Going Concern

CFOs

The Housing Crisis Didn’t Stop the Fannie Mae CFO From Keeping Everyone in Stitches

Caleb Newquist
November 17, 2010

“Since joining Fannie Mae in 2008, David has worked diligently and successfully to help Fannie Mae respond to the housing finance crisis while developing strategies to enhance the finance function and prepare our company for the future. We will miss David’s intellect, energy, and good humor.”

~ Fannie Mae CEO Michael Williams in an email to employees announcing the resignation of CFO David Johnson.

Fraud

Sue Sachdeva’s Defense Team Provides Hysterical Argument for a Lighter Prison Sentence

Caleb Newquist
November 17, 2010

Koss embezzlement mastermind Sue Sachdeva will receive her prison sentence tomorrow for ripping the headphone cobbler off to the tune of $34 million. Yesterday, the government’s sentencing memorandum (full document after the jump) was released and the prosecution and defense each made their arguments for a heavier/lighter prison sentence.

Naturally, the prosecution is seeking the maximum sentence, as is Koss CEO Michael Koss, who wrote a letter to the court with his thoughts:

“She stole from the hardworking employees of the company and their families, and ultimately the stockholders of the company,” Koss wrote. “They are the true victims of her crimes.”

Yes! The shareholders! Including the Koss family members who 67% owned of the stock ! Especially the ones who held five executive positions at once!

But never mind that for two. Tracy Coenen breaks down the defense’s argument for S-squared to receive a lighter sentence and it’s a hoot:

They argued that Sue Sachdeva should get a lighter sentence because:

a. she’s been a law-abiding citizen until now

b. the fraud was “simple”

c. and poor, poor Sue has a “compulsive shopping disorder”

Jump over to Tracy’s post for more analysis but our take on these three reasons are as follows:

A. “Until now,” as in “right up to the moment she pleaded guilty”? If so, that sorta ignores a scam that went on for over a decade.

B. Again, so simple that it went on for over ten years? You’re really making the Koss management look like a bunch of idiots…Wait, maybe they’re on to something here.

C. Please. Show us someone who wasn’t addicted to shopping in the 90s and 00s.

Sentencing Memo

IRS Commish: Gird Your Loins, Offshore Bank Havens

Caleb Newquist
November 17, 2010

Yesterday we mentioned that the IRS’s new Global High Wealth Industry Group was putting the screws to the rich via “Audits from Hell.” Today, the Service announced that they were withdrawing the federal court summons against UBS since the Swiss Bank provide 4,000 more names of American clients who had parked funds offshore.

With the announcement, IRS Commish Doug Shulman put those 4k lucky ducks on notice that they should prepare for their personal audit inferno:

The IRS on Tuesday withdrew its Miami federal court summons seeking identities of suspected U.S. tax dodgers at UBS after receiving more than 4,000 names as required under an August 2009 agreement that also included the Swiss government. Each of those people expect what Shulman called a “full-blown audit” and many are likely to be charged criminally.

But that’s not all! Clearly, not satisfied with the example made of UBS, the Commish made a promise to everyone that the Service’s offshore bank raids were just getting started.

This is the close of what I call the first chapter,” IRS chief Doug Shulman told The Associated Press in a telephone interview. “We are actively pursuing a number of other banks and promoters and advisers.”

Shulman declined to get into specifics about ongoing offshore tax investigations, but said: “It’s not just about Switzerland, this is about multiple countries and multiple institutions.”

Tax
Video

Tim Geithner Doesn’t Think a Tax Cut Compromise Should Be Complicated

Caleb Newquist
November 17, 2010

He’d take care of this right here, right now if he could.

[via DB]

News
Video

Here’s What Charlie Rangel Missed at His Ethics Trial

Caleb Newquist
November 17, 2010

He really should have stuck around. He won on a couple of ’em, which is probably better than most people were expecting.

Of course Chuck isn’t going quietly:

How can anyone have confidence in the decision of the Ethics Subcommittee when I was deprived of due process rights, right to counsel and was not even in the room? I can only hope that the full Committee will treat me more fairly, and take into account my entire 40 years of service to the Congress before making any decisions on sanctions.

[…]

The Committee’s findings are even more difficult to understand in view of yesterday’s declaration by the Committee’s chief counsel, Blake Chisam, that there was no evidence of corruption or personal gain in his findings.

