CFOs

Ford CFO: Having Ready Access to Cash Is a Decent Business Practice

FYI for any budding CFOs out there:

Having liquidity is key to any business and it is important to build it before any crisis, said Ford Motor Co.’s (F) chief financial officer Thursday.

“We have to assume that when you really need liquidity, it won’t be there,” said Lewis Booth, speaking at Treasury & Risk’s 15th annual Alexander Hamilton Awards ceremony in New York City.


After those insightful comments, Booth gushed about how the company that Hank built was doing.

“We expect our automotive cash to be about equal to our debt by year-end 2010, earlier than expected,” Booth said, adding “this has been a magic year.”

Just a CFO walking the talk (almost anyway).

Berkshire CFO Attempts to Kill SEC Curiosity

When you’re a folksy billionaire octogenarian, you can afford to have others do your dirty work. In the case of the Warren Buffet, he has Charlie Munger hate on accountants for anything and everything under the sun.

Similarly, when the SEC comes calling, the Sage of Omaha can ring up Berkshire CFO Marc Hamburg. On the one hand, you might expect WB to shoot the breeze with the SEC employees since they likely share a fondness for a certain film genre.


However, when the conversation turns to business, the old man probably claims that he has an interview on tax cuts, a bridge match with WHGIII or a lunch date with Z-Knowles. This allows him to turn the SEC scamps over to Hamburg who plays a little bit of a bad cop to the Buffet’s chatty, dirty Grandpa. The CFO then lets the SEC know, in no uncertain terms, that they’re barking up the wrong tree:

In an April letter, the SEC asked Berkshire why it was not recording write-downs on shares with $1.86 billion in unrealized losses, all of which had been in that position for at least a year.

Given the duration of those losses, the SEC said they appeared to be more than temporary and as such should have been written down.

In a detailed response, Berkshire Chief Financial Officer Marc Hamburg said most of the losses with more than 12 months’ duration as of December 31 were concentrated in Kraft and U.S. Bancorp, shares it had acquired in 2006 and 2007.

Hamburg said that as of December 31, Berkshire determined both companies had enough earnings potential that their share prices would eventually exceed the original cost of the stock. It also has the “ability and intent” to hold the shares until they recovered, he said.

“We believe it is reasonably possible that the market prices of Kraft Foods and U.S. Bancorp will recover to our cost within the next one to two years assuming that there are no material adverse events affecting these companies or the industries in which they operate,” Hamburg said.

And if this doesn’t work, they’ll just schedule Munger for another speech.

SEC questioned Warren Buffett’s Berkshire on loss accounting [Reuters]

Accounting News Roundup: Debunking the Audit Industry Green Paper; Theories Behind the Tax Cut That Nobody Noticed; AIG Is Doing a Happy Dance | 10.22.10

The EC’s Green Paper, “Audit Policy: Lessons from the Crisis”: The Bureaucrats Blow Another Chance [Re:Balance]
Jim Peterson dissects the European Commission’s Green Paper on the audit industry and isn’t impressed with what is inside.

Interesting Issues in Timing of Green Mountain Insider Stock Sales and Disclosure of SEC Inquiry [White Collar Fraud]
Sam Antar is curious about GMCR executive Michelle Stacy’s sudden exercising of stock options. You see, GMCR was notified of the SEC investigation into their revenue recognition on September 20th. Ms. Stacy exercised and sold her options on the 21st. The company announced the SEC investigation on the 28th.

Regardless of what analysts think about Vermont hippies and their knowledge of revenue recognition, the timing will certainly get the attention of someone (who finds porn disgusting) at the SEC.

Why Nobody Noticed Obama’s Tax Cuts [TaxVox]
According to Tax Policy Center estimates, 96.9 percent of households enjoyed a tax cut that averaged almost $1,200. Just one measure—Obama’s Making Work Pay tax credit—put more than $116 billion into people’s pockets in 2009 and 2010.

Yet, a Times poll found that fewer than 10 percent of those surveyed had any clue. Remarkably, fully one-third thought their taxes went up—even though the actual number was about zero.

Poll: Financial crisis will force states to raise taxes [On the Money]
78% say it’s gonna happen.

Office Depot, execs settle SEC disclosure charges [Reuters]
The SEC had accused the company, its CEO Stephen Odland and former chief financial officer Patricia McKay of conveying to analysts and big investors that the company would not meet analysts’ earning estimates for the second quarter of 2007.

New Faces Enter Fray in Accounting [NYT]
Floyd Norris remembers the old cast at the FASB, IASB and introduces the new ones.


AIG Raises $17.8 Billion in Record AIA Hong Kong IPO [Bloomberg]
American International Group Inc. raised a record HK$138.3 billion ($17.8 billion) from the Hong Kong initial public offering of its main Asian unit, putting what was once the world’s largest insurer on course to repay its 2008 bailout.

AIG sold 7.03 billion shares, or a 58 percent stake, at HK$19.68 each, the top end of a marketing range, Hong Kong-based AIA said an e-mailed statement. It used an option to expand the sale offered from 5.86 billion, or a 49 percent stake.

Comment: EU audit proposals full of contradictions [Accountancy Age]
More debunking of the EC Green Paper.

Aetna CFO duties to expand under new CEO [Reuters]
Aetna Inc [AET.N] will expand the responsibilities of Chief Financial Officer Joseph Zubretsky to include leadership of the health insurer’s strategic diversification plans under the incoming chief executive officer.

Accounting News Roundup: Tax Cut Political Football Goes Flat; Google’s Remarkable Tax Planning; Yes, IRS Agents Are Strapped | 10.21.10

Tax Cuts Slide To Back Burner On Campaign Trail [WSJ]
It’s a sign that a decision by Democratic leaders, to put off a vote on extending the tax cuts until after the Nov. 2 elections, may be paying off politically.

“It’s harder to write an ad portraying a vote that hasn’t happened yet,” said Brian Gaston, a former senior aide to House GOP leaders and now a lobbyist at the Glover Park Group.

Google 2.4% Rate Shows How $60 Billion Lost to Tax Loopholes [Bloomberg]
Google y $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda.

Google’s income shifting — involving strategies known to lawyers as the “Double Irish” and the “Dutch Sandwich” — helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization, according to regulatory filings in six countries.

TUI Travel CFO Quits After Accounting Error [Dow Jones]
In an embarrassing admission, the company said an ongoing audit for the fiscal year ended September 2010 had highlighted the accounting error in the integration of IT systems in its U.K. mainstream business that had accrued over a period of four to five years and which increased its total write-off for 2009 from GBP29 million to GBP117 million.

Chief Executive Peter Long told Dow Jones Newswires that the issue had been identified when it reported its third-quarter results but continued to investigate the matter and “only last night were we able to determine the scale of the problem.”

Banks Clueless on Foreclosure Mess Severity [Jonathan Weil/Bloomberg]
The biggest U.S. mortgage lenders and servicers say they’re putting the foreclosure mess behind them, and that it never was a major problem. The reality is these companies are so big and unmanageable, the people in charge of running them have no way to know if that is true.

One thing that remains unknowable is how many flawed home- mortgage records and foreclosure proceedings are out there waiting to be unearthed. Dozens of federal and state agencies are investigating. It’s anyone’s guess what they might turn up.


NJ man cashes $158G check IRS mistakenly sent him [Asbury Park Press]
He figured no one would notice.

For ‘B-to-B’ Companies, Finding Facebook ‘Friends’ Can Be a Struggle [WSJ]
These days, even small “business-to-business” concerns like Bill.com are experimenting with social media, perceiving the popular online hangouts as low-cost, easy-to-use venues for attracting new customers and retaining existing ones. But unlike their consumer-focused counterparts—retailers that sell smartphones, jeans, games and other personal products—so-called B-to-B businesses seem to be having a harder time connecting with their target audience.

Some IRS agents carry guns, too, agents tell UAB accounting student group [Birmingham News]
“My first day on the job, I thought, ‘Why are they carrying guns?'” said Donald Smith, a UAB graduate and special agent with the IRS-Criminal Investigation unit.

Korea wants G20 to delay accounting standard consolidation [Korea Times]
Apparently they have a say in the matter

Accounting News Roundup: America’s Fiscal Conundrum; FASB Attempting to Price Convergence; Rent and Healthcare Are Both Too Damn High | 10.20.10

Pledging Our Way to Fiscal Disaster [Tax Vox]
Three-quarters of Americans believe that entitlement programs such as Medicare and Social Security “will create major economic problems” over the next 25 years. But two-thirds are opposed to addressing these challenges by reducing benefits, and 56 percent are against raising taxes.

And congressional candidates, who read the polls, are scrambling to pander to the free-lunch beliefs of their respective bases. As a result, they are locking themselves into opposing both reductions in future benefits and tax increases.

NFIB calls for action on Bush tax cuts [On the Money]
“Increasing the individual rates will mean that business owners have less money for business investment and job creation,” the NFIB stated. “One study found that a 5 percent increase in individual tax rates decreases business investment by 10 percent.”

Democratic leaders have repeatedly promised that rate cuts for all but the top two brackets will be extended into next year, allowing most businesses to avoid a tax increase. The NFIB states their plan will still hit small businesses.

FASB Seeking Input on the Costs of Convergence [JofA]
FASB issued a discussion paper to gather input from stakeholders about the time and effort that will be involved in adapting to several anticipated new accounting and reporting standards and when those standards, which are part of the FASB and International Accounting Standards Board (IASB) convergence projects, should be effective. The board said it will use the input it receives to develop an implementation plan that helps companies and other stakeholders manage both the pace and cost of change.

“We issued this discussion paper to gather the information we need to create a realistic, cost-effective plan for transitioning to the new standards,” Acting FASB Chairman Leslie F. Seidman said in a press release.

Paul V. Stahlin Elected Chairman of the AICPA [PR Newswire]
Stahlin said the United States is emerging from a period of economic turmoil that has “driven demand for new business practices, new regulations, new oversight and new solutions,” in his inaugural speech, titled “Seize the Future.” He said CPAs have been finding solutions for more than 100 years.

“We as CPAs have the unique ability to make sense of a constantly changing complex world,” Stahlin said. “Employers, our clients and our country turn to us to make sense of the most complex developments in business and regulation. We best understand how a business ticks.”

Bob Evans Financial Chief To Depart At Year’s End [Dow Jones]
Tod Spornhauer wants to do something different.


Yahoo 3Q profit doubles, revenue still lackluster [AP]
Bartz and CFO Tim Morse are still in process of turning this thing around.

J&J CFO: Healthcare Spending Growth Is Decelerating [Dow Jones]
Certain medical expenses are simply too damn high.

Jimmy McMillan: Rent is Too Damn High! [CBS]
Speaking of, in case you missed it yesterday (or Monday night):

Some People Aren’t Too Concerned About the Walgreen CFO’s Second DUI

Yesterday we shared with you the unfortunate tale of Walgreen CFO Wade Miquelon picking up his second DUI in just over a year. While Mr. Miquelon is obviously responsible for his own actions, this whole mess could have been avoided if WAG would just splurge a tad and get him 24/7 car service. Sure you might catch some shit from Footnoted but isn’t that better than people getting hurt?

Anyhoo, most of the coverage on this story is in and around Chicago but naturally, analysts that cover the company were asked about the whole ordeal and frankly, since jumping behind the wheel after a few highballs doesn’t seem to have any effect on Wade’s professional capacity, it’s really NBD:

Dereck Leckow with Barrington Research […] sees no reason for investors to be concerned.

“Certainly, it’s rather embarrassing, but he’s not been found guilty of anything at this point,” said Leckow.

“At this point in time, it’s not something to be concerned about,” he concluded. Leckow has an “Outperform” rating on Walgreen shares and a $46 price target.

The risk for investors, if anything serious were to result from the latest charge, is that Miquelon is regarded as key to restructuring that’s been going on at Walgreen.

“Wade has been very valuable for the company’s cost-reduction efforts,” observes Scott Mushkin of Jefferies & Co. “If there were any problem that would take him away from his responsibilities at Walgreen, that would be a negative,” said Mushkin.

As we noted yesterday, WAG isn’t commenting on this “personal matter” but some people are wondering aloud about Wade’s decision-making ability:

Companies have to disclose “events that occurred during the past 10 years and that are material to an evaluation of the ability or integrity” of an officer. This includes whether the person “was convicted in a criminal proceeding … (excluding traffic violations and other minor offenses),” according to the Securities and Exchange Commission.

So the question becomes when does such an issue stops being a “personal matter” and starts becoming a “material” one. And what does it say about a person who makes such repeated mistakes, risking himself and others in the process? Can shareholders trust him with running the finances of their company?

The answer is, it depends.

“Some companies might have disclosed the second arrest right away; some might have said something somewhere,” said Edward Best, a partner at law firm Mayer Brown. “Other companies could reasonably have concluded, ‘Hey, the guy still showed up Monday morning.’ He’s still able to fly to New York to meet with rating agencies, investors and bankers. It’s not a material issue.”

One thing is for certain – Miquelon is losing his license for three years effective November 10th, so Walgreen has a couple of weeks to arrange for that car service.

Walgreen: Street Unperturbed By CFO DUI Arrest [Barron’s]
Walgreen CFO Arrested on Drunk Driving Charges … Again [Daily Finance]
Walgreens CFO charged for 2nd time with DUI [Chicago Breaking Business]

Walgreens Is ‘Aware’ of CFO Being Charged with Second DUI in Just Over a Year

At this rate, Wade Miquelon is going to be at Billy Joel territory in no time:

Walgreen Co. Chief Financial Officer Wade Miquelon was arrested on suspicion of drunken driving last month, his second such arrest in a little more than a year, according to Kenilworth and Glencoe police.


Miquelon stonewalled officers when they requested a breathalyzer test which goes over well approximately 100% of the time. As for the past incident:

In Sept. 2009, he was stopped at 12:51 a.m. at Green Bay Road and Glencoe Drive and charged with speeding, improper lane usage, DUI and having alcohol in his system. In May, he accepted a one-year supervision for the latter offense, according to a Cook County District Court clerk.

“We’re aware of it,” said Walgreen’s spokesman Michael Polzin. “It’s a personal matter, and we don’t comment on personal matters.”

Are they also be aware that it’s relatively inexpensive to hire a full-time driver for a senior executive when you have profits of $2 billion? Just so, you know, no one gets killed.

Walgreens CFO charged for 2nd time with DUI [Chicago Breaking Business]

Mermaid Greeters, Awesome Party Favors Potentially at Risk as Tyco Names Outsider as New CFO

This past summer we learned that Tyco was still throwing epic parties, despite the best efforts of rank and file accountant Jeff Weist, who couldn’t fathom how scantily-clad mermaids, pirates, wenches, a tattoo artist, fire breather, among other things were legitimate business expenses.

Jeff claimed in a lawsuit that he was fired, more or less, for his integrity and trying to keep Tyco out of trouble, again.

Fast-forward to present day and Christopher Coughlin is retiring as Tyco’s CFO. Rather than promote someone from the inside, presumably letting the good times continue (tone at the top is everything, yo know), the company has appointed Eastman Kodak CFO Frank Sklarsky to take over effective December 1.


Now, if you’re a Tyco employee that happens to be on a regular on these legendary ragers, you’ve got to be concerned. Years of debauchery in exotic locales could be coming to an abrupt halt (right before the holidays!) if the transition doesn’t go right.

However, there is a ray of hope, “Coughlin, 58, who has been Tyco chief financial officer since 2005, will advise the company on some projects until his retirement in 2011.”

So it appears that Chris will have to explain “how we do things at Tyco” to Frank before he hangs it up. Judging by how things have gone at Kodak for the last few years, Sklarsky is probably thrilled to be out of there and maybe willing to play ball the Tyco way. Think of the mermaids, Frank.

Tyco Int’l hires CFO away from Kodak [Reuters]

Future CFOs, Partners Best Not Check Integrity at the Door

The following post is republished from AccountingWEB, a source of accounting news, information, tips, tools, resources and insight–everything you need to help you prosper and enjoy the accounting profession.

A strong moral compass can give high-potential managers a leg up the career ladder, according to the results of a recent survey.

One-third of chief financial officers (CFOs) interviewed said that, other than technical or functional expertise, integrity is what they look for most when grooming future leaders. Interpersonal and communication skills also ranked high, cited by 28 percent of respondents.

The survey was developed by Robert Half Management Resources, a provider of senior-level accounting and finance professionals on a project and interim basis. The survey was conducted by an independent research firm and includes responses from more than 1,400 CFOs from a stratified random sample of U.S. companies with 20 or more employees.


CFOs were asked, “Other than technical or functional expertise, which one of the following traits do you look for most when grooming future leaders at your organization?”

Their responses:
• Integrity – 33%
• Interpersonal/communication skills – 28%
• Initiative – 15%
• Ability to motivate others – 12%
• Business savvy – 10%
• Other/don’t know – 2%

“History has shown time and time again the importance of ethics in business – even a single lapse in judgment by one employee can significantly affect a company’s reputation and its bottom line,” said Paul McDonald, senior executive director of Robert Half Management Resources. “Leaders who are principled and forthright inspire this same behavior in their teams, creating a culture in which integrity is a core value.”

McDonald pointed out that communication skills also are requisite as executives take on greater responsibility.

“Especially during difficult periods, managers must be able to promote open, two-way communication with their teams,” McDonald said. “Executives in companies that have moved successfully through the downturn understand the importance of listening intently to feedback from employees and are always on the lookout for this skill in potential leaders.”

Universal Travel Group, Who Appears to Be ‘Partially a Fraud,’ Has Gone Through a Shocking Number of Auditors, CFOs

Yesterday, Henry Blodget wrote about Universal Travel Group’s auditor – Goldman Kurland Mohidin, LLP – quitting two weeks after Bronte Capital’s John Hempton issued a ress explained that the whole damn company was a fraud.

This, of course, resulted in a reactionary measure by UTA, who denied all the allegations immediately and announced that they were looking to sue Hempton because, seriously, who likes getting their feelings hurt?

So that’s the backstory. A little bird suggested to us that maybe we should look into the company’s past to see just how many auditors they’ve burned through and maybe check out how many CFOs they’ve gone through also. WELL!


Auditors
First we went back to the 10-K filed on March 31, 2008 and discovered that on June 23, 2006, the company dismissed Moore & Associates, Chartered:

On June 23, 2006, we dismissed the firm of Moore & Associates, Chartered (“Former Auditor”), which had served as our independent auditor until that date. The Former Auditor was our auditor prior to the acquisition of control of our Company by Xiao Jun.

On June 23, 2006, we retained Morgenstern, Svoboda & Baer, CPA’s, P.C. to serve as our principal independent accountant.

This seemed to be a pretty good call on UTA’s part since it turned out that Moore & Associates was issuing bogus audit reports. No cause for concern at this point.

The relationship with Morgenstern, Svoboda & Baer appeared to be going on swimmingly but ultimately, for reasons unbeknownst to all, it didn’t work out. MS&B resigned on June 30, 2009 to make way for Acqavella, Chiarelli, Shuster, Berkower & Co., LLP:

On June 30, 2009, our prior independent registered public accounting firm, Morgenstern, Svoboda & Baer CPA (“Morgenstern”) resigned and on the same day, we appointed Acqavella, Chiarelli, Shuster, Berkower & Co., LLP (“ACSB”) as our new independent registered public accounting firm.

Similar to their predecessors, ACSB & Co. was humming along just fine, getting ratified in the recent preliminary proxy statement filing until they were up and fired on September 1st:

On September 1, 2010, our current independent registered public accounting firm, Acqavella, Chiarelli, Shuster, Berkower & Co., LLP (“ACSB”), was dismissed and on the same day, we appointed Goldman Kurland Mohidin (“GKM”) as our new independent registered public accounting firm.

Anyone weirded out yet? Does appointing a new auditor the same day that the previous quit strike anyone as panicky? Maybe that’s just us. Anyway, so GKM spends four weeks on the job until:

On September 29, 2010, we received a letter dated September 28, 2010 from our current independent registered public accounting firm, Goldman Kurland Mohidin, LLP (“GKM”), informing us that they had resigned as our independent registered public accounting firm effective with the commencement of business on September 27, 2010. No reason was given as to the cause for their resignation.

Windes & McClaughry Accountancy Corporation is new auditor and has not quit at the time at the time of this writing. They way things seem to be picking up, however, it could be any minute. So for those of you not counting, that makes five different auditors going back to June 23, 2006. Probably not a record but it certainly puts the auditor musical chairs at Overstock.com to shame.

CFOs
The CFO situation is less exciting but there’s enough going on that should make any investor run screaming for the hills. Xin Zhang was appointed CFO as of July 12, 2006. After an eternity (by UTA standards anyway), on February 17, 2009, UTA appointed 27 year-old Jing Xie as CFO. Now maybe this Jing is a financial wizard but this seems, at best, fishy.

Xie lasted exactly six months, resigning on August 17th and Yizhao Zhang was appointed to the big chair the same day, again because there was no time to waste.

Yizhao was on quite a roll but then he resigned on August 16th for “personal reasons” (freaked the hell out?) and the company promoted the crafty veteran Xie back to his old position (on an interim basis). This rivals the CFO shuffle that was going on at Lehman.

So quite the riddle. Quite the riddle indeed. Maybe Hempton and Blodget are on to something with this whole “it’s a complete sham” notion. Or maybe UTA is just a bunch of jerks. Theories are welcome at this time.

Auditor Quits At Universal Travel Group (UTA) — The NYSE-Listed Company That Looks Like A Fraud [BI]

Accounting News Roundup: SEC at “Bottom of the Barrel” When it Comes to Diversity; More on Competition (or Lack Thereof) in the Audit Market; Define “Rich” | 10.01.10

SEC Plans to Hire More Women and Minorities Amidst Poor Rankings [FINS]
“At a recent panel discussion and networking event at the agency, Commissioner Luis Aguilar spoke about the need to hire ‘the best and brightest,’ while acknowledging that in the past it hasn’t done a good job of recruiting women and minorities.

In his speech, Aguilar said that as of FY 2009, 89% of the SEC’s senior officers were white, 4% African-American, 3% Hispanic and 2% Asian. Along gender lines, 67% of the officers were male and 33% were female.

Moreover, in a recent survey published by the Partnership for Public Service, the SEC fell from 11th to 24th place on a list of the ‘Best Places to Work’ rankings. With regard to diversity, the SEC ranked 24th out of 28 agencies when it came to diversity. In other words, the bottom of the barrel.”

PCAOB Fires Shot on Audit Issues, Calls for Enforcement [Compliance Week]
“The Public Company Accounting Oversight Board has published a report summarizing its observations after inspecting audits performed while credit market seized and the economy plunged into depression. The report says auditors generally didn’t adhere adequately to PCAOB standards when it came to some of the toughest areas in financial reporting through the credit crisis – namely fair value measurements, goodwill impairments, indefinite-lived intangible assets and other long-lived assets, allowances for loan losses, off-balance-sheet structures, revenue recognition, inventory and income taxes.”

Viacom Names New CFO [WSJ]
Controller James Barge succeeds Tom Dooley who jumped over to the COO seat.

Accounting niches [AccMan]
Are accountants doing enough to leverage their professional expertise?

Investors unhappy with lack of competition in audit market [Accountancy Age]
“The Association Of British Insurers (ABI), whose members account for almost 15 per cent of investments in the London stock market, is worried about the audit structure and said it has made its views known in a submission to a House of Lords inquiry into audit competition.”


H&R Block sees 5-cent hit from IRS policy change [AP]
Fewer rapid refunds doesn’t seem like a bad thing.

KPMG’s Fuzzy Math on Atlantic Yards [NYO]
The completion of the Atlantic Yards project remains on a timetable that runs parallel to the adoption of IFRS in the United States.

Tax the rich, whoever they are [Don’t Mess with Taxes]
Come out with your hands up!

Accounting News Roundup: AIG Rolls Out Repayment Plan; Wal-Mart Names New CFO; IRS Files Lien Against Sharpton | 09.30.10

AIG to Convert Preferred Shares Into Common to Repay U.S. [Bloomberg]
“American International Group Inc. agreed with U.S. regulators to repay its bailout by converting the government’s holdings into common shares for sale, a step toward independence for the insurer whose near collapse two years ago threatened the global economy.

