Here at Going Concern, we’re especially fascinated by the ever-unchanging dynamic between grunts and the benevolent leaders they serve. That’s why when I saw this article pop up on some sciencey subreddit I follow for no discernable reason, I just had to share. Let’s jump right into “Shall we serve the dark lords? A meta-analytic […]
Here's a study (via Broc Romanek) that surveyed 400 CFOs on the misrepresentation of earnings. It's remarkably unremarkable on a number of points, including that CFOs say the two biggest drivers of earnings manipulation are 1) to influence a company's stock price and 2) pressure to hit earnings targets. But also, you'll be floored to […]
This morning I linked to a story about a study that ties the willingness to manage earnings to successful careers in corporate accounting departments. This is not a remarkable study because of its findings insomuch as it is a remarkable study because of its timing. I just figured the equation CREATIVE ACCOUNTING = SUCCESSFUL ACCOUNTING […]
There are plenty of comparisons between flighty, mysterious Millennials and their generational predecessors, but this is a new one: Milennials (18-24) trust the IRS (73%) to enforce the law fairly more than people over 50 do (54-56%), says new IRS oversight board survey. — Richard Rubin (@RichardRubinDC) December 8, 2014 What do we make of […]
We're sharing the following with you not because we think it is a sign that both clients and their auditors have cleaned up their acts but it is a perfect example of how dangerous data can be in the wrong hands. Let's take a look at the results of the work done by Susan Scholz, […]
Next time you reserve your desk, pick one near a window.
The Project 28-40 report is a study of 25,000 people (23,000 of those women) by Opportunity Now and PwC that looks at the obstacles facing professional women in the UK. The report itself is nothing groundbreaking, however it is courtesy of said report that we are given this gem: A perceptions gap between women and […]
Most Americans comply with the tax laws, but every year many of our fellow citizens don't. The result is the “tax gap” — the amount of revenue that the government loses because people are cheating. In one recent year, for example, the tax gap was $450 billion. That’s a lot of money — more than […]
We'll file this under "Things You Probably Already Know" but found this bit over at Above the Law and wanted to share with the class: I think we’ve long known that law is a refuge for people who are afraid of numbers. People who are good at math don’t borrow hundreds of thousands of dollars […]
They managed to round up a lot of their (and their competitors') clients though! According to a new study by BDO USA, LLP, one of the nation’s leading accounting and consulting organizations, less than one-third (27%) of public company board members believe the Public Company Accounting Oversight Board's (PCAOB) proposed changes to the annual auditor's report […]
A paper presented in August at the annual meeting of the American Accounting Association in Anaheim, Calif., found that “the current Sino-phobic reaction to Chinese reverse mergers may be overblown.” In an effort to assess the performance of these often maligned companies, the study concluded that “as an asset class, Chinese reverse-merger firms (CRMs) have performed […]
Apparently the Life at Deloitte Twitter account has been busy tweeting other people's links to the Deloitte study we wrote about earlier this week, but of course no Going Concern love. We're going to assume this is due to our unruly comment section and not at all a reflection on our journalistic integrity or total […]
Diversity, as you all know, is critical to the success of any major company's efforts to appear as though they care about something other than making money. You might hear something like, "We celebrate diversity at our firm because it's the right thing to do, yada yada yada, but it's also good for business." Okay, […]
A new study from the Tax Policy Center discovered that more taxpayers will be subject to the alternative minimum tax in the coming years — 6.1 million by 2023 — but man, things could've been really interesting/irritating. Without the fiscal cliff deal, 22.6 million taxpayers would've gotten to know Form 6251 in 2013, growing to […]
Before the House of Representatives got down with some Audit Integrity whatever whatever, we had the Jumpstarting Our Business Startups Act as an example of Congressional wading into the accounting/auditing regulatory waters. If you need a refresher, the JOBS Act flew through Congress and the got the President's signature last year despite a lot of people saying […]
More than 8,000 French households' tax bills topped 100 percent of their income last year, the business newspaper Les Echos reported on Saturday, citing Finance Ministry data. The newspaper said that the exceptionally high level of taxation was due to a one-off levy last year on 2011 incomes for households with assets of more than 1.3 […]
Naturally, my esteemed colleague Colin sent me this Forbes article to write up, presumably because I am the resident crazy cat lady around here. I'll take it. Fortunately Taxgirl took it before I did: Birds in Germany are dying by the millions and Peter Berthold of the Max Planck Institute for Ornithology in Radolfzell, Germany, […]
