G-20 Agrees to Cut Debt [WSJ]
“The wealthiest of the Group of 20 countries said they would halve their government deficits by the year 2013 and ‘stabilize’ their debt loads by 2016, a signal to international markets and domestic political audiences they are taking seriously the need to wean themselves from stimulus spending.”
Once you catch your breath from laughing, the President also cited the tax code specifically and his threatening to put some (i.e. Congress) in a tight spot:
“They might have to make deeper cuts in deficits to comply with its pledge. A White House statement said that government debt in the fiscal year 15, would be at an “acceptable level.” President Obama said that next year he would present “very difficult choices” to the country in an effort to meet deficit goals.
The president cited his disappointment with the U.S. tax code. ‘Next year, when I start presenting some very difficult choices to the country, I hope some of these folks who are hollering about deficits and debt step up, ’cause I’m calling their bluff,’ Mr. Obama said.”
Bank auditors eyed for whistleblower role [FT]
A paper from the UK’s Financial Services Authority puts forth the discussion of requiring auditors to work more closely with regulators on irregularities found during the bank’s audit engagement.
“Experts say bank executives are nervous about the prospect of increased bilateral discussions between regulators and auditors. Auditors have been fearful the paper could thrust the profession into a regulatory spotlight it has so far avoided.”
Koss Fraud: We didn’t bother to look at the endorsements on our own checks, but Grant Thornton should have! [Fraud Files Blog]
Fraud sage Tracy Coenen presents her latest view on the Koss fraud mish-mash and how Koss management has managed to make themselves “look like absolute morons.”
BP Loses $22 Billion in Legacy of Share Buybacks [Bloomberg]
“The sum represents the hole after the 52 percent plunge in BP shares since the Deepwater Horizon exploded and sank, resulting in the worst oil spill in U.S. history. BP bought back more than $37 billion of its stock in a bid to return money to investors between 2005 and 2008. Those shares are now worth $15 billion, excluding dividends.”
Martin Ginsburg, Noted Tax Lawyer and Husband of Justice Ginsburg, R.I.P. [ATL]
Mr Ginsburg was a tax law professor at Georgetown for many years and was known for his great sense of humor, as evidenced by his faculty bio, noted by our sister site, Above the Law:
Professor Ginsburg is co-author, with Jack S. Levin of Chicago, of Mergers, Acquisitions, and Buyouts, a semi-annually updated treatise which addresses tax and other aspects of this exciting subject. The portions of the treatise written by Professor Ginsburg are, he is certain, easily identified and quite superb.
Open Letter to the Securities and Exchange Commission Part 9: Overstock.com’s Excuses Simply Don’t Add Up [White Collar Fraud]
It appears Sam Antar has caught Overstock.com in another disclosure snafu but this time it isn’t really clear whether the company gave the wrong excuse, lied to the SEC or simply doesn’t know what they’re doing, “Overstock.com’s 2008 10-K report claimed that a reportable “gain contingency” existed as of November 7, 2008. However, the company contradicted itself and claimed to the SEC reviewers that reportable reportable ‘gain contingency’ did not exist on November 7, 2008.
If Overstock.com’s 10-K disclosure is true, the company’s explanation to the SEC Division of Corporation Finance can’t be true. Likewise, if Overstock.com’s explanation to the SEC Division of Corporation Finance is true, the company’s 2008 10-K disclosure can’t be true.”
Accounts bodies revise workplan [FT]
Convergence 2.0.
Today’s taxes aren’t too bad [Don’t Mess with Taxes/Kay Bell]
Kay Bell provides some perspective on tax rates over the last century. The following graphic should help clear up any confusion.