The U.S. Treasury Department will convert its preferred stake of about $49.1 billion for 1.66 billion shares of common stock and then sell the holdings in the open market, AIG said today in a statement. Common shareholders, who hold about 20 percent of the company, will have their stake dilutent, the insurer said. Those investors will receive as many as 75 million warrants with a strike price of $45.”

Spain loses AAA status, stands firm on austerity [Reuters]
“Spain lost its final top-line debt rating on Thursday as the government sought backing from lawmakers for a budget it hopes will be austere enough to convince markets it can slash the deficit at a time of economic weakness.

Moody’s become the third and last rating agency to cut Spain out of the highest AAA category which has helped it finance its debt relatively cheaply. The one-notch cut had been expected and the agency said it hoped not to have to cut again soon, bolstering Spanish debt markets.

But the agency also said a poor growth outlook meant Madrid would have to take further steps to meet its deficit targets in years to come. The Bank of Spain said a sluggish recovery would slow further in the third quarter.”

IASB head knows all about cross-channel frictions [FT]
“In a decade spent overseeing international accounting standards, Sir David Tweedie has become an amateur student of French psychology.

The Scot has locked horns with France several times as head of the International Accounting Standards Board, the body that sets the International Financial Reporting Standards rules followed in the European Union and other countries.

His fascination for his adversary is such that he recently thrust into my hands an academic paper entitled “France and the ‘Anglo-Saxon’ Model: Contemporary and Historical Perspectives”. The article explores the hostility often felt in France towards the British and American way of doing business.”

McDonald’s May Drop Health Plan [WSJ]
“While many restaurants don’t offer health coverage, McDonald’s provides mini-med plans for workers at 10,500 U.S. locations, most of them franchised. A single worker can pay $14 a week for a plan that caps annual benefits at $2,000, or about $32 a week to get coverage up to $10,000 a year.

Last week, a senior McDonald’s official informed the Department of Health and Human Services that the restaurant chain’s insurer won’t meet a 2011 requirement to spend at least 80% to 85% of its premium revenue on medical care.”


Wal-Mart picks successor to longtime CFO [Reuters]
“Wal-Mart Stores Inc (WMT.N) named Charles Holley to succeed Chief Financial Officer Tom Schoewe, who will retire on November 30.

The world’s biggest retailer said on Wednesday that Schoewe, 57, will stay at Wal-Mart until January 31 to help with the transition.

Holley, 54, joined Wal-Mart in 1994 and is treasurer and executive vice president of finance.

Those credentials should make him a capable CFO, said Wall Street Strategies analyst Brian Sozzi, though Wall Street could view the transition negatively since it adds uncertainty.”

All We Are Saying Is Give Dick Fuld a Chance [Jonathan Weil/Bloomberg]
Names being floated to replace Larry Summers as the National Economic Council include Citigroup Chairman Dick Parsons and Xerox CEO Anne Mulcahy. Jonathan Weil sees where Obama is going with this:

“There’s much we can learn about the kind of person the president is looking for by studying these two contenders’ credentials. In addition to CEO chops, it seems Obama is seeking someone who also has served on the board of directors of at least one company that either had a massive accounting scandal, blew up so spectacularly that it threatened to take down the global financial system, or both.”

…and doesn’t think he’s aiming high enough. He has some of his own suggestions.

Memo to Media Departments: Here Are Three Ways to Make My Job Easier – rebuttal [AccMan]
Dennis Howlett’s rebuttal to Adrienne’s plea to PR types.

Sharpton faced with fresh tax woe [Tax Watchdog]
The Rev. owes around $538k to the IRS for 2009. His lawyer is a tad confused by the whole thing and says everything will paid up by Oct. 15th.

Wendy’s/Arby’s CFO: Killing Cows and Pigs Isn’t as Profitable as It Used to Be

This is especially troublesome for the House that Dave Thomas partially built because eating more produce isn’t an option for most Americans.

Higher costs for commodities like beef and bacon will take a bite out of margins at Wendy’s/Arby’s Group (WEN.N) in the second half of 2010, an executive for the No. 3 U.S. fast-food chain said on Tuesday.

“Beef and bacon are two commodities that have been troublesome to us in this current environment,” Steve Hare, Wendy’s/Arby’s chief financial officer, said at an investor conference.

Beef, bacon to bite margins at Wendy’s/Arby’s: CFO [Reuters]

Accounting News Roundup: ‘Won’t Somebody Think of the Small Businesses?!?’; Facebook’s New Arbitrary IPO Date; Debunking The ‘Failure’ of Bush Tax Cuts | 09.28.10

Analyzing the Small-Business Tax Hysteria [You’re the Boss/NYT]
“The rhetoric on this subject has become counterproductive. It can’t be helping consumer confidence, and it’s certainly not creating any jobs. In what used to be a running joke on ‘The Simpsons,’ whenever trouble arose, Reverend Lovejoy’s wife would shriek, ‘Won’t somebody please think of the children?!!!’ The emerging counterpart to that cry in our real-life politics seems to be, ‘Won’t somebody please think of the small businesses!’ ”

AOL in Talks to Buy TechCrunch [WSJ]
“A deal would mark a high-profile marriage between the Internet giant and one of Silicon Valley’s most high-profile blogs, which has often been discussed as a possible acquisition target.

It would also be the latest in a series of alliances between content and Internet companies, which are seeking to draw more users and advertisers by pumping out inexpensive articles on popular topics like fashion, news and sports.”

Facebook IPO likely after late 2012: board member [Reuters]
“Facebook, the world’s largest online social network, is likely to go public sometime after late 2012, a board member said, satisfying investors’ appetite for a slice of one of the Internet’s biggest growth stories.

A stock market debut by a company valued in the tens of billions of dollars would be one of the most highly anticipated initial public offerings of the decade.

But Facebook board member, venture capitalist and PayPal co-founder Peter Thiel stressed on Monday that will not happen until after late 2012, and would depend on the company hitting certain revenue targets and how its business model develops.”

Auditors Aren’t Forcing Full Repurchase Risk Exposure Disclosure [Re:The Auditors]
Auditors looking the other way for their banking clients. Again.

BlackBerry Maker RIM Enters Tablet Scrum [WSJ]
“RIM Co-Chief Executive Mike Lazaridis on Monday showed the device, dubbed the PlayBook, at a conference for BlackBerry developers in San Francisco. The PlayBook has a seven-inch touch screen and high-definition cameras on the front and back sides, but the device won’t connect directly to cellular networks.

RIM said its tablet won’t go on sale until early next year in the U.S. and the second quarter elsewhere in the world, meaning it will miss the key holiday season. The timing also puts RIM behind iPad competitors from Samsung Electronics Co., Dell Inc. and others.”


IRS won’t be mailing tax forms next year [AP]
They’re saving $10 million a year, presumably on stamps and envelopes.

News Corp. SVP Kevin Halpin named Dow Jones CFO [AP]
Kevin Halpin is taking the reins from Stephen Daintith.

Correlation Proves Causation, David Cay Johnston Edition [Tax Foundation]
“I agree with Johnston that tax cuts are not the correct response to every economic situation, and I do not believe that letting the Bush tax cuts expire would cause an economic armageddon. If the federal government’s proclivity for deficit spending can’t be curbed by reducing tax revenue – the ‘starve-the-beast’ approach – then permanently extending the Bush tax cuts for any and all taxpayers is a worse policy than letting the cuts expire because the country will drive off the fiscal cliff even sooner.”

It Appears That Albany International Fired Their CFO Because They Felt Like It

Michael Burke need not worry. David Paterson will be unemployed soon enough.

Albany International (NYSE: AIN) announced on Sept. 23 that it terminated CFO Michael Burke without cause. Burke was also senior vice president at the manufacturing company headquartered in Menands, New York.

Albany International’s board of directors tapped John Cozzolino to serve as acting CFO. Cozzolino is a vice president overseeing strategic planning.

The moves are effective immediately. Albany International would not say why Burke was fired.

“There were absolutely no ethical, legal, accounting or personal issues involved,” said Susan Siegel, a company spokeswoman.

Just a board of directors channeling a little bit of Steinbrenner.

Albany Int’l Corp. CFO terminated [The Business Review]

Time Warner CFO Gives Shocking Assessment of the Print Ad Market

In case you haven’t been paying attention for the past, say, 5-10 years:

Time Warner Inc. (TWX) Chief Financial Officer John Martin said Thursday that the television advertising market is “really strong,” while the print advertising market is “okay–but not really robust.”


Not to worry though, there are no signs that things are getting worse.

Meanwhile, he said the company’s publishing arm, Time Inc.–which he called “the most secularly challenged part of our company”–faces difficult comparisons in the second half of this year, though he added that he didn’t see any slowdown ahead.

The magazine business was pummeled by the recent economic downturn at a time when it was already declining due to the rise of digital media.

Time Warner CFO: TV Ad Market `Really Strong,’ Print Less So [Dow Jones]

Accounting News Roundup: The End of Summers; KPMG Adds More Restructuring Talent; Back to Basics | 09.22.10

Summers exit lets Obama retool team and message [Reuters]
“The departure of economic adviser Larry Summers opens the way for President Barack Obama to shake up leadership of his economic team and show he is taking seriously growing public frustration over the sluggish economic recovery.

Whoever replaces Summers ions constrained by a record $1.47 trillion budget deficit and the possible Democratic loss of control of the House of Representatives in November 2 congressional elections.”

The Obama Tax Plan: Who’s in the Crosshairs? [TaxVox]
“President Obama’s plan to raise taxes on the nation’s highest income households may not quite mean what you think. A closer look suggests that fewer people may get whacked than either Obama or his Republican critics suggest. And for many of the victims, the club won’t be the president’s plan to raise rates to 36 percent and 39.6 percent. Those rate hikes may be getting most of the attention, but the real cudgel would be higher taxes on capital gains and dividends going to high-earners.”

H&R Block Announces New Chief Financial Officer [MarketWatch]
“H&R Block (HRB 12.82, -0.08, -0.62%) announced today the appointment of Jeff Brown as chief financial officer. Brown has been the company’s interim CFO for the past five months. As an eight-year veteran of H&R Block, Brown has played an important role in a variety of financial functions.

‘I am very pleased with the leadership Jeff has provided me and the organization in his interim role,; said Alan Bennett, H&R Block’s president and chief executive officer. ‘Jeff has all the talent and personal characteristics needed to be highly successful as the permanent CFO. He has earned my full confidence, as well as that of the board of directors.’

Most recently, Brown served as H&R Block’s corporate controller. Prior to that, he was the corporate controller and vice president of finance (Americas) at Bacou-Dalloz, now Sperian Protection, and served in key positions at KPMG. Brown has a business administration degree from the University of Nebraska and is a certified public accountant.”


Sentencing of Petters’ accountant is postponed [Minneapolis Star-Tribune]
“Tuesday’s scheduled sentencing of James Wehmhoff, the accountant who helped Tom Petters file false tax returns, has been postponed until sometime in October. The postponement was ordered by U.S. District Judge Richard Kyle at his own behest.

Wehmhoff faces a prison sentence of between 70 and 80 months on tax charges, but federal prosecutors have asked Kyle to consider Wehmhoff’s cooperation in the Petters investigation and his previously “unblemished” career before he hooked up with Petters Group Worldwide. The government also noted that Wehmhoff was not part of the $3.65 billion Ponzi scheme that Petters and others orchestrated for more than 10 years.”

KPMG Continues to Add Restructuring Talent With Appointments of Tony Murphy, Tom Bibby [PR Newswire]
The House of Klynveld must be counting on more companies falling prey to their massive debt loads with the appointment of Tony and Tommy who both have “proven track records” as restructuring professionals.

Accounting Basics: A Guest Post From Robert B. Walker [Re:The Auditors]
“[New Zealand] follows an American model in which people who are to become accountants are ‘educated’ in Universities. There is minimal emphasis on double entry. Most of the courses are dedicated to theory, bullshit sociology, complex management accounting, auditing and so on. None of this makes any sense to a student if they first do not know the basics of accounting and that can only be gained by actually practicing the discipline.”

Comparing the Ethics Codes: AICPA and IFAC [JofA]
“Sharp increases in the number of multinational audits being performed by U.S. accounting firms means that more CPAs are performing services under the International Federation of Accountants (IFAC) audit and attest standards. Although auditors must comply with the specific standards adopted in each jurisdiction, familiarity with IFAC’s International Ethics Standards Board for Accountants (IESBA) Code of Ethics for Professional Accountants (IESBA Code) in addition to the AICPA Code of Professional Conduct (AICPA Code) is a critical first step. When specifications differ, members should comply with the more restrictive of the applicable standards.”

Sign of the Times: CFOs Living on Franks and Beans

Or ones that soon will be:


Look at the bright side, you were on the front page of the Post!

[via Gawker]

NFL CFO Sick of Working for a Shrewd, Egotistical Organization; Returning to Goldman Sachs

Two years working for Roger Goodell must have been pure hell, compared to reporting to Lloyd.

Chief Financial Officer Anthony Noto is leaving the NFL after two years to return to Goldman Sachs.


Tony will be slumming it in IBD as the co-head of the Global Media Group. The NFL is cool with it though; they understand that not everyone is cut out for the big leagues. The good news is they’ve still got a Team Jehovah alum heading up the Finance Department:

The league said Monday that Eric Grubman will oversee the finance group at least until the end of collective bargaining negotiations with the NFL Players Association. Grubman is executive vice president of business operations and led the league’s finance operations when he joined the NFL in 2004.

NFL CFO Anthony Noto returning to Goldman Sachs [AP]

The Path to CFO: Is the CMA Credential Just as Important as the CPA?

Many of you soldiering in public accounting have aspirations of one day achieving the pinnacle of many a numbers junkie’s career – Chief Financial Officer. You may think that becoming a CFO will mean hobnobbing with other C-suiters, first-class flights and access to exclusive swing joints but in all likelihood, it will consist of long hours, political maneuvering and maybe burning a few bridges.

While there are many paths to ascending to such a heralded position, one has to wonder if the skill set obtained in public accounting will really prepare you for all the demands and headaches that will inevitably come with a CFO position.

Because so many accounting grads get their start in public accounting, one ofobtaining the CPA credential. There’s no question that obtaining your CPA is a must for anyone that intends on spending a significant portion of their career in public accounting and little debate about the advantage of having those three letters on your résumé when you start looking outside public.

Tthe timing of that move may determine what kind of path you have ahead of you in order to land that coveted CFO gig. If you manage to stick out life in public until partner or in some cases the director or senior manager level the path is more clear. You may jump right into it immediately or you assume a position that reports to the current CFO and be groomed to assume the big chair at the appropriate time.

But what if you’re just starting your career and you’re fed up with public already? Or what if you’ve gotten laid off and you took a job in private. Are your dreams crushed at this point? What’s a wannabe CFO to do?

Speaking with John Kogan, CEO of Proformative, an online resource for finance, accounting and treasury professionals, obtaining the Certified Management Accountant credential is something that often gets overlooked.


“It’s the Rodney Dangerfield of finance certifications,” John told GC, “it doesn’t get enough respect.” The argument for today’s CFOs to have a CPA are being made and statistics have shown that more and more CFOs are, in fact, CPAs. The most recent data we can find shows that in 2009, 45% of Fortune 1000 CFOs were CPAs, up from 29% in 2003.

However, the viewpoint of “Warren Miller” in the comments of Francine McKenna’s guest post at FEI Blog on the subject, is that accountants usually make terrible CFOs:

[A]ccountants tend to make lousy CFOs because (a) they see everything as an accounting problem, (b) their ignorance of finance AND of human nature (where incentives are concerned) can be breathtaking, (c) they look backwards, and (d) they are conflict-avoiders. If accountants wanted to deal with the ambiguity of the future, they’d have never become bean-counters.

In addition, most accountants LOVE “rules.” They avoid conflict by hiding behind rules. They are go-along/get-along people. I’m fond of saying this: “If accountants had been running our country in 1776, we’d still be working for the King.”

So if the gamut of accountants are ignorant about finance matters, does the CMA provide a bridge to closing that knowledge gap? John Kogan thinks so, “The CMA designation wants to be the ‘CPA’ for finance professionals,” he said, “but it’s so far from being that.”

When you look at the two sections of the CMA exam on the Institute of Management Accountant’s website, you certainly get the impression that the CMA could be the “CPA for finance professionals” based on the curriculum:

PART I – Financial Planning, Performance and Control
• Planning, budgeting, and forecasting
• Performance management
• Cost management
• Internal controls
• Professional ethics

PART II – Financial Decision Making
• Financial statement analysis
• Corporate finance
• Decision analysis and risk management
• Investment decisions
• Professional ethics

So why isn’t the CMA a more coveted credential? John Kogan claims it’s due to poor marketing on the IMA’s part, “The CMA [credential] has similar requirements, not identical but similar, and they don’t enjoy the reputation of the CPA,” John said. “The CMA is getting its butt kicked because it doesn’t market itself well.”

You can easily make the argument that the AICPA has the distinct advantage of partnering with the Big 4 – firms that’s primary purpose is to serve as CPAs – on marketing and promotional efforts while the IMA has no apparent equivalent.

That being said, our recent conversation with IMA Chair Sandra Richtermeyer shed some light on the careers that are available for accountants moving into a financial role that the CMA designation complements well. She was of the notion that the CMA is simply not about cost accounting and John Kogan agrees, “I think anyone who knows anything about [the CMA] knows that the [designation] is broader than that, it’s just that very few people know what the heck it’s about,” he said. “Without a doubt, the skills that the IMA are teaching and certifying are corporate finance skills.”

If you consider yourself to be on the path to CFO Rockstar, maybe you have the CPA locked up but what’s next? Having the CPA credential may make you an attractive candidate on paper but it’s won’t guarantee success with the wide range of knowledge that CFOs need. So, while it may not hold a candle to the CPA in terms of prestige, the skills and knowledge that fall under the CMA are essential for any successful CFO.

The Kansas City Chiefs Figured It Was About Time They Hired a CFO

You figure someone has to determine whether or not the Hunt Family should vote to lock the players out next year.

The Kansas City Chiefs have hired Dan Crumb as their chief financial officer, the team reported Friday.


Plus, dude is a CPA so we like the move. The real question is, are the Chefs for real?

Crumb has a bachelor’s in finance from the University of New Orleans and an MBA from Tulane University. He is a certified public accountant and a member of the American Institution of Certified Public Accountants.

The Chiefs did not have a CFO before Crumb’s appointment. Crumb’s hiring comes two days after the Chiefs announced that Denny Thum had stepped down as president and that Chairman Clark Hunt had taken the title of CEO.

“Dan has a proven track record of success as a financial officer, and his leadership and experience make him a key addition to our business operations,” Hunt said in a release.

Kansas City Chiefs add a new CFO to executive roster [Kansas City Business Journal]

Halliburton CFO Can’t Speak for Anyone Else, But His Company Is Going to Be Just Fine

The demand for fossil fuels remains high; can you believe it?

Halliburton Co. (HAL) remains bullish on the recovery of its oil services business, which was hit hard last year by the economic downturn, Chief Financial Officer Mark McCollum said Thursday.

“We continue to be very bullish about the recovery itself,” McCollum said in a webcast presentation to investors. The company is seeing increases in the pricing of contracts in North America, where activity in the third quarter “remains high.” The North American market “continues to do very well,” he said.

You people with poor attitudes really aren’t helping matters.

Halliburton CFO: Still Bullish About Economic Recovery [Dow Jones]

Time Warner Cable CFO Pretty Frank About How Crappy Things Look

That, or Robert Marcus needs a little training in positive spin:

The environment for cable television subscribers is “very, very weak,” according to Time Warner Cable Inc. (TWC) Chief Financial Officer Robert Marcus, and the company may actually see the total number of subscribers to its television, Internet and telephone services shrink during the current quarter.

The statement, made Wednesday at a Bank of America Merrill Lynch conference in California, caused Time Warner Cable stock to lose as much as 5.3% in Wednesday afternoon trading immediately after Marcus delivered his opening remarks.

Marcus said August saw the “usual uptick in subscriber performance,” as children went back to college, but unemployment, high vacancy rates in housing and “really anemic new home formation” are “resulting in some pretty weak subscriber numbers.”

Time Warner Cable Stock Sinks After CFO’s Downbeat Remarks [Dow Jones]

CFOs Want Tech Investments to Pay Off…Stat!

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

CFOs and CIOs have very different priorities when it comes to IT spending, and that dichotomy is not likely to change any time soon, even as IT budgets are starting to once again increase.

After being slashed to almost nil during the height of the crisis for many corporations across sector and size, IT budgets are beginning to rise.

But CFOs are keeping a keen eye on where that money is going and still expect a relatively swift return on investment (ROI) in order to consider anything beyond maintenance and upgrades.


They want to clearly see that ROI—whether it be through qualitative measures, like better compliance or improved risk management, or through quantitative measures like reductions in days sales outstanding (DSO) or decreased cost-per-check.

As Craig Himmelberger at SAP said in a recent interview I did for Global Finance magazine: “People don’t want to rip and replace systems that are still functioning well, so a lot of the investments we see now are incremental.”

This IT budget allocation is likely to continue for the near future, at any rate, regardless of what CIOs may want. However, there does have to be a balance. At some point when liquidity risk fears begin to subside, CFOs will once again be more open to their CIOs’ suggestions for IT spending.

And what CIOs want to see is more spend on innovation, as Ellen Pearlman noted in her blog on CIOZone.com last month.

She quoted CXO Art Sedighi as saying: “In the current time and environment, the biggest challenge is [to] convince upper management to open up their wallets again after almost 3 years. The IT staff has been pulling things together with nothing short of band-aids since 2008, and things are about [to] fall apart. All management sees is the fact that spending was down, and they survived.”

Pearlman points out that while most execs believe that IT innovation is important, companies have consistently slashed spend on innovation over the past decade. In an AT Kearney study, executives cited IT innovation spend of 30 percent in 1999, compared with just 14 percent by 2009.

In the study, 45 percent of IT budget went to improving operations and 41 percent went to business enablement/process improvement. Most respondents felt that 24 percent of the IT budget should be directed towards innovation.

The current budget split certainly meshes with the continued corporate focus on driving down costs across the working capital chain. Indeed, it may be quite some time before CIOs get their dream IT allocation.

Accounting News Roundup: GOP Senators Not Caving on Tax Cuts; NY Court of Appeals Hears In Pari Delicto Cases; Convicted Ex-PwC Employee Loses Case to Get MBA Back | 09.14.10

~ Good morning capital market servants. It’s Dan Braddock’s favorite day of the week. Just another reminder that we’ll be on a lighter posting schedule today as TPTB continue to interrogate us about our lack of influence. We’ll pop in from time to time today to make sure everyone is playing nice and be back to a full schedule tomorrow.

A Career in Accounting [WSJ]
“[W]hile jobs dried up during the economic crisis, hiring in accounting wasn’t hit as hard, and cutbacks have created a need for more hiring as the econmy Thompson, the U.S. campus recruiting leader at PricewaterhouseCoopers. She’ll be hiring 3,000 people this year, up from 2,600 last year.”

Does Anyone Really Want to Be an Accountant? A Tailgate Survey [Re:Balance]
Jim Peterson articulates two time-honored traditions: college football and accounting. The former’s popularity is never in question but Jim talked to some young tailgaters that might make you doubt the substantive popularity of the latter.

Senate Republicans firm on tax cuts for rich [Reuters]
“Republicans in the U.S. Senate poured cold water on Monday on hopes for a compromise with President Barack Obama that would have allowed Bush-era tax cuts for the wealthiest Americans to expire.

Taxes have become a flashpoint going into a November 2 election in which Republicans are seeking to wrest control of Congress from the president’s fellow Democrats. Obama says the cost of keeping the tax cuts for the rich is too high as the United States emerges from recession with a massive budget deficit.”

AIG Plots End to U.S. Aid [WSJ]
“American International Group Inc. and its government overseers are in talks to speed up an exit plan designed to repay U.S. taxpayers in full while enabling the giant insurer to regain independence, according to people familiar with the matter.

Under the plan, which could commence as early as the first half of 2011, the Treasury Department is likely to convert $49 billion in AIG preferred shares it holds into common shares, a move that could bring the government’s ownership stake in AIG to above 90%, from 79.8% currently, the people familiar said. The common shares would then be gradually sold off to private investors, a move that would reduce U.S. ownership and potentially earn the government a profit if the shares rise in value.”

