Going Concern

News

Accountant Convinces David and Victoria Beckham That They Don’t Need Seven Gardeners

Caleb Newquist
August 20, 2010

The Beckhams were concerned that “ordinary people were tightening their belts,” so what did they do? They fired a bunch of ordinary people! All it took was a shrewd accountant to tell them, “You’re pouring money down the drain.”

The fun-killing accountant is then quoted by a source in The Sun that employing 50 people around the word isn’t necessary, ” ‘You CAN afford to employ all of these people. But why the hell DO you?’ “

Vic took it to heart, so she cut 14 people off the payroll. This included a housekeeper that worked for them for eight years who was replaced by “two ‘cost efficient’ foreign staff,” so things aren’t completely falling apart.

As for the gardening, they’re down to one and now that poor bastard has to double as a chauffeur. Can you imagine the hell that must be having that guy track muddy shoes into the car? The horror.

Don’t Let 2011 CPA Exam Changes Keep You From Studying This Year

Adrienne Gonzalez
August 20, 2010

I’ve talked to a lot of panicked CPA exam candidates out there who seem to be bewildered and anxious about CBT-e changes coming up in just a few short months and even though we’ve covered it plenty here on Going Concern, I figured I’d take the time to remind you once again to relax. Please. Seriously. Like now.

A few things to keep in mind and then we’ll get to the good part.

1. Accounting is still accounting and IFRS puts debits on the left too. While international standards are spooking everyone, let’s take a deep breath and remember that accounting is still accounting whether it’s GAAP, government, IFRS or that wonky version of financial accounting that the Fed gets to make up. For the first few testing windows, if not years, it is highly likely that the AICPA will take a conservative approach when it comes to integrating the new standards into the CPA exam. They are not going to scrap years worth of effort put in to the computerized exam just to test international standards that aren’t even used in the U.S. so stop thinking 2011’s exam is THAT much different.

2. Regulation isn’t really changing at all. Does it ever? You’d be surprised how little the exam changes from year to year even as new standards are released and introduced to the bank of questions candidates receive. The fundamentals haven’t changed much over time and probably won’t. In the last three years, I can only remember two very large changes: a massive overhaul of Audit in mid 2007 that changed a lot of terminology but not much else and FAS 141(r) or, as candidates know it, business consolidations last year. Beyond that, the meat and potatoes of the exam have remained pretty constant in the 6 years since the exam went computerized.

3. Simulations will be easier. Believe it or not, the new sims should be way easier than the current ones. Instead of hoping you get a simulation that covers the two or three areas you studied (ahem, procrastinators, I’m talking directly to you), you get 6 or 7 smaller simulation problems that cover a multitude of areas. This makes your crapshoot odds of knowing what you’re doing far better than they are under the current structure.

So, now that we’ve pointed out those few things, I think you should know that there’s no reason to hold off on studying this year if your plan is to start taking exams in the beginning of 2011. GAAP will not change and will still be tested, it is just that new international standards will also be added to the mix.

You can certainly get a jump on studying by going over the current material towards the end of the year and then hit the 2011 stuff once it is available. Otherwise you’ll have to cram up to 150 hours of studying into a couple weeks right after New Year’s when you’re probably in no mood to study anyway. Trust me, a fourth quarter 2010 FAR exam isn’t going to be drastically different from a first quarter 2011 FAR exam except for the obvious international stuff sprinkled throughout. No big deal.

You CAN use 2010 books to START to prepare for the 2011 exam, just be sure to update them with 2011 material once it is available. If you rely solely on 2010 materials you will probably fail but you can definitely use them to get the foundation on topics that are still going to be tested in 2011 and beyond in much the same way they have been since 2004.

Hope some of you can now sleep at night. You’re welcome.

Accounting News Roundup: GM Still Lacks Effective Internal Control System; The Ten Highest State Income Tax Rates; How to Know When Your Boss Is Lying | 08.20.10

Caleb Newquist
August 20, 2010

GM filing warns on reporting [Detroit Free Press]
This may come as a shock but General Motors, despite filing paperwork for its IPO, admits that they still don’t have effective internal controls.

“[I]n regulatory filings about its upcoming initial public offering, GM warned potential investors that ‘our internal controls of financial reporting are currently not effective.’

