Going Concern

The IRS Would Like to Remind You That They are Not Spammers

Adrienne Gonzalez
April 30, 2010

With tax season over, scam season has begun and the IRS wants to be sure that you know they will never send you unsolicited e-mails or request identifying information about you a la PayPal scams. Because, you know, they’re helpful like that. Since many of you are waiting patiently by your mailbox (or bank statement if you E-filed for direct deposit) for your refund checks, it’s all that much more important to be on the lookout for these kinds of tricks hitting your inbox.

Protect yourself, little taxpayer, and know that the IRS is here to help make sure you don’t get scammed by unscrupulous impersonators:

The IRS does not send taxpayers unsolicited e-mails about their tax accounts, tax situations or personal tax issues. If you receive such an e-mail, most likely it’s a scam.

IRS impersonation schemes flourish during filing season. These schemes may take place via phone, fax, Internet sites, social networking sites and particularly e-mail.

Many impersonations are identity theft scams that try to trick victims into revealing personal and financial information that can be used to access their financial accounts. Some e-mail scams contain attachments or links that, when clicked, download malicous code (virus) that infects your computer or direct you to a bogus form or site posing as a genuine IRS form or Web site.

Some impersonations may be commercial Internet sites that consumers unknowingly visit, thinking they’re accessing the genuine IRS Web site, IRS.gov. However, such sites have no connection to the IRS.

IRS Spokesperson Jennifer Henrie-Brown gave us a few tips for avoiding scams and reporting sketchy e-mails to the Service to combat the spamming problem: “The IRS does not initiate taxpayer communications through e-mail and does not request detailed personal or financial information through email. If you receive an e-mail from someone claiming to be the IRS or directing you to an IRS site, you should not reply. Do not open any attachments or click on any links. Doing so may download malware that can damage your computer or allow remote access to your hard drive,” she told us.

What do you do if you get one of these weird, misspelled, bad-grammar-infested fake e-mails claiming to be from the IRS? “If you receive a suspicious email claiming to be from the IRS, or Web addresses that do not begin with http://www.irs.gov, you can relay that email to IRS mailbox phishing@irs.gov. IRS can use the information URLs and links in the suspcious emails you sent to trace the hosting Web site and alert authorities to help shut down the fraudulent sites.”

Suggested reading: Online Scams that Impersonate the IRS [IRS]

KPMG
News

(UPDATE) Friendly Reminder to TierOne Bank: Today Is the Last Day to Get Your Act Together

Adrienne Gonzalez
April 30, 2010

Catch up, we covered this on Sunday night: In a bizarre piece of auditing news released late on a Sunday night, KPMG has verbally resigned as Nebraska-based TierOne Bank’s independent auditor, withdrawn its audit opinion for 2008 and taken back its review of TierOne’s financials for the quarter ended March 31, 2009. Citing risk of material misstatement, KPMG has also warned the audit committee that TierOne’s financials are not to be relied upon by investors.

Well today is April 30th and that means TierOne has run out of time to get its shit together to please the OTS. Meanwhile, KPMG is still paddling away in the lifeboat before the ship sinks but with a week’s head start, we’re sure they’ve gotten far enough away from the scene of the crime to be entirely unaffected by the outcome, whatever it may be.

In a textbook case of he said/she said, TierOne is a little butthurt that KPMG would suddenly change its tune and bail on the bank so close to such an important deadline. Adding insult to injury, KPMG claims that TierOne destroyed a document on specific reserves required by the OTS, even though the auditors had requested the document more than once. TierOne claims that it gave the document to both the OTS and KPMG as requested. TierOne also enthusiastically states that not once did KPMG express any concerns about the bank’s condition until just before bailing on the bank and resigning from the audit.

We’ll update if the FDIC moves in later this afternoon and takes down TierOne.

UPDATE: TierOne tried to sell itself to Great Western Bank but the deal was shot down by the OTS. The $2+ billion bank is sort of just sitting there exposed in the open without an auditor and no real plan, you can pretty much guess what happens from here. Meanwhile, it was a busy Bank Fail Friday but TierOne was not among them. See you next week?

