Going Concern

Former Deloitte Intern Not So Good at Gambling on Corporate Card, Lying About It

Caleb Newquist
April 7, 2010

In blatant-misuse-of-the-corporate-credit-card news, a former Deloitte “trainee/student” (let’s assume an intern, shall we?) has admitted to racking up over £8,800 in gambling debt on his Deloitte issued credit card.

Umar Qureshi, using his Deloitte laptop no less, managed to lose the money in just a couple of months, October and November of 2008. At that point, Qureshi, rather than admit to being a horrendous gambler, lied about the charges, telling Deloitte that they were fraudulent. Depending on when this particular lie took place, he only managed to keep a straight face, at the most, for two months, as Deloitte terminated his contract in January of ’09.

Which is understandable. Gambling can be nerve-racking on its own but losing your ass on the Corporate Card has got to be a real pant-crapper. This makes for the second Big 4 degenerate loser to make headlines this year in the UK. Back in February, a ex-KPMGer really was rolling, slamming over £25,000 on his expense report.

Accountancy Age reports that the Institute of Chartered Accountants in England and Wales (“ICAEW”), “ordered that the defendant cease to be a provisional member and be ineligible for re-registration for six months, and that he be severely reprimanded.” As we mentioned in the KPMG case, we’re not sure what a “reprimand” entails but a weeklong diversity training with Barry Salzberg could be a possibility.

Luckily, for Qureshi a relative was kind enough to pay the debt owed to Deloitte, who must have really wanted the money back. It’s just principle.

Former Deloitte student admits £8k bill from online gambling [Accountancy Age]

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GoingConcern
April 7, 2010

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

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Some New Jersey Taxpayers Can Put Off That 1040 For Awhile Longer

Caleb Newquist
April 7, 2010

Are you dreading April 15th North Jersey? Thought so. With just over a week to go until deadline, it may have crossed your minds that you should start tearing your house apart for that W-2.

Well, you can postpone the treasure hunt for now because the IRS is showing mercy on you for the Biblical rainfall that poured on the Garden State last month.

The IRS announced on Monday that they are delaying the filing deadline “for taxpayers who reside or have a business in the disaster area. This includes the April 15 deadline for filing 2009 individual income tax returns, making income tax payments and making 2009 contributions to an individual retirement account (IRA).”

The counties declared a disaster area by the POTUS include Atlantic, Bergen, Cape May, Essex, Gloucester, Mercer, Middlesex, Monmouth, Morris, Passaic, Somerset, and Union and thus qualify for the extended deadline, which is now May 11th.

New Jersey makes the third state allowed a prolonged procrastination period, joining counties in Massachusetts and all of Rhode Island.

Don’t try to get cute though, Garden Staters, if you’re thinking you can falsely claim residency in one of the affected counties, the IRS will be all over your shit, “IRS computer systems automatically identify taxpayers located in the covered disaster area and apply automatic filing and payment relief.” So appreciate the compassion if you can get it but don’t get any ideas; the IRS is still watching.

New Jersey Severe Storm and Flooding Victims Have Until May 11 to File Their Tax Returns [IRS.gov]

Joseph Stack Was Oddly Polite Right Before Crashing His Plane into an IRS Building

Caleb Newquist
April 7, 2010

Considering the tone of Joe Stack’s manifesto, you’d think common courtesy would have been abandoned ages ago. Not necessarily so:

Perhaps it was a more sinister “have a great day” than we’re imagining, although the jig would have been up if he had given any indication about his plans (e.g. read the manifesto to air traffic control).

Michael Oxley Is Spreading the Good Sarbanes-Oxley Word to Nonprofits

Adrienne Gonzalez
April 7, 2010

Presented by Serenic Software. Download our free whitepaper – “5 Key Reasons Why Great Financial Management is So Important for Your Nonprofit Now”

If you’re a non-profit leader and free on April 12th, why not head to Washington and listen to Mike Oxley (yes, that Oxley, without whom SOX would still be the property of a certain Chicago baseball team and not the bane of accounting’s existence) speak about transparency and accountability for non-profits?

The ironic part, of course, is that non-profits don’t really have to suffer with the legislation named after Oxley but he’d like to see a little more, well, Oxley in NFP, even if it isn’t necessarily required by law.

