Going Concern

CPA Exam

How Much Harder Is REG Going to Be in 2011?

Adrienne Gonzalez
October 12, 2010

Well we’ve reached the end of our 2011 wrap up series so here are FAR, AUD and BEC if you missed them.

Let’s skip the pleasantries and get right into what you’re dying to know, how bad is Regulation going to be next year?

Things they are a-changin’…but not much – The good news is that REG is hardly changing at all. After all, you can’t test international standards of federal taxation as globalization hasn’t completely taken over so don’t expect to see much different content-wise come 2011. You will see the new simulation problems and notice there are no longer written communications. But beyond the cosmetic changes, the actual content that makes up Regulation will be quite similar to what’s already being tested. Of course, that is true across the board as a good 90 – 95% of what is being tested will still be tested next year if my gut feeling is still any good. You guys have to remember – next time you are freaking out about new exam material – that CPA exam questions are difficult to develop and the AICPA Board of Examiners isn’t about to trash all their useful questions just to start testing you on the international stuff.

Tax year overlap – One thing to keep in mind when taking REG – in the first two windows of the year you can be tested on both current and former tax year numbers. This means if you take it in January of 2011 you may see 2010 tax numbers or you may see 2009 or a mix of both. Chances are the newer numbers will not make their way to the exam (hey, the AICPA BoE is super busy getting those IFRS questions in working order!) but just something to be aware of. That doesn’t mean you have to memorize tons of different tax tables but it would be wise to stay up on tax changes in the year ahead as many tax rates are still in the air at the point many review courses are rushing to go to print.

Who said anything about ethics? – Ethics and professional responsibility are moved out of REG and put back into AUD except for those pertaining to tax practice and will still be tested about the same as 2010: 15-20% versus 15-19% in 2011. Business law will carry less weight, making up 17-21% of all questions. Federal tax procedures get a boost from 8-12% in 2010 to 11-15% in 2011. Great news for those of you who really do not like taxes, federal taxation of entities gets a downgrade from 22-28% to 18-24%. Individual tax stays about the same, going from 12-18% to 13-19%. Don’t expect much of a break, it is Regulation after all.

Other than that, REG won’t see much of a change. Business structure (partnerships, et al.) has been moved out of BEC (rightfully so) and will only be tested in REG but you already know most of that stuff if you have passed either section in 2010.

If you can, I advise holding off on Regulation until the last two windows of the year so you have a better chance of getting only one year of tax numbers (the AICPA will generally test the previous year’s tax numbers) but if you are looking for a good one to hold off on taking until next year ahead of the CBT-e changes, REG would definitely be it.

Good luck and we’ll see you on Friday!

Oh and in case you didn’t get the memo, if you have a CPA exam question for us (for example, which part can I procrastinate on until the very end of 2011?, Is farting allowed at Prometric?, How can I tell my girlfriend to leave me the hell alone and let me study? etc etc), do get in touch.

ANR

Accounting News Roundup: Dutch Minister Replacing Tweedie as IASB Chair; REMINDER: Nonprofit Deadline Is Friday; Panel Recommends Separate Board for “Little GAAP” | 10.12.10

Caleb Newquist

October 12, 2010

Former Dutch minister picked as IASB chairman [FT]
“The head of the Dutch financial markets regulator has been given the pojob of running the body that sets the accounting rules followed in the European Union and an increasing number of other countries.

Hans Hoogervorst, a former Dutch finance minister, was on Tuesday named chairman of the London-based International Accounting Standards Board, which sets the IFRS accounting norms.

He will take on the job at the end of June 2011, succeeding Sir David Tweedie, the Scot who has occupied the post for a decade.

Mr Hoogervorst, chairman of the executive board of the Netherlands Authority for the Financial Markets, is not an accountant.”

I Can Afford Higher Taxes. But They’ll Make Me Work Less. [NYT]
Wherein we discover one more example of how tax cuts (or lack thereof) will affect someone.

Gap scraps new logo after online outcry [Reuters]
“GAP Inc scrapped a new logo on Monday just a week after launching it following an “outpouring of comments” online and from customers in support of the original blue box design it’s had for more than 20 years.

Gap rolled out an updated version of the logo last Monday on its website and planned to include it in its holiday marketing, a spokeswoman said.

But the company saw more than 2,000 comments on its Facebook page on the issue, with many people railing against the new logo and calling for a return to the old.”

Friday Is the Drop-Dead Date for Small Charities Wanting to Stay Tax-Exempt [Tax Update Blog]
You’ve been warned.

