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GoingConcern
May 19, 2010

A quick word of thanks to this week’s advertisers on Going Concern:

• Bisk Education

• Delta

• Serenic Software

• Sunshine Suites

If you’re interested in advertising on Going Concern, email us at advertising@breakingmedia.com.

Thanks!

PricewaterhouseCoopers Suggests You Put Your Money on Brazil to Win the World Cup

Caleb Newquist
May 19, 2010

Leave it to an accounting firm to make a conservative pick on the biggest sporting event in the world. The firm tries to make the point that wealthy countries do not outperform poorer ones in the football tournament. The most poignant (and blatantly obvious) example being that the United States sucks and Brazil is a heavyweight:

“The US football team performs well below expectations based on the size of its economy or population relative, for example, to Brazil. This reflects the ascendency of football in Brazil as contrasted to the greater popularity of sports such as American football and baseball in the US.”

However, P. Dubs manages to give England a fighting chance, “England seems a reasonable bet to reach the quarter finals based on its current FIFA world ranking and past World Cup performance, but it will do well to get beyond that point – which it has never done before when playing outside Europe.” That’s especially shocking since the firm has a vested interest in at least one English lad.

But as we mentioned at the outset, P. Dubs suggests the safe money is on Brazil, “Brazil remains the favourite to lift the World Cup this summer as the number one ranked footballing nation and the only country that has won the tournament outside its home region.” If you want some sweet action, take the home team.

Power v passion: Wealth comes second to location and tradition when projecting World Cup winners [PwC]

News
Tax

You Can Forget That Deal on the Estate Tax

Caleb Newquist
May 19, 2010

Yes, the brain trust known as the U.S. Senate has managed to prolong the agony on the estate tax. There was a deal on the table as of yesterday but you can forget it! Hard to believe this could happen. Was it a fundamental disagreement on the proposal? Was it because everyone was broken up that Arlen Specter?

No, it’s mostly because some people (the R’s) don’t like that other people (the D’s) are being fraidy cats about not having enough votes:

Senate Minority Whip Jon Kyl (R-Ariz.) said the accord, which was all but forged a week ago, began to dissolve Monday night and broke down Tuesday after talks between leaders in both parties.

After talks with Senate Finance Chairman Max Baucus (D-Mont.) and Senate Minority Leader Mitch McConnell (R-Ky.), they scrapped a plan to move forward with the tax that expired at the end of 2009.

The reasoning, Kyl said, is that Senate Democrats aren’t allowing any legislation to reach the floor that doesn’t have support from the majority of its members.

“We no longer have an agreement because the Democratic side has decided that unless a matter has a guaranteed majority of Democratic votes going in, they’re not going to allow it on the floor, at least not voluntarily,” he said. “So we have to find a way to get a reasonable permanent estate tax reform to the floor where members can vote on it.”

For crissakes. This is this biggest case of “I’m taking my ball and GOING HOME” we’ve seen this week.

Joe Kristan does put the whole thing in perspective however, “Congress has been botching the estate tax for almost ten years now; why should they start getting anything right now?”

Kyl: Senate deal off on estate tax [On the Money/The Hill via TaxProf]
Estate Tax Deal? Not so Fast [Tax Update Blog]

Panera Bread Combines Free Markets and Nonprofits in Missouri

Adrienne Gonzalez
May 19, 2010

In a test run to see if expenses can get covered at the end of the day, Panera Bread has opened a unique new location in Clayton, MO that combines the benefits of nonprofit status with the fundamental principle of the free market system: let the market determine what an item is worth. But it adds a unique qualifier to the traditional concept of the need determining price: human nature.

The menu is exactly the same as other Panera locations (sick foodies can check that out here if they aren’t familiar with Panera’s offerings) but instead of charging a fixed price for each item, this special little spot will ask only what customers can afford. “Take what you need, leave your fair share,” says the sign at their entrance, just in case one is confused by such a foreign transaction model. No prices? Do we even know how to value items independently any more?