Auditors Anticipate NY Ruling on Malpractice Exposure [Compliance Week]
“A group of investors in the reinsurance firm American International Group are suing the company’s audit firm, PricewaterhouseCoopers, for failing to detect a long-running bid-rigging and accounting fraud scheme at AIG. PwC won a dismissal of the suit contending AIG shared blame because it was AIG employees who carried out the fraud that PwC failed to identify, a common defense for audit firms against shareholder claims.

The investor group, led by the Teachers Retirement System of Louisiana and the City of New Orleans Employees’ Retirement System, appealed the dismissal and will have their day in the New York Court of Appeals this week. A Delaware appeals court handed the case over to the New York Appeals court, saying ‘a resolution of this appeal depends on significant and unsettled questions of New York law.’ ”


Seeking An Equitable Outcome: NY State Court of Appeals Hears In Pari Delicto Cases [RTA]
Francine McKenna’s take on the case above.

Verizon Finance Chief Joh Killian Announces Plan to Retire After 31 Years [Bloomberg]
Get your résumé in now.

So Then I Guess Accounting Is Mostly Influenced By Middle-Aged White Dudes? [JDA]
“I’m on a roll with offending people lately so let’s just take this all the way and pull the diversity card, specifically when it comes to Accounting Today’s recent list of 100 Most Influential in accounting.

OK so some faces were predictable and totally warranted; soon-to-be-former FASB Chairman Bob Herz (we’re talking about influence in the profession, not sexiest), GASB Chairman Robert Attmore, PwC Chairman Dennis Nally, IRS Commissioner Doug Shulman… you get the idea. No, I mean you really get the idea, as the rest of the list is comprised of middle-aged white guys too except for 13 women and 3 1/2 black men (Barack Obama counts as .5 if we’re looking at this in a strictly statistical way). Yeah, we noticed.”

Convicted Accountant Loses Legal Bid for MBA Degree [BusinessWeek]
“A certified public accountant who hid his conviction for insider trading from his teachers at New York University’s graduate business school wasn’t entitled to the MBA degree that he thought he earned, a judge ruled.

In February 2007, three months after completing his course work at NYU’s Stern School of Business, Ayal Rosenthal pleaded guilty to charges that he leaked to his brother secret tips that he learned at his job at PricewaterhouseCoopers LLP. Rosenthal never told the school about the investigation of him or his guilty plea, even while serving as a teaching assistant in a professional responsibility course, according to a court ruling.”

Accounting News Roundup: GM’s Magic Goodwill; IRAs Under Attack By IRS; Grant Thornton Names Non-exec Directors in UK | 09.09.10

Home Buyer Tax Credit Price Tag: $22 Billion [WSJ]
“The total estimated cost of the home buyer tax credits is about $22 billion, according to a report released by the Government Accountability Office last week. The report looked at all three of the tax credits, which were in effect from April 2008 through June 30, 2010.

As we’ve written, the credits did a lot to juice sales. But many have argued that the government incentives basically pulled folks who were already planningto the market earlier. And certainly, we’ve been seeing the post-credit hangover: Home resales dropped to record lows in July. Talk of a housing double-dip is in the air.”

How GM Made $30 Billion Appear From Thin Air [Jonathan Weil/Bloomberg]
General Motors somehow ended up with $30 billion in goodwill on their balance sheet that was on their recent registration statement. Funny thing – the company only has equity of $23.9 billion. Another funny thing – the company said that the goodwill number would have been less if they were a better credit risk.

But don’t worry, apparently this is all in accordance with fresh-start accounting.

Bringing the US on board [Accountancy Age]
“Sir David is a realist – the two accounting codes will never match. ‘There’s absolutely no way [international standards] can converge with US GAAP – you can’t converge two and a half thousand pages with seventeen and a half thousand. There are going to be differences,’ he said.”

The New Threat To Your IRA: An IRS Crackdown [Forbes]
“After years of haphazard enforcement, the Internal Revenue Service is starting to systematically search out violations of the convoluted rules governing individual retirement accounts. There’s a lot at stake. Americans hold $4.3 trillion in IRAS, and the cost of even innocent mistakes can be steep; if you miss taking a required payout from your IRA, Uncle Sam will demand half of the amount you forgot to take as a penalty.

The IRS was prodded to act by the Treasury Inspector General for Tax Administration. In a report earlier this year it concluded that IRA violations have been growing and estimated that more than half a million taxpayers either missed required payouts or contributed more than allowed to IRAS during 2006 and 2007.”


Grant Thornton responds to non-executive code [FT]
“Grant Thornton has become the first major UK auditor to respond to new governance rules by announcing the appointment of independent non-executive directors to help oversee its business.

The accountant’s UK arm said on Wednesday that it had recruited Richard Eyre, a media industry veteran, Caroline Goodall, a lawyer, and Ed Warner, the head of the governing body for UK athletics, to fill the posts.”

Thomson Reuters Releases First iPhone(R) App for Tax and Accounting Professionals [PR Newswire]
“The Tax & Accounting business of Thomson Reuters is pleased to announce the release of Mobile CS, a first-of-its-kind iPhone app for tax and accounting professionals. Using advanced mobile application technology, this comprehensive practice management tool extends the reach of Practice CS(R) from desktop to iPhone, giving more than 60,000 Practice CS users the ability to access key firm, staff, and client data anytime, anywhere.”

Glaxo Taps Goldman Deal Maker as Finance Chief [WSJ]
“GlaxoSmithKline PLC Wednesday chose Simon Dingemans, a Goldman Sachs Group Inc. deal maker, to be its next chief financial officer but said the choice won’t change its cautious approach to mergers and acquisitions.

Mr. Dingemans, 47 years old, will succeed Julian Heslop, who will retire from the post at the end of March. Mr. Dingemans has advised Glaxo on an ad-hoc basis over the years and is currently managing director and partner with Goldman Sachs in London. He joins the U.K.’s biggest drug maker as chief financial officer designate and executive director from Jan. 4, 2011. He most recently worked with Glaxo to establish ViiV Healthcare, GlaxoSmithKline and Pfizer Inc.’s joint venture for AIDS drugs.”

Gun-slinging accountant loses Chapter 7 battle [South Florida Business Journal]
“Jay Levin, a Boca Raton accountant who shot and killed a teenager in 2003, has lost his battle to erase a $750,000 judgment related to the shooting.

Levin shot Mark Drewes, his 16-year-old neighbor, in the back after the teen rang Levin’s doorbell in a “ding-dong-ditch” prank one night, according to motions in Levin’s Chapter 7 bankruptcy case.

Levin had filed the bankruptcy in February, alleging he couldn’t pay the $750,000 judgment from a 2007 civil lawsuit Drewes’ parents had filed against him. Levin paid $102,260 of the judgment, but still owes the remainder”

Accounting News Roundup: Obama Opposes Deal on Tax Cuts for Wealthy; Former Advatech CFO Sentenced; Citrin Cooperman One of Inc. Magazine’s Fastest-Growing | 09.08.10

Obama Against a Compromise on Extension of Bush Tax Cuts [NYT]
“President Obama on Wednesday will make clear that he opposes any compromise that would extend the Bush-era tax cuts for the wealthy beyond this year, officials said, adding a populist twist to an election-season economic package that is otherwise designed to entice support from big businesses and their Republican allies.

Mr. Obama’s opposition to allowing the high-end tax cuts to remain in place for even another year or two would be the signal many Congressional Democrats have been awaiting as they prepare for a showdown with Republicans on the issue and ends speculation that thee open to an extension. Democrats say only the president can rally wavering lawmakers who, amid the party’s weakened poll numbers, feel increasingly vulnerable to Republican attacks if they let the top rates lapse at the end of this year as scheduled.”

Oracle CEO Rails Against H-P For Mark Hurd Lawsuit [Dow Jones]
Were the HP board membersnot aware that Larry Ellison does what he wants? Oh and that’s he’s filthy rich and will buy all of their homes and their families’ homes and burn them to the ground if you dare cross him?

“Oracle Corp. (ORCL) Chief Executive Larry Ellison issued on Tuesday a strongly worded criticism of Hewlett-Packard Co. (HPQ) and its lawsuit against H-P’s former Chief Executive Mark Hurd, suggesting that Oracle might discontinue its 25-year partnership with H-P.

‘Oracle has long viewed H-P as an important partner,’ said Oracle CEO Larry Ellison in a statement. ‘The H-P board is acting with utter disregard for that partnership, our joint customers, and their own shareholders and employees. The H-P Board is making it virtually impossible for Oracle and H-P to continue to cooperate and work together in the IT marketplace.’ ”

Six Flags Entertainment Corporation Announces John Duffey to Join Company as Chief Financial Officer and Lance Balk to Serve as General Counsel [PR Newswire]
Despite rumors that Duffey is scared to death of roller coasters, he assumes the big chair.

Former Advatech CFO Sentenced To 51 Months In Prison [Dow Jones]
“Richard Margulies, 59, was convicted of a June 2008 scheme that involved hiring two individuals to make “manipulative” purchases in the company’s stock in exchange for illegal kickbacks. He provided the two with shareholder lists, confidential information and non-public press releases to help slowly drive up the share price.

Soon after, Margulies was investigated by the Securities and Exchange Commission. He was indicted in December 2008 on charges that included conspiracy and securities fraud. Margulies pleaded guilty.

The court found he intended to cause $2.5 million to $7 million in losses as a result of his actions.”


Deloitte Becomes a Thomson Reuters Certified Implementer [PR Newswire]
Apparently this is BFD.

BP Takes Some Blame in Gulf Disaster [WSJ]
“The report finds BP facing a tricky balancing act. The British company risks exposing itself to greater legal liability if it assumes a large part of the blame for the disaster, but if it doesn’t do this it likely would be accused of evading responsibility. Meanwhile, parceling out blame to other companies involved in the well risks drawing blowback from them. BP officials and legal analysts say the company is trying to be careful to avoid letting the findings devolve into more mud-slinging.”

Citrin Cooperman Ranked Among Inc. Magazine’s Fastest-growing Private Companies [PR Log]
“According to Inc., Citrin Cooperman was the 148th fastest growing firm in the magazine’s broad “financial services” category, which includes accounting firms, brokerages, lending services and technology firms serving the financial industry.”

Pressure from CEOs More Likely to Lead CFO Shenanigans Than Monetary Gain

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

A recent study, “Why Do CFOs Become Involved in Material Accounting Manipulations,” by researchers at the University of Pittsburgh and the University of Washington attempts to answer just this question. Their finding? Pressure from the companies’ CEOs, more than the possibility of financial gain, tends to drive the actions of crooked CFOs.

Of course, the researchers couldn’t actually divine the motivations that drove the CFOs who manipulated numbers. Instead, they reviewed a group of firms subject to SEC enforcement, analyzing the role of the CFOs, as well as the costs they incurred and any benefits they gained from their actions.

They found – not surprisingly – that the CFOs involved faced stiff penalties for their actions. More than half of the CFOs (54 percent) employed by the nearly 300 firms in the sample that were charged by the SEC for accounting manipulation were prohibited from serving as an officer, director or accountant with a public company in the future. About 48 percent of CFOs were fined as a result of their wrongdoing, with a median fine of $50,000. A small number – about 4 percent – also faced criminal charges. Clearly, monkeying with the numbers can be quite costly for CFOs.


On the other hand, the CFOs that engaged shady number crunching didn’t have significantly higher equity incentives than CFOs in the control sample. That means the CFOs involved in misstatements took on a lot of risk, yet couldn’t expect to come out much further ahead financially than their counterparts at law-abiding firms.

Conversely, the CEOs of firms in trouble exhibited both greater power and equity incentive than CEOs of control firms. For instance, these CEOs were more likely to be company founders and to serve as chair of their boards than the heads of the other firms. “This evidence is also consistent with the pressured CFO explanation; that material accounting manipulations are more likely in the presence of powerful CEOs,” the researchers write.

What’s more, CFO turnover jumped during the three years before the misstatements occurred. That suggests that at least some CFOs either left or lost their jobs because they refused to participate in the manipulation.

The SEC also seems to have taken note of the larger role that CEOs, rather than CFOs, typically played in the schemes. When the researchers examined 188 companies in which both the CFO and CEO were charged with manipulating numbers, they found that the SEC had charged 18 percent of CFOs with orchestrating the schemes. When it came to CEOs, however, 32 percent were charged – almost double the CFO number.

Moreover, when the SEC charged just the CFO with wrongdoing, 30 percent of them benefited financially. That’s a lot, but it’s significantly less than the 46 percent of CEOs who were charged and also gained financially.

Given these findings, are there changes that could reduce accounting shenanigans? To be sure, the research doesn’t mean that CFOs who cook the books can simply blame their actions on their bosses; clearly they could have acted differently, as difficult as doing so might have been. The findings do suggest, however, that one step to reducing the opportunity for wrongdoing would be to provide CFOs with greater independence from their CEOs. One way to accomplish this would be to expect greater participation from corporate boards or audit committees when it comes to hiring and evaluating their firms’ chief financial officers.

Accounting News Roundup: More Tax Cuts for Small Business?; Scenes from a SaaS Meltdown; SEC Files Charges Against Sachdeva | 09.01.10

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 sece 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.

Boeing CFO Reiterates Delivery Target of 787; No One Believes It

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.

Boeing CFO repeats 787 deliver target [Reuters]

Singapore Stock Exchange Weighs Mandatory Sustainability Reporting

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.

Accounting News Roundup: Deloitte Poised to Be the Biggest of the Big 4; A Guide to Avoiding Layoffs; Forensic Accountant Testifies That Stanford Skimmed Funds | 08.26.10

~ 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 alrin 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.’ ”

Accounting News Roundup: Wells Fargo Comes Out Against FASB Fair Value Proposal; PwC Buying Diamond Management; MLB Teams Financials Leaked | 08.24.10

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.

Ex-BofA CFO Would Appreciate It if Andrew Cuomo Got His Name Right

Andrew Cuomo must be feeling pretty good about his chances at becoming Governor of New York, even with some new competition entering the race.

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.

Hey, Cuomo, The Name’s Joe, Not Joseph [Charlotte Business Journal]

Accounting News Roundup: The Problem with American Apparel’s non-CPA CFO; Diversity Still Lags in Accounting; Patrick Byrne Denies Insider Trading Accusations | 08.23.10

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.”

How to Shine in a Skype Interview [FINSying across the country for a second round of meetings, you may be asked to interview for a job from the comfort of your living room.

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]

SHOCKER: CFOs in New York Make Good Money

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.

Hey I’ll take it.

Charlie Gasparino Suggests That Erin Callan Should Be Shaking in Her Designer Boots

“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.

C-Suite CPAs Remaining Pessimistic on the Economy

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.

Accounting News Roundup: How Is Deloitte Like HP?; Moss Adams’ Bunting Appointed to IIRC; Small Businesses Remain Pessimistic | 08.10.10

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.”

In Other Words, “Our Numbers Are Good and My Old Boss Is a Pig.”

“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.”

~ HP Chief Financial Officer Cathie Lesjak, who is now interim CEO after an abrupt resignation by Mark Hurd amid sexual harassment allegations.

Accounting News Roundup: Tax Cuts Debate Rages On; Tax Issues for A-Rod’s 600th; Wyclef’s Campaign Stumbles Out of the Blocks | 08.05.10

Geithner Pushes Tax Boost for Wealthy [WSJ]
“Treasury Secretary Timothy Geithner made the Obama administration’s economic case for letting tax cuts for high earners expire at the end of this year, saying that failure to do so would harm rather than help economic growth.

In a speech Wednesday in Washington, part of the administration’s broader strategy to overcome Republican opposition on the issue, Mr. Geithner said that keeping current tax levels even on a short-term basis “would hurt economic recovery by undermining confidence that we are prepared to make a commitment today to bring down our future deficits.” The government needs the revenue it would get from allowing tax rates for the wealthy to rise, he said.”

PCAOB Logs No Progress on International Inspections [Compliance Week]
“The Public Company Accounting Oversight Board isn’t yet making much headway in catching up on overdue international inspections, but the Dodd-Frank financial reform bill at least clears an obstacle the board has repeatedly blamed for its inability to meet its inspection mandate.”

Regulator fears auditors may abandon scepticism to meet deadlines [Accountancy Age]
“The Auditing Practices Board (APB), which sets standards for the industry, is concerned auditors might be abandoning their professional scepticism to meet contractual audit deadlines, and wants to coach them in how to be sceptical.

Audit contracts are often negotiated on the assumption few problems will be revealed, according to the APB. When a potential issue does arise timetables often have to be extended.”

A-Rod’s Home Run Ball: a Tax Headache for the Record Books? [WSJ]
The ball is reportedly worth around $100k and if the ball is technically Yankees’ property and the team were to give it to A-Rod, then he may owe tax and the Yanks would get a corresponding deduction. The team could also argue that the ball is technically A-Rod’s property and then neither would owe tax.

Of course then the question remains, what if A-Rod sells or donates the ball to a nonprofit? If he sold it, then it would depend on how long he keeps it (less than a year would be at ordinary rates, greater than a year would be at capital gain rates). While donating the ball after one year could net him a near full deduction.

TheStreet.com names Thomas Etergino finance chief [AP]
Tom starts his new gig on September 7th.


IRS Hits Wyclef With $2.1 Million In Tax Liens [The Smoking Gun]
Whether it’s the U.S. or Haiti, this is not how you want to start a Presidential campaign.

Delta Said to Plan New York JFK Hub Renovation for $1.2 Billion [Bloomberg]
Anyone that has been to Terminal 3 at JFK is aware of the problem.

Accounting News Roundup: Insurance Accounting Is IASB’s Latest Puzzle; Former Deloitte CEO Catches a Keeper; Small Businesses Using Foursquare for Cheap Marketing | 08.04.10

IASB proposals aim to demystify insurance accounting [Accountancy Age]
“The international accounting standard setter has released new proposals for insurance contracts which seek to demystify one of the most complex areas of company reporting.

The rules, announced yesterday, aim to transform current rules, said to be all but indecipherable for investors, to a model which helps to communicate the contract economics.”

‘Static Kill’ Appears to Be Working in Well, BP Says [NYT]
“BP said Wednesday it had brought pressure under control in its stricken well in ther pumping heavy drilling mud into it, calling the development a “significant milestone” in its efforts to permanently seal the well.

The company began the effort, known as a static kill, on Tuesday afternoon and stopped pumping the heavy mud after about eight hours, saying that the procedure appeared to have reached the “desired outcome” of controlling pressure in the well.”

American Accounting Association and AICPA Create Pathways Commission to Study the Future of Accounting Higher Education [PR Newswire]
“The American Accounting Association and the American Institute of Certified Public Accountants together have formed the Pathways Commission to study possible future paths of higher education for those seeking entry into the accounting profession.

‘Interest in accounting as a career is the highest it’s ever been and underscores the need to make sure the educational infrastructure remains solid and able to meet the profession’s evolving requirements,’ said Barry Melancon, CPA, AICPA president and CEO, who served on the Human Capital Subcommittee of the U.S. Treasury Advisory Committee on the Audit Profession.”

Catch of the day: ESPN sells fishing organization [Bloomberg]
Apparently a former Deloitte CEO – Jim Copeland – is involved in a group buying the BASS fishing organization.


From Playboy to Biglaw: New Orrick CFO Has A Bitchin’ Resume [ATL]
A former Playboy CFO recently joined Biglaw firm Orrick, Herrington & Sutcliffe, presumably because access to a nice grotto is a must.

Getting Customers to ‘Check In’ With Foursquare [WSJ]
“Businesses of all sizes are trying the services out, looking to tap the networks’ ever-growing fan bases—Foursquare alone has 2.4 million users globally, and is growing 30% to 40% a month—and ability to harness enthusiasm for local establishments. For a small company with a limited marketing budget, the services are attractive because they’re free or cheap, require minimal time and effort, and appeal to loyal consumers who favor local businesses over big, cookie-cutter chains.”

Another Question about Timing of NBTY Insider Stock Purchases Prior to Announcement of Carlyle Acquisition [White Collar Fraud]
Sam Antar is still a little suspicious about the timing of the two NBTY directors that purchased stock right around the time that the Carlyle Group agreed to purchase NBTY stock. According to filings, NBTY executives met with Carlyle on May 11th and the two directors in question purchased their shares on May 13th and 18th. The next regularly scheduled board meeting was on May 21st.

Soooo, Sam wonders aloud, “At what point in time did Ashner and White know anything about the discussions with Carlyle and when did they find out about the confidentiality agreement? Often, such agreements are executed after the board has been notified. In this case, the confidentiality agreement was signed before Ashner and White purchased their NBTY shares.”

At Work, a Drug Dilemma [WSJ]
Even if you are legally able to purchase pot for medicinal purposes, your employer may still prefer you to pass on grass.

AFP Survey: Financial Staff Salary Growth Outpaced CFO’s in 2009

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

Salaries of financial executives and their staff continued to outpace national averages in 2009, and raises were also larger than other white-collar professionals. But the pay of lower level finance professionals outpaced those of CFOs and other senior-level types.

Average annual salaries for financial professionals increased by 2.5 percent in 2009 and were 13 percent above the national average, according to the Association for Financial Professionals’ 2010 compensation survey.


But like other workers, CFOs, treasurers and their staff also enjoyed smaller salary growth than what they had been used to. The average salary increase for financial professionals in 2009 was a full percentage point below the average increase reported in 2008. Salaries went up 3.4 percent in 2008 and 4.5 percent in 2007.

But in previous surveys, executives and management-level financial professionals earned the largest salary increases, but that wasn’t the case in 2009. Instead, staff-level financial professionals experienced the highest salary growth, with a 2.7 percent increase on average compared with 2.5 percent for executives and management.

On a more granular level, budget analysts averaged the highest base salary increase within staff professionals, with a 3.4 percent increase. Treasurers saw the highest average increase of all senior executives, with a 3.2 percent boost, and assistant cash managers received the highest average salary increase within the middle management tier, with a 3.8 percent increase, also the highest increase of all positions.

With high losses at banks and the prospect of regulatory changes impacting Wall Street as well as great technological innovation in 2009, financial professionals in the Western half of the US earned the most, although those in the East had earned the most in prior years. Financial executives at technology companies earned the most in 2009.

The latest AFP compensation survey also found that the economy had almost no impact on bonuses of financial professionals. In 2009, 71 percent of organization awarded incentive-based compensation bonuses to financial professionals, down four percentage points from 2008. Incentive pay in 2009 was stable at about 14 percent of base salary.

Accounting News Roundup: 1099 Reporting Is the Latest Political Football; Financial Reporting Overhaul in the Works?; Zynga’s CFO Hire Spurs IPO Talk | 08.02.10

Parties Play Politics With Unpopular Tax Measure [WSJ]
The new 1099 reporting requia bit of belly aching to point of many groups asking for a repeal. Too bad the members of Congress are the ones with the power to actually make something happen:

“The House rejected a bill Friday that would have repealed the provision. The two parties disagreed on how to make up the lost revenue.

‘This foolish policy hammers our business community when we should be supporting their job growth,’ Sen. Mike Johanns of Nebraska said in the Republicans’ weekly radio and Internet address Saturday. ‘It’s only one example of how the administration’s promise to support small businesses really rings hollow.’

Democrats blamed Republicans for Friday’s failure.

‘Despite all of their rhetoric about the need to eliminate this reporting requirement, Republicans walked away from small businesses when it mattered most,’ said Rep. Sander Levin (D-Mich.), chairman of the House Ways and Means Committee.”

FASB Alumnus Trashes GAAP (and IFRS) [The Accounting Onion]
“I suspect that the folks being paid the big bucks to make the tough calls on accounting standards don’t pay a lot of attention to to the likes of Tom Whatshisname, even were I to announce that the sky is falling. But, I don’t take it personally. Over the past 40 years, any PhD not drawing a salary from the Big Four has been viewed with more suspicion than respect by the standard setting establishment.

I mention all of this now, because there is a new voice, whose credibility and qualifications cannot be so easily dismissed. That voice belongs to FASB alumnus David Mosso, who has written an 80-page monograph entitled Early Warning and Quick Response: Accounting in the Twenty-First Century). If you don’t want to believe me, take it from him: GAAP is broken.”

