If you've ever met a whistleblower, or heard one give a speech, you never get […]
That is, helped American clients stash money offshore.
Credit Suisse said Friday it had been notified that it was the object of an investigation by the United States Department of Justice, citing “a broader industry inquiry.” The Swiss bank said that it had previously received subpoenas and other information requests from the Justice Department and other government agencies regarding cross-border services that its private banking arm provided to American clients.
As you may recall, the situation for UBS didn’t turn out so well and they sorta went back on that whole “secrecy” thing. Unfortch for Credit Suisse, they’ll probably have to snitch too:
On Friday, a court in Lausanne upheld the Swiss government decision to force UBS to hand over client data, citing “virtually uncontrollable economic repercussions for Switzerland” if it had not done so. That decision implies that Credit Suisse, too, may be ordered to surrender information about customers’ accounts to American authorities.
Yesterday we mentioned that the IRS’s new Global High Wealth Industry Group was putting the screws to the rich via “Audits from Hell.” Today, the Service announced that they were withdrawing the federal court summons against UBS since the Swiss Bank provide 4,000 more names of American clients who had parked funds offshore.
With the announcement, IRS Commish Doug Shulman put those 4k lucky ducks on notice that they should prepare for their personal audit inferno:
The IRS on Tuesday withdrew its Miami federal court summons seeking identities of suspected U.S. tax dodgers at UBS after receiving more than 4,000 names as required under an August 2009 agreement that also included the Swiss government. Each of those people expect what Shulman called a “full-blown audit” and many are likely to be charged criminally.
But that’s not all! Clearly, not satisfied with the example made of UBS, the Commish made a promise to everyone that the Service’s offshore bank raids were just getting started.
This is the close of what I call the first chapter,” IRS chief Doug Shulman told The Associated Press in a telephone interview. “We are actively pursuing a number of other banks and promoters and advisers.”
Shulman declined to get into specifics about ongoing offshore tax investigations, but said: “It’s not just about Switzerland, this is about multiple countries and multiple institutions.”
Accounting News Roundup: IRS Drops Civil Suit Against UBS; PwC’s Diamond Deal; Roni Deutch Is Disappointed in Jerry Brown | 08.27.10
I.R.S. to Drop Suit Against UBS Over Tax Havens [DealBook]
UBS is finally dropping those 4,450 names it owes the IRS and skates past the civil charges.
3PAR Accepts Revised Dell Takeover Bid [WSJ]
“3PAR Inc. on Friday accepted an increased, $1.8 billion takeover offer from Dell Inc., a day after Hewlett-Packard Co. raised its offer in a bidding war for the data-storage company.
Dell’s revised offer matches H-P’s Thursday bid of $27 a share for 3PAR, whose software helps companies manage and store data more efficiently.
The fight over 3PAR illustrates how important it has become for tech companies to dominate the emerging technology known as cloud computing, in which data are managed and accessed over the Internet. Dell and H-P both sell storage products and see 3PAR’s assets as important additions to their portfolios as large technology companies seek to serve all the needs of corporate-technology departments.”
When Litigation Kills the Accounting Profession-Don’t Say You Weren’t Warned! [FEI Blog]
Jim Peterson of Re:Balane guest posted over at FEI Blog where he discussed his speciality – risk surrounding the Big 4.
PricewaterhouseCoopers Trying To Buy Consulting Revenue Again With Diamond Deal [Re:The Auditors]
Francine McKenna discusses PwC’s recently announced purchase of Diamond Management & Technology including whether some of Diamond’s consultants bailed early to avoid becoming a cog in the another public accounting firm, “Did some of the employees bail out before they were signed on as sterile strategists for an ineffective firm struggling under the weight of consulting ‘leadership’ with audit-shaped heads? I know for sure that there were significant groups of BearingPoint consultants that would have rather masticated glass shards than work for a public accounting firm again.”
Official Statement [Roni Deutch: The Tax Lady Blog]
Roni Deutch says Jerry Brown, California’s Attorney General-cum-Democratic nominee for Governor, is playing election year politics. Seems plausible.
Finance Execs React to Herz’s Retirement [CFO]
No one is panicking.
SEC vows more actions over crisis [FT]
The FT is finally getting to the story about the SEC bringing more actions, changing the culture with new teams, yada, yada, yada. Except not everyone is buying it, “[S]everal judges have questioned the SEC’s deals with Citigroup and Bank of America, and some plaintiffs’ lawyers believe the regulator has been too soft.