Panera is hopeful that the “Cares Cafe” model will thrive and grow to a series of donation-based stores that rely more on empathy than capitalism. “Hopefully we’ll be able to open them across the country, but our original St. Louis location must succeed first!” tweeted the fine folks behind Panera’s official Twitter account.

Can someone confirm Missouri rules on sales taxes related to the sale of food? And is it a sale if the exchange is really a donation? I’m really confused.

Anyway, not everyone is thrilled about this concept. Though it is obviously well-intentioned, the donation model may not necessarily transfer outside of St Louis. Trends consultant Marian Salzman reality-checked USAToday saying “while young people are very much attuned to helping out and making a difference, if they find themselves sitting next to other customers with whom they don’t feel comfortable, they’re not coming back.” You know, as in the possibility of homeless and otherwise destitute individuals (of which our country has plenty nowadays) lounging around with the nerve to eat a cheap meal.

Hedging against operating losses, this particular location has one slight difference from other Panera stores: its bread (except for sandwich bread) is really day old product from other locations around the St Louis metro. Hey, nothing wrong with getting the most out of inventory with a horrible turnover rate.

In the end, it’s hard to say whether this nonprofit experiment will float but if it does, Panera wants to open two more within six months. Good luck with that.

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.

Accounting News Roundup: FASB, IASB May Be Overachieving on Convergence; PwC Wants Your Fat; Who’s Betting on Legal Internet Gambling? | 05.19.10

Caleb Newquist
May 19, 2010

FEI Implores FASB, IASB to Slow Down [Compliance Week]
Financial Executives International is concerned that the FASB and IASB have gotten a little too ambitious in their convergence efforts and has written a letter to the Boards’ respective Chairmen that basically says, “Easy, tiger.”

Everyone knows that those knowitalls at the G-20 were insisting the accounting rule mavens to make convergence happen by next summer but FEI is trying to take pragmatic approach to this:

Arnold Hanish, chairman of FEI’s Committee on Corporate Reporting, said in his letter to the two boards the group is concerned about the “unprecedented volume as well as the complexity of proposed standards” that the two boards are developing. The committee fears the vast scope and aggressive timeline for the proposals will not allow adequate analysis of how the rules will work, which will lead to implementation problems and amendments further down the line.

In other words, this isn’t quantum mechanics, but it’s not Fisher Price either. Mr Hanish did his best to remind Bob Herz and Sir David Tweedie just how overambitious this little project is:

Our member companies are extremely concerned with the 10+ Exposure Drafts (EDs) that are in final stages and will be released for public comment through the third quarter of 2010. During any single period in time in its 38-year history, the FASB has had no more than 3 or 4 significant EDs out for public comment.

FEI doesn’t seem convinced that this unprecedented overachieving by Herz and Tweeds is going to result in the “one set of high quality standards.” They would prefer that hte Boards get this right the first time so they don’t have to slap the proverbial duct tape all over the efforts later.

Cabbies, Accountants Look to Chip-Fat Fuel on Cost, Environment [Bloomberg]
PricewaterhouseCoopers’ London office is trying to do its best for the environment by using local chip-fat converted into biodiesel to supplement its energy needs:

PwC is seeking local sources for 45,000 liters of biodiesel to meet one quarter of its monthly office fuel needs, said Jon Barnes, head of building and facilities services at the firm.

“I’m trying to locally source used chip fat from restaurants,” he said. “It’s a pretty pointless exercise of using biofuel if it’s been all round the world on a ship.”

Sounds like a bang-up idea but P. Dubs is always looking for an angle, “Having a renewable source for some of PwC’s office’s energy needs could help the company sell its services to clients wanting to do the same.”

House Holds Hearing Today on Tax and Internet Gambling [TaxProf Blog]
The House Ways & Means Committee is holding a hearing today to kick around the possibility of legalizing Internet gambling here in the US of A (and taxing it, of course). It kicks off at 9:30 am ET and with any luck, you’ll be legally losing your mortgage payments for the 2010 football season.