TierOne sale plan due today [Lincoln Journal Star]

Career Center

Job of the Day: UBS Needs an Accounting Director

GoingConcern
April 30, 2010

UBS is looking for someone to join their Fixed Income, Currencies and Commodities (FICC) Structuring Group at the Director level who has expertise in both U.S. GAAP and IFRS.

The position requires four years of relevant experience, and a CPA. Experience in a Big 4 transaction services group is ideal. This position is located in Stamford, CT.

Company: UBS AG

Title: Executive Director/Director – FICC Structuring – Accounting Expert

Location: Stamford, CT

Responsibilities: The candidate will be expected to (1) Structure and execute transactions, and (2) Support the Structuring Group in analyzing and structuring the accounting aspects of transactions. The candidate will report to Head of US RATL.

Qualifications/Skills: The ideal candidate will have practiced accounting in a transaction services group at a Big 4 accounting firm with experience in US GAAP and IFRS. The candidate should have a track record of innovation/creativity. Minimum of 4 years proven relevant experience; 4 year Bachelor’s degree or international equivalent; CPA.

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

When a Tax Time Bomb Goes Off: Repurcussions Await Some Small Nonprofits

Joe Kristan
April 30, 2010

At the end of the day on Monday, May 17, hundreds of thousands of little tax-exempt organizations will to turn into taxable little pumpkins. Under a provision of the Pension Protection Act of 2006, tax-exempt organizations that had been small enough to fall below IRS filing thresholds were required to start filing information reports. The law automatically revokes the exempt status of organizations that fail to file for three straight years. The deadline for that third year is May 17 for calendar-year filers.

Of course many of these organizations are inactive or defunct, but many aren’t. That means thousands of volunteer garden club, school parent organization and social club volunteer treasurers will unwittingly find themselves in charge of filing tax returns for their newly-taxable little corporations.

If you are an exempt organization treasurer or board member, you should find out right now whether your organization has filed. If your organization normally takes in less than $25,000 per year, the filing is a very simple on-line process, mostly just asking for identifying information. Bigger outfits will have to file a version of Form 990. If you need extra time, you can get a three-month extension on Form 8868. Some organizations, mostly governments and religious entities, are exempt from the filing and revocation rules.

But what will happen when these outfits lose their exempt status? They can ask for it back retroactively by filing Form 1023 or Form 1024 and paying a fee from $250 to $800. But many of these outfits will have no idea that they have lost their exempt status. What happens to them?

Most will become taxable C corporations or, in some cases, a taxable trust – depending on how they are set up. They will have income – for example, from contributions or dues – and they will be subject to normal Form 1120 filing requirements. If they fail to file, the normal kind and gentle penalties will accrue. Nobody really knows what the IRS will do about all of these little unwitting scofflaws.

And for what? Senator Charles Grassley explained back when the bill was passed in 2006:

The pension bill includes a good package of charitable giving incentives and loophole closers. It makes sense to tighten areas of abuse while increasing incentives for charitable giving. Americans are very generous with their donations. They deserve to know that their money helps the needy, not the greedy. Some individuals are creative about exploiting non-profits’ tax-exempt status for personal gain, and Congress has to be just as smart about shutting down abuse.

So take that, you greedy, abusive volunteer booster club treasurers! @ChuckGrassley has your number.

CPA Exam

All About the 4.5th Section of the CPA Exam: Ethics!

Adrienne Gonzalez
April 30, 2010

We covered Ethics before but since this is the last in our daily columns this week on the CPA exam, it’s a good way to wrap things up. Once again, if you are looking for CPA exam tips, tricks, hints or just have an idea for a topic you’d like to see addressed here, get in touch with us.

Last time we talked about the ethics exam, we suggested the following:

Speak to your state society of CPAs to find out if they offer some kind of ethics exam support. Helplines exist but you’ll never find them if you don’t look.

Because the ethics exam is open book, not timed, and allows potty breaks (unlike, say, FAR), take your time and don’t rush through it. You have more than 1.5 minutes to read through and answer the questions, take advantage of this fact.