‘There’s no real difference now to what it was like before Mary Schapiro became chairman,’ said Jacob Zamansky, a lawyer for investors and longtime SEC critic.”
Boeing Postpones Dreamliner Delivery Until 2011 [WSJ]
You’ll have to come up with a different Christmas gift for the boss this year.
Accounting News Roundup: UBS Clients Have ‘Mere Hours’ to Come Clean; Dixon Hughes Sued for ‘Comfort Report’; “Big 4 Only” Bank Covenants – Revealed! | 06.18.10
UBS Customers May Have `Mere Hours’ to Report to IRS [Bloomberg]
Since the Swiss Parliament were finally able to give the OK on the agreement to disclose UBS client names to the U.S., it’s only a matter of time until the IRS starts kicking down doors in the middle of the night.
“For UBS account holders, they have mere hours to run to the IRS and hope they can disclose the account before the Swiss hand the data over,” said Asher Rubinstein, a partner at Rubinstein & Rubinstein LLP in New York who said he’s been “getting panicked calls all week.”
The lesson to be learned here, it appears, is that he IRS on a bluff, you are likely to be wrong, wrong, wrong. Doug Shulman doesn’t like to be take for a fool, “We will immediately follow up on the information we receive from the Swiss and we will vigorously enforce the laws against those who have attempted to evade their tax responsibilities by hiding their assets offshore.”
KPMG chief calls for audit reform [Accountancy Age]
John Griffith-Jones, who wishes everyone would get comfortable with the idea of the Big 4, does admit that the question about the purpose of audit is a legit one that should not be ignored, “What is the point, they and others ask, of doing extensive and increasingly elaborate audits of the financial accounts of our banks, when audits failed to identify the huge and systemic risks which led to the near collapse of the Global banking system in the Autumn of 2008?”
Campbell Recalls SpaghettiOs [WSJ]
600 Parish investors sue accounting firm [Charleston Post Courier]
Dixon Hughes is being sued by 600 investors of convicted mini-Madoff Al Parish for their “Comfort Report.” “The lawsuit alleges that the firm claimed to compile the report from brokerage statements, when it received statements generated only by Parish that ‘summarized imaginary account balances.’ ” Oops.
Oh, You Mean Like the Same Fed Audits We Already Have? Way to Go, Congress! [JDA]
“As any accountant will tell you, we perform audits each year to ensure the comparability of financial statements for the sake of investors. Since there is no comparing Fed statements and there are no investors (excluding the banks with mandated stock holdings in the Fed banks they are regulated by), basically all we’re doing is jerking off with our left hands pretending it is someone else doing the jerking.”
Firing squad execution sobering, but dramatic [AP]
And who doesn’t like drama?
Restrictive bank covenants keep the Big Four on top [Accountancy Age]
“Big 4 only covenants” in lending agreements are blackballing smaller firms according to BDO International CEO Jeremy Newman and others. Nonsense, you say? AA presented an example:
Buried in the 81-page credit agreement for US-based healthcare provider Amedisys is a 22-word stipulation that highlights a problem some fear is threatening the stability of the global economic system.
“Audited consolidated balance sheets of the group members… [must be] reported on by and accompanied by an unqualified report from a Big Four accounting firm,” the phrase reads.
There’s no telling how many loan agreements have this exact language but “Big Four” is often replaced by “reputable” so it’s not if the “Big 4 covenant” is cooked right into the template. That being said, AA reports that the Big 4 + GT and BDO admitted last month that the covenants do exist in the UK.
CFOs on vacation: Fewer call office [San Francisco Business Times]
Accounting News Roundup: UBS Set to Release More Names as Standoff Ends; SEC Drops Cassano Inquiry; Levin, McCain Want Stock Option Gap Closed | 06.17.10
Swiss Parliament Backs UBS Pact [WSJ]
After a short standoff in Swiss parliament, Swiss lawmakers approved the agreement with the U.S. to turn over the remaining names of UBS clients, per the agreement between the two countries. The lower house dropped the referendum proposal that would have delayed the release of the names and likely caused UBS to miss the August deadline which would have resulted in new charges against the Swiss behemoth.
The Journal reports that a Swiss government is prepared to release an additional 1,200 names following the initial 500 released last year.
Lawmakers Weigh Changes to stor Protections [Bloomberg BusinessWeek]
Congress is kicking around the possibility of an office within the SEC to respond to whistleblower complaints. Brilliant!