Quote of the Day

The IRS Outreach to Nonprofits Didn’t Go So Hot

Caleb Newquist
May 19, 2010

“The IRS has conducted an unprecedented outreach effort in the tax-exempt sector on the 2006 law’s new filing requirements, but many of these smaller organizations are just now learning of the May 17 deadline.”

~ Doug Shulman, IRS Commissioner

Fraud
News

Despite Being a ‘Wreck of a Man,’ Allen Stanford Managed to Fire Another Attorney

Caleb Newquist
May 19, 2010

Things are not going so well for the Stan as he awaits trial in H-town.

For starters, he managed to fire another lawyer, which is not going to go over well with Judge David Hittner. Judge Hittner warned Stan about his Steinbrenner-ish ways last month, “You’ve had 10 attorneys attempt to enter this case on your behalf. I will not entertain any further substitutions.”

And secondly, Al doesn’t seem to be very good at making friends:

When Mr. Stanford surrendered to authorities, he was a healthy 59-year-old man,” Stanford’s Houston-based lawyer, Robert Bennett, wrote in a brief on which Harvard Law Professor Alan Dershowitz consulted.

“Mr. Stanford’s pretrial incarceration has reduced him to a wreck of a man: he has suffered potentially life-impairing illnesses; he has been so savagely beaten that he has lost all feeling in the right side of his face and has lost near-field vision in his right eye,” Bennett said.

Naturally, AS’s lawyers want him out and placed on house arrest ASAP since his trial doesn’t start until January but so far no one is convinced that Al won’t bolt the second he gets outside the prison walls.

“Savagely beaten” Stanford asks to be freed [Reuters]

KPMG

Exodus Watch ’10: KPMG New York

Caleb Newquist
May 19, 2010

From somewhere deep inside 345 Park Ave:

“Damage control beginning – 3 managers and 3 SAs out.”

It’s our understanding that this is the audit side of the house in financial services. No indication at this point whether it’s promotion de-nied related or if it’s has something to do with the unconfirmed compensation rumors we’re hearing.

If you’ve got details on comp, promotions, or lack thereof, email us with the details.

Imprisoned Russian Billionaire Shows Americans How To Protest Tax Injustices

Caleb Newquist
May 19, 2010

If you’re formerly the richest man in Russia and you’ve been wrongfully imprisoned (sayeth he) you’re not going to take this shit lightly. Flying a plane into a building is cowardly; shooting at another person – what does that accomplish?; Bulldozer? That guy is an idiot.

No, if you’re seriously going to show these tax happy bastards that you mean business, only explicit self-loathing will suffice.

Mikhail Khodorkovsky is serving an eight year prison sentence for tax evasion and fraud and he was recently dealt a blow in his attempt to land a new trial:

Mikhail Khodorkovsky has gone on hunger strike in protest at an order extending his detention ahead of a new trial. In a statement quoted by his lawyer, Khodorkovsky said the order violated legal amendments that had been approved by President Dmitry Medvedev. He has vowed to continue his protest until President Medvedev confirms that he is “fully aware” of the situation.

All he wants an acknowledgment from the President of the country and then he’ll get back to eating with a spork.

Russian oil tycoon Khodorkovsky on hunger strike [BBC]

BDO Breaks Barrier to Be First Accounting Firm to Land on Obscure Employer List

Caleb Newquist
May 18, 2010

First off, we can’t remember the last time BDO graced these pages twice in one day. You’d think something would come out of B to the D to the O more often but whatevs. BDO 2.0 today is a little bit of good news for the firm in the form of an exclusive spot on an obscure “Best Places” list.

God forbid our lives be devoid of a ranking in the last half of May but since it’s graduation season and there are some job hunters out there that need to start paying back school loans and credit cards debts, perhaps the timing isn’t so bad. A list we might add, that did not previously have an accounting firm on it. Progress people. Progress.