One Step Closer to Little GAAP [CFO]
“A blue-ribbon panel has recommended that a new set of accounting standards be drawn up for private companies based on U.S. generally accepted accounting principles. The panel also recommended that a private-company rulemaking board be established, separate from the Financial Accounting Standards Board, which currently writes and revises U.S. GAAP.

The details of how the rules will be developed — and how FASB and its parent organization, the Financial Accounting Foundation (FAF), will be involved in the process — will be outlined in a report issued in December, said panel chair Rick Anderson, chairman and CEO of accounting firm Moss Adams, during the panel’s fourth and final public meeting on Friday. The final product, often dubbed “little GAAP,” will be a pared-down version of the full set of rules, requiring fewer disclosures and less-detailed measurements of some assets and liabilities.”

Wal-Mart Lands Agreement to Sell iPad [WSJ]
“Wal-Mart Stores Inc. said it will start selling Apple Inc.’s iPad on Friday at hundreds of stores throughout the U.S.

Wal-Mart landed the tablet computer a little later than two of its largest retail rivals: Best Buy Co., which has been selling the iPad since its launch in April, and Target Corp., which began carrying it this month.

The Bentonville, Ark., retail giant said that what it lacked in timeliness it will make up for in sales heft. It vowed to slowly ramp up the number of U.S. stores carrying the iPad to more than 2,300 by the height of the holiday season in mid-November.

There will also be no Wal-Mart “rollback” price cut on the iPad: The tablets will sell for Apple’s suggested retail price, which starts at $499 for the cheapest version with 16 gigabytes of storage and wireless internet access but no 3G mobile connection.”

Quote of the Day

Iowa Pastor Practically Begging the IRS to Sue Him, Consume His Life for Years to Come

Caleb Newquist

October 12, 2010

“I’m tired of pastors submitting to this tyranny — and I’m expecting to try to get the IRS to sue us so that we can take it all the way to the Supreme Court and restore freedom in America’s pulpits.”

~ Pastor Cary Gordon, of Cornerstone World Outreach in Sioux City, Iowa, has some strange ambitions.

KPMG

Bedbug Scare at KPMG’s New York Office?

Caleb Newquist

October 11, 2010

Summer of 2010 had its share of gripping stories: Islamic community centers, “pink-faced halfwits” whipping the masses into a frenzy, Lindsey Lohan.

All of these stories grabbed ahold of American’s two-second attention span far longer than you would expect. But the thing that really transfixed the nation was a tiny insect that was, as one time, merely a fun game for kids to play so their parents could smoke grass in the basement. BEDBUGS.

With all the bedbug hysteria that’s been going on, we’re surprised that we haven’t ANY news about accounting firms having their offices invaded with bedbugs. Finally, we’ve gotten word of what probably amounts to just a scare at KPMG in New York.

We were tipped off this morning to the news that there was a “bed bug issue” over the weekend at one of the KPMG’s offices in New York. We asked around and discovered that the “issue” was at the 345 Park location and that “only one bedbug” was found. Everything that has happened since then have been “precautionary measures.” This no doubt involved scores of people crawling around with magnifying glasses until the bedbug dogs could be called in.

A message and voicemail left with KPMG spokesman Dan Ginsburg had not been returned at the time of posting.

Of course, the real concern is that if there’s one bedbug, there are likely more. And in New York, there have been no shortage of bedbug cases including at the nearby MetLife Building. So far nothing we’ve heard indicates that it’s a full-blown infestation over at 345 Park but do get in touch if you hear more.

Deloitte

Jim Quigley Is Still Talking About Deloitte’s Hiring Bonanza, Last Year’s BusinessWeek List

Caleb Newquist

October 11, 2010

After his appearance on Fox Business, Quigs plugged himself in for 24 hours and then hopped over to Bloomberg to talk about the disappointing job numbers from last week but that at Deloitte, things are just swell.

ANR

Accounting News Roundup: Chris Columbus Edition | 10.11.10

Caleb Newquist

October 11, 2010

Ed. note: In observance of a day that reminds Italian-Americans and Native Americans that they are sworn enemies, we’ll be posting on a lighter schedule today. Let us know if anything exciting happens (shouting matches, faux-holiday layoffs, etc.) and we’ll manage to get something up. Back with a full slate tomorrow.

PwC clients asked to reveal information on internal accounting judgments [Accountancy Age]
“PwC auditors will ask audit chairmen to reveal more detail about internal accounting judgments on a voluntary basis. Andrew Ratcliffe, senior audit partner with PwC, said he was unsure how the audit chairs would react, but hopes to have more sensitive information in the public domain by February.

