Going Concern

PwC
Salaries

Compensation Watch ’10: PwC Puts a Number Out There

Caleb Newquist
April 24, 2010

Multiple sources have told us that Bob Moritz has put a number out there for comp adjustments during the firm’s webcast today :

Sitting in the Bobby Mo Firmwide Townhall Webcast. Raises: 5% to 8%.

But don’t start high-fiving just yet:

PwC expected to be 5% to 8% raises this year, but still a “quarter to go” per Moritz on today’s townhall webcast.

Early reports also are that internal firm services (IFS) will be getting 3-5%.

Thoughts? Your move, KPErnstDeloitteMG.

News
SEC

(UPDATE) Let’s Take a Closer Look at This SEC Accountant’s Porn Activity

Caleb Newquist
April 23, 2010

Since we’ve been out of the number crunching biz on a day to day basis, our reaction to the 16,000 attempts by an SEC accountant to access porn was simply, “Holy shit, that’s a lot.”

Thankfully, we still have plenty of friends that still burn up the 10-key calcs and we got a drop from one of them a little while ago:

I did [a] calc on that accountant that viewed porn sites up to 16,000 in one month. He was averaging 725x per day (including weekends). That is impressive. I don’t think I can hit 725 times in a year (and I don’t even have a girlfriend), let alone one month.

The best part of this whole ordeal is that it’s now becoming a political football and hyperbole that even makes us scoff.

UPDATE: Our stupid friend is obviously rusty on the calc (they’re no longer in public accounting) and we’ve been re-informed by said friend that 725x is based on 22 workdays (i.e. not including weekends).

Even more importantly, how many accountants out there double-checked this pre-update calc and then failed to get all self-righteous about it?

Furthermore, and perhaps most importantly, the bar has been raised in the wasting time department. Granted this accountant was wasting everyone’s tax dollars while those of you in public accounting are wasting your clients’ dollars but these porn surfing numbers are no doubt a challenge worth accepting. Go forth.

News

Five Questions with MACPA’s Bill Sheridan

Adrienne Gonzalez
April 23, 2010

If you don’t know the MACPA and their quality content machine Bill Sheridan, you’re probably not in accounting, have never used Twitter, and most definitely wouldn’t have any clue what Second Life is. When it comes to social media, the Maryland Association of CPAs was on it long before a certain cable company figured it out and Bill has been just one of the organization’s main “faces” as far back as I can remember.

Bill speaks of using CPA Success as a tool to reach the MACPA’s members in ways they never thought they could and speaks as someone who truly enjoys what he does for a living. He likes posts he’s written in airports (who doesn’t love travel blogging? *cough*) while his co-blogger Tom Hood (I believe you all are familiar with his work as MACPA CEO and CPA) prefers tackling the topic of leadership. Whatever your accounting poison, CPA Success covers it all.

Bill was hard to pin down but finally found a moment to get to our five questions, enjoy.

Why do you blog?
It’s yet another way of connecting with our members. Our blog allows us to present news and analyses much more quickly than we ever could before. It allows us to communicate with members in ways we never had before. We’ve had an opportunity to carve out a niche as a thought leader in the CPA space that we never could have established without blogging.

A good accountant is…
A good CPA is a trusted advisor, strategic thinker and confidant, someone who sees beyond the numbers and helps companies grow and clients understand how their finances impact their personal and professional lives. And at all times, honest and ethical.

A good blogger is…
… observant, and a good story-teller.

What is the biggest benefit you’ve gotten from starting your blog?
Notoriety. But the biggest benefit is this: CPAs have really worked hard to carve out a place for themselves in the social arena. When we first started playing around with this stuff three years ago, there weren’t a lot of accounting and finance folks in there with us; it seemed like we were working in a void. Since then, though CPAs have really taken the social bull by the horns. They’re blogging, they’re using things like Twitter and LinkedIn and Facebook, and they’re figuring out to put these tools to use in ways that benefit their businesses and their clients. It’s been fun and extremely rewarding to see CPAs make the leap and work with them to figure all of this out.