Experts are divided on whether the warning — one of about 30 risk factors identified by GM in a document describing a planned sale of shares — is just an obscure accounting matter or a red flag that taints GM’s financial reporting

The 10 Highest State Income Tax Rates For 2010 [Forbes]
If you’re single and make $200k or $400k and married in Hawaii, you get dinged for 11%, the highest ranking state on the list. Dark horse Iowa comes in at #5 gets 8.98% of taxable income over $64,261. That’s above New Jersey and New York tied at #6.

Transocean accuses BP of withholding data on Deepwater Horizon and oil spill [WaPo]
Just when you thought the ugliness was slowing down (at least in the media coverage), ” Even as they work together to kill the Macondo well in the Gulf of Mexico, the oil giant BP and the deep-water drilling rig company Transocean are in an increasingly bitter battle over what went wrong on April 20 to trigger America’s worst oil spill.

The conflict flared Thursday when Transocean fired off a scathing letter accusing BP of hoarding information and test results related to the Deepwater Horizon blowout that killed 11 people, including nine Transocean employees. Signed by Transocean’s acting co-general counsel, Steven L. Roberts, the letter says that Transocean’s internal investigation of what went wrong has been hampered by BP’s refusal to deliver ‘even the most basic information’ about the event.

‘[I]t appears that BP is withholding evidence in an attempt to prevent any entity other than BP from investigating the cause of the April 20th incident and the resulting spill,’ the letter states, and it demands a long list of technical documents and lab tests.”

How to tell when your boss is lying [The Economist]
Apparently cursing is a good sign.

Koss reports smaller quarterly loss on 14% sales decline [Milwaukee Journal Sentinel]
The company lost $423,450 for the six months ended June 30th. They spent $1.12 million on legal fees related to Suzy Sachdeva.

Quote of the Day

This Could Easily Be a Member of Congress

Caleb Newquist
August 20, 2010

“We are grateful to the courageous taxpayer who came forward to notify the United States attorney’s office of a corrupt public servant.”

~ U.S. Attorney Todd Jones is really just referring to that IRS agent who needed $9,700.

Ernst & Young Risks Alienating Acrophobic Employees in China

Caleb Newquist
August 20, 2010

From Big 4 Blog:

Ernst & Young China is announcing the grand opening of its new office in China’s tallest building and premier location – Shanghai World Financial Center (SWFC) in the Pudong District of Shanghai. All of Ernst & Young’s 2,500 Shanghai people (of the 9,000 total China employees) will be one single location to help provide better services to clients and laying the groundwork for our further expansion in the China market. Prior to this, E&Y was in three different Shanghai locations.

Jim Turley managed to ignore the issue entirely saying, “Our confidence in the long term prospects in China is demonstrated in the investment in our business and our people. We currently have over 9,000 people in China, and will further grow our manpower with the business.”

News

Is Your Firm Cutting Fringe Benefits?

Caleb Newquist
August 19, 2010

Last week we touched on the shockingly sensitive subject of charging time while traveling. You see, apparently it was (at one time) a-okay in some KPMG offices (Southeast) while in others, the mere idea of charging time while traveling was utter nonsense.

So that got one reader to thinking – what the hell else is being cut out these days?

Please consider a post related to fringe benefits. I’m curious in knowing whether the larger firms are allowing their employees to keep points for dollars spent on company credit cards. But there are other points programs (i.e., frequent flyer miles) and fringe benefits (i.e., gym memberships, cell phones, etc.) that may be declining on top of all of the poor raises.

Big 4 firms have been quite generous with the fringe benefits (e.g. elderly parent care, subsidizing public transit passes, etc.) and they make a point to remind you of it from the day you interview with the firm to the day you leave. However, since we’re living in unprecedented times, nothing is unheard of.

If your firm has recently gotten stingy on fringe benefits, from the vastly important (401k match) to the less crucial (discounts at Brooks Brothers) discuss or shoot us the details.

Three Important Filing Tips for Luddites

Joe Kristan
August 19, 2010

There is an immense body of law governing whether last-minute tax filings are timely. So often a cheap little postmark is all that stands between a taxpayer and tax catastrophe. With the IRS herding preparers and taxpayers towards e-filing, timely-mailed, timely-filed cases may seem like an arcane body of law, like piracy cases, but paper filing still has some proud hard-core holdouts, and sometimes only a paper filing will do. At the Tax Court, for example, where the website says “Initial filings, such as the petition, may be filed only in paper form.”

