Going Concern

Is RSM McGladrey Worried That Natalie Gulbis Isn’t Sexier Than Lane Kiffin?

Caleb Newquist
March 18, 2010

It’s bracket season and while many of you are trying to get out of work to watch hoops, the good folks at Esquire have a much more pressing matter at hand.

The Sexiest Woman Alive Bracket is: “A single-elimination battle royale: sixty-four women, seven rounds, one readers’-choice champion, and not a single Kardashian,” and RSM McGladrey’s own Natalie Gulbis is a number one seed.

Her first round cruise match is against…Lane Kiffin?

Yes, Lane Kiffin. For those of you not pigskin inclined, Lane Kiffin recently left his job as the University of Tennessee football coach for the job at the University of Southern California.

As you might expect, Volunteer fans didn’t take too kindly to a young first-year coach bolting for the sunny confines of L.A. This is not lost on the folks at Esquire and they opted to include the Trojan coach in this year’s bracket.

And as it stands right now, Natalie is trailing Lane in the first round match-up with just under 35k votes to Kiffin’s 46k-ish votes. How does Kiffin, who at first glance does not even qualify for this particular bracket, manage to hold on to what seems to be a insurmountable lead? Is it possible that LK is sexier than Natalie?

Plus, if this lead holds up, isn’t this a public relations disaster for everyone involved? How will RSM explain this to their clients? Will this lead to a desperate move by the firm to drop NG in favor of someone else, say a newly recovered sex addict — who’s a little down on his luck re: sponsors — that will be playing in the Masters?

Vote for the Sexiest Woman Alive! [Esquire]

KPMG

KPMG Reinstating “Standing Ovation” Bonus Awards

Caleb Newquist
March 18, 2010

Back in November 2008, KPMG suspended the highest level of its Encore bonus award, the Standing Ovation to “manage costs.” Since there is no shortage of exceptionalness at Radio City, the $500 awards were adding up so word came down that it was ixnay the tandingsay vationsoay.

The firm did keep its “Bravo” award that was good for $200 and replaced the five-hundo bonus with a $25 award and “thanks e-cards” that were way better than anything from Hallmark simply because Tim Flynn probably included a personalized message.

And you, simply, cannot put a dollar figure on that.

The most devastating part of the Standing O kibosh was that the trophies — which could easily qualify as a “blunt object” at a crime scene — were no longer handed out. These, understandably, are most coveted of all KPMG tchotchkes.

Well now, according to accountants familiar with the matter, the firm has reinstated the Standing Ovation for reasons that we can only speculate. It will be reserved for those Klynveldians that “go above and beyond” the call of their duties. Again, we can only speculate as to what this actually entails. Considering the fact that the hours you’ve been putting in for the last month or so have been expected, it may just mean that you have to try a little bit harder.

The reintroduction is being received tepidly, as one source told us:

Kinda meaningless to me. They don’t hand them out. Except for managers that want to get laid by younger staff.

Seconded by another source:

Just because they bring them back, doesn’t mean any partners plan on approving them. – “Oh, I nominated you for a standing ovation, but it didn’t get approved! It’s the thought that counts though, amirite?”

Another source saw it as too little, too late:

“Do they really think $500 is going to stop a mass exodus of [people] from leaving? Perhaps they should have thought about that when they didn’t give raises.”

Despite the vague qualifications for the award, it’s good to see TPTB reinstating the bonus for the sake of morale/bribery/empty hope. Now go get yourself one!

News

Job of the Day: BlackRock Needs an IT Internal Audit Manager

GoingConcern
March 18, 2010

BlackRock is looking for an experienced auditor who has is familiar with testing of SAS 70 and Sarbanes-Oxley technology controls.

The position requires 9 years experience with Big 4 firm and professional certifications (e.g. CPA, CISA). The position also requires approximately 20% travel.

Check out the details for this position, based in New York, after the jump.

Company: BlackRock

Title: IT Internal Audit Manager

Location: New York, NY

Experience Required: 9 years

Description: The candidate will supervise one to two staff and will work closely with other internal auditors in executing the global integrated internal audit plan. The candidate will report to the Director of Internal Audit IT, who reports to the Global Head of Internal Audit. BlackRock’s internal audit group is comprised of approximately 40 professionals based principally in New York, San Francisco and London, with additional personnel in Edinburgh, Tokyo and Hong Kong.