‘We will ask what are the key judgments and assumptions that the auditor discusses with the audit committee when he completed his audit,’ he said.”

Deloitte’s Phoenix partner moving to Los Angeles post [Phoenix Business Journal]
Michelle Kerrick makes a break for the L.A. OMP gig.

The Tragic Decline of Business Casual [Bloomberg BusinessWeek]
The bosses have had it up HERE with your liberal interpretation of the business casual dress code.

The Future of Fraud Investigations: A Guest Post From Tracy Coenen [Re: The Auditors]
Tracy Coenen drops in at RTA for a guest post.

Deloitte & Touche settles Kentucky Central suit for $23 million [Business First of Louisville]
“The Kentucky Department of Insurance has reached a $23 million settlement with Deloitte & Touche LLP, ending a lawsuit the state brought against the accounting firm for its dealings with the now-defunct Kentucky Central Life Insurance Co.”

Tax Masters [TaxProf Blog]

Is Obama Raising Taxes on the Middle Class? According to Joe Biden, Yes [Tax Foundation]
The Veep escaped and managed to say some things that aren’t so helpful with the President’s tax rhetoric.

Quote of the Day

Does That Make PwC Crestor?

Caleb Newquist

October 9, 2010

“It looks like Gap is schilling for Lipitor.”

~ Dhani Mau, over at our sassy (former) sister site Fashionista, avoids the ED drugs.

BDO

How Are BDO Offices Celebrating the Firm’s 100th Birthday?

Caleb Newquist

October 8, 2010

We’re merely echoing the question.

Apparently there is some go-karting happening in Charlotte which sounds fun, especially if there was a three beer minimum to get on the track.

Other things we’re envisioning:

• Gents of all body types in the Woodbridge, NJ office coming to work as The Situation (i.e. sans shirt).

• Miami office employees are wearing their homemade “FUCK BANCO ESPIRITO” t-shirts (that could be any office really).

• At HQ in Chicago, CEO Jack Weisbaum reenacting Dos Equis ads only to substitute “Stay thirsty my friends” with “People who know – Know BDO”

What else is going on? Let us know.

News

BREAKING: California Manages to Approve a Budget Before Electing a New Governor

Caleb Newquist

October 8, 2010

Which is significant because A) neither of the current candidates has cyborg abilities that would allow them to go back in time to fix anything and B) some people were getting antsy:

“You’ve got to get things moving. You’ve got to patch something together to keep operations going,” said John Moorlach, an Orange County supervisor.

Having a state budget in law is “extraordinarily important,” added Mayor Chuck Reed of San Jose, California’s third-largest city.

Yeah, after 100 days, you figure you should slap something together. A sorry-ass $87.5 billion budget for one of the largest economies on EARTH is better than no budget at all, amiright?

California budget approved 100 days late [Reuters]

News

Some People Are Really Excited That MarcumStonefield Is the Auditor of Fuqi International

Caleb Newquist

October 8, 2010

That or it’s because they managed to not have an adverse opinion.

Fuqi International, Inc. (FUQI) gained more than 14 percent this morning. After the close yesterday, the seller of precious metal jewelry in the People’s Republic of China filed an 8-K form with the SEC where it disclosed that:

“The principal accountant’s reports of Stonefield on the financial statements of it as of and for the years ended December 31, 2008 and December 31, 2007 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the years ended December 31, 2008 and December 31, 2007 and through October 1, 2010, there were no disagreements with Stonefield on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which if not resolved to Stonefield’s satisfaction, would have caused it to make reference thereto in connection with its reports on the financial statements for such years.”

That emphasis is the orig. Supposedly that justifies the stock being up ~17%. Personally, we feel that it’s pretty snooze-worthy but maybe people get really amped when a Chinese company actually complies with the regulations.

Or maybe everyone is gaga over the MarcumStonefield marriage. Could be anything, really.

Career Center

Need Help Choosing Between a Career in Audit and Advisory at a Big 4 Firm?

Caleb Newquist

October 8, 2010

Since we’ve already checked out for three-day weekend and a reader needs advice ASAP, we’ll dispense with another edition of “Accounting Career Couch.” An aspiring accountant is trying to decide between joining the advisory and audit practice of a Big 4 firm but – surprise! – can’t decide since she likes both. Sigh.

Have a question about your next career move? Worried that you’re not doing enough for your clients? Need help casting a satirical political ad? Email us at advice@. Like donuts, there’s nothing we can’t do.