[Oxley] will speak about the importance for nonprofit organizations to be transparent and ensure greater accountability with their financial standards to build on and preserve donor trust, strengthen the reputations of nonprofit organizations and associations, and enhance the overall nonprofit sector.

Attendees will include thought leaders from foremost nonprofits, trade associations and key congressional staff members. Both the House and Senate Ethics committee’s staff have deemed this a “widely attended event.”

My feelings on Sarbanes-Oxley have been expressed more than once here on Going Concern but I can sum them up thusly: more useful things could be done to “protect” the investor interest besides arcane SOX compliance and the PCAOB including but not limited to random auditor cavity searches, TSA-style interrogation of management, and waterboarding the internal audit team. Is Oxley trying to imply that non-profits should follow suit but only voluntarily and out of obligation to donors instead of investors?

Surely his plan is not that sinister.

Only because non-profits already have their own version of SOX in the Form 990 (which I have complained about before as well) that has all of their bases covered. The only SOX carry-overs are strengthened whistleblower protection and retention of documents in lawsuits, perhaps because non-profits may have been where Mike Oxley got his ideas.

SOX compliance costs averaged $2.9 million during fiscal year 2006, actually down 23% from the fiscal year previous according to FEI. Do you know many nonprofits who have that sort of cash lying around?

I think it might be better to get some advice from the guy who wrote the bill and start tightening up the ship just in case.

Recommended reading by April 11th if you’re checking out Oxley’s “I just want to be helpful” presentation: The Sarbanes-Oxley Act and Implications for Nonprofit Organizations (last updated January 2006). Bring a notepad.

Former Congressman Mike Oxley to Speak at Nonprofit Summit [Council for Non-Profit Accountability]

News

Accounting News Roundup: SEC Image Makeover is a Work-in-Progress; Washington Considers Increasing Sales Tax on Beer; Ex-CFO in Backdating Trial Blames Dead CEO | 04.07.10

Caleb Newquist
April 7, 2010

• SEC faces setbacks, skepticism in trying to reform its enforcement image [WaPo]
Whether you believe it or not, the SEC is trying like hell to turn it’s image around. As you know, this is not a small challenge when you check down the list of ball drops and/or embarrassing moments. Plus, when Real American Hero Harry Markopolos repeatedly refers to the SECstaff as idiots, who’s not going to believe him?

Tasked with this turn around, Mary Schapiro and Rob Khuzhami are on the offensive, doubling the number of investigations from ’08 to ’09, as well as doubling fines. Emergency stop actions have also increased over 80%, according to the Commission’s data.

Yet, some remain unconvinced, like Commissioner Luis Aguilar who was quoted in the WaPo, “I’m looking to see whether or not all of the new initiatives are actually resulting in improved sanctions. I don’t yet see the empirical evidence.” Patience, Luis. We hear there’s a couple of things possibly in the pipeline.

• Beer Today, Taxed Tomorrow [Tax Girl]
Everyone in Washington State that isn’t a recovering alcoholic (or a teetotaler) should probably start freaking out. WA is considering a “temporary” sales tax increase to 50 cents per gallon, or 43 cents per sixer, sayeth La Tax Chica. The current tax is 15 cents per six pack.

What’s worse (for most anyway) is that only “big-brand” beer is subject to the tax, leaving the micro-breweries alone and TG thinks this will be challenged as unconstitutional for protectionism. In our opinion, punishing people that drink bad beer is a completely acceptable sin tax, since they choose to drink the bad beer, unconstitutional or not. It definitely doesn’t help the college kids though; that’s an $8 extra on a keg.

• Ex-Maxim CFO Blames Dead Boss at SEC Backdating Trial [Law.com]
Carl Jasper is the former CFO of Maxim Integrated Products and is currently on trial for backdating stock options. This is the first case of this kind since the SEC started cracking down on the practice a few years ago. Mr Jasper is relying on the defense that his dead boss, Maxim founder Jack Gifford, is to blame.

The SEC finds this all too convenient:

Mark Fickes delivered a crisp, scripted opening statement for the SEC, beginning simply: “This case is about cheating and then lying about it.” Fickes hammered on the hard-to-ignore fact that Jasper is an accountant who presumably knows accounting rules about granting stock options.”When it came to accounting, no one knew more at Maxim than the defendant,” he told the jury.