Responsibilities: More than 9 years experience in the fields of information technology audit, information security and technology risk management; Strong experience auditing operating systems, databases, networks, and technology operations; Experience working within a risk based internal audit function executing audit planning, fieldwork and report writing; A good understanding of information technology, technology risks and emerging technologies; A good understanding of information technology best practice disciplines and frameworks such as CoBIT, ITIL and COSO; Experience managing small teams of skilled professionals and building strong trusted relationships with senior IT and business management.

Qualifications: Experience of auditing Unix, Linux, Sybase, Oracle, MSSQL and Windows; Experience working in a global financial services firm, and a good understanding of the asset management industry and regulatory environment; A “Big 4” background and experience of SAS70 and SOX technology controls testing; Experience working in a non-audit role such as information security or technology operations; Professional certifications such as: CPA, CISA, CISM, CISSP, GSNA, CGEIT, CRISC; Additional technical knowledge, e.g. attack and penetration techniques, security configuration audit tools and techniques, development tools and languages, data modeling and data management techniques.

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

Small Business

Are Direct Loans from the Small Business Administration a Bad Idea?

GoingConcern
March 18, 2010

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

With all the news about President Obama’s proposals to increase bank lending to small business, there’s one obvious question that needs to be addressed: Why not have the Small Business Administration take a more aggressive role? Why not allow the agency to lend directly to small businesses?

The issue came up at a recent hearing held by the House Financial Services and Small Business Committees.

Turns out, the Small Business Act creating the SBA allows the agency to do direct financing of companies, as the You’re the Boss blog recently pointed out. And through at least the 1980’s, they did so, lending to companies rejected by banks.

Plus, in the past year, the Senate has introduced legislation to help the SBA make direct loans. And the House has passed two bills creating programs aimed at direct lending. That legislation would create a program which would exist only in a recession, through which the SBA would help small businesses fill out loan applications. Then, if no bank were willing to lend, the agency would step in.

But the Obama administration is against any and all such proposals. The reasons: 1) The agency doesn’t have the staff or the resources; 2) It would take as long as a year to get such a program up and running; 3) Administrative costs would be in the billions of dollars; and 4) Historically, SBA direct loans have had higher cumulative loss rates than other SBA-backed loans.

Those, in fact, are pretty convincing arguments.

It might just be that, while it sounds good on paper to give the SBA the power to lend directly, the reality is very different. Sure, drastic action is needed to increase bank lending. But this one might be thoroughly impractical.

The bottom line: Ultimately, it’s bankers who probably are more qualified than anyone at the SBA to make these decisions. In a time of scarce government resources and a need for fast action, the most efficient approach is for the SBA to do whatever it can to encourage banks to lend.

Of course, whether the steps proposed by the Obama administration are likely to do that is the $64,000 question.

News

CPA Suing Craigslist Vindicated by New Reviews

Caleb Newquist
March 18, 2010

In Tuesday’s QOTD someone did not have kind words for Leo Kehoe, a Queens CPA. Specifically, “Watch out for this fraudulent scumbag! … He will botch up your tax returns and forget to submit them.” Scumbag? Fine. “Botch up” and “forget to submit” are also tolerable. Stuff like that happens (right?). What no CPA needs or wants, is their name associated with “fraudulent.”

Anyway, someone had a bad enough encounter with Kehoe that it demanded these words for anyone searching out both a CPA and perhaps some NSA coitus.

Mr Kehoe should be able to rest a little easier now as the Gothamist reported yesterday that a certain someone or someones has a completely different opinion on his services, “Leo Kehoe is a great CPA. He charged me a lower fee than what I had payed with someone else and he did a much better job,” and this one from yesterday, “Leo Kehoe: Much better than Cats. I’m going to see him again and again!”

Depending on your point of view, the “Cats” compliment may be worth far more than the $4 million that Kehoe isn’t likely to get but since accountants seem to be hung up on money far more than cultural comparisons, we expect him to continue moving forward with the lawsuit.

Accountant Sues Craigslist Over Negative Rant [Gothamist]

Tax Day Countdown: Five Overrated Tax Planning Ideas

Caleb Newquist
March 18, 2010

There is plenty of tax advice floating around this time of year but the problem, as you may expect, is that not all of it is useful for everyone. Sure, you can throw read every piece of advice out there but some of that advice is worth ignoring or at the very least, investigating further so you can find out for yourself if it will actually benefit you.