If all else fails, try to find a lifeline. The CalCPA Education Foundation gives you a “lifeline” if you have unsuccessfully attempted their ethics exam three times.

A few more things to keep in mind:

If possible, choose the Online version of exam materials in searchable PDF form so you can search for keywords that will answer the questions. It beats flipping through a book and is often cheaper than the book version of the exam anyway.

Don’t take the ethics exam too early or you may have to take it again. If you decide to take the ethics exam before you have completed all four parts of the CPA exam, be sure you know how long your score is good for (probably a year max). You don’t want to have to take it twice so wait until you are at least 3/4 of the way through the exam or completely finished to tackle ethics.

Though review courses don’t have coursework on ethics, there are tons of resources available that consist of tips from others who have taken and passed the ethics exam. Start with the CPAnet forums, plenty of candidates and would-be CPAs have shared their experiences and many are happy to help if you have specific questions about how they did it.

Hope that helps and thanks for joining us for this week of CPA exam goodness!

News

You Can’t Force Convergence According to the IASB (Allegedly)

Adrienne Gonzalez
April 30, 2010

IASB member Phillippe Danjou would be happy to see convergence go well and according to schedule but like most of Europe, he’s concerned that what’s good for America may not be good for the rest of the world.

Earlier in the week, the European Central Bank said nearly the same thing, going so far as to call out FASB for its archaic fair value rules that disregard liquidity (or lack thereof) in markets.

“Can we converge on everything? What’s good for America is not always seen as being good for the rest of the world, and vice versa… Convergence is the aim. It is a very desirable goal, but you cannot force it.

“If our stakeholders say we should take slightly different solutions, we will have to accept that,” he said. “If we can’t reach a solution, we can bridge.”

This brings us right back to the question of the IASB’s independence and the announcement by the SEC that funding the IASB would be a priority moving forward. Maybe that’s the bridge to which Danjou was referring; America buying its own piece of international accounting standard influence. 20% won’t cut it, people, where did the SEC get those bribe numbers from anyway?

It looks like Plan B for accounting convergence [Reuters]

ANR
News

Accounting News Roundup: ‘Enron’ Opens to Mixed Reviews; Grant Thornton Closes Madison, WI Office; New CFO at Credit Suisse | 04.30.10

Caleb Newquist
April 30, 2010

With ‘Enron,’ Financial Misdeeds Hit Broadway [DealBook]
“Enron” opened on Tuesday at the Broadhurst Theatre and is receiving mixed reviews. Given the time and subject matter, brief and inadequate descriptions of the accounting techniques involved (e.g. champagne metaphor to explain mark-to-market) were necessary and some didn’t appreciate the patronization:

At the after-party for “Enron,” the most common complaint about the play was the incessant use of metaphors and monologues to explain financial topics. It took up a large amount of time in the show and some audience members felt like they were being “talked down to.”

“I know what mark-to-market accounting is,” said one audience member who did not wish to be identified but did not work in the financial industry. “I felt like they were bashing me over the head with their juvenile explanations.”

Regardless of the “one-dimensional view of this multifaceted accounting technique” and its “lacking of dramatic depth,” “Enron” also has raptors and mice in suits. That, along with choreography using light sabers has led some to call the show “visually stimulating.” If your subject matter includes accounting rules, putting them in an acid trip seems like a good approach.

Grant Thornton to close Madison office [Business Journal of Milwaukee]
Grant Thornton is closing its Madison, WI office, consolidating those operations in Milwaukee. The firm stated “its goal is to retain as many of the Madison office’s 61 employees as possible,” and that it is “committed to assisting all employees during this transition.”

This latest move follows the Grant Thornton office closure in Greensboro, NC that occurred earlier this year.

Credit Suisse Taps Mathers as New C.F.O. [DealBook]
David Mathers is currently the COO and Head of Finance for the investment banking unit at CS. He takes over for Renato Fassbind in October.

