Going Concern

Exquisite Insults: PCAOB Edition

Caleb Newquist
October 1, 2010

“The Accounting Board Is a Sinecure Qua Non”

~ Headline over at Bloomberg BusinessWeek

Industry

Is Anyone Surprised That Christine O’Donnell’s Nonprofit Failed to File Their Tax Returns?

Caleb Newquist
October 1, 2010

We were really hoping to avoid the whole Christine O’Donnell anti-masturbating/witchcraft/evolution-is-a-myth dealio but we can’t, in good conscience, ignore the fact that the nonprofit group founded by a candidate for the U.S. Senate hasn’t bothered to file tax returns in three years.

The AP got their hands on IRS documents that show O’Donnell’s “pro-abstinence outreach organization” failing to file their 990 for the past three years. This, as you may know, means that the anti-pre-marital bumping uglies organization could lose its tax-exempt status.

O’Donnell’s camp is blowing this off (seems to be standard operating procedure), “It’s not any big deal. I’m dealing with this for all kinds of clients right now,” the AP quotes the campaign’s lawyer, “There are thousands of nonprofits doing this. Everyone is scurrying around.”

According to the AP, the most recent return filed by Savior’s Alliance for Lifting the Truth (SALT) shows $2k in contributions and $1,973 in expenses.

Since this attorney seems to be on top of the situation, we probably don’t have to tell her that the nonprofit can likely file a 990-N in less time than it would take for a young Salty to engage in a manual override. Or cast a spell on the IRS. Whichever.

O’Donnell nonprofit failed to file [AP]

White House Takes The UPS Approach to Explain Tax Cuts

Caleb Newquist
October 1, 2010

Keeping it simple for the folks: colors, shapes, numbers.

Not really too subtle with the “Blue=Good; Red=Bad.”

News

“Robert Herz has had a more interesting career than any accountant deserves.”

Caleb Newquist
September 30, 2010

We probably don’t need to remind you that today is Bob Herz’s last day at the FASB. It’s a sad day indeed for many that have been addressing their poignant comment letters to Roberto for the last eight years.

How Herz is celebrating his last day up in Norwalk isn’t immediately known but we’re sure it involves making crank calls to the American Bankers Association, Barney Frank’s face on a dartboard and plenty of cake.

Not so surprisingly, there’s not much mention of Bob’s last day out there except for cheeky article over at the Economist that informs us of precisely nothing new but manages to give Bob a backhanded compliment and take a major swipe at every single accountant on Earth:

Robert Herz[…]has had a more interesting career than any accountant deserves. He began his tenure as chairman of America’s Financial Accounting Standards Board (FASB) in 2002, dealing almost immediately with the fallout from the Enron and WorldCom scandals, which had been abetted by accountants. He was due to end it on October 1st, a sudden departure for undefined personal reasons, after a crisis also partly pinned on the profession.

Accountants “deserve” boring careers? Their choice of a profession automatically merits a long drab livelihood that involves choice of pen color, whether or not to upgrade the 10-key calculator on their desk and auditing Excel formulas? Forget about the rest of us for a minute; there are people who are ashamed to share humanity with Herz. It’s the man’s last day. Way harsh, Economist.

Beancounter there, done that [The Economist]

Career Center

Here are Five Essentials to Successful Mentoring

GoingConcern
September 30, 2010

The following post is republished from AccountingWEB, a source of accounting news, information, tips, tools, resources and insight–everything you need to help you prosper and enjoy the accounting profession.

It is such a wonderful feeling to see that many of your firms are taking REAL action steps towards creating a culture of mentoring within your firms, a culture that is “alive and healthy.” It is not just a document, laying on a shelf somewhere that some people follow and some don’t.

In a successful mentoring connection, the mentor and the mentee must both want the relationship to work and be willing to commit time and energy to the process. Five elements are essential:  

Respect: This is established when the mentee recognizes the knowledge, skills, and abilities of the mentor and when the mentor appreciates the success the mentee has reached to date and the mentee’s desire to develop to their full potential.

Trust: Mentors and mentees should build trust through communicating and being available, reliable, and loyal.

