Bryan N. Polozola simply misremembered that he took that exact amount of money from a […]
Tag: Oops
Oregon Accountant Indicted for Fatal Hit-and-Run
In aren’t-you-glad-this-isn’t-you news, an Oregon accounting director has been indicted on one count of criminally negligent homicide and one count of failure to perform the duties of a driver when a person is killed.
On January 26, Les Schwab Tire Center Director of Accounting Bret Lee Biedscheid, 38, allegedly hit Anthony Martin, 48, around 11 pm while Martin was crossing the street on his bicycle. The grand jury made their determination based on witness testimony and videotape evidence.
Two days after the incident, Biedscheid’s lawyer contacted police and surrendered the 2008 GMC pickup matching the description of the truck involved in the crash.
Bend, Oregon police later served search warrants on Biedscheid’s house and seized computers, cell phones, GPS devices and other items. “I feel like if it had been myself or anyone else, we would have already been arrested just on the evidence that they already had,” said the victim’s sister.
Biedscheid has not been arrested and is scheduled to be arranged Thursday morning.
Slow down out there when you’re heading home from ANO, kids.
Orient Paper’s Auditor Left Out That Part About Not Being Licensed
Details-shmetails.
In an 8-K regulatory filing and in a press release, Orient Paper said it was unaware of the problem until recently. Called the Davis Accounting Group, the Cedar City, Utah-based audit firm was supposed to be licensed by its home state, but its license lapsed in September 2008 and was formally revoked as of November last year. “During the time when Davis Accounting was retained by the Company, Davis Accounting represented that it was in good standing,” Orient Paper said in its press release.
Other than that, everything is kosh. Deloitte even said so. BDO Hong Kong is doing the restatements so everyone can pretend this never happened.
Ohio Mistakenly Notified a Woman That She Was Due a $200 Million Tax Refund
Ohio, like many states, is in a bit of a budget pickle and perhaps this level of vigilance is part of the reason.
Denise Bossetti received a notice in the mail that indicated she was due $200 million but was skeptical (even with the letterhead).
Apparently 9,700 Ohioans received notices of inflated refunds and the Ohio Department of Taxation claims this is a new one and that “The problem has been fixed.” Probably a good idea.
Woman gets $200 million tax-return notice — but it was mistake [Sandusky Register via AT]
Grad Assistants May Starve After University of Illinois ‘Payroll Glitch’ Results in Back Taxes Owed
The irony being that UI is consistently one of the top accounting programs in the country. The Champaign News-Gazette has the scoop:
The University of Illinois failed to withhold taxes for hundreds of graduate assistants over seven years, resulting in thousands of dollars in back taxes owed to the Internal Revenue Service. The payroll “glitch” also means some graduate assistants will go without pay for the next few months to cover taxes owed on their tuition and service fee waivers. About 280 graduate assistants will be taxed for part of their 2011 tuition waivers starting this month, and 17 who owe more than their next few paychecks will get no pay for three months, officials said.
Seven years. Hopefully some of the grad assistants have some money saved but it sounds like more than a few of them will be having a helluva time with this. The Graduate Employees’ Organization director of communication, Natalie Uhl gets serious:
“For some of them, they have absolutely no way to pay rent next month, no way to buy food,” she said. Some students are planning to drop out of school, Uhl said. “They’ll essentially be paying to work for the school,” she said. “They’ll be receiving no money for the work that they do.”
Jesus. That’s worse than working for minimum wage at an accounting firm! The University, for their whole role in this, is saying “my bad” but rationalizes the lack of paying the GAs by keeping things no nonsense. This is the IRS we’re talking about, after all. They’ve got guns!
“We feel bad about the inconvenience. We understand that the additional withholding may create a hardship, and it’s unfortunate. We’re required by the law to take the withholding,” [UI spokesman Thomas Hardy] said.