The biggest issue facing accountants today is…
… complexity. The profession is facing numerous legislative and regulatory changes these days, and that’s in addition to the many changes in accounting standards and other technical rules that have been enacted recently. Keeping up with all of these changes is a monumental task for CPAs, who are busy enough simply serving their clients.

Career Center

Job of the Day: An International Bank Needs a VP of Technical Accounting

GoingConcern
April 23, 2010

Ashton Lane Group has a client looking for a VP of Technical Accounting that will be responsible for addressing accounting issues under both U.S. GAAP and IFRS.

Candidates need at least eight years of experience, a CPA license, and a Masters degree is a plus.

Recruiter: Ashton Lane Group

Title: VP – Technical Accounting

Location: New York, NY

Description: Advisory expert for complex accounting policies for an international bank

Responsibilities: Analyze accounting treatment for a wide range of complex transactions under both US GAAP and IFRS; Provide on-going support to the financial and regulatory control functions; Work closely with a network of experienced technical accountants globally to provide a cohesive accounting framework; Assist in reviewing US GAAP financial statements and filings; Participate in the new product and trade review functions in New York; Stay abreast of new and emerging accounting developments and assessing their impact on the business.

Qualifications: CPA (or equivalent) with 8+ years financial control experience within financial services; Broad knowledge of International Financial Reporting Standards (IFRS) and US GAAP; Excellent PC skills, proficient in Excel, knowledge of GL packages a plus; Strong interpersonal and communication skills; Bachelors Degree or equivalent required, Masters degree a plus.

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

Some Behind the Scenes Details on the Ernst & Young “We Are Las Vegas” Video

Caleb Newquist
April 23, 2010

On Tuesday we briefly shared a video that was put together by the E&Y Las Vegas office that involved a large pair of headphones (Koss perhaps?) an Elvis impersonator, plenty of off-key singing and out-of-sync choreography.

Unfortunately, the video didn’t last and AG piped in only to replace the singalong with another video that had – ugh – subtitles but at least it was a little better rehearsed.

Anyway, we did some poking around and we found out a little back story on this whole “We are Las Vegas” production.

Apparently, the video had its non-GC debut at a townhall meeting in LV last night that was relatively uneventful, according to an accountant close to the sitch:

It was basically a loyalty pep rally. They told us that we would be getting raises, but of course said we would “follow the market.” That’s ironic from a firm that strives to be the “market leader.”

Sounds like the typical yarn but it sounds like it was followed by mucho boozing so that made up for it… Anyway, what about that video?!?

What’s with the ginormous headphones?

Headphones guy was just asked to wear them as a prop. Stevie Wonder did, why not somebody else???

Was the whole office in on this thing? Were accountants forced to participate against their will?

There were people from all service lines. I would say tax and audit were both represented equally. Amazingly, there WERE people who were excited about singing the song.

How was the video received?

I was amazed how the upper level management at the town hall (from various west coast cities) was impressed with the song. The overwhelming response at town hall was “that was a good video.” I think a training at our Times Square office might be in place.

Why on Earth did someone decide to put this on YouTube?

The world may never know.

News
Tax

Strip Club Owner, Sans High School Diploma, Blames His Accountant for Tax Troubles

Caleb Newquist
April 23, 2010

When you own a strip club there are certain things that you understand. Things like, knowing that there is large portion of the male species that will pay women to take off their clothes regardless of the fact that sex is not happening. And while this is going on, they’ll imbibe lots of booze. And eventually, they may get hungry and with the last sliver of will power they have left, pull themselves away to pay $5.99 for a prime rib buffet. AND since there’s no windows in the place these men will stay in your strip club and spend money until you throw them out or they’ve spent every last dime. Oh, and poles are imperative.

On the other hand, there are things that strip club owners are less savvy about. One of these things may be tax compliance. Accordingly, many proprietors find a local accountant, they swap services, everyone wins.

