Going Concern

Deloitte

Barry Salzberg Is Proud of All of You

Caleb Newquist
December 23, 2009

Somehow we missed Barry Salzberg’s latest masterpiece on leadership from last week and since you’ve all checked out, we’re sure you won’t mind.
When asked “Who was the best business leader of 2009?”, Dr. Phil — using every fiber of his being not to nominate himself — chose “Do-right employees”. It’s not about the BSDs of the world. It’s those of you that manage to not sit bare-assed on the copy machine and resist the urge to watch porn on your work computer. You’re the leaders setting the example:

Rather than single out a best business leader, I’d recognize the many unsung ethical heroes in our organizations. I’m talking about people who, even when no one is watching, consistently do the right thing. And they’ve been doing it at a time when confidence in business urgently needs to be restored.

Not only are you restoring confidence (?) in business, you’re going to lead us the charge into this recovery:

As we prepare our organizations for the upturn, we also need to prepare our people for the uptick in wrong-doing that can accompany better times.

First of all, what is this “upturn” you speak of? Also, Costanza-stache: “uptick in wrong-doing accompany better times”? Just what the hell is all this accounting fraud talk? Or how about executives’ bad attitudes about its employees? Or everything else?
Apparently you need to get even more vigilant people! This ship is turning around and wrong-doing is really going to take off. We need you more than ever.
Do-right employees [Washington Post]

The JDA

How Bad Unemployment Is Guaranteed to Get Worse

Adrienne Gonzalez
December 23, 2009

Editor’s Note: Want more JDA? You can see all of her posts for GC here, her blog here and stalk her on Twitter.
I try most of the time not to jerk myself off but this is important and worth paying attention to. Until the grand money laundering scheme is finally put out of commission, economic “recovery” will continue to drag, unemployment will continue to rise and credit will remain tight.
So check out “How a Jobless ‘Recovery’ Costs You… Quietly” for more on the plan to print our way out of this mess. Sort of like Enron after Ken Lay’s convenient death, it’s obvious what’s been going on once you realize the details are painfully simple.
Anyway, the strategy moving forward into 2010 will be one of cautious optimism. Hell, calling it optimism is pushing it.

Business Week (Why This Business Owner Isn’t Hiring in 2010):

Right now the Administration is proposing income taxes that are still equivalent to the rates during the Clinton era. I’m not sure how long this is going to last before the rates start going up. And I’m reading that many states are quietly raising their unemployment taxes. Some experts are estimating that state unemployment taxes could double or even triple in the next year or two. Is an increase in the Federal Unemployment Tax rate on the horizon? One expert thinks so.

Read that again just to make sure it sinks in. Increased unemployment taxes is bad enough a phrase on its own but add the words “double” and “triple” and suddenly you see small business walking blindly into the train tunnel with the 5p Bridge and Tunnel Express coming straight for it.
AccountingWeb reported the potential increase on December 17:

States that have borrowed money from the federal government under the Federal Unemployment Trust Act (FUTA) to cover their current obligations will need to pay this money back with interest.
According to the Journal of State Taxation, at least 12 states, including Michigan, Texas, and Virginia, with depleted trust fund balances had borrowed from the federal government under FUTA provisions of by the end of the summer, and others are expected to follow suit. States that accepted interest-free loans offered under ARRA (the Stimulus Act) will need to pay interest on these loans after two years.

There’s probably some really offensive translation of the FUTA acronym I’m missing here but frankly I’m just tired of having to report on this depressing shit. Looks like another exciting year ahead! Yay!

Uncategorized

Is Beckstead & Watts a Real Firm?

Caleb Newquist
December 23, 2009

We kid, we kid. We’re sure it’s a real firm but they don’t seem to have time for professional services these days.
B&W is the audit firm plaintiff in Free Enterprise Fund and Beckstead and Watts, LLP v. Public Company Accounting Oversight Board that was heard before the SCOTUS earlier this month.
We were pointed to the B&W website which you might notice, is entirely devoted to its case against the PCAOB. As far as we can tell, there isn’t any indication that the firm provides, you know, professional services.
The page does link to the 2006 Accounting Today article that mentions Brad Beckstead as one of the “100 Most Influential People” because he serves as “the symbol of the very opposition to reform the law” but there’s no mention of his superstar auditing abilities.
Even stranger is the firm’s latest PCAOB report which could indicate that the firm is indeed open for business except the report states that the firm doesn’t have any professional staff or issuer audit clients.
So can we assume that the firm’s purpose of being is to serve as the poor audit firm that is taking on the PCAOB? We admire the gusto but what happens when the case is over? Seems like a lot of trouble just for spite.
2006 Top 100 Most Influential People.pdf
Beckstead & Watts PCAOB Report 6.29.09.pdf