Group formed to overhaul financial reporting [Accountancy Age]
Meanwhile: “A project to overhaul company reporting has been launched by a high level group of accountants, businesses, regulators and market participants.

The International Integrated Reporting Committee will look at the wider concerns about financial reporting, in terms of addressing risk, and presenting a clearer and broader picture of companies’ performance, including governance and environmental issues.”


Goldman Details Its Valuations With AIG [WSJ]
“How did Goldman come up with the mortgage-securities prices it used to extract cash from AIG?”

Before There Can Be An IPO, First Comes A New CFO For Zynga [Tech Crunch]
Dave Wehner comes in from Allen & Co. taking the spot of Mark Vranesh who is becoming Chief Accounting Officer. What does all this mean? First, it gives most MSM outlets a day or two worth of stories about when Zynga will go public but mostly it means the business of Farmville, no matter how you hate it, is serious business.

Facebook Would-Be Owner Says He Owes His Claim to Arrest [Bloomberg]
“Paul Ceglia, who claims in a lawsuit that he owns 84 percent of Facebook Inc., said his case wouldn’t have been possible if state troopers hadn’t come to his house in October to arrest him for fraud.”

Forced Employee Engagement and the Overworked Employee [The Exuberant Accountant]
“In my many interactions with business owners, I have heard some speak of employees as being ‘lucky to still have a job.’ While that may be true, thinking (and acting) in such a manner is very short sighted.”

Twitter, Facebook, LinkedIn? [AccMan]
Got business model?

Accounting News Roundup: Mazars Would Like to See More Competition in the Audit Market; Citi CFO Settles with SEC; Colbert on Tax Cuts | 07.30.10

Auditors don’t know the meaning of ‘competition’ [FT]
In a letter to the Financial Times, David Herbinet, the UK Head of Public Interest Markets for Mazars, takes issue with the notion (he says ‘puzzled’) that there is robust competition in the audit market, “Figures calculated from the most authoritative research available – the Oxera report that first spurred examination of the issue – show that a FTSE 100 auditor can on average expect to remain in place for an eye-watering 48 years and their FTSE 250 counterpart for 36 years. When the research was conducted more than 70 per cent of the FTSE 100 audits had not been subject to tender for at over, 97 per cent of current FTSE 350 audits are held by just four firms. If this represents fierce competition I would not like to see a stagnant market.”

Facebook Said to Put Off IPO Until 2012 to Buy Time for Growth [Bloomberg]
“Facebook Inc. will probably put off its initial public offering until 2012, giving Chief Executive Officer Mark Zuckerberg more time to gain users and boost sales, three people familiar with the matter said.

Facebook would benefit from another year of growth absent the added scrutiny that comes with a public listing, instead of holding an IPO in 2011 as investors speculated, said the people, who asked not to be identified because Facebook doesn’t discuss share-sale plans. Still, Zuckerberg, who holds board control, could push for a stock sale at any time, they said.”

U.S. Financial System Still at Risk, Says IMF [WSJ]
Get RIGHT out of town. “The International Monetary Fund says the U.S. financial system is “slowly recovering,” but remains vulnerable to crisis, in part because Congress and the administration have failed to streamline a regulatory system marked by turf battles and overlapping responsibilities.

‘We asked many times why bolder action could not be undertaken,’ said the IMF’s Christopher Towe, who oversaw the agency’s first broad review of the U.S. financial sector.”

SEC Charges Citigroup and Two Executives for Misleading Investors About Exposure to Subprime Mortgage Assets [SEC]
That includes former CFO Gary Crittenden who agreed to pay a $100,000 fine.


Colbert on the Expiration of the Bush Tax Cuts [TaxProf]

The Colbert Report Mon – Thurs 11:30pm / 10:30c
The Word – Ownership Society
www.colbertnation.com
Colbert Report Full Episodes 2010 Election Fox News

Will Governments Finally Recognize Their Fiscal Responsibility?

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

If you live or work in New York City you know how the subway can be both a blessing (when it runs on time) and a curse (when it doesn’t) or for reasons that on Wednesday became clear: fare hikes.

If you don’t live in New York you can appreciate why the agency responsible for public transit, the Metropolitan Transportation Authority, is having such a difficult time making ends meet. At the top of the list is compensation and benefits costs, which account for two-thirds of the MTA’s $12 billion operating budget for 2011.

The MTA says its health care costs are going up about 9 percent annually-which is actually in line with national increases. The challenge for a public agency of course is that it is locked into contracts with its heavily unionized workforce. Making changes is not easy.


The plan the MTA put forward Wednesday was to enter in what it called “net zero” contracts with its unions-contracts in which any raise would be “paid” for by givebacks in productivity, changes in work rules or increased contributions to health care benefits. The unions took exception to this proposal but no one doubts that the compensation structure of government employees needs to come in-line with their private sector counterparts. Andrew Cuomo, the Democratic nominee for governor, has made reforming this imbalance part of his platform.

Debt service aside (and the MTA’s debt service totals $1.8 billion this year, growing to $2.5 billion by 2014), the MTA, like so many government entities throughout the country, has long term health care challenges ahead. Its health care retirement obligation totals $1.4 billion growing to $1.7 billion by 2014. While the MTA continues to pay enough into its retiree health care fund to pay for its current retirees’ health care, the authority, citing this year’s cash-flow problems, will not pay $57 million this year into a fund for future obligations.

The Great Recession has helped bring the issue of government post-retirement obligations to light. As government revenues shrink and obligations grow, taxpayers sense an inherent injustice between their own grim retirement prospects and the assurances given to public sector workers. Subway service cuts and fare hikes are only meaningful if they address the long-term problems rather than enable government to deal with short term crisis.

Cuomo is banking on this public displeasure, as is the MTA. Next year the MTA’s contract with its largest union is up for renewal. The transit authority will be able to test whether it has public support for changing the way the state entity does business with unions. Bringing government into the 21st century by reducing health care and other post-retirement obligations will be good for taxpayers and for businesses, including those with heavily unionized workforces.

Key Steps for CFOs Starting at a New Company

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

Last year, 13 percent of chief financial officers changed jobs. Although this was down from 18 percent the prior year, Deloitte’s CFO Programs predicts CFO turnover will rise again this year.

The ramifications of turnover are huge. Tom Bonney, founder and managing director of CMF Associates, which offers temporary CEO, COO and controllership services, estimates that when a CFO leaves, efficiency in the finance department is automatically cut in half and exposure to risk i CFO joins the company, the ramp up period is longer than other key executive roles, due to the CFO’s broad array of responsibilities.


A recent report from Deloitte CFO Services highlights practices that successful CFOs have used to get off on the right start in their new positions based in large part on interviews with more than 20 CFOs from varied companies with nearly $170 billion in combined revenues, most with more than $2 billion in revenues.

Step one: Get to know the business. Learn what works and needs to be changed. Use your team as a resource in the process. The ability to be a good listener, as well as a clear communicator is crucial as CFOs establish relationships and plan for the long term. Listening to your team will not only help you plan your business goals, but reveal your company’s culture, and establish you as a trusted leader.

Step two: Create a 180-day agenda. Most CFOs surveyed by Deloitte felt they had six months to establish their roles. This includes creating an agenda with their CEOs and peer executives, as well as recruiting and renewing talent to build an ideal team. Then clearly communicate your agenda to your team and begin establishing a long term vision.

Step three: Make an impact on the business. If the first 180 days are about getting to know the company, choosing what to do and getting the right team in place, the next 12 months are about execution and ratcheting up the contribution of finance to the business. Making this difference requires deploying resources and capabilities effectively to achieve key initiatives. To do this, align talent with top priorities, delegate with confidence, adopt effective practices, and encourage transparency and accountability throughout your team.

Be mindful about how you allocate your time. Focus on where you can get results, sooner rather than later. “You need to get quick wins,” says Ajit Kambil, Deloitte’s global research director.

You also need to gain a quick understanding of the trends and metrics of your company, especially as it relates to the industry you are serving. “This knowledge, along with the ability to communicate with the management team, will foster success for the executive and assist in reaching corporate goals,” says Thomas Galvan, CFO of Rising Medical Solutions, a medical-financial solutions firm.

Think strategically. If you move up from controller to CFO, instead of worrying about GAAP and FASB, you may be asked to participate in strategic decisions. “The critical relationships are now not so much between the income statement and balance sheet, but between the CFO and a CEO – as well as the board of directors,” explains Todd Ordal, president of consulting firm Applied Strategy. “The political skills required can be significant.”

Culture also counts. For example, in a small organization, it can be critical for a CFO to be hands-on, but in a larger organization, it can be critical for the CFO to delegate. Do your homework and don’t assume anything.

Ultimately, the Deloitte study found the critical issues fell into three buckets: time, talent and relationships. Says Kambil: “If you don’t get them right, you diminish the opportunity to succeed.”

Accounting News Roundup: BP’s Ugly 2nd Quarter; Bernanke Backs Extending Some Tax Cuts; Back-to-school Sales Tax Holidays | 07.27.10

BP replaces CEO and posts $17 billion quarterly loss [Reuters]
“Oil giant BP Plc launched a plan to repair its battered image in the United States on Tuesday, ditching itsxecutive and promising to slim down by trebling an asset sale target to $30 billion.

However, the company, the target of public anger over its Gulf of Mexico oil spill, tempted further ire by denying it needed cultural change and offsetting the costs of the spill, including expected fines, against its taxes.

The tax move will cost the U.S. taxpayer almost $10 billion.”

Northern Rock CFO Banned And Fined GBP320,000 Over Bad Loans [Dow Jones]
“David Jones, the former chief financial officer of Northern Rock PLC, was Tuesday fined GBP320,000 and barred from working in finance after the Financial Services Authority found he misled investors about the bank’s bad loans in the lead-up to the bank’s eventual collapse.

Jones most recently was CFO at Northern Rock Asset Management PLC, the “bad bank” of the nationalized lender after a restructuring of its operations. He left the company in April because of the FSA investigation, a week after two former colleagues were fined and banned for their roles in making the bank’s 2006 bad-loan figures appear better than they were.”

Where will those next gen clients come from? [AccMan]
And what will ask of their professional service providers? Right now, Gen X and Millenials don’t compromise much of the client base but that will change quickly when Baby Boomers start retiring en masse. What these new business owners will ask of their service providers is not quite clear. Similar to the demands currently placed on employers, service providers will have to be flexible and innovative.

Bernanke Says Tax-Cut Extension Maintains Stimulus [Bloomberg]
“Federal Reserve Chairman Ben S. Bernanke said extending at least some of the tax cuts set to expire this year would help strengthen a U.S. economy still in need of stimulus and urged offsetting the move with increased revenue or lower spending.

‘In the short term I would believe that we ought to maintain a reasonable degree of fiscal support, stimulus for the economy,’ Bernanke said yesterday under questioning from the House Financial Services Committee’s senior Republican. ‘There are many ways to do that. This is one way.’ ”


Accounting firm Kaufman Rossin & Co. settles case for $9.6M [Miami Herald]
Kaufman Rossin was the auditor of the two Palm Beach funds that invested over a billion dollars with convicted Ponzi Schemer Tom Petters.

And in case you forgot, convicted forensic accountant and suit lover Lew Freeman was the Chief Restructuring Officer for the Palm Beach funds. Quite the cesspool.

How Low Self-Esteem Can Cost You The Job [Forbes]
Are you a low talker? No one is suggesting that you don’t know what you’re talking about but the perception could be that you don’t and in turn, It could be affecting your career.

Lords to probe audit market [Accountancy Age]
“A recent report from the FRC and FSA criticised the role of auditors during the crisis saying they had failed to tackle management bias.

The Lords investigation will look at basic questions such as wether Big Four dominance increases the price of audit and whether the market needs to be opened up.”

Oracle’s Ellison: Pay King [WSJ]
$1.84 billion over the last ten years is not too shabby.

Sales tax holidays 2010 [Don’t Mess with Taxes]
Kay Bell has a rundown of the sixteen states that are having sales tax holidays right before the kids go back to school.

CFO Survey Finds Signs of Life for Accountants in the Bay Area Job Market

In the CFO survey du jour, San Francisco CPA firm Armanino McKenna LLP (“the 37th largest CPA firm in the nation”) says that, as far at the Bay area is concerned, CFOs are looking to hire more accounting staff in the second half of 2010.

More than 40% of those surveyed in the San Fran neck of the woods are planning on it and they aren’t looking for newbies. No, they’re looking for the slightly grizzled, slightly jaded types that are wasting away in their current cube farm. “[T]he most desired new hire is the mid-range accountant, such as an analyst, staff or senior accountant,” sayeth the press release.


As for the rest of the country, things are probably still up in the air but we’ve got to start somewhere.

So if you’re sick of your current city and really want a new job, hoof it out west. If you’re lucky, maybe Adrienne will let you crash at her place. Just try to keep the CPA exam questions to a minimum.

CFOs Predict Increased Accounting Hires in Last Six Months of 2010 [PR Newswire]

Trend of CFOs Transitioning to CEO Likely to Continue As Companies Refocus on Strategy

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

The need for a chief executive to work with boards and communicate with Wall Street has never been greater, and CFOs have experience in both those areas–making them excellent candidates for the top spot in an organization.

Companies are increasingly recognizing the value of this internal asset and promoting their CFOs to CEO, according to executive search firm Russell Reynolds’ Chief Financial Officer Moves North America, Q1 2010.


Currently there are some 50 CEOs in the Fortune 500 who were previously CFOs for the same company. Their numbers recently increased, at least on an interim basis, as Marcel Smits, the CFO at Sara Lee, was promoted to the CEO slot.

CFOs have been promoted to CEO typically in organizations that are heavy on logistics or analytics, says Christopher Langhoff, who specializes in financial officer assignments for Russell Reynolds. He offers the example of Clarence Otis, Jr. at food services firm Darden–which owns and operates restaurants such as the Olive Garden and Red Lobster.

Otis started with the company in 1995 as vice president and treasurer and progressed to CFO. He was appointed CEO in 2004. Similarly, David West joined the Hershey Company in 2001 as vice president of business planning and development and worked his way up to CFO, where he served from 2005-2007. He was promoted to CEO in 2007.

It’s rare, however, to see a move from CFO to CEO in the tech industry, says Langhoff.

The ascension of CFO to CEO is not likely to slow down any time soon. “We have more and more clients that are coming to us asking for a world class CFO that will likely be ready to be CEO in two to three years,” says Langhoff. “That’s a tall order. We looked back and many times prior to the appointment of a CEO, the person had served, on average 16 years at the company.”

The first quarter also showed a continued, robust turnover of CFOs in the middle market. “The lifespan of a CFO can be shorter than an NFL career,” says Langhoff. As for the rest of the year, Langhoff predicts more turnover. Over the past four months, Russell Reynolds reported a dramatic increase in search activity in the United States, Europe and Asia that spans industries.

The spike has been most pronounced within the financial services sector. Companies like Bank of America, Morgan Stanley, Neuberger Berman, Kellogg, PepsiCo, Walt Disney, Dow Chemical and CVS/Caremark all named new CFOs.

Says Langhoff: “When Sox was in full gear there was a need for a CFO who was a CPA. Now, companies are looking for a strategic CFO, a business partner. There could be a big shift.”

Was the $550 Million Not Enough for You?

“I couldn’t tell you, Mike, that there is a company in the world that does not have a threat of a criminal investigation at some point in time. I mean, every company in the entire world has that. All I can tell you is that we are not aware of any criminal investigation of Goldman Sachs.”

~ Goldman Sachs CFO David Viniar, responding to CLSA analyst Mike Mayo, who really, really, really, really wants to know if there is a threat of a criminal investigation into Goldman Sachs.

Has Senior Leadership Resorted to Parenting in the Workplace?

By the time you read this, Monday will be one foot in the bag for most of you. So not to hurt your already-tuned-out minds with, I wanted to report on something that probably comes as no shocker to you: the difference in working attitudes between generations continues to cause grief for company leadership across the country.

The full FINS article can be found here, but here’s the bit I want to discuss:

Another issue that cropped up in the survey is the subtle generational shift evidenced by more Gen Y’ers infiltrating the accounting pool. The survey concludes that members of a younger workforce have different expectations about their careers, insofar as they’re more focused on work-life balance and not bound to a “work is all I am” mantra. When asked about reasons for voluntary turnover, 45% of respondents said a poor work/life balance, including excessive hours, was responsible.

The other 65% 55% listed “working for cranky old farts that have no concept of a balanced life” as the reason for looking for a new job. But really, there is obviously a clash in working styles and expectations between the different generations.

Older generations worked their way through school, and many were the first in their families to attend college. This work ethic carried over into the workforce, as Baby Boomers competed against one another for everything; jobs, money, social and economic status, etc. Boomers were raised on the concept of “you eat what you kill.” Simply put, they were a generation pushed and pushed and pushed to work and work and work; by parents, peers, and society alike.

Fast forward to the Generation Y and Millenials that are currently entering the workforce. The large “complaints” of senior leadership about the new waves of workers are the necessary changes that must be made – flexible work arrangements, work/life balance initiatives, community outreach programs, etc. All of these HR-friendly programs have one thing in common – they cost time and money. Upper management and partners of the accounting firms complain frequently (even here in the comments) that the Y’s and Me’s are a lazier, more high maintenance group of professionals.

Newsflash, Baby Boomers: you’re responsible for this. This was to be expected after years of an upbringing centered around access to things, supply of stuff, and promises of you can do whatever you want to do. Baby Boomers saw an advancement in education and the quality of professional training required in the workplace. Today’s generations are seeing another advancement; this one being the quality of the workplace.

But I digress. Perhaps we should all agree to disagree on the continued generational differences and focus on these lines from the FINS article:

The survey found that praise and attention from managers can have a more positive effect than cash bonuses and increase in base pay, for example. To that end, CFOs are focusing more on gold stars and less on pay stubs.

Sounds like parenting, doesn’t it?

Ernst & Young Report: Most CFOs Aren’t Interested in Becoming CEOs

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

A surprising new report from Ernst & Young makes the bold claim that only 10 percent of CFOs actually want to become CEO. The report – entitled ‘DNA of the CFO’ – was based around a survey of 699 CFOs in Europe, Middle East, Africa and Asia and included in depth interviews with CFOs of leading companies such as Heineken, Dubai Aerospace Enterpriser.

The accepted wisdom is that in times of trouble, boards turn to CFOs to become CEOs. CFOs are seen as having a good handle on the numbers, attention to which is seen as the cure to the company’s problems.

While CFOs are generally seen as detail focused but not necessarily strategically focused, the survey shows that some 35 percent of all CFOs are intimately involved in the strategic side of the business. This is in addition to their day to day duties of keeping on top of the numbers.


While only 10 percent say that they want to be CEO, 73 percent say that they would like to remain in their role while taking on more strategic responsibility. This suggests that CFOs are put off by the unwelcome levels of scrutiny that CEOs face, which as CFOs they can largely avoid. And if CFOs can undertake much of the interesting strategic work which CEOs do but without the glare of publicity, that would appear to be a good bargain.

The survey also laid out CFOs’ professional failings, with a majority saying that their biggest lay in communication with external stakeholders, especially the media. Any financial journalist can attest that CFOs are difficult people to communicate with. They might possess the keys to the kingdom, in terms of the juiciest details about what’s actually going on in a company, but they are generally woeful at crafting a positive message. Those few that can are usually the ones who make it to the top.

Even so, the survey shows that not many CFOs actually want this. Rather what is revealed is that the CFO position is the destination itself, not the staging post to a role any higher. To that end, the report crafted a list of the competencies that finance professionals need to reach the role of CFO. These competencies are listed below, in order of priority.

• Extremely strong financial professionalism
• A strong commercial sensibility
• Deep understanding of the business
• Skill with people
• Ability to think strategically
• Excellent communication skills – the ability to translate complex issues in a simple, straightforward way
• Ability to manage conflict
• Inclination to solve rather than create problems
• International experience
• Language skills
• Experience of running major projects
• Business analytical skills
• Ability to manage stress and complexity under pressure
• Good health
• Operational experience
• Ability to adapt to change
• Experience of adversity
• Passion

Many of these are the normal, boilerplate nonsense that headhunters come up with: it is difficult to do any job if you are not in good health, or even if you lack passion for the job in hand. Others seem bland enough to apply to any high level job such as the ability to adapt to change. Others might seem mutually exclusive: experience running major projects can often conflict with the task of managing the finances around those projects.

International experience and excellent communication are also skills that can be acquired. More challenging, perhaps, is the need to be a problem solver and not a creator while at the same time being excellent with numbers. Financial results are obviously not a day at the beach. If you can master them and don’t feel the need to be an excellent communicator, then like 90 percent of the respondents, becoming CFO is the end itself, not a path to the other corner office.

Accounting News Roundup: FinReg Brings Plenty of Change; Some Number Crunching of Goldman’s Fine; ATF: Sin Taxes Rose 41% | 07.16.10

Law Remakes U.S. Financial Landscape [WSJ]
The Journal asked twelves experts about the bill, many of whom are not nearly as impressed as the Deal Professor. “Congress approved a rewrite of rules touching every corner of finance, from ATM cards to Wall Street traders, in the biggest expansion of government power over banking and markets since the Depression.

The bill, to be signed into law soon by President Barack Obama, marks a potential sea change for the financial-services industry. Financial titans such as J.P. Morgan Chase &Group Inc. and Bank of America Corp. may be forced to make changes in most parts of their business, from debit cards to the ability to invest in hedge funds.”

Apple May Offer IPhone Cases, Rebates to Address Flaw [Bloomberg]
Start forming the lines again, “Apple Inc., looking to avoid a recall of the iPhone 4, may give away rubber cases or offer an in-store fix to address a design flaw in the newest version of its top-selling product, according to analysts.

The company, which is holding a news conference at 1 p.m. New York time today, doesn’t plan to announce a recall, a person familiar with the matter said yesterday. Chief Executive Officer Steve Jobs may instead offer the giveaways or refunds to dissatisfied customers, some analysts said.”

Google CFO: Old Spice Is The Future [Tech Crunch]
Written on a horse: “You know you’ve got a viral marketing hit on your hands when the CFO of Google mentions it in an earnings call. Yes, I am talking about the Old Spice YouTube Tweetathon where the bare-chested Old Spice Man addresses people on Twitter via personalized commercials on YouTube.”

Goldman’s SEC Settlement by the Numbers: We Do the Math [ProPublica]
Effectively, it will be paid for by August 1.


AIG Says It Counted as Much as $2.3 Billion of Repos as Sales [Bloomberg BusinessWeek]
Somewhere a former Lehman CFO is screaming, “See, I told you everyone was doing it!”

“American International Group Inc., the bailed-out insurer, said it classified as much as $2.3 billion of repurchase agreements and $3.8 billion of securities- lending transactions as sales in calculating quarterly results.

In late 2008, ‘certain of AIG’s counterparties demanded significantly higher levels of collateral to enter into repurchase agreements, which resulted in sales rather than collateralized-financing’ treatment under accounting guidelines, the New York-based insurer said in an April 13 letter to the Securities and Exchange Commission released today. The accounting didn’t materially affect any ratios or metrics the company publicly disclosed, AIG said in the letter.”

‘Sin Tax’ Revenue Surges [TaxProf Blog]
“The Treasury Department’s Alcohol and Tobacco Trade and Tax Bureau has released its Fiscal Year 2009 Annual Report, detailing a 41% increase (to $20.6 billion) in the amount of “sin taxes” on alcohol, tobacco, firearms, and ammunition collected by the federal government. Most of the $6 billion revenue increase resulted from the higher tobacco taxes included in the Children’s Health Insurance Reauthorization Act of 2009. Firearms and ammunition excise tax collection rose 45%, the largest annual increase in the agency’s history.”

KV Pharma Names New CFO; Hunt for Auditor, Signs of an Internal Control System Begins

The AP reports that K-V Pharm named Tom McHugh as their new CFO today which is good news for KV but could be some serious bad news for Tom.