If you and some cohorts are fed up with walking the straight and narrow, be advised that a recent study by Ernst & Young discovered something that may help assist you in making your future fraudulent endeavor a wild success: Phrases such as “nobody will find out”, “cover up” and “off the books” are […]
The continued prevalence of fraudulent activity in business will undoubtedly lead many of you to a career in forensic accounting and/or fraud examination. Because of the nature of their work, you might be under the impression that the organizations in this little corner of the sandbox would be above reproach and bickering over petty differences […]
Back in October, we learned that PwC auditors had finally whined loud enough to earn a second monitor. Up until that point, it was only by the grace of God that anyone was able to accomplish anything and it probably explains the firm's dreadful PCAOB inspection results. Some found it strange that a firm of […]
Here's a sign that a board of directors resembling a Guys Night Out at the Tilted Kilt could be a problem: New research shows that firms with at least one woman director are significantly less likely to restate quarterly or annual earnings than are companies with an all-male slate of directors—40% less likely, researchers […]
Lawyers. Gotta love 'em. They have many functions but when it comes to accounting and financial reporting, it's usually to sue the pants off those who make gross errors in these two areas. Maybe the company was stupid; maybe the company did something illegal. It doesn't matter. If some numbers are wrong and someone lost […]
A recent study from City University London determined that "the 'tyranny of billable hours' in professional service firms leads to over-charging clients, overworking junior employees, and avoiding strategic issues." Thanks to Professor Obvious, his two-year study of tax lawyers at an undisclosed Big 4 firm, and his grant from the Institute for the Verification of Stupid Shit, now the […]
From Reuters: Letting tax rates for the wealthy rise will not put a short-term damper on the economic recovery, according to a report by the non-partisan research arm of the U.S. Congress. The study by the Congressional Research Service is likely to be used by Democrats in the looming battle over whether to extend tax cuts […]
[R]esearch finds auditing fees charged to companies to be significantly related to the their financial performance for as long as five years into the future: the higher the fees this year, the lower firms’ performance next year and beyond. In the words of the journal report by Jonathan D. Stanley of Auburn University, “Primary results indicate a significant inverse relation between audit fees and the one-year ahead change in clients’ operating performance… Further analysis reveals that the primary results extend to changes in operating performance observed up to five years after the fee is disclosed; are more pronounced for future negative versus positive chances; and [are] applicable to future changes in earnings unaccounted for by analysts’ forecasts.” Asked if these findings are likely to be of value to average investors, Prof. Stanley answers in one word: “Definitely.” [AAA]
Especially if you’re the jealous type.
According to accounting firm BDO, middle market CFOs typically earn 55% to 60% of their CEO’s pay, but in 2010 they earned just 40%, on average.
In a study of 600 public companies with annual revenues ranging from $25 million to $1 billion, BDO found that CFOs earned an average of $927,743 in 2010, a 19% increase from 2010, while CEOs earned an average of $2.34 million, representing a 25% increase from the previous year.
Convoluted corporate financial reports are just as unreadable for professional stock analysts as they are for the average investor, according to a new study.
The study, published in the current issue of the American Accounting Association journal Accounting Review, tested the readability of tens of thousands of company filings over 12 years and found that analysts’ earnings forecasts for firms with less readable reports “have greater dispersion, are less accurate, and are associated with greater overall analyst uncertainty.” Ironically, however, the syntactic and linguistic complexity of these reports generated greater demand from investors for analysts’ commentary and greater reliance on their forecasts. [AT]
I am pleased that the SEC’s Office of the Chief Accountant’s thoughtful study recommends retention of Section 404(b) of the Sarbanes Oxley Act for companies whose market capitalization is between $75 and $250 million. Section 404(b) requires independent auditors to attest to management’s assessment of the effectiveness of its internal controls over financial reporting […]. The study concluded that costs of Section 404(b) compliance have declined and financial reporting is more reliable when the auditor is involved with ICFR assessments. Importantly, the study found that investors generally view the auditor‘s attestation on ICFR as beneficial. [Cindy Fornelli/CAQ]
It’s ironic that I read this this blog post today (rather than on Friday) since A) approximately a third of the country is in a some stage of a hangover B) I’m listening to “Rehab” by Amy Winehouse as I write this and C) there was a murder at a fraternity in Youngstown, Ohio over the weekend (I realize it’s a stretch to assume that anyone would have been drinking at a frat party) but this is pie-in-the-sky postulating that just begs to be mocked.