The tax law says that a tax return is considered timely-filed if it is mailed on the due date, but the shift to e-filing can make things awkward for paper filers. For example, few post offices still offer late April 15 hours for last-minute paper filers. Stepping into the last-minute filer void are authorized private carriers of tax documents, like FedEx and UPS. A proper shipping document by an authorized private carrier can document timely filing. That gives taxpayers new ways to meet disaster, as the Tax Court illustrated this week.

A California couple wanting to take the IRS to Tax Court had a July 20, 2009 deadline for filing their petition. They filed by FedEx, perhaps at a FedEx/Kinkos location. They generated a shipping label on their home computer with a July 20 date. But FedEx spoiled everything, as the Tax Court explains:

The petition, which was sent by FedEx Express (FedEx), was received and filed by the Court on Thursday, July 23, 2009. The envelope containing the petition bore two shipping labels. The first shipping label, which had been placed inside a clear plastic pouch adhered to the envelope, had been electronically generated by the sender using FedEx Ship Manager (customer generated label). The second shipping label, which had been affixed to the outside of the clear plastic pouch, had been electronically generated by FedEx (FedEx-generated label).

Of course the FedEx-generated label had a July 21 date. And that, says the Tax Court, is the date that counts, and our couple was out of luck.

So what does that mean to you?

• File electronically if you can. You get a nice electronic confirmation that you can beat up the IRS with, and you don’t have to worry about your valuable tax forms going awry.

• If you must paper-file, Registered Mail or Certified Mail, Return Receipt Requested, are still the best deal in town. They’ll generally be cheaper than a private carrier, and that hand-stamped certified mail postmark has the same effect on IRS agents as sunlight on Dracula.

• If you find yourself at FedEx/Kinkos late on April 15, make sure the clerk knows that you need them to stamp it before midnight. If you use private delivery, be sure to use the proper street address, as the private carriers can’t deliver to post office boxes.

Otherwise, you might find yourself trying to reach Jiffy Express.

News

California Controller All But Guarantees That the State Will Issue IOUs Again

Caleb Newquist
August 19, 2010

As the State Controller of California, John Chiang arguably has one of the worst jobs on Earth. Public service is a fine calling and working for the Terminator probably has its moments of awesomeness but he still presides over one of largest fiscal nightmares you could possibly imagine.

For starters, it doesn’t help when you overshoot tax revenues for the month of April by $3 billion. Plus, you’re dealing with a state legislature that is probably incapable of agreeing on what ocean serves as the border of their state.

So take that and a bunch of other stuff that’s not really worth rehashing, you get this, “[W]ithout a new spending plan that closes a $19 billion shortfall, the state would run out of money by late October. ‘We will run out of money if everything remains the same,’ [Chiang] said in an interview.”

Of course the state Assembly’s Republican leader, Martin Garrick, finds this to be a load of crap since what it comes down really is your political party “[He] didn’t represent the fact that it is his party’s own lack of leadership that have led to these delays.”

Look, we’ve all accepted the fact that California is the brokest-ass state of the union and is completely inept when it comes to doing anything about it. Sure New York is a pathetic loser that manages to embarrass itself on a regular basis and most of the rest of the states out there leave a helluva a lot to be desired but Cali really outdoes everyone on a regular basis. This will make two years straight of issuing IOUs at the expense of citizens and yet the diaper-wearing California reps do nothing.

If Whitman gets in there, her first act as Guv could be to auction them off one by one (or just list them all as “Buy It Now” for $1). Of course the take wouldn’t be nearly enough to fix the budget but at this point a symbolic gesture will do.

California Faces Prospect of Issuing IOUs Again [WSJ]

Job of the Week

Job of the Week: SAS 70 Solutions Needs Senior Auditors

GoingConcern
August 19, 2010

SAS 70 Solutions, Inc. is conducting a national search for Senior Auditors, with specific focus in California, Illinois and Texas.

Select qualifications include 2 to 5 years of Big 4 experience and currently holds or is pursuing any of the following certifications: CPA,
CISA, CISSP, PCI QSA and/or CIA.

Company: SAS 70 Solutions, Inc.

Title: Audit Senior

Location: National search with specifirnia, Illinois and Texas

Compensation: Competitive

Position Type: Permanent

Position Type: Full Time

COMPANY DESCRIPTION

SAS 70 Solutions was the first ever CPA firm founded for the purposes of performing SAS 70 audits. It is now the largest non-Big 4 provider of such services in the world. Over time, the company’s services have expanded to include other attestation services, such as SSAE 16 and AT 101 examinations, AUP reviews, and Trust Services certifications. The company also performs PCI DSS validations and ISO 27002 compliance assessments.

