SEC sues ex-Dell accountants over fraud [Reuters]
“The U.S. Securities and Exchanges Commission on Friday sued two former top accountants of Dell Inc for manipulating financial statements to meet Wall Street earnings targets between 2001 to 2003.
The regulator said in its suit, filed at the U.S. District Court of the District of Columbia, that former Chief Accounting Officer Robert Davis, and former Assistant Controller Randall Imhoff had maintained a number of ‘cookie jar’ reserves — an improper accounting method in a bid to cover shortfalls in Dell’s operating results.
The SEC said the improper accounting led to Dell having to restate all its financial statements from 20 g>Mosque big owes 224G tax [NYP]
“Sharif El-Gamal, the leading organizer behind the mosque and community center near Ground Zero, owes $224,270.77 in back property tax on the site, city records show.
El-Gamal’s company, 45 Park Place Partners, failed to pay its half-yearly bills in January and July, according to the city Finance Department.
The delinquency is a possible violation of El-Gamal’s lease with Con Edison, which owns half of the proposed building site on Park Place. El-Gamal owns the other half but must pay taxes on the entire parcel.”
States See Pickup in Tax Revenue [WSJ]
“Overall tax revenue increased 2.2% in 47 states that have reported their receipts for the three months ended June 30, compared with the same period a year ago, according to a report to be released Monday by the Nelson A. Rockefeller Institute of Government at the State University of New York.
This marks the second quarter in a row of recovering tax collections—and follows five quarters of declines in revenue that hammered local-government budgets. The latest figures are still a mixed bag: Some states continue to see declining revenue, but those were offset by states that saw increases.”
KPMG Accounting Malpractice Verdict Affirmed but $38 Million Damage Award Vacated [Law.com]
Is this what you call a lose/win?
Relax! Iowa Is Funding Hollywood Again [Tax Update Blog]
That is a relief. But Joe Kristan reminds us how things went the first time around, “The film program collapsed in scandal last fall, and the film office director and two filmmakers face criminal charges. Iowa is on the hook for $200 million for credits already committed — about $66 per Iowan. ”
An S.B.A. Loan Program Goes Quietly [You’re the Boss/NYT]
The Small Business Administration’s America’s Recovery Capital Loan program (“ARC”) is being shut down just after a year in operation. At the outset, the 10,000 that were going to made available was thought to be too small. As of August 20th, the program had made less than 8,300 loans and it will be lucky if it reaches 9,000 by the time it expires next month.
Starting a new school year [Accounting Professor]
Fans of Professor David Albrecht has started a new blog; this is the first post.
Obama’s Tax Reform Panel: A Missed Opportunity [TaxVox]
“The paper, approved by the panel this afternoon, is filled with lots of useful information about our flawed tax system but leads nowhere. There are no recommendations. No revenue estimates. And no ownership by President Obama, even though he picked the panel’s members and staffed it with White House aides.
As a result, this report is a huge missed opportunity. Obama might have used this exercise to jump-start a debate over fundamental tax reform. Instead, the report does nothing to fill the policy vacuum that is being filled by an argument over what to do about the decade-old Bush tax cuts.”
It’s time to dial down all the fuss about SBA loans.
First, there are the reports about increases in SBA loan dollar volume, thanks to the stimulus bill. For example, according to the SBA, over a period of about a year, average weekly loan dollar volumes increased more than 90 percent in the two most popular programs, 7(a) and 504, from the average before the passage of the stimulus bill. 7(a) loans can be used for such purposes as working capital and the purchase of equipment, while 504 provides long-term, fixed-rate financing for buying real estate and other fixed assets used for expansion or modernization.
But, a recent analysis by Scott Shane, professor of entrepreneurial studies at Case Western Reserve, shows this conclusion should be taken with a big pitcher of salt. According to Shane, the level of growth is only impressive when compared to the previous year’s poor results. That is, in 2009, the volume was about $180,000,000. So, the approximately $300,000,000 for the first 27 weeks of the 2010 fiscal year represents a big jump. But compared to, say, 2006 and 2007, it’s about the same.
Then, there’s the more important matter of just how many small businesses get SBA loans in the first place. The answer is: Not many. Take the 7(a) program, which comprises 90 percent of SBA loans. According to Shane, last year, less than one percent of small businesses with employees received one of these babies. If you look at non-employer businesses, which comprise the majority of all small companies, their share was between one tenth and one twentieth of one percent–about 50,000 small businesses out of 29.6 million.
Of course, 2009 was a lousy year. But, the data still suggests that all the attention being given to the SBA-loan program may not be warranted. That, in turn, has some pretty serious implications for government policy. Those businesses that got SBA loans undoubtedly were helped, possibly increasing their sales and, perhaps, their hiring. But, to reach more companies, the programs just aren’t enough. Another approach is needed to help the vast majority of businesses that don’t use these loans at all.
With all the news about President Obama’s proposals to increase bank lending to small business, there’s one obvious question that needs to be addressed: Why not have the Small Business Administration take a more aggressive role? Why not allow the agency to lend directly to small businesses?
The issue came up at a recent hearing held by the House Financial Services and Small Business Committees.
Turns out, the Small Business Act creating the SBA allows the agency to do direct financing of companies, as the You’re the Boss blog recently pointed out. And through at least the 1980’s, they did so, lending to companies rejected by banks.
Plus, in the past year, the Senate has introduced legislation to help the SBA make direct loans. And the House has passed two bills creating programs aimed at direct lending. That legislation would create a program which would exist only in a recession, through which the SBA would help small businesses fill out loan applications. Then, if no bank were willing to lend, the agency would step in.
But the Obama administration is against any and all such proposals. The reasons: 1) The agency doesn’t have the staff or the resources; 2) It would take as long as a year to get such a program up and running; 3) Administrative costs would be in the billions of dollars; and 4) Historically, SBA direct loans have had higher cumulative loss rates than other SBA-backed loans.
Those, in fact, are pretty convincing arguments.
It might just be that, while it sounds good on paper to give the SBA the power to lend directly, the reality is very different. Sure, drastic action is needed to increase bank lending. But this one might be thoroughly impractical.
The bottom line: Ultimately, it’s bankers who probably are more qualified than anyone at the SBA to make these decisions. In a time of scarce government resources and a need for fast action, the most efficient approach is for the SBA to do whatever it can to encourage banks to lend.
Of course, whether the steps proposed by the Obama administration are likely to do that is the $64,000 question.