No Charges for Moody’s in Ratings Violation [NYT]
“The Securities and Exchange Commission said Tuesday that it had declined to charge Moody’s Investors Service for violating securities laws by failing to comply with its own procedures for rating complex derivative sec e decision followed an S.E.C. investigation, and the commission used the opportunity to warn all of the national credit rating agencies that it would use new powers under the Dodd-Frank banking law to take action against similar conduct, even if it occurred outside the United States, as the Moody’s case did.
The S.E.C. said it had declined to pursue a fraud enforcement action in the case because of jurisdictional issues. The securities in question originated in and were rated and sold in Europe, the S.E.C. said.”
Tax Cuts Weighed to Spur Economy [WSJ]
“The Obama administration is considering a range of new measures to boost economic growth, including tax cuts and a new nationwide infrastructure program, according to people familiar with the discussions.
The president’s economic team has met frequently in recent days to list ways to bolster the struggling recovery, according to government officials.
On the list of possible actions: additional tax cuts for small businesses beyond those included in a $30 billion small-business lending bill before the Senate. It’s not clear what those tax breaks would target or how much they might cost in lost revenue to the government.
Also in the mix: a possible payroll tax cut for businesses and individuals, as well as other business tax breaks, according to people familiar with the discussions. Currently, income taxes are scheduled to rise with the expiration of Bush-era tax cuts at the end of this year.”
Lessons from ClearBooks failure [AccMan]
What happens when a SaaS provider has a blow-up? Well, it depends.
“Non-Combat” Troops Remaining in Iraq Will Still Receive “Combat Zone” Tax Treatment [Tax Foundation]
The troops that remain in Iraq will still receive combat zone treatment (i.e. ‘designated hostile fire or imminent danger pay areas’).
Brainiest Cities [The Daily Beast]
Boulder #1; DC #3; Boston #4. Austin comes in at a paltry #16 behind Ames, IA. What’s up with that?
Former Rothstein CFO Stay Gives Up Boat [SFBJ]
Convicted Ponzi Schemer Scott Rothstein’s CFO had to give up her 28-foot 2008 Southport boat in order to settle a claim against her for the $154k loan she received from the firm to buy said boat.
SEC Charges Two Accounting Professionals at Milwaukee-Based Company with Fraud [SEC]
The SEC got around to filing civil charges against Sue Sachdeva. The Commission also charged Senior Accountant Julie Mulvaney with helping S-square conceal the fraud through bogus journal entries.
Confidential to BA: Everyone is sick of the defense contractor who cried “the jumbo jet is ready!”
Boeing Co is confident it can deliver the first 787 Dreamliner in the middle of the first quarter of 2011, the chief financial officer of the world’s largest aerospace and defense company said on Tuesday.
Speaking at a conference hosted by Morgan Stanley, James Bell reiterated the updated delivery target for the long-delayed carbon-composite commercial aircraft.
Last week, the company announced another Dreamliner delay — this one related to a a delay in the availability of a Rolls-Royce Plc(RR.L) engine needed for the final phases of flight testing. The plane is already more than two years behind schedule.
This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.
Moves are underway around the world to define and mandate reporting on the sustainability of companies’ operations. Using the aftermath of the crisis as a cover, securities regulators, industry bodies such as FASB and IASB and investor groups are looking at how companies can usefully report on the sustainability – environmental, operational and financial – of their businesses.
The latest move comes from Singapore where the stock exchange SGX has issued a policy paper on whether or nor to mandate sustainability reporting for all companies listed on the exchange. The policy paper calls for expressions from the public prior to a deadline of October 29. SGX does not say whether or not it will introduce mandatory sustainability reporting, but it hints that it might.
“Investors who lead world opinion expect listed companies to be accountable for their financial results, how they achieve the results, and what impact they have on the communities within which they operate. SGX encourages more listed companies to commit to sustainability practices and reporting,” it says in the preamble to the policy document.
