of quarterly tax provisions.

So in other words, Weatherford has no tax experts in their accounting department, no one to supervise or review the work of those experts and no checks or balances over the tax provision process as a whole. Was the Ernst & Young audit team aware of this? Last year’s 10-K had a clean opinion, in case you were wondering. Oh, and Weatherford moved its HQ to Switzerland back in ’08. So there’s that.

Oops: Weatherford reports $500M tax error [FuelFix]

BREAKING: Tax Reform Will Be a Long Process

Caleb Newquist
March 2, 2011

Yesterday in a Senate Finance Committee hearing, Senator Max Baucus (D-MT) said that he would like a “weekly set of get-togethers” to address reforming our tax code. You see, Baucus was having similar weekly hearings for two years leading up to the healthcare reform bill that was passed last year. And since those were such a hoot, he figures attacking a equally polarizing issue like tax reform will demand a similar strategy. However, witnesses before the committee – all former assistant Treasury secretaries for tax policy – warned that this debate will likely haunt our dreams and news cycles for a long time:

Fred Goldberg, Jonathan Talisman, Mark Weinberger, Pamela Olson and Eric Solomon discussed, among other issues, the difficulties in crafting a revenue-neutral tax reform plan; problems with the alternative minimum tax and the tax exclusion for employer-provided healthcare; and issues with double taxation in the corporate code.

The former Treasury officials also declared that any successful overhaul of the tax code could take several years and would require leadership from the Oval Office.

Now for the older crowd, the long arduous process of tax reform harkens you back to days of when Charlie Sheen was winning by dodging…er, Charlie in Platoon. For many of the Millennials, well, you were all a lot cuter back then.

“We saw that in 1986,” Weinberger said. “President Reagan at the time made it his No. 1 domestic policy initiative and it still took over two years and failed three times before it was ultimately enacted into law.”

Baucus wants weekly tax reform hearings [On the Money/The Hill]

Technology

Intel’s Thunderbolt Makes FireWire Look Like Your Grandma on the Freeway

Adrienne Gonzalez
March 2, 2011

Sick of staring at your computer screen watching the data crawl by? Stare no longer, the future of data transfer is here with Intel’s new Thunderbolt™ technology:

From the company with the fastest processors comes the fastest way to get information in and out of your PC and peripheral devices. At 10 Gbps, Thunderbolt™ technology gives you great responsiveness with high-speed data and display transfers in each direction—at the same time. With a single cable, connecting a PC to multiple devices is simple, making it easy to get and see what you want, when you want it. Thunderbolt technology gives you incredible flexibility; high performance expansion is just a cable away for new and novel uses, now and in the future.

Intel boasts that you can transfer a full HD movie in less than 30 seconds or backup an entire year of continuous mp3 playback in around 10 minutes using this technology.

Thunderbolt is bi-directional and allows for daisy-chaining, making that tangle of USB cords hanging off your desk obsolete, as soon as hard drive storage size necessitates lightning-fast data transfer, that is.

New MacBook Pros come equipped with Thunderbolt ports but for the rest of us, it’ll be USB for the foreseeable future until PC technology catches up and new laptops begin shipping with bolts emblazoned on the side.

Just think how many years of SOX-compliant data you can transfer away from prying eyes no sooner than the front desk says “the PCAOB is here!”

Accounting News Roundup: IRS Commish: Budget Cuts Will Help Tax Cheats; Date Set for International CPA Exam; The 16th Turns 98 | 03.02.11

Caleb Newquist
March 2, 2011

IRS Chief Tells U.S. Lawmakers House’s Spending Cuts Would Help Tax Cheats [Bloomberg]
The House spending bill for the rest of fiscal 2011, which is opposed by Senate Democrats and President Barack Obama, would cut $603 million from the IRS’s fiscal 2010 spending level of $12.1 billion, Shulman said. Those cuts would cost the government $4 billion in collected revenue, Shulman said. The hearing highlighted the conflict between the House Republican majority’s push to reduce spending and the Obama administration’s proposed funding increases for some agencies, including the IRS.

