(UPDATE) Accounting News Roundup: Europe’s $1 Trillion Deal; PwC Gets Some Action in Dubai; The Longest Auditor-Client Relationships | 05.10.10
EU Crafts $962 Billion Show of Force to Halt Euro Crisis [Bloomberg]
With the Euro under pressure, the European Central Bank has hatched a plan to “offer financial assistance worth as much as 750 billion euros ($962 billion) to countries under attack from speculators.” EU countries are chipping in 440 billion in loans, the EU’s budget throws in 60 billion, and 250 billion from the International Monetary Fund.
The funds will be available to those countries that experience a financial crisis similar to Greece. Portugal and Spain have debt to GDP ratios of 8.5% and 9.8% respectively, exceeding the EU’s mandated limit of 3%. package approved last week, receiving 110 billion euros “after agreeing to unprecedented austerity measures,” triggering riots in the country.
Dubai Holding Hires Debt Advisers [WSJ]
Dubai Holding Commercial Operations Group, a part of Dubai Holding (not to be confused with fellow Dubai conglomerate Dubai World) has hired PricewaterhouseCoopers to help them with a teenie debt restructuring project. DH’s debt issues come about after Dubai World is still working to restructure the $14 billion in outstanding debt that it has with its creditors after a slight panic late last year.
UPDATE: KPMG and Deloitte are getting in on the fun as well, as the Financial Times reports that they have been engaged to advise Dubai Group and Dubai International Capital, respectively.
You Complete My Audit [CFO]
Had your auditor for awhile? If you want to crack the top 100 of longest auditor-client relationship, you’d have to be putting up with the same firm for over 50 years. According to the CFO’s analysis of Audit Analytics data, the longest auditor-client relationship belongs to Deloitte and Proctor & Gamble who have been together since 1890. PricewaterhouseCoopers’ longest relationship is with Goodyear Tire & Rubber, starting in 1898; Ernst & Young with Manulife Financial, 1905; KPMG and General Electric go back to 1909.
Of the 100 companies that have stuck with their auditors the longest, 97 of those companies were with Big 4 firms:
• PricewaterhouseCoopers – 34
• E&Y – 25
• Deloitte – 24
• KPMG – 14
Straight Talk about Brutality of White Collar Crime from a Convicted Felon [White Collar Fraud]
GC friend and forensic sleuth Sam Antar recently had some a two part interview produced that from his recent speaking presentations at Stanford Law and Business Schools. Part one is below and you can see part two over at WCF.
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 t hich 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.
Accounting News Roundup: EU Threatens Convergence; IRS Is Not Hiring 16,500 Agents to Enforce Mandatory Healthcare; Charges Look Unlikely in AIG Probe | 04.05.10
• Accounting convergence threatened by EU drive [FT]
Somewhat of a bombshell was dropped over the weekend when an EU politician suggested that funding for the IASB could be subject to its willingness to buckle to political pressure, according to the Financial Times. Michel Barnier, the EU’s new internal market commissioner would like ‘issuers – more banks and more companies – and more prudential regulators represented on the governing board [of the IASB],’ and suggested that it was too early to determine if the IASB’s scant budget of $6.5 million would be increased.
The FT reports that the EU pols “believe prudential regulators should be mor overnance so that accounting can be used as a tool for financial stability,” despite the feeling of other countries (e.g. U.S. and Japan) that accounting rules “should not be the subject of regulatory intervention but should focus on providing an accurate snapshot of a company’s value.”
This difference in opinion on what the purpose of accounting is could disrupt the convergence process which won’t do much to impress the G20 chaps who demanded some progress on the global accounting sitch.
• IRS Expansion [Factcheck.org via TaxProf Blog]
Those 16,500 new IRS agents you keep hearing about, or is 17,000? Whatever it is, Factcheck.org was posed the question about this small army of tax enforcers that will be marching into your home, heavily armed and stealing your freedom by forcing you to buy healthcare that you don’t want.
Are you prepared for this shock? Turns out, it’s not true:
This wildly inaccurate claim started as an inflated, partisan assertion that 16,500 new IRS employees might be required to administer the new law. That devolved quickly into a claim, made by some Republican lawmakers, that 16,500 IRS “agents” would be required. Republican Rep. Ron Paul of Texas even claimed in a televised interview that all 16,500 would be carrying guns. None of those claims is true.
The IRS’ main job under the new law isn’t to enforce penalties. Its first task is to inform many small-business owners of a new tax credit that the new law grants them — starting this year — which will pay up to 35 percent of the employer’s contribution toward their workers’ health insurance. And in 2014 the IRS will also be administering additional subsidies — in the form of refundable tax credits — to help millions of low- and middle-income individuals buy health insurance.
Plus, Doug Shulman testified before the House Ways & Means Committee that the Service will not be auditing individuals, rather, “insurance companies will issue forms [some possibilities here] certifying that individuals have coverage that meets the federal mandate, similar to a form that lenders use to verify the amount of interest someone has paid on their home mortgage. ‘We expect to get a simple form, that we won’t look behind, that says this person has acceptable health coverage,’ Shulman said.” So maybe this is what Anthony Weiner was trying to explain to Bill O’Reilly?
• Federal Prosecutors Leaning Against Charges in AIG Probe [WSJ]
If you were thinking that it would only be a matter of time before Joe Cassano was charged with pushing the financial apocalypse button, you’re about to be severely disappointed. The Journal is reporting — citing “people familiar with the matter” eight times or so — that the former head of the AIG Financial Products unit is not likely to be charged by the Department of Justice for deceiving PricewaterhouseCoopers about AIG’s exposure to credit default swaps.
The DOJ was initially under the impression that Cassano had not informed PwC about an adjustment that AIG had made to make the losses from the CDS look just horrendous as opposed to catastrophic. When PwC came back with a material weakness on AIG’s internal controls, they abandoned the adjustment. The DOJ’s investigation turned up some notes of a PwC auditor that show that Cassano had told the firm about the adjustment thus, covering his ass. The Feds haven’t officially made up their minds about charging Cassano but this element was considered a “central issue.”