We asked Mike Callahan, tax director at Spicer Jeffries LLP in Greenwood Village, CO, to pay us another visit, this time with ideas or strategies that he thought were overrated so that you can sort out some of the noise.

• Buying a car for the “write-off” – Mike told us that deductions related to depreciation on cars are extremely limited. He said, “If you need a new car, fine. But don’t expect a huge tax benefit.”

• Maxing out your mortgage – According to Mike, borrowing as much as possible to purchase a home because of the interest deduction is not worth it. “If your combined federal and state tax rate is 30%. 70% of your interest payments are going out the door.”

• Check your W-4 – Withholding a lot of taxes during the year so you can get a big refund is not the way to go. Mike puts it this way, “You just gave Uncle Sam an interest free loan. Adjust your withholding so you come close to breaking-even at tax time.”

• Running up a credit card on deductible expenses before year-end – This one should be a face-slap moment but, “Using a credit card to prepay expenses before year-end if you can’t afford to pay the balance when the bill comes next month.”

• Don’t sock money in an IRA away if you need it now – Mike said that saving money doesn’t do much good if you plan to withdrawal it later, “[Don’t] contribute to an IRA when you need the money. You’ll end-up withdrawing the funds andsubjecting yourself to a 10% penalty,” and more taxes. And by “need” Mike isn’t referring to your Range Rover payment. Good choices people.

More tax advice:
Six Small Business Tax Strategies for the Entire Year
Tax Day Countdown: Five Tax Planning Ideas for Individuals

Accounting News Roundup: Satyam Auditors Barred by PCAOB; TheStreet.com Pulls an Overstock.com; How High Are Your State’s Property Taxes? | 03.18.10

Caleb Newquist
March 18, 2010

• US accounting watchdog sanctions Satyam’s auditors [Reuters]
Siva Prasad Pulavarthi and Chintapatla Ravindernath, the two auditors that were arrested in India for their roles in the Satyam fraud, have been barred by the PCAOB from “being an associated person with a registered accounting firm.”

The Board who released the two orders against the men on Monday, that describe their efforts to get them to testify about their roles in the engagement last spring but they refused to cooperate, “After several attempts to accommodate Respondent with respect to the dates and location of testimony, including a delay to allow new counsel to become familiar with the matter after Respondent changed counsel, Respondent, through counsel, informed the Division in January 2010 that he would not comply with the Demand for testimony.”

• TheStreet.com To File Annual Report Late On Accounting Review [WSJ]
TheStreet.com announced yesterday that it was pulling an Overstock, delaying the filing of its 10-K for 2009. The Company, founded by sound effects specialist Jim Cramer, said that in a filing that it and Marcum (its auditor) needed to “focus attention on matters related to the Company’s previously-announced review of the accounting in its former Promotions.com subsidiary.”

In other words, the SEC is snooping around the accounting which typically is not a good sign (just ask Jim!). Despite this little bump in the road, the company assures everyone that it will “be able to file its 2009 Form 10-K on or before the fifteenth calendar day following the prescribed due date.”

• Lowest and Highest Property Taxes [Tax Policy Blog]
This map, courtesy of Tax Policy Blog, shows Texas claiming top prize for highest property tax (as a % of median home value), with New Jersey not far behind:

Jefferies Follows Select Comfort’s Lead, Dumps KPMG for Deloitte

Caleb Newquist
March 18, 2010

So this makes two SEC clients lost for KPMG in as many days. Again, Jefferies had no disagreements with KPMG yada yada yada. Jefferies didn’t even receive a GCO like Sleep Number. However, KPMG did include this language for this year’s (i.e. December 31, 2009) audit opinion:

“As discussed in Note 1 to the consolidated financial statements, in 2009 the Company retrospectively changed its method of accounting for noncontrolling interests in subsidiaries and earnings per share due to the adoption of new accounting requirements issued by the FASB.”

BFD, right? Could Jefferies really be so bent of shape over that to make the auditor switcheroo?