BDO shattered the glass ceiling on Experience’s “Best Places to Work for Recent Grads” that “picked 20 organizations whose entry-level hiring and retention practices are exceptional.” The list is specifically aimed at those companies that are hip to the Gen Y crowd, although we don’t really know any “recent grads” list that wouldn’t be.

Regardless, BDO has some decent company on the list that includes Accenture, Kellogg’s and Morningstar but BDO is the sole accounting firm. The fact that not a single accounting firm (let alone a Big 4 firm) is on the list is a travesty of the highest order. We then realized that the list’s very nature is severely flawed.

It’s too short. Any employer list with less than 50 companies on it simply cannot be taken seriously.

And since there were no accounting firms on last year’s list, this might as well have been random list of companies thrown together for the sake of keeping communications professionals busy.

This year, the Experience folks must have recognized their gross error and that since no employer list could be taken seriously devoid of a professional services firm. Not wanting to make it too complicated, BDO’s inclusion be probably chalked up to an alphabetical advantage.

Best Places to Work for Recent Grads [Experience]
BDO Press Release

Career Center

Job of the Day: PwC Needs a Tax Manager

GoingConcern
May 18, 2010

PricewaterhouseCoopers is looking for an experienced tax professional to join its Private Company Services (“PCS”) team. PCS helps private companies and their owners with tax planning an compliance decisions at all stages of the business.

The position requires five to seven years experience and is located in Chicago.

Company: PricewaterhouseCoopers

Title: Tax Manager

Location: Chicago, IL

Description: The Private Company Services (PCS) team is a dedicated group of professionals who focus on the audit, tax compliance and planning, and business advisory needs of public interest entities, and private companies and their owners. By helping private companies make strategic decisions throughout the business lifecycle, our PCS practice is designed to help clients improve cash flow and increase owners’ wealth accumulation. This includes access to capital markets, initial public offerings and assistance with growth into international markets. The team’s clients primarily reside in private equity portfolio companies and the manufacturing, retail, wholesale and distribution, professional services and construction industries.

Qualifications/Skills: 5 – 7 years of tax consulting or compliance experience is required.

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

Small Business

Small Businesses Lead on Long-term Job Growth

GoingConcern
May 18, 2010

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

If you harbored any doubts about the importance of small businesses to job growth, then you should consider the results of new research looking at payroll data over the past ten years. The clear conclusion is that the lion’s share of employment growth over the long term has happened at establishments employing fewer than 50 people.

But the implications for our current economic situation are disturbing.

The research, from Case Western Reserve’s Scott Shane, looked at data collected from Automated Data Processing’s monthly employment numbers from 2000 to 2010. The numbers are broken down into three categories: establishments with 1-49, 50-499, and more than 499 employees. By establishment, ADP means “a single physical location where business transactions take place and for which payroll and employment records are kept.”

According to Shane’s analysis, the most job loss has occurred at the bigger establishments. For example, in March 2010, the biggest folks employed 84.3 percent of the people who worked for them in December 2000. As for establishments with 50 to 499 workers, they employed 93.6 percent of those who worked for them over that same time period.

But, for the smallest establishments, the story is startlingly different. They now employ 103.5 percent of the people they employed in December 2000.

Then, there’s a study from the Ewing Marion Kauffman Foundation I wrote about recently. It showed that high-growth companies that are three -to- five years old account for about 10 percent of new jobs in any given year, although they make up less than one percent of all businesses.

But, if small establishments and so-called gazelle firms are so important to job growth, then the latest data from the National Federation of Independent Business, reported on by my colleague Stephen Taub, is especially sobering. The findings showed continued decreases in hiring and flat growth in capital expenditures.

It all has urgent implications for government policy. Given the importance of fast-growing young firms, in particular, to employment creation, the wisest policies would be those that support these promising, three-to-five year old businesses. Something has to be done to get our engine of employment creation back on track.

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