Partnership Building: The mentor and mentee are professional partners. Barriers that partnerships face may include miscommunication, an uncertainty of each other’s expectations, and perceptions of other people. In order to overcome these barriers, they should work together to maintain communication, address and fix obvious problems as they occur, examine how decisions might affect goals, and have frequent discussions on progress.

Realistic Expectations and Self Perception: A mentor encourages the mentee to have realistic expectations of the mentee’s capabilities, the amount of time and energy the mentor can commit to the relationship, and what the mentee must do to earn their support for his/her career development. The mentor gives honest feedback when discussing the mentee’s traits, abilities, talents, beliefs, and roles.

Time: Set aside the time to meet, even by e-mail or telephone. Don’t change times unless absolutely necessary. Control interruptions. Frequently “check in” with each other via informal telephone calls or by e-mail.  

TIGTA Concerned That IRS Is Blowing Off Deaf, Mutes (and Presumably Deaf-Mutes)

Caleb Newquist
September 30, 2010

The IRS sucks at a lot of things. Given.

Thankfully we have Treasury Inspector General of Tax Administration to inform us about said ~~failures~~ opportunities for improvement.

But today’s news that the IRS isn’t doing enough to help our hearing and speech-impaired friends is especially disheartening to the TIGTA overlords. They can (somewhat) understand providing crappy service to regular Americans (try reading the instructions people) but if you’re unfortunate enough to be without speech or hearing, the IG felt obligated to point out the IRS’s shortcomings:

TIGTA performed an audit to evaluate both the IRS’s customer service toll-free telephone access during the 2010 Filing Season and the access and service it provided to hearing and speech-impaired taxpayers. TIGTA found that the IRS exceeded its overall performance measurement goals by 2.3 percent. However, the Level of Service for the TTY/TDD toll-free telephone line for the 2010 Filing Season was just 8.8 percent, meaning that only 8.8 percent of calls placed using the TTY/TTD successfully reached an IRS assistor. The total dialed attempts for the TTY/TDD product line during the 2010 Filing Season were more than 350,000; however, IRS assistors answered only 339 of those calls.

“Our report found that far too few hearing and speech-impaired taxpayers successfully reached an IRS assistor,” said J. Russell George, the Treasury Inspector General for Tax Administration. “The IRS must do a better job of ensuring that all Americans have equal access to its services,” he said.

Actually, that is pretty shitty service. Even by IRS standards.

The IRS Could Improve Toll-Free Telephone Assistance For Hearing and Speech-Impaired Taxpayers [TIGTA]

IFRS

Some French Guy Still Trying To Tell the U.S. What to Do Re: IFRS

Caleb Newquist
September 30, 2010

Look, pal. We get that you’re anxious to slap these sets of accounting rules together like an IKEA ottoman. We also get that you and a certain knight want – nay – need the RW&B to be on board.

But we don’t know who you’re trying to boss here. See, we’re fairly certain you’d be speaking German if it wasn’t for us. Furthermore, in case you haven’t noticed, we like dragging things out until the last possible minute. Or just ignoring things until we have a giant mess on our hands and then we try cleaning up. Why would we treat IFRS any different?

We understand it’s a new century, millennium and you guys have a rough go in the World Cup but you can give it a rest.

We’ll get to IFRS when we’re good and ready and just because today is Bob Herz’s last day at the FASB doesn’t mean you need to get all anxious about it:

The US is due to make a decision about whether fully buy in to international standards in the latter half of next year. There has been speculation that the appointment of a new chairman for the US standard setter, FASB, could determine which way the world’s biggest economy will go on international standards.

In a speech yesterday to a conference organised by European financial think tank EUROFI, Barnier welcomed the involvement of the US in the Basel talks on financial regulation. But he added that the US should not part company with IFRS.

“It’s essential that we adopt the same prudential framework. I say this very simply, we cannot afford to take the risk of divergence in this area. And this is also the case for accounting standards,” he said.

