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Georgia Voters Will Decide on the Use of Accrual Accounting by the Department of Transportation

Interestingly enough, Caleb just covered accrual vs cash here on Going Concern the other day. Not interestingly enough, as a subsection of the Georgia state government, the Georgia DOT’s only option is government accounting and that sure as hell ain’t accrual. Apparently Georgia governor Sonny Perdue is hip to this accounting trick that just can’t be tapped and is questioning whether or not the DOT has the legal authority to use accrual for multi-year state funding commitments.

The short answer, without being an authority on matters of accounting legality, is HELL no. They better stick to fund accounting like every other government agency but that comes with its own set of flaws. See also: 49 of 50 states facing massive budget deficits.


If you aren’t familiar with government accounting, let me make it very simple: in regular accounting, balance sheets balance. Companies shoot for assets to outweigh liabilities and if they don’t for an extended period of time, shareholders bail and the company goes under.

In government accounting, there is no real concept of “balance” and it’s all about expenditures and estimates of spending that have little connection with actual money coming in. Most government agencies would be crippled if they were forced to institute GAAP, even with the magic of government accounting we have already witnessed from the smallest municipality to entire sovereign nations.

Anyway, in 2008, an audit of DOT practices concluded that accrual accounting was a violation of Georgia’s constitution (and the sanctity of government accounting fortheloveofsweetbabyJesus) but DOT officials claim that sweating their questionable accounting methods prevents the state from funding important road projects.

Again, magic on paper, garbage in practical application. Accounting methods are not meant to turn insolvency into funding, they are merely options and their use should not be abused for users. Seriously.

Georgia voters will be trusted with resolving the issue. Better start reading some Advanced Accounting textbooks, Georgia voters, you’ll need them to pick the right door on this little game show.

Voters to weigh on DOT accounting system [Atlanta Business Chronicle]

Embezzling Accountant Will Pay Back Stolen Money and Pay For the Audit That Caught Him

In aren’t you glad these aren’t your internal controls news, former SDN Communications chief accountant Bradley Whitsell of Sioux Falls, SD pleaded guilty to mail fraud on Monday. The U.S. Attorney’s office states that 46-year-old Whitsell used his various oversight positions to embezzle more than $392,000 over a 10 year period beginning in 2000.

According to court documents, Whitsell used company accounts to pay his credit card bills and pay private school tuition. He also wrote checks to himself, redirected electronic payments to cover his expenses, created company checks on his office printer and requested reimbursement for expenses that already were paid by SDN to pay for various personal expenses, including a large landscaping project at his residence and his country club membership.

Whitsell used access to the company’s accounts payable system to change approved vendors’ names with his own, or with those of companies to which he owed money. He would then print out these checks on his office printer and change the names back to the appropriate vendor in the A/P system.

Whitsell could end up in prison for up to 20 years. He initially pleaded not guilty in June to one count each of Mail Fraud and Wire Fraud, each of which could potentially carry a 20 year sentence and a $250,000 fine. U.S. Attorney Brendan Johnson states that Whitsell has agreed to pay back the $392,111.65 and will also cover the $84,000 cost of the audit that uncovered his theft.

SDN CEO Mark Shlanta stated officials started noticing “financial irregularities” connected to Whitsell last year, at which time he was put on administrative leave so the company could conduct a forensic audit and internal investigation. Whitsell resigned before the investigation began (hint: red flag). “It’s been embarrassing for me,” Shlanta said. “I’ve been saddened by the events. Really, I felt betrayed in this past year. Brad was someone I hired and trusted.”

The interesting part of this otherwise droll and useless story is that before the house of cards came crashing down all around him, Whitsell served on the City of Sioux Falls audit committee, not only as a member but as its chair.

Back in June, Sioux Falls Councilor Vernon Brown told one SD blogger that Brad Whitsell received high marks from committee members for his work on the Audit Committee in setting up internal controls for city government. Oh the irony.

Whitsell is currently free on bond and returns to court for sentencing November 7th.

Former SDN accountant pleads guilty to mail fraud [HC]
Former SDN executive admits to mail fraud [AL]

Muslim Man Sues PwC for Discrimination, Destroying His Life

Maybe PwC should consider pulling up the stakes in Tampa:

A Muslim who was a PricewaterhouseCoopers senior manager was interviewed for an article about diversity in a company newsletter and then fired when he criticized his employer, his federal lawsuit says.

Issam Azziz, 37, wpany’s Tampa office, filed suit on Tuesday in U.S. District Court, alleging the company, now called PwC, discriminated against him because of his faith and race.

“What happened to me should not happen to any other person,” Azziz said in a news conference outside federal court. “They’ve gone out of their way to destroy my life.”

PwC has responded that “this lawsuit is without merit” (which I think is taught on the first day of Corporate Communications 101) and wouldn’t tell me much else but you get the feeling that this whole story is a bit of a dog and pony show. First of all, the press conference held by Mr. Azziz included appearances from his lawyer, Peter Helwig, the Tampa Chapter of Council on American-Islamic Relations and Ahmed Bedier, “a civil rights activist” which seems to indicate that this was a well oiled PR offensive. Secondly, this press conference occurred less than a week after PwC told Tampa and the State of Florida to shove their subsidies. You don’t have to be too clever to put that one together.

Anyway, you can watch clips of the conference here and here (no embed code, sorry). If you watch the video, Mr. Azziz alleges (through the words of Mr. Bedier) that the company’s “fraternity mentality” that includes “overnight partying, binge drinking and gambling” feels a little hyperbolic but whatever. I spoke to Hassan Shibly, the CAIR representative that appeared with Mr. Azziz but he declined to go on the record. Peter Helwig has not yet returned my call.

The other little twist is that you get from the story is that Azziz claims that after he found another job, PwC got wind of it and were the ones behind his dismissal from that firm:

The lawsuit claims the company orchestrated his firing from a second firm that later hired him and has effectively blackballed him from getting any other job in his profession.

The company “retaliated against (Azziz) in reprisal for his opposition to (PwC’s) racial discrimination against persons who are Muslim or of Arab ethnicity,” the suit says.

Maybe I’m just not as paranoid as I used to be but a firm like PwC going out of its way to blackball one person seems like a stretch. I understand that this is Florida and I’m not a Muslim (i.e. they aren’t exactly popular with some people) but COME ON. PwC is far more interested in ruining the lives of its current employees – it’s called client service.

Suit accuses PricewaterhouseCoopers of discrimination against Arab-American [SPT]
PricewaterhouseCoopers discriminates, suit states [TBO]
Earlier:
PwC Decides It Doesn’t Want $1.1 Million in Free Money From Tampa After All
There Appears to Be Some Fuss About PwC Tapping $2 million in Subsidies Once They Spend $78 million and Hire 200 People