To many, the story of Crazy Eddie is a story of loving to hate a television commercial. The Crazy Eddie pitchman, Jerry Carroll, typically wore a turtleneck under a dark blazer or a Santa Claus suit, sans the fake beard. Carroll waved his arms, would list off electronics merchandise, and scream to “shop around, get the best price, but then GO TO CRAZY EDDIE” because he would beat that price. All the zany theatrics crescendoed into one of the most wily taglines ever to grace the airwaves: “His prices are INSANE!”

The real story of Crazy Eddie is a familiar American story of wild success. It’s about family, business, ambition, money, and betrayal. And, as has frequently been the case in American business, it’s a story of fraud. This particular great American scam is told in painstaking detail by Gary Weiss in “Retail Gangster: The INSANE, Real-Life Story of Crazy Eddie.” And Weiss, a veteran investigative reporter, has all the receipts, which is far more than could be said of Crazy Eddie.

The Eddie in Crazy Eddie is Eddie Antar. Eddie is a streetwise, ambitious kid who builds a chain of consumer electronics stores partly on the campy TV and radio commercials starring Caroll and partly on the willingness to cut corners. A lot of corners. It all began with the nehkdi, or “the skim,” which involved holding onto the sales tax collected on a sale of merchandise. This wasn’t some accounting sleight of hand; the nehkdi was simply how the Antars, Syrian Jews whose ancestors were submitted to endless taxation by Turkish oppressors, conducted business. The nehkdi was distributed throughout the Antar family, piled up in attics and under mattresses, and wasn’t given much more thought. One memorable family story featured Murad Antar—Eddie and Sam’s grandfather and family patriarch who immigrated to America in 1920. On one occasion, Murad was carrying thousands of dollars in cash and thought he was being followed. He ducked into a store, left the money with the Syrian shopkeeper, and promptly forgot about it for several weeks.

Eddie, however, wasn’t satisfied by simply skimming sales tax. He had big plans, but he couldn’t do it alone. His key accomplice was his bookish cousin, Sam E. Antar, known as Sammy. Sammy’s talent for numbers and studious ways made him the perfect person to learn the gray areas of accounting and finance, so Eddie paid for his college education to do just that. This made Sammy indispensable to Crazy Eddie, giving the company a veneer of legitimacy and putting it on a path to rapid growth and fabulous wealth.

Weiss guides us through the cast of characters around Eddie and Sammy. It’s not an easy task. There are at least two more Sams, two Debbies (Eddie’s wife and paramour/second wife had the same name), two Daves, and countless others, including cameos from James Brown, Abbie Hoffman, and yet another Sam: Alito, this time. Weiss keeps it all straight with skill, wit, laying out the intricacies of the fraud and how everyone fits in, wittingly or unwittingly. All the while, 1980s New York City lurks in the background, with all its grit and hustle, a time when those terms weren’t used in corporate slogans.

When Crazy Eddie IPO’d in September 1984, the market responded enthusiastically, with analysts gushing about this scrappy company that was making it big. The stock skyrockets, Eddie and other Antar family members cash in, the company does another stock offering, the stock splits.

But behind the scenes: chaos. To meet Wall Street’s growth expectations, the skim had to give way to bigger, more complicated schemes. Eddie only demanded more when the pressure to grow the company’s revenue intensified. At one point, when he insisted that warehouse managers send their prime merchandise to a wholesaler to artificially increase sales, Weiss makes the priority clear: “The fraud came first.” Meanwhile, Eddie’s personal life is in shambles as he tries to keep money from his wife (Debbie I) with a trail of broken promises, audacious lies, and threats.

The fall of Crazy Eddie in the third act is as spectacular as its rise in the first. It was during this time when the weight of the fraud started crushing everyone, no one more than Sammy. Still, Eddie continues to double down while secretly plotting his escape. The market loses its love for Crazy Eddie, the stock sinks, and the vultures begin to circle. When it becomes clear to Sammy that Eddie is (and always was) looking out for himself, Sammy starts cooperating with the FBI. The dominoes begin to fall, and that’s when Eddie finally absconds to Israel. The law chases him, but Weiss keeps you guessing right to the finish, even if you already know how this story ends.

Founders like Eddie Antar don’t really exist anymore. These days, founders are worshiped as geniuses. They transfix investors with ideas, technology, and charts that go up and to the right. Money, many of them claim, is an afterthought, just a way of keeping score.

Not for Eddie and his crew. Despite the never-ending shenanigans, when you read Retail Gangster, you cannot help but feel nostalgic for businesses like Crazy Eddie, just like we inexplicably yearn for a sleazier Times Square.

Crazy Eddie hawked electronics, ran a hypnotic ad campaign nonstop, and used any accounting gimmick they could. If you had a low price, he would beat it. Simple as that, and today, looking back, we love it. There was no talk of changing the world. There was no vision for the future. There was no keynote filled with yogababble about saving humanity. Why? Because it sounds INSANE.

Retail Gangster: The Insane Real-life Story of Crazy Eddie is now available from Hachette Books

Caleb Newquist is the founding editor of Going Concern and co-host of the podcast Oh My Fraud. Listen on Earmark and earn free CPE.

The post Crazy Eddie: They Don’t Fraud ’Em Like That Anymore appeared first on Going Concern.

Oh, you have been exerting yourselves? I get that being stuck home hasn’t been great for a lot of people, and lots of accountants don’t know what to do without work, so you’re saying lots of you have just been working the whole time? Am I in the ballpark? Oh, man. That makes me sad.

Look, I don’t know what to tell you; the last couple of years have been weird. So weird in fact that no one—and I mean no one—would blame you if you said, “You know, I’m going to take it easy until this blows over.” And if your manager or partner threatens to fire you, or hangs a guilt trip on you, just quit. Lots of people are doing it! You’ll find another job. Probably a better one! Don’t settle for shitty employers, please.

Alright, alright. This is supposed to be a post of predictions, and as I’ve stated previously, I don’t like making predictions. It’s just one more thing that I am not good at. But it feels like a good exercise in planning for things that we could reasonably expect to happen. And also to try imagining things that we can’t reasonably plan for at all. Things like PwC screwing up the Oscars or corrupt audit partners at the top of KPMG or a fucking pandemic upending the whole world aren’t all that surprising when you think about it. It’s just that virtually everyone didn’t take the possibility of these things seriously. So when they do happen, everyone is SHOCKED and can’t believe how the thing that could have never happened, happened.

So let’s try to be better than that. Or worse. I’d be a fool if I didn’t admit that there’s a greater than zero chance that I’ll get every single prediction wrong.

Here we go.

The metaverse will be the next big overhyped thing in accounting

I’m old enough to remember when all anyone could talk about was how the blockchain would revolutionize accounting. So what happened on the way to this triple ledger revolution? Oh, yeah. It’s actually super technical and boring. “How does it work?” an auditor in the near future might ask. Someone with a Ph.D. in computer science will provide a response that will be nearly incomprehensible to virtually every auditor in practice today (which is OK with Barry Melancon, apparently).

Not that I doubt the impact that blockchain will have on accounting and auditing. It will provide better security and improve the quality of data.

The same cannot be said for Mark Zuckerberg’s latest pipedream: the metaverse. Oh yeah, it’s not even his idea. He stole it from Neal Stephenson. The general idea is that people will plug into a virtual world to hang with friends, go to work, concerts, and do countless other activities they can’t or won’t do in the real world. 

So naturally, I recently came across an article that posited how the metaverse will change accounting. These changes mainly revolve around people interacting with each other in a virtual environment, which sounds only slightly worse than how we’re interacting with each other online right now. I can only imagine the other disappointing uses for the metaverse that accounting will come up with. Among them: filling out timesheets in the metaverse, cheating on ethics exams in the metaverse, and paying lip service to diversity in the metaverse. I’m already over it.

The next big accounting fraud is …

I’m not going to name names because that’s a fool’s errand, but I think it’s reasonable to assume that there will be a giant corporate fraud in one of the following:

• Electric vehicles
• SPACs
• Trump Media & Technology Group

OK, so one name. But, honestly, there’s so much stupid money flying around right now, it’s inevitable that something somewhere is going to unravel. Do you think anyone learned anything from l’affaire Thearnos? Nope! No one seems to care much if they’re faking it until they make it, or even if they don’t make it. When it comes to investing in early-stage companies, the only wrong move is not getting in early enough.

Full disclosure: I have a conflict of interest here, namely, a fraud podcast. One new accounting fraud gives me material for at least a few episodes. Keep your fingers crossed. 

The PCAOB … attempts a comeback

There’s a new audit sheriff in town—Erica Y. Williams—and the deck is stacked against her. Still, it’s bound to be an improvement from her predecessor, William Duhnke III. His tenure was rocky, to say the least. There have been allegations that the environment at the PCAOB was toxic under Duhnke, including his “using anti-Chinese slurs in reference to the Covid-19 pandemic,” which was cited in a lawsuit filed by Sue Lee, the Board’s former chief administration officer. 

Then there’s this:  

At a meeting in October 2019, then-board member Jay Brown and Duhnke got into a heated argument sparked by a news leak. According to three people who were briefed on the dustup after it happened but asked to remain anonymous to discuss an internal squabble, Duhnke whizzed an empty soda can toward Brown. (He was near a trash can, which may have been the intended target.) Then, as Brown tried to leave, Duhnke physically blocked him from the door. Shaken up after the confrontation, Brown discussed with an SEC official the possibility of reporting Duhnke to the police.

This all happened after the conspiracy between KPMG auditors and PCAOB officials was revealed. It hasn’t been going well!

As the PCAOB’s new chair, Williams has the opportunity to clean things up this year. Or at least start to. Or attempt to? That will take the form of some new rule proposals that will probably offend the audit profession’s delicate sensibilities. I mean, it has to! Half-measures will only reinforce the doubts that people have had about the PCAOB all along. That it’s a mostly sleepy, outmatched regulator hobbled by the revolving door, sparse resources, and low expectations. 

No place to go but up!

Pay lip service: SALY

Stop me if you’ve heard these before:

• The accounting profession is committed to diversity and inclusion.
• The accounting profession needs to adapt to change.

These are layups as far as predictions go. For decades now, accounting leaders have been paying lip service to building a more diverse profession. Yet, the most recent AICPA Trends Report found that 84% of CPAs in accounting firms are white, and 91% of accounting firm partners are white. To make matters worse, the forthcoming changes to the CPA exam will make it even harder for many Black and Brown people pursuing accounting to obtain the credential. At this point, you could suggest doing the exact opposite of what the accounting profession is doing and its diversity would improve.

Elsewhere in broken records, the accounting profession will continue its time-honored tradition of paying lip service to the peskiest feature of existence: change. Every year nothing is the same, so let’s make sure we talk about the same thing every year … which is how nothing is the same. The only thing that doesn’t change is change; change is constant, which is why everything is constantly changing. Get it? 

More accounting unicorns

Last year, accounting startup Pilot raised $100 million in its Series C round of funding, putting its valuation at $1.2 billion. But don’t call it an accounting firm! Seriously, in the footer of Pilot’s website, it says:

Pilot is a provider of financial back-office services, including bookkeeping, controller services, and CFO services. Pilot is not a public accounting firm and does not provide services that would require a license to practice public accountancy.

This is fine! Maybe you’ve noticed, but the vast majority of services that accounting firms offer these days do not require a license to practice public accounting. The stuff that Pilot is listing—bookkeeping, controller and CFO services, tax preparation—can be done by virtually anyone. Naturally, having some accounting chops is nice if you’re in the field, and it seems that technology-oriented accounting companies have those chops. Companies like Bench and Botkeeper have raised millions of dollars, too, and it seems like only a matter of time before they break the $1 billion valuation.

With money in hand, these companies will continue to pick off small businesses, but eventually, they’ll start gaining the interest of companies with slightly more complex needs and situations. Sure, some businesses won’t want to be a 12-digit number in a massive database of customers, but plenty won’t mind at all! These tech-enabled accounting whatchamacallits (just don’t call them firms!) will compete for all those customers and will build multibillion-dollar companies in the process.

Two (fewer than three) more private equity deals

OK, so with accounting startups raising gobs of easy money, what’s a legacy firm to do? Well, if you’re EisnerAmper, you spin off the audit firm so you can take a chunk of money from a private equity firm, namely, TowerBrook Capital Partners. 

There are two firms now: EisnerAmper LLP, the audit firm, and Eisner Advisory Group LLC, which gets everything else. It makes sense in a lot of ways. The advisory, tax, et al. are no longer hindered by independence conflicts that come with the audit practice. And the audit practice can say, “Hey, look at us! We’re an audit-only firm! We don’t have all the baggage any more. Work with us, and you’ll get the most focused, highest-quality audit that any firm can provide.”

Then there are the payouts. This whole interview with Allan Koltin is pretty insightful, but the thing that will get most people’s attention is how a private equity investment could result in multiple windfalls, with some coming much sooner than what accounting firm partners are accustomed to:

So the trade-off for the partners is you give up part of your annual compensation today in exchange for a significant payment at closing, as well as one or two significant payments three to seven years from closing? Can you drill down on how that works?

Koltin: The largest payment is at closing, but there is typically a second payment about three years after the deal closes if the firm hits certain milestones. These milestones typically have to do with growing EBITDA and overall firm growth.

The last payment, which typically happens in years five to seven, usually occurs when the PE group sells its shares in the accounting firm to a larger PE group. What’s important to keep in mind is that the accounting firm partners, as owners in the firm, will also benefit in the proceeds of that sale. It’s also important to note that the CPA firm will be part of the approval process as to whom the PE group selects to purchase their investment. 

[…]

Another benefit, especially for younger partners, is the final payment would be in roughly five years from the close of the first PE deal. So while oftentimes we talk about the benefits to an older partner, let’s assume a partner is 35 years old and planning to retire at age 65. In that scenario they wouldn’t receive their deferred compensation until 30 to 40 years down the road. Compare and contrast receiving payments taxed as ordinary income 30 to 40 years from today versus getting payments with capital gains treatments over roughly five years. You don’t have to be an accountant to do the math on that one.

Not everyone is sold on this idea, however. The late Dom Esposito wrote a column for INSIDE Public Accounting with a rundown of reasons for firms to be wary of a private equity deal. Esposito’s arguments against firms taking a private equity investment aren’t that compelling, in my opinion, but they’re not crazy either. Plus, he wrote this column five months before the TowerBrook/EisnerAmper deal. Clearly, there is some hesitation on the part of accounting firms to take private equity money.

Despite the risks, some accounting firms won’t be able to resist the chance to grow and line up big liquidity for their partners. Koltin predicted last October that a second top 20 firm would announce a deal in the next month. That doesn’t seem to have materialized, but he also predicted that “no less than three, maybe even as many as four” top 20 firms would have private equity ownership in the next year.

I can’t think of anyone who would know this aspect of the accounting world better than Koltin, but since he missed his first prediction, I’ll take the under. There will be two deals in 2022.  

Accounting talent will continue winning

The pandemic seems to have unlocked something that has permanently shifted a key aspect in the balance between employers and employees. Namely, the office is optional. Many younger workers will want the social benefits of an office environment, and they should fully take advantage of those. But there’s also something to be said for doing work on your own time, on your own terms, while not living at the office. Employers that can provide both a great office environment but also allow for flexible and fluid working arrangements have the advantage. 

Accounting firms aren’t convinced, though. The profession has relied on facetime and long hours for so long, it took a once-in-a-lifetime pandemic to show them that it was possible to do things differently. Still, they can’t quite let it go, as a study from last summer learned:

In a recent survey of close to 500 managers, executives and senior leadership in banking, financial planning, fintechs, financial services, accounting and other related industries, leaders at accounting firms were far more likely to be working full-time at their firms’ offices; much more likely to expect to keep their current office footprint after the end of the COVID-19 pandemic; and more likely to predict their employees will all be working full-time in their firms’ offices a year from now.

The results of the survey, conducted by Accounting Today’s parent company, Arizent, in mid-April, indicate that the profession has not fully embraced the remote work revolution brought on by the pandemic, viewing it as a temporary solution to an immediate problem.

It’s funny because the accounting profession seems to have forgotten that it has an immediate perpetual problem: finding accountants who want to work in accounting firms. And there’s no solution to it, as far as I can see, especially if, at the very least, most firms are going to try strong-arming people back into the office. 

So, prediction: All year long, we’ll be seeing articles in Accounting Today and every other accounting trade with the profession’s leaders offering advice on winning the battle for talent. And most of it won’t even be bad advice. It will center on firms providing a more flexible, inclusive, and dynamic workplace. It’s a proven approach by many companies all over the world. But most accounting firms won’t listen. 

Same as last year.

The post Half-Assed, Half-Baked, Better-Late-Than-Never Predictions For Accounting In 2022 appeared first on Going Concern.

So now July 20, 2019 is here, and it’s their 50th and 10th anniversaries, respectively. A big coincidence? Or a cosmic signature that will forever be remembered in the annals of history? You’ll have to decide, but I think it’s clearly something beyond all of our control.

OK, maybe an irreverent, yappy accounting site doesn’t have much to do with our species’ most significant achievement, but they’re both fanciful endeavors that turned out just fine. Maybe even better than expected.

I had spent about a month building up Going Concern’s archive before the site went live. The first morning it was online, I slept through my alarm that had been getting me up at the crack of dawn to keep an East Coast publishing schedule. So yeah, the first day didn’t start off so hot.

I whipped together a morning link wrap and then managed to publish nine more posts to meet the expected daily quota. I remember my first publisher, David Minkin, asking me if I thought 10 posts a day was doable. “Yeah, should be,” I said, having no idea what I was agreeing to. I had people helping me, after all: namely Francine McKenna (one post per week) and Adrienne Gonzalez (three posts per week), so only having to come up with 46 more articles would be a breeze.

This gif sums up what my typical workday was like pretty well:

What transpired over the next 10 years is kinda hard to explain. Going Concern became a thing, much more than just a blog run by a Big 4 refugee, thanks to many different people who’ve contributed to its success. 

In those early days, especially, Going Concern became a must-read for the hundreds of accountants laid off during the financial crisis, if for no other reason to gossip in the digital unemployment line. Many of you wrote looking for career advice. We were sent farewell emails, some better than others. The Big 4 leftovers continued to dish as they were sucked in deeper, burned out, or engaging in some insider trading. 

There’s been a lot of snark (almost all of it warranted), a hatchet job here and there, and more than a few unsubstantiated rumors. But, I have to say, I think we were appropriately upfront and transparent about those unsubstantiated rumors. There was, dare I say, lots of decent journalism too—10 years of it. That’s far longer than my career in public accounting (5 ½ years), and most of your public accounting careers, too. And Adrienne can denigrate it all she wants, but it’s the steadiest gig she’s ever had. 

I left GC full-time last year, but AG and Jason have this thing handled; God knows there’s plenty of crazy stuff going on in this profession to keep them busy. KPMG antics alone could staff an entire desk.

The point is, Going Concern will continue, and the accounting profession is better for it. Even if some people think the whole thing was faked or a waste of money, it remains a giant leap for accountant kind.

The post Going Concern: 10 Years Of Giving You the Moon appeared first on Going Concern.

For the last decade or so, superhero comics have morphed into superhero movies, and while I have seen several, I am not one of these people who sees every goddamn new AVENGE CAPTAIN AMERICA: CIVIL RAGNAROK INFINITY PANTHER WAR film that hits the big screen. But judging by the amount of money these movies make, this puts me in the minority. Whatever, no judgment here. The movies are fine. I just choose not to make the Marvel Cinematic Universe my fundamentalist religion.

Anyway, my point is that lots of you will be making the sign of the Iron Man cross as you wait in line to see Avengers: Endgame this weekend.

In the last movie, Avengers: Infinity War, mega-villain Thanos got all six Infinity Stones, which gave him the ability to “rebalance the universe,” which is comic speak for carrying out mass genocide at the snap of a finger. At the end of the movie, with the Infinity Gauntlet full of gems on his hand, Thanos snapped his finger, turning several Avengers—as well as half of all life on Earth and in the universe—into piles of dust. Avengers: Endgame will take three hours to show us how our remaining superheroes presumably go back in time to stop Thanos, save the universe, and bring everyone else who turned to dust back to life.

Now, a question you’re probably asking yourself right this second is, “If Going Concern and its favorite accounting luminaries existed in the MCU, which ones would be dead?” Some people on staff here had the same question, and well, here we are.

If I remember correctly, there was no rhyme or reason to who lived and who died in Infinity War, so it stands to reason that there’s no rhyme or reason to who lives or dies in the MCU accounting world. It’s all perfectly random and dumb!

Alright, let’s get on with it. Here’s who disintegrated into a cloud of dust:

Dead

• Caleb Newquist, founding editor, Going Concern, Editor-at-Large, Gusto
• Jason Bramwell, staff writer, Going Concern
• AICPA President, CEO, and “more of a Superman guy” Barry Melancon
• Russell Golden, chairman, FASB
• Cathy Engelbert, CEO, Deloitte
• Greg Kyte, CPA, comedian, Going Concern cartoonist
• Joe Adams, CEO, RSM US
• Grover Norquist, president, Americans for Tax Reform
• Jay Clayton, chairman, SEC
• Jason Blumer, CEO, Thriveal CPA Network

Don’t worry, Adrienne fanboys; she survived. Too bad, though; half of you are dead and the other half of you repulse her. As for the others who are stuck with her:

Alive

• Adrienne Gonzalez, senior writer, Going Concern
• Tom Hood, executive director and CEO, MACPA
• Tim Ryan, U.S. chairman, PwC
• Lynne Doughtie, U.S. chairman and CEO, KPMG
• Mark Weinberger, global chairman and CEO, EY
• Mike McGuire, CEO, Grant Thornton
• Wayne Berson, CEO, BDO USA
• Ralph Albert Thomas, executive director and CEO, NJCPA
• William Duhnke, chairman, PCAOB
• Charles Rettig, commissioner, IRS

Your death and mine won’t be mourned in the MCU as much as Groot’s, but, hey, at least we won’t have to listen to Steve Rogers lecture us about our bad language any more, right?

The post Accounting Endgame: Who Would Survive Thanos’s Snap? appeared first on Going Concern.

It’s bleak to think about, but the truth is that the vast majority of us are wholly insignificant in the greater context of the universe. If you zoom in to our own, individual little worlds, then that significance increases, of course, but even if you are influential in your relative sphere, you’re still highly meh.

But who’s the mehest among us? Hard to say; it’s a tight race! If we keep things within the confines of the accounting world, however, I think we can at least get things down to a handful or so.

Auditors

Honestly, did anyone ever care about auditors? Why else do we have #auditorpride? It’s not as if auditors were shoved in the closet for the whole of human history and then, fed up with not being treated as human, burst onto the scene singing show tunes demanding respect. They’re here! They like bagels and schmear! GET USED TO IT.

And their effectiveness has more or less always been debatable! It shouldn’t take a massive company going bankrupt every five years to remind people of that fact.