UI didn’t withhold taxes for hundreds of grad assistants [CNG]
WFT’s Material Weaknesses Led to Giant Tax WTF
It’s bad enough that 3% of Weatherford International’s revenues come from Libya, Egypt, Tunisia, Yemen and Bahrain but the company also revealed in a their NT 10-K filed yesterday that they aren’t so good at staying top of their taxes:
The Company’s Annual Report on Form 10-K (the “Form 10-K”) for the year ended December 31, 2010 cannot be filed within the prescribed time period because the Company has identified a material weakness in internal controls over financial reporting for income taxes and requires additional time to perform additional testing on, and reconciliation, of the tax accounts to be included in the annual financial statements to be presented in the Form 10-K. The Company expects to file the Form 10-K on or before the 15th calendar day following the prescribed due date.
FuelFix has the gory details:
Oil field services firm Weatherford International goes by the stock ticker is WFT, but analyst reaction to the company reporting more than $500 million in tax errors is more likely drawing the reaction of “WTF?” from investors.
The company said it will have to restate its earnings going back to 2007 due to “material weaknesses” in its internal controls, namely:
1. inadequate staffing and technical expertise within the company related to taxes,
2. ineffective review and approval practices relating to taxes,
3. inadequate processes to effectively reconcile income tax accounts and
4. inadequate controls over the preparation of quarterly tax provisions.
So in other words, Weatherford has no tax experts in their accounting department, no one to supervise or review the work of those experts and no checks or balances over the tax provision process as a whole. Was the Ernst & Young audit team aware of this? Last year’s 10-K had a clean opinion, in case you were wondering. Oh, and Weatherford moved its HQ to Switzerland back in ’08. So there’s that.
Ohio County Auditor Discovers an Ongoing 30-Year Tax Mistake
After a massive flood in the Ohio county of Butler March 25, 1913, the Miami County Conservatory was formed to preserve the quality of Great Miami River water. This mission, hammered out in 1914, allowed for a tax against Butler County residents but apparently when this tax was raised in 1976, it didn’t actually go in front of Butler County votes like it was supposed to.
Which means $4 million in taxes has been collected since then ($252,793.74 in 2009) and somehow no one noticed until now.
Via the Oxford Press (OH):
Following an internal review and opinion from the Ohio Department of Tax Equalization, Butler County Auditor Roger Reynolds is removing the tax from the 2010 bill.
“I am proud of my office for this discovery, and for instituting our plan for stronger internal controls on behalf of the citizens of Butler County,” Reynolds said in a press release. “Our role as government leaders must be to protect taxpayers’ money, and to safeguard against waste and error.”
The tax is allowable according to Ohio law. A 1914 statute states taxes for a conservancy district can be collected up to 10 mills, but anything greater must have voter approval.
The funny part is that according to Miami Conservatory District PR, the county is only obligated to pay $207,982 a year to the conservatory. So they really over-collected.
This county auditor is the same who caught another tax boo-boo in early 2010 in which a $1.46 assessment was wrongly collected from every parcel of land in the county for a grand total of $2.3 million.
And you guys wonder why tax protesters do what they do.
A Walmart Sticker Leads to California Lawsuit Against Overstock.com
~ UPDATE includes link and quote from Overstock.com’s press release responding to the suit.
Gary Weiss is all over the $15 million lawsuit brought by seven California counties against Overstock.com today, noting that this could be a helluva problem for our fave SLC problem-child:
The counties had offered to settle with Overstock for as little as $7.5 million, but Overstock refused. No wonder: if the company had coughed up such a substantial amount of cash, it probably would have been driven into bankruptcy.
The suit came out of some alleged false comparative advertising claims (e.g. think Crazy Eddie commercials) including this one that got investigators on the case:
It was a Cottonwood man’s complaints about the firm that persuaded prosecutors to investigate the matter, said Erin Dervin, a Shasta County deputy district attorney.
In 2007, Mark Ecenbarger bought a patio set for $449 on Overstock. The website claimed the list price other companies were charging for the set was $999.99.
But when the furniture was delivered, there was a Walmart sticker on the side of the box showing the set was really worth $247.
Naturally, Overstock is saying that this one big misunderstanding and that isn’t how they do business. The prosecutors aren’t convinced:
The suit claims Overstock often outright makes up its list prices and compare-at prices based on arbitrary markups over the firm’s cost for the product. In many cases, Overstock entirely fabricated a fictitious comparison price and then claimed it was discounting that price, even when it was the only seller of the product, prosecutors allege.