McGladrey Mourns the Loss of Former Partner Ray Krause
Mr Krause passed away on Monday after 40 years of service to both McGladrey and the accounting profession. He served on many professional standard setting groups including AICPA’s Accounting Standards Executive Committee, the Financial Accounting Standards Board’s Emerging Issues Task Force, and on the Financial Accounting Standards Advisory Council. H was memorialized by his friend and colleague Jay Hanson, McGladrey’s National Director of Accounting:
Ray died unexpectedly yesterday. He was on vacation in Orlando with his nine-year-old grandson doing what he loved—visiting Disney World.
Before his retirement six years ago, Ray spent more than 40 years with McGladrey. He practiced in a number of locations, including a long stop in the national office as national director of accounting. He retired as partner in 2004 but continued to work for the national office part-time in Rockford, Ill.
During his long career, he served in a number of professional standard setting groups, including the AICPA’s Accounting Standards Executive Committee, the Financial Accounting Standards Board’s Emerging Issues Task Force, and on the Financial Accounting Standards Advisory Council.
Ray is best remembered for being the consummate professional and his easy-going style. He was very well respected in the accounting profession. Comments coming in from those that knew him include: “Ray was one of the true gentlemen of the accounting profession,” and “Ray was about as fine a human being as there is.”
He was a great mentor to many colleagues in the national office. His style of giving his complete attention to whomever he was talking to, providing understandable explanations for complex topics, probing deeply for all the facts, and his uncanny ability to help draw a conclusion with full understanding will be greatly missed. Ray could convey the message to someone that they were getting to the wrong conclusion with such delicacy that you didn’t even feel it, and felt good about the answer. He knew many of the “back stories” about how and why some of the most complex accounting standards came about, which is often important to understand what they mean.
Ray will be greatly missed by his daughter, son, four grandchildren and other family and friends. McGladrey and the accounting profession have also suffered a great loss.
Inquiry Ends on Cassano, Once of AIG [WSJ]
The SEC has dropped its investigation of Joseph Cassano, the former head of AIG’s Financial Products Unit, which means he won’t face civil charges in the unit’s role in financial crisis. The SEC is also declining to pursue charges against another AIGFP executive, Andrew Forster, who was also under scrutiny.
Senator sees big reporting gap in stock options [AP]
Senator Carl “Shitty Deal” Levin and new Snooki BFF John McCain “have proposed legislation that would require that the tax deduction for stock options not exceed the expense for options reported in financial statements.”
The two are a little rankled about the $52 billion gap between the amount of stock option expenses recognized for financial reporting purposes and the expense reported for tax purposes. Guess who’s getting the short end on that one?
Bank auditors were fully involved in developing report [FT]
John Hitchens, head of the Institute of Chartered Accountants of England and Wales (ICAEW) and a PwC Partner would like to dispel any notion that auditors will resist reform after taking it on the chin for the financial crisis:
As chairman of the ICAEW working group that produced the proposals, I would like to correct this impression.
Bank auditors from the six largest audit firms were fully involved in developing the report and supportive of all its recommendations, including the proposal that banks develop summary risk statements which auditors would then give comfort over.
U.K. Scraps FSA in Biggest Bank Overhaul Since 1997 [Bloomberg]
Chancellor of the Exchequer George Osborne will do away with the Financial Services Authority, replacing it with three new regulatory bodies and giving most of its oversight powers to the Bank of England.
Intuit Works to Restore Online Access [WSJ]
Any individuals or small businesses that use TurboTax, Quicken and QuickBooks have been in a world of hurt as online access has been down, down, down. “Some Intuit websites were beginning to come back online late Wednesday afternoon,” according to an Intuit spokesperson. The situation is fluid.
Fannie Mae, Freddie Mac to delist from NYSE [CNN]
Meant to mention this yesterday since it was the DoD but you know how it goes. Anyway, see you another life FNM and FRE.
Accounting News Roundup: UK Launches Probe of E&Y’s Final Lehman Audit; Revolving Door at SEC Scrutinized; Swiss Upper House Rejects Referendum | 06.16.10
UK watchdog launches Lehman audit probe [Reuters]
The UK’s Accountancy and Actuarial Discipline Board (AADB), investigative and disciplinary body for accountants, has started an investigation into the Ernst & Young’s final audit of Lehman Brothers’ UK operations for the year ending November 30, 2007.
E&Y, completely familiar with this drill, is sticking to their guns, “Ernst & Young’s audit opinion stated that Lehman’s financial statements for that year were fairly presented in accordance with the relevant accounting standards, and we remain of that view.”