Going Concern

Fraud
KPMG

The Restatement That Never Ends: KPMG Hasn’t Received Necessary Docs for Satyam

Caleb Newquist
August 3, 2010

Back in June we told you about Satyam requesting just a wee bit more time to nail down their restatement of their financial statements. It wasn’t because KPMG and Deloitte weren’t working their asses off, it was more of commitment to get things right. Putting good numbers out there, repairing broken trust, so on and so forth.

Well! The three month extension ends next month but as you might expect, there’s a bit of a problem. More specifically, KPMG is now saying that they haven’t received the documentation necessary to finish the job. Unless everyone is okay with some wild-ass guesses, in which case they can proceed.

[F]or all its documents, KPMG had to depend on the [Central Bureau of Investigation (“CBI”), which is investigating the scam.

NDTV has learnt that KPMG’s analysis of the documents don’t match with the CBI’s. There is a discrepancy between the two which amounts to over [$200 million].

CBI has based its calculations on estimates of Satyam’s assets and liabilities while KPMG says they need documentation to base their estimates.

KPMG says that they didn’t get all the documents needed to make a clear assessment which is why the accounts are likely to be re-stated full of riders.

But again, if you’re cool with some double-entry hocus-pocus, that can be arranged. There’s a merger at stake after all, “This confusion in the numbers could hold up Satyam’s merger with Tech Mahindra, which needs the go ahead from market regulators in India and the US, since Satyam is also listed in the US.”

Good luck getting that U.S. approval.

Satyam accounts restatement: KPMG’s analysis differs with CBI’s [NDTV]

Fraud

If Your Accountant Marries a Stripper, Should You Assume There’s a Ponzi Scheme Behind It?

Caleb Newquist
August 3, 2010

Not that it’s impossible for an accountant to score a trophy wife – a former Scores Dancer, no less – but observers of accountant/business manager-cum-Ponzi Schemer du jour (allegedly!), Kenneth I. Starr are pretty confident that it was a decent sign of things going in the wrong direction.

Vanity Fair’s article on “not that Ken Starr” gets a lot of perspective from people that knew Starr, including Blackstone co-founder, Pete Peterson, ” Did something in the way of a profound midlife crisis trigger this behavior?”

But of course, there are people that are more forthright:

Like a Greek chorus, his shocked clients pointed as one to the lavishly endowed Diane, for whom, the indictment notes, Starr purchased more than $400,000 of jewelry from bling jeweler to the rap world Jacob Arabo. “When your business manager marries a stripper,” says one rueful client, “that’s a tell.”

All The Best Victims [Vanity Fair]

CBT-e Strategies: What To Do When You’re Still Sitting for the CPA Exam in 2011

Adrienne Gonzalez
August 3, 2010

Those of you who graduated in May should already be buried in your review books and planning to sit for some parts – if you haven’t already – but for some of you, the long wait to get your applications processed is anything but over OR you managed to procrastinate up until this point and haven’t even begun the process. I’ll resist the urge to smack you if you promise to submit those as soon as you’re done reading this post. Regardless of where you’re at in the process, chances are you’re tripping about 2011 changes. Not to worry, my big fat brain packed with CPA exam goodness is here to help.

Accounting Is Still Accounting – Even if they are testing IFRS in 2011, debits still go on the left (at least I’m pretty sure they still do under IFRS) and pension accounting is still really annoying. Keep in mind, IFRS isn’t the norm in the wild – at least in the U.S. at this point – and will not be for several years so it would be irresponsible of the AICPA Board of Examiners to heavily test rules that aren’t even widely accepted in practice. So relax, the changes are coming but they aren’t nearly as scary as you think.

FAR – If you are able to, get FAR done this year so you don’t have to worry about it next year. The first two windows of 2011 will say a lot about the AICPA’s strategy but knowing them, I wouldn’t expect 2010’s exam to be completely different from 2011’s. Those questions cost a lot of time and energy to make and the BoE isn’t about to trash all of them just so they can start testing rules that we don’t even use. With me on this one? Calm down.