Cloud experts

I wrote a cloud explainer for laggards recently, and you know what I learned—who cares if they’re behind the times? I feel like if some self-identified cloud guru was harping on the next big thing in accounting, I’d ignore their advice out of spite. Oh, the internet allows you to do things that weren’t possible before? KNOCK ME OVER WITH A FEATHER. We ended up with infinite free porn and a bullhorn for authoritarians disguised as a cute bird. I’ll get on the cloud when I damn well please.

Deloitte

Seriously. Get over yourselves.

EY’s HR department

I have to believe that someone in EY’s HR department has muttered to themselves, “Well, at least Harvey Weinstein isn’t a partner.”

The 10% of controllers who’ve just resigned themselves to committing fraud

From a survey: “Among the 64 percent who said they have felt pressure to misrepresent their company’s performance, 10 percent reported this is a regular part of their job.”

Yep! There’s a not insignificant number of controllers who’ve looked at their situation and decided, “To hell with it! No one even cares.”

KPMG’s head of tradecraft

If you’re following the trial of ex-KPMG partner David Middendorf, it’s pretty clear that this particular band of thieves were in way over their heads from the beginning. They really had no business trying to pull any of this off. (Allegedly!) Whoever’s job it is at KPMG to teach partners how to keep their cool when conducting shady business failed miserably. I wouldn’t put them in the category of accepting paper bags of cash from a golf buddy in a Starbucks parking lot, but they’re still a bunch of morons.

PwC’s Oscars team

I mean, obviously. And sure, things have gone off without a hitch the last couple of years, but: Guys! You’re just counting ballots, stuffing the results in envelopes, and handing them to celebrities. A team of gifted eighth graders could pull this off.

The robot that’s supposed to take Barry Melancon’s job

Adrienne has a hunch that AICPA President, CEO, and Cardi B fashion consultant Barry Melancon is the robot that is supposed to take Barry Melancon’s job. And if she’s right, then the future is going to be really dull if our sentient robot overlords are going to be old white dudes.

Caleb Newquist

Speaking of old white dudes, I’m becoming one! Not in the cultural sense, I’d like to think, but, rather, in the literal sense. I’m middle-aged! I’m white! I’m a man! I’m building a repertoire of Dad jokes. Virtually no one cares what I have to say about accounting. Which is fine! There’s enough white dudes in accounting telling people what to think.  

The post A List of Prominent Accounting Incompetence appeared first on Going Concern.

Speaking of that request, it went more or less like this:

AG: Would you be interested in opining on what 2019 holds for the profession?

Me: What if my 2019 preview was a list of terrible predictions?

AG: Like “Barry Melancon will come out as genderfluid pansexual” terrible?

Me: Something like that.

How could I say no?

Once I had agreed to write my predictions for 2019, it dawned on me: I hate making predictions! But this is the internet, where shitty prognostications happen at a breakneck pace. Making lousy predictions is a big part of the editorial strategy for practically every sports, political, and business news website. I imagine a news startup will emerge in the near future that will have a “What’s Your Best Guess?” desk. The desk will be run by one person throwing darts at a range of possibilities pinned on a cork board while an algorithm writes up the story based on results of the dart thrower. The company will raise $1 billion in its first month of operations.

So while I hate making predictions, I’m a good sport, so here I am, doing my best accounting impersonation of Miss Cleo. I’ve made seven predictions, four or five of which most likely will not come to pass. Or maybe they will! Who knows! The president is bound to relieve himself on the White House lawn any day now and the internet will break for good, so who cares.

Anyway, here are a handful-ish of predictions for 2019:

1. Naughty KPMG partners will plead guilty. The remaining alleged co-conspirators in the KPMG/PCAOB dramedy who are accused of conspiracy, fraud, etc. will cut a last-minute deal in an effort to avoid jail time. Is there any point to fighting a mountain of evidence that shows that they bumbled their way through a laughable effort to improve the firm’s inspection results? I daresay, my good reader, there is not. These clowns face decades in prison if they go to trial and are found guilty! It’s time to ditch the Radio Station loyalty and save your own skin, dudes. You do NOT want to be the one left holding the bag.

2. PwC will extend its no-screw-ups-at-the-Oscars streak to two. This will be the second year of the new and improved policies and procedures that include double-triple-checking the votes, no tweeting, or Emma Stone ogling. I also assume that between now and the Academy Awards, Tim Ryan will pray to St. Joseph daily.

3. AICPA will plead with members to embrace change. Year after year after year, the AICPA asks its members to embrace change. It’s a wonderful irony for an organization that’s had the same CEO for 20-odd years to spout a perennial message while asking its membership to do something completely different.

4. The robots will still be coming. I think I’ve lost count of the number of years where people said this is the year all the boring work will be done by robots, and accountants will be left to do the important work. And they’re still saying it! I think we’ll know that the robots are doing all the boring work when Big 4 firms announce that they’re no longer hiring new associates off-campus. The Global Recruiting Leaders of the Big 4 will hold a televised joint press conference, and all the accounting majors watching will melt like the Nazis in Raiders of the Lost Ark.

5. Art imitates life. All the misconduct at EY will inspire an episode of Law & Order: SVU. If things continue at this rate, they’ll have enough material for a whole season.

6. More Big 4 bros will try to unseat their boss lady. Cathy Engelbert and Sacha Romanovitch both had their tenures cut short under shady circumstances, emboldening similar “boys rule, girls drool” campaigns at KPMG and EY.

7. Someone will ask you to help them with their tax return. Don’t worry. Just send them this.

Happy new year.

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What Will Be the Greatest Issue to Impact the Accounting Profession in 2019?
Some of Our Favorite Accounting People Put a Bow on 2018 and Talk Robots in 2019

The post 7 (Mostly Terrible) Predictions for the Accounting Profession in 2019 appeared first on Going Concern.

Eventually, I rebelled against the idiocy of the industry norms and founded a firm to do everything differently – High Rock Accounting. Our motto is even “Accounting, Done Differently.” It took me almost 10 years in public accounting and working for three different firms to realize my passion lay in the disruption of an old-school industry.

Let me back up for a minute. This is an origin story – I will get to the how I am going to take over the world in a later post. This post will cover the why.

It was 2004, and I was a 19-year-old accounting student with a budding curiosity for business….just kidding, this is not going to be that boring. Like many of you, started in public accounting when I was basically still a kid. I grew up there: intern, associate, senior, and manager at 25.

After a few years of working my butt off at manager — for less money than any man at my level), I started questioning reality. What was my passion? The specialty group I managed to get into was interesting, plus I was learning a ton, so, cool? It did not make me happy. FPA.

I started in business school because I love business. I wanted to help them grow! I wanted to give back to my local economy and do things for good (not evil). I found myself working for big corporations and helping giant companies that did not care or need help. I went to a local firm hoping that would be better, and in some ways, it was much better. I was working with local companies, I was selling, the people I worked with were cool, and I did not feel like just a number.

Internally, however, the firm was exactly the same – you needed a million billable hours, you had to have ridiculously high realization, and all of the incentives were bassackwards. Many of the partners at every firm I worked for were divorced and miserable – still working 80-hour weeks. That was not the life I wanted. FPA.

There had to be a way to build a profitable firm that both cultivated closer client relationships and foster a culture and of work/life balance that normal humans could embrace.  Have you ever looked at a Senior Manager or Partner with kids and thought, “how do they do it all?” Have you ever wondered if you could have the life and career of your dreams? FPA for making us think we have to choose. We can have both!

I quit my job one week before AICPA Leadership Academy. I went to Leadership Academy with no idea how I was going to fix this industry, no job, and no life plan. It was humbling. The other attendees of Leadership Academy 2013 were AMAZING people who had accomplished so much more than I had at such young ages. I was finally in a room with intelligent, motivated, and accomplished CPAs that got it. They were all seeing the same issues I was and were determined to help the industry.

Right after Leadership Academy, I founded High Rock Accounting (with two co-founders who are no longer around – I learned many lessons on that front). High Rock is a new type of firm. Everything is cloud-based. We bill monthly subscriptions. We have a culture that encourages our team to take vacation. Honestly! We pay them $1,000 to go away, and they have to disconnect while gone. We have clients that send us axe-throwing lessons for Accountant’s Day. The first stage of #CPAWorldDomination is complete. We have proved that this model works, and is the front-line of the change occurring in the industry. High Rock will be a catalyst to change the future of the CPA firm. Stay tuned for Stage 2 – I am going to blow your minds.

Stand with me and blow up the traditional model; stand with me and shout FPA; stand with me and build a better future; stand with me and execute #CPAWorldDomination.

Image: iStock/drante

The post How I Stole My Soul Back From Public Accounting appeared first on Going Concern.

UK watchdog acts against Deloitte over Autonomy accounts [FT]
The Financial Reporting Council says that two Deloitte auditors “failed to challenge the company’s disclosure in relation to the purchase and sale of hardware and its treatment of reseller contracts” and failed to correct false statements provided to the Financial Reporting Review Panel.

Hong Kong audit reform falls short [China Accounting Blog]
Paul Gillis is disappointed with the legislation moving through Hong Kong’s parliament to install an audit regulatory body that was supposed to help get HK back to “regulatory equivalency” with the European Union. Gillis writes that proposed budget is paltry, and the HK Institute of CPAs has polluted the bill to the point that if it becomes law, it would not obtain regulatory equivalency which was the “whole point of this exercise.”

AICPA asks IRS for FAQs on taxation of virtual currency [AT]
Seeing how many taxpayers with crypto income are so bad at reporting it, and others aren’t reporting it all, some fresh IRS guidance would be helpful.

The Nation’s Partisan Divide Is Infecting Tax Policy [TPC]
Howard Gleckman writes that GOP policies that raise taxes on lower income people and Democratic proposals targeting the rich “are almost caricatures of themselves” and if citizens do wish to have governments provide services and benefits, “everyone ought to help pay for them.”

Trump endorses Rep. Dan Donovan who he mistakenly says voted for tax bill [USAT]
Naturally.

Previously, on Going Concern…

I wrote about a career limiting move that auditors keep making: altering workpapers.

Greg Kyte’s Exposure Drafts cartoon addressed extreme tax planning.

In other news:

• Buffett Proposed $3 Billion Uber Investment But Deal Crumbled
• Sears Will Close 72 More Stores
• I Can’t Believe This Stock Footage Of A Guy ‘Sleeping’ While Using Tesla Autopilot Is Still Online
• National Donut Day is tomorrow.
• Don’t smoke pot in an airplane bathroom.

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: AICPA Asks IRS for More Clarity on Taxation of Crypto | 05.31.18 appeared first on Going Concern.

However, if you’re making a go of an accounting career, specifically as an auditor of public companies, there seem to be pitfalls all around you. It’s strange, though, because these pitfalls should be pretty easy to avoid. A few rules of thumb:

• Don’t share material, non-public information with outsiders;
• Don’t use confidential PCAOB information to help you plan for inspections;
• Don’t have intimate relationships with clients;
• Don’t audit when you’re not supposed to be auditing; and
• For the love of God, don’t improperly alter audit workpapers.

I mention that last one because the PCAOB issued a couple of disciplinary orders last week where auditors obviously couldn’t help themselves and went ahead and improperly changed audit workpapers. In each case, the person who did the improper altering was fired.

This is unfortunate because getting fired is not fun, but it’s especially unfortunate because it’s entirely avoidable! Here’s the order against Adam Sanderson, formerly of Deloitte UK:

Come on, man. Don’t do that!

Likewise, don’t do what Elliot Kim, formerly of KPMG, did:

Oh. Oh, no.

To make matters only slightly worse, “Kim did not correct Senior Manager B or otherwise disclose that the screenshot was inaccurate,” when PCAOB inspectors asked about it. The firm found out later that that was the case, and they fired Kim.

Both of these guys succumbed to the temptation to try to fix an error. But why? The PCAOB has already explained that not doing something is probably better than doing something:

The consequences of providing improperly altered audit documentation to PCAOB inspectors or investigators may in many cases be far more severe than would be the consequences of the PCAOB staff identifying the audit deficiency that the revisions to the documentation attempt to obscure.

I suppose it’s possible that in each of these instances, the impropriety may not have been discovered, the inspection result would have been slightly worse, and Sanderson and Kim would not have been fired. But why take the risk? It seems to be way less risky to accept the fact that a mistake in documentation was made, let the PCAOB discover it, add it to their list of infractions, and keep your job. Similarly, if they felt pressure from their superiors, it seems like any repercussions wouldn’t be as serious as getting fired. Sure, it might result in a lousy performance review, but chances are you were going to get a lousy performance review anyway.

Image: iStock/marchmeena29

The post Reminder: If You Improperly Alter Audit Workpapers and Are Found Out, You Will Be Fired appeared first on Going Concern.

Blackstone’s tax-free hedge fund pitch woos more clients [Bloomberg]
If there’s one thing the ultra rich like, it’s a good tax avoidance strategy. Blackstone Group owns a wealth planning firm called Lombard International that promotes “private placement life insurance” which allows investment in hedge funds while deferring or avoiding most taxes. “This is a sexy product that people get excited about owning and tell their friends about,” says a guy.

Big Four’s EY Law Snaps Up 6 Lawyers From Troutman Sanders’ Soon-to-Be Closed Asia Offices [Law.com]
Reminder: If you’re looking to close a global law office or just shed a few lawyers, I’m sure you’ll be able to find a Big 4 firm that will take them off your hands.

Accountant embezzled $3.4M from famed literary agency [NYP]
Darin Webb has been charged with embezzling $3.4 million from Donadio & Olson, a literary agency that represents authors like Chuck Palahniuk and the estate of Mario Puzo. The complaint alleges that Webb took money that was “earmarked for author royalties and advances,” starting in January 2011, but a forensic analysis is looking back to 2001 when he joined the agency. In a somewhat awkward twist, some authors hadn’t been contacted about the alleged theft and learned about it from the news reports.

Previously, on Going Concern…

Grant Hutchinson wrote about myths about remote work.

In other news:

• GASB 77 helps journalists on tax abatements.
• Did We Say $1.5 Million? We Meant $10.9 Million. Firms Fix CEO Pay Flubs
• Tesla hits parked California police vehicle; driver blames ‘Autopilot’
• Yahoo hacker whose work compromised 500M accounts sentenced to 5 years
• CIA report says North Korea won’t denuclearize, but might open a burger joint

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: PCAOB’s Enforcement Chief Is Latest to Go | 05.30.18 appeared first on Going Concern.

They are the only players large enough to check the numbers for these multinational organisations, and thus enjoy effective cartel status. Not that anything as improper as price-fixing would go on – with so few major players, there’s no need. “Everyone knows what everyone else’s rates are,” one of their recent former accountants told me with a smile. There are no serious rivals to undercut them. What’s more, since audits are a legal requirement almost everywhere, this is a state-guaranteed cartel.

N.J. warns IRS against banning property taxes as charitable gift [Bloomberg]
New Jersey Attorney General Gurbir Grewal said that the IRS should “think twice before going down that misguided road,” that road being a ban on states allowing SALT deductions. He promised a showdown “Should the IRS and Treasury Department continue down this path.”

As Tennessee’s Adult Entertainment Tax Starts July 1, Three Lessons From a Decade of the Texas ‘Pole Tax’ [BNA]
While an adult entertainment tax would seem like an odd wrinkle to focus on, some SALT professionals in Tennessee might find themselves studying the subtler points of a similar law in Texas, including what constitutes as “nude.”

Previously, on Going Concern…

Jason Bramwell interviewed controllers about having good relationships with audit committees.

I suggested that anyone who got a crappy raise last year should get a new job.

In Open Items: Larger Mid-Size Firm with potential to blow up!

In other news:

• In ‘Founder Friendly’ Era, Star Tech Entrepreneurs Grab Power, Huge Pay
• The FBI would like you to restart your router.
• An orthodontist with over $1 million in student loans.
• I heart GDPR playlist.
• Homeless Jesus statue stops runaway truck

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: The Big 4 Cartel and New Jersey Puts the IRS on Notice | 05.29.18 appeared first on Going Concern.

Finance professionals received an average pay raise of 4.3% in 2017, according to a survey from the Association for Financial Professionals.

The survey found chief financial officers got a base salary increase of 5.7%.

Jim Kaitz, president and CEO of AFP, said the results showed the value of continuing education:

“Those who meet the new challenges in today’s treasury and finance field by engaging in more training are being richly rewarded. Treasurers and CFOs know these individuals have the newest skills and freshest insights and knowledge.”

Okay, look, Mr. Kaitz is probably right; if you earn a new certification or become a blockchain wizard or an expert in AI and use these powers for good instead of evil, you’re likely to be paid a premium. But if you’re too busy, or not interested in that stuff, or just plain lazy, you can probably stumble into a better paying job:

The executive tier saw an average increase in base salary of 4.4% last year, up from 2.7% the year before. Management-tier professionals saw a 4.4% increase as well, up from 4.0% the year before. Staff saw a pay increase of 3.5%, up from 3.4% in 2016.

The survey tracked pay trends across twenty different job titles in seven different industries.

“Financial reporting specialists” gained an average pay raise of 6.9% — the largest increase for all the job titles tracked.

In the time that it took you to read this post, someone accepted a new job that will pay them a lot more. Who knows, maybe they even got a signing bonus? Jim Cavezial, what are you waiting for?

Alright, fine. You can do it after the long weekend.

[CFO]

Image: iStock/SeventyFour

The post Accountants: If You Got a Crappy Raise Last Year, Go Land a New Job appeared first on Going Concern.

The PCAOB found that Deloitte was primarily responsible for the violations because none of the engagement personnel it assigned to the audits had sufficient software industry experience and knowledge (including of the relevant generally accepted accounting principles) to properly evaluate and audit the accounting for software license revenue.

This happened over three years of audits. The order notes that Deloitte did find “a number of audit and accounting issues” after it had been notified that the Jack Henry fiscal year 2014 audit would be inspected. Deloitte reported these issues to the PCAOB before its inspection began. So, hey, great job not altering workpapers, Deloitte. Few seem to have that kind of willpower.

PwC announces plan for hundreds of new Connecticut jobs [SA]
The firm is planning to add 400 jobs in Stamford, and if you enjoy public officials gushing over big business, then this article is for you. Anyway, Stamford will be the home of PwC’s “Insourced Solutions for Tax team.” That’s the group that was created out of the deal that saw PwC hire General Electric’s tax department last year.

A Most Unusual Way To Impress KPMG CEO Lynne Doughtie At Your Job Interview [Forbes]
Ugh, yet another interview I’ve read for you. This one isn’t as bad as the “raise-your-hand” nonsense if only because we learn that Lynne Doughtie’s favorite movies include Air Force One, Armageddon, The Help, and The Blind Side.

Samsonite tumbles after short seller questions accounting [Bloomberg]
Blue Orca Capital claims “Samsonite concealed slowing growth with debt-funded acquisitions and inflated profit margins with dubious accounting linked to its takeovers.” Blue Orca also alleges that there are some dodgy related party transactions between Samsonite CEO Ramesh Tainwala and companies controlled by him and his family, as well as  “a revolving door of auditors” in the company’s South Asia business.

Blood Cleaning Company’s Ousted CEO Denies Exit in Filing Faceoff [Bloomberg]
Dueling 8-Ks have caused Rockwell Medical Inc. to have, what Bloomberg’s Matt Levine describes as “different, let’s say, metaphysical statuses.” One 8-K says the CEO has been fired. Another 8-K says that’s not the case. Sounds confusing, right? That’s because it is:

At 9:27 p.m. on Tuesday RMTI-B’s 8-K, announcing that Chioini is still the CEO, arrived at Edgar; at 6:05 a.m. on Wednesday, RMTI-A’s 8-K, announcing that no he isn’t, arrived. Because late-evening Edgar filings don’t actually become public until the next day, the two filings ended up hitting the Bloomberg terminal news feed five minutes apart on Wednesday morning.

Previously, on Going Concern…

I  wrote a farewell post.

In Open Items, WHY CAN’T WE FIX REGULATION?

In other news:

• Dozens of American News Sites Blocked in Europe as GDPR Goes Into Effect Today
• Six C.E.O. Pay Packages That Explain Soaring Executive Compensation
• About $1.2 billion in cryptocurrency stolen since 2017: cybercrime group
• Could Beyoncé help revive ‘Parks and Rec?’
• Mussels off the coast of Seattle test positive for opioids

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: PCAOB Fines Deloitte; PwC’s New Tax Team; Dueling 8-Ks | 05.25.18 appeared first on Going Concern.

It turned out to be the perfect outlet for me, though; taking the ridiculous thoughts out of my head and putting them online was the catharsis I sorely needed, and suddenly work didn’t seem so bad. Still, I got let go in the fall of 2008, but instead of feeling dread or worry, I couldn’t have been more relieved.

To make a long story short, I kept writing online and after a few months, by virtue of few prospects and some fantastic luck, I was asked to help start Going Concern. The two guys who hired me — Above the Law founder David Lat and Breaking Media co-founder David Minkin — asked me if I could make accounting sexy. I said that I could — a blatant lie — but they must’ve figured, “Well, we have the name and domain, so what the hell?” I owe them pretty much everything for that.

Has Going Concern helped accounting become sexy? Probably not. There’s a lot of overcompensating out there, after all. But I’d like to think we did our best to bring some fun, hijinks, and accountability to an otherwise sleepy and unaccountable profession. It sure as hell needs it. The next person to run this place will have the opportunity to build on what we’ve done so far, and take it in new and exciting directions.

As for me, I have to take a break from the day-to-day rigors of being a writer and editor at a small publication. Part of the reason is I recently became a dad for the first time, which means I’m in a perpetual state of exhaustion while figuring out how to balance work and family. After harping about work-life to you all for so many years, you’d think I’d have it figured out. God, no. I’m a mess.

The good news — or bad, depending on your view — is that I’ll still write for Going Concern as an Editor-at-Large, covering topics and stories that are of interest to me, on my own schedule. I’ll have a new day job, too; I’m joining Gusto next month as a member of their content team, writing for their small business customers and accountants network. I also plan to write other stuff utterly unrelated to accounting, which means I’ll get to experience boatloads of rejection with the rare, obscure success that pays virtually nothing. I’m pretty excited!

There are loads of people for me to thank, so in no particular order: Adrienne Gonzalez, Jason Bramwell, Megan Lewczyk, Greg Kyte, Gail Perry, Rob Nance, Jeff Phillips, Francine McKenna, Jim Peterson, Jonathan Weil, Sam Antar, Tony Nitti, my wife, my cats, all the baristas who gave me free refills, Bob Moritz for being a good sport after we put his face on David Beckham’s mostly naked body, my wife. If you think I owe you thanks, then email me by the end of the month and we can discuss it. I’m sure you’re probably right.

And thanks to all of you — the readers, tipsters, fans, haters, and trolls of Going Concern who helped make this site great. Keep it up. Keep sending tips, posting questions and answers, and talking to the future writers and editors of this site. Your support and participation will mean a lot to them and the accounting world. Okay? Okay. See you around.