The other point is — and maybe we’re making a mountain out of a molehill here — this is the second example of a non-standard auditor opinion from the House of Klynveld followed by clients kicking them to the curb for the clean scalped, mustachioed comfort of Deloitte.

One thing is for sure and that is that Deloitte is clearly on the offensive here after losing so many SEC clients last year. Still, we’re curious about a few things: 1) Is Big D going after KPMG clients specifically? 2) Is there a secret weapon being employed to woo these clients (e.g. Barry does a dead-ringer Dr. Phil impression during the presentation)? 3) Are KPMG clients upset about Tim Flynn stepping down as chairman? OR are they upset that the Radio Station is still camping out in Iran?

If you’ve got concrete knowledge, crackpot theories or just want to take a shot in the dark (since most of you are probably drinking by now) on this new and emerging (?) trend, fire away.

8-K [Jefferies]
10-K [Jefferies]
Jefferies Announces the Engagement of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm [Business Wire]

Quote of the Day

Quote of the Day: Accountant Argues for Naked News | 03.17.10

Caleb Newquist
March 18, 2010

“She would be prepared to read the news without clothes and only wears the clothes because her employer requires it.”

~ An accountant representing Sian Williams, co-host of BBC Breakfast one, trying to convince a tax tribunal that her clothes should be tax deductible because she has “to look good on screen.” He failed.

More IRS Resistance, Now with High-Speed Car Chases!

Caleb Newquist
March 18, 2010

A man in Oklahoma City fled police after IRS agents that had been staking out his house attempted to pull him over after it was clear he wasn’t showing up for his court date. The tax-hater du jour was due for a court date in Texas and when the IRS Agents realized he wasn’t headed for the LSS, they tried to stop him. The suspect then did what any clear-thinking person would do when pursued by IRS agents: ESCAPE.

An OKC policman saw the speeding Lexus, pursued, and one left turn later and a brief foot race later, the tax scofflaw was brought justice. IRS: 1. A guy that has probably appeared shirtless on Cops: 0.

No word on whether the IRS were the zealous type but we’re assuming they were packing heat. And since this particular ne’er do well had a court date, it’s safe to assume that he had a settle up for more than just his pocket change.

Police: Chase Suspect Fleeing IRS [KOCO]

Fraud
SEC

The Latest Developments in the Overstock Accounting Mess

Adrienne Gonzalez
March 17, 2010

In case you haven’t been paying attention, this has been a banner week for the alleged but fairly obvious and ongoing Overstock.com accounting drama (aka “The Quarterly Lie”) and now’s your chance to get caught up. Thank me later (unless you are Patrick Byrne, in which case you are welcome to trash me later out of pure, outraged butthurtedness).

Gross violations of the sanctity of GAAP are not the largest of Overstock’s numerous accounting issues. I know, how could it get any worse? Sam Antar discovers GAAP violations both new and old in this, the latest hilariously fraudulent SEC filing by our friends at OSTK. What makes it even funnier is that they apparently attempted to slip in the new violations with old ones in the hopes that the SEC (and those of us paying attention) may not notice.

Overstock.com nonchalantly lumped in its latest GAAP violations with other GAAP violations previously disclosed by the company on January 29, rather than separately disclosing them. Those newly identified GAAP violations add to a long laundry list of other violations.

Well that’s cute. Now I may not be an SEC filing savant like some among us but, um, something smells wrong here. I’d say I can’t put my finger on it but I can, the only problem is I can’t seem to wash the stink off my finger.

Gary Weiss is also all over it (naturally) and is equally shocked that OSTK would attempt to casually insert new, previously undisclosed accounting violations in with the old, previously disclosed accounting violations as if, you know, it’s a good idea to just lump them all in together while we’re on the subject of violating GAAP accounting. I’m no CPA but if I were advising Overstock on its accounting practices, I might warn against netting its creative accounting in SEC filings for starters. Separately stated items, people, come on.

Do you think it’s merely a coincidence that Overstock has burned through two audit firms in a year’s time? Perhaps not and maybe KPMG has the magic touch that will turn Overstock’s straw financials into gold but if we were the betting type, we’d put our money on indictments and a really messy fall for the Salt Lake City outlet.

We’re all calling bullshit, Overstock. Your turn.

Announcements

Thanks to This Week’s Advertiser

GoingConcern
March 17, 2010

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

• Serenic Software

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

Thanks!

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