Quote of the Day

She Forgot to Mention How None of Her Porn-Watching Employees Were Fired

Adrienne Gonzalez
April 30, 2010

“Swift and vigorous prosecution of those who have broken the law is at the heart of the agency’s efforts to restore investor confidence.”

– SEC Chair Mary Schapiro in testimony before a Senate appropriations subcommittee Wednesday defending the SEC’s request to be self-funded.

The SEC Wants to Help the IASB Meet its ‘Arbitrary Deadline’

Adrienne Gonzalez
April 30, 2010

The SEC is interested in securing capital markets and protecting the interests of investors by putting a new level of priority on accounting standards setters… European accounting standards setters, that is.

SEC Chief Accountant James “P is For Principles” Kroeker announced today that the SEC’s new project will revolve around securing funding for the gatekeepers of IFRS, the IASB. “A stable broad based funding system with a diversity of capital market participants providing ‘no strings attached’ funding is of great importance to establishing a structurally sound international standards setter,” he said at a Baruch College accounting conference. Earlier in the week, JP was defending GAAP and calling the planned June 2011 adoption of IFRS in the US an “arbitrary” target but this leads us to believe that he’s since changed his mind and would like to see this convergence thing get rolling once and for all.

About 20 percent of the IASB’s funding is expected to come from US sources this year – the largest chunk of funding from any single source.

While Kroeker was busy cheerleading the IASB telethon this week, SEC Chair Mary Schapiro was off doing a little fundraising of her own, except hers failed miserably when the Senate rejected a request by Schapiro and several former SEC leaders to self-fund the agency. As everyone knows, the SEC has been plagued recently with accusations of regulatory laziness, not to mention problems with employees sitting around watching porn all day when they should be guarding capital markets. No increase in allowance for you, Mary!

Anyway, the main concern is – as always – independence. Without secure funding, the IASB is exposed to excessive political pressure and if you recall the fair value debate, you have already seen what happens when standards setters cave in. With secure funding, the IASB can be bought and sold as easily as some companies A/Rs so it makes sense that Kroeker would shift the SEC’s focus from begging Congress for a raise to funneling in cash to the IASB. You know, for convergence’s sake.

US seeks secure funding of global accounting board [Reuters]

Ernst & Young’s Raises Will Be Better Than PricewaterhouseCoopers’

Daniel Braddock
April 29, 2010

I said it on Tuesday and I’ll say it again. HERE. WE. GO.

Caleb ran a post yesterday about Ernst & Young raises that as of deadline time had no comments. Zilch. Nadda. I was surprised by this because if anything guarantees comments on GC posts it’s talk about layoffs, Overstock.com shenanigans, and money (not in that order). Needless to say, I think this update will change things.

GC received a tidbit from an EY reader about the recent phone call:

“I did receive a voicemail from Steve reassuring compensations but, it appears that the firm will concentrate giving raises to its “high performers”. So, this potentially could mean that only EYers rated a 5 (need to catch a fraud to get this or have really sore knees) or 4s (need to be well liked all the way up the pipeline on an audit) will have a respectable raise.”

So – if you burned through busy season working yourself to the bone for Uncle Steve but stopped short of needing knee pads (it should also be noted that the parts in parentheses above are part of the original email…) you might be shit out of luck for a respectable raise.

Continuing…

“In addition, I checked with a partner and the August 1st early pay increase is a rumor. The rumor appeared believable since EY is a monkey see monkey do type of firm but, our partner said that EY’s raises although be start on October 1st, will be higher than what PwC will offer to its auditors.”

Boom. To quote my man and crime fighting detective Marcus Burnett, “Shit just got real.”

Shit. Just. Got. Real.

Is there any credibility to this? Sure there is. To think that the upper leadership from every firm does not talk to one another about compensation targets is ridiculous. Merely for the sake of the partners’ bottom line, it’s necessary to know what ones ~~competitors~~ peers are paying in compensation. Why some loose-lipped partner is sharing this information is beyond me, but hey, it’s dedicated readers fed up with their own compensation that forward these tips on. Now, let’s talk it out.

