Going Concern

Depantsing Day for the SEC

Caleb Newquist
September 2, 2009

In the biggest shocker of the day, the inspector general of the SEC reports that the Commission never undertook a ‘thorough and competent’ investigation into Bernie Madoff’s operations.
This seems to be the official “our bad” statement by the SEC, although Chris Cox didn’t waste any time throwing worker bees under the bus, “Days after the conman’s arrest, the SEC’s then-chairman, Christopher Cox, faulted the agency’s staff for failing to act on ‘credible and specific allegations’ about the operation for at least a decade.”
More, after the jump

Harry Markopolos was soiling himself the whole time and no one bothered to listen probably because you called country club rules when you took the big chair, C-squared. Call us Monday morning QB but if some guy called us up with dirty undies screaming about the biggest fraud in history, we’re pretty sure we’d take him seriously.
Anyhoo, it’s all water near a bridge now. Schape and Co. are kicking ass and taking their sweet time naming key positions, so we’re sure that everything will be hunky-dory from here on out.
SEC Never Took ‘Competent’ Look at Madoff’s Firm, Report Finds [Bloomberg]
UPDATE: Check out more of the SEC sucking over at our sister site, Dealbreaker.

Uncategorized

The Day the Audits Died

Adrienne Gonzalez
September 2, 2009

128 The Agony - Gethsemane.jpg I will refrain from expressing my opinions on the PCAOB and do my best to keep this neutral, I swear.
Accounting Onion pointed out in 2007 that “more than half of the PCAOB’s inspection resources (> $65 million) are protecting the public against the equivalent of a flea bite on the hindquarters of a bull (market),” meaning a bunch of overpaid auditors are inspecting 1% of public company revenue. 1%! What do we need them for?
More, after the jump

And it gets worse. The PCAOB and SEC have decided as of August 13, 2009 that auditors need a whole lot more on their plates including but not limited to increased disclosures for:
• An audit firm withdrawing an audit report
• Any time a firm’s name is used in an unauthorized manner by an issuer without the firm’s consent
• Any time new hires are brought into the firm with a history of disciplinary sanctions
• Anytime professional licenses are revoked, suspended, or subject to conditions or sanctions.
The last one is my personal favorite. Watch your Ps and Qs out there kids, they’re coming for you.
Let’s hope State Boards of Accountancy aren’t as broke as the states they belong to (this means you, California BoA, with your 3 furlough Fridays a month and ELEVEN WEEK WAITING TIME to process CPA exam applications!) otherwise there might be monetary incentive for state licensure authorities to put more bad accountants in the back of their monthly pub just so firms can avoid as many of these reports as possible.
As of October 12, 2009, firms will be required to make these reports to the PCAOB, who will then disseminate the information to the unwashed masses as it sees fit.
The same PCAOB of which Skeptical CPA speaks so highly on June 4, 2009:

Another PCAOB triumph. Does the PCAOB think say KPMG is unaware of problems at Citigroup? Or is the PCAOB aware that it is? How can anyone take the SEC and PCAOB seriously? Is Spokane more fraud plagued than Wall Street? Or just less well connected? Now if Goldman Sachs moved its offices to Spokane …

Check out the article for the backstory.
The SEC is having trouble seducing accountants to its team because of the competitiveness of PCAOB salaries. So what, let them get the scraps? You hear that, soon-to-be-grads? Why are you at Meet the Firms when you could be off getting wined and dined by the PCAOB? Sounds like fun, right?
The Maryland Association of CPAs’ CPA Success made the new reporting requirements sound much tamer, as if it were just a polite, albeit groundbreaking request from the PCAOB.
Perhaps it is a benign request. But this appears to be a PCAOB power grab to me, not to mention a costly one.
Just my $0.02. Do I have to report that to the PCAOB?

Uncategorized

Two Obscure Firms Get Together to Form a Slightly Larger Obscure Firm

Caleb Newquist
September 2, 2009

Call us snobs for being ignorant about regional firms but until our New Firm Name Challenge, we’d never heard of J.H. Cohn and we’ve definitely never heard of Charles Brucia.
Regardless, the two firms are copulating to form a new firm but there won’t be a new name, which is pretty boring. According to Web CPA, “The firm will operate as Charles Brucia & Co., a division of J.H. Cohn.” Vomit.
This current get together follows JHC’s mergers with Frederic Kantor last summer and Good Swartz Brown & Berns last spring.
So at this pace of mergers, we’re predicting JHC will start throwing around “Global 6 Accounting Organization” somewhere around the 24th and one half Century.
J.H. Cohn Combines with Charles Brucia [Web CPA]

Religious Freedom Hanging By a Thread at the IRS?