The post Thanks, This Has Been Fun appeared first on Going Concern.

“Despite these state efforts to circumvent the new statutory limitation on state and local tax deductions, taxpayers should be mindful that federal law controls the proper characterization of payments for federal income tax purposes,” the I.R.S. wrote in a notice released on Wednesday.

If the IRS does take action to prevent SALT workarounds, states will almost certainly sue. States tax credits for donating to colleges or private K-12 schools have been around for years, and any disparate treatment would be “hard to maintain on its face and politically difficult to reach,” according to one tax professor.

Exec groped employee, attacked her when she recorded him: suit [NYP]
Kate Merli, a CPA and former CFO of Snow Park Capital Partners, has sued her former employer and the firm’s chief investment officer Jeffrey Pierce, alleging all kinds of disturbing behavior. It started with unwanted grabbing and attempted kissing at a holiday party, followed by an incident where “Pierce pawed at her body and begged her for sex.” That’s when things got, whoa:

The 31-year-old began recording the accused creep on her phone, but Pierce became furious and insisted she delete the recording, the suit says.

When the CPA refused, he “physically and viciously assaulted [Merli], tackling her to the ground and attempting to wrestle the phone away,” the papers read. Terrified, she deleted the recordings.

Merli quit and then says Snow Park started spreading false information about her. Snow Park calls her “a fabricator” and says she was terminated for “[an] unauthorized transfer of management company funds to a personal bank account.”

There’s only one untainted “Big Four” accounting firm left to audit Malaysia’s scandal-ridden wealth fun [Quartz]
PwC avoided the 1MBD mess as long as they could, but now they have the distinct pleasure of picking up where Deloitte left off. Deloitte quit the engagement in 2016, while KPMG was fired in 2013 and EY got dismissed in 2010. Anyone wishing to pick up some lucrative work should get themselves to Malaysia pronto. PwC probably won’t last.

Previously, on Going Concern…

I questioned KPMG’s raise-your-hand culture.

In Open Items, someone’s annoyed with AICPA President, CEO, and Royal Wedding tchotchke collector Barry Melancon.

In other news:

• Uber’s raising up to $600M in a secondary round at $62B valuation, Q1 sales grew to $2.5B
• SEC Commissioners are Heading to Atlanta to Interact with Investors
• U.S. Justice Department Opens Investigation Into Cryptocurrency Price Manipulation
• Seven ways to deal with hay fever
• Elon Musk wants to rate journalists on a site called Pravda.

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: 1MDB Is Down to Its Last Big 4 Firm | 05.24.18 appeared first on Going Concern.

One of the things that we highly value at KPMG is having a “raise-your-hand” culture and speaking up. If you even suspect something is amiss, it is exactly right that you should question it. At our company, the responsibility for the ethical environment is not your boss’s. It’s everybody’s, whether you are a brand-new intern or the most senior partner.

However, if you read the indictment of the former KPMG partners¹ and PCAOB employees² involved — and I highly recommend that you do so — you might question the “raise-your-hand culture” claim. Francine McKenna’s report explains:

The alleged scheme required a joint effort by the named defendants but also the complicity of others in the firm, including partners referred to in the DOJ complaint as Partner-1, Partner-2, Partner-3 and Partner-4 who were explicitly told by Sweet that their audits would be inspected before that formal announcement came from the PCAOB and used that information to fix audits ahead of those inspections, including audits at seven KPMG bank clients.

“Partner-5” was the person who eventually “reported the scheme to that partner’s superiors and then to the firm’s general counsel, who reported the misconduct to the regulators.” So, yes, someone did raise their hand, but if even a few parts of the allegations in the indictment are true, then a whole bunch of people did not raise their hands.

And I suppose that’s understandable. When kids walk into kindergarten, they’re almost universally told, “If you’d like to talk, please raise your hand.” Inevitably, however, there will be kids who talk without raising their hands. Does that mean kindergarten doesn’t have a “raise-your-hand culture”? Meh. Who really knows about these things? But I’m pretty confident no kindergarten teachers are strutting around, talking about the raise-your-hand culture in their class.

Anyway, in KPMG’s sample, you have three fired partners, and four others who didn’t raise their hands, so that’s a total of seven people who didn’t raise their hands; then you have one person who did raise their hand, so you have a 12.5% successful hand-raising rate. I don’t have evidence to back this up, but it seems to me that if you only had 1 in 8 kindergartners raising their hands when they wanted to talk, you’d have a pretty out-of-control classroom.

Which isn’t to suggest that KPMG is chock full of auditors passing around a cheatsheet; but a raise-your-hand culture? Are you sure?

[Forbes, MW]

¹ David Middendorf, Thomas Whittle, David Britt
² Cynthia Holder, Jeffrey Wada. A third PCAOB employee, Brian Sweet, cooperated with the investigation and pleaded guilty to conspiracy.

Image: iStock/monkeybusinessimages

The post Clearly Not Everyone at KPMG Got the Memo About the ‘Raise-Your-Hand Culture’ at the Firm appeared first on Going Concern.

“We don’t need to really understand the underlying software,” he said. “It’s the implications and power of blockchain that are more important that [sic] the actual software.”

Yes, just cede the knowledge to the tech nerds. We’re all working for them, anyway.

PCAOB Chief Auditor Martin F. Baumann to Leave the Board [PCAOB]
The PCAOB’s announcement that Marty Baumann would be leaving follows the news that Helen Munter, the Director of Inspections, and General Counsel Gordon Seymour would also depart this month.

GE seeking to shed troubled insurance business [Reuters]
That’s the same insurance business that the company took a $6.2 billion write-down for, as well as an additional $15 billion in reserves. I’ll bet that auditor with 109 years of experience will be relieved to have one less thing to worry about.

Trump says he will propose new tax cuts prior to November [Reuters]
Does this guy know his audience or what:

“We’re going to be submitting additional tax cuts sometime prior to November,” Trump said in a speech to the Susan B. Anthony List, an anti-abortion group.

I guess he’s making up for the time that he was supposed to talk about tax cuts and went off on immigration instead.

Previously, on Going Concern…

Megan Lewczyk wrote about Wells Fargo and its seemingly endless string of control failures.

Here’s a whitepaper from our partner FloQast: The Definitive Guide to Effective Close Management.

In other news:

• Comcast says it will bid on Fox, in attempt to block Disney acquisition
• Ex-Valeant Executive Is Convicted of Bilking Drugmaker in Kickback Scheme
• Small Banks’ New Money Maker: Bitcoin
• Email Is Dangerous
• A Taxonomy for Tax Loopholes
• Restaurant arms diners with squirt guns to ward off goddamn seagulls

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: AICPA Wants Everyone on the Blockchain Bandwagon | 05.23.18 appeared first on Going Concern.

PCAOB explores whether to change audit inspection process [CW]
In a recent speech, new PCAOB Chairman William Duhnke said that the board was undergoing a “comprehensive organizational assessment,” noting, “While the PCAOB is no longer a nascent organization, many of our operations and programs maintain their original design.”

Financial Crisis May Have Hit ’80s Generation the Hardest [WSJ]
According to the Federal Reserve Bank of St. Louis, children of the ’80s “are at substantial risk of accumulating less wealth over their life spans than the members of previous generations.” Their wealth is 34 percent below where it would be if not for the most recent financial crisis.

Previously, on Going Concern…

I wrote about how the Big 4 loves the SCOTUS ruling on arbitration.

In other news:

• What it was like to be a female CPA in the 1970s
• GOP Senate Aide Considered for SEC Post
• NYSE appoints Stacey Cunningham as its first female president
• Trust in Self-Driving Cars Has Plummeted in the Last 6 Months
• “No Bernie Madoff, no Amazon.”
• Bowl food.

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Big 4 Tenure Premiums; PCAOB Considers Overhaul; Poor Millennials | 05.22.18 appeared first on Going Concern.

The U.S. Supreme Court delivered a blow to the rights of workers on Monday by allowing companies to require them to sign away their ability to bring class-action claims against management, agreements already in place for about 25 million employees.

The justices, in a 5-4 ruling with the court’s conservatives in the majority, endorsed the legality of the growing practice by companies to compel workers to sign arbitration agreements waiving their right to bring class-action claims on various disputes, primarily over wages and hours.

Wage and hour lawsuits are a topic we’ve covered extensively on Going Concern, since the early days of the site, as well as the emergence of mandatory arbitration. But this ruling will likely put the nail in the coffin of wage and hour lawsuits brought by unlicensed accountants. The clauses dictate that anyone wishing to resolve a complaint against their employer will have to do so individually and waive their right to litigate them in court. This will make it virtually impossible for anyone to pursue their claims effectively.

What recourse do unlicensed accountants have? Not much, unless they decide to unionize like EY Israel did. Of course, the 150-hour credit requirement to sit for the CPA exam all but assures that more and more accounting students will pursue master’s degrees, making it increasingly likely that the vast majority of entry-level hires will be “learned professionals” and ineligible for overtime.

Francine McKenna shared a theory three years ago about the Big 4’s strategy:

I predict the largest public accounting firms will mandate a Masters Degree in Accounting to be hired and disqualify anyone with only an undergraduate degree, whether or not they have the required 150 credit hours. The largest public accounting firms will expect passing grades on all parts of the new bar-exam style CPA exam before a full-time start. In addition to passing the exam, most jurisdictions also require between 1–2 years of experience doing audits on the job in a public accounting firm to be licensed as a CPA. If graduates start full-time employment with the exam already nailed, within 1–2 years, depending on state law, everyone is licensed. (I wouldn’t be surprised if the firms start lobbying to reduce experience requirements on the strength of their significant, quality ongoing in-house training programs that meet continuing professional education requirements to remain licensed now.)

When all this is in place, the largest public accounting firms will have closed the window on vulnerability to any new class action overtime lawsuits brought by entry level auditors.

KPMG’s fancy master’s program requires participants to stay with the firm for three years; that’s plenty of time to get certified. Now with SCOTUS’s help, and a business-friendly government, all the pieces are falling into place for the Big 4 to smote any chance for employees to bring overtime lawsuits.

[Reuters, Medium]

Image: UpstateNYer/Wikimedia Commons

The post The Big 4 Loves the SCOTUS Decision on Arbitration appeared first on Going Concern.

The Big Four: Break-Up or Audit Only? Can They Survive the UK Regulators? [re:Balance]
Meanwhile, Jim Peterson worries that the torches and pitchforks in the U.K. might not realize what they’re doing. He points out that since mandatory re-tender was implemented in Britain that Grant Thornton has given up on auditing FTSE 350 companies and BDO might not be far behind. Also, he says audit-only firms are not the panacea they’re made out to be.

Deceptive non-GAAP financials will lead to future SEC whistleblower awards [AT]
Given their widespread use, the possibility of the SEC paying awards for some extra-egregious non-GAAP reporting seems like a pretty good bet.

Brought to you by Accountingfly

Firm owner Amanda Aguillard discusses why she has a remote workforce. If you’re interested in building a remote firm, check out this webinar today featuring Amanda, her co-founder Ryan Watson, and Accountingfly CEO Jeff Phillips.

Previously, on Going Concern…

After taking Thursday off to get a few things in order, a rebuilt and redesigned Going Concern debuted on Friday.

Greg Kyte’s Exposure Drafts cartoon noted that accountants are perfectionists about their perfectionism.

Jason Bramwell wrote about controllers preparing their teams for an IPO.

The University of North Carolina presented a post about how accounting skills make a difference.

In other news:

• PCAOB inspection head Helen Munter steps down
• A book review of “Bad Blood” the inside story of Theranos, by the reporter who broke it open, John Carreyrou.
• The Trump Administration seems unsure if we’re in a trade war or not.
• Google Removes ‘Don’t Be Evil’ Clause From Its Code of Conduct
• A wedding you didn’t go to.

Get the Accounting News Roundup in your inbox every weekday by signing up here.

See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Comfortable Audit Firms and Non-GAAP Whistleblowers | 05.21.18 appeared first on Going Concern.

PwC said it had “a documented business continuity plan covering a range of scenarios that could threaten the existence of the firm”. EY said: “Working alongside regulators and standard setters, the profession can evolve to best serve business, investors and stakeholder needs.”

This doesn’t mean they think audit-only firms are a good idea. KPMG’s Bill Michael points out that “There will still be big, complex, hairy companies around the world [even after a break-up].” Even Grant Thornton, who decided that it was done with FTSE 350 audits earlier this year said, “We fundamentally do not believe that this is the solution to the existing systemic issues in the audit market.”

It’s hard to disagree. The biggest and hairiest audit-only firm would still struggle to get comfortable forming an opinion on sprawling companies like AIG or General Electric.

But Big 4 audit firms keep screwing up in spectacular fashion. They abdicated their duty to the investing public long ago for the warm comfort of their wealthy corporate clients, with virtually no accountability. This would all be fine if they just dropped the pretense of integrity and objectivity. Yes, breaking up would be the Big 4 would be a bitter pill to swallow, but it increasingly looks like the best medicine for everyone to take.

Season Tickets? Steak Dinners? Small Firms Rethink Client Events After Losing Tax Break [WSJ]
The heyday of lavish entertainment expenses may be over thanks to the new tax law; at least for small businesses. Large corporations will make up the lack of deduction with their new low tax rate, but small companies that are typically organized as pass-throughs aren’t so lucky:

“How do you justify to your board of directors that you are incurring expenses that are nondeductible?” said Mark Olander, CEO of TaxAudit , a tax-audit defense firm near Sacramento that opted not to renew season tickets for the Kings and canceled plans to buy season tickets to the Angels and the Anaheim Ducks hockey team. “I have tried it in the mirror—and can’t even do it with a straight face.”

BKD buys part of Grant Thornton’s Wichita practice [AT]
GT is sending one partner and “16 other professionals” to BKD in exchange for a bag filled with cash and two accountants to be named later. Okay, of course not. They didn’t disclose the terms. But I kinda wish these transactions were described like baseball team trades.

Previously, on Going Concern…

After some fits and starts, we launched the new and improved Going Concern. We hope you like it. As a reminder, comments on articles have been discontinued, but you can always start a thread in Open Items where comments are still in full force.

As is typical with updates like this, there are going to be some loose ends. So if something seems amiss, or doesn’t appear to be working properly, please let us know at editor@goingconcern.com. Thanks for your help.

From the archives: ‘Dear friends at the FASB: I am concerned that you good folks have lost touch with reality’; see also: So Who’s the GAASMAN?

In other news:

• Shari Redstone and Leslie Moonves Have Starring Roles in a Corporate War
• Companies including Symantec are using ‘ghost revenue’ to calculate bonuses
• United Continental’s CFO left.
• This Is Ajit Pai, Nemesis of Net Neutrality
• All of Mugshots.com’s alleged co-owners arrested on extortion charges

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

Image: Gage Skidmore/Wikimedia Commons

The post Accounting News Roundup: Breaking Up the Big 4 Is Hard to Do | 05.18.18 appeared first on Going Concern.

Elsewhere: Big Four accountancy firms plan for UK break-up

SEC Tries to Scam ICO Investors to Show Them How Easy It Is [Bloomberg]
“HoweyCoins” features everything from a white paper to celebrity endorsements, and, of course, great returns on your investment:

We anticipate OVER 1% daily returns, with DOUBLE 2% returns on Tier 1 investors in pre-ICO stage secured purchases. The average registered coin return over a two month period in 2017 was an amazing 72%. Based on market conditions, including record-setting prospects in both the digital asset and travel industries, we expect surpassing that BEFORE the Tier 2 offering closes.

HODL! We also forecast a minimum growth rate of between 7% to 15% annualized, making HoweyCoins attractive for long-term investment. In addition, HoweyCoins can serve as a GUARANTEED hedge against inflation and market loss.

I have to believe that someone from the Fort Worth office was involved with this idea.

‘I Lost It’: The Boss Who Banned Phones, and What Came Next [WSJ]
“Don’t show up at a meeting with me with your phone. If someone shows up with their phone, it’ll be their last meeting,” one boss threatened a meeting full of his people. And, yes, while people glued to their phones are annoying, yelling at them seems a little, I don’t know, MONSTROUS. I much prefer the IT project manager who forced people to stand for the rest of a meeting when their phones went off.

Previously, on Going Concern…

I wrote about the end of comments on Going Concern. (Don’t worry, they will remain on Open Items.)

Grant Hutchinson wrote about internal audit careers.

In Open Items: Leave Big 4 then come back? (After trying to get into med school.)

In other news:

• The Bezos-Buffett-Dimon joint venture to save health care is struggling to find a CEO
• Senate Democrats Win Vote on Net Neutrality
• Six Reasons Why States Shouldn’t Be Counting Their Sports Betting Tax Revenue Yet
• Wells Fargo Employees Altered Information on Business Customers’ Documents
• Argentina apologizes for manual on seducing Russian women

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: The Big 4 Oligopoly; HoweyCoins; Phone Bans | 05.17.18 appeared first on Going Concern.

The trend of publications ditching comments is not new; in fact, we’re a little behind the curve. Sites big and small have done away with them as the comment sections lost their value. Many were not welcoming places, filled with nonsense, hostility, and ad hominems.

Going Concern’s comments have been no different. While there are still comments that are insightful or funny, the vast majority fail to add much to the conversation. There will probably be a portion of the audience that believes this will be the death knell of GC, but most sites that have scrapped comments have continued on and we’ll do the same. Others will say that the site has been dead for years, yearning for the GC of circa 2009-10 when anything and everything was fair game.

But in the last nine years, the internet has changed a lot. This span of time is basically equivalent to an eon online. That means GC has had to change too, especially in this era of “fake news” where credibility and accountability is important, but also creating content that is informative, helpful, and sustainable. Gossip and irreverent commentary will always be a part of GC, but so will a range of other topics that are important to accountants outside of just the Big 4.

Now, before the pro-comment crowd storms out, you should know that they will remain on archived posts and Open Items. Most of the Q&A that occurs in Open Items is still useful and substantive, and we want to maintain a robust, active forum, so the comments will remain there. Obviously, it wouldn’t be much of a forum without them. And there’s nothing to prevent a user from starting a thread in Open Items about a Going Concern story. Likewise, we’ll still maintain other channels for your commentary, complaints, or suggestions. You can quickly get in touch with us on Twitter or our Facebook page, as well as email us.

So that’s that. Thanks to everyone who’s provided thoughtful, funny, and substantive comments over the years. It helped make Going Concern what it is today. If all goes as planned, the new version of GC will debut tomorrow, meaning this is likely to be the last article with comments, so you can reminisce and/or lament their demise here.

The post That’s (Mostly) It for Comments appeared first on Going Concern.

Another HR Startup Ousts Its CEO Over Misconduct Claims [Bloomberg]
There’s something wonderfully ironic about an HR company’s CEO being fired for bad behavior. “We offer a solution to better manage your employees, except we can’t manage our own CEO.” In this case, Namely ousted its CEO Matt Straz for “actions” that were “inconsistent” with the “leadership standards” at the company.

Judge orders restitution, apology letters for victims in Watford City embezzlement [BT]
Here’s a new one:

Hannah Lloyd, 39, pleaded guilty Thursday to three felony counts of theft. As part of her sentencing, Northwest District Judge Daniel El-Dweek ordered Lloyd to pay restitution in approximate amounts of $139,000 to the Watford City Park District, $50,000 to the Watford City Golf Course and $56,000 to Rink Construction, as well as write apology letters to the victims.

In my imagination, Ms. Lloyd phoned in the first apology. Something like:

Dear Watford City Golf Course,

I’m sorry.

Hannah.

Then the judge scolds her for an insincere letter and forces her to re-write it until he’s happy with it.

I’d like to see more judges require embezzling accountants to write apology letters. “You’re going to apologize for what you’ve done, and we’re going to sit here until you get it right!” This sounds like a decent sentence for most first-time embezzlers, frankly.

Previously, on Going Concern…

In Open Items, Stay mid-market or try to get big 4?

From the archives: Guy Who Tried to Ransom Mitt Romney’s Tax Returns Regretting His Choices Right About Now

In other news:

• Blockchain Is Being Taken Seriously by Companies, Deloitte Finds
• How Does Your Pay Stack Up?
• The SEC’s Acting CFO is now just a CFO.
• Required smiling.
• “Yanny” or “Laurel”: the audio clip that’s tearing the internet apart

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

Image: iStock/avemario

The post Accounting News Roundup: Big 4 Get Share of Blame for Carillion and Apology Letters for Embezzlement | 05.16.18 appeared first on Going Concern.

IRS may nix blue states’ workaround on tax deduction caps [CNBC]
Treasury Secretary Steve Mnuchin doesn’t appreciate the efforts of state legislatures in New York, New Jersey, and Connecticut that have established municipality charitable funds that could accept contributions from taxpayers in exchange for tax credits. Sayeth Steve: “I hope that the states are more focused on cutting their budgets and giving tax cuts to their people in their states than they are in trying to evade the law.”

Seattle Scales Back Tax in Face of Amazon’s Revolt, but Tensions Linger [NYT]
When the Seattle city council proposed a $500-per-employee tax on big companies to fund affordable housing and homeless services, Amazon played hardball, “halt[ing] two major expansion projects in Seattle in protest over the larger tax increase.” The city council eventually passed a smaller tax, $275 per employee, and included a sunset provision. Amazon was still unimpressed, saying, “We remain very apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here.”

Previously, on Going Concern…

In Open Items, someone’s asking about a community-based app for consultants.

From the archives: Is This the Most Embarrassing Thing To Ever Happen to an Accountant at Work?

See also: Tormentors of IRS Fresno Location Have Lost Their Sense of Scatological Humor

In other news:

• Supreme Court Ruling Favors Sports Betting
• CEO Pay and Performance Often Don’t Match Up
• How the World’s Biggest Companies Are Fine-Tuning the Robot Revolution
• Why introverts might actually be better networkers
• Florida 7-Eleven blasts opera music to ward off loiterers

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

Image: Wikimedia Commons

The post Accounting News Roundup: GOP Donors Get Stingy Over Tax Law; Seattle vs. Amazon | 05.15.18 appeared first on Going Concern.

Xerox Drops Fujifilm Merger Plan, Strikes a Deal With Activists [WSJ]
The saga of Xerox and Fujifilm has taken a new turn, as the company has abandoned its merger plans to work with and activist investors Carl Icahn and Darwin Deason. How did they weasel out of the deal? Simple:

Xerox said it opted to back out of the deal with Fujifilm because the Japanese company didn’t deliver Fuji Xerox’s audited financial statements by April 15, and there were material deviations in the audited financials when compared with the unaudited financials.

Any auditors seeking additional evidence that, yes, somewhere your work — although not necessarily your work — means something, should bookmark this page.

Avalara files for IPO [AT]
The cloud-based digital tax compliance company filed confidentially last summer and plans to raise $150 million in its offering.