The move comes a few weeks after the creation of the International Integrated Reporting Committee (IIRC), a working group of companies, investors and industry bodies to find ways to improve corporate reporting.
The scope of the IIRC is wider than sustainability, but sustainability is nevertheless likely to form a major part of any upheaval in the reporting process. Indeed, no less a body than the G20 has said that it wants changes to the global system of reporting so that all company reports follow the same global standard. Such an overhaul is likely to be very protracted. But in the meantime, it looks as if sustainability reports will form part of the eventual package. CFOs who are still behind the curve had better start planning now.
~ Sorry about the downtime yesterday. Our best people are on it like ConEd.
Deloitte to be world’s biggest accountant as partners sweep up £590m [Telegraph]
“According to Mr Connolly, when Deloitte publishes its global results in October the firm is set to reveal it has overtaken PriceWaterhouseCoopers to become the biggest of the “Big Four” accountancy houses globally.
However, Mr Connolly, who is set to retire in 2011, predicted the current financial year could prove even more successful despite describing future growth in the wider economy as ‘low and slow.’ ‘We have alr in the first quarter of this year, so I expect we shall return to double-digit growth. The M&A market has started to get much busier and our tax business is growing well again. Changes in regulation also mean good business for us.’ “
Investors Gain New Clout [WSJ]
“In a decision years in the making, the SEC voted 3-2 in favor of the “proxy access” rule, which requires companies to include the names of all board nominees, even those not backed by the company, directly on the standard corporate ballots distributed before shareholder annual meetings. To win the right to nominate, an investor or group of investors must own at least 3% of a company’s stock and have held the shares for a minimum of three years.
Currently, shareholders who want to oust board members must foot the bill for mailing separate ballots, as well as wage a separate campaign to woo shareholder support. Both are too costly and time-consuming for most. Now, the targeted companies will essentially be footing the bill for the dissidents, including them in the official proxy materials. The new rule will be in place in time for the 2011 annual meeting season next spring.”
Celgene names new chief financial officer [Reuters]
Jacqualyn Fouse will replace David Gryska effective Sept. 27
Herz Resigns As FASB Chair [The Summa]
Professor David Albrecht’s take on Roberto Herz’s decision to step down.
3Par Accepts Dell’s Increased Takeover Offer [Bloomberg]
“Dell Inc. said 3Par Inc. has accepted its increased offer of $24.30 per share in cash, or about $1.6 billion, net of 3Par’s cash.”
Dodging the Ax: How to Avoid Layoffs [FINS]
“As professionals working in financial-services witness the ax drop around their companies, many are living in fear that they could be included in the next round of layoffs. However, there are measures you can take right away to help safeguard your position and make you seem indispensable to management.”
Stanford Used Skimmed $1.6 Billion For Loans To Start-Ups, Witness Says [Bloomberg]
“The $1.6 billion that indicted financier R. Allen Stanford is accused of skimming from the funds of his investors was actually loaned by his Antiguan bank to start-up entities and other businesses he controlled, a fraud examiner testified.
Forensic accountant Alan Westheimer testified before a U.S. judge in Houston today that Stanford Financial Group Cos. comptroller Mark Kuhrt and chief accountant Gilbert Lopez told him they believed the borrowing should have been publicly disclosed.
‘The funds were being passed through as inter-company loans to the entities that were the recipients of the shareholder loans,’ Westheimer said. ‘Within a short period, usually six months, Mr. Stanford would assume those loans and the recipient companies transferred those balances to their underlying capital.’ “
Wells Fargo “Strongly” Opposes Accounting Board’s New Rules on Loan Value [Bloomberg]
“Wells Fargo & Co., the largest home lender in the U.S., said it disagrees with an accounting board’s plan that would require banks to report the fair value of loans on their books.