Preliminary Analytics

Preliminary Analytics | 12.23.09

Caleb Newquist
December 23, 2009

• Stanford again seeks bail – Dude is crackin’ [Houston Chronicle]
• Blackberry users faced e-mail outage Tuesday evening, less than a week after previous outage – Speaking of crackin’. [CT]
• Citi Denies Theft Report, Says Accounts Are Safe – Apparently the Journal is in the business of publishing fake news as Citi continues to maintain that there’s “Nothing to see here.” [WSJ]
• AIG executives’ promises to return bonuses have gone largely unfulfilled – All the populist rage was totally worth it. [Washington Post]

Review Comments

Review Comments | 12.22.09

Caleb Newquist
December 23, 2009

• The Goldman Sachs Coffee Conspiracy – Worse than Flavia? [Gawker]
• CIT’s CFO follows CEO in retiring – Submit your resumé now. [Reuters]
• How to choose a hedge fund manager – Probably works just as well as any other strategy. [Felix Salmon]
• SEC Charges Austin-Based Investment Adviser in Fraudulent Scheme Utilizing Football Stars – So go with talk shows, avoid jocks. Got it? [SEC Press Release]

Video

An Alternative to the Bob Dylan Christmas Album

Caleb Newquist
December 23, 2009

So in case you weren’t aware, there is a singing CPA that actually puts out albums. He wrote a song for Sarbanes-Oxley’s fifth birthday, has appeared on Nightline and yes, he has a Christmas album.

Make fun if you want but we dare you to deny the song-writing genius of someone that mentions Martha Stewart, Pavarotti, Al Capone, and Dennis Kozlowski in one song (“Deck the Halls with Calculators”).

And then of course, there’s this:

Rumor Mill: More Ernst & Young Restructuring Details

Caleb Newquist
December 23, 2009

We’ve got a follow up to our post yesterday about E&Y’s restructuring plans for the North Central and Pacific regions.
A source has informed us that the Financial Services Office (“FSO”) began nationalizing non-audit banking and asset management clients earlier this year. Insurance clients are also going to be under FSO, which will centralize all non-audit financial services clients. Our source has further indicated that the next step is to nationalize the audit clients. The ulitmate goal is to slim the firm down to five total regions (West, Central, Southeast, Northeast, and FSO).
We asked a couple of sources about this particular rumor to get some opinions:

I do hope this is not true, as [FSO] can’t audit their way out of a paper bag. I’m not sure why they would make an interim step as they’re making now if there’s an ultimate goal of five sub-areas

Another view:

Running FSO out of NYC seems like a good call from an overhead…cost standpoint but that’s about it. I have heard horror stories about the kind of hours FSO staff typically pull year round. I don’t see this making the “people in the trenches” any happier. Having all the work routed to one place makes it easier…to make sure that work is getting done…Of course I think this is just going to turn FSO into more of a meat grinder than it already is since they are going to do everything they can to get as much work in the pipeline as possible to keep that group busy.

As we mentioned yesterday, E&Y would not comment on internal firm matters.
If you’re in the FSO practice and can attest or refute any of the above details (horror stories, meat grinders, auditing out of paper bags) or even if you’re not and have an opinion share your thoughts below.

Announcements

Thanks to This Week’s Advertiser

Caleb Newquist
December 23, 2009

A quick word of thanks to this week’s advertiser on Going Concern:
• Verizon Wireless
If you’re interested in advertising on Going Concern, email us at advertising@breakingmedia.com. Thanks!

Uncategorized

Non-Knights Don’t Think Rule Convergence Is All That Important

Caleb Newquist
December 23, 2009

Not everyone is as hung up on converging U.S. GAAP and IFRS as Sir David Tweedie.
As you may recall, Tweeds delayed his retirement in order to see the rules copulate and bring forth debit and credit harmony.
As admirable as his commitment to the project is, not too many people share his enthusiasm:

A survey by CFA Institute , an international association of more than 16,000 investment professionals, showed that three quarters of respondents believe that improving standards so they are more useful for making investment decisions is “at least as important if not more important” than reducing complexity or convergence.
While respondents generally support convergence, only 6 per cent of those surveyed, including research analysts, portfolio managers, corporate financial analysts and accountants, believe converging the International Accounting Standards Board and its US rival should be the primary objective.

It’s bad enough that Tweeds gets hassled by non-knighted clowns that don’t know a debit from their ass but now there’s a survey out there that says his pet project isn’t that important.
Plus, the SEC doesn’t seem too hung up on it and the FASB has its own problems. Has double-entry chivalry lost all its meaning?
Investors cool on audit convergence [FT]

Career Center

Job of the Day: Tax Maven Wanted at BBH

Caleb Newquist
December 22, 2009

Nine days left in 2009 and all you tax trolls are gearing for another great tax prep season. For those of you looking to bestow your IRC wisdom at a new shop, we’ve got at least one option for you.
Check out a Senior Tax Manager position at Brown Brothers Harriman in New York, after the jump.