“[It will] help prevent another financial crisis like the one that we’re still recovering from.” ~ President Barack Obama on the financial reform bill. If it wasn’t for WS, there would be no vampire craze. Sure the last Blade film was six years ago. And sure the first in the series was twelve years ago but it doesn’t mean the man still didn’t start the popularization of bloody-thirsty, sexy undead types. However, this prison sentence thing hanging over his head has probably made him a bit of a liability. But thanks to some crafty lawyering, he’s been able to stave off the joint long enough to catch a bit of luck. A federal appeals panel is considering whether the arrest of actor Wesley Snipes’ former financial adviser could pave the way for a new trial on tax evasion charges. Snipes was convicted and sentenced to three years in prison in 2008, but his attorneys asked the 11th U.S. Circuit Court of Appeals in Atlanta to allow a new request to dismiss the movie star’s conviction or grant him a new trial. The motion centers on the arrest of Kenneth Starr, the one-time financial adviser to Snipes and other celebrities. RSM McGladrey reported fiscal 2010 pretax income of $58.7 million, down nearly 39 percent from $96.1 million in the prior year. Revenues declined 4.2 percent to $860.3 million, primarily due to the impact of the overall weak economic environment, which continues to pressure billable rates and hours within the industry. Profitability was negatively impacted by costs associated with previously resolved arbitration proceedings involving McGladrey & Pullen and other costs of litigation totaling $14.5 million in the aggregate, as well as a $15.0 million goodwill impairment charge at our capital markets business unit. A 39% drop in profits could explain the nationwide layoffs at McGladrey that we reported on earlier this month. It’s a good thing they didn’t have the ginormous golf cake in this year’s numbers, otherwise the results would have been worse. But if you ignore all that, things were essentially flat and everyone knows that flat is the new up! Excluding these charges, pretax income would have been approximately $88 million and pretax margin for the segment would have been 10.3 percent, essentially flat with the prior year. The shortfall in revenues was partially mitigated by cost reduction efforts throughout the year. These efforts included headcount reductions to reflect lower client demand, as well as other non-client facing cost reduction initiatives. OH! There’s the layoffs and they’re citing “lower client demand.” Thoughts on that, anyone? H&R Block Reports Fiscal 2010 Financial Results [Market Wire] Protestors of this weekend’s G-20 Summit invaded Toronto this week which promoted some companies in the TO’s financial district to take extraordinary measures so that their employees wouldn’t be bothered by all the jobless ruffians. Most shops just sent people home as a precautionary measure as protestors gathered throughout the week but some diehards are camping out, as FINS reports on StatPro North America’s office that is near the red zone that surrounds the Toronto Convention center: Andrew Peddar, chief operating officer of StatPro North America, said that the firm wanted to ensure that its clients, which include asset managers and hedge funds, could be assured of uninterrupted service during the week. The campout was the employees’ suggestion. That way, they’ll avoid potential disasters on the client front and also sidestep protestors. “We have sleeping bags, lot of food and lots of liquid,” said Peddar. The axes? “In case we need to break out.” Or chop off some ne’er do well’s arm, you know, whatever is necessary. Obviously these guys are overachieving, bedwetting amateurs that don’t recognize an opportunity when they see one. Fortunately, Deloitte knew better and told all its employees to work from home starting Tuesday. Some used the unexpected time off to get enamored by the security, “Junaid Zia, a risk analyst at Deloitte, had most of the week off. When he left the office Monday night, he said he didn’t see any protestors, only a lot of policemen…’They should just do G-20 every year,’ he said.” But at least one Big 4 veteran saw this as a perfect opportunity to do some weekday drinking: [A] senior analyst at the office, took the opportunity to spend time riding his motorbike and watch soccer… “I went to a British bar for the England game, an Argentinian bar for an Argentina game, a German bar for a German game,” he said. “But I’ve been working.” By Thursday, he was lying down at home, having injured his back. He declined to elaborate on how the injury happened. Probably hurt it tracking that fantasy football team, no? Like many celebrities, Mr. Franken took his act on the road, making a good living on gigs in various states. Unlike many celebrities, Franken ran for office, subjecting his tax life to unnatural scrutiny. It turned out that he hadn’t filed taxes in every state wher $70,000 of back taxes