Which would you prefer – every 10 key cruncher receiving a mediocre payout or just the stars receiving something slightly-better-than-insulting? Comment below, regardless of which firm you work for. Be sure to shed some light on the timing of EY’s payouts if you know any details.

PwC
Video

Barry Minkow Would Like to Remind Everyone, Especially PwC, That InterOil Has Never Found Any Oil or Gas

Adrienne Gonzalez
April 29, 2010

Barry Minkow has a message for InterOil auditors at PwC and it appears as though he would really, really like for P. Dubs to remember its fiduciary responsibility. So much so that he even made a video to help drive the point home so let’s hope this lands where it is supposed to and PwC considers Barry’s friendly suggestions.

Peep the press release:

“InterOil and its CEO have shown a troubling pattern of behavior that goes back to the company’s founding in 1997,” Minkow said. “We’ve seen inflated assets, a missing report from world-class Netherland Sewell, no major partners willing to put up cash for its proposed LNG plant, a recent bad-faith bankruptcy filed by CEO Phil Mulacek for a company he controls, and unreported $5.7 million commission, insiders dumping tons of stock last month, hyped press releases, and the list goes on. In fact, the only thing we haven’t seen from InterOil is any commercial oil or gas.”

Previously: Let’s Take a Closer Look at This Shia LaBeouf and InterOil Situation

CPA Exam

All About Financial Accounting for the CPA Exam

Adrienne Gonzalez
April 29, 2010

Editor’s note: You can find our Audit, Regulation, and BEC outlines posted earlier in the week and expect an ethics review tomorrow to wrap things up.

Good news: Chances are you took most of this stuff in school so while it’s a lot of information to get through, most of it should be somewhat familiar.

Bad news: As the largest section, FAR covers a lot of ground and a lot of it isn’t very pleasant (like government, pensions, bonds and leases – all fairly heavily tested and all awful to get through when you’re studying) so prepare yourself accordingly and don’t take too much of it in at once.

FAR is a 4 hour exam and you will run out of time. Do not spend more than 1.5 minutes on each MCQ (FAR has 3 testlets of 30 questions each) and be sure to give yourself at least 45 minutes per simulation. If you run out of time towards the end, be sure to at minimum complete the written communication for both sims as only one is tested and you don’t know which one it is. It’s an easy 10 points and you don’t want to blow it.

The AICPA BoE has set the following target weights for skills testing:

Communication (6% – 16%)
Research (11% – 21%)
Analysis (13% – 23%)
Judgment (10% – 20%)
Understanding (35% – 45%)

Based on the Content Specification Outlines, Financial Accounting and Reporting covers the following areas:

Concepts and standards for financial statements (17% – 23%) Financial accounting, consolidated and combined financial statements, balance sheet, income statement, notes to financial statements, financial statement analysis.

Typical items in financial statements (27% – 33%) Typical items: recognition, measurement, valuation and presentation in financial statements according to GAAP. Cash, cash equivalents, and marketable securities, inventory, PP&E, investments, intangibles and other assets, payables, deferred revenue, notes and bonds payable, equity and revenues.

Specific types of transactions and events (27% – 33%) Accounting changes and corrections of errors, business combination, contingent liabilities, discontinued operations, earnings per share, foreign currency transactions and translation, taxes, interest cost, leases, R&D costs, segment reporting, subsequent events.

Accounting and reporting for governmental entities (8% – 12%) Government accounting concepts (fund accounting, budgeting, and notes to financial statements), net assets, capital assets, transfers, financing sources, expenditures, encumbrances, etc etc. And of course governmental non-profit accounting is in this.

Accounting and reporting for nongovernmental (8% – 12%) Accounting and reporting for non-profit organizations, typical items for non-profits.

Studying for FAR should take between 100 – 150 hours regardless of whether or not you took multiple financial accounting classes in school. The key to FAR is taking it in small chunks to prevent being overwhelmed by information so don’t spend more than 3 hours per day studying and break each section into smaller subsections to retain your sanity through the process.

Good luck and see you tomorrow with ethics!

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