That Endless Series of Menu Options Is Paralyzing Diners [WSJ]
About a year ago, I noted some trends in lunch, and now, I guess, it seems the latest development in food stuff is that people are terrified of making decisions:

As menu choices multiply—and multiply and multiply—diners are suffering from option paralysis. Especially troublesome are assembly-line-style chains in “fast casual” restaurants where diners have just seconds to answer rapid-fire questions such as whether they want tahini or aioli sauce on their chicken shawarma, or prefer the turmeric almonds or pickled ginger on their beet falafel bowl.

Applebee’s VP of strategy even confessed that he suffered from the plight of too many choices, “When you’re standing at the cashier and you haven’t made a decision yet and there are people behind you, you can sense the impatience.”

Now that both food and TV are a constant loop of impossible choices, we’re about a step or two away from an entire country of Chidi Anagonyes. It’ll be a relief when our lunch and TV watching decisions are either offshored or automated.

Previously, on Going Concern…

I wrote about IBM banning flash drives.

From the archives: Why Yes, This Guy Did Pay His Accountant’s £800 Bill in Coins Purely Out of Spite.

See also: The Only Thing Better Than Working an Eminem Lyric into Your Accounting Paper Is Your Professor Calling You Out For It, and Aaron Rodgers Has Heard of Ernst & Young, Just Not Sure Where…

In other news:

• HSBC claims first trade-finance deal with blockchain
• CBS Sues Redstones to Block Viacom Merger
• Airbus finance chief joins CEO Enders in departures lounge
• Fresno jury says Chipotle owes former manager $7.97 million for wrongful termination
• A live tiger at prom, sure.

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Tardy Audited Financial Statements; Avalara’s IPO; Too Many Food Choices | 05.14.18 appeared first on Going Concern.

And sure, okay. So what’s the next corporate nanny move from Big Blue in the interest of financial and reputational security? Literally chaining people to their desks to prevent employees leaving the premises with proprietary information? Unannounced strip searches? Mandatory body cameras? I’m sure there’s plenty IBM can do to further eliminate any shred of trust it has with employees.

[BBC, The Register]

Image: iStock/OlyaSoloDenko

The post Flash Drives Are Contraband at IBM Now appeared first on Going Concern.

Botta further described the problem:

“the risk of collusion between auditors and management in this valley . . . with management paying us the fees and auditors picking and choosing what to call an audit issue.”

It’s a familiar story: Botta, who came from PwC’s Italian firm to the U.S. in 2004, had stellar performance reviews until he didn’t. One performance evaluation he provided to POGO details PwC partners saying things that PwC partners wouldn’t necessarily want anyone outside the firm to hear, such as, “As a partner you have to have the position that you want these guys to like you,” and “When you get to be a partner they need someone to confide in and trust who will look out for you,” and “When you are a 1 rated top performer/partner, you tow the party line.” Also, there’s this:

In answer to the question “What is preventing Mauro from being rated a top performer and/or progressing to partner?” the feedback survey described him as “an emotional Italian guy,” a comment he has cited as evidence of ethnic bias.

Botta was fired shortly after he filed his whistleblower complaint with the SEC. He has now filed a lawsuit, alleging that the firm retaliated against him.

US watchdog bans former Deloitte Turkey chiefs [FT]
The PCAOB has banned two of Deloitte Turkey’s former CEOs “for failing to prevent individuals at the firm from altering documents ahead of an inspection.” One professor drops a sufficiently scathing quote: “The case exemplifies the deep ethical rot in auditing today.”

PPG Industries fires controller as it finds more accounting mistakes [MW]
Oops:

PPG said that errors pertained to the first quarter and would result in a $7.8 million net decrease in income from continuing operations before taxes.

PPG also said that millions in improper reclassifications “from income from discontinued operations to income from continuing operations” were made. The company says this all went down at the now-former controller’s direction.

Steinhoff on Hunt for Executives Behind Accounting Scandal [Bloomberg]
The company says it is “taking legal advice on how to seek justice.”

Brought to you by Accountingfly

The featured job of the week is a Senior Cloud Accountant with Bookkeeper360 in Woodbury, N.Y.

Previously, on Going Concern…

Grant Hutchinson wrote about working at a global firm without the Big 4 baggage.

In Open Items, someone is wondering about an ERM master’s versus a MAcc.

In other news:

• Want to Prove Your Business Is Fair? Audit Your Algorithm
• Starbucks: No Need To Purchase To Use The Potty
• FCC Fines Massive Neighbor Spoofing Robocall Operation $120 Million
• Chicago man charged in scam that routed United Parcel Service mail to his apartment
• “Nothing was left behind of the chocolate, vanilla and strawberry cupcakes except for some smeared icing and a paw print.”

Get the Accounting News Roundup in your inbox every weekday by signing up here.

See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: PwC Faces Whistleblower Retaliation Suit | 05.11.18 appeared first on Going Concern.

“Our Murder of Crowes is consistently recognized for their market-leading expertise and I am proud to say 2017 was no exception,” Mellor said in a statement. “The Murder will thrive in a rapidly changing world through our clear strategic vision, new common brand and the commitment of our Murder. Murder of Crowes brings smart decisions that deliver lasting value to clients, talent, and the communities where we live and work. ”

Despite the grisly thoughts it might bring to your mind, I think it actually improves the statement a bit.

Trump Lawyer Received $500,000 From Firm Linked to Russian Oligarch [WSJ]
If you’ve been following the saga of Donald Trump’s attorney, Michael Cohen, you’re likely aware that he’s the type of lawyer whose competence is on the same level of Lionel Hutz. Which is why this news from a memo published by Stormy Daniels’ attorney Michael Avenatti is so perplexing:

The Avenatti memo also said Korea Aerospace Industries Ltd. made a $150,000 payment to Mr. Cohen in November 2017. Korea Aerospace said it hired Essential for legal counseling regarding U.S. accounting standards.

“Essential” is Cohen’s ambiguously named business “Essential Consultants, LLC” and the idea that a bagman like Cohen had a company that provided “legal counseling regarding U.S. accounting standards” is laughable, but also par for the course in this story. Anyway, if someone from Korea Aerospace is reading, I’ll gladly provide comparable services for half that price. Yes, that infers that I’m at least as half as good of a lawyer as Michael Cohen without actually being a lawyer. The offer stands.

Why It’s a Good Time to Look for a Job [WSJ]
The number of unfilled jobs rose to a record high of 6.55 million at the end of March, and plenty of them are in accounting:

The largest growth in job openings over the year came in the business services category. There were 193,000 more available positions in the broad field that includes accountants, software developers, temporary staffers and other office workers.

Let’s prepare ourselves for the complaints about talent crisis to get louder over the next few months.

Previously, on Going Concern…

Just a reminder: If you haven’t taken our spring survey on the month-end close, please do so.

Megan Lewcyzk wrote about cybersecurity snafus.

In Open Items, someone is asking about negotiating salary as part of a relocation.

From the archives: “Next time you abuse your first year, remember that they are the ones that pick up your food.” See also: Apparently PwC Partners Aren’t Eligible for Anti-Bullying Protection

In other news:

• Accounting professor among three detainees in North Korea returning to U.S.
• ZTE Says It Halted Major Operations Following U.S. Sales Ban
• U.S. Senate to vote to reinstate open internet rules
• Board game company Asmodee explores sale: sources
• Canadian zoo faces charges after taking bear out for ice cream at Dairy Queen

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: A Murder of Crowes and Bad Legal Advice | 05.10.18 appeared first on Going Concern.

By 2030 — no more than a couple of economic cycles away, in all likelihood — the worldwide talent shortage will reach about 85 million people with needed skills, according to a new report. The estimated financial impact: as much as $8.5 trillion of unrealized annual revenue.

More scary datapoints include: The U.S. would lose out the most, with $1.7 trillion in unrealized revenue; the projected labor deficit of 3 percent in 2020 will be 11 percent in 2030, and the U.S. labor participation rate dropping to 60 percent by that same time.

The good news, however, is robots are NOT taking people’s jobs:

In countries with low unemployment and booming manufacturing production — the Czech Republic, Poland, Hungary, and Slovakia, for example — labor shortages are accelerating automation and increased use of robotics “not to replace people, but because there aren’t enough of them to fill the factories,” the report says.

Plus, a growing skills shortage. Whee!

Snap is giving an Amazon exec $20 million in stock to replace its CFO [BI]
If you enjoy big compensation package porn, the one Snap is giving Tim Stone should be sufficiently arousing:

Stone, 51, will be paid an annual salary of $500,000, plus $20 million in restricted stock units and 500,000 options to purchase Class A shares.

$19 million of Stone’s restricted stock vests over four years, while a $1 million “sign-on” grants vests in 6 months.

Snap likes big stock awards. CEO Evan Spiegel received — essentially from himself — one of $637 million; Chief strategy officer Imran Khan: $100 million, and general counsel Michael O’Sullivan: $16 million.

Jay-Z ordered to testify next week in U.S. SEC investigation [Reuters]
Aka Shawn Carter, Jay-Z sold his Rocawear clothing brand to Iconix Brand Group in 2007 for $204 million, but now the company has written down that investment to zero. The Securities and Exchange and Commission subpoenaed Jay-Z for its investigation, but his lawyer claimed it was a “celebrity hunt” and “is driven more by governmental fascination with celebrity and headlines than by any proper investigative purpose.”

Previously, on Going Concern…

Jason Bramwell wrote about how controllers support CFOs during the IPO process.

In Open Items: “I regret that I just threw away that big 4 opportunity so easily when I fought so hard for it and has worked so hard to get there. I am having a hard time finding peace with my decision and coming terms with myself.”

In other news:

• SEC filing suggests MoviePass’ time is running out
• Five More Nike Executives Exit Amid Probe
• Uber’s flying car prototype looks like a plane.
• Denver Post Journalists Go to New York to Protest Their Owner
• Sudden Urge For A Slurpee Helps Save Man’s Life

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

Image: Kolforn/Wikimedia Commons

The post Accounting News Roundup: Talent Shortage Fears; Big Stock Compensation; Jay-Z | 05.09.18 appeared first on Going Concern.

One big factor was a change in how Tesla accounts for vehicles it leases. Whereas previously many of these would have been accounted for as operating leases, with much of the revenue deferred, they are now effectively accounted for as sales, but with a right of return.

Tesla cited this as a factor in last week’s release, but without details. The numbers in the 10-Q filing show that, stripping it out, the like-for-like automotive sales margin drops from the headline 18.4 percent to 17.1 percent. Underlying growth in sales was 11.2 percent, rather than the 25.9 percent the headline revenue figure suggested.

Someone in the finance department gets an A+ for that one.

Valeant Will Become Bausch Health Companies Inc. [VPI]
To those of us who remember this 8-K that, at the time, I called “an amazing feat in impregnable corporate argot,” Bausch Health Companies will always be Valeant Pharmaceuticals in our hearts.

Four Women Accuse New York’s Attorney General of Physical Abuse [TNY]
Eric Schneiderman resigned a few hours after this New Yorker article was published. Mr. Schneiderman’s career as New York Attorney General involved many tussles with the Big 4, including EY’s settlement over Lehman Brothers’ bankruptcy, a subpoena of PwC’s audit workpapers of ExxonMobil, last year’s hack of Deloitte, among others.

Deloitte plans $600m of cyber security spending [FT]
Speaking of that hack of Deloitte, if you recall, the firm failed to use two-factor authentication for its global email server, which helped grant access to the intruder. So naturally, the firm is spending over half a billion on its cybersecurity to get things up to snuff.

Previously, on Going Concern…

I wrote about my real fear in the aftermath of a massive cloud failure: old, crusty CPAs saying “I told ya so.”

In Open Items, someone is asking about assessment tools for hiring.

In other news:

• Comcast prepares all-cash bid to gate-crash Disney-Fox deal
• ‘World of Warcraft’ Currency Is Now Worth 7 Times as Much as Venezuela’s Cash
• Amazon’s Tim Sloan will be new CFO of Snap.
• Woman wins $1.2m on $18 Kentucky Derby bet
• Free Cone Day.

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Tesla’s Numbers; Valeant’s New Name; Deloitte’s Cybersecurity Spending Spree | 05.08.18 appeared first on Going Concern.

A cyber incident that takes a top-three cloud-services vendor offline for three to six days would spawn customer financial losses of about $7 billion to $15 billion, according to a report, “Cloud Down,” by Lloyd’s of London and catastrophic risk modeler AIR Worldwide.

Yes, if something were to knock out, say, Amazon Web Services for a few days or weeks or smote the whole operation, things would be bad. Very bad. Catastrophically bad. Horrific. Terrifying. Like, The Walking Dead bad. But I swear to you, regardless of the chaos that would emerge as a result of a significant portion of the cloud going down would pale in comparison to the schadenfreude that male CPAs of a certain age would be swimming in.

First, they’d laugh and point, but then it would turn ugly. They’d don their khaki trousers and blue blazers and hit the streets, promising to be “The Trusted Advisor” you need in this time of darkness. They’d start tent revivals, preaching “Reject the cloud,” telling followers that only true salvation can be found within…your own IT infrastructure. They’d demand that all accountants prepare tax returns by hand and schlep physical ledgers home every night to be placed under lock and key just to be on the safe side. They’d re-introduce BUSINESS FORMAL. Basically, it’d reinvigorate the CPA equivalent of flat-Earthers.

So, I guess what I’m saying is: Lock your shit up, AWS. Nobody needs this.

[CFO]

The post We’re One Meltdown Away From a Bunch of Crusty Old CPAs Saying ‘I Told Ya So’ About the Cloud appeared first on Going Concern.

Tesla’s Numbers Are Even More Dramatic Than Its CEO [WSJ]
The bond price, net working capital, and free cash flow, among other metrics, are not looking so hot.

See also: Elon Musk trolls Warren Buffett

AmTrust Has Been Under an SEC Investigation for Five Years [WSJ]
We’ve noted stories about AmTrust that have included auditor spying and a beautiful woman laughing at bad accounting jokes, and all this has been going on while the company has been under an SEC investigation for 5 years. The company finally disclosed this fact last week, with a bleak outlook: “AmTrust said it can’t predict when or how the inquiry will end or whether it could have a material impact on the company.”

Previously, on Going Concern…

On Friday, I wrote about EY’s settlement with a now-former partner over its failing to act on her sexual misconduct complaint against an also-now-former partner.

In Open Items, someone is asking about federal jobs.

From the archives: Deloitte Manages to Tone Down Its Response to This Year’s PCAOB Inspection Report

In other news:

• Coffee deals.
• Spinoffs – Chinese style
• Mandatory solar panels.
• “Orwellian nonsense.”
• Lots of Big Macs.

Get the Accounting News Roundup in your inbox every weekday by signing up here.

See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Buffett’s Nightmare, Musk’s Drama, AmTrust’s Probe | 05.07.18 appeared first on Going Concern.

One of the more shocking details from the sexual harassment complaint against Ernst & Young is that even though the victim, Jessica Casucci, was a partner, other partners and senior officials in the firm either did nothing or took action to protect the firm and one of the alleged perpetrators, John Martinkat.

Although the futility of reporting incidents to human resources has been widely reported and commented upon, a public account like the complaint against EY just reinforces the suspicion that many have held that firms will go out of their way to bury serious complaints of sexual harassment.

The ordeal raises a bunch of troubling questions, but perhaps one of the more obvious ones is: If EY treats a partner this way, how are complaints from staff handled?

If you haven’t read the Equal Employment Opportunity Commission complaint against EY filed by Ms. Casucci, it’s on her lawyer’s website, and as we’ve stated before, the details are disturbing. And it’s not only the actions of Mr. Martinkat, but also the actions or lack of action by several other people mentioned, that create doubt about how these incidents are handled within EY.

For starters, there were two partners who witnessed Mr. Martinkat’s alleged assault of Ms. Casucci: Gerald Whelan and Jim Givens. By now you probably have read the details, but to summarize: Mr. Martinkat allegedly groped and sexually harassed Ms. Casucci including, “lifted her up over his shoulder and aggressively groped her breasts and rear end,” and telling her “I know you want to fuck me.” After the encounter, Martinkat continued the harassment with calls, texts, and emails asking her to come to his hotel room to have sex. The next day, Ms. Casucci confided to a nameless partner about the assault and harassment.

According to the complaint, “[N]either Mr. Whelan, Mr. Givens nor the partner in whom Ms. Casucci confided the following day ever reported Mr. Martinkat’s behavior to Human Resources.”

It has been reported, and EY spokesperson John La Place confirmed to Going Concern, that the firm terminated John Martinkat. Requests for comment to Messrs. Whelan and Givens were referred to Mr. La Place. Attempts to reach Mr. Martinkat were unsuccessful.

The complaint also details other alleged incidents suffered by Ms. Casucci, including a partner, Michael Serota, who “repeatedly asked Ms. Casucci if she was wearing underwear while rehearsing to speak at EY’s Executive Tax Update [ETU],” and Derek Schulze, a senior manager, who is alleged to have a bit of a reputation:

Nothing in the New York Post report mentions any action taken by EY against either Mr. Serota or Mr. Schulze for their alleged actions.

In response to questions about discipline for the two men, EY referred Going Concern to its statement from April 18 that “strong disciplinary actions will be taken against anyone we determine to have violated our policies and/or our Code of Conduct.”

According to the complaint, Ms. Casucci finally approached Karyn Twaronite, EY’s global diversity & inclusiveness officer:

Ms. Twaronite also told Ms. Casucci to “trust the Firm” to handle this appropriately. Despite those assurances, from August 2016 to late 2017, the firm appeared to have taken no action to address the alleged assault, according to the complaint. In a statement to Going Concern, EY said: “When the matter was reported to Karyn Twaronite in 2016, she listened with care to Jessica Casucci, and then escalated the matter to our then senior employment lawyer.”

Meanwhile, Ms. Casucci went to great lengths to avoid Mr. Martinkat, including turning down several assignments and changing to a different group within the tax practice. As the complaint states, she “had to completely reinvent her career and leave a substantial book of business to build a new one,” while Mr. Martinkat’s continued “unabated.”

In January 2018, Ms. Casucci notified Paul Stroud, EY’s Americas tax managing partner for financial services, of the incident. And in February 2018, Ms. Twaronite and EY’s Vice Chair of Talent, Carolyn Slaski, met with Ms. Casucci where she discussed the lengths she had to endure to avoid Mr. Martinkat:

Later, when Ms. Casucci stated that she had “follow ups” for Ms. Slaski, Ms. Twaronite said that if it is related to “how to navigate client assignments” that she wanted to involve Mr. Stroud. The complaint states that was “evidence of discriminatory and retaliatory animus.”

Finally, Ms. Casucci was referred to an EY attorney, Lisa Swanson, about the matter. According to the complaint, when the two women met, “It quickly became clear that Ms. Swanson had not been given all the facts,” most notably that she had “not been told about Mr. Martinkat’s sexual assault” and only knew of the lewd emails he sent after it occurred. Ms. Swanson rescheduled the meeting to get caught up, and that’s when the most shocking details are revealed:

In a statement provided to Going Concern on May 4, EY said, “We have been transparent in discussing this matter with our people and have learned from this experience. [Americas Managing Partner] Steve Howe and [Americas Managing Partner-elect] Kelly Grier conducted an EY-wide discussion where they shared what happened, where processes may have broken down, what we learned, and how we can get stronger.”

A week after her March 19 meeting with Ms. Swanson, Ms. Casucci retained counsel and the complaint with the EEOC was filed on April 18. Requests for comment to Ms. Twaronite, Ms. Swanson, Mr. Stroud, and Ms. Slaski were referred to La Place.

Ms. Casucci’s lawyer, Michael Willemin of Wigdor, declined to answer questions, but issued a statement: “Jessica Casucci and EY have reached a fair and equitable confidential settlement of this matter that involves Jessica leaving the Firm. We are pleased to have reached this resolution.” EY provided an identical statement to Going Concern.

The New York Post story about the settlement reports that, “The company has launched an internal investigation, and Twaronite’s actions are part of that probe, according to a person briefed on the investigation.” Going Concern has learned that the firm does not agree with this characterization, and that the investigation has been closed.

EY said further that in the discussion held by Mr. Howe and Ms. Grier, the firm “emphasized that our values, culture and Code of Conduct define the expectations we have of each other and the ethical framework on which we base our decisions. We are also focused on undertaking ongoing efforts to further strengthen our reporting and disciplinary processes.”

As mentioned at the top, the victim in this case was a partner who had spent 16 years of her career at EY. It’s hard to imagine how a person could be treated much worse, and this is someone who probably intended on spending the rest of her career at EY. In very short order, those plans were irreparably disrupted. It’s a cold reminder of how mega firms like EY will always put their interests first. Even over one of their partners.

The post If EY Treats a Partner Who Reports Sexual Misconduct Like This, What Hope Do Other Employees Have? appeared first on Going Concern.

Related: Buffett’s Berkshire Braces for ‘Wild’ Swings From New Accounting

Barclays Africa fires KPMG over Gupta connections [FT]
Aside from the bar of KPMG from performing work for the South African government, the loss of Barclays is the biggest blow yet to the firm there.

Elsewhere in KPMG South Africa implosion: KPMG still operates the ethics hotline for troubled retail conglomerate Steinhoff International. And although the lines are operated with their “own unique telephone number and are answered in the name of the organisation” all KPMG lines use the same hold music: “Celebration” by Medwyn Goodall.

Theranos Cost Business and Government Leaders More Than $600 Million [WSJ]
The heirs to the Walton fortune, Rupert Murdoch, and the family of Education Secretary Betsy DeVos are among the big losers in Theranos, now arguably one of the most audacious frauds in history. “To say they’re highly disappointed in Theranos as a company and an investment is an understatement,” the DeVos family COO said.

Ex-Wilmington Trust CFO Guilty of Loan Fraud [CFO]
Not only the CFO, but also Wilmington Trust’s former president, chief credit officer, and controller were found “guilty of 15 counts, including conspiracy to defraud the United States and making false entries in banking disclosure documents.” The CFO, David Gibson, had three false certifications in financial reports convictions, too, for good measure.

Previously, on Going Concern…

In Open Items, someone is deciding between PwC M&A and Deloitte International Tax.

From the archive: California CPA Under the Impression That CPA Exam Is Still an Infernal, Multi-day Event That Drives You to Drink

In other news:

• U.S. job growth rebounds; unemployment rate falls to 3.9 percent
• Lower Tax Bills Fuel Best Earnings Quarter Since 2011
• Ex-Volkswagen C.E.O. Charged With Fraud Over Diesel Emissions
• Here’s the SEC’s announcement about its subpoena of Jay-Z, without any “99 problems” references.
• Reminder: It will always be dangerous to take a selfie with a bear.

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Mischievous Non-GAAP Reporting; More Bad News for KPMG South Africa; Theranos Losers | 05.04.18 appeared first on Going Concern.