paid to 17 states later, Mr. Franken squeaked into the U.S. Senate by the narrowest of margins. State taxes are a compliance nighmare for glamour professions like sports, entertainment, construction and auditing. That’s why the Multistate Tax Commission is working on model legislation that would exempt workers from state taxes if they work in a state for less than 20 days in a year. That is, unless they work in sports, entertainment or construction (perhaps the only known instance where auditors aren’t abused worse than other professionals). A bill going nowhere in Congress, the Mobile Workforce State Income Tax Fairness and Simplification Act, would would create a 30-day threshold, but similarly screw entertainers and athletes, but not construction workers. This raises the obvious question: why do they want to screw the athletes and entertainers? Presumably the states all want to pick Taylor Swift’s pocket (understandably), but for every Taylor Swift there are hundreds of struggling young musicians trying to scrape by and make a name for themselves. Yet the tax law, in all its majesty, requires the same level of tax compliance for millionairess Taylor Swift and the wonderful, but surely less prosperous, Carrie Rodriguez. Small businesses used to be able to blow off states they only visited for a brief time. That’s becoming a bad bet. Better and cheaper data mining software makes it easier each year for state revenuers to sniff out temporary presence. If there is any publicity for your visit, you leave a Google trail. If you don’t file in a state, the statute of limitations never runs there, and you can build up a painful multi-year liability. If they catch you after the statute of limitations for your home state runs out, you lose your credit on the home state return for taxes paid in the other state — meaning you pay tax on the same income in two states. So what do you do if you are a small business? Pay attention to which states you are doing business in. Don’t assume they just won’t notice you. Discuss things with your tax preparer. If you have sinned, most states will work out a deal through your preparer to only collect for a few years, and maybe waive penalties, if you come forward before they catch you. And remember that if you live in a high tax state, like California, New York or Iowa, you should be able to get an offsetting refund on your home state return for non-resident state taxes on an amended return for open years. Joe Kristan is a shareholder of Roth & Company, P.C. in Des Moines, Iowa, author of the Tax Update Blog and Going Concern contributor. You can see all of his posts for GC here. Selected responsibilities include researching technical accounting topics, reviewing target companies accounting policies and analyzing quality of earnings. Candidates should have one to three years of audit or due diligence experience. Travel required as needed. Title: Due Diligence Analyst Location: Los Angeles, CA Responsibilities: Preparing analytical schedules to be used in discussions with Management of target companies; Identifying transaction focus areas based on preliminary analysis; Researching technical accounting topics for contemplated transactions; Researching public industry and competitor information relevant to the target company; Analyzing cyclicality of target’s business and working capital trends; Investigating contingent liabilities, off-balance sheet items and related party transactions; Analyzing quality of earnings and non-recurring items; Reviewing target company’s accounting policies for proper application of GAAP; Participating in discussions held with Management; Contributing to the report-writing process. Qualifications/Skills: Bachelor of Science/Business Administration in Accounting from an accredited college or university; 1-3 years of Audit or Due Diligence experience: However, new graduates with a minimum GPA of 3.2 will also be considered; Strong analytical, comprehension and problem solving skills, as well as strong verbal and written communication skills; Flexibility to travel, as needed. See the entire description over at the GC Career Center and visit the main page for all your job search needs. It’s raining bonuses and raises over at PricewaterhouseCoopers these days. Unfortunately, all I’m seeing are news tips (monetary tips or buybacks at the bar are always appreciated). All of my sources are from the NYC office, so if you’re elsewhere in the country, please share your numbers in the comments below. Here’s what we know so far: • A recently promoted associate to senior associate in advisory received a 10.5% raise and a $3,000 bonus. • Tax bonuses are being handed out now as well. Size matters in this instance, people. Cough up the details below. This indicates that resources are being spent on what is being determined to be the right people in the right practices. Average performers should expect to receive 4-6% and take it to the bank. Audit people, what are your numbers looking