EU chief urges US to buy into IFRS [Accountancy Age]

The Latest on KPMG Compensation: Been Better, Been Worse

Caleb Newquist
September 30, 2010

Just a quick follow-up to our earlier post on KPMG compensation. There’s been a fair amount of bellyaching about the less serious comments on the thread so we’ll alleviate some of the bitching with reports from trusted sources:

Senior associate promote in West advisory, SP+ rated, 11% raise, 3% bonus. Raise was higher than expected but bonus was definitely lower than what I thought it would be. It was explained to me that the 11% is inclusive of the promotion bonus so it’s really 5% promotion + 6% merit

And back on in the East:

NY Metro M1 to to M2: 10% base increase, $2,600 bonus, SP+ using 9-box system.

We understand that there are still sit-downs going on so do keep us updated.

Earlier:
KPMG Gives Green Light to Start Pretty Disappointing/Pleasantly Surprising Conversations

UPDATE:
Apparently some Klynveldians (we hear in NYFS) will get the esteemed pleasure of sweating this out through the middle of next week. We also had a mini-Flynn close to the situation inform us that “1st year managers can’t be exceptional performers [highest rating in the House of Klynveld].” Keep the tips coming in.

Accounting News Roundup: AIG Rolls Out Repayment Plan; Wal-Mart Names New CFO; IRS Files Lien Against Sharpton | 09.30.10

Caleb Newquist
September 30, 2010

AIG to Convert Preferred Shares Into Common to Repay U.S. [Bloomberg]
“American International Group Inc. agreed with U.S. regulators to repay its bailout by converting the government’s holdings into common shares for sale, a step toward independence for the insurer whose near collapse two years ago threatened the global economy.

The U.S. Treasury Department will convert its preferred stake of about $49.1 billion for 1.66 billion shares of common stock and then sell the holdings in the open market, AIG said today in a statement. Common shareholders, who hold about 20 percent of the company, will have their stake dilutent, the insurer said. Those investors will receive as many as 75 million warrants with a strike price of $45.”

Spain loses AAA status, stands firm on austerity [Reuters]
“Spain lost its final top-line debt rating on Thursday as the government sought backing from lawmakers for a budget it hopes will be austere enough to convince markets it can slash the deficit at a time of economic weakness.

Moody’s become the third and last rating agency to cut Spain out of the highest AAA category which has helped it finance its debt relatively cheaply. The one-notch cut had been expected and the agency said it hoped not to have to cut again soon, bolstering Spanish debt markets.

But the agency also said a poor growth outlook meant Madrid would have to take further steps to meet its deficit targets in years to come. The Bank of Spain said a sluggish recovery would slow further in the third quarter.”

IASB head knows all about cross-channel frictions [FT]
“In a decade spent overseeing international accounting standards, Sir David Tweedie has become an amateur student of French psychology.

The Scot has locked horns with France several times as head of the International Accounting Standards Board, the body that sets the International Financial Reporting Standards rules followed in the European Union and other countries.

His fascination for his adversary is such that he recently thrust into my hands an academic paper entitled “France and the ‘Anglo-Saxon’ Model: Contemporary and Historical Perspectives”. The article explores the hostility often felt in France towards the British and American way of doing business.”

McDonald’s May Drop Health Plan [WSJ]
“While many restaurants don’t offer health coverage, McDonald’s provides mini-med plans for workers at 10,500 U.S. locations, most of them franchised. A single worker can pay $14 a week for a plan that caps annual benefits at $2,000, or about $32 a week to get coverage up to $10,000 a year.

Last week, a senior McDonald’s official informed the Department of Health and Human Services that the restaurant chain’s insurer won’t meet a 2011 requirement to spend at least 80% to 85% of its premium revenue on medical care.”

Wal-Mart picks successor to longtime CFO [Reuters]
“Wal-Mart Stores Inc (WMT.N) named Charles Holley to succeed Chief Financial Officer Tom Schoewe, who will retire on November 30.

The world’s biggest retailer said on Wednesday that Schoewe, 57, will stay at Wal-Mart until January 31 to help with the transition.

Holley, 54, joined Wal-Mart in 1994 and is treasurer and executive vice president of finance.

Those credentials should make him a capable CFO, said Wall Street Strategies analyst Brian Sozzi, though Wall Street could view the transition negatively since it adds uncertainty.”