Back to our indecisive co-ed:

Hi Caleb:

I feel as if I am facing a small dilemma at a pivotal point in my young accounting career. I am interviewing with one of the Big 4 tomorrow and have been asked which service area I would prefer to go into: Audit or Advisory.

To be honest, with this job market, I would love either and I am 100% sure I would be a good fit for either type of position. I am very actively involved in Beta Alpha Psi and my resume is very “plump” with positive customer service experience. I posses very strong soft skills at quite a young age and have a lot of leadership experience in school and through my role in BAP. The company I am interviewing with is my #1 and I have built two strong relationships, each in each service area. For my high interest in Advisory, I can say, I always gravitate toward the headlines that have become the new hot topics that include, fraud, forensic accounting, and investigation. This is consistent with my very investigative and curious personality. However, on the other hand, understanding and learning the breakdown of a specific client’s company as I am involved in an audit interests me very much. The point is, what are the pros and cons for the two different services: Audit v Advisory. What is the opinion for a positive, fulfilling career in each service area, as public accounting is my interest for a lifetime? Am I hurting myself by letting the company choose where to put me by saying I am interest in BOTH opportunities?

To answer your last question – yes, it’s our feeling that you are marginalizing yourself by saying you’re interested in both practices. If you’re on the fence about which to join, other candidates that are more sure about their preference may have an edge over you. Make a choice for crissakes.

With that in mind, let’s break down a few pros and cons.

Pros

Audit – Your schedule is more predictable; less travel.

Advisory – Money is better; work is sexier; better reputation.

Cons

Audit – If you’re the type of person that is easily bored, then you will eventually get bored with auditing; auditing practices are bureaucratic nightmares – keeping up accounting and auditing rule changes; audit does not enjoy a sterling reputation.

Advisory – Hours can be unpredictable – you might work late nights for weeks (sometimes months) away from your home office or quite the opposite – you might find yourself with nothing to do for weeks at at time; the advisory practice is more susceptible to changes in the economy which means if things get bad, layoffs are more likely in advisory than in audit.

The real question is – what path do you want your career to take? You say that “public accounting is my interest for a lifetime.” Call us cynical but we’ll be shocked – SHOCKED! – if this is true in 3-4 years. If you really, really, really think that it is true, then audit is probably the choice for you. You’ll find a business line you like and if you’re ambitious and active within your firm, you’ll be on the partner track.

On the other hand since you say you’re drawn to fraud, forensics, investigative nature etc., we feel you should go with your instincts and go for advisory. Granted, Sam Antar will also tell you that you need the proverbial ironclad balls but those come in over time.

Anyone else faced with this dilemma? Anyone made the choice and got some input? Fire away.

PwC

Let’s Speculate About: The Oddly Similar Logos of PwC and The Gap

Caleb Newquist

October 8, 2010

Last month we learned about PwC’s new look to welcome that portrayed beauty and majesty of autumn. That and it reminded us something that Harry Pitfall might encounter if aliens landed.

Anyway, people have their opinions on the new look and Bob Moritz is okay with that as long as it doesn’t concern the color or shape.

The latest twist in this seemingly unending logo-mama drama was brough to our attention by a reader who saw an eery resemblance between ~~PwC~~ pwc’s new look at the new look of recently rebranded and ridiculed retailer The Gap.

Caleb,

Does is strike you as odd that soon after PWC changes their logo the GAP changes theirs to a similar style? Although Deloitte is currently GAP Inc. auditors, the company may be opinion shopping. Changing the company logo to look like their would be auditors’ is a surefire way to get the desired opinion.

This may be a total coincidence. However should GAP grab headlines in the style of the Universal Travel Group and hop over to PWC, at least now you won’t be surprised.

Our reader brings up an excellent point. We admit that the new logos aren’t identical but there’s more than a slight chance that they are brothers from another mother. So what’s the deal here? Maybe it is a coinky-dink. But then again, you would think that the cheap denim, khakis and plain t’s business would be thriving in this economy. If our reader is to be believed, Gap may be trying to find an auditor that’s willing to look the other way on [ideas on financial reporting chicanery are welcome]. And it just so happens that a certain professional service provider has also been recently taken some heat for their rebranding.

The only thing we can be sure of is that if Ernst & Young is serious about their makeover, they should resist the temptation to stick with squares.

Like we said, the motives here are not obvious and it’s imperative that we get to the bottom of this mystery, so that involves getting your ideas. Nothing is too crazy.