From here forward, it is my hope that the full Ethics Committee will take into consideration the opinion of its chief counsel as well as the statement by Rep. Bobby Scott, a member of its investigatory subcommittee who said that any failings in my conduct were the result of “good faith mistakes” and were caused by “sloppy and careless recordkeeping, but were not criminal or corrupt.”

Earlier:
Charlie Rangel Has Heard Enough

Top 10 Tax Changes to Know Now

Caleb Newquist
November 16, 2010

In March 2010, the President approved two huge pieces of tax legislation: the Hiring Incentives to Restore Employment Act and the Patient Protection and Affordable Care Act. Numerous tax provisions from these two bills take effect over the next several years. Will you be able to identify the tax changes that may impact your clients’ tax returns? Here’s a quick list of the things you will want to be familiar with.

1. Tax timeline in the health care reform act—when each provision takes effect. These are major tax changes spread over the next 8 years!

2. The additional Medicare Tax on unearned income and wages found in the new Health Bill (the hottest tax topic of the year)

3. How the Gillet case affects the tax return of a same-sex couple. Is filing “Married Filing Joint” permitted?

4. The 5 tests for qualifying a child as a dependent and who can claim the child after a divorce.

5. The new rules for basis reporting starting in 2011 (Form 1099-B).

6. Cancellation of debt (and exceptions to COD Income (Section 108).

7. The myriad adjustments to gross income such as health savings accounts and prepaid tuition accounts.

8. Changes to itemized deductions including the new charitable contribution rules, the home mortgage rules and medical expenses.

9. Features and effective dates for the American Opportunity Tax Credit (Hope Credit) and the Lifetime Learning Credit.

10. The over 60 provisions that expire at the end of 2010; Ordinary income tax rates, capital gains rates, EIC, child tax credit, dependent care credit, limit on itemized deductions and exemptions, etc. will all revert to 2001 law.

Need help pulling all the information together? Get the details on these and other issues related to individual income taxes in Part 1 of CPE Link’s Federal Tax Update webcasts scheduled November-January. Course includes 120 page downloadable manual containing hyperlinks to applicable code sections.

CPA Exam

Prioritizing the CPA Exam, Getting a Masters and a Big 4 Job Part MMXXXII

Adrienne Gonzalez
November 16, 2010

In today’s edition of “let me figure out your life for you and push the CPA exam down your throat”, our little would-be Big4er writes in wondering:

I’m trying to figure out some options to get to a Big 4 firm. I interned at a regional firm in Los Angeles this past summer and realized that I want to be at a Big4 firm instead. I have been through the on-campus recruiting process this quarter and unfortunately I did not receive any offers after going through PwC’s second round interviews. I did receive an offer from a regional firm in the San Francisco area. Though, my ultimate goal is to end up at a Big 4 firm.

I will be graduating in March 2011 and was planning on begin studying for my CPA exam. I hopby October or at least a majority of the exam. Do you guys recommend I study for my CPA and go through the recruiting process again next year or continue my education and get a Masters in Accounting and go through the recruiting process after that?

I love when you kids have a plan, or rather when you have a goal in mind and come banging on our door asking how to get there.

Anyway, as always, I am inclined to recommend getting the CPA exam out of the way before anything simply because it’s easier to do now before you’re bogged down with commitment (OK, mostly a really time-consuming Big 4 gig). However I’m a little sketchy on your actual timeline since you say you are graduating in March and plan to be done by October; does that mean you’re planning on taking two parts per testing window after you apply and are approved to sit for the exam?

Assuming you are applying in California (you mentioned LA), might I recommend you take the exam shortcut now while you still can? Here’s the deal: submit your application to the state board now while you don’t qualify, pay your $100, wait 8 – 10 weeks for a rejection letter and then apply again in March right after your degree posts to your transcripts so you can be approved to sit in just 1 – 2 short weeks. That way you cut down on the waiting time while you’d still be waiting anyway, can jump right into taking your exams and can get in April/May, July/August and October/November instead of trying to cram in four parts in two testing windows.

Keep in mind that tackling the CPA exam before going to the Big 4 – or any firm for that matter – can sometimes work against you. If you really stand out as a public accounting rockstar and have already passed the entire exam they might assume (usually correctly) that you’re simply trying to get your foot in the door for your two years of experience. So be careful with the overachieving there, it might be wise to get through two parts or perhaps just get started on the exam without actually blowing through all of it before you go knocking on PwC’s door again.