‘We strongly oppose the expansion of fair value as the primary balance-sheet measurement attribute for virtually all financial instruments,’ Wells Fargo Controller Richard Levy wrote in the Aug. 19 letter. ‘It will only serve to cement a short-term focus on fair-value measures.’
Wells Fargo is the first of the largest U.S. banks to publish its p writers who named an affiliation, according to the Financial Accounting Standards Board website. The letter was written to officials at the board, which said in May that it may require banks to report the fair value and amortized cost of loans and some other financial instruments on their balance sheets.”
PricewaterhouseCoopers to Buy Consulting Firm Diamond Management [WSJ]
PwC is paying $378 million for Diamond Management & Technology Consultants, “[share]holders will get $12.50 a share, a 31% premium to Monday’s closing price. The stock, up 29% in 2010 through Monday, was last at the bid level three years ago.
‘This is an attractive all cash opportunity for our stockholders, creates exciting prospects for our people, and will provide us new and enhanced capabilities to bring to our clients,’ said Diamond President and Chief Executive Adam Gutstein. ‘There’s a clear strategic fit between PwC’s assets and aspirations and Diamond’s positioning.’ “
Return prudence to accounting [FT]
“What a pity that ultra-theoretical standard-setters around the world have chosen to jettison prudence, a generally accepted accounting convention derived from more than 100 years of experience. This high-risk approach has led to absurdly lengthy and unrealistic annual reports that are now virtually incomprehensible.”
Sex Harassment at Work Gets Weirder, Scarier [Bloomberg]
“Not that I think it’s weird that a brokerage firm chief executive would pin a female clerk on the floor by putting his shoe on her breast (the right one, if you must know), or that some insurance company guy in Fullerton, California, would put a sample of his semen in a female colleague’s water bottle. Twice.
But it did get my attention when I started leafing through this year’s press releases from the U.S. Equal Employment Opportunity Commission and found a case where a supervisor allegedly said that women should outfit themselves in Vaseline, and nothing else; one where a manager in human resources (yes, in human resources) allegedly inquired as to the color of an assistant’s panties; and a case against a company president who the EEOC says pulled a subordinate’s pants down in front of her coworkers.”
Borders CFO resigns for new job [Reuters]
Mark Bierley is moving on after 12 years for a new gig.
Businesses Add iPads to Their Briefcases [WSJ]
“Apple, which said it sold more than three million iPads through the end of June, attributes some of the device’s success to businesses. The Cupertino, Calif., company’s Chief Operating Officer Tim Cook said in July that ‘very surprisingly’ half of the Fortune 100 are testing or deploying iPads.
More than 500 of the 11,000-plus applications built specifically for the iPad are in the business category. A free app from Citrix Systems Inc., which allows people to access internal corporate programs from the iPad, has been downloaded more than 145,000 times.
‘Everyone in IT is jumping on this one,’ said Ted Schadler, an analyst at Forrester Research. ‘Rather than wait for people to start complaining they’re saying why don’t we get a few of them in and see what they are good for.’ “
MLB Confidential: The Financial Documents Baseball Doesn’t Want You To See, Part 1 [Deadspin]
Deadspin got their hands on financial statements for several Major League Baseball teams and even the lowliest of clubs – namely the Pittsburgh Pirates – make truckloads for their owners: $20.4 million in partner distributions for fiscal year ’08.
The sports rag also has financial statements for the Tampa Bay Devil Rays, Florida Marlins and L.A. Angels. And as you might expect, people (MLB and the clubs’ people) are not happy.
However, we came across a little mistake that could worry voters that Drew doesn’t really pay attention to the little things that matter. Like people’s names.
You’d think that if Cuomo was going to traipse all over town throwing allegations at people, he’d at least know what those people’s names are.
Case in point, the first line of the response from former CFO (and current consumer banking CEO) Joe Price had to go to the trouble of pointing out that his name is not, in fact, “Joseph,” it is “Joe.”