As you may recall, things haven’t been as good as you could ask for over at KV this year – directors, auditors and executives are all bolting for the door and someone has to make a run at this thing. One of those lucky ducks is Tom McHugh:

K-V Pharmaceutical Co. on Thursday named Chief Accounting Officer Thomas McHugh as its new chief financial officer, replacing Stephen Stamp after three months.

The company said McHugh becomes its CFO effective immediately. McHugh served as the company’s interim CFO from September 2009 until April 2010. He was named chief accounting officer in February.

So it sounds like Tommy probably knows the place well enough but he still gets to fix all this:

“Material weaknesses have been identified and included in management’s assessment in the areas of entity-level controls (control awareness, personnel, identification and addressing risks, monitoring of controls, remediation of deficiencies and communication of information), financial statement preparation and review procedures (manual journal entries, account reconciliations, spreadsheets, customer and supplier agreements, stock-based compensation, Medicaid rebates and income taxes) and the application of accounting principles (inventories, property and equipment, employee compensation, reserves for sales allowances and financing transactions).”

And find an auditor! Since KPMG quit, the hunt is on for a new one, so hopefully there’s someone in St. Louis willing to help them out because…the NYSE kinda, sorta took notice that the company didn’t file their 10-K on time and well, that’s a no-no. Just ask Koss.

So the good money is probably is riding against Tom but we’re rooting for you buddy. Turn this ship around!

K-V Pharma replaces CFO after 3 months [AP]

Accounting News Roundup: Americans’ Irrational Demands on Policy; Number of Women CFOs Same as ’09; Summer Camp Tax Credits? | 07.14.10

We Can’t Always Get What We Want: Why Governing Americans is So Hard [TaxVox]
Basically it’s because as a group, we’re children. We throw tantrums until we get what we want and stomp around the living room when we don’t.

“[O]ur demands on policymakers are so inconsistent and irrational that we make governing nearly impossible. We hate big deficits, but oppose the actual tax increases or spending cuts that we need to dam the flood of the red ink. We are furious that government passed an $800 billion stimulus last year, but feel lawmakers are not doing enough to get the economy going. We want government to “do something” about the gulf oil spill but reject government interference in private business.”

Women CFOs Holding Steady [CFO]
In the Fortune 500, there are 44 woman CFOs, the same number as last year.

“What are the prospects for women breaking the 10% barrier? At least some are hopeful the numbers will climb in coming years, albeit not dramatically. ‘Anecdotally, I am seeing a next generation of female finance leaders who can and want to rise to the CFO role,’ says Lorraine Hack, executive recruiter with Heidrick and Struggles. She adds, ‘I have seen a lot of companies becoming more cognizant of diversity, or the lack thereof, and making a conscious effort to recruit, retain, and grow such talent.’ ”

U.S. Business Groups Air Policy Concerns [WSJ]
“Washington’s major business groups plan a united front Wednesday in their confrontation with the Obama administration over economic policy, calling on the White House to cut taxes and curb its regulatory agenda.

Business groups including the U.S. Chamber of Commerce, the Business Roundtable and the National Federation of Independent Businesses will air a list of concerns about government policy at a “Jobs for America Summit” at the Chamber’s offices Wednesday.”


Wall Street Fix Seen Ineffectual by Four of Five in U.S. [Bloomberg]
“Almost four out of five Americans surveyed in a Bloomberg National Poll this month say they have just a little or no confidence that the measure being championed by congressional Democrats will prevent or significantly soften a future crisis. More than three-quarters say they don’t have much or any confidence the proposal will make their savings and financial assets more secure.

A plurality — 47 percent — says the bill will do more to protect the financial industry than consumers; 38 percent say consumers would benefit more.

‘Banks and the government are making out, not the ordinary person,’ says Lenore Critzer, a 70-year-old retiree and poll participant who lives in Nelson, Ohio, about 40 miles from Cleveland. ‘We’re going to have another crisis and worse.’ ”

A tax credit for summer camp? IRS says it’s true [Kansas City Star]
Unfortunately, expenses for overnight camps do not qualify. So parents will have to squeeze the sex in during the day somehow.

Mysterious CFO Firing of the Day: Angeion Corp.

Anyone that is in St. Paul/Minneapolis (ideally Baker Tilly Virchow Krause employees) should get in touch with us because this reeks of bad behavior that we absolutely must know about:

Angeion Corporation has terminated the employment of its Chief Financial Officer, William J. Kullback, effective July 9, 2010. The termination of Mr. Kullback is not related to any issue with respect to the Company’s financial statements.


Yes, that’s all there is. We did poke around a little bit and found that Mr Kullback was formerly with Price Waterhouse which could lead to believe that he’s got a bit of a temper and/or was roofied but then again we’re just throwing that out there.

We rang up Angeion to see what’s what and left a message with CEO Rodney Young who is supposed to call us back. We’ll report back if we find out the scoop.

8-K [SEC Filing]

UPDATE: Mr Young got back to us and we had a very pleasant chat although he wouldn’t elaborate on the dismissal of Mr Kullback, so speculate away! Or if you’ve got actually knowledge that will do too.

Accounting News Roundup: Quasi-Exodus at H&R Block?; National Taxpayer Advocate Issues Report That Congress Won’t Read; SEC Might Want to Take a Closer Look at Amedisys | 07.08.10

H&R Block names Alan Bennett as CEO [AP]
This all came about since Russ Smyth resigned, made official by a two sentence 8-K filing, “On June 30, 2010, Russell P. Smyth provided H&R Block, Inc. (the “Company”) with notice of his resignation as President and Chief Executive Officer of the Company, and as a director of the Company. The effective date of Mr. Smyth’s resignation from these positions is August 29, 2010, unless the Board of Directors selects an earlier date.”

It seems like there’s a quasi-exodus in the C-Suite at HRB as General Counsned on Friday and the company is still on the hunt for a CFO after Becky Shulman left in April.

Yahoo CFO Aims to End Buy-High, Sell-Low Record on Deals [Bloomberg]
Tim Morse told Bloomberg that the company has been doing things completely bassackwards, “You’ve seen our track record on M&A with buying really high and selling pretty low,” Morse said in an interview. “We’ve got to be careful.”

Some examples of doing things exactly wrong include, “Yahoo, the second-biggest U.S. search engine, agreed to sell its HotJobs website for $225 million in February after paying about $436 million for it in 2002. In January, Yahoo sold Zimbra, an e-mail and collaboration unit, netting $100 million. Yahoo bought it in 2007 for $350 million.”

Auditors could face grillings from analysts [Accountancy Age]
“Steve Maslin, chair of the partnership oversight board at Grant Thornton, envisages an expanded audit role which may involve greater face-to-face time with stakeholders, including question and answer sessions at annual general meetings.

‘Many investors believe there is valuable information that gets discussed by the auditors with management and audit committees to which investors do not have access – and I think they are right,’ he said.”


Legg Mason CFO resigns [Baltimore Sun]
Get your resumé in now.

FEI Announces 2010 Hall of Fame Inductees [FEI Financial Reporting Blog]
Come on down! “FEI’s 2010 Hall of Fame inductees: Karl M. von der Heyden, former Vice Chairman of the Board of Directors and Chief Financial Officer of PepsiCo, Inc., and Ulyesse J. LeGrange, retired Senior Vice President and Chief Financial Officer of ExxonMobil Corporation’s U.S. Oil and Gas Operations.”

National Taxpayer Advocate Submits Mid-Year Report to Congress [IRS]
Nina Olson’s mid-year report to Congress has plenty to wade through so that means none of the members will likely read it. Fortunately the IRS narrowed the three biggies (Taxpayer Services, New Business and Tax-Exempt Organization Reporting Requirements, IRS Collection Practices) into a much more consumable version.

Open Letter to the [SEC]: Investigate Troubling Issues at Amedisys Missed by Wall Street Journal [White Collar Fraud]
In Sam Antar’s latest WTFU letter to the SEC, he details some issues at Amedisys which weren’t covered in the Journal‘s report from back in April. Since we are into the whole brevity thing, we won’t get into the number crunching here but things look fishy. Plus there’s this:

On September 3, 2009, Amedisys President and COO Larry Graham and Alice Ann Schwartz, its chief information officer, suddenly resigned from the company. Amedisys provided no reason for their resignations and simply said that the two execs “are leaving the company to pursue other interests.”

In my experience, sudden, unexpected executive departures are often a sign of problems beneath the surface. And while it could be entirely coincidental, the trends at Amedisys appear to be consistent with my experience.

But Sam doesn’t believe in coincidences.

A Couple of Suggestions for NPR’s New CFO

NPR has a new CFO and if you’re not a public radio junkie, you might not give a shit less. For those of you that can’t function without hearing the soothing voices brought to you courtesy of your very own tax dollars, then this is big news.

Deborah Cowan is joining NPR from Radio One where she was SVP of finance. She also did stints at IBM and Coopers & Lybrand (look it up, young people).

Not sure if Ms Cowan will be able to weigh in on editorial matters but we humbly suggest more of the following:

Oh and if you could encourage your boss to reverse a particular asinine policy, that’d be great. Good luck in the new gig.

Accounting News Roundup: Are “Tax-Aware” Juries the Solution to Deductible Punitive Damages?; Financial Fake Twitter Feeds; Deloitte’s Czech Problem | 07.02.10

Damages Control [NYT]
Because BP could end up paying a metric asston in punitive damages over the Deepwater Horizon whathaveyou, the Senate recently approved a repeal of punitive damages awarded in civil disputes being deductible for tax purposes.

The problem is that it probably won’t work, as Gregg Polsky and Dan Markel, two law professors at the University of North Carolina at Chapel Hill and Florida State University write in an op-ed in today’s Times:

“When plaintiffs and defendants reach a settlement before a trial, which happens in most cases, they aren’t required to specify which parts of the settlement are punitive and which are compensatory; therene number. That allows defendants to disguise the amounts that they would have paid as punitive damages as additional compensatory damages.

And because the measure maintains the deductible status of compensatory damages, nearly all punitive damages will remain, as a practical matter, deductible. This easy circumvention surely explains the meager revenue projections from the measure: $315 million over 10 years.”

The solution, according to Polsky and Markel is to make juries “tax aware” so that they may adjust their findings appropriately, “the prospect of tax-aware jurors would also raise the amounts of settlements before trial — when, again, most cases are actually resolved. This is because the amount of a settlement depends on the amount that a jury is expected to award after a trial. If tax-aware juries became the norm, plaintiffs would push for higher settlements, and thus both settling and non-settling defendants would bear the correct amount of punishment. Under the Senate’s approach, in contrast, only the very few non-settling defendants would bear that punishment.”

Five Fake Finance Twitter Feeds [FINS]
These are far better reasons to be on Twitter than Ashton Kutcher or Kim Kardashian.


Charities fail to communicate in annual reports: Deloitte [Accountancy Age]
Whatever they are communicating, it’s still more informative than a “Transparency Report.”

More cloud accounting benefits [AccMan]
“It is becoming increasingly obvious that clouding computing benefits as they apply to the accounting arena stretch way beyond the ability to save time, effort and cost. As I meet with more customers, I am discovering benefits that only customers can express.”

Apollo Said to Hire PricewaterhouseCoopers’s Donnelly as CFO [Bloomberg BusinessWeek]
“[Gene] Donnelly, who starts in his new role today after 29 years at New York-based consulting firm PricewaterhouseCoopers LLP, fills a vacancy left by the departure of Kenneth Vecchione in January, said the person, who asked not to be identified because the hiring wasn’t announced. Barry Giarraputo, the company’s chief accounting officer, had been serving as interim CFO.”

Deloitte answers fraud reports [The Prague Post]
Francine McKenna tweeted about this story yesterday, where Deloitte has been cited by one Czech newspaper as being investigated by Czech anti-corruption police.

“Deloitte has been put on the defensive since the June 28 report in the daily Lidové noviny (LN) that quoted unnamed sources alleging a slush fund used to bribe public officials and fraudulent accounting that gave clients better financial results. Deloitte says the results of an internal review highlighted ‘certain deficiencies in management reporting,’ but considers the results an internal matter and will not make any comments.”

Goldman Sachs Isn’t Perfect, Ya Know

“During the course of the financial crisis, we made our fair share of mistakes. We lost a considerable amount of money through our exposure to leveraged loans and mortgages.”

~ Goldman Sachs CFO David Viniar, in his opening statement before the Financial Crisis Inquiry Commission.

Rough Year at KV Pharmaceutical Continues as Chairman, CFO Quit

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

There’s no shortage of drama at KV Pharmaceutical. Last week Chairman Terry Hatfield, Stephen Stamp, who was named CFO April 13, and board member John Sampson quit, citing “serious concerns” about newly elected board members and senior management.

The previous week, immediately following the company’s annual meeting, the newly elected board ousted interim President and CEO David Van Vilet, who had been in charge since December 2008.

The St. Louis-based company has not named a new CFO.


It also said it is looking for a CEO with extensive pharmaceutical experience. For now, Gregory Divis will be interim president and CEO, while continuing as president of Ther-Rx, the company’s branded pharmaceutical subsidiary.

In their resignation letters, Hatfield and Sampson said they had “serious concerns regarding the ability of the newly constituted board and senior management to provide the required independent oversight of KV’s business during this critical time in the company’s history.”

They noted that only three of the board’s seven nominees for board seats were elected at the annual meeting. The remaining elected members were candidates proposed by shareholders. Among those re-elected to the board was Marc Hermelin, son of the founder, who was ousted as CEO in 2008. Also re-elected was David Hermelin, the son of Marc Hermelin, and a former director of corporate strategy who retained his seat. David Hermelin was among the board’s nominees, Marc was not.

The year has been tumultuous. In February, KV agreed to a $25.8 million settlement with the United States Justice Department. Officials with the company’s subsidiary, Ethex Corp. pleaded guilty to two felony counts of criminal fraud for failing to report it was manufacturing oversized tablets that could be harmful to patients, (some had double the advertised dosage of medicine). In March the company fired 289 employees, or 42 percent of its staff, to lower operating costs.

However, the company’s board still found the cash to pay themselves a hefty raise. According to a recent SEC filing, the board was paid $116,000 in 2009, a $60,000 raise while the company was involved in massive layoffs.

Earlier this month KV closed the sale of the assets of Particle Dynamics for $24.6 million, plus up to an additional $5.5 million in potential earn-out payments over the next four years.

In a prepared statement the company said the board’s primary focus is two-fold: to continue to work with the Food and Drug Administration to reinstate KV to Good Manufacturing Practice compliance, and to continue to explore a variety of financial alternatives as a means to strengthen the company’s cash position.

The company could not be reached for comment.

Accounting News Roundup: More Execs Say Benefits Sarbanes-Oxley Outweigh Costs; New Jersey Millionaire Tax Fails; Has the SEC Learned Anything? | 06.22.10

As Congress Mulls SOX Exemption, Survey Suggests Acceptance [Compliance Week]
Just when Sarbanes-Oxley compliance was about to get torpedoed by the financial reform bill, a new study comes out that shows companies are starting to see benefits from the legislation, “In its 2010 Sarbanes-Oxley compliance survey, Protiviti says 70 percent of executives in at least their fourth year of working to comply with Sarbanes-Oxley say they believe the benefits outweigh the costs. That’s a big swing from the first year the firm asked the same question and heard only 39 percenbenefits greater than the costs.”


Showdown Over Strippers [WSJ]
Some people in the Show Me State are not interested in living up to that name, “Last month, the Republican-controlled legislature passed one of the nation’s toughest state laws aimed at strip clubs and other adult-entertainment venues. It would ban nude dancing and the serving of alcohol in adult cabarets, force strip clubs to close at midnight and forbid seminude dancers to touch patrons.”

The legislation is currently awaiting sign/veto from MO Governor Jay Nixon.

Opponents argue that the state’s very economic recovery is at stake, “Club owners and dancers say that the venues rarely attract crime, and that the new rules would be so strict that hundreds of jobs and millions of dollars in state revenue could be lost at a time when Missouri’s economy is struggling to recover from the recession.”

JP Morgan Names Doug Braunstein CFO in Shake-Up [AP]
“JPMorgan Chase said Tuesday it is shuffling the positions of three executives, including naming a new chief financial officer. The shake up is part of a program JPMorgan Chase has put in place to have executives work across multiple divisions to broaden their experience. Doug Braunstein is taking over as CFO. He was previously head of the bank’s investment banking division in the Americas. Braunstein, 49, replaces Michael Cavanagh, who had served as CFO since 2004. Cavanagh was named head of the bank’s treasury and securities services business.”

Tropical Storm May Pose Threat to BP Spill Cleanup [Bloomberg]
The first storm of the Atlantic hurricane season may enter the Gulf of Mexico as soon as next week, possibly disrupting BP Plc’s efforts to clean up the worst oil spill in U.S. history.

Thunderstorms in the Caribbean may strengthen into a tropical storm this week before heading into the Gulf between Mexico and Cuba, said Jim Rouiller, a senior energy meteorologist at Planalytics Inc. in Berwyn, Pennsylvania.

“The first named tropical storm of the 2010 season appears more likely to form over the northwestern Caribbean late this week and will go on to represent a formidable threat to the Gulf, along with heightening concerns about the oil slick,” Rouiller said in an e-mail yesterday.

Forecasters are predicting this year’s Atlantic hurricane season, which runs from June 1 to Nov. 30, may be among the most active on record and hamper the U.K. oil company’s efforts to plug the leaking well. AccuWeather Inc. forecast at least three storms will move through the region affected by the spill.

New Jersey Democrats fail to extend millionaires tax [Reuters]
Garden State millionaires rejoice!

SEC Crazy Talk [Portfolio/Gary Weiss]
Sam Antar recently turned over 37,000 documents to the Securities and Exchange Commission but not because the SEC was getting nostalgic for the Crazy Eddie days.

The SEC wanted documents, emails etc. from both Antar and Fraud Discovery Institute founder Barry Minkow on companies that have been covered by both men. The information relates mostly from information obtained from short-sellers. However, Gary Weiss writes that the SEC also asked for emails that the two exchanged with two reporters and from Antar’s ex-wife.

Gary thinks that this poking around by the Commission is all too familiar, “Well, I think what we may be seeing is a repeat of the [David] Einhorn fiasco, and then some,” referring to the SEC’s investigation into Einhorn’s criticism and short-selling of companies.

Einhorn was eventually vindicated and the companies – most notably Allied Capital – outed for their shady practices. Why the SEC is digging around the very people trying to help them isn’t quite clear but then again the SEC doesn’t have the greatest track record.

BP CFO Explains the Ixnay on the Ividenday

“It’s an extraordinary thing for a company to do, but it’s an extraordinary thing we’re in.”

~ BP CFO Byron Grote, on the company’s decision to suspend its dividend, on a conference call with investors.

AICPA: CFOs Want More Input from Auditors on IT Matters

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

Certified Public Accountants are increasingly being asked to solve information technology problems for clients and prospective clients, according to a survey by the American Institute of Certified Public Accountants.

But that raises a potential conflict of interest of the sort that led the Securities and Exchange Commission to keep auditing and IT consulting separate. The pressure for auditors to help provide IT solutions will persist nonetheless, says the AICPA.


“The tide has really turned this year with the economy and increasing regulations,” said Joel Lanz, co-chair of the AICPA’s Technology Initiatives task force in a prepared statement.

“As small and medium-sized companies increasingly place IT under their chief financial officers, it’s becoming much more of a broad scope of responsibility,” added Ron Box, Lanz’s co-chair.

With a renewed focus on IT-related issues, the survey makes clear that CPAs need to be literate about information technology in order to collaborate effectively with clients and their IT partners.

Data security clearly is driving the new interest, and CPAs believe the issue will persist in importance for years, the survey suggests.

The biggest surprise from the survey, Lanz told CFOZone, is the fact that “CPAs are not only providing guidance on financial issues, but there is an expectation by audit committees that CPAs could advise on different IT governance issues. CPAs are now commenting to audit committees about business operations in addition to pure financial issues.”

It’s not that CPAs are expected to be the technology expert, but the expectation is that the CPA is able to provide business insight and IT guidance which then enables their clients to effectively leverage their technology to enhance the businesses value, he added.

Is this simply recreating the problem that led to the separation post-Enron and WorldCom of audit services from consulting, much of which was IT oriented? There’s the potential for a conflict of interest here, and a slippery slope toward bad audits as result. SEC rules specifically say audit firms cannot provide IT consulting services on matters that relate to financial reporting for the same client. And the audit committee must sign off on other types of consulting services.

Lanz concedes that CPAs will have to be careful. “It is a fine line,” said Janis Parthun, senior technical manager – IT, for AICPA, but she added that CPAs can help companies avoid problem here. “Sometimes audit committees do need some education in these areas and this is where they can reach out to CPAs that have some understanding of IT to give the audit committee options to make the right decision.”

Lanz adds says that the AICPA has helped on this front with some recent guidelines. “Recent standards provide CPAs with specific criteria for when they need to communicate with audit committees, as well as the type of communication required,” he said.

A spokesman for the Securities and Exchange Commission declined to comment on the trend.

Accounting News Roundup: Dell Looks to Settle SEC Probe; BP’s Request for Tax Docs Causes Issues for Fishing Communities; Salesforce CFO: We Need Sales People! | 06.11.10

Dell, CEO Are in Talks to Settle SEC Probe [WSJ]
The SEC’s probe, launched in 2006, into Dell had initially focused on some accounting manipulation that has now ensnared founder and CEO Michael Dell focusing on disclosure and omissions related to Intel Corp. and negligence-based fraud charges.

The Journal reports that the possible fraud charges “suggests that the SEC may suspect that Mr. Dell unintentionally made statements that he should have known were misleading.”

In anticipation of the settlement, the company will restate its most recent earnings report, reducing its net income by $100 million.


The fishermen and the tax man [Los Angeles Times]
BP is requesting tax records from people in fishing communities in order process claims of lost work related to the Deepwater Horizon spill. Those seeking payment need to submit a commercial fishing license, proof of residence and tax statements. The problem is that many of these people do not keep tax records since they are paid in cash for their work.

More than 25,000 claims have been submitted so far and payments to about 12,000 have been made, totaling $36 million, according to the LA Times.

BP, through Graham MacEwan says that there’s a plan although like most of this crisis, the company isn’t sure how it will be fixed, “BP Chief Operating Officer Doug Suttles has been telling parish council members over the past few days that if someone’s tax documents are not available, we will find other metrics. I don’t know exactly how we are going to do that yet.”

Salesforce CFO: Company Aggressively Hiring Sales Staff [Dow Jones]
Cloud trailblazer Salesforce.com is looking to add more sales personnel, having added 18,000 new customers over the last 12 months according to CFO Graham Smith.

Mr Smith also said the company is rolling out two new products in the near future including Chatter, a “a social-networking application for office collaboration” and VMforce, a collaboration with VMware, Inc. that will give Java developers a new way to deploy applications over the web.

Charlie Gasparino: Former CFO Is Getting Some Extra Stink-eye in Lehman Probe

Namely, Erin Callan.

CFOs Return to Pessimism on the Hiring Front

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

More bad news on the hiring front, as CFOs say they are less likely to hire people now than they were three months ago.

According to the latest quarterly Robert Half Financial Hiring Index, six percent of chief financial officers said they plan to hire full-time accounting and finance employees during the third quarter of 2010.

In the prior survey conducted three months ago, seven percent of CFOs indicated they planned to add full-time accounting and finance employees during the second quarter. At the time, the folks at Robert Half celebrated the fact this was the highest hiring forecast since the first quarter of 2009.

Well, that party was short-lived.


Meanwhile, in the latest survey, nine percent of CFOs said they anticipate staff reductions. This is up from eight percent in the prior quarterly survey.

Add it up, and CFOs are more pessimistic now than they were three months ago. Not a recipe for bringing down the nation’s stubbornly high unemployment rate.

And accounting was supposed to be the good profession to go into because it is supposedly growing. Oh well.

Of course, the folks at Robert Half-an employment agency–put a positive spin on its results, asserting: “CFOs remain optimistic about the outlook for their businesses.”

The reality is – the job picture in this country is bleak and possibly getting worse. There is not one report out there that suggests companies are ready to unleash their HR departments.

In fact, the government’s recent report – which President Obama inexplicably predicted several days earlier would be strong – found that nearly half the unemployed have been out of work at least six months.

