When accounting goes unaccounted for
We've got another RIF at KPMG, a consulting cull that went down yesterday (that's Wednesday the 29th for those of you reading this a week from now). Let's start with…
The other day -- and by the other day we mean like more than a week ago -- we received a text on the tipline that read "KPMG US to…
We're sure you've seen this FT headline floating around today: KPMG to axe 10% of US audit partners. And if you, like most denizens of the internet these days, read…
So much for PwC letting all their people work remotely forever. Remember when that got headlines five years ago? See: PwC Just Announced That You Never Have To Go Back…
Did you happen to see this WSJ article from the other day? In "In This Critical Part of Audits, the Accountant’s Role Is Shrinking Fast," we're given a look into…
Footnotes is a collection of stories from around the accounting profession curated by actual humans and published every Friday at 5pm Eastern. While you're here, subscribe to our newsletter to…
We've got another RIF at KPMG, a consulting cull that went down yesterday (that's Wednesday the 29th for those of you reading this a week from now). Let's start with…
The other day -- and by the other day we mean like more than a week ago -- we received a text on the tipline that read "KPMG US to…
Hey. Looking like this is gonna be a short news brief, it was a quiet weekend. In accounting, anyway. In this news briefEveryone Loves an Informative 990The Official IRS Shit…
Footnotes is a collection of stories from around the accounting profession curated by actual humans and published every Friday at 5pm Eastern. While you're here, subscribe to our newsletter to…
Did you happen to see this WSJ article from the other day? In "In This Critical Part of Audits, the Accountant’s Role Is Shrinking Fast," we're given a look into…
While staff in tax at EY US will soon be spending more time with their flesh-based colleagues due to a return-to-office mandate that requires them in the office for an…
Commence to fantasizing about what you'll do with all that glorious free time when you lose your job to AI in 12-18 months because that's the confident prediction made by…
TIL that early AI accounting platform Botkeeper has died. I found out via this CFO Brew article which pointed to a post on Botkeeper's own site. Turns out r/accounting was…
The image is upside down because Australia. This story sounds like a joke but we assure you it is not. KPMG Australia has expanded KPMG's storied cheating repertoire by being…
Struggling to Find Remote Accounting or Tax Talent? We’ve Got You Covered.If your firm or internal team is having a tough time sourcing qualified remote tax and accounting professionals, you're…
Struggling to Find Remote Accounting or Tax Talent? We’ve Got You Covered.If your firm or internal team is having a tough time sourcing qualified remote tax and accounting professionals, you're…
Struggling to Find Remote Accounting or Tax Talent? We’ve Got You Covered.If your firm or internal team is having a tough time sourcing qualified remote tax and accounting professionals, you're…
Struggling to Find Remote Accounting or Tax Talent? We’ve Got You Covered.If your firm or internal team is having a tough time sourcing qualified remote tax and accounting professionals, you're…
Struggling to Find Remote Accounting Talent? We’ve Got You Covered. If your firm or internal team is having a tough time sourcing qualified remote tax and accounting professionals, you're not…
'Resign or be fired' ultimatum costs accounting firm $7,000
New from me: Congress’s accidental decision to turn off tax deadlines during the pandemic could yield refunds for tens of millions of taxpayers.
Recruiting firm Brewer Morris has released its 2025 US CPA salary guide and should you want to read the whole thing you can request it from them here. Perhaps you,…
Saw this on the bird app yesterday and thought its message would be worth passing along what with 20 days remaining until April 15 and nerves as strained as ever…
Ed. note: An earlier version of this article's headline stated the sheriff is investigating. The Alexander County Sheriff's Office informed us they are not investigating, only fielding calls from the…
Boston Business Journal wrote an article about Deloitte's new office in Boston and for some reason they chose to lead with this: You won’t find trash cans at the desks…
We realize the decision to run maintenance on IRS systems likely isn't made by anyone who understands deadlines but surely someone who does could inform the IT department of these…
Looking to staff up for a season or hire a freelancer for a project? Accountingfly is ready to partner with you! Gain full access to a pool of highly skilled…
Every accounting firm struggles with project management, with smaller practices that are rapidly expanding taking the brunt of the damage. As your firm adds new clients, takes on more work,…
Email: The word itself sounds innocent, doesn't it? Kind of like "snail mail," but faster, sleeker, and without the slimy trail. But don't be fooled—email is secretly a sinister beast,…
Business growth is always a high priority for accounting firms, especially small-to-midsize practices. Take care, though, because growth can be a double-edged sword. If your firm expands too quickly or…
“Michael Koss is a clown. He does not belong on the board of directors of any company. He needs to be minding his own company, and until he can clean things up there, he should not be allowed to go outside and play.”