CPA Review Materials – If you haven’t yet committed to a CPA review course, be sure to ask about 2011 materials and how changes affect the course you choose THIS year. A good review course will offer updates to the material but be on the lookout for additional product purchase charges or fees to update your materials. For BEC, REG and AUD the changes are minimal: international audit standards will appear here and there and a few things are moved around but for the most part the largest change in these areas will be the cosmetic change in BEC as written communications are moved out of the other three sections and stuck there. This does not change the content, only how you prepare and the point percentages for this section.

You can find the new 2011 CSOs via the AICPA here if you’d like a better look at what you’re in for next year but as I said, it doesn’t take long to figure out that next year’s exam really doesn’t look all that different from this year’s.

Accounting News Roundup: Geithner Supports Obama Tax Policy; Reznick Group Announces Principal Promotions; What’s It Cost to Be the Boss? | 08.03.10

Caleb Newquist
August 3, 2010

Geithner defends Obama policy on tax cut extension [AP]
“Treasury Secretary Timothy Geithner said Tuesday it would be ‘deeply irresponsible’ for the Obama administration to support a wholesale extension of Bush era tax cuts, including breaks for the wealthy.

Geithner said in a nationally broadcast interview that President Barack Obama strongly believes those reductions should be retained for the ’95 percent’ of taxpayers with individual incomes under $200,000 a year and families below $250,000.”

Bank of America, KPMG Settlement With Countrywide Investors Wins Approval [Bloomberg]
“Bank of America Corp. and KPMG LLP’s $624 million settlement with investors in Countrywide Financial Corp. led by New York pension funds won initial court approval.

U.S. District Judge Mariana Pfaelzer in Los Angeles ruled today on the accord. A fairness hearing will be held on final approval for the settlement, first announced in May.”

Snooki Tanning-Bed Protest Splits Sin From Taxes [Bloomberg]
“[P]eople don’t like government moralizing. If there’s one thing people dislike even more than taxes, it’s being told what to do.”

So does that mean that Alabama is imploring reverse psychology?

Reznick Group Promotes Four New Principals [Business Wire]
Reznick Group promoted Dan Fox and Renee Matthews in Bethesda, MD, Eric Jones in Sacramento and Daniel Worrall in Atlanta are the big winners.

Accounting & Consulting Group acquires Roswell’s Miller & Associates [New Mexico Business Weekly]
“With 95 employees overall, Accounting & Consulting Group is now the third-largest accounting firm in the state. Headquartered in Albuquerque, it has offices in Alamogordo, Carlsbad, Clovis, Hobbs and Roswell, and has a member firm office in Lubbock, Texas. The firm specializes in audit and financial reporting, tax compliance, business consulting and trust and estate planning.”

Becoming the Boss Can Cost Plenty [WSJ]
“When starting a business on a tight budget, a single spending gaffe can spell disaster. For this reason, experts in entrepreneurship recommend taking precautions, such as doing research to identify potential hidden fees, focusing only on necessities and setting aside emergency funds.”

SAP Business ByDesign 2.5: time to invest? [AccMan]
Dennis Howlett gives the lowdown on the “general availability of SAP Business ByDesign 2.5,” which means that it is available for any to purchase. Dennis reports that starter packs for as few as ten users are available for CRM, ERP and PSP.

Three Pet Peeves to Avoid at Work

Daniel Braddock
August 3, 2010

Happy MOANday, people. Back from the weekend and cranky to be here, today’s post is not supposed to come off as salty.

But it might. My (somewhat sincere) apologies.

Good intentions aside, our coworkers and their habits get to us; this should come as no surprise. It is inevitable – being surrounded by the same individuals for long periods of time – that we will not like everything about our coworkers. Listed below are few popular pet peeves that should be avoided:

Music – This is a catch-all for all aspects of music at work: listening to music without headphones; listening to music with both headphones; humming to your playlist; using red pencils as drum sticks and binders as snare drums. There are other people around. Grow up, Tommy Lee. Keep the air drumming restricted to your Rock Band parties.

Everything about food – Food in the fridge labeled “do not throw out”. Fish for lunch. There’s nothing wrong with bringing a hot lunch to work; but have some respect for the surrounding cubicles. Eat your tofu and bean curd in the same area you heated it up – your floor’s kitchenette.