like? Email us or post your comments below. Practice/office/level are always appreciated Thanks to everyone that is sharing information. Enjoy the weekend. Koss is suing S-squared and Grant Thornton for their respective roles in the alleged embezzlement of $31 million from the Brew Town company. Koss hired one of the best accounting firms in the world, Grant Thornton, and should have been able to rely on Thornton’s audits to uncover wrongdoing, Avenatti said. The suit against the auditing firm says auditors assigned to Koss were not properly trained. The lawsuit lists hundreds of checks that Sachdeva ordered drawn on company accounts to pay for her personal expenses. She disguised the recipients — upscale retailers such as Neiman Marcus, Saks Fifth Avenue and Marshall Fields — by using just the initials. But the suit says Grant Thornton could have ascertained the true identity of the recipients by inspecting the reverse side of the checks, which showed the full name. Forget the fact that the CEO was also vice chairman, chief operating officer, president and chief financial officer. Oh, and he sat on the audit committee at another company. Apparently Koss wanted GT partners auditing those cash accounts rather than implement anything that even closely resembles an internal control system. Grant Thornton, meanwhile, is still sticking to the boilerplate statement as reported in the Milwaukee Journal-Sentinel, “We remain confident that we have met all of our professional obligations and that our work complied with professional standards.” Sigh. Of course no one wants to be responsible, so let’s decide for them. Let’s get a show of hands: It’s worth mentioning that the lawsuit comes just a few short days before Koss’ tardy restated financials are due. If the company doesn’t cough them up, the Nasdaq will banish them like they’ve got lice. Koss sues former executive, auditor over alleged embezzlement [Milwaukee Journal-Sentinel] As most of you already know, the CPA exam is changing and our last two testing windows are quickly approaching. If you are concerned about the impact of IFRS on CPA exam content, get FAR done this year. If you absolutely hate written communication, knock out BEC in 2010 as it will contain them in 2011. A few topics will be moving around and for an overview of everything that’s changing starting January 1, 2011, check out the updated Content Specification Outlines for all the gruesome details. The biggest and most obvious change will be a shift in the thinking of the CPA exam itself Contrary to popular rumor, BEC WILL NOT CONTAIN SIMULATIONS The Unknown The AICPA used to have a tutorial at cpa-exam.org but since they redid their website, these tutorials have moved to their main page and can be found here. The cpa-exam.org site is still down and, presumably, will not be brought back now that everything is stashed on the AICPA’s website. So our guess is that the new format WILL be available in tutorial form from the AICPA before January though we haven’t seen anything to date. When the research function changed in mid 2008, they made it available for practice at least one window prior to the new function appearing on the exam and 2011’s simlets should be no different. We’ll let you know if we spot the new format available for practice so stay tuned and better knock out some exams while you can, there are only four testing months left before everything changes! Adrienne Gonzalez is the founder of Jr. Deputy Accountant, a former CPA wrangler and a Going Concern contributor. You can see more of her posts here and all posts on the CPA Exam here. U.S. Lawmakers Reach Accord on New Finance Rules [WSJ] “After more than 20 hours of continuous wrangling, Congressional Democrats and White House officials reached agreement on the final shape of legislation that would transform financial regulation, avoiding last-minute defections among New York lawmakers that had threatened to upend the bill. After months of uncertainty about how the U.S. would craft new rules, the agreement offers th ince the financial crisis of how markets and the government will interact for decades to come. The common thread: large financial companies are facing a tougher leash.” Just in case you missed it yesterday, former SEC Chairman Arthur Levitt isn’t nearly as excited as some people about the bill. The President is expected to sign the bill before July 4. Sidenote on this one: how the Journal managed to slip Maxine Waters through as one of a dozen “players” in this bill should cause you to question – if even for just a minute – the credibility of the paper. Florida Appeals Court Turns Down Heat, For Now, On BDO Seidman [Re: The Auditors] In other words, the “idea” of fraud being a kickback or a bribe is obvious and was defined. Manipulating mark-to-market and off-balance sheet accounting rules or “something else equally outrageous” were not and thus the law was unconstitutional. Long story/short, Norris writes, is that Funny story on the way to