~ Tracy Coenen, on Mr Koss’ resignation as the Audit Committee Chairman of Strattec Security Corp.
About a month ago we briefly mentioned Sheryl Lynn Vertoch who had been “staying at the Inn Marin Hotel in Novato, California for over seven years telling the staff there that she was an IRS agent.” Her cover was blown, not by hotel pool boys turned crack-squad investigators, but by the hotel calling the IRS to complain about their lack of support for this public servant that worked on important cases such as Enron.
Probably feeling a tad sheepish, the hotel is firing back by suing SLV for the $55,175.25 that she owes the hotel.
The hotel, being very thorough of its records (but not necessarily multi-year guests) attached a 24 page invoice to show the charges that Vertoch racked up for “guest fees, expenses and pet charges” from January 21, 2008, to January 26, 2010.
Somehow the hotel’s management/owners/lawyers came to the conclusion that A) the actual IRS wasn’t the cause of the problem and B) the use of a plane, bulldozer or firearm were simply not the best course of action.
Personally, we’re shocked but at the same time relieved that there is a sliver of sanity left in this country.
Novato hotel wants IRS imposter to pay $55,000 tab [Mercury News]
Earlier:
Phony IRS Agent Racks Up $55k Hotel Bill
But this time it is called, “Diversifying Business Standards” and he’ll be touching on a […]
Retired Andersen CEO and Managing Parter, Duane Kullberg was part of a panel discussion that went on at Carthage College in Kenosha, Wisconsin this week where he was the featured speak on the “The Rise and Fall of Arthur Andersen”.
Mr Kullberg was part of a panel that included our friendJim Peterson of Re:Balance and Bill Goodman, President of Schneck SC, a firm with offices throughout Wisconsin that also discussed the future of the audit profession.
Mr Kullberg served as the Andersen CEO from 1980 to 1989 but “the profit-driven company culture in the 1990s, that valued sales more highly than the ethically rigorous auditing practices that built the accounting firm,” was ultimately brought the firm down.
The greed came from the development of the consulting business that became a signficant part of Andersen’s business during the 1980s:
By the time Kullberg took the reins, Andersen was an international player, increasingly involved in providing consulting services. By 1988, it was the largest consulting firm worldwide, deriving 40 percent of earnings from that side of the business.
That brought growing demand for greater independence and a bigger piece of the money pie from partners on the consulting side, while those on the tax-audit side militated against revising the company’s historic approach to treating all partners as financial equals.
So the seeds for the firm’s demise were planted long ago and it was due, dare we say, partners that were jealous over the booming consulting side of the house. After Kullberg split the consulting from the audit/tax the feuding got bad and lawyers got involved. Then the bright idea of rebirthing the consulting business within the audit/tax firm came about:
Under Kullberg, two operating units were created: Arthur Andersen, the tax-audit/accounting group, and Andersen Consulting, both under Andersen Worldwide, each under its own managing partner.
The equal compensation system also was revised, with funds being set aside to reward individual partners and teams of partners for superior performance.
Fissures widened dramatically in 1997 when Andersen Consulting (now Accenture) won an arbitration against Andersen Worldwide and broke off on its own after the tax-audit group set up its own competing consulting service
“All of a sudden, they went back into the arena of business consulting. It was untenable,” Kullberg said.
The rest of this story is well-known. If not, there’s a play coming out this spring. That should catch you up.
Accounting for greed [Kenosha News]
Carthage welcomes Duane R. Kullberg [Carthage College]
Of course the investors are appealing but one win at at time, amiright?
The suits were filed in the fall by investors who lost millions in the LuxAlpha Sicav-American Selection fund which had 95% of its fund invested with Bernie Madoff. The fund claims that it had $1.4 billion in net assets a month prior to Madoff’s arrest.
UBS acted as the custodian while E&Y was the auditor and were sued for “seriously neglecting” their supervisory duties for the fund. Investors in the fund filed more than 100 lawsuits against the two companies.
Luxembourg’s commercial court said in a ruling today concerning 10 test cases that investors can’t bring individual lawsuits for damages. The court said it’s up to the liquidators of the funds that invested with Madoff to seek the “recovery of the capital assets.”