Even the teaching profession – long considered recession resistant and secure – is experiencing massive layoffs nationwide. Only a wage freeze movement is preventing even more teachers from losing their jobs.

Ultimately, companies need to see a connection between hiring more people and growing their business for them to decide to add to staff.

Increasing their taxes and piling more and more regulatory and policy mandates on them is certainly not going to entice companies to hire more people.

Accounting News Roundup: Ernst & Young Expresses ‘Sympathies’ to Equitable Policyholders; ABA: Fair Value Will Result in ‘Craziness’; Annoying Is a Vital Accountant Trait | 06.04.10

E&Y pays out almost £3m following Equitable verdict [Accountancy Age]
“E&Y successfully contested a claim they were not objective in their audit of the firm. However the JDS finding that the 1999 Financial Statements from Equitable did not show a true and fair view, still stand. The firm extended ‘our sympathies’ to policyholders of Equitable Life, who have been impacted by the near-collapse of the company.” Is expressing sympathy a new strategy for E&Y?


FASB Exposure Draft Alarms Bank CFOs [CFO]
What kind of alarm you ask? So alarming that a lobbyist spoke out against it with statements like, ‘aw-dropping’ and ‘You don’t want that craziness in your financial statements.’ That’s the words of the American Bankers Association’s Senior VP of Tax and Accounting who was hospitalized with cardiac trouble.

CFOs were a little less sound-bitey, but still aren’t jumping for joy over the proposal, telling CFO “I don’t see how that improves transparency” and “[FASB] they will end up with is a situation where there is a ton of judgment involved.”

Field narrows in race for top Deloitte job [Times Online]
The Times Online is having fun speculating about the new Deloitte CEO in the UK, now that Vince Niblett, “The early favourite” has been appointed as the head of audit there. It’s a three horse race according to the Times, with David Sproul, head of tax, and Martin Eadon, a senior audit partner also rumored to be taking the head spot after John Connolly retires next year.

TaxProf Blog Crosses 10 Million Visitor Mark [TaxProf Blog]
And counting…congrats Paul!

Friday tip: embrace your annoying accountant [AccMan]
“In order to be a successful accountant you do not need to be ‘born dull.’ But you do need to be born annoying.”

SEC: Diebold Financial Execs Would Step Over Their Own Mothers to Meet Earnings Forecasts

The Diebold CFO, controller and Director of Corporate Accounting had a fairly standard routine back from 2002 to 2007 – 1) get daily “flash reports” 2) look at BS estimates that analysts came up with 3) cook up some ideas for meeting those estimates 4) make up the numbers.

Pretty standard stuff, especially if you buy the idea that “legally cooking the books is a critical skill for attracting investors.”


The SEC presented the accounting hocus-pocus earlier today:

The SEC alleges that Diebold’s financial management received “flash reports” — sometimes on a daily basis — comparing the company’s actual earnings to analyst earnings forecasts. Diebold’s financial management prepared “opportunity lists” of ways to close the gap between the company’s actual financial results and analyst forecasts. Many of the opportunities on these lists were fraudulent accounting transactions designed to improperly recognize revenue or otherwise inflate Diebold’s financial performance.

Among the fraudulent accounting practices used to inflate earnings and meet forecasts were:

• Improper use of “bill and hold” accounting.
• Recognition of revenue on a lease agreement subject to a side buy-back agreement.
• Manipulating reserves and accruals.
• Improperly delaying and capitalizing expenses.
• Writing up the value of used inventory.

Gotta give yourself some options, amiright? Can’t just simply rely on channel stuffing!

But in all seriousness, if you’re a top financial executive at a company and part of your daily routine is finding ways to increase profitability through accounting manipulation, at some point you’d have to think to yourself, “This is one shitty business we’re running.”

Will Self-insured Companies Bear the Brunt of Rising Healthcare Costs?

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

The employer-sponsored health care system provides health insurance to more than 60 million people–but it does not exist in a vacuum. Employers are often reminded of this fact when their health care costs go up each year. Factored into that cost increase are premiums employers pay to hospitals to help those institutions provide care to the uninsured.

Two years ago the actuarial firm Milliman put a price tag on this cost-shifting: employers pay an additional $1,115 more for a family of four’s health insurance to make up for this loss. That totals about $88 billion annually.


This cost-shifting is once again becoming an issue as the federal government looks to provide insurance to people who cannot otherwise get it because they are considered high-risk.

States have for years created high-risk pools to separate the people with especially high health care costs from the rest of the population. Normally these folks can’t get insurance. The high risk pool absorbs some of the cost to insurers.

Now the federal government is getting in on the action, in large part to address the issue that insurers regularly refuse to issue insurance to some people or they do so at rates that are prohibitively high.

A new analysis on so-called high risk insurance pools that the federal government will set up as soon as July as a result of health reform makes the point that the money allotted will run out much sooner than originally thought. Instead of covering as many as 7 million people who could qualify there will likely be enough money to cover about 200,000 annually. This is not surprising. The need is always greater; the funds always inadequate.

So what does this all mean for employers?

It appears one step removed. But, as employers know, the health care system is fragmented yet, in the end, someone – either the federal government or employers – ends up paying the cost. In the analysis, published by the Center for Studying Health System Change, the authors point out that states with high risk pools currently do not assess self-insured employer plans.

Under the federal law this will change. Employers will face an assessment. One possibility is that the assessment will have to go up in order to increase the amount of money in the pot. The other of course is to limit who can get access to the high risk pools.

It remains to be seen what kind of conflict this issue will provoke. Like many other aspects of the new health care reform, it has the potential to fade away or to metastasize into something problematic.

But one thing remains likely: costs will continue to go up. The question is who will pay for these costs? If these assessments are any sign, it will be insurers and self-insured employers.

Memo to CFOs: Layoffs, Frozen Salaries Don’t Always Save the Most Money

Layoffs, pay freezes, pay cuts. Pretty simple cost cutting solutions for CFOs who’ve got tight budgets. Unfortunately, the slash and burn tactics for personnel may have been better applied in another area – inventory.

A recent survey performed by Greenwich Associates of midsized and small company “financial decision-makers” found that, in particular, midsized companies ($10 million to $500 million in revenue) that reduced their inventory, on average, saved 30% more ($520k inventory vs. $400 layoffs).

While that’s great news, the unfortunate part is that only 17% of the companies survey bothered with that particular cost saving strategy while 47% of those survey used “staffing reductions.”


The survey also found that while 37% of used pay freezes to reduced costs with an averaged savings of $245,000. Crunching the numbers, that’s nearly 53% less savings than the inventory reduction savings.

Of course, not all companies have inventory in the dusty-stacks-of-pallets-in-a-warehouse sense. This is especially true of the professional services/financial services area where, unfortunately, the staff are sometimes considered to be inventory.

Lesson from the Downturn: Cut Inventory, Not People [CFO]

Accounting News Roundup: Reasons Why CFOs Are Still Stalling on Cloud Solutions; IASB Trumpets Latest Convergence Steps; OCA Gets a Deputy | 05.28.10

What’s stopping CFOs putting their money on cloud computing? [Silicon.com]
Some CFOs are still hesitant to jump into cloud computing for three main reasons: 1) They aren’t sure what they’re getting for their money 2) Security and information assurance 3) The cost of migrating their data.

All legitimate concerns, however steps can be taken and questions asked in order to address most concerns (or at least put CFOs in a better informed position than before):


1) “Ask providers to clarify how they intend to deliver your service so that you understand the risks involved and know exactly what you are getting for your money.”

2) “Undertake due diligence and ensure that cloud providers can replicate the appropriate security policies and procedures. Agree realistic [Service Level Agreements] and make certain that services are scalable enough to meet present and future requirements. Finally, ensure that everything is clearly written down in the contract.”

3) “Evaluate how much time, effort and money will be required to migrate data and rework business processes.”

IASB unveils profit and loss proposals [Accountancy Age]
It appears that Tweeds and Co. like the U.S. GAAP method of presenting Other Comprehensive Income: “If adopted, these proposals will result in further convergence of IFRSs and US GAAP in an increasingly important part of the financial statements.”

Buffett to Testify to Crisis Panel on Moody’s [WSJ]
This will be a breeze – folksy insights with a dash of sexual metaphors will clear up this area of the crisis. Plus, no one is going to scold an old man.

H & H bagel big cops to $369,000 tax fraud [NYP]
Helmer Toro simply kept the money. He’ll spend 50 weekends in jail for that little stunt.

Brian T. Croteau Named Deputy Chief Accountant for Professional Practice in SEC Office of the Chief Accountant [SEC]
Prior to the new gig, Mr Croteau was a Senior Associate Chief Accountant at the OCA. He joined the OCA after being a partner in the Assurance practice at PwC in the Auditing Services Group. He obviously wasn’t bothered by the Partner to Senior Associate title change. It must have been the “Chief Accountant” suffix.

Accounting News Roundup: FASB Takes Another Stab at Mark-to-Market; Property Taxes Are States’ Savior; CFOs Prefer to Get Taxes Right | 05.27.10

Proposed Overhaul of Accounting Standards Contains Mark-to-Market Rule [NYT]
The FASB has rolled out MTM 2.0 and while the usual suspects have already started belly-aching, Bob Herz insisted that “The financial crisis reinforced the need for better accounting in this area.”

The new rule will require loans and loan-related instruments to be valued at their market value immediately, thus accelerating any losses that might occur. Losses will either be booked as a hit to earnings or as a reduction in the value of the asset. The Times quotes Jack T. Ciesielski of Accounting Analyst Observer, who reassures, “It will messier to read, but if you know what you are doing you can figure it out.”


The comment period (which should yield some interesting thoughts) will run through the end of September, after which the FASB will hold roundtables discussing the rule and then make any final changes. Institutions with greater than $1 billion in assets will be required to adopt the rule in 2013 while those with less than $1 billion will have until 2017.

The Property Tax: Unsung Hero [TaxVox]
States have their property tax revenues to thank for their budgets not being in an even bigger mess than they already are, according to TaxVox. “[P]roperty tax revenues have yet to fall both because the levy tends to be backward-looking (it takes a while for assessed values to catch up with reality on both the upside and the downside) and because local governments can raise rates. The strength of the property tax was the main driver of the small positive growth in overall state and local taxes for the fourth quarter of 2009.”

If states are lucky, by the time property tax rates adjust to the reduced home values, sales and income tax revenue may be on their way to recovery. However, it’s unlikely that tax revenues will return to their previous levels which means governments may have to continue (or maybe start?) to – God forbid – cut spending.

“I Didn’t Know What ‘$’ Means” Fails as Tax Defense [TaxProf Blog]
Who let this guy out of the lab? “I am unaware of the meaning of this symbol.”

Yahoo CFO Sees Annual Revenue Growth Of 7%-10% From 2011-2013 [WSJ]
Contrary to what some might believe, Yahoo is still in business and doing quite well, thankyouverymuch. CFO Tim Morse expects things to brighten up with revenue increasing 7-10% from 2011-2013, due mostly to increased advertising business. Yahoo’s partnership with Microsoft and Zynga (they make Farmville) are seen as key to the search engine competing with Google.

Survey finds tax departments more concerned with getting it right than aggressive tax planning [GT Press Release]
Grant Thornton’s latest CFO survey finds that they are more concerned with getting their taxes right than with paying less. Obviously the latter is a goal but considering the regulatory environment (i.e. Democrats are running things), it’s not the priority, despite what those people running for re-election might tell you.

CFO: Philips’ Efforts Have Company Moving Up the Outsourcing Ladder

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

As a follow-up to last week’s blog on Molson Coors’ experience with outsourcing, the CFO of the Latin American division of Dutch comglomerate Philips provided a different perspective Thursday morning at the Hackett Group’s best practices conference in Atlanta.

While Molson Coors’ CFO Stewart Glendinning expressed disappointment over high turnover rates at the outsourcing company the beer company signed up with, Philips’ Latin American CFO Ronald Eikelenboom said he planned on high turnover when he inked a deal with Indian outsourcer Infosys in late 2008 to expand the two companies’ relationship to Brazil, where Philips’ Latin American operations are based.


Eikelenboom told the audience (and me in a follow up video interview that will be posted shortly) that high turnover was central to Infosys’ business model, as the outsourcer keeps salary costs low by rotating from older to younger workers. But that turnover was priced into the terms of the deal, which at $250 million (for, I believe, the global contract, not just the Latin American part) is considered one of the largest of all such transactions. Too, the terms set a minimum level of performance, so it’s up to Infosys to manage the downside of high turnover.

Infosys had few qualms about Philips’ demands, said Eikelenboom, because the company was eager to expand into Brazil and the Philips deal gave it an entrée. So the CFO had enough leverage with the outsourcer to reassure himself about the potential risks.

“We’re building something together with Infosys,” he told the gathering. “We share the same aspirations.”

For that reason, Eikelenboom also expressed less concern than Glendinning did about outsourcing complex financial processes. And he said that was important for Philips as labor cost advantages in emerging markets dwindle over time as wages rise, and innovation and process improvement thus become more critical to the value that outsourcing creates.

“We’re moving up the ladder in BPO,” he said, referring to business process outsourcing.

With outsourcing, as with everything, I suppose, it’s different strokes for different folks.

COSO Study Finds Accounting Frauds Getting Larger, Execs Named in Nearly 90% of Cases

If you could sum up the years of 1998 to 2007, how would you do it? Promising career crushed in a millisecond? A seemingly endless loop of awkward moments? Various forms of experimentation?

If you’re the Committee of Sponsoring Organization of the Treadway Commission (“COSO”) you’re more or lessway: Financial reporting fraud is getting bigger. Financial reporting fraud causes businesses to fail. CEOs and CFOs are usually the ones blamed.


If you’ve been paying attention at all, this probably doesn’t surprise you one iota but it is nice that COSO took it upon themselves to wrap it up in a nice little package entitled, Fraudulent Financial Reporting 1998-2007, An Analysis of U.S. Public Companies.

The report examined cases of alleged accounting fraud that were investigated by the SEC for the period. Some of the more interesting findings:

• Financial fraud affects companies of all sizes, with the median company having assets and revenues just under $100 million.

• The median fraud was $12.1 million. More than 30 of the fraud cases each involved misstatements/misappropriations of $500 million or more.

• The SEC named the CEO and/or CFO for involvement in 89 percent of the fraud cases. Within two years of the completion of the SEC investigation, about 20 percent of CEOs/CFOs had been indicted. Over 60 percent of those indicted were convicted.

• Revenue frauds accounted for over 60 percent of the cases.

• Twenty-six percent of the firms engaged in fraud changed auditors during the period examined compared to a 12 percent rate for no-fraud firms.

• Initial news in the press of an alleged fraud resulted in an average 16.7 percent abnormal stock price decline for the fraud company in the two days surrounding the announcement.

• Companies engaged in fraud often experienced bankruptcy, delisting from a stock exchange, or material asset sales at rates much higher than those experienced by no-fraud firms.

Lot of takeaways: bogus revenue is still popular, switching auditors is usually not a good sign (*ahem* Overstock.com), oh and if you cook the books, investors run away from you like a band of lepers.

Further, Compliance Week reports that the 347 cases reported is an increase from the 294 reported for the 1987-1997 period as well as tripling the average size of the fraud from $4.1 million to $12.05 million. The median assets and revenues of $100 million jumped from $16 million in the ’87/’97 range.

While this suggests that frauds are getting bigger, occurring at larger companies and as a result, destroying more wealth, the successful criminal prosecution of the people in charge of the companies doesn’t appear to be keeping up.

COSO Chair David Landsittel said, “All parties involved in the financial reporting process need to continue to focus on ways to prevent, deter, and detect fraudulent financial reporting,” although if the CEO or CFO (who certify the financial statements) are involved in the fraud, this statement doesn’t mean much. Sam Antar doesn’t think so either, telling us,

[W]e needed a study to find out that financial fraud leads to bankruptcy? Where have these guys been?Until we move away from the process oriented “check the box and fill in the blanks” routine in audits and start understanding criminal behavior, there isn’t much any auditor can do to deter fraud. Former Speaker of the House of Representatives Tip O’Neill once said, “All politics is local.” Similarly, we need to learn that “All fraud is personal.”

And since the SEC names a CEO or CFO in 90% of these cases, yet only 20% of those cases actually result in indictment within two years, does this indicate that the naming of said CEO/CFO is largely a photo op for the SEC/DOJ et al? Even if 60% of those executives are convicted it appears that finding fraud is (relatively) easy part; successfully blaming someone in the court of law is something else entirely.

One of the authors of the study, Mark S. Beasley of North Carolina State University noted that there is work still be done, “We need to determine if there are certain board-related processes that strengthen the board’s oversight of risks affecting financial reporting.” This seems to indicate that there is some significant high-level processes that are still not in place that could keep tabs on the Andy Fastows of the world but for now, we still seem to be going with the honor system.

COSO Press Release [COSO]
Fraudulent Financial Reporting 1998-2007, An Analysis of U.S. Public Companies [COSO]
COSO Fraud Study Catalogs Latest Decade of Incidents [Compliance Week]

You Can Forget About Landing That CFO Position at the SEC

Mary Schapiro took some time out of her fraud fighting Friday to ask Kenneth Johnson to quit acting as the Commission’s CFO and to take on the official responsibility of running the Office of Financial Management.

Mr Johnson (KenJo?) vehemently accepted the offer and threw in a shout out to the boss, “I’m honored to accept this new role at such an important time for the agency. Chairman Schapiro is deeply committed to strong financial management, and I’m proud to lead the agency’s initiatives in this area.”


Presumably, the CFO position isn’t a kicking-down-doors type job so Johnson’s first order of business should be to determine the savings on a group rate at one porn site that can appropriate service all tastes.

Washington, D.C., May 21, 2010 — Securities and Exchange Commission Chairman Mary L. Schapiro today announced that Kenneth A. Johnson has been named Chief Financial Officer for the agency.

Mr. Johnson has been serving as acting CFO for much of the past year. The agency’s CFO is responsible for leading its Office of Financial Management, which handles the budget, finance, and accounting operations for the SEC.

“I’m delighted that Ken has agreed to take on this role at the SEC,” said Chairman Schapiro. “His deep experience in the financial arena will be incredibly valuable as we grow as an agency.”

Mr. Johnson added, “I’m honored to accept this new role at such an important time for the agency. Chairman Schapiro is deeply committed to strong financial management, and I’m proud to lead the agency’s initiatives in this area.”

Mr. Johnson, 37, joined the SEC in 2003 as a Management Analyst in the Office of the Executive Director. In that role, he advised on all aspects of the budget process, developed strategy initiatives, and responded to inquiries from the Office of Management and Budget (OMB) and Congress regarding the SEC’s budget and financial operations. He became Chief Management Analyst in 2006.

Mr. Johnson has served as a valuable staff expert on legislative proposals, and he managed the development of the SEC’s long-range Strategic Plan that would guide agency policy through 2015.

Prior to joining the SEC staff, Mr. Johnson worked as a Commerce Analyst at the Congressional Budget Office. His primary responsibility in that role was to analyze and report on the budgetary effects of committee-approved legislation.

Mr. Johnson earned his Masters in Public Policy from the Kennedy School of Government at Harvard University, and earned his BA at Stanford University.

Abercrombie & Fitch’s Jonathan Ramsden: CFOs Need to Challenge Conventions

Jonathan Ramsden has been Executive Vice President and Chief Financial Officer of Abercrombie & Fitch since December 2008 and is a key part of a team trying to guide the retailer’s global expansion while managing something of a remake of its domestic operations. Going Concern caught up with him recently to find out how he sees A&F’s business and what else is on his mind.


Prior to joining Abercrombie & Fitch, Ramsden was CFO of TBWA Worldwide, a global marketing services company with operations in over 70 countries. He began his career with Arthur Andersen, spending nine years in the firm’s London and New York offices. He is a graduate of Oxford University and a UK Chartered Accountant. Jonathan lives in Columbus, Ohio, with his wife and threng>Going Concern: I’ve got to start by asking how analysts got Abercrombie’s early-year outlook so wrong. One early year report out in the Wall Street Journal anticipated an ugly same-store-sales decline, and the next day you post an 8% increase in January sales in stores open at least one year. February and March were good for you too. Why the gulf between predictions and performance?

Ramsden: Our business improved at the beginning of the year and, since we don’t give forward looking guidance, the analyst consensus was modeling a continuation of the prior trend. We have also consistently said that one or two months do not constitute a trend, and that month to month results may be volatile. Our focus is less on monthly sales figures than doing what we think is right for the long-term health of the brands and the business.

Going Concern: Do you see it as part of your job to find metrics that allow shareholders and analysts to make more accurate predictions and better comparisons, or does that really fall beyond the CFO’s purview? What can you do as CFO to help people better understand the company’s business?

Ramsden: We try to provide data that enables shareholders and analysts to understand the underlying dynamics of the business. Since the beginning of last year we have not been giving forward looking guidance on sales or earnings since we think that implies a degree of precision about future results we have not had in the environment we have been through.

Going Concern: How do you expect Abercrombie to perform this year overall?

Ramsden: We feel very good about our international business, which continues to affirm the global appeal of our brands. We have been through a challenging time domestically, but are working hard to improve the domestic trend of the business. Protecting the global appeal of our brands remains a paramount objective, and we have been willing to take some pain domestically to do that.

Going Concern: Is it fair to say that the growth will now come overseas? Expanding abroad can be fruitful, but it’s also a big investment. What if sales soften more quickly than expected?

Ramsden: We do believe that the future of our business is tied to our international strategy. At the same time, if we can achieve a sustained improvement in our domestic productivity, that will be very significant to both sales and earnings. There are certainly risks associated with an international expansion, but we have been very encouraged by the results so far.

Going Concern: There seems to be a wane in the company’s popularity here in the States. Does the company agree with that statement and what’s being done to address it?

Ramsden: We believe that our brands retain a strong appeal. 2009 was a challenging year in the US, but we think we can improve the domestic business going forward. Firstly, we continue to work on our pricing. Secondly, there are a number of initiatives in place on the marketing front that we think will help us to better connect with our core customer. We feel better about the assortment than we have in some time. Lastly, we expect that we will need to close a number of stores that don’t really fit in the portfolio, particularly for the A&F brand.

Going Concern: Has Abercrombie & Fitch actually cut costs over the last couple of years? How involved have you been in that and can you explain a little about the process behind identifying excess cost in the business?

Ramsden: We went through a reorganization of our corporate “Home Office” about a year ago, which included some significant lay-offs. The company had never been through anything like that before so it was a difficult process, but we believe the company will be more efficient as a result. The entire leadership group was involved in the process. At the store level, on an ongoing basis we have been looking to find efficiencies in variable costs such as store payroll, packaging, supplies and so on. The biggest component of the margin erosion we have incurred has been in store occupancy costs (rent, depreciation etc) which are relatively fixed in the short term, but which we think we can make progress on over time, including through store closures where appropriate.

Going Concern: What are your biggest challenges as CFO with respect to financial reporting in the coming year?

Ramsden: As we roll out internationally, we have to ensure that our local reporting is to the same standard as our US reporting. In addition, the international rollout adds to the complexity of our US reporting.

Going Concern: Have you started laying the groundwork for converting to IFRS? If so, when do believe the conversion will be complete? Can you give us a sense of the scale of this task and who is helping you with it?

Ramsden: We have done our initial assessment of what would be required to convert. The area of greatest complexity for us would be moving from the retail to the cost method of accounting for inventory.

Going Concern: A recent survey by Financial Executives International/Baruch college stated that only 44% of CFOs anticipate an increase in their hiring and that 25% expect to cut back on their rate of hiring? What kind of cost saving measures (as they relate to employees) did A&F utilize in 2009? Have economic conditions improved to the point that further cost saving measures (e.g. salary freezes, layoffs, reduced working hours) won’t be necessary? What are A&F’s plans with regard to hiring for 2010?

Ramsden: During 2009, as well as layoffs, we took a number of other measure such as deferring and reducing raise pools and reducing retirement plan contributions. Our current direction is a gradual return to normalcy. We are hiring where we need to, while seeking to keep the overall headcount close to the current level.

Going Concern: You were previously a CFO at a global marketing-services company. How difficult did you find it moving sectors? What are the main differences you see between overseeing the finances of a services operation as opposed to a retail operation? (What would you say to a senior level business finance executive who is switching business sectors?)