All We Are Saying Is Give Dick Fuld a Chance [Jonathan Weil/Bloomberg]
Names being floated to replace Larry Summers as the National Economic Council include Citigroup Chairman Dick Parsons and Xerox CEO Anne Mulcahy. Jonathan Weil sees where Obama is going with this:

“There’s much we can learn about the kind of person the president is looking for by studying these two contenders’ credentials. In addition to CEO chops, it seems Obama is seeking someone who also has served on the board of directors of at least one company that either had a massive accounting scandal, blew up so spectacularly that it threatened to take down the global financial system, or both.”

…and doesn’t think he’s aiming high enough. He has some of his own suggestions.

Memo to Media Departments: Here Are Three Ways to Make My Job Easier – rebuttal [AccMan]
Dennis Howlett’s rebuttal to Adrienne’s plea to PR types.

Sharpton faced with fresh tax woe [Tax Watchdog]
The Rev. owes around $538k to the IRS for 2009. His lawyer is a tad confused by the whole thing and says everything will paid up by Oct. 15th.

Technology

What Do We Make of The Sage and SAP Rumors?

GoingConcern
September 30, 2010

The following post is republished from AccountingWEB UK, a source that delivers topical, practical content to accountants and accounting professionals.

Merger rumors. What would we do without them? The past decade or so of my professional life has been shaped by the regular appearance of bid rumors around Sage, usually of the “who are they going to buy this week?” sort.

So you can imagine my surprise to hear on the grapevine that Sage’s share price had surged almost 5% on Tuesday night on rumors that it was an acquisition target for SAP, with Microsoft and Gapgemini reported to be sniffing around the undergrowth in Newcastle too.

I’m not a stock market analyst, so I don’t really need to chase geese like this, but I couldn’t help myself from doing a little background checking. The Daily Mail appears to have broken the story, without naming sources, around 10:30 pm on Monday night. By the next morning, Reuters and numerous other outlets had picked up the trail and various analysts were puffing up the story with blogs and tweets.

There was a tweet from China Martens at 451 group of “late night activity in Walldorf” to verify that something was up, but with none of the companies involved breaking cover this really was one of those stories where one bit of unfounded gossip was feeding off another.

Years of industry-watching have taught me never to be surprised at what a software company with a wedge of cash in its back pocket can get up to, but neither SAP or Microsoft strike me as being suitable suitors for Sage. Microsoft’s entire business solutions strategy has been in turmoil for years and if it ever enters Steve Ballmer’s consciousness, my guess is that he wishes the company had never got into bed with Great Plains and Navision.

SAP meanwhile, is everything that Sage isn’t: a technology-focused global monolith that still has trouble thinking of an SME as having anything less than a $500m annual turnover. On this point Dennis Howlett blogged, “So much of Sage’s business is at an end of the market about which SAP has little understanding. Sage is on a declining organic growth curve, has a rat’s nest of code from acquired companies, is propped up by maintenance fees and has a nightmare in the US to manage with the ongoing Emdeon fiasco.”

It doesn’t happen often, but for once I find myself in complete agreement with him.

Strangely, by Wednesday afternoon the rumors had simmered down and so had the share price (although somebody seems to have done very nicely out of the rumors with 1.7m of shares shifted at the peak of the frenzy on Tuesday night).

Now I’ve voiced my doubts, they’ll probably turn around an announce the deal in the morning.

Indecisive Econ/Accounting Major Needs Help Plotting the Next Move

Daniel Braddock
September 30, 2010

Ed. note: I’ve been called to an emergency meeting in an undisclosed location, so here’s a guest post from your friendly human resources professional, DWB.

Caleb interrupted my weekly Wednesday tradition with the following reader submitted question:

I am an undergraduate at a pretty big school and recently decided I want a job when I graduate so I switched my major from History to Economics with the intent on minoring in Accounting (it is too late for me to officially major in Business Economics but I plan on taking all the relevant classes anyway).

I am entering my junior year this fall but right now, my accounting academic career puts me with about a freshman level of re my belt.

Normally, next summer would be the internship phase of a student’s life but I’m wondering if I should put off graduation by a quarter and/or go to grad school so that I might also push off my internship applying to a different summer when I have more than GC-provided gossip to offer a firm.