In other words, UBS and E&Y, you’re going to get sued by Irving Picard de Luxembourg rather than 100+ pissed off individuals whose life savings went *poof*. Setting legal precedent aside, taking emotion of the equation works wonders for making an argument.
UBS, Ernst & Young Win Bid to Block Madoff Lawsuits [Bloomberg BusinessWeek]
Earlier:
Ernst & Young Is Thankful for Lawyers, Possibly Toblerones
Morgan Stanley is looking for someone to join their Merchant Banking Accounting and Control Group to handle day-to-day operations and managing the processing and the financial reporting of several products including real estate, private equity and infrastructure.
The position requires three to five years experience. Get more details on this position in New York after the jump.
Company: Morgan Stanley
Title: Merchant Banking Accounting VP
Location: New York, NY
Description: This position within the Merchant Banking Accounting and Control Group includes responsibilities of handling the day-to-day operations and managing the process and deliverables involved in consolidated accounting and reporting of the various Merchant Banking products (Real Estate, Private Equity, Infrastructure, and other private placements) as related to Morgan Stanley’s interest, both as a General Partner and Limited Partner, in each of the underlying funds.
Responsibilities: Ongoing support to and liaison with the Business Unit/Senior Management/Corporate / External Reporting/Segment Group/Fund Controllers/Various Other Internal Divisions: Responsible for monthly close process (Firm’s books); Involvement in new product developments and meetings; Involvement in accounting policy development and implementation; Other areas of exposure include Maintaining the general ledger and Marking to market the Morgan Stanley LP and GP interests in various Merchant Banking funds, Various Disclosures Requirements (FIN 45, FN 46R, FAS 157, FAS 157 g, FAS 159, FAS 160, FAS 161, etc.), SOX /404 documentation, Balance Sheet Review & Reporting, Legal Entity Reporting, Process Control, Transfer Pricing, PBT Analysis, Expense Analysis & Billing, Due Diligence, Senior Management Reporting, Cost of Capital, and others
Qualifications: 3-5 years experience; Bachelors Degree in Accounting or Finance; Strong Accounting Skills
See the entire description over at the GC Career Center and visit the main page for all your job search needs.
This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.
There are three pieces in the blogosphere today that touch on the fundamental problem with our economic system and why it will remain in a ditch, or just lurch onward to the next crisis, if it isn’t addressed.
And that is monopoly. I’ll leave aside the politics of that, which is addressed well enough by Thomas Franks over at the Wall Street Journal. In a nutshell, he warns of a return to feudalism, which I’ve done as well before.
What struck me as new was this analysis, which made me realize that the macroeconomic problem with monopolies is that they discourage hiring and capital investment.
After all, if you have a market locked up, your profits are so high that it makes no sense to take any risk on new investment. You just keep doing what you’re doing with the resources you have, hoping to maintain your barrier to entry. Oh sure, you expand, but only by acquiring competitors so as to keep your monopoly intact and your margins high.
Capital investment? Hiring? Forget about it. There’s no need. In fact, you want to reduce those things. That’s called synergy.
So where does expansion in GDP come from in that case? It derives more and more from speculation about where your stock price will go. Multiply that to the nth degree, a process known as financialization that’s been taking place for decades, and everything ultimately becomes geared to asset prices, with the bubbles and busts that inevitably ensue.
Yes, this description is woefully simplistic and won’t pass muster in a traditional macroeconomics course. There’s also plenty of room for argument as to what degree monopolies currently dominate the economy.
But it seems to me that this is the sort of analysis that’s required to restore the economy’s health. How else, after all, can one explain the paltry amount of hiring and capital investment we’ve seen since the late 1990s?
The point of such a discussion, of course, would be to come up with a solution to the problem. As cogent but unfashionable as its description of the problem may be, the Marxist view expressed in the Monthly Review article cited above is that it cannot be solved because of the irreconcilable contradiction at the heart of capitalism, and that political instability of the highest order is thus inevitable. Sorry, but no thanks.
The alternative: Vigorous antitrust enforcement, which, as Simon Johnson of MIT points out, is what the progressive Republicans pursued a century ago when financial trusts threatened to put a stranglehold on the entire system.
Indeed, breaking up monopolies, in banking and elsewhere, strikes me as the only viable means of growing the economy without creating a more dangerous asset bubble in short order.