Personal calls in public spaces – Early in my career my cubicle was adjacent to Lover Boy. Every day like clockwork Lover Boy would speak to his lady friend at 9am, 12:30pm, 3pm, and whenever he closed out for the day. Conversations were always predictable (“I’m eating the salami and Munster cheese sandwich you made me”) and oftentimes cases of TMI. The issue of over sharing on the phone is rooted in the fact that people are comfortable at work; more time during the week is spent in the office than at home. Because of that, people forget that there are strangers within earshot (we all know the person I’m referring to – feet up on the desk, recounting the cake at Aunt Thelma’s 60th birthday bash). Taking the time to find a quiet room or unused conference space to argue about unwarranted cell phone charges shows respect for your colleagues. A good rule of thumb is avoid having a conversation at your desk that you wouldn’t take while sitting next to your grandmother. If your grandmother wouldn’t want to hear it, neither do I.

Expand on these or share your own pet peeves below.

Quote of the Day

Maxine Waters Takes Exception with the Ethics Violations

Caleb Newquist
August 3, 2010

“I have not violated any House rules. Therefore, I simply will not be forced to admit to something I did not do.”

~ The California Congresswoman, in a statement, won’t be going quietly.

News

FASB to Make Heads or Tails of Repurchase Accounting Soon Enough

Caleb Newquist
August 3, 2010

Back in April when he was testifying before the House Financial Services Committee, FASB Chairman Bob Herz couldn’t really say one way or another what he thought about the repurchase accounting that Lehman Brothers was using.

At the time, Herz just said that FASB would work diligently with the SEC (no porn allowed), that Lehman skirted the disclosure rules and that they were going to get to the bottom of this, come hell or Barney Frank’s shrewd disposition.

In a recent meeting with his fellow double-entry wizards in Norwalk, Herz said that he was opening up ‘a very targeted scope project’ that will get to the bottom of this pile:

“Once we’re made aware that people are trying to structure around specific provisions in the accounting literature, it makes you think about whether those provisions need to be looked at,” he told the board. “We’ve asked the staff to take a look at that and come back with some recommendations in the pretty near term,” he said.

FASB Plans New Rules Around Repurchase Agreements [Compliance Week]

Alabama Strives for the #1 Ranking in Obesity with Consideration of Tax on Gym Memberships

Caleb Newquist
August 2, 2010

Yes, it’s true! Bama was number #2, according to the latest Robert Wood Johnson Foundation and the Trust for America’s Health ranking but with a little bit asinine tax policy, the Yellowhammer state could ascend to #1 spot.

Kiplinger has a slideshow that goes over some of the stranger (and desperate) measures some states are going to in order to close their budget gaps. Twenty-six states already tax bowling for crissakes! And now Michigan, Nevada, North Carolina and New Mexico are thinking about it too!

The ultimate, for us anyway, is the Alabama’s show of complete disdain for anyone considering to exert themselves in any manner, shape or form:

Later this year, Alabama will debate taxing gym memberships, a plan that could raise several million dollars a year in state revenue. A monthly membership would include the Yellowhammer State’s 4% sales tax.

You hear that? Several million dollars. Easily eaten by the costs associated with the 31% obesity rate. Sounds like a great plan.

10 Surprising Ways Your State May Tax You Next [Kiplinger via Bucks]

Rather Than Admit that She Was Getting Tax Advice from Reggie Bush, Khloe Kardashian Blames Her Accountant

Caleb Newquist
August 2, 2010

Because there doesn’t appear to be anything else going on today, we’ll be forced to tell you that Khloe Kardashian should now be at the top of your shit list for reasons none other than she is blaming her accountant for not paying her taxes.

TMZ reported yesterday that K-squared III owed California around $18.5k for ’07. Now the word is that she did pay but the accountant failed to remit the amount owed. Everything is cool though because, by the grace of God, Khloe has found a new accountant and everything should be cleared up shortly.

The only question that remains is, if she paid this twice, what the hell happened to the original $18k? Did the accountant just blow out of town with some Kardash cash? Did it somehow wind up in Reggie Bush’s pockets? Is there a spectacular Ponzi Scheme behind the whole thing that will result in the Kardashians being wiped out of popular culture altogether? God, we can only hope.