Elon Musk’s Most Dumbfounding Moments on Tesla’s Earnings Call [Bloomberg]
Last fall, we mentioned on a couple of occasions that Tony Stark impersonator and Tesla CEO Elon Musk doesn’t seem too hung up on production estimates, sales projections, among other things that Wall Street analysts tend to care a lot about. In Tesla’s earnings call on Tuesday, Iron Man finally reached his wit’s end with the number crunchers:

Musk aimed his sharpest words at Toni Sacconaghi of Sanford C. Bernstein, who rates Tesla the equivalent of a hold. After the analyst asked a question about whether the company could reach its 25 percent gross margin target on the Model 3, Chief Financial Officer Deepak Ahuja said recently imposed tariffs, more expensive commodities and higher labor costs factored into the company’s guidance.

“Yeah, but we’re talking about a 3 percent to 5 percent difference, and that’s something that we’ll solve like within three months to six months later,” Musk said. “So don’t make a federal case out of it.”

Musk wrapped that exchange with: “Boring, bonehead questions are not cool. Next?” and at one point admitted, “Sorry, these questions are so dry. They’re killing me.”

Has The TCJA Supercharged The Economy? The Data Don’t Show It. [TPC]
Howard Gleckman of the Tax Policy Center cites trends in GDP, the S&P 500, the 10-year Treasury rate, and unemployment as evidence that Tax Cuts and Jobs Act hasn’t turned out to be the “rocket fuel” to the economy at President Trump promised, at least not after the first quarter.

Private equity firm KKR to convert to a corporation after U.S. tax reform [Reuters]
KKR follows Ares Management as the second private equity shop to convert to a C corp as a result of the new tax law. The change is effective July 1st and “is designed to broaden our investor base, simplify our structure and make it easier to invest in our shares,” according to the company’s co-CEOs, George Roberts and Henry Kravis.

Previously, on Going Concern…

Greg Kyte’s Exposure Drafts cartoon touched on ghosting post-busy season.

From the archives: Auditing in China Sounds Like Pure Hell. See also: How to Cope With Post-Busy Season Depression

In other news:

• Bloomberg’s New Paywall Will Charge Users $35 a Month
• WeWork bond loses appeal days after debut
• More businesses are mellowing out over hiring marijuana smokers
• “One employee shared bleakly titled Spotify playlists in Slack featuring songs like ‘High and Dry’ by Radiohead, ‘The End’ by The Doors, and ‘Help!’ by The Beatles.”
• What it’s like to attend a flat-Earth convention

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: EY Settles With Partner Over Sexual Harassment | 05.03.18 appeared first on Going Concern.

[P]rosecutors presented evidence that Hussain used backdated contracts, round-trips, channel stuffing, and other forms of accounting fraud to inflate Autonomy’s publicly-reported revenues by as much as 14.6% in 2009, 17.9% in 2010, 21.5% in the first quarter of 2011, and 12.4% in the second quarter of 2011.

Hussain’s lawyer said his client would appeal and expressed dismay “that the United States Department of Justice lent its support to HP’s campaign to blame others for its own catastrophic failings.”

WeWorked to solve a rent-accounting puzzle [FT]
If you enjoyed WeWork’s accounting gymnastics last week, you’ll love this FT Alphaville column that goes further into the weeds on the company’s straight-lining rent adjustment. An adjustment, Alexandra Scaggs writes, that even causes the extra-lenient, company’s never-been-heard-of “community adjusted Ebitda” metric to be negative.

Apple Says It Will Buy Back $100 Billion in Stock [NYT]
Thanks, tax cuts! “No company has ever done stock buybacks like Apple. In the most recent quarter, Apple repurchased $23.5 billion in stock — the largest single stock buyback ever.”

Previously, on Going Concern…

Megan Lewczyk wrote about the IRS’s legacy systems.

In Open Items, someone wonders if they should apply to two different jobs at the same firm.

From the archives: Life in Public Accounting: Expectations vs. Reality

In other news:

• ‘Hi, It’s Amazon Calling. Here’s What We Don’t Like in Your City.’
• “Their product could be great for U.S./Russia relationships.”
• The Airport Lounge, Once a Refuge, Is a Total Zoo
• Please don’t use this study to justify your horrible habit of using two spaces after periods
• Turkish meatballs.

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: ‘Special Skills in Accounting’ and Rent Expense Puzzles | 05.02.18 appeared first on Going Concern.

ZTE – Where were the auditors? [China Accounting Blog]
Paul Gillis asks if “EY have blown the whistle earlier?” about ZTE, the Chinese tech company that the U.S. Commerce Department recently banned from buying American components for seven years. The ban puts the company’s existence in serious doubt.

U.S. Tax Revamp Weakens Case for Companies to Shift Profit Overseas [WSJ]]
Richard Rubin reports that the new 21 percent corporate rate will reduce profit shifting offshore by $65 billion a year, but countries with lower tax rates will still tempt some gamesmanship. “You’re never going to eliminate this until we have exactly the same tax rates and tax rules across all the countries, [b]ut you can certainly not have the U.S. be a chump,” one tax expert said.

Previously, on Going Concern…

I wrote about a judge tossing a Deloitte employee’s lawsuit against a New York City bar over his MAGA hat.

The featured job of the week was a Finance and Operations Analyst with Incandescent in New York.

From out partner Hubdoc: How a Career in Cloud Accounting Can Change Your Life

From the archives: It’s Not Every Day That 50 Cent Gets Mentioned in an SEC Filing. See also: Has Microsoft Excel Ruined the World?

In other news:

• Sprint announces deal to merge with T-Mobile
• Twitter sold data access to researcher in Cambridge Analytica scandal
• Tesla Doesn’t Burn Fuel, It Burns Cash
• $11 Million a Year for a Law Partner?
• Bob Dylan whiskey.

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Partner Names; EY and ZTE; Offshore Profits | 04.30.18 appeared first on Going Concern.

Last year we shared the story of Greg Piatek, a Deloitte senior manager who sued The Happiest Hour, a bar in New York’s West Village that he claims kicked him out over his “MAKE AMERICA GREAT AGAIN” hat. On Wednesday, a judge threw out Piatek’s lawsuit, but not before Piatek’s lawyer made a laughable argument:

“The purpose of the hat is that he wore it because he was visiting the 9/11 Memorial,” his attorney Paul Liggieri told Justice David Cohen in court Wednesday.

“He was paying spiritual tribute to the victims of 9/11. The Make American Great Again hat was part of his spiritual belief,” Liggieri claimed. Piatek and his pals had, in fact, visited the memorial before the bar.

“Rather than remove his hat, instead he held true to his spiritual belief and was forced from the bar,” Liggieri said.

I’m no lawyer, but suggesting that an ugly hat with a ripped off slogan that endorses a buffoon is part of a spiritual belief seems like a legal strategy that Lionel Hutz might come up with. Anyway, it seems like Judge Cohen had fun with this one:

When the judge asked how the bar employees were supposed to be aware of Piatek’s unusual religious beliefs, Liggieri answered, “They were aware he was wearing the hat.”

The judge pressed Liggieri on the idea of his client’s professed creed.

“How many members are in this spiritual program that your client is engaged in?” the judge asked.

“Your honor, we don’t allege the amount of individuals,” Liggieri said.

“So, it’s a creed of one?” the judge asked.

“Yes, your honor,” Liggieri replied.

Judge Cohen quickly ruled that the bar had not discriminated against Piatek, saying “Plaintiff does not state any faith-based principle to which the hat relates,” which basically translates to “That hideous hat has nothing to do with being spiritual. Nice try, dummy.”

[NYP]

Image: Gage Skidmore/Wikimedia Commons

The post Judge Tosses Accountant’s Suit Claiming Bar Discriminated Against Him for Wearing MAGA Hat appeared first on Going Concern.

WeWork, a commercial landlord pretending to be a tech-lifestyle company, raised over $700 million in a bond offering yesterday, and it seems they are taking a page from Groupon’s accounting playbook, offering a ludicrous profit metric for all of our enjoyment:

In the offering documents, WeWork went to unusual lengths to show ways in which the company would be profitable. While many companies typically offer “adjusted” earnings, WeWork offered three different layers of adjustments.

It called the fully adjusted number “community adjusted Ebitda,” by which it subtracted not only interest, taxes, depreciation and amortization, but also basic expenses like marketing, general and administrative, and development and design costs. Those earnings were $233 million, WeWork said.

“I’ve never seen the phrase ‘community adjusted Ebitda’ in my life,” said Adam Cohen, founder of Covenant Review, a bond research company.

There are lots of unflattering things that someone could say about your company’s ridiculous non-GAAP metric, I have a hard time thinking of something worse than “I’ve never seen that in my life.”

A Look at WeWork’s Books: Revenue Is Doubling but Losses Are Mounting [WSJ]

Update:

The Guardian on WeWork’s failed IPO published December 20, 2019:

Everything went wrong for WeWork soon after it publicly filed documents for an initial public offering of shares, on 14 August. Six weeks later, Neumann had voted to remove himself from the CEO job and given up his majority control of WeWork’s stock. The company’s proposed valuation had fallen by more than half, and the IPO had been called off entirely. The failed IPO and the company’s subsequent takeover by SoftBank, its largest investor, were both facilitated by the public exposure of long-known information: WeWork was losing a ton of money; its projections of the size of the market for shared office space (up to $3tn) were wildly optimistic (it counted anyone who worked at a desk in an American city where there was a WeWork as a potential “member”; in non-US cities with WeWorks, the estimate applied to anyone with an office job); and its corporate culture and strategy were completely in hock to Neumann and his family’s bizarre ideas and whims.

The company’s business model had been known to be expensive and have little path to profitability since at least 2015, when BuzzFeed first published documents WeWork had used to solicit investors.

Why WeWork went wrong [The Guardian]

The post Let’s All Have a Good Laugh at WeWork’s Stupid ‘Community Adjusted Ebitda’ (UPDATE) appeared first on Going Concern.

KPMG Gets Cold Shoulder From GE Shareholders [WSJ]
Michael Rapoport reports, “Only 64.9% of GE shareholders voted to ratify KPMG as GE’s auditor.” One governance expert called it an “extraordinary” level of opposition, but the fact remains: KPMG will be GE’s auditor for another year: Its 110th. Wells Fargo shareholders also voted to retain the firm, with 91.1% giving KPMG their blessing despite a recommended “No” vote from proxy firm Glass Lewis.

PCAOB Seeks Input into its 2018-2022 Strategic Planning Through a Public Survey [PCAOB]
“Following the recent appointment of five new Board members,” the auditors’ auditor wants the opinions of the public to “[take] a fresh look at the organization and its future direction in fulfilling its mission.” The survey is here.

Under New Tax Law the Question Is, To Be or Not to Be a REIT? [Bloomberg]
Some are considering a change to C corporation tax status to avoid paying most of their earnings in dividends, using it to expand or re-invest in their properties.

How High Are Recreational Marijuana Taxes in Your State? [Tax Foundation]
Nine states and the District of Columbia have legalized recreational marijuana, but only eight of these have legal markets, meaning that pot is sold and taxes are collected.

Previously, on Going Concern…

I wrote about KPMG’s announcement that it would be adding independent directors to its board.

In other news:

• CFPB Director Mick Mulvaney Urges Bankers to Pay for Influence
• Peter Thiel Agrees Not to Buy Gawker
• What Amazon’s New Headquarters Could Mean for Rents
• Texas town holds .5K – not 5K – for underachievers
• “Rather than using a public restroom, the leader of North Korea has a personal toilet that follows him around when he travels.”

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: KPMG Keeps GE, Wells Fargo Audit Gigs | 04.26.18 appeared first on Going Concern.

In today’s complex and fast-moving global business environment, successful organizations regularly reassess their mission and responsibilities to the markets they serve.

They raise a mirror to themselves — closely evaluating what they believe to be their proven tools — and determine if those tools remain fit for purpose. And leaders who steer these organizations — whether publicly traded companies or private partnerships — similarly must be willing to take a fresh look at the systems and structures they have in place to ensure their organizations are best positioned to thrive.

At KPMG, we embrace that responsibility. That’s largely why we’re now embarking on the important process of adding outside directors to our board. We regularly evaluate ways to improve how we manage our business to meet the expectations of our stakeholders, including the companies we serve and their boards and investors, the capital markets, our regulators and our people. In 2017, certain events, and the actions of a few former colleagues, caused us to take a deeper dive into examining our culture and values, and to assess with fresh eyes how we could improve and best position our more than 100 year-old firm for future success. What has emerged from that ongoing exercise is not surprising. We have been reminded of the cardinal rule in our business, namely that trust is paramount and, as such, must inform all that we do.

You may have missed it, but buried in that third paragraph, Doughtie used 10 words to summarize a small matter of six KPMG employees being fired for mishandling confidential PCAOB inspection information, four of whom face a slew of criminal charges. (Sidebar: The firm is paying the legal fees for three of the people charged.)

That’s what got the firm to do some soul-searching. I suppose this is the accounting firm equivalent of an alcoholic hitting rock bottom. “KPMG, you promised to be independent, objective, and to act with integrity, but then you got hammered, soiled yourself in front of everyone at the Christmas party, and then drove off and crashed into a parked cop car.”

But the most annoying thing about this essay isn’t Doughtie barely admitting that mistakes were made, but how much time she spends saying how awesome KPMG is:

We are a vibrant private partnership, deeply committed to our clients, to the public, to our communities, and to each other — and, because of the work that we do each day for the most important organizations in the world, we know that commitment is made stronger when informed not only by deep experience, but also by diverse perspectives. We know that we are best at what we do when we push ourselves to think innovatively and act boldly. We craft the smartest ideas and deliver the most effective solutions when we step outside our comfort zone and beyond what is familiar. And we provide the most fertile ground for our people to show up each day and be stewards in the workplace when we aim to eliminate groupthink and reward individual responsibility and accountability.

And that’s just one paragraph. To read the rest of it, you’d think KPMG had planned the invasion of Normandy.

Maybe it occurred to KPMG leadership that outside directors were a good idea before its partners got in trouble up to their eyeballs, but they were probably too busy peddling golf hats. Now that the firm actually has to salvage what’s left of its reputation, no one should be impressed by directors short of Pope Francis, Malala Yousafzai, and the ghost of Nelson Mandela. Get on it, Lynne.

[AT]

The post A Massive Scandal, the Likes of Which the Accounting Profession Had Never Seen, Got KPMG to Consider Outside Directors appeared first on Going Concern.

Microsoft denies auditing partner KPMG’s anti-piracy work in India [Reuters]
Although a Microsoft executive explained that the company was “getting an assessment agency to carry out an audit of the process delivery at KPMG to identify and correct gaps” after a surprise inspection by a KPMG employee irritated a politician, the two companies jointly said that no auditing of auditors is going on.

This next accounting rule change will add liabilities to every balance sheet [MW]
In many cases, billions of dollars in lease obligations. Francine McKenna reports on a LeaseAccelerator study that found “76% of the companies reported that there will be a material impact resulting from the transfer of most ‘right-of-use’ assets and liabilities from footnotes onto the balance sheet.” The company in the report showing the biggest impact was Walgreens, with over $32 billion in leases.

Correction: New York Times, “Zelle, the Bank’s answer to Venmo, Proves Vulnerable to Fraud” [PwC]
In Monday’s ANR, we linked to a New York Times report about Zelle’s vulnerability to fraud, and blockquoted an excerpt that cited a PwC partner from the firm’s financial crimes unit as saying, “I know of one bank that was experiencing a 90 percent fraud rate on Zelle transactions, which is insane.” I like to read it in my best Crazy Eddie pitchman voice.

Anyway, the firm has now walked that back:

PwC has determined the 90 percent figure is unsubstantiated. In addition, the statement could be read to incorrectly suggest that there is an issue with Zelle itself rather than merely pointing out that appropriate controls and procedures are needed by banks and other users in order to properly implement any new payment system. We recognize that most banks do have strong fraud authentication and fraud detection controls in place.

We regret the error and take full ownership.

We have contacted the New York Times to inform them the partner misspoke and to seek a correction.

The New York Times story remains unchanged at this time, and it won’t change, but also, it’s a little weird to see PwC correct a statement by one of its experts so publicly. This isn’t a couple of deer-in-headlights partners screwing up the Oscars; this is just a person — an expert in their field — telling a reporter what they know.

Has a statement from an Big 4 expert ever been corrected so publicly before? And do firms regularly go this far out of their way to add this much context? I confess to being ignorant about delicate PR matters such as these, so I asked a veteran PR person why a firm would do this and they suggested that it could’ve been prompted by an “Angry client?” or perhaps a “very angry client?” If someone out knows more, enlighten me.

Previously, on Going Concern…

Jason Bramwell shared the advice of controllers who work for universities.

In Open Items, someone is wondering about getting tax prep experience in a side gig.

From the archives: Auditor Made Nauseous By Computer Screens Needs Some Options

In other news:

• Wells Fargo Protesters Shout, March While Investors Back CEO Raise
• Google overhauls Gmail to lure businesses away from Microsoft
• Lots of Johns.
• Long flight.
• Mad goose.

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Apple Ponies Up; Big Lease Obligations; Walkbacks | 04.25.18 appeared first on Going Concern.

Ernst & Young accused of firing manager who requested parental leave [Reuters]
A former EY senior manager, Shmuel Eisenbach, has filed a lawsuit in Philadelphia, accusing the firm of firing him after “he requested additional time off after his wife gave birth.”

Alphabet’s earnings look better than ever thanks to a new accounting rule [Quartz]
Gains and losses from equity investments gave the company a boost last quarter. However, Google has warned that it can go both ways.

Private companies falling behind on new accounting standards [AT]
A survey from consulting shop MorganFranklin found that only 9 percent of private companies have “completed adoption” of the new revenue recognition standard and 6 percent for the new lease standard. Sixty-three and 68 percent haven’t made “significant progress” on revenue recognition and lease standard respectively.

Steinhoff Pleas for Investor Support to Save ‘Burning Building’ [Bloomberg]
Um, this is an odd way to contextualize a failing business:

“There was a time in early December that it could be likened to finding oneself in a burning building,” Heather Sonn said at the retailer’s annual general meeting at an airport hotel in Amsterdam, where the Stellenbosch, South Africa-based company is registered. “Typically when in a burning building you run out. Some stayed. We are happy some stayed in the burning building to help.”

Okay, since we are NOT talking about saving children or pets or leftover pizza, let me set the record straight — run out of the burning building.

Previously, on Going Concern…

Grant Hutchinson wrote about staying productive when working remotely.

In Open Items, a user wonders if accounting firms will consider their MBA with an accounting certificate “as sufficient to recruit me”?

In other news:

• 4 Ways to Deal With a Toxic Coworker
• Amazon will now deliver packages to the trunk of your car
• Michael Cohen’s Other Woe: Mounting Unpaid Taxes on New York Cabs
• What Your Sad Desk Lunch Says About You
• Man rescued from tree after he got stuck while rescuing cat

Get the Accounting News Roundup in your inbox every weekday by signing up here.

See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Will KPMG Survive Calls for Its Ouster as Auditor of Wells, GE? | 04.24.18 appeared first on Going Concern.

“I know of one bank that was experiencing a 90 percent fraud rate on Zelle transactions, which is insane,” said Genevieve Gimbert, a partner in PwC’s financial crimes unit. Most banks have strong authentication and fraud-detection controls for Zelle, she said, but some “just implemented it without any protections” like two-factor authentication and user-behavior monitoring.

“There are very few incidents” according to Early Warning Services, the consortium of banks that runs Zelle.

Ex-Employee Tried to Steal SunTrust Data [CFO]
Elsewhere in bank fraud stuff, SunTrust, the 12th largest bank in the U.S. by assets, is “proactively notifying approximately 1.5 million clients that certain information, such as name, address, phone number and certain account balances may have been exposed.”

County Accountant Pleads Guilty to Embezzling $2 Million [SBI]
File to Accountants Behaving Badly: Find a better hobby. Lynn Hogan pleaded guilty to stealing over $2 million from accounts under the Public Works Department of Santa Barbara County over 9 years. She’s only one of 9 defendants in this case, but the “exact relationship” between Hogan and her co-conspirators is not known, other than “they once bowled together.”

Previously, on Going Concern…

A webinar from out partner, FloQast: 5 Strategies for Streamlining Reconciliations in Excel.

Jason Bramwell interviewed a couple of CPAs who went back to school to become controllers at universities.

In Open Items, someone is wondering if their Big 4 internship offer will be rescinded.

In other news:

• RSM acquires Explore Consulting
• Walmart Is Close to $12 Billion-Plus Deal for Flipkart
• A glossary of blockchain jargon
• South Korea stops blasting K-pop at North Korea across the DMZ ahead of nuclear talks
• The End of the Joint As We Know It

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Fraud, Fraud, Fraud | 04.23.18 appeared first on Going Concern.

Ernst & Young Partner Claims Firm Retaliated Against Her After She Reported Sexual Assault [TDB]
We mentioned this story yesterday, but much of the coverage has reported more of the details of the complaint made by partner Jessica Casucci against John Martinkat, and they are disturbing:

Jessica Casucci accuses at least three men of inappropriate behavior, including one partner who lifted her up over his shoulder at a restaurant, and groped her breasts and rear end in front of other colleagues, she alleges in the documents submitted to the Equal Employment Opportunity Commission.

While he was allegedly groping her, the partner said, “I’ve wanted to fuck you for so long,” “I know that you want to fuck me,” and that the “sex would be amazing,” according to the complaint, which noted that the man assured her it would be “the best night of [her] life.”

Two other partners witnessed the interaction, while the “terrified, upset, and deeply offended” Casucci tried to pull herself away, the document claims.

After Casucci reported this and other incidents — including a partner who “repeatedly asked her ‘if she was wearing underwear’ while she was rehearsing a speech,” — she was told to “trust the firm.” At least seven partners knew of the complaint.

Hedge Fund Titans Pull Money From Funds for Huge Tax Bills [Bloomberg]
Many wealthy hedge fund managers — including John Paulson, David Einhorn, and Steven Cohen — had until last year to make good on fees earned offshore. Some of them waited until the bitter end, “benefiting from the magic of tax-deferred compounding –- and hoping that someone would figure out a clever way for them to lower their tax obligations in the meantime. That didn’t happen.”

How To Improve the Child Tax Credit for Very Low-Income Families [TPC]
TCJA expanded the CTC, however, it is still a non-refundable credit and limits how much the poorest families can receive. A new paper has suggestions on how to improve that, including making the CTC refundable.

Previously, on Going Concern…

The featured job of the week is an Audit Manager with BHLF in Walnut Creek, Calif.

In Open Items, someone seems surprised by EY’s Vault ranking.

In other news:

• Palantir Knows Everything About You
• Amazon employs 560,000 (!) people and doesn’t allow PowerPoint in meetings.
• Wells Fargo Fined $1 Billion Over Consumer-Business Missteps
• Robot Conquers One of the Hardest Human Tasks: Assembling Ikea Furniture
• The Turn-of-the-Century Pigeons That Photographed Earth from Above

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: PwC Gave Facebook Privacy Protections the ‘All Clear’ | 04.20.18 appeared first on Going Concern.