Yeah, so that could be a bit of a problem for Jasper which is probably why he invoked his 5th Amendment privilege.

News

Quote of the Day: The AP Doesn’t Hire Criminal CFOs | 04.06.10

Caleb Newquist
April 7, 2010

If you want to know what the firm’s actual P&L is like, I suggest you read people who can perform basic addition and subtraction.

~ Barry Ritholtz, who was not impressed with the Associated Press story on Overstock.com’s 2009 profit. He suggests this.

IRS Commish: We’ll Send You a Letter if You’re Uninsured, Not Heavily Armed Agents

Caleb Newquist
April 7, 2010

This is disappointing on a multitude of levels. On the one hand, the notion of thousands of IRS agents running around the country, kicking doors is kind of exciting.

On the other, if crazed tax-haters can’t threaten the lives of IRS Agents who can they threaten? The census only occurs once every ten years and threatening to gun down OSHA employees just doesn’t seem to be as effective.

Doug Shulman spoke at the National Press Club yesterday and assured everyone (despite what Dave Camp or Ron Paul says) that agents will not be storming your house packing heat if you don’t purchase insurance. The IRS will be counting on insurance companies to help them run identify those who are skipping on the required coverage.

He said insurers eventually will be required to file a document similar to Form 1099 used by financial institutions to report investment income. The agency will send letters to the uninsured notifying them fines could be deducted from their tax refunds for refusing to comply with the new law, Shulman said.

“These are not the kinds of things we send agents out about,” Shulman said. “These are things where you get a letter from us.”

We imagine the letter won’t be particularly friendly but it’s a far cry from jack-booted thugs pointing firearms at your head.

Shulman Says IRS Has Few ‘Punitive’ Ways to Enforce Health Law [Bloomberg BusinessWeek]

Big 4

Walking the Opportunistic Line – What Should the Big 4 Do About India?

Daniel Braddock
April 7, 2010

The developing issues in India have been covered by Going Concern on a fairly regular basis, so I suppose I should take a crack at the subject as well.

It can be very easy scroll past the articles on India, but I advise you not to; after all, as one of the BRIC countries (do your homework), there is an absolute necessity for the Big 4 to position their resources here. And no, I’m not referring to outsourcing.

Based on February research, the Gold Men are bold to state the following:

While it’s clear that BRICs nations tightened their financial conditions when the financial crisis hit at the end of 2008, they rapidly eased back afterwards. Chinese and Indian financial conditions have eased substantially post-crisis, they’re now looser than pre-crisis even. Brazilian conditions also remain very stimulative compared to its past decade. Only Russia looks tight and unstimulative historically.

Sounds like a cash cow, doesn’t it? The BRIC development has long been looked at as the next fat cow for accounting firms to feed off of; closing the gap between the SOX hey days and the ~~inevitable~~ eventual IFRS transition. A fundamental issue is how the firms chase after business in these emerging markets. Push too hard and get burned. Tip toe through the daises and be passed by your three bullish cousins. Either way, on the table at all times is the branding image of each firm.

No one wants a Satyam situation on their hands, because even though no one knows what Satyam actually does, PwC’s global image is at stake because of this situation. Think about ripple effects. The potential client that is ignorant of the situation and whose thought process is “I think PwC is in some kind of trouble in India” is a more volatile problem than a client that, you know, reads the paper every day. Protecting the welfare of client relationships, but seeds and established, is absolute priority in situations like this.

With the exception of those few public sponsorships, the Big 4 don’t spend much time in the presses. And you know what? The big wigs like it that way. After all, we’re all accountants, forced to work in broom closets and wet basements for long hours and GREAT financial gain.

So the quieter the better, because we all know how it turned out for the last one to steal the spotlight.

The PCAOB Is the Latest Headache for Ernst & Young

Caleb Newquist
April 7, 2010

Charlie Gasparino is on E&Y like stink on a monkey this week. After reporting yesterday that the SEC may eventually get around to charging Dick Fuld and/or Ernst & Young for the accounting hijinks at Lehman Brothers, CG is now reporting that the PCAOB is asking all kinds of questions that E&Y would rather not answer.