Yes, you could conceivably do it instead through better regulation, and I’m all for that, but the back and forth we’ve seen in Washington over financial reform shows that better regulation is impossible until the economic power of the banks, and the political influence that goes with it, is sharply curtailed. The Federal Reserve and other bank regulators had all the authority they needed to keep banks in check, but failed to do so. Why? It wasn’t because they were dumb.
The Sue Sachdeva wrecking ball continues to do damage as we learn today that Michael Koss has resigned as the audit committee chair of Strattec Security Corp. Oh, and Strattec also dismissed Grant Thornton from its audit duties for the Company, saying that “[it] decided to consolidate all of its outside accounting/auditing work with Deloitte”.
And yesssss, Michael Koss resigned, at least in part, due to the uesay achdevasay tealinsay oneymay:
David Zimmer, Strattec’s new audit committee chairman, said the problems at Koss Corp. played a role in Michael Koss’ decision to step down as the committee chair at Strattec. He said audit committee chair is a demanding and time-consuming job. “Everyone has to evaluate how much time they have to spend on things,” Zimmer said.
So in other words, you’re saying that Mr Koss, who by all accounts wasn’t spending any time keeping an eye on his own company, can’t be expected to serve as the audit committee chair of this company since it’s kinda sorta an important position. We get that.
As for GT, Pat Hansen, Strattec’s CFO said that this was something the Company was ‘mulling’ over anyway and that the Koss fiasco and the timing of this dismissal were ‘more coincidental’. Okay but it the made the decision a helluva lot easier, didn’t it?
And the Sue trainwreck rumbles on…
Koss resigns as audit committee chair at Strattec [Milwaukee Journal Sentinel]
Recent Koss/Sue Sachdeva News:
Koss Sues AMEX for Sachdeva Spending Spree
Koss: Financial Results Will Be Better Now That the Whole Fraud Thing Is Over
So, servants of the capital markets, how’s the motivation? Stable? Critical? Grave? Whatever your condition, if you work at Grant Thornton, you’ll be happy to know that there’s a chance (somewhere between slim and good) that you’ll receive a little token of appreciation tomorrow:
Exciting, right? We’re not sure these GT e-cards are of the erotic variety but that would definitely be a great show of apprec t have the self-control to forward it to your non-GT address and wait to check it at home so you don’t end up like some people.
Turns out National Employee Appreciation Day has dropping on the first Friday in March since 1995 but we’ll be damned if we’d ever heard of such a thing. Is there some coordinated effort among accounting firms, large and small, to keep this thing as quiet as possible? It’s busy season after all; the close proximity to deadlines should be appreciation enough.
Anyway, Recognition Professionals International put this together back in the Clinton days and presumably it’s been a hit because, well, it’s still going on. Jump over to the website however, and you’ll find out that they have far bigger ideas that just e-cards:
Recognition can take a hundred forms and variations. Here are just a few ideas:
1. Ask an employee to write down six ways they would like to be rewarded. Anything goes. The only rule is that half the ideas need to be low cost or no cost.
2. Schedule lunch dates with employees. Give them an opportunity to select the luncheon site, and use the time to simply get to know them better.
3. Offer a free one-year subscription to an employee’s favorite business magazine and have it sent to their home.
4. Consider a gift certificate entitling an employee to lunch with you or another mentor of his/her choosing for the purpose of being coached on one or more topics.
5. Offer a shopping spree to a local supply store for an employee to get items (no staplers or paper clips allowed) to personalize his/her office or cubicle.
6. Give the gift of wellness. Have a limousine pick up an employee for a full day at a spa. Give gift coupons for ballroom dance, yoga or golf lessons.
7. Give a fun-loving employee a series of On your mark-get set-GO cards that they can redeem at their discretion. For example: Leave work early to go to a movie, or shopping, or play ball.
8. Send a handwritten note of thanks for the completion of a job well done.
9. If an employee stays late/goes above and beyond to complete a project, send the employee and his/her partner to a nice dinner.
10. Purchase a company “toy” your employees would most enjoy; a cappuccino machine, dart board, volleyball court, exercise room.
Now judging by this list, it appears that GT looked through these and thought, “Number 1 could be taken advantage of in ways that could get the firm in trouble (wink-wink, nudge-nudge) and the rest of these involve spending money. With the exception of number eight!”