However, every once in awhile this traditional arrangement may run awry. Kevin Moury, owner of Kittens (NSFW), is suing his accountant, Michael Walsh, for negligence in preparing his returns that resulted in “criminal charges, penalties, costs, fines, loss of income, medical expenses, loss of life’s enjoyments, emotional distress and mental anguish.”

Okay, before we continue, we have to ask – “loss of life’s enjoyments” and “medical expenses” because of a CPA? Where do we draw the line people? Next thing you know, accountants will be blamed for the collapse of the entire financial system…

Anyhoo, Moury pleaded guilty in October to “federal charges of falsifying tax returns and failing to report substantial cash income.” He spent one night in jail, got nine months of house arrest and had to pay back taxes of $88k, etc. etc.

This all came up because Moury apparently thought it was a-okay to deposit money from various revenue streams like fining dancers for tardiness or bolting early, massages for customers, and Jell-O shots (you know, the usual stuff) and then not report it as income. Obviously the IRS was not cool with this, prosecutors threatened to go after his wife and daughters (all employees at Kittens, btw) and that got him to plead guilty.

As a result of his guilty plea, Moury lost a sweet $90k/year gig as a “superintendent of environmental management” (which sounds a lot like “boss of the garbage collectors” but whatevs) and this resulted in lost future earnings of $1.3 million, allegeth the lawsuit.

Regardless, this shit ain’t fair and the accountant needs to be held responsible (his attorney the allegations or “groundless”) and Moury’s attorney isn’t shying away from the stupidity defense:

The lawsuit claims Moury’s lack of formal education — he didn’t finish high school and has a high school equivalency certificate — led him to rely on Walsh to accurately report his income and prepare his tax returns.

“Mr. Moury gave his accountant anything and everything for his business, his real estate and the salary from his job with Methuen,” Cote said. “He signed the returns, but did he looked at them? No. Is he responsible? Yes.

Strip club owner blames accountant for his tax woes [Eagle-Tribune]

Three Ways Soon-to-be Accounting Grads Can Get Ready for the CPA Exam

Adrienne Gonzalez
April 23, 2010

With May graduation season nearly upon us, handfuls of future CPAs around the country are preparing to tackle one of the most important events of their careers: the CPA exam. Unlucky for them, few colleges adequately prepare accounting grads to enter the real world and though you may have the knowledge necessary to practice the art of accounting, chances are you’re completely lost on how to get started on the CPA exam.

Don’t worry, that’s why we’re here. Just a reminder that if you have a CPA exam question for us, do feel free to get in touch and we’ll do our best to help you along.

Anyway, soon-to-be grads, here’s what you need to be thinking about:

Confirm when your degree is posted – As with most things CPA exam, the rules and procedures vary depending on the state you will be sitting in. Few states allow you to sit with less than 150 semester units and even fewer allow you to sit without your degree posted to your transcripts so the first thing to do now is find out how long your school takes to post your degree. Some schools will let you pay an extra fee to expedite this process so if you are in a rush, inquire at your school if you can move this along.

Apply to sit for the exam with your state’s board of accountancy – Once you have your degree, you’ll need your school to send your transcripts to the board of accountancy to which you are applying (NASBA if you’re in a NASBA state, or CPAES – authorized provider of CPA exam qualification services for some states). You cannot send them in yourself (even sealed, official ones) and should submit any application fees and forms in at the same time as requesting your transcripts be sent.

The Board will match your application (and likely cash your check before doing anything else) with your transcripts and like magic, you’re authorized to sit for the exam. If you meet your state’s requirements, that is. It’s usually a good idea to look these up before leaving school just in case you need to sneak in Federal Taxation or Advanced Accounting to please your State Board.

Start studying for the exam when you apply to sit – Though it’s probably wise to focus on finals for now if you are graduating this spring, you can get a jump on studying by starting your CPA exam review around the same time you submit your application. Always check with your state to see how long this might take (generally 4 – 6 weeks) as you don’t want to start studying for BEC 4 months before you will actually be able to sit. Keep in mind that just because you are authorized to sit for the exam you will not necessarily begin testing immediately and will still have to factor in wait times for your payment coupons (NASBA wants their money) and Notice to Schedule (NTS). Generally these take 10 business days each to arrive.