Company: Brown Brothers Harriman
Title: Senior Tax Manager
Location: New York City
Experience: 8 – 10 years
Description: The Sr. Tax Manager at Brown Brothers Harriman (BBH) is responsible for the maintenance of tax records as well as the preparation and review of all specifically assigned tax returns and related documents for all BBH Partners and Managing Directors, Partnership and Trust returns.
Responsibilities: Tax Preparation: Review as well as assist in data gathering, preparation and filing of the firm’s federal, state, and local partnership income tax returns as well as personal property tax returns, sales tax returns, unincorporated business tax, business privilege tax and other returns.
Tax Research: Collaborate on tax research on new tax laws, regulations and rulings to disseminate information to the firm; Research and assess the integration of foreign tax credits, from operations and investments, on the overall tax burden of the firm.
Tax Review: Review individual partner tax filings as well as discuss and explain tax positions to Partners. Review tax returns and tax return workpapers for individual Partners and Managing Directors
Requirements: BA/BA degree; Masters in Tax and/or CPA a plus but not required; Strong knowledge of federal, state, and local personal income taxes, gift taxes, generation skipping taxes, estate taxes, nonresident withholding taxes and payroll taxes for high net worth individuals; Strong fundamental understanding of international tax concepts, including value-added tax, foreign tax credits and withholding tax.
See the entire description over at the GC Career Center and visit the main page for all your job search needs.

The American People Have Spoken on Tax Reform

Caleb Newquist
December 22, 2009

After asking pretty much everyone for their suggestions on tax reform, the President’s Tax Reform Panel has released 384 submitted suggestions and the American People did not disappoint.

The FairTax.org crowd turned out en masse and plenty of practitioners and academics also provided their $0.02.
We didn’t really read those but we’re sure they’re great. We were more interested in those people that were more or less thinking out loud.

Suggestion #239 Mike Finch:

I support yearly audits of all government big wigs and prison terms for any that are found to have made more than $100 mistake on their taxes.

Suggestion #249 from “Froggy” whose organization is “peace man”:

Tax the rich! tax the rich! tax the rich!. oh please please please tax the rich. I want the economy to sink further!

Suggestion #278 from Alex Clay:

Make it explicit that cheating on your taxes makes you ineligible for presidentially appointed positions or committee chairmanships in the congress

Suggestion #346 from Ed:

0% tax rate. Reduce the tax law to 2 pages.

David Laing’s suggestion (#359) must have gotten lost on its way to the health care debate:

No option is NO OPTION! No bill that does not contain a public option is not worth your signature.

Since most of you have checked out for the week, consider spending some digging through these for more gems (we haven’t been able to find an intern that’s up to the job) or suggest your own ideas in the comments.

Tax Reform Submitted Comments [TWH]

The JDA

Pleasing the Accountants, Road Trip Style

Adrienne Gonzalez
December 22, 2009

Editor’s Note: Want more JDA? You can see all of her posts for GC here, her blog here and stalk her on Twitter.
NYT had a piece yesterday called “Paying With Plastic to Please the Accountants” and I have to admit at first glance, the title annoyed the shit out of me. The accountants don’t care what you use when expensing your stupid airport Starbucks and car rentals, all they want is to be left alone to decode your receipts in peace. At least mine does.
But it isn’t just the accountants. Apparently your expenses are of extra importance to the IRS – though we’ll save the wild speculation that might dictate Timmy the Tax Cheat is just really hard up for some revenues (especially after that $38 billion tax break he gave Citigroup without anyone’s permission).

The I.R.S. is engaged in an initiative to audit tax returns of about 6,000 companies, partly to look at executive fringe benefits, including travel-expense procedures. This takes place as companies are already struggling to get a better handle on overall travel and entertainment management, especially as business travel picks up in a still shaky economic environment.

The article goes on to talk about extra airline fees (I won’t bitch about the $40 I just had to pay to check a suitcase on a recent Chicago trip) and makes expense reports sound like financial statements. The IRS apparently doesn’t care about receipts for charges under $75 while most companies use $25 as their receipt required limit. Is a $4 airport latté material? Maybe not. Are 25 dinners between $20 and $24? You bet your sweet little bean-counting ass.
I will go ahead and state the obvious here because sometimes I feel like you rubes need a BIG SIGN: in this economy, companies can no longer afford the jetsetting of yore, and why the hell should they? With video conferencing, email, mobile productivity and social networking helping to bring an entirely new meaning to collaboration, all of that cross country crap is no longer as critical as it once was. And so go the $4 airport lattés and bad $15 dinner tabs with it.
So remember, kids, keep your receipts, Timmy might want to run some substantive tests on your company rental cars and client dinners on the road. God forbid he not get a piece.

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Remote Tax Advisor, CPA Firm