A Big 4 firm was fined by a regulator across the pond today, and for once, it wasn’t because of its lack of auditing prowess. BUT! It did involve running afoul of independence rules. The Financial Times reported: The administrators to collapsed electricals retailer Comet Group have been handed a record UK insolvency fine of […]
The LOLs just keep coming from across the pond — why doesn't the AICPA make a bigger deal out of accountants behaving badly? I'd love to see these stories front and center on the Journal of Accountancy like the ICAEW does with economia. Today's tale of accounting gone wrong is a woman who not only […]
Note this happened over the pond. Things might be different over here, but probably not.
Sir Michael Rake is currently the Deputy Chairman of Barclays. and, from 2002 to 2007, he was the Chairman of KPMG International. Last night, Sir Mike did quite the impressive thing — that is, he got all Dad on accountants and bankers by telling the former how proud he was of them while telling the […]
This morning we learned that the ICAEW gave up, refusing to go along with the lie that the IASB has been telling itself all this time — "They'll call. They'll realize that they've been wasting their time with U.S. GAAP all this time and they'll call." Those chartered accountants in England and Wales simply […]
What do you do when you are feeling the pressure to pass your professional exams but just can’t seem to get over the hump? If you’re this guy from Deloitte UK, you forge doctor notes to buy yourself some more time. Too bad for him he failed again and got busted. Nahied Kabir had two […]
Apparently what the Institute of Chartered Accountants in England and Wales didn't know (i.e. that one of their members was doing six years for hiring a hit man) wasn't going to hurt them: A member who resigned from ICAEW in 2002 saying he was going abroad, and no longer intended to practise, was in fact […]
BP unlikely to cancel dividend, but mulls several ideas: source [Reuters]
They may defer it, pay it in shares or “pay into a ring-fenced account until the oil spill liabilities become clearer.” All of which will please absolutely no one.
Auditors to reveal bank talks under new plans [FT]
Proposals by the ICAEW would require auditors to disclose their private discussions with bank audit committees afte showed that “the value of bank audits had shown investors especially were dissatisfied by the audit report. The internal process involved was perceived as helping to keep bank executives in check, but investors felt the report was only a box-ticking exercise.”
The Big 4 have historically resisted these types of proposals, arguing that it will expose them to additional legal liability.
Suggestions cited include assurance on the “front half of annual reports,” as well as an audit of the banks’ summaries of risks. The ICAEW said it was aware that this would add to the auditors’ workload.
Vantis trading suspension follows difficult financial period [Accountancy Age]
The court-appointed liquidator for Allen Stanford’s bank, Vantis, has had trading of its shares suspended by the AIM after the company was unable to obtain any funds for their services related to the Stanford case, among other financial difficulties.
Ernst & Young had issued a going concern opinion for the company back in February, warning that continued lack of cash flow would have to be remediated quickly for any possibility for the continuation of the business.
How the New Wealth Taxes Will Hit You [WSJ]
Are you one of those “rich” people? That is, do you have an adjusted gross income of $200,000 or more ($250,000 for joint filers)? If so, you’ll probably want to know that two new tax levies will come your way in 2013 as a result of the new healthcare legislation – a 0.9% levy on wages and a new 3.8% tax on investment income.
The 0.9% tax is on any wages over $200k/$250k. For example, if you are single and made $300,000, your additional tax would be $900.
Similarly, the investment income tax would tax any investment income in excess of the $200k/$250k threshold and the 3.8% tax would be applied. What’s investment income you ask?
Interest, except municipal-bond interest; dividends; rents; royalties; and capital gains on the sales of financial instruments like stocks and bonds. The taxable portion of insurance annuity payouts also counts, unless it is from a company pension. So do gains from financial trading, as well as passive income from rents and businesses you don’t participate in. All are subject to the 3.8% tax on amounts above the $250,000 or $200,000 threshold, as described above.
Income that is not considered investment income include: distributions from IRAs, pensions and Social Security, annuities that are part of a retirement plan, life-insurance proceeds, muni-bond interest, veterans’ benefits, and income from a business you participate in, such as a S Corporation or partnership.
KPMG considering move to 1801 K [Washington Businsess Journal (subscription required)]
KPMG might move their Washington, DC office location to 1801 K St. NW from 2001 M St. NW according to “real estate sources.” KPMG’s spokesman said that the firm is continuing to “examine all of our options.” The situation is fluid.
Open Letter to the [SEC]: Why You Must Review Medifast’s Revenue Accounting Disclosures [White Collar Fraud]
Sam Antar would like to put the SEC on notice that Medifast seems to be less than transparent when it comes to its disclosures, “it seems that Medifast is recognizing revenue upon shipment and not delivery. As a minimum, Medifast, like Overstock.com, should be required to expand and clarify its disclosures to avoid confusing investors.”