Talk about a low blow, Cuomo. You think you can run Albany and just get people’s names wrong? They’ve threatened to shut down the whole government for less than that.
Potash says in talks for superior deals [Reuters]
“Potash Corp’s board urged shareholders to reject BHP Billiton’s hostile $39 billion offer and said it was in talks with a number of potential suitors for a superior deal.
Potash Corp, the world’s largest producer of potash based in the Canadian province of Saskatchewan, said superior offers or other alternatives are expected to emerge.
Discussions are on with several of these third parties in order to generate superior offers, the company said in a statement.”
While it might sound less stressful to some than an in-person meeting, such an interview can be filled with landmines for job candidates.”
The Problem With a Non-CPA CFO [FEI Financial Reporting Blog]
Francine McKenna guest-posts over at FEI for the second time, this time discussing the American Apparel situation and noting that 31 year-old CFO might be in over his head.
Goldfarb Branham LLP Investigating Shareholder Claims Against American Apparel, Inc. [Business Wire] Speaking of APP, investigations are starting, “Goldfarb Branham LLP is investigating American Apparel, Inc. (APP 0.75, 0.00, -0.09%) due to allegations that the company may have issued materially inaccurate statements to investors concerning its 2009 financial results and the circumstances surrounding the replacement of American Apparel’s auditor.”
Movement afoot to increase diversity in accounting industry [Pittsburgh Business Times]
“Sam Stephenson, a partner at ParenteBeard LLC, a Downtown-based certified public accounting firm, brings an interesting perspective to the equation as a black man who has worked in the profession for nearly four decades. During his long tenure, he has seen improvements in efforts to recruit and promote women in the profession, but ethnic diversity still lags behind.
‘We need to bring this issue to the attention of individuals who run local and regional firms because they may not be aware that this is a problem,’ said Stephenson, who serves as a member of the Pennsylvania State Board of Accountancy, which enforces the licensing rules for CPAs. ‘A lack of diversity often means missed opportunities to attract talent and clients.’ “
Preparer Costs Will Increase Some; Taxpayer Costs Will Increase More [Tax Update Blog]
Joe Kristan responds to fellow practitioner/blogger Robert Flach’s question of how the new tax preparer registration will affect costs for consumers more so than tax preparers.
Gays See Complex, Changing Tax Picture [Dow Jones Adviser]
“Gay couples are taking one step forward, one step back when it comes to their tax rights. Not to mention sideways.
The shifting landscape of new rules and initiatives makes it a big challenge to provide same-sex partners with good tax advice.
In Massachusetts, a successful challenge to a federal law denying gays tax breaks that heterosexual couples get could mean progress, but only if it stands up to an expected government appeal.”
Patrick Byrne Refutes Insider Trading Claims [Forbes]
This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.
Thomas Dooley, CFO of Viacom, received a total compensation package of more than $26 million in 2009. John Killian of Verizon Communications made a lot less–a mere $9.6 million. And Ian G.H. Ashken of Jarden Corp. got $9.5 million.
Those fellas are the three highest paid executives included among the 25 most richly compensated CFOs in the Big Apple, according to a list just published by Crain’s New York Business, drawing on data from compensation research firm Equilar.
Indeed if you’ve been wondering how CFOs in big New York-based companies have fared during these tough times, the answer seems to be: pretty darn well. The lowest paid on the list, Laurence Tosi of the Blackstone Group, made a mere $4.6 million. Second to last Adena Friedman of Nasdeq OMX Group: $4.8 million.
The biggest jaw dropper, however, is Dooley, who received $10 million in non-equity compensation and $10 million in stock awards. That, in fact, is somewhat of an anomaly among the group members. Generally the CFOs received a hefty sum in either non-equity compensation or stock and option awards, not in both. (An exception is Colm Kelleher of Morgan Stanley, who made $9.4 million but got zip in both non-equity compensation and stock/option awards. He did, however, get a $64 million bonus).