The company’s personnel are almost exclusively the alumni of the “Big 4” / Tier 1 global accounting firms. SAS 70 Solutions’ clients are located throughout the United States, and include a significant number of publicly traded and Fortune 1000 companies, as well as privately held organizations of all sizes.

SAS 70 Solutions builds on the best of what the “Big 4” firms have to offer, such as the ability to offer high quality professionals to our clients. It also eliminates the parts of the job that personnel tend to dislike about their “Big 4” experience, including time reporting, chargeability goals, small and arbitrary bonus amounts, sales pressure, and the practice of using inexperience associates to provide the bulk of professional services.

RESPONSIBILITIES

Because SAS 70 Solutions does not employ inexperienced associates, senior auditors provide the majority of all “hands-on” activities with oversight from an audit manager and shareholder. Activities include standard project execution and report preparation activities. Senior auditors report to audit managers, which rotate based on client assignment. Audit managers generally handle project planning and interaction with the client prior to an engagement. Client engagements typically last less than three weeks, which allows senior auditors the opportunity to work on many projects over the course of each year.

DESIRED QUALIFICAITONS

• Bachelor’s Degree in accounting, finance or other related topics
• Between two to five years of related experience within professional services in financial auditing, operational auditing, information systems auditing, internal auditing, information security consulting and/or risk consulting
• Achieved the “senior” auditor/consultant level at a “Big 4” firm
• Currently holds any of the following certifications – CPA, CISA, CISSP, PCI QSA and/or CIA
• Willingness to pursue relevant professional certifications (e.g. CPA, CISA, CIA, CISSP, PCI QSA, etc.)
• Demonstrated entrepreneurial abilities, client focus, industry savvy, and the ability to work independently or as part of a collaborative team
• Advanced written and verbal communication skills
• Strong analytical and interpersonal characteristics
• Ability to operate in a dynamic environment
• Demonstrated consistency in values, principles, and work ethic

BENEFITS

• Competitive salary
• Quarterly performance bonus, which has historically averaged in excess of $20,000 per annum
• The opportunity to work with other highly skilled personnel on a constant basis
• No time reporting!
• No financial audit support work!
• No chargeability goals, sales goals or managed fee goals!
• Monday morning through Thursday evening considered “standard travel”, with little or no travel scheduled on Fridays, Saturdays, or Sundays
• Travel bonuses for any non-standard travel (e.g., overnight flights and/or Friday, Saturday or Sunday travel)
• Confirmed client schedule and related travel that extends months into the future and rarely changes within 30 days of an engagement
• Twenty-five (25) days of personal time off
• Immediately vested annualized employer 401(k) matching of 6% of the employee’s base salary
• Employer paid (or subsidized) health, vision and dental insurance
•Employee directed health savings account

TRAVEL

Out-of-town travel is estimated at 50%, or more, and is heavily dependent on the candidate’s location. Candidates must be available to travel and work in excess of standard hours when necessary.

Questions or Resumes may be submitted to careers@sas70solutions.com

For further information about SAS 70 Solutions, Inc., visit http://www.sas70solutions.com. SAS 70 Solutions, Inc. typically does not pay relocation expenses for employment candidates. Non-US citizens will not be considered. SAS 70 Solutions, Inc. is an equal opportunity employer (EOE) and strongly supports diversity in the workplace.

Fraud

Release of Satyam Founder Ensures That No Progress Will Be Made in the Investigation for the Foreseeable Future

Caleb Newquist
August 19, 2010

We’re getting used to this.

Chances of a speedy resolution to l’affaire Satyam receded on Wednesday with the Andhra Pradesh high court granting bail to the company’s founder and former chairman, B. Ramalinga Raju, freeing, albeit temporarily, the last of the accused in a corporate fraud that came to light in early 2009 with Raju’s confession and whose magnitude has since doubled to a claimed `14,000 crore.

Raju’s release is a setback for India’s federal investigating agency, the Central Bureau of Investigation (CBI), which is yet to produce him in court in person. Arrested on 9 January 2009, Raju has been undergoing treatment for Hepatitis C at Nizam’s Institute of Medical Sciences, Hyderabad.