In blatant-misuse-of-the-corporate-credit-card news, a former Deloitte “trainee/student” (let’s assume an intern, shall we?) has admitted to racking up over £8,800 in gambling debt on his Deloitte issued credit card.
Umar Qureshi, using his Deloitte laptop no less, managed to lose the money in just a couple of months, October and November of 2008. At that point, Qureshi, rather than admit to being a horrendous gambler, lied about the charges, telling Deloitte that they were fraudulent. Depending on when this particular lie took place, he only managed to keep a straight face, at the most, for two months, as Deloitte terminated his contract in January of ’09.
Which is understandable. Gambling can be nerve-racking on its own but losing your ass on the Corporate Card has got to be a real pant-crapper. This makes for the second Big 4 degenerate loser to make headlines this year in the UK. Back in February, a ex-KPMGer really was rolling, slamming over £25,000 on his expense report.
Accountancy Age reports that the Institute of Chartered Accountants in England and Wales (“ICAEW”), “ordered that the defendant cease to be a provisional member and be ineligible for re-registration for six months, and that he be severely reprimanded.” As we mentioned in the KPMG case, we’re not sure what a “reprimand” entails but a weeklong diversity training with Barry Salzberg could be a possibility.
Luckily, for Qureshi a relative was kind enough to pay the debt owed to Deloitte, who must have really wanted the money back. It’s just principle.
Former Deloitte student admits £8k bill from online gambling [Accountancy Age]
Somehow female accountants over 45 in the UK earn 60% less than their male counterparts. The disparity is so ridiculous it defies understanding, but according to a study conducted by the ICAEW and Robert Half, men earn more than women at all stages of their careers and the gap widens with increased experience. This finding is consistent with the 2008 report. So ladies, if you’re on the partner track and thinking, “London might nice,” we’d advise against it. As for our female readers from the UK, you can always jump the pond, we’d love to have you here …
From the report:
Overall, male [Associate Chartered Accountants] are better remunerated than females – an average basic salary of £88,200 for males (median £76,000) is almost 50% higher than their female colleagues’ average of £60,500 (median £53,000) (Fig 3). The average male salary is up by 7% on last year, females by 10%. However, the average bonus of £24,700 for males has dropped slightly compared to last year, while that of their female colleagues, at £11,600, has increased by 33% (median £6,900 males and £2,400 females). The bonus received by male ACAs represents 28% of average basic salary, while females received only 19%.
The differential reflects in part at least that male ACAs are typically older (46 against 40 for females), longer qualified (18 and 14 years respectively) and more likely to be in a permanent full-time role (88% and 72%). They also spend longer hours at work (45 v 38 hours per week).
It’s especially cute how this is “in part” chalked up to age and experience. It would probably be terribly bad form for the ICAEW and Robert Half to come right out and say that the difference in average pay is say, absolutely ridiculous and blatant evidence of patriarchal institutions exhibiting clear gender bias when it comes to compensation.
ICAEW/Robert Half Career Benchmarking Survey 2009 [ICAEW via Accountancy Age]
We meant to get to this on Friday but as you recall, our plans we’re slightly derailed by forces beyond our control. We’re sharing it now because there are lessons here for all the newbies out there. Pay attention, this could one of you.
During busy season the temptation to get a little aggressive with the expense reimbursement comes naturally to just about everyone. If you deny this particular bit of weakness then you are either A) lying through your coffee-stained teeth or B) in the wrong profession; join the clergy.
It should be noted that the abuse of reimbursement policy has relative levels of ridiculousness. Partners can rationalize and get away with more extravagant abuse than a mere associate so keep that in mind here.
So maybe every once in awhile you and some team members slip out for a three martini lunch that falls on the expensive side and you ram it through on your expense report because you figure you deserve it. Totally natch.
It gets overboard when you have the tendency to place some wagers and because you’re a degenerate loser, you start submitting expenses to fund this little gambling hobby.
Vikas Gupta was employed by KPMG until he couldn’t pass his “accountancy exams” aaaaannnnddd it was discovered that he claimed expenses of £25,000 to fund his gambling and to pay off debt. Gupta claims that he hit “various internal charge codes” to charge the expenses; which, we hear, is a typical methodology.
Gupta also claims that he suffered from depression (losing streaks will do that), is now in Gamblers Anonymous and is employed by a new firm, so he’s back on the straight and narrow.
This didn’t impress a tribunal of the Institute of Chartered Accountants for England and Wales (the AICPA of E&W), who has recommended that Gupta be banned from having provisional membership for 12 months and to be “severely reprimanded.” Since he has no means to pay fines (he entered an individual voluntary agreement), one can assume that the reprimand will consist of 30 lashes, a marathon of technical accounting trainings, or both.
Ex-KPMG trainee admits £25,000 expenses fraud [Accountancy Age]