Gregg Clark rejoins Ernst & Young LLP as Americas Consumer Products Leader for Advisory Services [PR Newswire]
“We are thrilled that Gregg has decided to re-join the firm in this new role,” says Bryan Segedi, Vice Chair of Advisory Services at Ernst & Young LLP. “His experience in the areas of M&A, business and IT strategy, e-business and supply chain management make him a vital asset to the Advisory Services Practice and allows us to expand on the services already offered to our consumer products clients.”

CPA Exam Slated for International Debut in August [JofA]
Japan, Bahrain, Kuwait, Lebanon and the UAE join the fun.

Charlie Sheen And Public Company Disclosure [Forbes]
CBS and TimeWarner don’t appear to be winning. Should they be disclosing?

Big Four domination creates dearth of expert witnesses [Accountancy Age]
A lack of non-conflicted expert accounting witnesses could impact on the ability to bring litigation against the biggest firms. The Joint Disciplinary Scheme, the accountants’ watchdog that has issued its last annual report after completing its caseload, warned that the “near monopoly” of Big Four audits of the FTSE 350 meant it was difficult to find expert accounting witnesses to help in tribunals.

HMV lenders set to appoint Deloitte over debt talks [FT]
Lenders to HMV Group, including state-backed banks Royal Bank of Scotland and Lloyds Banking Group, are about to appoint Deloitte to advise them in talks over the group’s debts, according to people familiar with the situation. The decision to appoint financial advisers came as the embattled music and entertainment retailer warned on Tuesday that it would miss analysts’ expectations for full-year pre-tax profits of £45m because of a continued “challenging” trading conditions.

Happy Tax Day (er, Sort Of) [Tax Girl]
Memo to Tax Deniers: The 16th Amendment turned 98 yesterday.

News

Does Hollywood Always Portray Accountants as ‘Pathetic’ or ‘Despicable’?

Caleb Newquist
March 2, 2011

That’s the question put forth by a reader across the pond to the group and since the Academy Awards have come and gone with nothing more than the cliché PwC jokes, it seems worth discussing.

But first, the Brit with the beef:

I watched the brillant [sic] Untouchables yesterday. This triggered the point about portryal [sic] of accountants by Holloywood [sic]. It is very poor in comparision [sic] to other professions.

Most accountants in the movies are either pathetic (think Rick Moranis in Ghostbusters) or despicable (Ed Begley Jr. as the sleazeball accountant who crosses a vengeful Roseanne Barr in She-Devil).

Other professions like, firefighters, doctors, and lawyers (Julia Roberts in the Oscar-winning Erin Brockovich), get their fair share of heroic roles. But when it comes to accountants we are pushed aside.

Well, for starters, comparing the work of firefighters and doctors to accountants makes as much sense as sending a team of interns into an audit committee meeting. If you’re looking for heroics, there are few opportunities for accountants in Hollywood; even a crook-turned-crime-fighter like Sam Antar would be a anti-hero at best. One exception would be Ben Kingsley as Itzhak Stern in Schindler’s List.

As for Morris in Ghostbusters, he scores with Annie Potts in Ghostbusters 2, so that hardly qualifies as pathetic. As for motive behind the unflattering portrayals, maybe enough people working in Hollywood have been ripped off by their own accountants that a slight vein of villainy is always written into their characters. The most recent muse being Ken Starr.

Despite that possibility, there are plenty of accountants in film that we like:

• Thandie Newton as Stella in RocknRolla

• Leo Bloom in The Producers (Wilder or Broderick, take your pick)

• Danny Glover as Henry Sherman in The Royal Tenenbaums

• It’s on the small screen but George Wendt as Norm Peterson on Cheers

Whether you see these characters as flattering or not, is your call but their awesomeness is not in question (I’m partial to Stella, frankly). We’re missing some, surely, so feel free to chime in with others.