On 16 August, he retracted his confession in the trial court by responding in the negative to questions posed by the court about the fraud. The burden of proof for Raju’s fraud now rests with CBI. And now, he is out on bail—for two sureties of `20 lakh each.

India’s minister for corporate affairs Salman Khursheed insisted that Raju’s release would not “hamper the ongoing investigation”.

Satyam case weakens with Raju’s release [Live Mint]

Former Ernst & Young Partner Still Getting Screwed By Mistress He Gave Insider Tips To

Caleb Newquist
August 19, 2010

Former E&Y partner James Gansman could finally be done paying for all his bad decisions. Web CPA reports that Gansman has settled with the SEC over his insider-trading-for-sex activities. You may recall that Jimbo received (and is currently serving) a one year and a day prison sentence back in February for his efforts.

This settlement with the SEC will set him back $250k but his mistress – who admittedly cheated on him and then testified against him – seems to have gotten a better deal.

The final judgment to which [Donna] Murdoch consented further orders that she is liable for disgorgement of $339,110 together with $64,943.52 in prejudgment interest, but, based on her demonstrated inability to pay, waives payment of disgorgement and prejudgment interest and does not impose a civil penalty.

Murdoch will probably still see some jail time but this just has to burn the Gansman up. Unless he’s found Jesus or something.

Former E&Y Partner Settles Insider Trading Charges for $250,000 [Web CPA]

Accounting News Roundup: EisnerAmper Partner: GM Balance Sheet ‘Stronger’ Ahead of IPO; KPMG Moves on From New Century, Countrywide; No Bookie Needed for Betting on Grades | 08.19.10

Caleb Newquist
August 19, 2010

GM’s balance sheet draws praise ahead of IPO [MarketWatch]
“Peter Bible, partner-in-charge at accounting firm EisnerAmper LLP, said General Motors is now carrying a much stronger balance sheet than its predecessor, based on the company’s initial public offering filed late Wednesday. ‘Their debt-to-equity ratio looks handsome,’ Bible said in an interview. ‘This thing has gotten restructured quite a bit. GM’s health care liabilities have fallen significantly. As I look at the balance sheet, it is much healthier.’ “

Move to converge just exported crisis [Re: The Auditors]
KPMG has put two major lawsuits behind them – Countrywide and New Century. One major difference between these two cases was that New Century had a bankruptcy examiner’s report while Countrywide did not.

Judge Denies Online Religious Group’s Bid for Church Status [WSJ]
A virtual “church” gets denied the whole “church” thing.

For the rich, ’tis better to give than wait [Reuters]
“With U.S. taxes almost guaranteed to rise next year, the rich have a rare opportunity to distribute some wealth and preserve their fortunes.

A weak economy has led to razor-thin interest rates and beaten-down valuations, which make giving less costly for and potentially more rewarding to heirs. Moreover, the U.S. government is widely expected to rein in a popular tax-avoidance scheme.

‘This is a golden era for shifting estates and giving assets away,’ said Bill Fleming, a financial planner for PricewaterhouseCoopers in Hartford, Connecticut. ‘If you have an estate plan, keep going: Uncle Sam soon will be back in your pocket.’ “

Wager 101: Students Bet on Their Grades [WSJ]
“The website attracted wagers by 600 students from two colleges last year, said Mr. Gelbart and co-founder Steven Wolf, graduates of Queens College. This month, the site expanded to let students on 36 campuses—including Harvard, Stanford and Brigham Young University—place bets. More than 1,000 new bettors have signed on.

Lisa Lapin, a Stanford University spokeswoman, said school officials were ‘appalled’ when they learned Stanford students could place bets on their grades, adding, ‘the concept of betting on academic performance is contrary to academic development.’

Lance Miller, a finance major at the University of Pennsylvania, says the criticism misses the mark. Mr. Miller, with a GPA of 3.6, won about $80 on two $40 bets that he would earn A’s in business courses.

‘We’re acing classes to make money—isn’t that what they call a win-win?’ said Mr. Miller, 20.”

Facebook’s Places Feature Lets Users Share Their Whereabouts With Friends [Bloomberg]
“Services that help Web users share their whereabouts and find nearby friends could generate as much as $4.1 billion in annual ad sales by 2015, according to Borrell Associates. The features can help marketers more easily target customers — say, by reaching shoppers when they’re close to making a purchase.”

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