this Skilling outcome – if the SCOTUS rules against the PCAOB (it is expected on Monday), “It will blame Congress for writing bad laws,” Norris writes. And who forced Congress into action on Sarbanes-Oxley? BP: Oil-Spill Cost Hits $2.35 Billion [WSJ] Caturano being acquired by RSM McGladrey [Boston Business Journal] As if PricewaterhouseCoopers hasn’t been popular enough around the GC community, I received the following letter from an Advisory practice leader out of their New York City office yesterday: You know what it takes to succeed here. Smarts. Flexibility. Teamwork. Excellence. Leadership. Sounds more like a description of the US Soccer team, no? My emphasis and notes below. That’s why we’re turning to you to help us find our next new hire, that future teammate, a qualified colleague. And, beyond the reward of perhaps having a friend work here and enhancing our level of talent, we’re making it more worthwhile to recommend a friend by temporarily increasing the referral bonus for client service p sue our growth goals and win more work, our staffing needs are growing too. In Advisory, our business continues to grow and we need the right talent to fill the dynamic and challenging positions we have open to support our continued growth for the remainder of the year and beyond. As we communicated to you, we recognize the need for additional resources in many areas of our practice. Referring qualified candidates has always been one of the best sources of candidates for us, and an important way you can help. Refer someone you know for a client service position, and you can earn up to a $6,000 referral bonus if they accept the position, depending on the level of the position, from June 14 through September 30. Asking you to help is just part of our push to find new ways to bring talent in faster and through different channels. So, take a minute and think about people you know from your professional and personal networks. Use LinkedIn or Facebook to connect with a former colleague, a friend, or someone you volunteer with who has the skill sets we need. We all know people who could achieve personally and contribute to the success of the firm, whether in our line of service, or in another. (And, we could all use a little spending money.) Not sure you want to comb through all your contacts? You may want to think again. As additional incentive, for client service referrals, you’ll: § Receive a $100 American Express gift card for any client service referral who is submitted between June 14 and September 30 and interviewed for a position other than partner or principal in any line of service other than IFS [Internal Firm Services] by October 31, 2010. These will be awarded on a monthly basis after the interview takes place. DWB: Tell your buddies at other firms to apply, interview, and take you for $100 worth of drinks. § Be entered automatically into announced prize drawings for each new client service referral who accepts a job offer (other than as partner or principal) for the position which you referred them in any line of service other than IFS. And these aren’t just any prizes: the first drawings will be for $15,000 or one of four iPads, per line of service of the referrer. There’s no limit on how many acceptances gain you entry, either — so if you refer three new people who accept the client service job offer for which you submit them, you’re entered into the drawing for your line of service three times (though you can only win one prize per drawing). DWB: Uhhhh. So you can win either $15,000 or an iPad? Fifteen THOUSAND dollars or a personal computer? What pains me is to see the money they are throwing at this process – surely one would assume PwC has an internal recruiting team to fill these needs. Right? Wrong. My source was kind enough to check their internal job directory, and there are multiple experienced recruiter positions for the Advisory line up for grabs. This makes sense, as these glorified internal “head hunters” are cut early on when times get tough (no sense having recruiters when there is no need for new personnel). These roles were probably canned in 2008 or ’09 when the Advisory sector was bleeding resources. So get on the horn, PDubbers – call up your friends at the other public accounting shops and cash in on this opportunity. 
Write It Down: No More Financial Crises Ever
Wesley Snipes May Still Be Able to Get Back into the Vampire Game
Since Ponzi-schemer-to-the-stars Kenneth Starr has been outed as a complete shame (not to mention a complete wuss) Wes can get back to the business of making truckloads of cash in this bloodsucking phenomenon:
He was a key witness in Snipes’ 2008 trial but was charged in May with securities fraud worth $59 million.RSM McGladrey Can Explain the Disappointing Year
H&R Block announced its earnings for fiscal 2010 yesterday which included the details for the fka RSM McGladrey. The company’s press release basically says that times are tough but RSM had some good reasons for that.