Man Arrested for Threatening to Bomb IRS Building Would Erect Monument to Austin Plane-crasher ‘If He Had Any Extra Money’

Caleb Newquist
March 2, 2011

And what’s the reason 64 year-old Leonard Mackey doesn’t have the dough to put up a statue of domestic terrorist, Joseph Stack? It’s not entirely clear but you can bet the IRS has something to do with it:

Leonard C. Mackey, of 1025 W. Wilkes-Barre St., went to the IRS office at 3 W. Broad St. around 3 p.m. saying he was “sick and tired of the IRS harassing him.” He demanded a copy of a 2008 letter indicating he no longer had money, a news release from police said. […] Mackey went on to say he would erect a monument to the guy who blew up the IRS building in Texas. That is, if he had any extra money. As he left the office, he said to the security guard who had asked him on the way in if he had a firearm that “you didn’t ask me about bombs. We have them downstairs.”

It’s sort of cute that he sabotaged himself like that.

Bethlehem: Tax dispute erupts with bomb threat, evacuation and arrest [The Morning Call]

Career Center

Do I Stay in Public Accounting Until Manager? Part XXXIII

Caleb Newquist
March 2, 2011

Welcome to but-what-does-Emilio-think? edition of Accounting Career Emergencies. In today’s edition we revisit the age-old debate of a senior associate wondering if they should stick with their firm until they get the bump to manager. It’s been awhile since I’ve addressed this, so it’s about time we went for another go-round.

Getting bad career advice? Trying to patch things up with the boss? Trying to land some goddesses at your firm? Email us at advice@goingconcern.com and we’ll get you back to WINNING.

Back to our SA:

Hey Going Concern,

I’m an S2 working for a 2nd tier accounting firm. I’m contemplating looking for a new job once this busy season is over, but am also considering working 1 more year and making manager before moving on. What do you think? Is it worth leaving now when I’m so close to manager or should I stick it out 1 more year? Will I have more/less or better/worse job opportunities after I make manager?

Thanks.

Dear Maybe Manager,

As I alluded, your plight is common amongst many in the world of public accounting. And as you can imagine, there are two divergent camps in this debate: those who think you should stay and those who think you should jump ship. I’ll do my best to tackle both arguments, running down the pros of each first.

PROS

Stay until promoted – Staying until manager means you get a title, a nice bump in salary (historically) and if you’re lucky, a little bonus. You’ve either mastered the art of navigating the political waters of your firm or you’re such a superstar at your job that TPTB had no choice but to recognize your talents with a promotion. Now that you’ve reached this crucial level in your firm, clients, recruiters and others view you slightly differently. You’ve got experience (obviously), management skills (presumably), are smarter than the average accountant (sometimes a BIG assumption). This will – right or wrong – give you the opportunity to get into similar more senior positions when you are ready to leave public.

Leaving prior to promotion – Jumping ship now allows you to move into a company where you’ll get the opportunity to learn what it’s like to be on the client side of the equation. Whether you’ll actually interact with your public counterparts will be determined by what kind of job you take (that may be a good thing). Regardless, you’ll learn a lot in your new job that you won’t in a public firm. This is ideal if you see yourself working in-house somewhere as opposed to making a career in public.

CONS

Stay until promoted – Simply put: managers have it bad in public accounting. They get shit from partners; they get shit from seniors; they get shit from staff; they get shit from clients. Managers are swimming in shit. As a senior, you definitely have to deal with a lot of the same people but the pressure from partners and clients, as a manger is different. You’re expected to be able to deal with all of it well. Mediocrity isn’t really an option. The only way to get around your mediocrity is to get really, really, really good at throwing people under the bus. If you’ve found yourself in that situation, you can probably count the people who think you’re a “good manager” on one hand and none of them work with you. Also as a manager, you’re so caught up managing, there’s very little time leftover for professional development. Granted, you’ll have the opportunity to learn more things but will you want to? You’re already overweight or severely sleep-deprived. Are you really the type to spend your precious spare time boning up on the latest developments in accounting rules or tax law? Probably not but the catch is, you’re expected to. Lastly, once you move outside the firm, your perspectives on audit/tax/consulting will largely be formulated and lots of employers are looking for people that still a tad impressionable. Prospective employers aren’t crazy about 30-something know-it-alls that just want a CFO/controller title and a salary.