Khloe Kardashian — My Accountant Ate My Tax Lien [TMZ]

Job of the Day

Job of the Day: AFEX Needs an Internal Auditor

GoingConcern
August 2, 2010

Associated Foreign Exchange is looking for an experienced auditor to join its Los Angeles office.

Qualifications include five years of experience and a strong knowledge of audit practices. Some travel is required.

Company: Associated Foreign Exchange

Title: Internal Auditor

Location: Los Angeles, CA

Description: This position is responsible to ensure that policies and procedures are being followed consistently throughout the Company to improve internal, operational and management control systems, verify the accuracy and reliability of Accounting Data and promote adherence to the recommended changes.

This position reports to the Internal Audit and Risk Management Officer. The nature of this position requires contact with AFEX Employees and may include communications with Vendors and other business-related representatives as well.

Responsibilities: Familiarize with the Company’s Policies and Procedures for each area; Develop a comprehensive internal audit program for the Company; Review transactions, documents, records, reports and methods for accuracy and effectiveness; Prepare working papers that summarize the result of each audit assignment; Hold preliminary discussions on apparent weaknesses with appropriate staff to verify and obtain explanations and document the responses; Submit the written audit findings, inclusive of the recommendations, to the IA/RMO; Monitor that recommended changes are being implemented

Qualifications/Skills: Bachelors Degree in Accounting; At least 5 years experience in Internal Audit for Financial Institutions; strong knowledge of the standard audit practices and ability to apply them; Strong knowledge of Microsoft Office; Excellent analytical skills and attention to details; Ability to work with little or no supervision; Excellent interpersonal skills; Excellent written and verbal communication skills; Will be required to travel to the different offices.

See the entire description over at the GC Career Center and visit the main page for all your job search needs.

EY
Salaries

(UPDATE) Comp Watch ’10: Ernst & Young Numbers Coming Out This Week?

Caleb Newquist
August 2, 2010

Last time we checked in on E&Y in the comp department, convos on promotions and ratings were to have gone down by last Friday. That appears to have happened right on cue and now we’re told that starting this week, the numbers will be coming down from 5 Times Square:

Latest regarding compensation (exact $ amount) in both FSO/New York and Northeast/New York regions is discussions should start today and run for 2 weeks. Big push right now in all business units to try and appear to care about people; people advisory board members have been reaching out for ways the firm can improve.

Feel free to speculate as to why the “caring” and “reaching out” is happening at this particular time of year (and if the Facebook downloading is at all related). Also, if you’ve had the talk and have great/disappointing news to report, do share or get in touch with us.

UPDATE: Word is that meetings are still being had this week and the numbers are still good. One source (Manager) in the assurance practice reported a 5 rating and a 21% bump. Not too shabby.

Fulltime Offer Watch ’10: Big 4 Class of 2011

Caleb Newquist
August 2, 2010

Now that it’s officially August, that means a few things:

1) Everyone around starts bitching how summer is almost over

2) The tax compliance folks take a field trip to the nearest Radio Shack to stock up on their batteries for the two and a half month stretch and

3) This year’s interns starting getting their offers for fulltime employment.

This of course means that your coffee jockeys and Xerox operators will start stressing over everything that they’ve ever done this summer and whether it’s good enough to be blessed with the honor and privilege to attain fulltime Big 4 employment.

So if you veterans out there have been doing your job, you’ve shaped some fine, young, booze-drenched minds into someone that is going to your new associate next fall. If you feel like giving them some credit below. And interns, if you’ve gotten some good news (official or otherwise) jump for joy below and share your experiences – the good, the bad, the truly mortifying (extra bonus points here).

UPDATE: Straight out of the rumor mill, we’ve heard that some E&Y interns have already found out that they won’t be partying with Mickey & the Gang:

There was a round of interns who were let go on Friday. They were told to come in to the office and terminated, offers not given. Saves the expense of sending them down to Disney (the interns that remain leave this Wednesday). There were at least 3 let go in NY.

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