So start the application process as soon as you qualify. A summer off can turn into 2 or 3 years of procrastination and next thing you know you are trying to remember which side debits go on and still no closer to your goal of CPA licensure.

Hope that helps and good luck to all of the soon-to-be new grads!

Accounting News Roundup: Ernst & Young Settles with HealthSouth Bondholders; SEC Accountant Tried to Access Porn 16,000 Times in a Month; The Best Accounting Rules Won’t Fix Everything | 04.23.10

Caleb Newquist
April 23, 2010

UBS to Pay $217 Million to Settle HealthSouth Case [Bloomberg BusinessWeek]
After the better part of a decade, Ernst & Young has finally settled with the bondholders of inpatient service provider HealthSouth. Bloomberg is reporting that the firm agreed to pay the Company’s bondholders $33.5 million after settling with shareholders last year for $109 million. HealthSouths’ investment bank, UBS settled with shareholders and bondholders for $117 million and $100 million respectively.

The $2.7 billion fraud resulted in guilty pleas from 15 executives, including five former CFOs but an acquittal of CEO Richard Scrushy. Scrushy managed to wind up in prison on bribery charges instead and is currently serving 6 years and 10 months. As is typical in these matters, both UBS and E&Y ponied up yet denied any wrongdoing.

GOP ramps up attacks on SEC over porn surfing [AP]
The official SEC porn report has been leaked and some interesting things that are new include:

• One guy had so much porn on his computer that he had to bring in CDs and DVDs to help expand the collection. He thought it wise to keep these at the office.

• “An accountant” was blocked from accessing sites 16,000 times yet still amassed a “collection of ‘very graphic’ material on his hard drive by using Google images to bypass the SEC’s internal filter.” He refused to ” testify in his defense” and was suspended for fourteen days.

• Seventeen employees were “at a senior level” with the highest salary reported over $222k.

Darrell Issa (R-CA) is not amused by this porn bonanza, saying, “[it is] disturbing that high-ranking officials within the SEC were spending more time looking at porn than taking action to help stave off the events that put our nation’s economy on the brink of collapse,” according to the AP. Based on this response, it wouldn’t be surprising to find Issa ensnarled in a porn scandal of his own before this year’s election.

Best accounting rules are not enough [FT]
A reader responded to the epic article published by the Financial Times, raising the notion that “one set of high quality accounting standards” will not solve the world’s problems.

Those who prepare and use accounts very often have a different perspective on accounting questions from accountants as such, whether or not they have had an accounting qualification in the past…

[T]he report on Lehman explicitly did not address the question of accounting arbitrage. This was because Lehman used an accounting rule to disguise from the markets the weaknesses in the balance sheet in a way which, as the examiner reported, was invalid even if the rule itself was completely valid in all jurisdictions.

This points to the fact that the best accounting rules possible are not enough – the financial reporting chain has other links: corporate governance, auditing and regulation.

Quote of the Day

CAQ to Senators Dodd and Shelby: Don’t Screw with Sarbanes-Oxley

Caleb Newquist
April 23, 2010

“We are writing to urge you in the course of your efforts to reform the financial sector to resist efforts to weaken protections for investors in the Sarbanes-Oxley Act of 2002 (SOX). Specifically, we oppose exempting smaller public companies from compliance with Section 404(b) of the Act. Further, we are troubled by evidence of a proposal to roll back to an arbitrary market capitalization point strengthened internal controls requirements for larger companies that are already in compliance with the provision.”

~ The Center of Audit Quality, in a letter to Senate Banking Chairman Chris Dodd (D-CT) and Ranking Member Richard Shelby (R-AL).

