You may have read that dedicated criminal Barry Minkow has once again been sentenced to […]
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 percen benefits 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.
Accounting News Roundup: Strange Letter Disrupts Ernst & Young’s Iraq Plans; Allen Stanford Is the Worst; Debunking a Tax Preparer Regs Conspiracy Theorist; Medifast Gets the Bird | 05.20.10
Mysterious letter rattles E&Y’s Iraq ambitions [Accountancy Age]
Ernst & Young has been trying to get its audit on in Iraq shortly after Saddam Hussein’s party ended in 2004. The firm has been providing services there, however not yet been approved to perform auditing services. E&Y has been claiming that it was making headway, “on the verge of obtaining an accounting license” but now a letter from somewhere within the dense Iraqi bureaucracy seems to have delayed those plans.
It came as a shock when the firm learned of a letter sent to the Iraqi Supreme Court, the Central Bank of Iraq, the Commission of Integrity gistrar and the Iraqi Banks Union, among other senior institutions, from the Iraq Union of Accountants and Auditors, which claimed the firm had been banned.
“It has been decided to forbid the accreditation of any financial statements audited by Ernst & Young (E&Y) company and forbid its operations in accountancy and auditing for governmental and private sectors in Iraq,” the letter stated.
The letter, in Arabic and signed by the Union Secretary Dr Rafed Obaid Al Nawwas, said the union reserved the right to go to “legal authorities to stop non-Iraqis from conducting audit and accountancy in Iraq”.
So in case you missed it, E&Y did not actually receive this purported letter but heard of it second-hand and then responded that the Iraq Union of Accountants and Auditors has no authority on the matter, since it’s just an “association of Iraqi accountants.” So it sounds like the AICPA of Iraq basically tried to tell the Iraqi version of the SEC, PCAOB, et al. that E&Y was not fit to be in country (if you’ve got another idea, by all means).
Iraq’s chief accounting regulator claims to not knowing about the letter and that E&Y is “just about to obtain its license” so this may be a nuisance more than anything else.
How Stanford is worse than Madoff [Fortune]
Mostly because CDs are the basic financial instrument that is usually held by little old ladies and other common folk. Not Kevin Bacon.
Unenrolled Tax Preparer: Preparer Regulation is a CPA Plot to Put Me Out of Business [Tax Lawyer’s Blog]
Naturally, there are some unlicensed tax preparers that are taking the IRS’ proposed regulations a little personally. Peter Pappas at TLB tells us about one unlicensed preparer who did some bellyaching to the Service. This sage of taxes challenges anyone to question his expertise:
1. “I prepare my returns accurately and would challenge anyone to find errors.“
2. “I have seen numerous returns prepared by CPAs and other similar preparers that were incorrect. [the man strives for perfection]”
3. “I am willing to take some courses or some certification, but to become an enrolled agent or CPA would cause an undo burden on my business. [i.e. require me to work more than 8 hours a day]”
And that’s just a sampling. Mr Pappas kindly debunks all of these (and more):
1. “A self-serving declaration by an unenrolled tax preparer that the returns he prepares are 100% accurate is about as valuable as an NBA player announcing that nobody can guard him.”
2. “This is utterly irrelevant and, if anything, an argument for more regulation, not less…[This] is dumber than texting while driving.”
3. “Becoming an enrolled [preparer] would force Mr. Jamieson to make expenditures of time and money he does not wish to make, therefore, because he is not prepared to make those sacrifices he believes that people who have made them should get no benefit from it whatsoever.”
Barry Minkow Gives Medifast the Middle Finger [White Collar Fraud]
At this point we’re assuming it’s only the figurative bird, by way of a report that states that Medifast’s business model is effectively a multi-level marketing scheme.
Despite Past Investigations and Borderline Childish Behavior, McGladrey & Pullen Takes Medifast Audit
McGladrey & Pullen/RSM McGladrey has been named the new audit/tax firm of Medifast, the company announced in a filing last Friday. The Company dropped Bagell, Josephs, Levine and Company LLP of New Jersey who was purchased by Friedman LLP, citing/blaming Sarbanes-Oxley for reducing the number of accounting firms that have the “extensive resources and experience with public companies on a national and regional basis to better serve Medifast.”
For those of you not familiar, Medifast is “an amazing weight loss program” whose products “are formulated with a