Leaving prior to promotion – The biggest risk here is that you’ll end up making a move that feels lateral. You may get a nice bump in salary but you’ll probably feel like you’re still in the same spot on the pecking order. Most SAs – regardless of practice – have self-inflated their own professional value and finding out that your experience is pretty unexceptional can be a shock. Sure, there are some opportunities for vertical move when you leave public but the odds are against you.

So there you have it. And to answer your question directly – I’m a believer that you’ll have more and better career opportunities if you leave your firm prior to being promoted to manager. Your experience will be more diverse, you’re hopefully still open to seeing how other companies do things and your brain won’t be watered down with “managing” so much. That will come later.

I’m sure I missed some things, so jump in people. I still haven’t watch the GMA interview.

Deloitte

Low Voter (aka Partner) Turnout Expected for Deloitte Leadership Election

Caleb Newquist
March 1, 2011

Last week we shared the Deloitte U.S. Leadership candidates with you but at the time we hadn’t confirmed that the thumbsup/thumbsdown had begun. This week, a source confirmed for us that voting had, in fact, started last week but no one should get too anxious about hearing the results:

The vote continues at least until the Firm achieves a 50% voting rate from all the partners. This is typically a struggle, and many voice messages and e-mails are sent rounding up at least the 50%. This is part of the problem (and a bit pathetic). Nobody believes their voices are heard, so they don’t care to vote. Or, if they vote NO, they fear retribution.

As we reported in January, the retribution of a “No” vote is something that many young partners may fear and you can presuppose that many veteran partners who are a little preoccupied with a little something called “busy season clients” aren’t exactly concerned with casting a vote in an election that is all but decided already. All this adds up to a pretty sad voter turnout, sayeth our source:

Ok – so then, among that paltry 50% voting rate, there needs to be a 2/3 approval for each candidate in order for them to win election. So – if you do the math…we have about 2800 partners. Only 1400 need to vote for a quorum, and only about 940 need to approve each candidate for them to get into office. So perhaps only about 33% of the partners end up approving of the people that run the firm.

Unfortunately – nobody focuses upon this fact. Unbelievable. And now we have a non-CPA being put up for the Chairman’s spot of an accounting firm. It’s insanity, really.

Oh, right; the non-CPA chairman controversy. For those of you that are unfamiliar, Punit Renjen is the CEO of Deloitte Consulting. Mr Renjen has been on the job for just over a year and by all accounts has done an acceptable job and it doesn’t surprise us that he’s up for this position. The fact that he, in all likelihood, will become the next chairman of a Big 4 firm, bothers a lot of CPAs. Despite the bellyaching of those on the audit/tax side of the house, what’s not up for debate is that Deloitte Consulting is the second largest practice, according to the this year’s revenue data. But what’s even more important, consulting is the fastest growing segment, with double digit growth in FY 2010. So if Mr Renjen’s ascension to the chairman position bothers some in a CPA puritanical sense, we can appreciate that. But from a numbers standpoint, it’s probably overdue and is definitely not surprising.

Career Center

The AICPA Is Giving Future Accounting Rockstars a Shot at Free Money

Adrienne Gonzalez
March 1, 2011

Let’s be serious for a moment, who doesn’t want free money? And if you could also advance your own knowledge base, further your career and benefit the profession in the process, why wouldn’t you take it?

The fact that we are facing a shortage of accounting faculty to teach future beancounters is not newsworthy as the AICPA is now in its fourth year of the Accounting Doctoral Scholars program. Launched in July of 2008, ADS provides funding for four years for up to 30 new candidates each year, incubating a total of 120 newly educated PhDs in audit and tax. Thirty candidates with an average GMAT of 718 were selected for funding in 2009 and 2010, with twenty-seven candidates placed in 2009 and 29 in 2010. If you are interested in taking advantage of some $17 miS will begin providing information on applying for fall 2012 in May of this year, stay tuned to their website for more details.

But we aren’t all cut out to be accounting professors. Many of you know this because you learned accounting from folks who had no business teaching. Did you know the AICPA also provides scholarships to minorities, those with little accounting education seeking to get into the industry and outstanding accounting students with a 3.0 GPA or better?