Audit

Here’s What Happens When You Lie to Your Auditors

Caleb Newquist
April 23, 2010

There’s been a fair amount kvetching, Monday-morning QBing, and just plain hating on auditors lately. Most of it deserved. That said, there are still laws on the books that say you can’t dismiss them entirely and tell them bald-faced lies whenever you want.

Bruce Karatz was the CEO of KB Homes and he was convicted for, among other things, lying to Ernst & Young:

Karatz was involved in a backdating scheme in which he awarded himself and other execs millions of dollars in stock-based compensation, a jury found. Background on Karatz is here and here.

The 64-year-old faces 80 years in prison after being convicted of four felony counts including wire fraud and lying to his company’s auditor, Ernst & Young, about the matter, according to the U.S. attorney’s office in Los Angeles. He was acquitted on 16 other counts.

Jesus, 80 years? We’re no expert on sentencing guidelines but using simple arithmetic, that’s 20 years per count. We’re all for justice but that’s some serious FPMITA prison time. And the way judges have been handing out sentences lately, we wouldn’t expect leniency.

After Backdating Setbacks, Feds Chop Former KB CEO Karatz [Law Blog]

DWB
News

Cash-strapped Clients Could Force Accounting Firms to Come Up with Creative Cost Savings

Daniel Braddock
April 23, 2010

Because times weren’t already cheerful enough around GT, they recently released a study which found that businesses are generally pessimistic about raises and bonuses this year.

From the press release:

The firm surveyed 496 U.S. CFOs and senior comptrollers from March 22 through April 5, and found that 53% plan no salary changes in the next 6 months, while 32% plan to decrease and 15% plan to increase. On the bonus front, there is also equal pessimism, 47% plan no change, 44% plan to reduce, and only 8% plan to increase.

Well – that certainly sucks.

We know raises are the last thing on the minds of higher-ups at GT, but come on, really? Imagine being a no-name staffer at GT grinding away on a report about how your clients are a collective group of Negative Nancy’s. With headcount discussions ongoing in several GT offices, one would be – and should be – concerned.

The freezes in salary and bonuses don’t really apply to the accounting firms because – as it has already been discussed here in great length – money should be flowing your way this summer. The underlying concern with this report is this – if your client isn’t giving its own employees a bump in pay, there’s no bloody chance your firm is getting a bump in fees, either.

Any and all resources will be applied to minimizing any talent exoduses from occurring.

So how will the firms find enough cookies in the jar to “support the current pipeline?” I checked in with a Big 4 auditor in New York who had this to share:

During casual conversation with my mentors, word is the firm will be pushing for leaves of absence again this summer for everyone who has not completely passed the CPA. The hope is for a decent percentage of staff members to do this to save on salaries.

Makes sense-ish. Temporarily cut staff salaries during a relatively quiet audit period. Will this be enough to cover raises and bonuses while client fees remain stagnant? Heavens no but it’s a start. As always, let us know if you learn of ways your firm plans to pinch pennies.

News

Web CPA Breaks Down the Latest AICPA Survey So You Don’t Have To

Caleb Newquist
April 22, 2010

Writing and covering accounting isn’t the easiest thing in the world. Trying to communicate complex accounting and taxes issues without sound like the latest edition of Kimmel, Weygandt, and Kieso is no small feat.

So when the AICPA released results of a survey that showed that half of Americans are able to save money while the other half are unable to save, the gang at Web CPA decided that this particular bit of data needed to be further broken down for those accountants whose brains are complete mush post-busy season.

Accordingly, they presented this story with the following headline:

“Half of Americans Save, Half Don’t”

Now you may be asking yourself, can this be possible? Is there some way that this equation be disproven? That is, can Americans somehow save and not save at the same time and thus the 50/50 split is rendered ludicrous? We’ve searched the entire Internet and unfortunately this is the only thing we’ve found, and since we’re not engineering experts it’s not so helpful.

One can safely assume that most of Web CPA’s visitors are accountants and, as mentioned above, now that busy season is over, asking them to crunch any more numbers would be a disservice to the readership.

Half of Americans Save, Half Don’t [Web CPA]

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