In a complaint alleging discrimination and retaliation filed with the U.S. Equal Employment Opportunity Commission, Jessica Casucci, a partner in Ernst & Young’s New York office, accused fellow partner John Martinkat of sexually assaulting her in front of two other male partners in a bar in 2015. The complaint was seen by Reuters.

Ms. Casucci says she reported the incident to EY’s diversity and inclusion officer “after she learned that another woman had been subjected to inappropriate sexual conduct,” yet the firm took no action against Martinkat. Her complaint went on to say that she had to “rebuild her entire book of business from scratch” to avoid Martinkat while his “career has not been affected at all.” The firm has placed Martinkat on administrative leave.

Will Treasurers Ever Dump Their Spreadsheets? [CFO]
There seems to be plenty of anecdotal evidence that no one plans to dump their spreadsheets, let alone corporate treasurers, even though some people think they should. A study from the Aite Group found that many treasurers have a “fear of moving on to an overly complicated [treasury management] system.”

Report finds big fraud problems for small businesses [JofA]
The ACFE’s 2018 Report to the Nations on Occupational Fraud and Abuse found that the median loss for businesses with fewer than 100 employees was $200k, nearly double of the median loss for those with more than 100 employees.

Uber Selects VMware’s Rowe as Top CFO Candidate [Bloomberg]
Zane Rowe has had stints at Continental Airlines and Apple. He would be the last piece of Uber’s executive puzzle, as the company looks toward an IPO in 2019.

Elsewhere in fancy CFO jobs: Alesia Haas will leave Och-Ziff for Coinbase.

Accounting class-action suits hit record levels [AT]
Cornerstone research found that 165 securities class action lawsuits with “accounting-related allegations” were filed in 2017, up from 88 in 2016. The number of settlements was also up from 2016 (46 to 49) but the settlement value declined from $4.9 billion to $861.6 million.

Previously, on Going Concern…

Jason Bramwell reported the perspectives of non-CPA controllers on certifications.

I revisited the KPMG South Africa dumpster fire.

In Open Items, someone is asking about background checks.

In other news:

• Why Asking About Current Pay Is the New Taboo for Prospective Employers
• P&G to Acquire Merck KGaA’s Consumer-Health Unit
• “It’s like washing the sins of busy season for four months.”
• A cryptocurrency wallet for kids.
• ‘No to sex on roundabouts‘, Norway tells high school graduates

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: EY Partner Accuses Firm of Blowing Off Assault Complaint | 04.19.18 appeared first on Going Concern.

KPMG LLP’s South African unit is flying in trouble shooters from around the globe and hurriedly meeting clients to stem any further loss of business after becoming embroiled in three evolving scandals.

Let me jump in here to say that I think I’d make a fine accounting firm troubleshooter. A Big 4 Mr. Wolf, if you will. I would appear at the door of the troubled firm and politely give orders to blood-soaked executives and smoke cigarettes in their offices while they carry out my instructions. And then I would spray them off with a hose and jet off to the next problem.

The problems that KPMG South Africa is having, though, woo boy. These clowns are doing a number on themselves:

Over the past eight months, the auditor issued a public apology for work done for the politically connected Gupta family, withdrew the findings of a report about the country’s tax authority, and interrogated staff who signed off on VBS Mutual Bank’s accounts before it failed. In meetings over the weekend in Johannesburg, directors came up with three ways to convince its customers that the audit firm still deserves its fees. That didn’t stop it losing one of its biggest clients on Tuesday, the government’s Auditor-General.

Those three things are: 1) Auditing its entire staff every two years; 2) Reviewing the quality of past audits and 3) Setting up a hotline for employees to report wrongdoing.

“We’ve reached the breaking point,” Chairman Wiseman Nkuhlu told reporters. That doesn’t sound like a Big 4 Chairman that’s had adequate media training. I have it on good authority that the U.S. firms stick their executives in a room, set it ablaze and lock in the door until they calm down and say, “This is fine” to prepare them for occasions such as this.

Anyway, more South African banks are said to be discussing their relationship with KPMG, especially after the VBS failure. So, yes, it could get worse!

[Bloomberg]

Image: iStock/Baloncici

The post KPMG South Africa Calls in Reinforcements, Is Dumpster Fire appeared first on Going Concern.

Millions of taxpayers who waited until Tuesday to file their 2017 tax returns and make payments through the Internal Revenue Service’s website were thwarted by a systemwide computer failure that advised last-minute filers to “come back on Dec. 31, 9999.”

The message on the IRS website also said, “Note that your tax payment is due although IRS Direct Pay may not be available,” and haha, just kidding, they’re giving everyone until today to file their returns. This was a pretty epic disaster, and, yes, people overuse “epic” but come on, I think it’s warranted:

The website malfunction, which began in the early hours of Tuesday morning and was not resolved until early evening, crippled a crucial part of the agency’s website that allows taxpayers to file returns electronically and make their tax payments directly through their bank accounts. The technology failure essentially brought the nation’s tax machinery to a halt on a day when millions of Americans were expected to file their tax returns, undermining the Trump administration’s plan to use Tax Day to promote its recent $1.5 trillion tax overhaul.

This “catastrophic” malfunction came as a surprise to precisely no one since the IRS has been running the same hardware since the Kennedy Administration, and the GOP Congress has spent the last several years cutting its budget. Perhaps this is just the type of meltdown we needed.

Related: The IRS Really Needs Some New Computers

A Quick and Futile Reminder That TurboTax Is Pure Fucking Evil [Splinter]
This is your annual hate read about Intuit and H&R Block’s obstruction of return-free filing and keeping the tax law sufficiently complex. We first reported on this five years ago, and many other outlets have given plenty of attention to it as well. It’s gotten to the point that Vox is just updating its original “I’m boycotting TurboTax” post from two years ago. For the record, Libby Watson reports that Intuit spent $2 million on lobbying last year.

Trump Requests Extension to File 2017 Taxes [NYT]
Speaking of reminders, squishy creep and President of the United States, Donald Trump, filed an extension. Oh, and another reminder: He’s the first president since Gerald Ford to not release his tax returns to the public.

Survey says…

We launched a survey yesterday to learn about your experiences with the month-end close process. Your participation is appreciated. That is all.

Previously, on Going Concern…

I wrote about Levi’s accounting and jean ripping robots.

Megan Lewcyzk wrote about KPMG’s Master’s of Accounting program.

In Open Items, someone wants to know how to prepare for a Big 4 audit position.

From the archives: What Accounting Firm Logos Say About Those Firms. See also: I’m Calling BS on Your Cliched Career Aspirations

In other news:

• The Biggest U.S. Banks Made $2.5 Billion From Tax Law—in One Quarter
• Supreme Court grapples with the online sales tax
• A Trader Named Morgan Stanley Just Left Morgan Stanley
• The night before her death, 92-year-old Barbara Bush was alert, talking, and enjoying bourbon
• Flip phone comeback.

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

Image: iStock/chaoss

The post Accounting News Roundup: Let’s Try This Tax Day Thing Again | 04.18.18 appeared first on Going Concern.

The move mirrors Levi’s recent push to use lasers to create the holes, fraying and fading to give jeans a worn look, and replace a labor-intensive hand-finishing process.

I hope Levi’s can incorporate some artificially intelligent baby puke stains in a future line of jeans. I’m getting tired of explaining those.

[WSJ]

The post Levi’s Finds Artificial Accountants, Ripped Denim More Fashionable Than the Real Thing appeared first on Going Concern.

Those records suggest that this particular CPA — “John,” a New Jersey professional whose real name will be left out of this story — likely had his computer compromised sometime in mid-March 2018 (at least, this is as far back as the keylogging records go for John).

It’s also not clear exactly which method the thieves used to get malware on John’s machine. Screenshots for John’s account suggest he routinely ignored messages from Microsoft and other third party Windows programs about the need to apply critical security updates.

The IRS started informing John that many of his clients’ tax returns had already been filed but it took him two weeks to realize that he was the one who was compromised.

Worried About Your Tax Bill? Hedge-Fund Star John Paulson Owes $1 Billion [WSJ]
Although this story published last week, it seems perfect for today. John Paulson’s windfall from predicting the subprime mortgage crisis is finally having its tax day. He hasn’t had much success since then and has had to sell a lot of investments to shore up the cash to make good on this bill. Of course, the best part of the story is that the IRS does not accept checks of $100 million or greater, so one assumes that he has to cut at least 10 painful checks to make good.

No One’s Talking About the New Tax Law [NYT]
No one other than tax professionals, that is.

Ernst & Young teams with AIG on tax and tech [AT]
It seems EY has taken a page from PwC’s playbook, signing a “global tax compliance and technology operating agreement” with AIG, which includes “combination of managed tax services with the transfer of some AIG employees.” The five-year deal closed on February 5th and affected AIG tax people became EY tax people on March 31st.

Previously, on Going Concern…

In Open Items, someone asks: Is Leaving After 2 Busy Seasons A Resume Killer?

From the archives: KPMG Saves Employee’s Bowling Career. See also: What’s Barry Salzberg Doing While We’re Not Looking?

In other news:

• The ultimate guide to Tax Day deals
• Elon Musk’s Boring Co raises $112.5 million in funding, most from Musk
• Steve Ballmer’s “America’s Shareholder Meeting” is today at 1 pm ET.
• Teenagers wanted.
• A very high raccoon.

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Hacking CPAs; Big Tax Bills; EY and AIG | 04.17.18 appeared first on Going Concern.

Elsewhere: Microsoft auditing partner KPMG’s anti-piracy work in India after complaint: documents

The Interstate Tax Grab [WSJ]
The WSJ Editorial Board bemoans the possibility that SCOTUS could bring sales tax systems into the 21st century. “America’s founders devised the Commerce Clause to prevent states from burdening interstate commerce and making long-arm tax grabs,” as if those toothless powdered-wig-wearing rich white guys could’ve predicted the Internet.

Will CAMs Get the Shaft from the ‘New’ PCAOB? [Accounting Onion]
Tom Selling worries about the possibility that the Critical Audit Matters in the new expanded auditor’s report could “devolve into boilerplate,” writing “the required communications don’t go far enough.”

Ex-Soupman CFO Gets Jail for $600K Tax Fraud [CFO]
Yes, the finance chief for the Soup Nazi company received a nine-month sentence “for cheating the federal government out of nearly $600,000 taxes on compensation paid to employees.”

Previously, on Going Concern…

Greg Kyte’s Exposure Drafts cartoon touched on busy season betrayal.

In Open Items, someone is looking for business data analytics recommendations.

From the archives: Your End of Busy Season Party Hasn’t Really Started Until the Beefcake Shows Up; See also:  Utah Man Discovers Liberty Tax Not as Effective as Maury Povich in Determining Paternity.

In other news:

• Banks Get a Break on Accounting Rule
• Comparing Tesla to Enron might be Enron comparisons jumping the shark.
• Poor Boise.
• Egg recall.
• Kids skip school for Cubs home opener, run into school-missing principal at ballpark

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Auditing Auditors, Boilerplate, and Soup > Taxes | 04.16.18 appeared first on Going Concern.

Investors Want More Transparency About YouTube’s Sales, Profit [WSJ]
Last year, the Securities and Exchange Commission “cited international accounting rules” when it asked Alphabet (fka Google) about breaking out YouTube’s financial performance, and now investors are crowing about it, too.

Rules say that segments that make up more than 10 percent of a company’s total revenue, profit, or assets need broken out, and analysts estimate that YouTube’s revenue is in the ballpark of $11 billion to $20 billion, or 10 percent to 18 percent of the Alphabet’s total. The company’s director of accounting said last year that “the underlying offering—online advertising—is the same across our entire advertising business” and that the company didn’t need to report the segment.

Congress unveils package of bills to reform the IRS [AT]
A rare display of bipartisan legislation has emerged from Congress, as the House Ways and Means Oversight Subcommittee has released bills that would “improve cybersecurity and taxpayer identity protection, and modernize the information technology of the IRS,” among other things.

Get ready to say no a lot, accountant tells Mega Millions mystery winner [NJ]
Daniel Mahler, a CPA and also mayor of Wanaque, New Jersey, suggested the person who won the $533 million should “practice saying no” to everyone who will ask for money. Recalling another big winner, Mahler said, “People just knocked on his door.  He had to change his phone number because people kept calling him.”

Trump Sends National Guard to His Accountant’s Office [TNY]
“According to those familiar with the National Guard’s deployment, the troops will secure the corridors and elevator banks in the vicinity of the accounting firm that prepares Trump’s taxes.”

Previously, on Going Concern…

Jason Bramwell wrote about controllers who skipped the CPA and went down a different path in their careers.

From the archives: Would Hannibal Lecter Eat His CPA? See also: Donald Trump Once Proposed a One-Time 14.25% Net Worth Tax

In other news:

• Volkswagen’s CEO is out.
• Inside the Poisonous War for Control of CBS and Viacom
• 10 inspirational quotes from Theranos founder Elizabeth Holmes that she probably needs right now
• Mark Zuckerberg has been apologizing for reckless privacy violations since he was a freshman
• Guilty Plea Expected in $1.2 Million Fajita Theft

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

Image: iStock/Lisovskaya

The post Accounting News Roundup: YouTube’s Financials and a CPA Has Lotto Advice | 04.11.18 appeared first on Going Concern.

Federal Budget Deficit Projected to Soar to Over $1 Trillion in 2020 [NYT]
About those tax cuts paying for themselves:

The tax overhaul, which includes permanent tax cuts for corporations and temporary ones for individuals, will increase the size of the economy by an average of 0.7 percent from 2018 to 2028, according to the budget office.

But that added economic growth does not come close to paying for the tax overhaul, which the [Congressional Budget Office] said would add more than $1.8 trillion to deficits over that period, from lost tax revenue and higher interest payments.

Controversial crypto company Longfin says accounting firm has resigned amid SEC investigation [CNBC]
CohnReznick has had all the fun they can handle.

KPMG bans plastic cups in push to reduce pollution [FT]
Some staff in the firm’s Manchester office saw Blue Planet II and “question[ed] the firm’s approach to the environment and, in particular, its use of plastic.” The firm has provided its employees with water bottles.

Previously, on Going Concern…

In Open Items, someone wonders what Grant Thornton pays Rickie Fowler.

From the archives: The Poor Fashion Taste of Accountants, Explained. See also: Long Hours Are the Root of All Your Busy Season Problems.

In other news:

• U.S. watchdog seeks record fine against Wells Fargo for abuses – sources
• You won’t have to sign for credit card purchases much longer
• Tammy Duckworth Becomes First U.S. Senator To Give Birth While In Office
• The Forrest Gump of bitcoin.
• New CrossFit meal kits are just a $200 box of raw meat

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Audit-only Firms; Budget Deficits; CohnReznick Quits Longfin | 04.10.18 appeared first on Going Concern.

U.S. Tax Executives Gear Up for Tax Reform’s “Butterfly Effect” [BDO]
A BDO survey found that nine percent of tax executives have something more important to do than dealing with the new tax law.

The Post-TCJA’s Race To the Bottom [TPC]
Howard Gleckman writes that a “highly-respected tax lawyer” expects to lose clients “because other practitioners will give more aggressive advice.”

A Brass Sculpture Could Deliver a 1,400,000% Return for Heirs [Bloomberg via BNA]
Purchased for $5,000 in 1955, “La Jeune fille sophistiquee (Portrait de Nancy Cunard)” is estimated to be worth $70 million. If that’s in your price range, it’ll be on the auction block at Christie’s May 15th.

Bill Gates Sells $679 Million in Berkshire Stock [Barron’s]
For tax purposes: “The sales were made to facilitate compliance with federal excise tax rules limiting excess business holdings by private foundations.” Because his holdings are now less than 5 percent, Gates is no longer required to disclose his sales.

The Accountant, of all things, tops the list of 2017’s most popular digital rentals [A.V. Club]
I get the feeling that accountants took a “rent early, rent often” approach with this to put Affleck on top.

Previously, on Going Concern…

Grant Hutchinson wrote about the scandal of Malaysia’s sovereign wealth fund, 1MDB, one of the many fascinating tales that will be heard at this year’s Association of Fraud Examiners Global Fraud Conference.

Reminder: Gleim CPA Review has the lowdown on the CPA Exam’s renovation that went live on April 1st.

In other news:

• Mark Zuckerberg Says He’s Not Resigning
• Lawyers and doctors are lonely.
• The 10-Year Baby Window That Is the Key to the Women’s Pay Gap
• Atlanta has the world’s busiest airport.
• Upstate NY police department fed up with snow, charges winter with loitering

Get the Accounting News Roundup in your inbox every weekday by signing up here.

See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Bigger Big 4 Fines; Aggressive Tax Advice; ‘The Accountant’ Rentals | 04.09.18 appeared first on Going Concern.

“They always like to say, ‘Oh, that’s a conspiracy theory,’” Mr. Trump said. “Not a conspiracy theory, folks. Millions and millions of people.”

It seems a little foolish to repeat falsehoods rather than talk about tax cuts, as nearly everyone knows by now, unforced errors are a feature of this president rather than a bug.

What does the trade war mean for accounting? [China Accounting Blog]
Speaking of unenforced errors, Paul Gillis writes that the trade war between the U.S. and China could spill over into the Big 4’s territory since “they are generally viewed as American.” Gillis writes that there may be “an acceleration of the process of transferring major accounts to local [Chinese] CPA firms,” but the U.S. could retaliate by strictly enforcing its laws that could lead to “deregistration of Chinese accounting firms registered with the PCAOB.” Which, in turn, could lead to a lot of Chinese companies delisting from U.S. exchanges.

WageWorks to Restate Results, CFO Resigns [CFO]
WageWorks CEO Joe Jackson and CFO Colm Callan will quit after their company announced restatements “for two quarters of 2016, full-year 2016, and three quarters of 2017.”

Keep the Music Going – Staying in Tune with Music Tax Credits [BNA]
Georgia, Louisiana, and New York are among the states that offer tax credits “to encourage development of the music industry.”

SEC Warns of Government Impersonators [SEC]
Phony SEC employees are calling around “in an attempt to trick investors into sending money or revealing sensitive account information.” The Commission wants everyone to know that they do not “contact investors to confirm trades, set up trading accounts, or record the details of trades.”

Elsewhere: The SEC is accusing a startup founder of stealing $48 million from investors to fund private jets and a dairy cow farm

Previously, on Going Concern…

I suggested that if you suspect someone of fraud that you should promote them.

I also noted that PwC will be paying a decent sized damages award to the FDIC for its role in the failure of Colonial Bank.

From the archives: Do Any Millennials Want to Work at the IRS Non-ironically? See also: Everyone Suffering from Busy Season Depression: Grab Some Bubble Wrap, Stat

In other news:

• U.S. job gains smallest in six months, wage growth picks up
• ISS and Glass Lewis are calling for KPMG’s ouster as GE’s auditor.
• Looks like Domo is going public.
• Recycling fraud.
• Dunkin’ Donuts Is Giving Away Free Cold Brew Coffee Today.

Get the Accounting News Roundup in your inbox every weekday by signing up here.

See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

CORRECTION: An earlier version of this post incorrectly stated that Institutional Shareholder Services and Glass Lewis were recommending the ouster of KPMG as the auditor of Wells Fargo. While Glass Lewis did oppose the reappointment of KPMG as the auditor of Wells Fargo, ISS has yet to issue a formal recommendation.

The post Accounting News Roundup: Will the Big 4 Get Pulled Into the Trade War? | 04.06.18 appeared first on Going Concern.

The FDIC, acting as receiver for the failed Colonial Bank Group that collapsed in 2009, has asked Judge Barbara Rothstein to award it $625 million in compensation for the net losses it sustained in paying depositors and other creditors of the bank from the federal deposit insurance fund.

Even PwC’s offer of $306 million would result in the largest-ever final judgment or jury verdict for accounting malpractice, and the fifth-largest accounting malpractice award ever, according to data compiled by research firm Audit Analytics.

Rothstein is not required to accept either version of the damage estimates.

Jim Peterson pegged the tipping point for a Big 4 failure last year at somewhere between $4 billion and $6 billion, so PwC will be fine. However, because all the other recent settlements PwC has reached have been confidential, we have no way of knowing what the firm has agreed to pay out in the last 12-18 months. It’s unlikely that the total sum has reached Peterson’s danger zone, but it’s not impossible that the firm has shelled out the equivalent of a so-so year at Grant Thornton.

[MW]

The post PwC Faces Damages That Range From ‘Bad’ to ‘Worse’ But Probably Far Short of ‘Catastrophic’ for Colonial Bank Failure appeared first on Going Concern.

Anyway, if you’re a business owner or manager and you have the slightest inkling that something untoward is going on in your accounting department, try this: Promote your prime suspect and reassign all their responsibilities to someone else.

This story from the Deseret News reports on the allegations against Daniel Scott Richardson, who is accused of swiping more than $1 million from his former employer, Pegus Research Inc., and includes how the jig was upped:

From about April 2013 through December 2016, prosecutors say Richardson made “180 unauthorized transactions totaling just under $1.3 million.”

Some of the items Richardson purchased using his company’s money included a Hawaiian vacation; two Lincoln SUVs for more than $50,000; hotel stays; groceries; tens of thousands of dollars of airline tickets from Delta, including trips to London, Amsterdam and Australia; European hotel stays; $10,000 at Pottery Barn; and thousands of dollars of purchases from Apple and Amazon, the charges state.

The fraud was discovered by the person who took Richardson’s position after Richardson was promoted to senior accountant, according to the charges. He was fired on Dec. 5, 2016.

What’s not clear is if Pegus thought Richardson was doing a great job or if they got wind of his globetrotting or his spending sprees at Pottery Barn and wanted to flush out their suspicions. If it’s the latter, then good for them. If it’s the former, well, then catching a fraudster by dumb luck works too.

[Deseret News]

Image: iStock/AntonioGuillem

The post Suspect Someone of Fraud? Give Them a Promotion appeared first on Going Concern.

This type of work includes computer systems design, and management and technical consulting. These job areas have surpassed legal and accounting services since 1990, two services that people expect AI will disrupt. However, Fox writes that as AI emerges more people will be “guiding, correcting and managing the robots.” Sounds like a dream for those of you who don’t like working with the humans.

Facebook Says Cambridge Analytica Harvested Data of Up to 87 Million Users [NYT]
Did Mark say 50 million? Haha, yes, that wasn’t quite right. Maybe EY can take its non-bot adulterer counting skills and apply it Facebook’s problems.

In unusual move, prominent firm bashes Wells Fargo auditor [CO]
Glass Lewis is telling Wells Fargo shareholders to oppose the reappointment of KPMG as the bank’s auditor. In a report, the proxy advisory firm wrote, “Given the severity of the fraudulent account activity and KPMG’s prior knowledge of the incident, we believe shareholders may question whether KPMG is adequately ensuring the integrity and transparency of financial information.”

AICPA Seeks Clarity on Meals, Other Expenses [CFO]
It’s been over two months since the AICPA expressed their angst about the lack of guidance around the new tax law, so they’re raising their hand again to ask when the homework will be assigned.