Caleb Newquist
September 2, 2009

Okay maybe that’s a stretch but we’re guessing, what with all the rebellious employees, that the IRS is a tough place to work. Because of this high stress environment, normally rational people may jump to conclusions about otherwise harmless religious symbols.
A judge recently dismissed most of the legal claims of a former IRS revenue agent that wore a kirpan to work.
Continued, after the jump

Web CPA:

The revenue agent, Kawaljeet Kaur Tagore, sued the IRS after she was fired in July 2006 for wearing a “kirpan” to the IRS office in Houston…The blunt knife is traditionally worn in a curved sheath and is supposed to act as a reminder of a Sikh’s duty to protect the weak and promote justice for all. Tagore’s supervisor objected to the dagger, even though she claimed it never set off the metal detector in her building, and she was told to work from home.

How can you not get behind protecting the weak and justice for all? Still, Tagore was fired after refusing to wear a knife with a shorter, 2.5 inch, blade and returning with the 3 inch knife even though, as the original story reports, she had sharper items in her office, including her scissors.
Tagore filed suit earlier this year:

claiming that the government’s conduct violated both the Religious Freedom Restoration Act of 1993 and Title VII of the Civil Rights Act of 1964. The defendants included the IRS, the Treasury Department, the Department of Homeland Security, former Treasury Secretary Henry Paulson, former Homeland Security Secretary Michael Chertoff and several of Tagore’s supervisors.

Bad news is that the judge threw out the some of the Title VII claims but good news is that the one against T. Geith still remains. We’ll continue to follow this story if new developments happen to drop on another painfully slow news day.
IRS Dagger Carrier’s Claims Partly Dismissed [Web CPA Debits & Credits]

Big 4

Where are Deloitte’s Revenue Results?

Caleb Newquist
September 2, 2009

small salzberg.jpg Accountancy Age reports that P. Dubs still retains the most FTSE 100 clients in the UK while KPMG retains the largest amount of clients overall.
BFD, right? Stateside it’s all about the scratch. This begs the question of why the hell we haven’t seen any revenue results out of Deloitte yet. KPMG is too far out and P. Dubs and E&Y will be reporting next month.
But the Big Four Blog points out that Dr. Phil and Co. reported revenue in July last year but here we are approaching Labor Day (or for some, just the weekend) and not a peep.
We’ve contacted Deloitte about this and will update you with their response just as soon as we hear back. In the meantime, feel free to wildly speculate about the delay in the comments and what the fiscal year ’09 number will be. Last year global revenue was $27.4B so we’ll put over/under at $28.6B. Takers?

Firms Sponsoring Golfers – An Analysis

Caleb Newquist
September 2, 2009

Accounting firms don’t do much advertising. It’s got something to do with ethics and since the CPA exam is ancient history for some we can’t talk specifics.
Firms do like to sponsor stuff related to golf. Tournaments, players, etc. One recipient of accounting firm cash has been widely followed here but now we recently discovered another firm sponsoree that, we feel, may rouse as loyal of a following as Phil.
This is Natalie Gulbis who is sponsored by RSM McGladrey.
Natalie works with RSM in partnering with the Special Olympics Golf Program and will be a contributor to RSM’s new golf blog.
We’re not really into golf so we can’t really debate who has a better game or who garners better exposure for their sponsor so, after the jump, we’ve presented a more superficial analysis:

natatlie 2.jpg
We admit that we know nothing about promotion or advertising but if you’ve got opinions on which firm seems to have found the better golfer to sponsor, discuss in the comments.