You would think that such a troublesome lawsuit would cause havoc on the company’s stock price, wouldn’t you? Nope. Gary explains:
The reason for that is simple: fraud is already incorporated into the share price. This company is under SEC investigation for systematically cooking its books. Why should consumers be treated any differently than shareholders?
UPDATE: Full statement from Overstock is available although Patrick Byrne is MIA:
“Overstock.com stands by all our advertising practices, including providing comparison values which we thoroughly explain on our site. We have been singled out for standard industry practices, which we look forward to demonstrating in court,” said Jonathan Johnson, President of Overstock.com.
KPMG Pleased That Premature Audit Sign-offs Weren’t on Failed Audits
If you’re the partner on an engagement and you know, deep down in your plums, that the numbers are fine, you probably get pretty anxious to sign off on this bad boy. You want to go on vacation or a golf date with Phil or – if they’re lucky – spend some time with the family. With that in mind, it’s not so unusual that he/she might jump the gun a little and slap down the Johnnie Hancock before all the work gets done.
Unfortunately, as anyone studying for the audit section of the CPA exam will tell you, this is against the rules.
But hey! If the numbers are hunky-dory, there’s not much cause for concern and everyone has a good laugh:
In the case of KPMG, the FRC’s Audit Inspection Unit looked at 15 audits and found that in three cases the auditor’s report had been signed too soon. Significant changes were subsequently made to the accounts in one case.
Paul George, director of auditing at the FRC’s Professional Oversight Board, which includes the AIU, said the early sign-off problem was not limited to KPMG: “It is a profession-wide challenge to some degree.”
KPMG said it accepted the AIU’s comments. “We are pleased to note that in no case did they think that the audit opinion we issued was incorrect,” said Oliver Tant, head of its UK audit arm.
See? It happens everywhere! Plus, it’s not like accounting and auditing are based on rules that anyone takes that seriously, anyway.
Okay, sure signing off early on 20% of the audits sampled sorta looks bad but at least the numbers weren’t wrong. It would be really awkward to explain that.
Survey: Most People Get Away with Sending Inappropriate Emails
Recent data suggests that most of you sending emails regarding the person most likely to sleep their way to partner, the hot piece of ass that isn’t pulling their weight or a recruit from a certain school that asks less-than flattering questions about your firm, are getting way with passing it along to their friends and/or colleagues.
That being said, it does happen. One in twenty to be precise. Speaking from personal experience, sometimes people are reading your emails, especially if something goes viral within a firm and happens to sneak outside the firm. That’s when TPTB get on the horn and demand that people are held responsible.
Hey, nobody’s perfect right? When my particular reprimand came down, all I could do was laugh and say, “Yep, I did send that. Hell, it’s says “From: Caleb Newquist” right there. It was a bad decision on my part and I understand you have to do what you have to do.” And I moved on. Besides, I wasn’t the only one. It was communicated to me that literally hundreds of people were being reprimanded for forwarding the message so it was largely a damage control project and plenty of people were being told, “Don’t do that again. Ever.”
But for the most part, it sounds like most of your “inappropriate messages” fly beneath the radar, including:
Inappropriate jokes, angry messages sent in the heat of the moment, and scathing email replies forwarded to the wrong people are among some of the email gaffes that have landed office workers in hot water with their employers or clients.
One in five of those questioned said they had sent an inappropriate email in the heat of the moment, while almost a third said they had accidentally hit “reply all” instead of “reply”.
More than one in 10 of the 2,000 people surveyed admitted they had mistakenly sent an email criticising a colleague to the person they were insulting.
So while the Telegraph makes a point to note that 1 out of 20 people have been reprimanded for accidentally saying “God, can you believe the partner’s B.O. today?” in the “heat of the moment” it also shows that 19 people are having a great time sending inappropriate emails and not having any problems at all.