So an idea was born. GT e-cards. Here’s hoping that you all get an inbox full of these because A) you deserve them and B) the better the odds are that someone will forward it on to us so that we may take a gander and then share it with everyone. If you don’t receive a GT e-card (or anything for that matter), then you have every right to go postal on whoever you damn well please.
• Porn Nightmare Never Ends for SEC Official [FINS]
Whatever your porn preferences, you’re probably not sharing them with complete strangers. If you are, the cloud of awkward around you has got to be so thick that you may as well have leprosy. However, if you have the unfortunate luck of getting caught viewing this art form at work, then you might be forced to discuss your preferences, how often you’re engaging in the activity, among other things:
[T]he really juicy stuff begins when he’s asked about accessing Web sites like tgirlhotspot.com and ladyboyx.com (warning, very NSFW) : “Our records show that on Wednesday, August 13, 2008, beginning at 1:57 p.m., you made approximately 85 attempts…to access a Web site called tgirlhotspot.com. Do you have any recollection of attempting to access this site?”
The employee answers: “I do not personally have recollection of it, but it would not surprise me.” To which the inspector — and the reader — responds: “Okay. That’s fair.”
Seriously, who can remember every instance that they’ve visited ladyboyx.com? Does the guy have a photographic memory? Maybe on certain images but date, time, and spreadsheet you had open that you could quickly jump to in case someone came to close? That’s asking a little much.
• Should the U.S. Forget about Private-Company GAAP? [CFO Blog]
Now that the Blue Ribbon Panel for private company GAAP has been announced, it makes some people wonder if the non-SEC types will just ignore this whole song and dance the Commission is doing get with the IFRS program ASAP. Ahh, the advantages of being a private company…
Even though both the BRP and the SEC will release their musings on their respective topics in 2011, private companies already have options, “[T]he U.S. private sector has already set some IFRS wheels in motion. In 2008, AICPA recognized the IASB as an official standard-setter, which means U.S. auditors are allowed to issue opinions on private-company financial results filed using IFRS.”
It’s doubtful that IFRS reporting will spread like H1N1 among private companies but while the SEC twiddles the private sector seems to recognize where all this is ultimately going.
• Jason Chaffetz: Ax Hill staff tax cheats [Politico]
Since all the members of the House are up for reelection this year, everyone needs something solid to campaign on and apparently Jason Chaffetz (R-UT) has found his stump.
Chaffetz is introducing legislation that would extend an IRS policy — termination employees that haven’t paid their federal taxes — to all federal departments and agencies.
In 2008 alone, 447 House employees and 231 Senate workers didn’t pay their taxes, according to figures from the IRS, Office of Personnel Management and Department of Defense.
“We have over 600 staffers on Capitol Hill not paying their taxes. That’s just not acceptable,” Chaffetz said in an interview with POLITICO. “It’s disingenuous to take federal taxpayer dollars and not pay your full share of taxes. It’s wrong.”
Between to the two bodies in Congress, over $8 million are owed in taxes. We don’t have to remind anyone how little money this is grand scope of the federal government. But hey! Rep. Chaffetz has an election to win and by God, this could be the ticket. Some other notable delinquent federal employees include the Postal Service at $257 million; Dept. of Veteran Affairs at $131 million; Army and Navy owe $81 million and $61 million respectively.
But pointing out those people wouldn’t make for very good press.
“I’m encouraged by the fact that things are at least not getting worse.”
~ Gayle Anderson, CFO of Match.com, on the economy.
Today in insult to injury news, Bob Pfaff, who pleaded guilty back in the fall for conspiracy to defraud the IRS, was sentenced today to 57 months for his tax untruthiness. He was also ordered to pay the IRS over $1 million in restitution. The bright side for Pfaff is that Judge Richard Berman ordered that only three months of this new sentence would be served consecutively. After 97 months, an additional three will be nothing. That’s just half of a baseball season.
Pfaff is already serving a 97 month sentence for his role in the KPMG ‘tax shelter mill’ that originally involved 17 KPMG executives. Charges were dropped against all but four of the accused after it was determined that prosecutors had pressured the Firm to not pay their legal bills.
Seemingly this marks the end of this particular KPMG/tax shelter case. Another recent case involves Daryl Haynor, a partner in the Tysons Corner office. Mr Haynor was indicted back in the fall for allegedly conspiring to defraud the IRS to the tune of $240 million.
Ex-KPMG Partner Pfaff Gets 57 Months for Tax Crime [Bloomberg BusinessWeek]