Also noteworthy: About nine of the executives received these breathtaking compensation packages even though the company had a net loss from 2008 to 2009. Gregory Hughes of SL Green Realty Corp., for example, made $6.1 million, while the company had a loss of 84.9 percent. Pierre Legault got $4.9 million even as the corporation had an 82.8 percent loss.
Of course, this pay isn’t typical of the compensation at most companies. “These CFOs are going to get paid more than your typical CFO, simply because they’re in a large metropolitan area and a large company,” says Aaron Boyd, head of research at Equilar. According to Boyd, a recent report on CFO compensation among the S&P 500 found median pay to be around $2.5 million.
“At least part of it is focused on the March 2008 capital raise where they went out and did a preferred deal. Erin Callan made some very positive bullish statements about Lehman. About how the nature of its finances would mean that it did not need more capital and three months later Lehman Brothers needed more capital and then came the decline of the firm.”
~ The Fox Business Correspondent/Ace Reporter insists that an announcement is “imminent.” That’s what the rumor mill says anyway.
This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.
Following up from our brief mention yesterday, senior level CPAs have turned much more pessimistic about the economy. And somewhat surprisingly, they are partly concerned about deflation.
Just 21 percent of CPAs serving as C-suite executives said they are optimistic about the US economy, way down from 40 percent who were optimistic in May and the lowest level since April 2009, according to the American Institute of Certified Public Accountants and the University of North Carolina’s Kenan-Flagler Business School’s latest Quarterly Economic Outlook Survey. What’s more, pessimists outnumbered optimists by a two-to-one margin.
Even more worrisome, 78 percent believe US business conditions will not return to pre-recession levels until 2012 or later.
This sentiment seems to parallel a number of recent economic and corporate reports.
Altogether, 40 percent were pessimistic about the economy, up from 25 percent in the last quarter.
“Our survey signals the nascent economic recovery that buoyed expectations last quarter is stalling,” said AICPA Vice President for Business, Industry and Government Carol Scott, in a press release accompanying the survey’s findings.
What are these numbers crunchers worried about? Unemployment and a tight credit market, to name two.
The survey found that CPAs are much less concerned about inflation these days. This is not surprising, given the economy’s lackluster pace, the high unemployment rate and the inability of companies to raise prices.
Interestingly, 20 percent are now concerned their organizations will be impacted by deflation in the next six months.
This is further proof that deflationary fears are not just coming from a fringe group of radical thinkers, but are now entering the mainstream.
One silver lining from the survey: Nearly one-quarter of the survey participants are upbeat about the prospects for their own organizations. Still 55 percent of survey respondents do not anticipate their organizations’ employment levels returning to pre-recession levels in the next year, compared with seven percent who anticipate staffing levels returning to normal in the next year.
U.S., BP Near Deal on Fund [WSJ]
“The Obama administration and BP PLC are close to a deal to use future revenues from the oil giant’s Gulf of Mexico operations to guarantee its $20 billion cleanup and compensation fund, a move that would give both sides an incentive to continue production in the Gulf, scene of the U.S.’s worst-ever offshore oil spill.
The Justice Department and BP said Monday they had completed talks to establish the fund, which is designed to cover damage claims from residents and businesses hurt by the spill and clean-up efforts by state and local governments. BP paid $3 billion into the fund ahead of sch Hurd, Deloitte and Tone At The Top [Re: The Auditors]
“The auditors serve the role of independent watchdog, guardian of shareholders interests in the capital markets . Their relationship to management should be adversarial – not friendly, cozy and comfortable. They are hired and fired by the Board, also supposedly independent. Given the way auditors are compensated, directly by the companies they judge, they have a difficult job. Their regulators guard those guardians and are supposed to make sure they do it.
So how does a Vice Chairman, one of those guardians, “dupe” his fellow partners and professional colleagues more than three hundred times, as Deloitte’s lawsuit against him alleged?