Preliminary Analytics

Preliminary Analytics | 09.02.09

Caleb Newquist
September 2, 2009

• OTB Is in Financial Trouble, but It’s Ready to Roll – Sometimes, time-honored traditions such as OTB are allowed certain concessions. [NYT]
• Madoff Details, and Property, on Tap – “[Inspector General David] Kotz turned over the report to SEC Chairman Mary Schapiro late Monday, and it is likely to be released within a week after the SEC’s five commissioners review it.” Probably no details on girth, etc. [WSJ]
• Disney Deal Could Spark Imaginitive M&A Ideas “When merger momentum really gets going, companies splash out for takeovers that make little sense to anyone except the investment bankers involved.” [DealBook]
• Stanford Back in Jail After Medical Tests – An aneurysm can’t keep Stan out of jail. DON’T MESS WITH TEXAS. [DealBook]

Review Comments

Review Comments | 09.01.09

Caleb Newquist
September 2, 2009

• College Football Coach Follows Lead of Ponzi Kings – Go Blue. [DB]
• Canadian Deloitte Partner Fined $235k for ‘Shoddy Accounting’ [JDA]
• Mormons Become Victims in $50 Million Scam to Sell Gold Bullion – Mitt Romney was NOT involved. [Bloomberg]
• Wells Fargo Expects to Repay TARP Soon Without New Share Sale – We still haven’t seen a dividend check [Bloomberg]
• Buffett Helped AIG, XL – at a Price – “Both insurers signed so-called cut-through endorsements with a subsidiary of Berkshire Hathaway Inc. to offer some policy holders a guarantee that if the insurers couldn’t pay claims, Berkshire Hathaway would.” The man is nothing if he’s not good with money. [WSJ]

Uncategorized

If You Know What’s Good for You, Stand Up Right Now

Caleb Newquist
September 2, 2009

If your employer is of a shrewd nature and didn’t spring for Herman Millers, you need to get off your asses right now! Find out why, after the jump.

Product recalls: OfficeMax chairs

And yes, Gmail appears to be down.

One More Way Facebook is Working Against You

Caleb Newquist
September 2, 2009

Somehow we missed this last week but whatevs. State taxing authorities are apparently getting the swing of this whole Internet phenomenon.
We really thought the IRS had taken their game to the next level by putting videos on YouTube but States are really getting crafty by using social networking sites and Google to catch tax scofflaws.
Continued, after the jump

WSJ:

In Minnesota, authorities were able to levy back taxes on the wages of a long-sought tax evader after he announced on MySpace that he would be returning to his home town to work as a real-estate broker and gave his employer’s name. The state collected several thousand dollars, the full amount due.

This has us a little concerned. One minute you’re updating your Facebook status as “Just won $500 at my weekly poker game,” just to rub it in everyone’s face, and the next thing you know you’re filing an amended return because some jerk you met at a party, and for some reason added as a friend, happens to be an IRS agent and takes his job really seriously. Is no cash-only operation sacred?
And it doesn’t matter if you’re not into online social networking:

Now, when a tax dodger can’t be found, said Nebraska tax official Steven Schroeder, agents often turn to Google. One agent collected $30,000 of unpaid tax from a resident after a Google search found him listed as a high-ranking local marketing rep for a national firm.

Face it people. One way or another, you’re going to participate in your patriotic duty.
Is ‘Friending’ in Your Future? Better Pay Your Taxes First [WSJ]

On Campus

The Enigma of Business Casual and Other Questions Recruits Ask

Caleb Newquist
September 1, 2009

business casual?.jpg We brought up recruiting yesterday which brings up many questions from the students out there who are looking to impress the firms that are coming to campus.
KPMG has some suggestions including getting a haircut and reminding everyone that “college attire does not necessarily equal business casual attire”.
This is good to know because sometimes wearing your sweats to class gets really convenient and changing clothes should typically delayed until you’re ready to go to the bar.
Since we have some the best and brightest readers we’ll put it out to them to give the co-eds some suggestions on how to land their first gig. Our only suggestions would be to show up sober and wear shoes but use your judgment as such formalities are often overrated.

Uncategorized

Problem of the Day: Boring Repetitive Work Papers

Caleb Newquist
September 1, 2009

A reader pointed out a problem that plagues many of you in the number crunching universe: writing work papers, emails or other documentation that are incredibly boring and repetitive.
We’ll take that a step further and put it out there that speaking styles among accountants also take on a certain, shall we say, monotony.
More, after the jump

Nearly all accountants’ writing and speaking styles include these words or phrases:
• As such
• Notes
• Pretty straight forward
• Let me know if you have any questions
• Circle back
Clearly, accountants are not English majors. Short of putting a thesaurus on everyone’s desk, we’re not really sure how this can be remedied. Inserting the occasional curse word can add some shock value but this attempt to spice things up may be short-lived depending on your co-workers tolerance for vulgarity.
The list above is obviously not a complete one. Discuss in the comments the most annoying language that you see or hear on a daily basis and if you’ve got suggestions on how to make your day to day interaction more exciting, we’re all ears.

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