Not exactly great news from CG so we emailed E&Y spokesman Charlie Perkins to see what’s what. He declined to comment and said the firm would not be releasing a statement related to this report.

We also called up the PCAOB to get their take and spoke with Colleen Brennan, Deputy of Director of Public Affairs, who said that the Board is prohibited from discussing these matters and provided us with the details:

The PCAOB cannot comment on whether it is investigating a particular registered accounting firm or a particular public company audit by a firm. The Board, however, takes all allegations of improper professional conduct by a registered public accounting firm seriously and considers all information relating to such allegations.

PCAOB investigations and contested contested disciplinary proceedings are confidential under the Sarbanes-Oxley Act. The PCAOB’s inventory of enforcement matters includes audits of all sizes and varying complexity, including matters related to audits by large firms for issuer audit clients involved in the financial crisis.

So no one is talking. Fine, we’ll just have to take Charlie at his word. What we do know is that if the Board does decide to lay the smackdown on E&Y, they’re going to tell the entire universe about it via its “Disciplinary Orders,” and as CG notes in his report, if the PCAOB does bring an action against E&Y it will be the highest profile enforcement action in its short history. Not exactly a BusinessWeek list.

Ernst & Young Probed Over Role in Lehman Bankruptcy [FBN]

Tea Partiers Taking Serious Measures, Arrange Virtual March with Avatars

Caleb Newquist
April 6, 2010

The Tea Partiers (not to be confused with tax protestors who are way more delusional) have made their names known all across this great land for hating on taxes. They’ve marched pretty much everywhere but do you know where they haven’t marched? On the Internet! That’s right, nothing like a virtual march with politicians up for reelection joining the cause (can’t be seen with those nutjobs in person).

The “march” will occur on, you guessed it, April 15th and it will occur “in” Washington DC.

Some of the other cartoon leaders that will be in “attendance” are

• Former House Majority Leader Dick Armey

• Former Arkansas Governor Mike Huckabee

• Americans for Tax Reform president Grover Norquist

• Senator John McCain (R-AZ)

• Michael Reagan, son of former President Ronald Reagan

• The Tea Party Express – A red bus.

We have to admit that we’re impressed with this risky move by this group that we would otherwise shun a technological feat of this magnitude. Does anyone think that Dick Armey or John McCain even knows what an avatar is? What lucky member of their respective staffs got the responsibility of creating those?

This is especially fun for the tea p’s because since this particular march is virtual, it is likely that certain actions and/or methods that the tax haters could only dream of before, will now be allowed. These may include but not limited to:

• Leaving flaming bags of shit on White House’s front steps.

• Protestors showing “video” of President Obama walking around wearing a Sandwich Board saying “I love taxes.”

• Resurrecting the Founding Fathers (zombie TJ!) to get their testimonials about how the Obama Administration is ruining America.

• Portray Nancy Pelosi giving a speech on the Capitol steps in one of those olive-colored Castro outfits.

• Bring Ronald Reagan back to life, just because.

• Other portrayals of “taxation without representation” taken wildly out of context.

All we ask is that you keep it non-violent. Tea p’s that aren’t too good with them computers need not worry though, actual marches will be held around the country on April 15th where you’ll be allowed to shout, march and carry signs with plenty of misspelled words.

Tax Protesters Launch Online March on Washington [Web CPA]
Online Tax Revolt [Website]

Career Center

Job of the Day: Insurance Expert with Big 4 Audit Experience Needed in New York

GoingConcern
April 6, 2010

A major New York financial company is looking for an experienced accountant/auditor that is familiar with the insurance industry, specifically property & casualty, life or re-insurance companies.

Responsibilities include reviewing current accounting and reporting policies, as well as development and implementation of new policies.

Four to seven years of Big 4 or corporate accounting experience is preferred. CPA required.

Company: Not disclosed

Compensation: $120-$135k base + 20% bonus

Title: Accounting Analyst

Location: New York

Responsibilities: Responsible for reviewing current accounting policies and reporting proceedures and will also work on a team with responsibility for development of and implementation of new accounting policies.

Qualifications: 4 to 7 years of public or corporate accounting in the US Insurance Industries. Preference in Big 4 auditors with P&C or Life or Re-Insurance companies as clients or staff accounting professionals currently working in P&C or Life Insurers. CPA preferred. No travel.

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

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