Unless you absolutely want a Masters in Accounting, keep in mind it isn’t necessary to have one in California and you can just as easily pick up 30 extra units in just about anything to meet the 150 requirement. I usually discourage California CPAs from taking that route unless they absolutely have to so if it isn’t something that you really want, don’t do it just to do it. You can always get a Masters later when you’re more settled in the profession, know what you want to be when you grow up, have finished the CPA exam and have made a dent in your undergrad student loans (always a good idea before you take on any more debt).

The only issue with blowing off a Masters now is that you will obviously have a harder time getting the Big 4’s attention after you graduate so I would say plan to get started on the CPA exam as quickly as possible and put on your best game face next time the Big 4 come sniffing around at your school while you can. Hopefully that lands you something for the fall, giving you a chance to complete the exam before your start date, at which time you can try out Big 4 life and then maybe get back to us on how that’s working out.

Hope that helps and good luck!

BDO Culminates 100th Anniversary with a Two-Hour Disney Production on the History of the Firm

Caleb Newquist
November 16, 2010

As you probably know, BDO has spent 2010 celebrating the firm’s 100th anniversary in the U.S. Throughout the year there has been various celebrations along with Jack Weisbaum’s successful run as Dos Equis dopplegänger.

The apex of the firm’s centennial is going on as we speak in Orlando, at the firm’s Centennial Partners Meeting where 700 some-odd partners, alums and their better halves are celebrating the big one hundo.

A brief word from the most interesting accounting CEO in the world:

“In 1910, there were a little more than 2000 certified public accountants (CPAs) in the United States, that’s approximately the same amount currently working at BDO. Today, there are hundreds of thousands CPAs, but just a handful of national firms that have been able to grow and prosper across the country and build networks with member firms around the world,” said Jack Weisbaum, CEO of BDO USA. “Our firm bears little physical resemblance to the firm Maximillian L. Seidman started a century ago, and it is sure to change drastically in the coming century. What will stay the same is our unwavering commitment to clients, our capacity to adapt to change and our ability to find opportunity in every challenge.”

In addition to the Weisbaum speech, last night attendees were treated the aforementioned two-hour Disney production about the history of the firm.

Entitled “Proud Past – Bold Future,” the firm’s story is told with an extensive cast and musical arrangements, interspersed with video interviews of BDO partners – from both past and present – as the firm’s progress is tracked over the past century.

A Disney production sounds nice but two hours? Beauty and the Beast was nominated for Best Picture and it only ran for 84 minutes. Not that you can fairly compare the 100 years of getting to know BDO to animated bestiality. There really is no comparison but we’re just hoping – for the sake of the audience – it was screened before the comfort food and booze.

PwC Email Hottiegate Update: No Lawsuits, Two More Suspended

Caleb Newquist
November 16, 2010

It was quiet yesterday on the PwC Email Hottiegate beat as nothing new was reported out Ireland except that the country may or may not be going the way of Greece. Thank God we can set aside all this fiscal sovereignty stuff and get back the really important issues.

The latest from the Emerald Isle is that the young ladies in question were considering lawsuits against the dudes in question but now according to the Irish Central that won’t be happening:

The 13 women, who were trainees up to last Friday are not going to pursue legal action against the males in question responsible for the rating system.

It is believed last week that they may file sexual harassment charges against those involved but it is being reported that the apprentices are more interested in getting their careers off the ground and focusing on their new jobs.

The report also states that five of the male associates have been suspended, which is two more than initial reports last week. As for the ultimate fate of the offenders, it doesn’t sound like anyone is screaming “off with their heads!”

“The email was unacceptable and childish but no one in here thinks it should be a sackable offence,” a source within PwC told the Sunday Tribune.

“It happens in here every year.

“But it also happens at all the other big accountancy firms and solicitors firms both in Ireland and abroad.

So using work email to pass around pictures of co-workers ranking them by hotness and including sexist comments as long as it remains in the confines of the company is an annual tradition but once it gets outside the company, it’s unacceptable and childish behavior. Got it.