From This Way to CPA, we have four major scholarship programs and deadlines are fast approaching so you better get it together if you want some of this. Each scholarship has different requirements so please read them carefully before applying and you must be an AICPA student affiliate member to qualify. If you haven’t yet joined, you may do so here.

AICPA Accounting Scholars Leadership Workshop

Held June 2-4, 2011 at the Washington Duke Inn & Golf Club in Durham, NC on the Duke University campus, the AICPA Accounting Scholars Leadership Workshop is an annual invitational program for minority accounting students who plan to pursue the CPA designation. This event aims to strengthen students’ professional skills and understanding of the limitless possibilities and benefits of earning the CPA credential.

Participants will gain confidences and an enhanced understanding of the varied accounting career paths to help them make better career decisions after graduation. An all-expenses paid event, the AICPA covers the cost of student attendees’ transportation, hotel accommodation and meals.

Deadline to apply:
Fri, May 6 2011

The AICPA John L. Carey Scholarship

The John L. Carey Scholarship was established by members of the accounting profession to honor John Carey upon his retirement from the AICPA in 1969. During his 40-year tenure at the AICPA, Mr. Carey served as administrative vice president; executive director; and as editor and publisher of the Journal of Accountancy. Mr. Carey dedicated his entire career to serving the accounting profession and made it a priority to encourage outstanding students to become CPAs.

Recipients receive $5,000 for one year. Scholarship aid may be used only for the payment of expenses that directly relate to obtaining an accounting education (e.g.; tuition, fees, room and board, and/or books and materials only).

Deadline to apply:
Fri, Apr 1 2011

AICPA Scholarship for Minority Accounting Students

The AICPA Scholarship for Minority Accounting Students provides financial awards to outstanding minority students to encourage their pursuit of accounting as a major and their ultimate entry into the profession. Scholarship funding is provided by the AICPA Foundation, with contributions from the New Jersey Society of CPAs and Robert Half International.

The AICPA Minority Scholarship was created in 1969 with the purpose to increase the representation of ethnically diverse CPA professionals. For over four decades, this program has provided over $14.6 million in scholarships to over 8,000 accounting scholars.

Recipients receive individual awards of $3,000 per academic year.

Deadline to apply:
Fri, Apr 1 2011

AICPA/Accountemps Student Scholarship

The AICPA/Accountemps Student Scholarship program provides financial assistance to outstanding accounting students who demonstrate potential to become leaders in the CPA profession.

Recipients receive $2,500 for one year.

Deadline to apply:
Fri, Apr 1 2011

You’re welcome!

Accounting News Roundup: A Silver Lining for Charlie Sheen; Wells Fargo Snubs Ex-CFO; Property Tax Map | 03.01.11

Caleb Newquist
March 1, 2011

Egyptian accountants predict improved business after chaos [Accountancy Age]
Insert “denial” puns below.

Tax note to Charlie Sheen: rehab costs are a deductible medical expense [DMWT]
WINNING!

Wells Fargo Stock Grants Snub Former CFO [The Street]
Nice to see everyone is keeping this sophisticated.

Morningstar switches accounting firms [Reuters]
Good-bye EY. How-dy KPMG.

Whence The Next Fresh Accounting Scandal? The Ominous Threat of A Shoe That’s Yet to Drop [Re:Balance]
Jim Peterson thinks things have been quiet…too quiet.

There’s No Process Like FASB Due Process [The Accounting Onion]
Tom Selling goes through some constructive feedback he received on a recent post.

Seventh Circuit leaves bitter ex son-in-law bitter [Tax Update Blog]
Practical CPA advice of the day from Joe Kristan, “sometimes you just need to just let it go and move on.”

Property Taxes By County, 2005-2009 Average [Tax Foundation]
This may be the only time West Virginia looks like a tempting places to reside.

IRS Is Holding $1.1 Billion in Tax Refunds [TaxProf Blog]
If you didn’t file a return in ’07, you’ve got until April 18th to get on this and collect your refund.

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