Deloitte has a culture of non-compliance.”
Oracle Chief Faults H.P. Board for Forcing Hurd Out [NYT]
Meanwhile, Larry Ellison wrote an email to the Times, “The H.P. board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago. That decision nearly destroyed Apple and would have if Steve hadn’t come back and saved them.”
Moss Adams Partner Bob Bunting Helps Create Reporting Standards for Corporate Sustainability [Moss Adams]
“Bob Bunting, chairman of the Moss Adams LLP International Services Group and president of the International Federation of Accountants (IFAC), has been appointed to the steering committee for the newly formed International Integrated Reporting Committee (IIRC). The Prince of Wales’s Accounting for Sustainability Project (A4S) and the Global Reporting Initiative (GRI) announced the formation of the IIRC today.
‘In addition to the annual reports publicly listed companies are required to file, an increasing number of companies are voluntarily producing corporate social responsibility or sustainability reports,’ Bunting said. ‘It’s an honor to be tapped for this role and to contribute input to developing a single standard for these reports. It’s a natural extension of the work I’ve been involved with at IFAC to help drive adoption of a single set of global standards for accounting, auditing, and professional ethics. It’s also a pleasure to be working alongside so many thought leaders in the world of standards setting and corporate sustainability.’ “
Small business optimism sags in July [Reuters]
“Small business owners became more downbeat in July as expectations of weaker economic growth in the second half of the year reinforced a reluctance to hire, according to a survey published on Tuesday.
The National Federation of Independent Business (NFIB) said its optimism index fell 0.9 point to 88.1 in July.
‘Virtually all of the decline was due to weaker expectations for business conditions six months from now,’ said William Dunkleberg, the group’s chief economist.”
SEC Charges Seattle-Area Company and Former CFO With Phony Accounting of Infomercial Sales [SEC]
When did the SEC start putting photos up of the Regional Directors?
The SEC alleges that Karl Redekopp, the former CFO of International Commercial Television Inc. (ICTV), turned millions of dollars of quarterly losses into profits by falsely accounting for ICTV’s sales of the Derma Wand, a skin care appliance that purports to reduce wrinkles and improve skin appearance. Redekopp fraudulently recognized revenue before the Home Shopping Network had actually sold or delivered the product to viewers. He also improperly recognized revenue before a free trial period offered by the company had expired, and failed to reverse revenue from products that had been returned. Redekopp’s misconduct caused the company to falsely report millions of dollars in excess revenue in 2007 and 2008.
” ‘Redekopp violated fundamental principles of accounting to fraudulently boost ICTV’s bottom line and conceal its true financial health from investors,’ said Marc J. Fagel, Director of the SEC’s San Francisco Regional Office. ‘Unfortunately, ICTV’s auditors turned a blind eye to the company’s financial irregularities and failed to fulfill their role in investor protection.’ “
Accounting PACs spread the wealth [Web CPA]
“Political fundraisers in the accounting profession began shifting their largesse toward congressional Democrats after they won control over both the House and the Senate four years ago.
But now with Tea Party activists screaming for the heads of incumbents and Republican candidates showing strength across the country, is the accounting profession resurrecting its overwhelming partisan support for the GOP in time for the mid-term elections?”
Flight Attendant at JFK Pulls Emergency Chute, Flies Coop [NBC New York]
Steve Slater was hit in the head by some luggage, was cursed at by the passenger who refused to apologize for it and Slater then proceeded to flip out. He cursed at all the passengers over the PA system on JetBlue Flight 1052, grabbed two beers and slid down the emergency chute after inflating it.
He was later arrested at his home in Queens, “Police sources said that when authorities found Slater he seemed to be in the midst having sexual relations.”
“We thought it was important for people to appreciate that the announcement today has nothing to do with the operational performance of the company, it is all about Mark’s behavior and judgment.”
No Charges for Moody’s in Ratings Violation [NYT]