Crack and Pack: How Companies Are Mastering the New Tax Code [WSJ]
Speaking of guidance, many service businesses looking to qualify for the 20 percent pass-through deduction aren’t waiting for it to split their services from the real estate or administrative aspects of their firms: “It isn’t clear how the IRS will look at such arrangements or how it will determine where profits are made. The agency hasn’t yet issued regulations in this area.”

Previously, on Going Concern…

Jason Bramwell wrote about controllers’ love affair with Excel.

I mentioned a story about a guy accused of using federal funds for guns and porn (among other things) who is keeping his job because his boss didn’t want to put undue pressure on his people during tax season.

In Open Items, a frustrated, confused accountant needs advice.

From the archives: Table-Dancing Philly Audit Luigi Will Pretty Much Consume Your Entire Afternoon

In other news:

• Tinder and Bumble Are Seriously at War
• Study says students rate male instructors more highly than women even when they’re teaching identical courses.
• Good luck leaving your Uber driver less than five stars
• The Real Story of the Hawaiian Missile Crisis
• This Guy Was Banned From A Hotel For 17 Years For An Incident Involving Hungry Seagulls And A Suitcase Full Of Pepperoni

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Managing Robots; Glass Lewis Knocks KPMG; ‘Crack and Pack’ | 04.05.18 appeared first on Going Concern.

We’ll start with a recent Department of Justice press release that accuses David Michael McGraw of Fairbanks, Alaska of stealing $315,000 from his former employer:

From 2010 to 2014, McGraw was the Finance Director for the Yukon River Inter-Tribal Watershed Council (“Watershed Council”), a nonprofit corporation formed to improve and preserve the water quality of the Yukon River. The organization received federal grant money in excess of $1 million each fiscal year that McGraw was the Financial Director. According to the indictment, McGraw intentionally misapplied approximately $315,000 from the Watershed Council for his personal benefit including, among other things, the purchase of an airplane, maintenance on the airplane, flight school for himself, the purchase of real estate, more than a dozen firearms, and online pornography fees.

I know what you’re thinking: 1) Who pays for porn? And 2) What does this have to do with an accounting firm’s busy season? Well, it just so happens that McGraw has been working at Clymer, Hall & Davis, a Fairbanks tax prep outfit, for the past four years, and the NBC affiliate wanted to get their thoughts on the matter:

In response to questions about his employee and the accusations, Owner Richard Clymer writes, “During this time l have found David to be a good man, a good family man, and an extremely competent and diligent tax preparer. I am planning to employ David for the last couple of weeks of this tax season to avoid overburdening the rest of the preparer staff. After that, David will be put on administrative leave, to give him the time needed to deal with his legal problems.”

On the one hand, if you’re one of McGraw’s co-workers, you have to be relieved that he’ll be around for the next two weeks. On the other, everyone’s looking at him just a little differently, aren’t they? You just know that one of the guys there is pulling him aside to say, “Dude, I know of a good free site you should check out.”

[DOJ, Webcenter11]

Image: iStock/marekuliasz

The post Man Accused of Using Federal Funds to Purchase Plane, Guns, Porn Gonna Keep His Job Because Tax Season appeared first on Going Concern.

Longfin Collapse Puts Focus on Lax IPO Rules [WSJ]
The fintech company listed under the JOBS Act’s Reg A+, allowing it avoid certain “accounting and disclosure standards for conventional IPOs.” Its stock price fell 30 percent yesterday, the day after it disclosed that it was under SEC investigation and “reported material weaknesses in financial controls.”

Accounting watchdog eyes ‘front-to-back’ audit of annual reports [FT]
The U.K.’s Financial Reporting Council “is considering expanding auditors’ responsibilities by requiring them to examine the entirety of companies’ annual reports and accounts” which would include “strategic reports, director reports and corporate governance statements.”

WPP Is Looking at CEO Martin Sorrell’s Possible Misuse of Assets and Allegations of Improper Behavior​ [WSJ]
A spokesman for the mega agency “said the amounts involved weren’t material to the company.”

These 2 accountants ditched their City careers to teach arts and crafts instead [BI]
Diana Muendo and Sam Lehane left EY and KPMG to create M.Y.O. (Make Your Own), a studio that teaches ceramic painting, pottery, and calligraphy.

Previously, on Going Concern…

Our partner, Gleim CPA Review, covered the new CPA Exam renovation that went live on April 1st.

I told everyone to leave Scott Foster, the accountant-turned-Chicago-Blackhawks-folk-hero goalie, alone. He has accounting to do.

Megan Lewczyk wrote about some of the new features in Excel 2019.

In Open Items, someone’s missing the inflation adjustment in starting salaries at Deloitte.

From the archives: Busy Season Problems: Auditing During a Tornado; See also: Selling Pot Out of Your Tax Prep Business Named ‘420 Multi Services’ Will Only Fool People for So Long

In other news:

• Cheaper bacon and pricier gadgets — how a trade war with China would impact you
• Paul Gillis has a cameo in The China Hustle.
• Facebook CEO Mark Zuckerberg will testify before Congress next week
• The NYSE put out the Swiss flag for Spotify’s debut. The company is Swedish.
• Yelling ‘Dilly Dilly!’ Will Get You Kicked Out of The Masters

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Red Tape, Easy IPOs and Creative Accountants | 04.04.18 appeared first on Going Concern.

Since Friday, Foster has declined to talk any more about his sudden fame. A representative for Golub Capital’s (Foster’s employer) New York-based public relations firm said it fielded several requests for interviews and is turning them all down.

The Hawks fielded ”dozens” of requests early on but they tapered off. “Foster expressed to the team that he preferred to prioritize his family and work following his NHL stint, and the team is supporting his preference,” vice president of communications Adam Rogowin said Monday.

This is the right move. A more foolish person would milk all the t-shirts, jerseys, Office Space parodies, celebrity shoutouts, countless interviews and try to parlay it into a vapid reality TV show. Our Scott is going back to his kids and his spreadsheets, and that’s perfect. No one wants their accountant-turned-hockey-folk-hero to become the next Eric Decker. That’d be infuriating.

[CT]

Image: iStock/SIphotography

The post Leave Scott Foster Alone, He Has Accounting To Do appeared first on Going Concern.

Blockchain could be your solution to spreadsheet fatigue [AICPA]
Seeing as how people reacted to a few CFOs suggesting to ditch Excel, I imagine the Excel loyalists will consider the idea that blockchain can replace their beloved spreadsheets like someone pitching a timeshare on Mars.

IRS Data Book [IRS]
Impress/put everyone to sleep at your next dinner party by reciting these stats: “During Fiscal Year (FY) 2017, the IRS collected more than $3.4 trillion, processed more than 245 million tax returns and other forms, and issued almost $437 billion in tax refunds.” Also, calm the irrational fears of any paranoid relatives by letting them know that only 0.5% of all returns were audited.

Previously, on Going Concern…

I mentioned EY’s assurance of adulterer site Ashley Madison’s users.

In Open Items, a user is deciding between tax and investment operations.

From the archives: Please Don’t Celebrate the End of Busy Season By Doing the Harlem Shake.

In other news:

• Naturally, the NHL is cashing in on the Scott Foster phenomenon.
• Founders of a virtual currency endorsed by Floyd Mayweather face criminal charges.
• GE to Sell Part of Health-Care Division to Veritas Capital for $1.05 Billion
• The Working Person’s Guide to the Industry That Might Kill Your Company
• Dollaritas.

Get the Accounting News Roundup in your inbox every weekday by signing up here.

See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

Image: iStock/Plateresca

The post Accounting News Roundup: Andersen’s Expansion Plans and Blockchain > Spreadsheets | 04.03.18 appeared first on Going Concern.

Now, I do not recall reading or seeing a public demand for assurances of the actual number of potential paramours for wannabe adulterers. However, it is possible that somewhere in the preposterous abyss of the internet, this piece of writing exists. If you are aware of it then, please, by all means, send me the 5,000+ word treatise on this consequential topic because I am keen to read it.

Anyhoo, the reason I bring all this up is that Ashley Madison’s new owner has gone above and beyond what I think the vast majority of people would expect from an adultery website: They hired a Big 4 firm to check the numbers.

Via the New York Post:

[W]hile past estimates of the number of women users turned out to be false due to the dominance of bots posing as humans, Ashley Madison execs recently hired a Big Four accounting firm to review its stats.

The latest data received the once-over by Ernst & Young, according to a report due out Thursday, and the number-crunchers verified the number of wannabe adulterers climbing aboard — or an average clip of 15,542 per day.

“[This] was the first step in communicating to our members and potential members that we had listened to them, and were now dedicated to being what we’ve always been — the leader in the married-dating space,” said Paul Keable, vice president of communications for Ruby Life, the site’s new corporate parent.

Engadget reported that EY “[showed] 5.7 million new accounts on the site in 2017 and a ratio of 1.13 active females for every active male on the site,” and “that the bots are gone.”

There you have it. Ernst & Young stamped its approval on a pool of potentials hook-ups for adulterers. Weird, huh?

[NYP, Engadget]

The post Rest Assured, Seekers of Illicit Love, Ernst & Young Has Your Back appeared first on Going Concern.

KPMG in deep trouble in HK [China Accounting Blog]
Paul Gillis goes into more detail about KPMG’s recent troubles in China over its audit reports for China Medical Technologies. Gillis writes that “all of the Big Four in Hong Kong have had this problem” and that in KPMG’s case “partners may have to decide between a Chinese jail or a Hong Kong jail.”

Lease Accounting: What’s the Holdup? [CFO]
Only 21 percent of companies surveyed by Deloitte said they were ready to comply with the new lease standard.

Brought to you by Accountingfly

The featured job last week was a Tax Manager with Edwards, Largay Mihaylo & Co in Phoenix, Ariz. They’re looking for someone with 7+ years of experience and feature a 36-hour work week during May through August.

Previously, on Going Concern…

In Open Items, someone currently “in an internal role” at a Big 4 firm is looking for advice about transitioning to a tax department.

From the archives: It’s Probably Just a Coincidence That the Subject of an AICPA Newsletter Was ‘Learn How to Appreciate Staff’ on April Fools’ Day

In other news:

• Saks, Lord & Taylor hit by payment card data breach
• Tech Thinks It Has a Fix for the Problems It Created: Blockchain
• “So bankrupt, you can’t believe it.”
• Car vending machine.
• Free pizza.

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: PrivatBank Sues PwC and ‘a Chinese jail or Hong Kong jail’ | 04.02.18 appeared first on Going Concern.

Why Is The US Olympic Committee Tax-Exempt? [TPC]
Howard Gleckman asks a good question: “Why does the tax law grant non-profit status to an entity whose primary business model is to create content for television and other media[?]” The USOC’s 990 shows $293 million of its $336 million in revenue is from “broadcast rights and royalties” which “looks an awful lot like any other TV content provider—think the Apprentice in singlets,” he writes.

Accountant by day, beer-league goalie by night, steals show for Chicago Blackhawks [CDH]
Thirty-six-year-old Scott Foster, a Senior Financial Accountant at Golub Capital and a now-instant Chicago legend, had 7 saves in just 14 minutes in the Blackhawks’ 6-2 win over the Winnipeg Jets last night. He entered the game when Chicago’s second goalie went out with an injury in the 3rd period. Here he is in action:

Scott Foster robs Paul Stastny pic.twitter.com/8FxXzyaKM7

— TheRenderNHL (@TheRenderNHL) March 30, 2018

Sidenote: Blackhawks POTGs get championship belts? Hockey sure has gotten weird.

Former Dawson water clerk, treasurer accused of theft [SJR]
File to Accountants Behaving Badly: What a surprisingly forgiving boss. Dennise “Shelly” Farley, a former water clerk and treasurer for the Village of Dawson, Ill. allegedly stole $100k from public accounts. Her boss, the Village President Dee Smith, seems chill:

“She helped with a lot of other stuff in the community and made a mistake,” Smith said. “It makes me mad, but a lot of people make mistakes.”

Prospective ABBs should not expect this level of understanding.

Previously, on Going Concern…

Megan Lewczyk wrote about chivalry and emotional restraint.

Greg Kyte wrote about how busy season triggers his survivor guilt from public accounting.

In Open Items, a user has a tale of a shady client. Also, someone had an Opening Day quandary yesterday.

From the archives: Not Every Accountant Appreciates an Easter Card. See also: Survey: Accountants Far Less Deserving of a Knuckle Sandwich Than Donald Trump

In other news:

• Tesla Looked Like the Future. Now Some Ask if It Has One.
• Why 300,000 Volkswagens Are Being Stored In These Massive Auto Boneyards
• In land of Peeps, fight threatens U.S. pension plans
• A man downed a $1,200 whiskey shot and walked out on the tab.
• I’ll Ping You

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: KPMG’s Missing Workpapers and a Hero Goalie | 03.30.18 appeared first on Going Concern.

Atlanta Hack Highlights Ransomware Dangers [CFO]
A 2016 survey of CIOs found that less half of the governments reported having formal cybersecurity policies

Trump Attacks Amazon, Saying It Does Not Pay Enough Taxes [NYT]
An ironic thing to say, given that Trump just handed massive tax cuts to corporations only a few months ago.

How Taxpayers In Each State Will Fare Under the TCJA’s Individual Income Tax Provisions [TPC]
Taxpayers in Alaska, Louisiana, North Dakota, South Dakota, Texas, Washington, and Wyoming will do pretty well, seeing their after-tax income increase more than 2.1 percent. California, New York, and Oregon: Not so much.

Accountant admits creating fake employee, stealing $1.5M from her company [AJC]
Stantisha Kemp managed payroll for her employer, an unidentified medical development company, and started her scam in 2007 with phony records that led their payroll processor to deposit money into her account. Things “intensified” when she created a fake employee in 2010.  “Accountants who lie, cheat and steal threaten the financial solvency of businesses,” a U.S. Attorney said.

Previously, on Going Concern…

Greg Kyte’s Exposure Drafts cartoon touched on one area of diversity where accounting firms have had some success.

Jason Bramwell wrote about the nascent technologies — notably AI and blockchain — that will transform SOX compliance.

In Open Items, an ode to contra accounts.

From the archives: “Just Go Rob the H&R Block Instead, Their Computers Are Nicer”; See also: That Time an Accounting Firm Recruiter Told Me That My Personality Sucked

In other news:

• Morgan Stanley Knew of a Star’s Alleged Abuse. He Still Works There.
• DocuSign Files for IPO
• Are We Already Living in Virtual Reality?
• Woman Arrested After Raunchy Come-On To Easter Bunny
• Cryptodad.

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Grant Thornton Done Auditing Big U.K. Business | 03.29.18 appeared first on Going Concern.

Court rules ex-EY partner has right to accounting expert during PCAOB interview [AT]
The PCAOB denied Mark Lacetti an accounting expert to be part of his legal team that represented him during an investigation. The D.C. Circuit Court of Appeals said that was wrong and vacated the order from the SEC to suspend Lacetti from practice. His attorney said, “The consequences will be widespread, and should lead to fairer PCAOB investigations.”

Mulvaney nears victory in struggle with Mnuchin on tax rules [Politico]
There’s a turf war going on between the Office of Management and Budget and the Treasury Department over “the final say over IRS regulations — and the implementation of the Republicans’ tax law.”

SEC Charges Energy Storage Company, Former Executive in Fraudulent Scheme to Inflate Financial Results [SEC]
File to Accountants Behaving Badly: Keep an Eye on Those Sales People. Van Andrews, a sales executive for Maxwell Technologies, allegedly schemed to inflate the company’s revenue via secret side deals. He also falsified records to hide the scam from Maxwell’s finance department and the company’s auditors. However, that didn’t prevent SEC from charging the former controller, James DeWitt, with “failing [to] adequately to respond to red flags that should have alerted them to the misconduct.”

Previously, on Going Concern…

I mentioned robots replacing humans.

In Open Items: Using a (Tax) Recruiter

From the archives: Today in Questionable Business Expenses: A $100,000 Motor Home for Dogs; See also: When Stealing From Your Company, Be Sure To Charge Boss’s Birthday Party To Your Personal Account

In other news:

• Auditors PwC looking to complete Steinhoff inquiry by end of year
• Mark Zuckerberg will testify before Congress.
• Oracle Wins Court Ruling Against Google in Multibillion-Dollar Copyright Case
• Cockroaches can “run as fast as the human equivalent of 210 miles per hour, relative to its size.”
• Mother crashed car into pole to prove to kids God is real, police say

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

Image: Gary Alpert/Wikimedia Commons

The post Accounting News Roundup: ‘One of the worst income statements I’ve ever seen’ | 03.28.18 appeared first on Going Concern.

“I am not sure whether they are a couple. They are certainly related,” Mr. Hegge told CFO Journal in an interview on Friday.

Okay, he’s maybe not enjoying them, but he’s acknowledging the possibility that they have some connection and that’s far less than humans expect. In fact, he’s far exceeding the amount of personal interest that robots require. Regardless, there’s little doubt that the Rob-bots are proving useful and exceeding Hegge’s expectations:

Statoil has automated over 50 finance and treasury tasks and plans to grow the number of robots deployed in its finance unit, Mr. Hegge said. “This helps us to improve efficiency,” Mr. Hegge said.

Statoil has reduced its finance department from 1,400 in 2013 to 897 in 2017, and if you thought that was the end of doing more with robots and less with humans, you would be wrong:

“We will continue to shrink the finance function in terms of our full-time employees,” [Hegge] said.

Will the last human out of Statoil could turn out the lights? And maybe leave a bit of personality behind for the bots to tinker with? That’d be great.

[WSJ]

The post Statoil CFO Happy With His Robots; Later, Humans appeared first on Going Concern.

Trust Betrayed: Wives of White-Collar Criminals Tell Their Stories [NYT]
Since men commit 69 percent of white-collar crimes, it stands to reason that there would be a support group for that: The White-Collar Wives Project. e.g. “He played violin in the front row of the church while being a criminal all week.”

Yeti Cools on Initial Public Offering Plan [CFO]
The company cited “market conditions” for its cold feet.

Lawmakers introduce bill to reform the IRS [AT]
The IRS was last reformed in 1998.

DMX’s Lawyers Are Going to Play His Songs in Court to Sway Judge During Sentencing [Pigeons & Planes]
Judge Jed Rakoff will hear “Slippin” and “The Convo” among others. DMX faces five years for tax evasion.

Previously, on Going Concern…

I wrote about how millennials helped PwC learn that their employees aren’t a bunch of soulless robots.

Grant Hutchinson featured another cloud accounting firm owner who benefited from Xero’s help.

In Open Items, an intern seeks advice for an office relocation.

From the archive: Protip: Don’t Bring Your Mom To Job Interviews; See also: Remember Accountants, Busy Season Makes You Stronger

In other news:

• Lower Tax Rate Boosts Case for Corporate Bonds Over Munis
• Facebook scraped call, text message data for years from Android phones
• U.S., States Step Up Pressure on Facebook
• Babies ‘R’ Us Demise Sets Off Scramble for Baby Registries
• Man found naked in helicopter after driving car into lake

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: White-Collar Wives and DMX Songs | 03.27.18 appeared first on Going Concern.

Along the way to becoming a global behemoth, however, PwC became a firm synonymous with hard work and little else. If you think that’s exaggerating, then here’s a quote for you from this Quartz article:

“We sort of pride our selves on, ‘Ah, we don’t need to have lives, we just forge ahead,’” says Anne Donovan, the company’s US “people innovation leader,” summarizing the mindset that prevailed at PwC for most of her 34 years there.

The “What do I need a life for?” is not news to anyone who’s worked at PwC or any Big 4 firm (or its predecessors). The absence of work-life balance has been a cornerstone of the accounting profession’s culture for decades, and served as inspiration for Going Concern’s coverage since the beginning of the site.

At some point, however, a few people at PwC started noticing that more and more people weren’t towing the line on “we don’t need lives”:

[M]illennial employees, who by 2013 represented two-thirds of the company’s workforce, were no longer so willing to shelve their personal lives indefinitely for the possibility of a lucrative partnership years down the road. And those who did start as associates were far more likely than their predecessors to complain when flexibility promised in the recruiting process failed to materialize.

Again, this is not news to anyone who’s spent even a small amount of time on this site. Big 4 employees of all kinds were sending biting farewell emails, seeking career advice, and complaining — lots and lots of complaining — about their unfulfilling professional lives. And not surprisingly, people were leaving the firms in droves:

PwC faced “crisis-level attrition,” says Jonathan Amy, a PwC training executive. (The firm’s titles skew grand and opaque. Amy’s official title is “chief learning architect for learning and development.”) The attrition, coupled with reluctance at college recruiting events, made clear how unenthused the new generation was with the company’s culture. PwC’s youngest employees were leaving at rates incomparable to previous generations. As soon as they got the opportunity to go somewhere else, they went.

So PwC did what consultants do best: a study. In partnership with the University of Southern California and the London Business School, the company undertook a review of its own workforce. Between 2011 and 2012, the company surveyed 44,000 employees around the world.

That survey revealed that everyone at the firm wanted better lives, not just young employees; it’s just that millennials were willing “to question long-held assumptions about how that work should be done,” and “to speak up about their dissatisfaction, and to opt out when problems couldn’t be resolved.”

While millennials have been instrumental in this willingness to speak up, I’d go one step further to say that it was millennial women who led this charge. Think about it. Accounting is a profession that has been dominated by men since forever. Does anyone seriously think that if women hadn’t started entering accounting firms en masse 15-20 years ago that anything would’ve changed? Without women, Big 4 firms would still be an army of ill-fitting, blue button-down shirts working 16-hour days, insisting on mandatory Saturdays. Some smaller firms are still that way.

Only during this period, when millennial women are becoming an important and vocal part of PwC’s workforce, could this culture change be possible. Their male colleagues, not being complete idiots, saw what they were doing and heard what they were saying and realized they were right.

All this now adds up to 90 percent of the firm’s employees “incorporat[ing] some kind of flexibility into their schedules” and senior associates going on retreats in Southern California to discuss “wellbeing” “mindfulness” and attend other sessions with “Boxes of tissues […] placed in easy reach around the room.”

Is it a rebellion? Meh, maybe. If so, it’s been over 150 years in the making; and it’s long overdue.

[Quartz]

The post Thanks to Millennials, PwC Now Knows Their People Want Lives Outside of Work, Have the Feels appeared first on Going Concern.

As Amazon Steps Us Tax Collections, Some Cities Are Left Out [NYT]
Although Amazon has deals to collect sales tax for every state that has one, the company is not collecting many city sales taxes, meaning that the local governments are still struggling to capture that revenue.

It’s March Madness Time – And Duke’s Cost to Keep Coach K Just Went Up! [BNA]
If you’re a tax pro who follows college athletics, then you may or may not have been aware of the new excise tax on executive compensation at tax-exempt orgs. A 21 percent tax is due on salaries of $1 million or more, and this includes many, many, many college coaches. But not those at public universities; they lobbied for and won an exemption in the new tax law.