For starters, the small tiff with M&P sort of put a damper on things and a nasty goodwill write-off:
Deloitte Employees Enjoy Boozing, Checking Out Men in Uniform Thanks to G-20 Protesters
Franken’s Monster: State Taxes for the Traveling Employee
He’s good enough, he’s smart enough, and doggone it, the state revenue departments loved Al Franken — once he paid $70,000 in back taxes.
Franken has a lot of company in going from state to state without paying all of his taxes (he also has a lot of company in dumping on his accountant to weasel out of the blame). It’s a lot of work, and a lot of expense, for a traveling worker to pay taxes in every state. Every state has its own tax rules, and preparing all those returns isn’t cheap. Unfortunately, current law can make you taxable in a state with as little as one day of work. Job of the Day: Duff & Phelps Needs a Due Diligence Analyst
Duff & Phelps is looking for a Due Diligence Analyst to join its Los Angeles office.
Company: Duff & PhelpsCompensation Watch ’10: PwC Starts Spreading the News in New York
• Advisory/Consulting senior associate received a raise north of 18.5%. No, that is not a typo. So in the advisory practice it’s safe to assume the spread is 0% to 19% for raises this year, with the average being about 6% as reported by Caleb earlier.Koss Sues Grant Thornton, Blames Firm’s Assignment of Newbie Auditors
Well! You might have thought that Koss would just handle this Sue Sachdeva situation like gentlemen headphonesmiths but you would have thought wrong!
Why? Because Grant Thornton threw a few young associates on the engagement, that’s why!
How Simulations are Changing for the 2011 CPA Exam
Whereas we have always considered the CPA to be a world-renowned designation and GAAP the be-all-end-all of accounting rules, we now must recognize the global nature of capital markets and future CPAs will be expected to demonstrate a working knowledge of international standards in financial reporting and auditing.
For 2011 simulations, we’re expecting that the AICPA Board of Examiners will continue to use a similar format (you may see tabs that you recognize if you’ve already taken exam parts and done some simulation problems) but instead of getting 2 large sims, you’ll get 7 task-based simlets (6 in Regulation).
Blame that on the folks who don’t read but BEC will only contain written communications (3, of which 2 will be graded) and will go from 90 multiple choice to 72. You’ll get an extra 30 minutes to complete this part, which will be taken away from Audit.
It’s difficult to say at this point what candidates should expect come January 2011. Will research still be worth 1 point and therefore easily blown off if you’re running out of time? Will simlets require extended journal entries that can take quite a bit of time to put together? The honest answer is that we don’t know. Accounting News Roundup: Financial Reform Finalized; Banco Espirito v. BDO 2.0; Small Win for Skilling, Big Loss for PCAOB? | 06.25.10
By the end of this one, can’t you picture an exhausted Barney Frank with his tie loosened to mid-torso, pants undone with fly wide open open and some staffer dabbing his sweaty brow?
Francine’s take on the decision by the Florida 3rd District Court of Appeal to order a trial in the Banco Espirito v. BDO case. An event she isn’t thrilled about, “My doubts about the efficacy of a new trial are based on the disappointing, frustrating and completely unsatisfying way the court and the judges in this case have proceeded. Some of the additional comments raised by the Appeals Court do not bode well for this plaintiff’s chances next time around.”
Supreme Court Rolls Back a Law Born of Enron [NYT/Floyd Norris]
In more Congressional ineptitude (at least in the eyes of the SCOTUS), former Enron CEO Jeff Skilling won his case at the high court, arguing that “the concept of committing fraud through depriving an employer of ‘honest services’ was not adequately defined in the law,” Floyd Norris writes.
Has anyone handicapped this? Obviously the $20 billion reserve is a good ballpark figure but the overs have to be a pretty solid bet on that. Takers?
The firm fka RSM McGladrey purchased Caturano and Company, the fifth largest firm in Boston. The deal, if approved by H&R Block, would make RSM McGladrey…the fifth largest firm in Boston.PwC Is Making “Recruit a Friend” Worth Your While (No, Seriously)