However, if you’ve been caught red-handed sending a dirty joke and/or discussing your booze-fueled business trip that may or may not have involved a party back at the hotel room, and were later asked to explain yourself, we’d love to hear about it below. And of course, send us any and all future inappropriate emails that would be 100% appropriate for these pages.
Not that we’re suggesting that you use your work email in an inappropriate manner. You’re representing your firm after all. Have the common sense to use a different email address.
One in 20 people reprimanded for inappropriate emails [Telegraph]
Remember the $3 Million in Overstock Shares Patrick Byrne Sold? Sam Antar Does
Last we heard from Patrick Byrne, the Overstock.com CEO and Farmville enthusiast, he had just disposed of 140,000 shares of OSTK via High Plains Investments, LLC, an entity 100% owned by PB. This had a few people scratching their heads, including us.
At the time, we wondered why Patsy would need to dump the shares, especially after all the excitement the company generated by turning their first profit ever in 2009 and a profitable Q1. We were hoping that the KPMG engagement team – that was doing such a bang-up job – would get some new Segways to cruise SLC but pesky independence rules probably got in the way of that.
Regardless, Q2 wasn’t expected to be a showstopper but when asked, Patsy wasn’t worried, telling Investor’s Business Daily, “Given that in 2009 we had close to $40 million of free cash flow (and $8 million net income), I think we should just continue building the intrinsic value of the business right now.”
Well! The Company reported its Q2 earnings after the close yesterday and, um, they missed the numbers badly. The $0.02/share loss expected by analysts was tripled with a loss of $0.06/share. As you might expect, the shares are taking a beating and Byrne nemesis Sam Antar finds this just a little bit fishy:
[N]ine days after Q2 2010 ended, Byrne led investors to believe that Overstock.com was going to break even in that quarter by citing previous year’s free cash flow numbers. However, Byrne did not mention that Overstock.com’s free cash flow for the six months ended June 30, 2010 was negative $54.8 million compared to negative $35.8 million in the previous year’s comparable perid [sic] or about $19 million lower.
So, there’s that. OH! And the $3 million in shares. Don’t forget that.
Overstock.com CEO Patrick Dumped Stock Ahead of Bad Earnings Report and Misled Investors About Earnings [White Collar Fraud]
Did KPMG Plagiarize Part of Its Atlantic Yards Market Study?
Back in the fall we told you about a market study that KPMG issued on the Atlantic Yards project.
At that time, we learned that KPMG had done some less-than stellar research on the movement of the units on Prospect Park and it got the attention of some the local blogs covering the massive development project.
Namely, the Atlantic Yards Report blog. It reported:
KPMG’s report has some very shoddy research. Consider that the report (dated August 31) claims that Richard Meier’s On Prospect Park is 75% sold. (Only rental buildings are pre-leased.)
However, the New York Times reported September 27:
While the developers say half of the building’s 99 units have been sold, the real estate Web site StreetEasy.com documents only 25 closings through public records.
AYR didn’t state it so boldly back in the fall but in a post from yesterday (as well as reports in May and June) it isn’t so nice and flat out calls the firm out for lying, “The KPMG report got very little discussion, but it contains lies–blatant, checkable lies–about condo sales.”
But wait! There’s more! We learned today from a friend of GC that not only does AYR call out KPMG for having their pants on fire, it also says that the firm got a little carried away with the copy and pasting:
I discovered when I took another look, it contains more than two pages of shameless borrowing–plagiarism that is not diminished by a vague footnote.
The entire section on New York City Market Dynamics is cribbed from The Corcoran Report(s) for Manhattan and Brooklyn for the second quarter of 2009.
Yes, there’s a footnote to the section headline that cites “The Corcoran Report–2nd Quarter 2009” as a source (click to enlarge), but there’s no indication that nearly all the text–with the slightest of changes–comes from Corcoran.
No quotation marks, no indentations, no italics.
AYR provides several examples that are oddly the same identical. We’ve presented a clip from KPMG’s report here:
And here’s Corcoran’s (apologies for the small type):
Like we said, this is just one example. Our messages (email, voicemail, in a bottle) to KPMG have not been returned at this time.