Ramsden: There are some significant commonalities. Both A&F and TBWA are full of creative, energized and driven people. During the ten years I was at TBWA, we were seeking to build a cohesive global brand. For A&F, the next 10 years are also going to be about international expansion. The starting points are quite different, but many of the challenges of running a global business are the same. I think there are a core set of CFO skills that are transferable and that make up a significant part of the CFO role in any organization. Industry knowledge is definitely valuable, but coming from a fresh perspective also has some value. Clearly there is also a huge amount of instituational and industry knowledge at A&F.

Going Concern: In overall terms, how do you view your role as CFO?

Ramsden: There are some things that are black and white, but most are not. As the CFO, you need to be surrounded by people and processes you trust. Good processes will take care of the black and white stuff, and having people you trust in key positions will take care of most of the rest. So you have to have complete confidence in the people you work with, and you have to ensure that systems and processes are effective. The CFO also needs to challenge conventions.

Outsourcing Has Yielded Mixed Results So Far, Says Molson Coors CFO

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

I’m down at the Hackett Group’s best practices conference in Atlanta and just finished a video interview with Stewart Glendinning, CFO of Molson Coors, on the topic of outsourcing.

While the video won’t be up for awhile, I can report that Glendinning wowed the crowd of 250 or so finance executives in attendance this morning with a frank keynote address on the subject.

He essentially warned the audience that outsourcing is hardly the no brainer that everyone – from Wall Street analysts to third-party service providers – makes it out to be.


While the CFO stood by Molson Coors’ decision to outsource most if not all of its information technology, finance and HR functions in 2008, he conceded that the arrangement has yet to live up to billing.

The decision followed the merger of Molson and Coors in 2005, which was expected to produce roughly $180 million in cost savings. And while outsourcing has helped produce some of that, Glendinning – who was appointed CFO of the combined companies two years ago – acknowledged the arrangement with its vendor hasn’t been all smooth sailing. (He identified the outsourcer by name, but I’m leaving that out just to avoid starting an argument between the two.)

As a result of higher than expected turnover, largely in the vendor’s Indian and Costa Rican operations, for example, some of the labor savings that the outsourcer promised have failed to materialize. Glendinning said annual turnover in those two locations has run as high as 100 percent.

As a result, the CFO said the company was “a little shy” of the savings initially projected for the deal, due to project scope and implementation costs. He said that he would have to revisit some of these issue once the contract comes up for renegotiation in 2013. “You have to keep taking cost out,” he said.

In addition, Glendinning said that during the ramp up phase the arrangement produced higher-than-expected error rates in certain financial processes, and those produced an unwelcome payables backlog that threatened the company’s supply chain. And while he said some of the fault was that of Molson Coors, Glendinning noted that the outsourcer failed to bring it to the company’s attention, largely because of what Glendinning described as “reticence” on the part of its Indian employees to challenge their client.

While Glendinning said Molson Coors’ move to outsource was “the right decision nonetheless,” he cautioned the audience that there are a host of issues that finance executives must consider before going forward with such deals.

In particular, he noted that unlike IT or HR, more complicated, “sensitive” financial processes such as pricing and customer management probably should not be turned over to a third party.

“It’s not black and white,” he said about the decision to outsource. “There is a lot of gray in between.”

Pros and Cons of the CFO Serving on the Board of Directors

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

While shareholders and Sarbanes-Oxley demand more independent directors on boards, a new study shows companies with boards that have at least one key insider, the CFO, are better at financial reporting than those without that executive on their boards. But that doesn’t necessarily mean that all companies should appoint their CFOs to their boards, not at least without taking other considerations seriously into account. In fact, most companies probablelsewhere for the expertise that CFOs supply.


The study found that companies with CFOs on their boards have more effective internal controls over financial reporting, higher accrual quality and a lower likelihood of restatements.

The study measured the quality of financial reporting by examining the incidence of material weaknesses reported under Section 404 of Sarbanes-Oxley. The provisions require companies to document and test internal control over financial reporting, and the company’s independent auditor to independently test those controls and opine on internal control effectiveness.

“One overarching benefit we saw was that there was an improvement in financial reporting when a CFO was on the board,” Rani Hoitash, a professor in the department of accountancy at Bentley University and co-author along with professors Jean Bedard of Bentley and Udi Hoitash, of Northeastern University, “Chief Financial Officers on Their Company’s Board of Directors: An Examination of Financial Reporting Quality and Entrenchment,” told CFOZone.

From 2004 to 2007, 12 percent of those with a CFO on the board reported problems with their internal controls, compared with 15 percent of those without their CFOs on the board, according to the study. Companies with their CFOs on their boards were also 15 percent less likely to restate their results.

These results imply that having a CFO on the board is more likely to align management’s interests with those of shareholders. One reason, the study says, is that CFOs are more likely to share information with other board members about the status of the financial reporting function, and secure sufficient resources to invest in the establishment, documentation and testing of internal controls.

Yet only 8 percent of the more than 7,000 companies studied had their own CFOs on the board.

Of course, SarBox says a CFO can’t serve on his or her company’s audit committee because of the obvious conflict of interest. But as Hoitash points out, “they can have input.”

And SarBox also requires a board to have financial expertise. A CFO obviously fits that bill.

But having a CFO on the board is not without its drawbacks. CFOs serving on boards are more highly compensated than those in other companies, earning an average of $218,715, or 34 percent more in total compensation than their nondirector peers did. There was also a 35 percent lower turnover rate, 8.2 percent compared to 12.7 percent, among CFOs who sat on their own companies’ boards, an advantage that sometimes existed despite a decline in earnings. Hoitash said the findings were evidence that CFOs who serve on boards are more firmly entrenched than those who are not.

That can be a good or bad, depending on a company’s performance. While in many cases where companies are performing poorly, they will fire the CFO without addressing the underlying causes, Hoitash noted that the opposite is true in cases where the CFO is on the board, and that’s obviously not a good thing either. “If the CFO is on the board and the company is performing poorly we found that they sometimes don’t leave, because they have power and influence,” he said.

The question is, will they use the power to do good or bad?” asked Hoitash. If they see themselves as part of the board and work to achieve goals, that is clearly a good thing. However, that power could also be used in their interest to the detriment of shareholders.

That makes some observers wary of appointing CFOs to boards. Instead, say these observers, they should merely attend all board meetings so as to share their expertise without becoming entrenched. “Look back in history, what transgressions brought us to Sarbanes-Oxley and other regulatory reforms?” asked Marc Palker, a certified management accountant and director of CFO Consulting Partners. “Once the CFO was granted stock options in the same manner as the CEO, there was a possible partnership for crime,” Palker added.

Others go even further by recommending that CFOs not attend meetings devoted to discussions of the company’s finance functions. In that case, “it might be appropriate to hold them without the CFO present,” said Sue Mills, a consultant with Tatum, an executive services firm that provides interim CFOs.

Bottom line: CFOs don’t belong on boards unless they cannot otherwise get financial expertise. In that case, Hoitash said, “you might want” to consider the idea.

Survey: CFOs Don’t Think You Should Start Your Career at a Big 4 Firm

Accountemps released the results of a survey today that shows many Chief Financial Officers think that the best place for accounting graduates to start their careers is in a “small to midsize company.” The surprising thing about this particular survey is that the numbers aren’t even close.

When CFOs were asked, “In which one of the following employment environments would you recommend today’s accounting graduates begin their careers?” Their responses were:

Small to midsize company 56%
Small to midsize public accounting firm 16%
Large corporation 14%
Large public accounting firm 8%
Other/don’t know 6%


“Small to midsize public accounting firm” dropped 14% from 2005.

Oh right. And “large public accounting firm” came in dead last. So, for the CFOs surveyed, they’re not really hot on public accounting like they were five years ago and they’re really not crazy about the Big 4 and next tier firms.

Accountemps Chairman Max Messmer says, “At smaller companies, employees often must wear many hats because workloads are spread between fewer workers. Having a wider range of duties enables new hires to quickly build skills, gain exposure to diverse areas of the business and assume strategic roles earlier in their careers.”

From a personal standpoint, we’ve seen both the small and the freakishly large so we’ll try to provide some perspective here.

Maximilian’s thoughts are accurate as it relates to smaller companies. They do have more of a sink or you’re out on your ass approach that will help you grow up quick in that company. Additionally, small businesses have the tendency to be a little more flexible when it comes to your work/life balance. There aren’t any fancy initiatives or bombardments of emails; it’s more of the behavior of those around you. In small companies, you see people taking vacation for days and weeks at at time. That should encourage you to do the same.

At large companies, you hear about people that are losing their accrued vacation, mostly because they are lunatics, but also because it’s likely a widespread occurrence at the company. People in large firms have the asinine notion that somehow the wheels would fall off if they were to disappear for two days, forget about a week. This sounds ridiculous but it’s true.

However, large firms and companies do have resources and opportunities that smaller shops simply cannot provide. Want to move to San Francisco? Your large firm has an office there. Think you might want to spend two years in Australia? Your large company can make that happen. Small shops? Not so much.

What the press release doesn’t say is why the CFOs think you should start at a small/midsize company. Max’s opinion is fine but did he conduct all 1,400 of those phone interviews himself? Of course not. The survey was “a random sample of [CFOs at] U.S. companies with 20 or more employees.” Chances are, most of those CFOs have never worked at a big company so their perspective is likely skewed.

The other thing is – trying not to overstate this – you’ve got to make up your own damn mind about what you want to do with yourself. Do you want Big 4 experience? Then go for it. Do you want a flexible schedule that doesn’t involve a multi-level bureaucracy? Then a small company is probably more your speed.

No survey can answer those questions for you.

THINK SMALL: CFOs Recommend Accounting Grads Start Their Careers at Smaller Companies [Accountemps PR]

The BNY Mellon CFO Isn’t Mad at Andrew Cuomo…

…just disappointed about Andy getting all sue-y over BNY Mellon’s Ivy Asset Management’s involvement with Berns Madoff, which will result in more money going to – SHOCK – lawyers.

Bank of New York Mellon Corp.’s (BK) Chief Financial Officer Todd Gibbons told investors Wednesday that the company is “a bit disappointed” about the New York Attorney General’s decision to file a law suit against the bank related to Bernard Madoff’s Ponzi-scheme.

But as a result of the suit, and the current environment more broadly, legal cost are expected to run higher, the CFO said at UBS AG’s (UBS) Global Financial Services Conference in New York.

Accounting News Roundup: Why Did Power Integrations Fire Their CFO?; Spain Making ‘Sweeping Austerity Measures’; GM May Want GMAC Back | 05.12.10

Power Integrations fires chief financial officer [AP]
Not to worry Power Integrations investors, Bill Roeschlein’s firing “was not related to financial statements or regulatory issues,” according to the company. However, he is currently the “subject of a felony domestic assault criminal complaint filed in Missouri,” which he denies and naturally he will “defend himself vigorously.” Unfortunately, that might cut into the job search.

Spain joins euro zone austerity bandwagon [Reuters]
Spain has agreed to “sweeping austerity measures,” cutting civil service pay 5% and freezing it for 2011. The country will also cut approximately 13,000 public sector jobs.


Minority Owner Sues Cuban, Calls Mavericks ‘Insolvent’ [NYT]
Ross Perot, Jr. is suing SEC target Mark Cuban, accusing him of turning the Dallas Mavericks into a financial catastrophe. The Times reports, “Perot is seeking damages, the naming of a receiver to take over the team and the appointment of a forensic accountant to investigate its finances. Perot said that Cuban’s actions had diminished the value of his investment in the team and violated his and other minority owners’ rights.”

Cuban, as you might expect, isn’t impressed with Charts Boy, Jr.’s loserness. He wrote in an email to the Dallas Morning News, “There is no risk of insolvency. Everyone always has been and will be paid on time. Being in business with Ross Perot is one of the worst experiences of my business life. He could care less about Mavs fans. He could care less about winning.”

Failed Bomber’s Resume Fail [FINS]
Faisal Shazad’s resumé sucks.

Is G.M. Looking to Buy Back GMAC? [AP]
Sources say that GM is interested in buying back GMAC (now known as Ally Financial) “so they can offer more competitive lease and loan deals.” The U.S. Government currently owns 56% of GMAC and 61% of GM, who plans to announce its first quarter earnings next week.

Grant Thornton Survey Shows That CFOs Might Be Ignoring the SEC’s XBRL Deadline

It has been well established in these pages and elsewhere that the SEC has had its share of problems. Take your pick: 1) missing the biggest financial fraud in the history of the world 2) hiring an army of porn-addicted accountants and lawyers to protect our markets 3) waffling on IFRS 4) did we mention missing huge frauds?

To be fair, the Commission has been working hard to redeem itself by cracking down on dubious activity (from Goldman to Overstock), hiring more fraud experts and giving those tranny porn-obsessed employees a second chance.


Regardless of the turnaround-in-progress, CFOs in this country seem to have ceased taking the SEC seriously. Sure the 10-Ks and Qs still get filed but those were in place long before the wheels fell off.

In a recent survey, Grant Thornton found that, despite a SEC deadline for public companies to utilize eXtensible Business Reporting Language (XBRL), a fair amount of CFOs don’t seem all that worried about reporting their financial statements using the technology:

64 percent of public companies do not currently report financial results using eXtensible Business Reporting Language (XBRL); and of those, half have no plans to in the future even though the SEC mandated that public companies have to report their financials using Interactive Data by 2011.

“It’s concerning that almost a third of public companies still have no plan on using XBRL to report their financials despite the requirement that all public companies comply with XBRL filing requirements by mid-year 2011,” said Sean Denham, a partner in Grant Thornton’s Professional Standards Group and a member of the AICPA’s XBRL Task Force. “I foresee a lot of companies playing catch up as the 2011 SEC deadline approaches.”

Whether this lack of action can be attributed to defiance, fear of technology, or pure laziness is not explained but we wouldn’t rule out the possibility that the SEC has an outright mutiny on its hands.

A third of public companies have no plans to use XBRL – despite SEC mandate requiring XBRL use by 2011 [GT Press Release]
Also see: XBR-Lax [CFO Blog]

Accounting News Roundup: Will an International Audit Regulator Become a Reality?; GMAC Shopping for a CFO Candidate; FASB Sued for Antitrust Violations | 05.06.10

Audit chief welcomes debate on international regulator [Accountancy Age]
The idea of an international audit regulator is being kicked around in the EU with about as much seriousness as returning to the moon. That is, it’s absolutely something to be discussed but at this point nobody’s firing up the boosters just yet. IFRS has been proved to be, putting it lightly, a challenge but ever since the Lehman Brothers/E&Y fiasco, reform of the auditing business doesn’t seem far behind.

And while the idea is being entertained, the hurdles to an international regulator sound a little familiar:

Ian Powell, senior partner at PwC UK, said the establishment of an international regulator is “worthy of debate” but believes global consensus among nations may prove difficult.

“Most countries think their regulation is good and it is their system which should be applied – that is going to make it difficult to convince them to give up their system,” he said.

“If you talk to virtually any regulator in any country they do want to see more globalisation of regulation, but the big problem is there are certain political issues that are different in different countries.”

GMAC Said to Consider Ex-Citigroup Banker Yastine as Next CFO [Bloomberg Businessweek]
GMAC is hot on the trail for a new CFO after their last one bolted in March shortly after his TARP testimony. The ward of the state is said to be considering Barbara Yastine, who formerly was the CFO at both Credit Suisse’s and Citigroup’s investment banking groups.

FASB Defendant in Suit Alleging Antitrust Violations and Patent Misappropriation [Silicon Economics, Inc. Press Release]
Silicon Economics, Inc. is suing the FASB, alleging “antitrust violations and with willfully attempting to misappropriate patented technology,” according to the San Jose-based company’s press release.

The lawsuit concerns Silicon Economics’ EarningsPower Accounting™ (EPA™) – a patented method developed by the company to improve the accuracy, validity, and usefulness of financial statements. Silicon Economics recommended the merits of EPA to FASB in response to FASB’s request for public comment on the objectives of financial accounting (No. 1260-001, July 6, 2006). FASB claims that its website terms and conditions gave it ownership of Silicon Economics’ technology, even though such terms were not part of FASB’s invitation for public comment or otherwise disclosed to Silicon Economics.

Accounting News Roundup: Dissecting Overstock.com’s Q1 Earnings; The “Audit the Fed” Drum Still Has a Beat; AMT Patchwork Continues | 05.05.10

Can Investors Rely on Overstock.com’s Reported Q1 2010 Numbers? [White Collar Fraud]
Sam Antar is skeptical (an understatement at best), that Overstock.com’s recently filed first quarter 10-Q is reliable and he starts off by citing their own words (his emphasis):

“As of March 31, 2010, we had not remediated the material weaknesses.”


Material weaknesses notwithstanding, Sam is a little conpany’s first quarter $3.72 million profit that, Sam writes, “was helped in large part by a $3.1 million reduction in its estimated allowance for returns or sales returns reserves when compared to Q1 2009.”

Furthermore, several one-time items helped the company swing from a net loss of nearly $4 million in Q1 of ’09, including nearly $2 million in extinguishment of debt and reduction in legal expenses due to a settlement. All this (and much more) gets Sam to conclude that OSTK’s Q1 earnings are “highly suspect.”

UBS Dividend in Next 2-3 Years ‘Symbolic’: CFO [CNBC]
UBS has fallen on hard times. The IRS, Bradley Birkenfeld, a Toblerone shortage and increased regulation and liquidity requirements have all made life for the Mother of Swiss Banks difficult and CFO John Ryan told CNBC that could hurt their ability to pay their usual robust dividend, “They (capital regulations) are essentially rigorous to the extent that it is unlikely we’ll be able to pay anything other than a very symbolic dividend over the next two or three years,” Cryan said.

While that is a bummer but a “symbolic” dividend is still an improvement over “we’ve recently been informed that the Internal Revenue Service and Justice Department will be demanding that we turn over the names of our U.S. clients.”

Effort to expand audits of Fed picks up steam in Senate [WaPo]
Going after the Fed makes for good political theatre (*ahem* Ron Paul) and rhetoric to fire up the torches of the populist masses. The “Audit the Fed” drum continues to be beaten by the likes of Rep. Paul (R-TX) and Senator Bernie Sanders (I-VT) to much success and Sanders is quoted in the Washington Post as saying “We’re going to get a vote.” Pols want to crack open the books at the Fed to find out what the ugliest of the ugly is inside our Central Bank.

Ben Bernanke isn’t hot on the idea because letting the GAO sniff around may expose the Fed to short-term political pressures. For once AG – not a fan of the Beard per se – sides with BSB. As she said last fall:

It’s right there in the footnotes – pulling out the closest Fed annual report I’ve got (Richmond Fed 2007), both Deloitte and PwC agree that the Fed is a special case in Note 3: Significant Accounting Policies:

“Accounting principles for entities with unique powers and responsibilities of the nation’s central bank have not been formulated by accounting standard-setting bodies.”

The note goes on to explain why government securities held by the Fed are presented at amortized cost instead of GAAP’s fair value presentation because “amortized cost more appropriately reflects the Bank’s securities holdings given the System’s unique responsibility to conduct monetary policy.” Right there, you can see why auditing this thing might be a problem.

This might be one of those “careful what you wish for” scenarios.

Why We’re Going to Keep Patching the AMT—And Why It Will Cost So Much [Tax Vox]
The Alternative Minimum Tax has been a unmitigated failure in the eyes of many tax wonks. Congress has been talking reform in this area for some time and yet, the AMT remains largely unchanged, relying on temporary fixes that could eventually turn into a disaster:

Last year, about 4 million households were hit by the tax, which requires unsuspecting taxpayers to redo their returns without the benefit of many common tax deductions and personal exemptions. That would jump to 28.5 million this year, except for what’s become an annual fix to the levy, which effectively holds the number of AMT victims steady.

Here’s what happens if Washington does not continue that “temporary” adjustment. If Obama gets his wish and extends nearly all of the Bush taxes, the number of households hit by the AMT would soar to more than 53 million by the end of the decade—nearly half of all taxpayers. AMT revenues—about $33 million last year—would triple this year and reach nearly $300 billion by 2020. That is a nearly 10-fold explosion in AMT revenues.

Howard Gleckman argues that the AMT is too big of a political threat to let members of Congress let this sneak by and that the patchwork will continue but that it probably shouldn’t, “The President can assume the AMT will be patched indefinitely, but assuming won’t pay the bills. Unless he is willing to raise other taxes or cut spending to pay for this AMT fix, he’ll have to borrow more than $1 trillion to kick the can down the road for the rest of this decade.”

REMEC Court Decision Could Expose Companies to More Accounting Fraud Litigation

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

As if it wasn’t a big enough risk already, CFOs may have to brace themselves for more private litigation over accounting fraud if a court decision on April 21 involving failed telecom equipment maker REMEC serves as precedent. The good news is that plaintiffs will have to show evidence of the executives’ intent in such cases.


Most cases involving accounting are either dismissed because they involve judgment or are settled before they go to trial, Robert Brownlie, a partner in the law firm of DLA Piper who represented the defendants in the REMEC case, told CFOZone last Thursday. The Del Mar, Calif., company filed for bankruptcy in 2005.

One of the largest such cases involved former Lucent executives, whom shareholders charged had defrauded them through improper accounting for goodwill. In that case, shareholders agreed in 2003 to accept a $600 million settlement.

In contrast to the Lucent case, the one filed by shareholders against REMEC’s former CEO, Ronald Ragland, and former CFO, Winston Hickman, was dismissed, though it also rested on charges that they misled investors because they didn’t write off goodwill that was impaired.

But the dismissal was more difficult to achieve than it would otherwise have been, said Brownlie, because the plaintiffs submitted evidence of internal reports and testimony showing that the company was behind schedule on certain objectives and not meeting its internal forecasts. The court said that those reports created a factual issue that should be determined by a jury; the defendants had to show there was no evidence of intent to deceive on the part of management.

“Normally, with matters of opinion or judgment, you either can’t bring a suit or it’s very difficult to do so,” Brownlie said. But he warned that the decision could mean more cases against corporate executives over accounting fraud.

The court dismissed the charges even though the plaintiffs’ accounting experts testified that they would have reached different conclusions than the former executives did.

Brownlie added that his case was helped by evidence of good faith conduct by the defendants, including evidence of transparency between the company and its auditors, disclosures of disappointing results and write-offs of other accounting items during the period of the alleged fraud and the absence of stock sales.

Describing the outcome for CFOs as “both good and bad news,” Brownlie said the decision showed that the critical issue in such cases will be “a connection between claims and evidence.” And he cautioned that in other accounting cases, it’s likely to be harder to defend executives on the basis of intent, which is why he said “there’s a paradox” in the REMEC decision.

Accounting News Roundup: Would IFRS Prevented Repo 105?; The Crazy Eddie Movie Hits a Snag; JP Morgan May Bolt Tax-Refund Loan Business | 04.29.10

Lehman case “backs” accounting convergence [Reuters]
Philippe Danjou, a board member at the IASB has been quoted as saying that Repo 105 would not have been allowed under IFRS, “From an IFRS perspective I would suspect that most transactions would have stayed on the balance sheet. It makes a case for convergence, it makes a case that we should not have different outcomes under different accounting standards when you have such big amounts.”

The G-20 asked the sages at both the FASB and the IASB to converge their rules by June-ish 2011 but some people don’t sec, as there are too many disparities on treatment of key issues between the two boards.


The Real Reason Behind Danny DeVito’s Crazy Eddie Movie Project Meltdown [White Collar Fraud]
Danny DeVito wants to make a movie based on the Crazy Eddie Fraud, which was perpetrated by, among others, Eddie and Sam Antar. The project has run aground primarily because of Eddie Antar’s life rights and the potential profit he would reap from the making of the movie. Danny D is disappointed by the developments and has sympathy for Eddie, discussing it in s recent Deadline New York article:

“He’s gone through tough times, and he’s not the aggressive tough guy they paint him to be,” De Vito said. “He’s in his 70s and the past has come back to bite us all in the ass. Peter [Steinfeld] and I told him we think there is a terrific story there, but we can’t do it with you involved, in any way. We’ve taken a breather, but we’re figuring out how to jump back in.

