Autonomy Founder Challenges H.P.’s Claims [NYT]
Mike Lynch was growing bored in a business meeting in London on Tuesday when his phone buzzed. A text message from a friend informed him that Hewlett-Packard was taking an $8.8 billion charge. A few minutes later, another message said H.P. was putting most of the blame for the write-down on accounting problems at Autonomy, the company Mr. Lynch co-founded and sold to H.P. last year for $10 billion. There was talk of potentially criminal activities. Since that jolt, Mr. Lynch has been unusually candid and vocal in defending himself and the company he built, rather than hiding out behind a phalanx of lawyers as might be expected. He says he was blindsided by a long-prepared public relations onslaught by H.P., little of which had to do with the substance of its claims about Autonomy.
Autonomy founder says HP allegations don't add up [Reuters]
Mike Lynch, mathematics whiz and former boss of Autonomy, said he can't see how accusations levelled by Hewlett-Packard Co of dodgy accounting add up to a $5 billion writedown on the software business he sold them last year. […] While these accounting differences could have an impact, Lynch believes it is hard to reach the dizzying figures that HP has come up with. "There is nothing there that you can warrant such a big effect in terms of writedown," he insisted.
Questions mount for Deloitte over relationship with Autonomy [Independent]
FYI: "Autonomy paid Deloitte $2.7m in 2010, with $1.5m described as total audit fees and the rest ($1.2m) described as non-audit fees."
Muddy Olam Call Spurred by Rule Seen as Ambiguous [Bloomberg]
Short-seller Carson Block’s Muddy Waters LLC says that believing commodity trader Olam International Ltd. (OLAM)’s accounting requires a “leap of faith.” The ambiguity lies with the rules as much as the company. A global accounting standard introduced in 2003 forces companies every three months to value living things from wheat crops to cattle, or so-called biological assets. As Singapore- based Olam branched out from being the world’s second-largest rice trader and acquired dairy farms and almond plantations, the company began to apply the rules that accountants themselves say are riddled with subjective assumptions on future prices, inflation, production and costs. “It’s an accounting method that inherently introduces uncertainty,” said Ray Ball, an accounting professor at the University of Chicago Booth School of Business. “Some of these numbers are difficult to estimate. When there’s subjectivity, there’s always doubt in people’s minds.”
A Minimum Tax for the Wealthy [NYT]
WB: "Suppose that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.” Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.” Only in Grover Norquist’s imagination does such a response exist. […] So let’s forget about the rich and ultrarich going on strike and stuffing their ample funds under their mattresses if — gasp — capital gains rates and ordinary income rates are increased. The ultrarich, including me, will forever pursue investment opportunities. […] The group’s average income in 2009 was $202 million — which works out to a “wage” of $97,000 per hour, based on a 40-hour workweek. (I’m assuming they’re paid during lunch hours.) Yet more than a quarter of these ultrawealthy paid less than 15 percent of their take in combined federal income and payroll taxes. Half of this crew paid less than 20 percent. And — brace yourself — a few actually paid nothing. This outrage points to the necessity for more than a simple revision in upper-end tax rates, though that’s the place to start. I support President Obama’s proposal to eliminate the Bush tax cuts for high-income taxpayers. However, I prefer a cutoff point somewhat above $250,000 — maybe $500,000 or so.
Lindsey Graham, Peter King break with Grover Norquist [WaPo]
And someone else named Saxby Chambliss.
Audit needs to adapt or risk becoming “irrelevant”, say experts [Accountancy Age]
Experts […] concurred that the global financial crisis raised issues of trust across the profession and called into question the relevance of audit reports providing an early warning system. Sitting on the panel, chairman of the International Auditing and Assurance Standards Board (IAASB) professor Arnold Schilder said a greater focus on the risks affecting businesses led to a need for more information, but doubts about the ability of the audit profession to provide meaningful data needed to be overcome. Bob Dohrer, global leader of quality and risk for RSM, who chaired the debate, said: "If, as auditors, we are not warning the market of systemic risks, then what is the process there for?
Early Dividend for Wal-Mart Is Latest Move in Tax Tactics [NYT]
The Walton family, which founded Wal-Mart, could save as much as $180 million in federal income taxes after the huge retailer announced Monday that it would pay out its quarterly dividend on Dec. 27 instead of Jan. 2, as was scheduled. The change will allow the family and other Wal-Mart shareholders to record the income this year, when the federal tax rate on dividends tops out at 15 percent. Next year, if the Obama administration and Republicans are unable to reach a compromise, that rate is set to jump sharply to 39.6 percent. High earners will have to pay an additional 3.8 percent on most investment income to help pay for the new federal health care law, bringing the total possible tax bite to 43.4 percent.
Lindsay Lohan gets $100,000 gift from Charlie Sheen to pay toward IRS bill; Sheen now faces estate, gift tax issues [DMWT]
An early Festivus miracle?!
Is The IRS Investigating Lance Armstrong's Livestrong Foundation? [Forbes]
The cherry on top.
Worker sick of noise calls cops on downtown bell ringer [SCO]
When a Salvation Army bell ringer arrived in Market Square Tuesday morning, set up a donation kettle and began ringing for donations, Sarah Hamilton-Parker called the police. “I listen to this for 200 hours a year,” said Hamilton-Parker, who works in a downtown shop near the annual bell ringers. “This is my fourth year and I can't take it anymore. I'm so sick of it.” She said the bell ringing starts in the morning, clangs all day long, then continues into the night. According to her calculations, she listens to 40 hours of Salvation Army bell ringing every week, for five weeks a year, or 200 hours a year. “I don't get a break,” she said. “It makes my blood pressure go sky high.” Hamilton-Parker said she's complained to the Salvation Army every year for the past four years and asked that the bell ringers be moved across the street to the front of the North Church. But nothing has changed, she said. She's also researched the city's noise ordinance which bans excessive noise and said she thinks the fund-raising bell ringers qualify as noise under that definition. But Police Capt. Mike Schwartz said the noise ordinance “doesn't apply” because city officials grant permission for the bell ringers to shake their bells in that location on an seasonal basis. “I recognize her concern, but it's something the city has given permission for,” he said. “They don't even let me pick out my own clothes, so I don't have a say in it. But you do have a voice in city government. These are not back-room decisions.” […] “It makes me hate Christmas,” she said.