Accounting News Roundup: Reminder – Padding the Expense Report Is Illegal; What Does the Twilight of a CPA’s Career Look Like?; 33 New Small Business Owners Coming to Congress | 11.16.10

Caleb Newquist
November 16, 2010

GM Raises Sights for IPO [WSJ]
General Motors says it is raising the price range for its initial public offering of common stock to $32 to $33 per share. The new price range is about 14% higher than originally expected.

The share and price expansion are the result of strong investor demand for shares in the U.S. auto maker, which now is generating solid profits after shedding costs under a 2009 bankruptcy reorganization.

A Little Extra on the Road [NYT]
Corporate accountants have long known that otherwise law-abidinel expense fraud.

And while new software programs help detect fraud, businesses report that travel fraud increased in the last few years as the distressed economy put more financial pressure on both employees and employers.

“I don’t think people always take the view that falsifying expense claims is a criminal act,” said John Verver, vice president for services and product strategy at ACL Services, a provider of financial monitoring software and expertise.

IRS Throws in Towel on Closely Watched International Tax Case [TaxProf Blog]
Transfer pricing nerds will like this one.

Litigation Disclosure: What They Don’t Know Can Hurt You [Forbes]
Francine’s latest at Forbes discusses the progress on a new litigation standard. Or lack thereof, “Everyone – the lawyers, the auditors and company executives – has been fighting the Financial Accounting Standards Board’s (FASB) proposals for expanded disclosures over loss contingencies for more than two years. For shareholders, this means, everyone who is supposed to be working for you is fighting additional disclosures that would help you – the investor – know if a legal bomb was about to drop on your investment.”

Dudley Says QE2 Critics Don’t `Understand’ Fed’s Exit Plan [Bloomberg]
Federal Reserve Bank of New York President William Dudley said critics of the expansion of monetary stimulus are underestimating the central bank’s ability to raise interest rates when necessary.

“People do not understand clearly” that “we can have an enlarged balance sheet and not have a long-term inflation problem,” Dudley said in an interview with CNBC. “We are very confident of our ability to exit when the time comes.”

Jason Blumer: Don’t Believe the Lies [CPA Trendlines]
Blumer is thinking about the future, “It seems the end of a public accountant’s career is steeped in misery, being “worn out” and adverse to change. Not a very exciting picture for those entering universities deciding what to major in! Is this what the younger generation has to look forward to when they retire?”

Meet the New Small-Business Owners in Congress [You’re the Boss/NYT]
Last Tuesday’s elections will send 33 small-business owners and entrepreneurs to Washington, according to The Agenda’s exhaustive (and exhausting) search. All are Republicans. Two are women.

Jack Link wins national Ernst & Young award [MBJ]
The beef jerky company that does ads like this:

Quote of the Day

We’ll Drag Them Kicking and Screaming if We Have To

Caleb Newquist
November 16, 2010

“Then what we’ve done is lay a predicate for this next Congress to deal with where we have $3 of spending cuts for every dollar of revenue increase.”

~ Erskine Bowles

Deloitte

Jim Quigley Would Really Like It if the Big 4 Could Audit in India

Caleb Newquist
November 16, 2010

Deloitte is hiring about 3,000 people in India as part of their hiring bonanza and global CEO Jim Quigley dug into his bag of boilerplate statements to express his excitement:

“India is an extremely important market for Deloitte. As…Opportunities in the new economic environment emerge in India, Deloitte with its focus on hiring, developing, and deploying the best talent in the region, will help clients capitalise on these new market initiatives,” Deloitte Global CEO Jim Quigley told reporters here.

Right. So nothing new there. However, Quigs thinks that it’d be really swell if TPTB in India would change their mind about letting the Big 4 provide audit services there:

Quigley also made a case for India to open up its market and allow global audit firms to practice here, besides providing consulting and advisory assistance.

Allowing international accounting firms to practice here would require India to negotiate and allow the service to be accessed under the World Trade Organisation (WTO). At present, India has not opened up services like audit and law for foreign practitioners.

“I urge the Indian authorities to give a serious thought to allowing global audit firms to practice here. It is for the betterment of accounting professionals. A mutual recognition is required out of foreign direct investment,” Quigley said.

See? It’s not just about the biggest firm in the known universe getting bigger, it’s for the betterment for the entire accounting race. There’s so much fun to be had. The Satyams of the world are once in a blue moon.

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