Sam Antar is not amused by this and chimed in with his side of the story:

Eddie Antar is plainly still in denial about his cowardice towards his own family and investors. There actually is a “family dynamic” that “explains Antar’s fall” as DeVito claims. However, Eddie Antar and other members of his immediate family are simply unwilling to give a truthful account of what really happened at Crazy Eddie, while Danny Devito is willing to accept Eddie Antar’s bullshit excuses for his vile behavior.

As Chipotle Sizzles, CFO Sells Stock [Barron’s]
Ten thousand shares at $144 and change will buy a bunch of burritos.

Medifast Lawsuit: Anti-SLAPP motions filed [Fraud Files Blog]
Back when we discussed forensic accounting, the aforementioned Sam Antar said that forensic accountants can look forward to “making many enemies in the course of their work and must be unhinged by the retaliation that normally follows uncovering fraud and other misconduct.”

Tracy Coenen, no stranger to this retaliation, is now fighting back against Medifast who has sued her and others for saying not so flattering things about the company:

Anti-SLAPP motions have been filed in the Medifast lawsuit by me and by my co-defendant, Robert FitzPatrick. My motion can be read in its entirety here, and Fitzpatrick’s can be read here.

SLAPP stands for Strategic Lawsuit Against Public Participation. It’s basically when a big company tries to shut up a little guy with expensive litigation. In my opinion, Medifast sued me and others in an attempt to get us to stop publicly analyzing or criticizing the company and it’s multi-level marketing business model.

In filing an anti-SLAPP motion, we are essentially asking the court to rule in our favor and in favor of free speech. Consumers should have the right to discuss, analyze, and criticize companies without the fear of expensive lawsuits.

JPMorgan May Quit Tax-Refund Loans, Helping H&R Block [Bloomberg BusinessWeek]
Bloomberg reports that JP Morgan may discontinue its financing of 13,000 independent tax preparers, a move that will benefit H&R Block, according to a competitor:

“Block is the biggest winner in this,” said John Hewitt, chief executive officer of Liberty Tax Service, a privately held company in Virginia Beach, Virginia, that also may benefit…

The reason HSBC is exiting this industry, even though they’re making $100 million a year in profit from it, is because of reputation risk,” Hewitt said in an interview. “Bankers don’t like the consumer advocacy groups picketing outside their offices.”

Refund anticipation loans (RALs) are attractive to clients that need cash immediately, based on their anticipated refund. The business is controversial because the high interest rates can drive people further into debt and consumer groups oppose them vehemently.

Funding for smaller shops that offer these loans will likely lose the business altogether as large banks like JP Morgan discontinue the financing, thus driving the business to franchise tax prep shops like H&R Block, Jackson Hewitt, and Liberty.

Accounting News Roundup: Goldman CFO’s ‘Unfortunate’ Response; EU Prepares to Scrutinize Auditors; SEC Chief Accountant: June 2011 Deadline for Convergence Is ‘Arbitrary’ | 04.28.10

Carl Levin To Goldman CFO: When You See ‘Sh–ty Deal’ E-mail, ‘Do You Feel Anything?’ [TPM]
Late in the proceedings of yesterday’s epic Senate subcommittee hearing (involving some of the Almighty’s finest), Goldman CFO David Viniar may have had a bit of a Freudian slip when he responded to potty-mouth Senator Carl Levin’s badgering.

Levin asked Viniar how he reacts to hearing about the email. “Do you feel anything?” Levin asked. Viniar replied: “I think that’s very unfortunate thich got a smattering of laughter from around the room. Levin asked Viniar how he reacts to hearing about the email. “Do you feel anything?” Levin asked. Viniar replied: “I think that’s very unfortunate to have on e-mail,” which got a smattering of laughter from around the room. “On an e-mail?” Levin shot back angrily. “How about feeling that way?” Viniar started to backtrack: “I think that’s a very unfortunate thing for anyone to have said in any form.” “How about to believe that and sell that?” Levin asked. “I think that’s unfortunate as well,” Viniar responded.

That unfortunateness is in no particular order.

Brussels to scrutinise role of auditors [FT]
The EU has had it with auditors in their current form and is turning their stink eye towards the profession with a whole lot of skepticism, especially since Ernst & Young got in trouble over you-know-what.

Michel Barnier, the new EU internal market commissioner, joined the debate on Tuesday saying that the role of auditors needed closer scrutiny now that the financial turmoil of the past two years was subsiding.

“I’m convinced that it is the right time to launch a real debate at European level on the subject of audit. This conviction is reinforced by the questions recently raised in the context of the audit of the accounts of US bank Lehman Brothers,” Mr Barnier said.

The FT reports that the EU is kicking off this increased level of scrutiny by publishing a green paper this fall on the subject that will examine the way “audit firms are owned and governed…the concentration in the audit market and its implications on financial stability, the emergence of small and medium-sized practitioners, the audit of smaller companies and international standards on auditing,” and also the supervision of global audit firms.

PwC pays £427,000 damages over valuation work [Accountancy Age]
The original suit was for £35 million; that would a W for P. Dubs.

Miami accountant’s workers accused of aiding fraud [Miami Herald]
Two employees of “Miami’s go-to forensic accountant if you want to get ripped off” Lewis Freeman have been charged with conspiring with him in the embezzlement scheme that he pleaded guilty to last month.

SEC Chief Accountant Says Convergence Need Not Be Completed by June 2011 [Journal of Accountancy]
No rush on that, sayeth James Kroeker, on convergence by June 2011:

SEC Chief Accountant James Kroeker told the JofA Tuesday that he would support the boards’ cutting the number of projects due in June 2011, provided there was good rationale for a delay.

“June 30, 2011, is an arbitrary deadline and it’s not one that’s been put in place by the SEC or by our road map,” said Kroeker.

Has Florida CFO Alex Sink Watched Scarface Too Many Times?

It’s been a while since we shared some cost saving ingenuity from Florida’s CFOcum-Gubernatorial candidate, Alex Sink. However, this time we learn how she managed to spend some of those savings.

According to the Politics blog of the South Florida Sun-Sentinel, CFO Sink’s Department of Financial Services has “purchased 182 assault rifles – costing $255,000, according to Sink’s office – in the last two years.” When you Google “assault rifle” one of the first links takes you to this.


A spokesman for the wannabe Guv made it plain for those GOP haters (who are all of a sudden against guns?) trying to block Sink from purchasing more BFGs:

The rifles are necessary to protect fraud investigators who deal with “dangerous people,” said spokesman Kevin Cate – arsonists, sophisticated car insurance fraudsters, money launderers. If Republican legislators are taking a shot at Sink with the assault-weapon purchasing ban, “that’s a shot at officer security,” Cate said.

Sink said: “I rely on my law enforcement people to evaluate what the risks are and what they need. I’m going to do everything possible to protect them.”

Look. We’ve got no doubt that some white-collar criminals are dangerous but this seems a tad ridiculous.

On the other hand, since it is South Florida and basically anything can happen (including 10 – 26% returns on arbitraging groceries) perhaps this type of firepower is necessary.

Accounting News Roundup: Over 50% of CFOs Aren’t Planning on Salary Increases; Americans Don’t Trust Politicians; PwC Cleans Up on Lehman Bankruptcy | 04.19.10

National survey finds employee wages and bonuses to remain stagnant over next six months [GT Press Release]
All the excitement (or lack thereof) amongst the Big 4 about raises this year will, at least for the next six month, will be rare compared to other companies. Grant Thornton’s survey of CFOs revealed that 53% don’t expect any salary changes in the next six months while 32% plan for decreases. That leaves a whopping 15% of those left in the survey that are planning wage and bonus increases over the next six months.


Poll: 4 out of 5 Americans don’t trust Washington [AP]
So if you’re interested in running for office, this may be the year to do it.

PwC’s Administration of Lehman Translates to $24,000 Per Hour! [The Big Four Blog]
Naturally in most situations, there are winners and there are losers. While Ernst & Young is looking like a giant loser in the Lehman Brothers bankruptcy, the whole thing seems to have worked out well for PricewaterhouseCoopers.

TBFB reports that, as the administrator for the UK piece of Lehman, the firm has gained control of over $48 billion in assets. Costs associated with these services (in the 18 months since the bankruptcy) are 0.65% of the assets recovered. A quick punch of your 10-key reveals that this is around $312 million or $24,000/hour.

Accounting News Roundup: Deloitte ‘Encyclopedia’ to Join IASB; South Carolina’s $60 Million Accounting Snafu; CFO Job Market No Longer ‘Totally Dead’ | 04.16.10

Deloitte’s Paul Pacter Appointed to IASB [Web CPA]
Paul “Financial Reporting Encyclopedia” Pacter will resign his part-time position at Deloitte to take a seat on the IASB. Since 2000, he has been on Deloitte’s IFRS leadership team and has worked as the Director for small and medium sized entities for the IASB.

Sir David Tweedie said in a statement that “Paul is a walking encyclopedia on global financial reporting. He served as the determined leader of the development of the IFRS for SMEs, is an expert in both IFRS and U.S. GAAP, and in his spare time has run one of the most popular financial reporting Web sites on the Internet. He will bring a global perspective and immense energy to the board.”


Nearly $60 million accounting error means state budget cut [Charleston Business Journal]
Relative to other states that shall remain nameless, South Carolina’s problems aren’t really a BFD but somehow $60 million being “erroneously…counted as part of the state’s general fund,” as opposed to being earmarked for specific appropriations is still not good.

As a result of this little booboo, $60 million in budget cuts must be found with less than three months until the end of the state’s fiscal year. Such a short time frame could presumably lead to some desperate slash and burn methods. And here we thought the subversive organization legislation would have been a huge revenue stream for the Palmetto State.

Is There a Pulse in the CFO Market? [CFO]
Apparently the CFO job market is no longer ‘totally dead’ as it was from December 2008 to October 2009 and since some are feeling ‘overworked and under appreciated’ (just like you!) there promises to be a bit of a CFO exodus.

Accounting News Roundup: Bank America Lands a CFO; FASB, IASB Can’t Guarantee Convergence; Maine to Tax Medical Marijuana | 04.14.10

Bank of America Names an Outsider as CFO [WSJ]
Charles Noski will be the new Bank of America CFO, effective May 11th. He most recently was the CFO at Northrup Grumman, which he left in 2005 and prior to that held the same position at AT&T. He has also served as a advisor to Blackstone Group and is currently a director at Morgan Stanley and Microsoft. It is reported that he will give up his director seat at competitor Morgan Stanley. Noski began his career at Haskins & Sells (now Deloitte) for seventeen years and was a partner.

This ends BofA’s quest to land a CFO after former finance bigwig Joe Price moved into a new role under new CEO Brain Moynihan back in January.


IASB says “no guarantee” of full US accounting convergence [Accountancy Age]
The FASB and IASB, try as they might, have announced that they simply cannot guarantee that they will pull off 100% unadulterated convergence. The two boards have struggled to get their cerebral minds together on a number of “important technical issues” and are holding out for the possibility that they may not resolve any of their remaining differences.

The two boards issued a statement which warned, “Although our recent experiences with joint meetings show that we have been able to resolve differences on several projects, there is no guarantee we will be able to resolve all, or any, of our differences on this project.” The two cite “different imperatives that pushed our development timetables out of alignment,” in the struggle for converging the two sets of rules. While the FASB and IASB are warning that accounting rule convergence may be impossible, the statement indicates that the two still aim to finalize their work by the mid-2011 deadline.

Medical pot users to pay sales tax [Bangor Daily News via Tax Policy Blog]
The Pine Tree State will taxing its medical green that is sold at state-sanctioned dispensaries. The Maine Revenue Service had argued that since marijuana is currently issued for medicinal purposes, that the it should be treated as a prescription drug and thus, not taxed. However, since a prescription isn’t necessary to obtain medical marijuana, Maine lawmakers disagreed and ultimately decided to administer a levy on the sale of state-issued grass.

With IFRS Waiting in the Wings, Will Private Companies Get GAAP of Their Own?

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

A blue ribbon panel on private company accounting is holding its inaugural meeting Monday, to assess how financial reporting standards can best meet the needs of users of US private company financial statements, which are mostly for bankers and other types of lenders.

The panel, formed by the Financial Accounting Foundation, the American Institute of Certified Public Accountants and the National Association of State Boards of Accountancy, will meet five times throughout the year and will issue a report with recommendations on the future of standard setting for private companies by the end of the year.


The debate has resurfaced after the International Accounting Standard Board issued international standards for private companies last July (called IFRS for SMEs). Financial experts have been discussing this topic for decades. For instance, in 1996, the Financial Executive Research Foundation issued a paper titled “What do users of private company financial statements want?”

Some of the old and new questions the panel will address:

• What is the key, decision-useful information that the various users need from GAAP financial statements?

• Are current GAAP financial statements meeting those needs?

• How does standard setting for private companies in the US compare to standard setting in other countries, both those that have adopted IFRS for small and medium-size entities and those that have not?

To the extent that current GAAP is not meeting user needs in a cost-beneficial manner, what are some possible alternatives or private company standards?

Even if GAAP is found wanting, however, the panel might not be all that keen on IFRS as an alternative, given the limited experience of US companies with the international regime and rising skepticism on the part of the Securities and Exchange Commission about the independence of the body setting international standards.

Not that public or private US companies are eager to switch to IFRS, which will be costly and cumbersome. At this point, it seems as if private ones would rather have the accounting devil they know, except they no doubt wish it were a bit less hellacious on their results. And that’s been pretty much a forlorn hope for years.

Quote of the Day: From ‘Rockstar’ CFO to Mowing Lawns | 04.12.10

“Before the fraud broke, people would ask me what I did before I retired and I’d say I was founder and former CFO of HealthSouth. But today when people ask me what I did before I retired I kind of look away and say I was an accountant and hope they don’t ask me any other questions.”

~ Aaron Beam, former CFO of HealthSouth and current lawn-care business owner, at the University of Texas-Dallas Fraud Summit, earlier this month.

Transitioning from Typical Accountant to CFO Superstar

Let’s face it, accountants aren’t often featured as heroes in action flicks nor romantic leads in love stories, and are pretty much ignored by the media unless it involves blame and/or complicated financial rules that are just barely an accounting matter (accountants did not securitize every loan nor did some nefarious squad of beancounters dream up Repo 105) so it’s pretty exciting to see the Washington Post heralding accountant turned CFO Carl Adams.


No, he doesn’t have 12 mistresses and he hasn’t gotten any DUIs (that we know of) but the smart professional is cool again. As if he (or she) ever wasn’t.

Carl received his accounting degree from Penn State and, presumably, was really impressed by what he saw when he entered public accounting via Ernst & Young, so much so that he hung around to make senior manager before leaving to do a stint with the SEC.

Transitioning back to the private sector meant applying what he’d picked up from E&Y and the SEC in the capacity of an accounting professional, except plain old “accountant” just didn’t fit him anymore. Perhaps accountants are far more “superhero”-like than we give them credit for? Adaptable, talented, and equipped to deftly switch careers like some folks switch lanes on the freeway; what’s not to admire?

Since most CFOs are professionally qualified to be accountants anyway, a guy like Carl may not seem so spectacular on the surface but when you consider the ever-sophisticated landmine-laced territory of financial statements, there is no such thing as an over-qualified CFO. The definitive line between CPAs and finance professionals slowly becoming blurred and may become non-existent.

Since we know accountants – generally speaking – are change-adverse, why not introduce a more comprehensive curriculum in accounting programs that prepares future CPAs for this diverse, brave new world of accounting and finance to offer them maximum flexibility to transform with the industry?

Sorry for you old schoolers, the green eyeshade has been retired for quite some time: now is the era of the ever-evolving, constantly-changing, ready to head off the next Repo 105 before Wall Street implodes itself again accountant. Movie coming to theaters near you in 2011… in 3D!

Carl Adams: An accountant who yearned to do more finds his calling as a CFO – New at the Top [WaPo]

Accounting News Roundup: The Debate Over IRS-prepared Tax Returns; KPMG HK Senior Manager Arrested for Bribery; CFOs Starting to See Job Options | 04.09.10

Should the IRS Fill Out Our Tax Returns? [TaxVox]
Some say, YES! At the very least the Service could get the ball rolling, “by filling in your wage income, exemptions, and standard deduction and perhaps even figuring some other deductions and credits. This…could be a huge benefit for those who file Forms 1040A and 1040EZ.” Naturally, the taxpayer has to approve the return prior the actual “filing” of it but this would potentially assist millions of Americans who are otherwise stumped by 1040s of any stripe.


The other side of this argument is that it will delay refunds:

Bob Weinberger, a senior fellow at the Aspen Institute Initiative on Financial Security and a former top executive at the tax prep firm H&R Block. Bob counters that the “fatal flaw” of such a system is that it could delay refunds for months. For many taxpayers, Bob argues, getting a check from IRS in April is a key to their annual financial planning, and postponing that refund would generate a huge backlash. Bob also said such a system would be a huge drain on IRS resources.

While this likely true, the root of the problem is the “check from the IRS is key to financial planning” part. If these people need the money so bad, they should adjust their withholding so they don’t pay in so much during the year. Perhaps that’s not an easy concept to grasp, so if we say “You’re giving the government an interest-free loan for 12 months,” that will help.

HK charges KPMG man with bribery [FT]
Leung Sze-chit, a senior manager in the Hong Kong office, has been arrested on corruption charges after offering a co-worker a $12,280 bribe related to a client’s IPO. The FT reports that the firm learned of the situation via its internal hotline, “After investigation, the member of staff in question was suspended by KPMG and a report was then made . . . to the relevant authorities.” So yes, to answer some of you, people do call those internal hotlines.

CFO Job Options Opening Up [FINS]
After hunkering down for the last couple of years or so, CFOs are starting to see some new job options. FINS reports that “Some felt loyalty to organizations in financial straits, while others hesitated to jump given uncertainty about potential landmines at other companies.” Now that growth is slowly creeping back, “some companies are likely to find they need a different type of executive in the role. And some CFOs may even find themselves in line for positions higher up the corporate ladder.”

Cost Cutting Measure of the Day: Ditching Arial Typeface

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

Looking for an easy way for your company to save a few bucks on office supplies? Change the font in the documents you print, reports the Associated Press.

The idea is simple enough: Certain fonts use different amounts of ink. That Arial font Word formerly defaulted to actually cost you money compared to using something like Century Gothic. For example, the University of Wisconsin-Green Bay has asked its faculty and staff to switch to Century Gothic for all printed documents. By doing so, the school figures it could save between 5 and 10 percent on its annual $100,000 ink and toner bill.


But such a switch could create more problems, because documents printed in Century Gothic tend to run longer than others. So while you may save on ink, you’re now getting smacked by bigger paper costs.

But it’s certainly interesting to think about how typography affects our business world. I highly recommend the documentary “Helvetica“, which explores arguably the most used typeface in Corporate America (think New York subway signs, American Airlines, AT&T and Jeep, among many others) and why we find it so appealing.

The AP story offers up a great example of how powerful type can be. In order to discourage people from printing too many documents, Microsoft even switched its default font from Times New Roman to Cambria for serif type and from Arial to Calibri for sans-serif.

The thinking? “The more pleasing a font looks on the screen, the less tempted someone will be to print,” the AP reported.

Accounting News Roundup: SEC Image Makeover is a Work-in-Progress; Washington Considers Increasing Sales Tax on Beer; Ex-CFO in Backdating Trial Blames Dead CEO | 04.07.10

SEC faces setbacks, skepticism in trying to reform its enforcement image [WaPo]
Whether you believe it or not, the SEC is trying like hell to turn it’s image around. As you know, this is not a small challenge when you check down the list of ball drops and/or embarrassing moments. Plus, when Real American Hero Harry Markopolos repeatedly refers to the SECstaff as idiots, who’s not going to believe him?

Tasked with this turn around, Mary Schapiro and Rob Khuzhami are on the offensive, doubling the number of investigations from ’08 to ’09, as well as doubling fines. Emergency stop actions have also increased over 80%, according to the Commission’s data.


Yet, some remain unconvinced, like Commissioner Luis Aguilar who was quoted in the WaPo, “I’m looking to see whether or not all of the new initiatives are actually resulting in improved sanctions. I don’t yet see the empirical evidence.” Patience, Luis. We hear there’s a couple of things possibly in the pipeline.

Beer Today, Taxed Tomorrow [Tax Girl]
Everyone in Washington State that isn’t a recovering alcoholic (or a teetotaler) should probably start freaking out. WA is considering a “temporary” sales tax increase to 50 cents per gallon, or 43 cents per sixer, sayeth La Tax Chica. The current tax is 15 cents per six pack.

What’s worse (for most anyway) is that only “big-brand” beer is subject to the tax, leaving the micro-breweries alone and TG thinks this will be challenged as unconstitutional for protectionism. In our opinion, punishing people that drink bad beer is a completely acceptable sin tax, since they choose to drink the bad beer, unconstitutional or not. It definitely doesn’t help the college kids though; that’s an $8 extra on a keg.

Ex-Maxim CFO Blames Dead Boss at SEC Backdating Trial [Law.com]
Carl Jasper is the former CFO of Maxim Integrated Products and is currently on trial for backdating stock options. This is the first case of this kind since the SEC started cracking down on the practice a few years ago. Mr Jasper is relying on the defense that his dead boss, Maxim founder Jack Gifford, is to blame.

The SEC finds this all too convenient:

Mark Fickes delivered a crisp, scripted opening statement for the SEC, beginning simply: “This case is about cheating and then lying about it.” Fickes hammered on the hard-to-ignore fact that Jasper is an accountant who presumably knows accounting rules about granting stock options.”When it came to accounting, no one knew more at Maxim than the defendant,” he told the jury.

Yeah, so that could be a bit of a problem for Jasper which is probably why he invoked his 5th Amendment privilege.

Will CFO’s Audit Fee Benchmark Tool Help Keep the Big 4 Honest on Fees?

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

There’s a bit of a tiff going on over at my former place of employment as a result of the cover story in the latest issue of CFO Magazine on the recent fall in auditor’s fees.

Some critics seem to fear that the phenomenon will be encouraged by a new benchmarking tool the website unveiled on April 1.

For a fee of $1,200, the tool allows companies to compare the fees that their peers pay for auditors. The process should be both quicker and more comprehensive than the requests for proposals now put out by many companies trying to figure out what they should be paying.


Accounting mavens David Albrecht and Lynn Turner, however, seem to worry that such an exercise will lead to the further commoditization of audits, and so to lower quality financial reporting, even though there’s no evidence the increased fees we saw in the wake of the Sarbanes Oxley Act did anything to improve its quality. Lehman Brothers, anyone?

Yet after the article appeared, Turner sent around comments on his list serve saying it contained several “factual inaccuracies” and that “a firm cannot do the same amount of work with these lower fees without seeing a huge reduction in profits.”

One problem here, it seems to me, is that we’re talking about an oligopoly, which invariably skews the normal effects of supply and demand. Albrecht concedes that the industry is an oligopoly but doesn’t make a cogent point about the significance of that. And he misses the other complication, which is that SarBox not only required auditors to review a company’s internal financial controls as well as its financial results, but also prevented auditors from offering audits as loss leaders for their more profitable consulting services. Now auditors can’t offer both services to the same clients. So audits have to stand on their own two feet.

Turner gets this point, though he confuses the chronology of the regulatory events involved. And he seems to suggest the article is flawed in the conclusion it draws about it, without saying how.

Here’s the point. If, in fact, the extra work SarBox required inflated auditors’ profits, why shouldn’t CFOs be able to make sure they’re getting what they pay for?

And the apparent assumption that benchmarking will inevitably lead companies to push for lower fees seems a bit shaky to me. As CFO.com’s editorial director Tim Reason points out, the process may instead merely keep auditors on their toes. Are Albrecht and Turner arguing that opacity is necessary for the public good, so auditors can pad their fees with impunity? Sorry, but that just doesn’t compute.

In an email to me this morning, Tim wrote: “We think finance executives and audit committees will benefit from having an independent, trusted editorial source provide them with a quick way to benchmark their fees-and make sure they are neither too high nor too low.”

Too low? Sure. You get what you pay for.

Tim also points out that there are no advertisers or sponsors for the tool. “It is a pure editorial offering being made directly to our readers, giving them information they’ve been asking us for years.”

Now there’s a radical idea.