If I do this, are there Big 4 or mid-tier firms who would look at me for summer leadership programs (and other sophomore-oriented recruiting) or have I missed the boat on that?

I’d appreciate anything you have to say on the matter — snarky or otherwise.

Dear History Buff,

You wanted a job, so you decided to major in Economics. That statement is so conflicting I can’t tell whether it induced my headache or I simply need a third cup of coffee. The reason I say this is because I see my fair share of 3.95 GPA Econ majors from “pretty big” schools every day, and they’re desperate for work. Your accounting minor is a start but like you pointed out, it’s lacking in worthy experience. Your consideration of internships/grad school demonstrates that you’re looking beyond the remaining cup on the beer pong table and thinking about your future. Kudos.

I’m going to assume you’re considering a career in public accounting, because why else would you be on GC in the first place? You’re certainly not here for the chicks (“Chicks, man.”). If I am wrong on this assumption, follow up with me and we’ll discuss.

So, assuming the above, I suggest a few things:

1) Start talking to recruiters: They should be all over campus by this point in the semester. Make it known to them that you are pursuing a Masters in Accounting following your undergraduate degree. Ask questions about leadership programs and internships. Remember, the general timeline for Big 4 programs is leadership program two summers before graduation (for you – summer ’11); internship the summer before graduation (summer ’12).

2) Make it easy for the recruiters: Want to make a recruiter’s day easier and better position yourself in their pool of candidates? List all of your ongoing and anticipated education on your résumé, like this:

Education
“Pretty Big School” – Anywhere, USA
• Masters in Accounting – XYZ School of Business Anticipated Graduation: May 2013

• Will be CPA eligible upon graduation

• Bachelor of Science – ABC School of Economics Anticipated Graduation: May 2012

• Economics major, Accounting minor Overall GPA: X.Y | Major GPA X.Y

Formatting your résumé in this fashion provides the reader with answers to key questions – what is this candidate majoring in; when are they done with their education and ready to work; what is their CPA eligibility.

3) Follow up: Your educational path is not the road heavily traveled by most students with dreams of Big 4. Keep yourself in the conversation with recruiters by occasionally updating them through your process. Tell them when your GPA improves after a strong semester, when you get into grad school, etc. Don’t expect a response right away but rest easy knowing that they’re updating their records. Sharing this information can be done formally over email or informally during a conversation with a recruiter while they’re on campus.

4) Talk to Career Services: Be sure you’re taking the right classes to become CPA eligible in the state where you want to be licensed. Nothing worse than taking a counselor’s word on Ballroom Dance 201 counting toward the 150 credit requirement.

Go forth…and one more piece of advice if you’re following college football: Stanford over Oregon this weekend. Do it.

News

Here’s Some Stuff You Didn’t Buy at PwC’s Lehman Brothers Auction in London

Caleb Newquist
September 29, 2010

Gosh, team. It’s been over two years since Lehman bit the big one and now all that’s left is bits and pieces (Barclays, pink sheets, Dick Fuld’s stonewalling testimony) and charges from the SEC that could eventually see the light of day (unless the sun burns out first). Oh! And Ernst & Young. They’re in the mix too, although some people we talk to have their doubts about any repercussions.

Anyhoo, there was a big auction at Christie’s in London today directed by the newly-branded PwC. After everyone got done ribbing the P. Dubs partner in attendance about the Atari design, the bidding started. Here’s a little taste of what’s been sold so far, courtesy of the Times:

• Corporate Sign from Canary Wharf building – £42,050. Bidding started at £5,000

• Gary Hume’s Madonna – £120,000 (most expensive item so far)

• A collection of five maps from circa 1720 – £1,875

• An 1870 collection of the works of one Bill Shakespeare

• Two etchings by Lucian Freud

• Photographs by Sebastião Salgado

• A 43.5-inch painted pine model of a 62-gun ship

Overall, the auction has topped £600,000, according to Accountancy Age but is still rising. You can probably still get a bid in if you hurry.

Lehman Memories Sold Off Piece by Piece at Auction [NYT]

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