SEC Stops Ponzi-Schemer Targeting Retail Investors and Obtains Preliminary Injunction and Asset Freeze [SEC]
Niket Shah stole more than $250k from his family and friends to run a Ponzi scheme, according to an SEC complaint, and my hunch is these friendships are over, and that family members wish they weren’t. “Fraudsters who swindle their friends and colleagues using doctored financial statements and outright lies should expect the Commission and its staff to act swiftly and decisively, as we have here today,” said an associate director of enforcement. I hope they act swiftly and decisively when the victims are regular people, too.

Previously, on Going Concern…

I mentioned the IRS’s reminder for everyone with crypto income to be sure to report it.

In Open Items: Fired from national CPA firm; not sure what to do

From the archives: Three Ways to Get Back into Study Mode for the CPA Exam; See also: McGladrey Team’s Request for Confirmation Rubbed Someone the Wrong Way

In other news:

• How to Find Out Everything Facebook Knows About You
• The Long Shadow of GE Capital Looms Over GE
• A theory of jerks
• ‘The stench of it stays with everybody’: inside the Super Mario Bros movie
• “A man attempted to destroy McDonalds’ golden arches after the establishment refused to make him 30 double cheeseburgers last Friday in Sutherlin, police said.”

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

Image: Andrés Nieto Porras/Wikimedia Commons

The post Accounting News Roundup: Dodd-Frank; Amazon and City Sales Taxes; Big College Coach Salaries | 03.26.18 appeared first on Going Concern.

And because many of these crypto traders are amoral Objectivist shitbags, some of them are kicking around idiotic ideas like just not reporting their trading activity. This despite the fact that Coinbase, one of the largest digital currency exchanges, was ordered to turn over its customers’ account information to the IRS last year.

I think all that may explain this gentle reminder offered by the IRS today:

The Internal Revenue Service today reminded taxpayers that income from virtual currency transactions is reportable on their income tax returns.

Virtual currency transactions are taxable by law just like transactions in any other property. The IRS has issued guidance in IRS Notice 2014-21 for use by taxpayers and their return preparers that addresses transactions in virtual currency, also known as digital currency.

Taxpayers who do not properly report the income tax consequences of virtual currency transactions can be audited for those transactions and, when appropriate, can be liable for penalties and interest.

Then, for the Bitcoin Bros out there feeling really bulletproof, there’s another outcome to ponder:

In more extreme situations, taxpayers could be subject to criminal prosecution for failing to properly report the income tax consequences of virtual currency transactions. Criminal charges could include tax evasion and filing a false tax return. Anyone convicted of tax evasion is subject to a prison term of up to five years and a fine of up to $250,000. Anyone convicted of filing a false return is subject to a prison term of up to three years and a fine of up to $250,000.

Look, if you think you earned those big crypto gains and you deserve to keep them, by all means do so. Flout the law and knowingly file a bogus tax return if that’s what you think you should do. Just know that that is a dumb decision and if you make it, I seriously hope you wind up in jail. The end.

[IRS]

The post IRS Reminds Everyone to Report Their Crypto Trading Income and If You Don’t, Hey, Maybe You’ll Go to Jail appeared first on Going Concern.

IRS sees 60% increase in data thefts from tax pros [AT]
The “spear phishing” or “new client” scam involves a “new client” who emails a tax pro about a particular issue and includes an attachment. Unfortunately, the attachment contains malware, and if opened, allows the crooks to steal taxpayer info.

Working Mothers Gain Acceptance, But Perceptions of Sexism Persist, Poll Shows [WSJ]
A WSJ/NBC poll found that 78 percent of adults believe more women who have a career and are raising children is a good thing. That’s up from 46 percent in 2000. Still, the same number of women (61 percent) and men (43 percent) do not believe that men consider women to be equals in the workplace.

Previously, on Going Concern…

I mentioned that American internal auditors are working by candlelight compared to their European and Asian colleagues.

From our partner, the University of North Carolina Master of Accounting Program: Are You Ready for the Next Big Step in Your Accounting Career?

In Open Items, someone is asking about being a tax team of one.

From the archives: Conducting Tax Return Update Meetings at the Gym Maybe Not the Best Idea

In other news:

• Dropbox Priced at $21 a Share in I.P.O., Valuing Company at $9.2 Billion
• Crypto-Focused Hedge Funds on SEC’s Radar
• United gives flier $10000 voucher to give up seat on full flight
• Empty half the Earth of its humans. It’s the only way to save the planet
• A psychologist explains how to beat social anxiety
• “Why am I doing this? It’s an unoriginal thought, but it’s like a drug, where you get the dopamine hit with likes, and you crave it more and more.”

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

Image: Jules Meulemans/Wikimedia Commons

The post Accounting News Roundup: Congress Kicks the Online Sales Tax Can | 03.23.18 appeared first on Going Concern.

Read anything online and you’re likely to be told some variation of “The rapid pace of technology is disrupting X.” And since those words appear on the internet, adjacent to stock images of word clouds, or an illuminated light bulb, or a smug nerd with people clacking away on laptops in the background, you assume that the rapid pace of technology is disrupting X. If this technology is making some headway then, great; good for you, little disruptors!

But according to a Protiviti survey mentioned in this Wall Street Journal article, one little corner of the world that has managed to resist a fair amount of disrupting is American internal auditors.

U.S. companies are trailing their counterparts in Europe and Asia in the crucial task of integrating data analysis tools into the expanding role of internal auditors, according to a survey by management consulting firm Protiviti Inc.

“People are not moving at a pace of change that is responsive enough,” said Brian Christensen, executive vice president, global internal audit at the firm.

The survey found that 70 percent of Asian and 79 percent of European internal audit departments have “a dedicated data analytics function”; the U.S. came in at 40 percent. Christensen says, “Those who fail to integrate these initiatives risk becoming obsolete,” which sounds a lot like “DON’T MAKE US SEND IN THE ROBOTS.”

What gives, Internal Audit America? Are you warming your offices by campfire? Shall we send Emeril Lagasse in to bark “Kick it up a notch” every 15 minutes? Come on, this is embarrassing.

[WSJ]

The post Most U.S. Internal Audit Teams Still Crunching Numbers on Cave Walls Compared to Their European, Asian Counterparts appeared first on Going Concern.

And here’s Peterson: “The growth of the Big Four, operating in more than 100 countries, reflects their multinational clients’ needs for breadth of geographic presence and specialised industry expertise. […] Rather than a quick amputation, we need a full-scale re-engineering of the current model with all of its parts.”

Digital transformation in finance will be built on Excel [AT]
The Excel is strong with this one: “When you can use something as a foundation for solving a wide range of problems, it’s no wonder it becomes the de facto standard for an entire profession.”

See also: Insurrection in Excel Nation

Britain to review if accounting watchdog needs more teeth [Reuters]
Failures of HBOS and Carillion have caused enough people to wonder if the Financial Reporting Council needs enhanced powers. A review is being commissioned and details are “in due course.”

H&R Block hosts shredding promotion [AT]
This Saturday, bring all your old financial documents, personal information, and incriminating evidence to an H&R Block location from 9 am to 12 pm and destroy it for free. Also: “Guitarists Michael Angelo Batio and Bibi McGill will also host Block’s ‘Tax Shred Live’ on the company’s Facebook page on March 22 at 11 a.m. CDT.”

Deloitte Hires Head of Intelligence Agency to Help Run Booming Cyber Business [Bloomberg]
Europol Executive Director Rob Wainwright will join Deloitte and the firm plans to hire 500 cybersecurity professionals. With that much expertise, maybe Deloitte will be able to get its own house in order.

Previously, on Going Concern…

I observed that some crypto traders were going the “screw it” route with their taxes.

In Open Items, someone is worried that their Big 4 internship will be revoked.

From the archives: CPAs Spanked by SEC for Porn Site Audit

In other news:

• Point: #deletefacebook; Counterpoint: Don’t Delete Facebook—Just Be Smarter on Facebook
• Here’s what Congress is stuffing into its $1.3 trillion spending bill
• Is Your Blockchain Business Doomed?
• Congress Reaches Deal to Fix Tax Overhaul’s ’Grain Glitch’
• Scrunchies are back.

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: The Big 4 Break Up Debate and H&R Block’s Shred Party | 03.22.18 appeared first on Going Concern.

Ms. Walter said she had seen clients with cryptocurrency gains as large as $400,000 who did not withhold taxes during the year and subsequently lost money trading. “Now they’re stuck with these huge tax bills, and they don’t have the capital to pay it.”

Faced with such problems, some cryptocurrency traders have decided to avoid the issue entirely, by not declaring any cryptocurrency on their taxes and hoping for the best. According to Credit Karma, which provides tax-filing services, fewer than 100 of the 250,000 people who had used the company’s tax-filing software as of February reported cryptocurrency transactions, a rate below 0.04 percent.

Sure, why not. Although I’d venture that “To hell with reporting our gains” ranks high on the scale of idiotic tax strategies. Still, one consultant quoted by Roose says, “No one believes they’ll get in trouble,” which sounds about right.

But I suppose delusional overconfidence is precisely the trait you’d want in a cryptocurrency trader. Unfortunately, it’s not such a great characteristic when it comes complying with tax law. Best of luck, morons.

[NYT]

The post Some Cryptocurrency Traders Opting for ‘Screw It’ Tax Compliance Approach appeared first on Going Concern.

PwC charges more than £20m for first eight weeks of Carillion collapse [The Guardian]
U.K. MPs call the fees PwC is charging for “salvaging money” for Carillion creditors “superhuman.” The firm told a committee that it wouldn’t know what the total cost will be until June.

‘That’s the game’: Tax planners look for loopholes amid uncertainty over new law [WaPo]
Everyone wants in on the 20 percent pass-through deduction. “The doctors are going berserk. The lawyers are trying to figure out everything they can. Clients are calling right and left. It’s a planning frenzy,” says one tax advisor. “Trying to get this is a no-brainer,” says another. And even if the Treasury and IRS come out and ruin everything, another tax planner says it’s worth it and “[W]e’ll figure out something else.”

New Accounting Rule Moves Moody’s to Reevaluate Leases [WSJ]
The credit rater will start using companies’ calculation for operating lease obligations since the new lease accounting rule “will furnish a more precise calculation.”

Previously, on Going Concern…

Megan Lewczyk wrote about voluntold assignments.

In Open Items, someone is “looking for insight from anyone who has worked in transaction services at a Big 4 firm.”

From the archives: Life After Public Accounting: How One Woman Chose Porn Over Spreadsheets. See also: Deloitte Employee Suing Bar for Kicking Him Out Over His Ugly Hat

In other news:

• In Nafta Talks, U.S. Tries to Limit Junk Food Warning Labels
• Travis Kalanick is buying a new company that rehabs real estate and will run it as CEO
• Facebook picked mid-level staffers to face angry US lawmakers over Cambridge Analytica
• “Ms. Pence’s book is more sober children’s fare. It is not known if it identifies Marlon Bundo’s sexual orientation at all.”
• Lindsay Lohan Appointed New Spokesperson of Lawyer.com

Get the Accounting News Roundup in your inbox every weekday by signing up here.

See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

Image: Victorgrigas/Wikimedia Commons

The post Accounting News Roundup: Theranos’s Missing Audit Report; PwC’s Carillion Fees; Tax Planning Games | 03.21.18 appeared first on Going Concern.

More Whistleblowing, But Also More Retaliation [CFO]
A survey from the Ethics and Compliance Initiative found that fewer workers have witnessed misconduct, 47 percent of those surveyed in 2017 versus 51 percent in 2013. However, more workers are feeling pressure to “compromise ethical standards: 16%, compared with 13% four years ago.”

Elsewhere: Whistleblowers Helped SEC Bring $415 Million Settlement Against Bank of America

KPMG celebrates 30 years in Luxembourg [Delano]
Given Luxembourg’s reputation as one of the tax avoidance meccas in the world, you’d think the celebrating would be more subdued. In any case, the managing partner’s quote, “The regulatory environment has become so complex that our clients have increasingly come to rely on us to help them navigate it,” was presumably made with a straight face.

U.S. Companies Poised for M&A Shopping Spree [WSJ]
An Ernst & Young survey of executives at companies with more than $500 million in revenue found that “73% plan to ‘accelerate’ deal making strategies.”

Previously, on Going Concern…

Jason Bramwell wrote about how controllers have kept up with SOX over the last 16 years.

In Open Items, someone who wants to get into public accounting wonders if an internship in industry is a bad idea

From the archives: Internal Controls Are of the Devil (Or: Why Stealing from the Catholic Church Is So Easy)

In other news:

• Austin-bound package explodes at FedEx facility near San Antonio
• Arizona Governor Helped Make State ‘Wild West’ for Driverless Cars
• World’s last male northern white rhino dies
• Guy In Bear Costume Has No Problem Voting In Russian Election
• Happy Spring. Get some ice cream.

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Sports Trades and Tax Reform; Whistleblowers and Retaliation | 03.20.18 appeared first on Going Concern.

The post Submitting Open Items appeared first on Going Concern.

Hi, are any of you in solo tax functions or have been in one?

What is/was the experience like?  What did you lose or gain in a position like that?

Did you ever manage to grow the function? If so, how?

In a solo role now and wanted benchmark. Realistically not expecting the function to grow until another year or so as I plant seeds of the every growing need of the function… For me, I’m using this as a stepping stone to move to a director level role in the next 5 years (whether here or in another jump).

The post Solo Tax Function Experience? appeared first on Going Concern.

Theranos and Silicon Valley’s ‘Fake It Till You Make It’ Culture [Wired]
Silicon Valley would like people to believe that they’re not like Theranos, but you can’t help but wonder how many startups that are “faking it” are also committing “fraud.”

The Travels of Treasury Secretary Steven Mnuchin [CREW via DB]
“[T]he public still has no reasonable explanation for why Secretary Mnuchin apparently has never used commercial aircraft, while his predecessors did; why his travel is not designed to minimize costs by, for example, scheduling confidential calls when he is not on a short domestic flight; or why he needs military aircraft that can accommodate 120 passengers when his travel manifests contain far fewer names.”

Previously, on Going Concern…

I offered reminders for the idiots who haven’t gotten their tax stuff together.

Grant Hutchinson interviewed a young entrepreneur who partnered with Xero to help grow his accounting firm.

From the archives: You’re Wasting Your Time if You Attempt to Bribe an IRS Agent with Starbucks; See also: The Aftermath of the Ex-PwC Employee Who Got Fired After a Dispute with Comcast Is About What You’d Expect

In other news:

• Should the U.S. Retire the Penny and Nickel?
• AT&T and the government face off in court today.
• The Men Who Eat Like Boys
• Why You Need an Untouchable Day Every Week
• North Pole branch of Blockbuster to close

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Middle-aged Accountants vs. PwC; Fakin’ It or Fraud? | 03.19.18 appeared first on Going Concern.

Hello American Taxpayer,

How are you? Good? Great, that’s swell. Hey, here’s a question — have you thought about your tax return? No? Oh, yes, I did hear that March Madness is going on. But did you also know that the tax return filing deadline is coming up soon? What’s that? You can’t believe where the time goes? Ah, yes, well it keeps on going, that’s for sure. Were you also caught off guard by New Year’s Day, Wikipedia Day, Martin Luther King Jr. Day, National Hugging Day, the Super Bowl, Ice Cream for Breakfast Day, Valentine’s Day, Presidents Day, Pi Day, and Stone Cold Steve Austin Day?

Look, it’s okay, you’ve probably been busy making Oscar predictions, poring over your busted brackets, and reading about how a porn star might bring down a president. We get it; you have priorities. The good news is, you can still get your forms and receipts together and file your tax return without pissing off your CPA. The bad news is, that window is closing fast. Opinions may differ, but I’d say you have until March 31 to get your act together. Beyond that date, if you show up to your CPA’s office with a shoebox of forms and receipts, you should expect to watch in horror as they are set on fire and the ashes spread in the wind.

So! With all that in mind, we should cover a few reminders to prepare you for visiting with your friendly CPA. Similar to tardiness, being ill-prepared is not advisable.

• No shoeboxes — Maybe you picked up on this above, but dumping a bunch of paper into a cardboard container is not preparation; it is trash. Trash goes in the garbage.
• Non-cash charitable contributions — Do you have a pile of blank receipts from Goodwill, The Salvation Army, et al.? Did it slip your mind to document the thousands of dollars worth of used clothes, third-hand furniture, canned goods, and a broken-down Ford Festiva that you claim you donated to these organizations? Yes? Okay, then prepare thyself to get a deduction of $500 and not a penny more.
• Fraud! — You need to be open to the possibility that someone has already used your Social Security number to obtain a fraudulent refund. Yeah, sorry, it sucks. They probably bought a sweet new big screen to watch the tournament on. Not only that, but you’ll probably have to navigate a series of Kafkaesque phone calls with the IRS to clear it all up.
• Where’s the money? — You got a lot of 1099s this year, good for you. Right, GIG ECONOMY, BRO. Yes, we’ve heard. Hey, did you happen to notice if those 1099s had any amounts in the “Federal income tax withheld” box? There wasn’t. Huh. Okay, did you make any estimated payments? I see, you don’t know what those are. Alright, well, you’re not going to like what happens next. GIG ECONOMY, BRO.
• You’re not a tax protester, dummy — Oh, you’ve been doing some research on the internet? Well, there’s your problem right there.
• Your CPA is busy — I know we said that your CPA wouldn’t be pissed, but we were just being nice. Yes, you’re better off than the losers out there asking any accountant with a pulse for help, but what the hell have you been doing?

I realize this might be a stern letter, but contrary to what you may have heard, CPAs are people too. They have loved ones and dogs and some even like basketball. If you had gotten your act together this year, maybe they’d get to enjoy more of those things this week.

Honestly, your layabout attitude when it comes to tax returns makes you a bad person. You may not be what’s entirely wrong with this country, but you’re certainly not helping. There, I said it. Enjoy the basketball.

The post Reminders for The Idiots Out There Who Have Yet to Get Their Tax Stuff Together appeared first on Going Concern.

The Big Four accounting firm plans to unveil a new offering Friday that will provide an outside look at clients’ use of the blockchain—making sure companies are implementing and using it properly, and allowing people within a company to continuously monitor its blockchain transactions. The move will facilitate and encourage companies’ use of the new technology, PwC says. Attesting that all is going as planned will help ease any internal concerns about blockchain and get people to feel more comfortable with its use, it adds.

“There’s going to have to be some kind of independent validation that the technology is functioning as intended,” said A. Michael Smith, a PwC partner in charge of internal technology audit solutions.

Okay, sure. But how many times do you need that service? Companies aren’t constantly asking their third-party IT consultants if their internet is working, are they? After a couple of times, won’t the clients turn to PwC and go, “The computers have got it, guys.”

Probe urged into break-up of Big Four accountants [FT]
The U.K.’s Financial Reporting Council wants the Big 4 to spin off their audit practices.

EU set to hit big U.S. tech firms with 3 percent turnover tax [Reuters]
The EU wants to tax companies such as Google and Facebook that earn billions in digital revenues. The proposal under consideration would levy a 3 percent tax on companies with worldwide revenue of at least 750 million euros.

In Their Push to Lure Amazon, Cities Face Unintended Demands [WSJ]
Big companies are watching cities fawn over Amazon with lavish tax breaks and want the same handouts. JP Morgan CEO Jamie Dimon said, “he plans to call up the governor [mayor?] from the winning city and demand a similar deal.”

The Cost of March Madness [CFO]
All the number crunching about lost productivity during March Madness might be a little overblown. Companies that think block streaming services will result in people working don’t have a good understanding of people. Besides, one report found that one-fifth of workers don’t watch the tournament anyway and would “rather focus on work.”

Corporate Tax Avoidance and Honoring the Fiduciary Duties Owed to the Corporation and Its Stockholders [SSRN via TaxProf]
“Corporations often claim that they are legally required to engage in these aggressive strategies. But this article proves that claim is utterly and completely incorrect when based upon the fiduciary duties owed to the corporation and its stockholders.”

Brought to you by Accountingfly

The featured job of the week is a Remote Senior Cloud Bookkeeper at InSite CPAs.

Previously, on Going Concern…

From the archives: Accounting Firm Answers Wardrobe Crisis Questions for Upcoming Photoshoot

In other news:

• KPMG offers new IBM Watson-enabled accounting tools
• How the DOJ’s Face-Off With AT&T Could Alter American Business
• Behind the Breakneck Unraveling of Toys ‘R’ Us
• An inside look at how Sweden is building the world’s second-longest tunnel
• Sheriff who pocketed $750K from inmate food fund bought beach house for $740K

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: PwC Will Audit Your Blockhain and Britain Goes After Big 4 | 03.16.18 appeared first on Going Concern.

During busy season you need to work less. Do it by getting paid more. [Thriveal]
Our resident artist Greg Kyte writes over at Thriveal’s blog about the dropoff in productivity, but other stuff too. “We have a certain amount of self-control and it gets used up as we go through the day. By forcing yourself to stay at work for 11 or 12 hours, you gobble up your self control. That’s why you eat like crap from February through April.”

Finance Teams Face Budget Cuts Amid Digital Transformation [WSJ]
A study by the Hackett Group reported that finance departments expect budgets to be cut a smidge, 1.3 percent in 2018. This is down from reductions of 3.4 and 4.0 percent in 2017 and 2016, but CFOs “are unable to fully implement the digital tools needed to further streamline operations without more resources.”

Senate passes rollback of banking rules enacted after financial crisis [WaPo]
The bill allows banks with less than $250 billion in assets to be exempt from certain Dodd-Frank provisions, among other things. It heads to the House where lawmakers want to weaken the oversight of the Consumer Financial Protection Bureau.

Previously, on Going Concern…

Greg Kyte’s Exposure Drafts cartoon addresses dating and the CPA exam.

I noted that off-balance sheet liabilities are still successfully hiding the ugly.

From the archives: CPAs Acting Out a Scene from the Empire Strikes Back

In other news:

• Ex-Equifax Executive Charged With Insider Trading Tied to ’17 Breach
• Toys R Us to close all 800 of its U.S. stores
• “[I]t also seems like there are just so few credible economic thinkers willing to stand up and sign their name to the Trump economic agenda.”
• United Airlines Mix-Up Sends German Shepherd To Japan
• A startup is pitching a mind-uploading service that is “100 percent fatal”

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

Image: Brian Robert Marshall/Wikimedia Commons

The post Accounting News Roundup: Theranos’s Fraud and Busy Season Self-Control | 03.15.18 appeared first on Going Concern.

“Carillion’s approach to its reverse factoring arrangement had two key shortcomings: the scale of the liability to banks was not evident from the balance sheet, and a key source of the cash generated by the business was not clear from the cash flow statement,” Mr. Pijper said. The company’s 2016 balance sheet didn’t give a clear picture of the full scale of its liabilities to banks, he added.

The bummer for Carillion, of course, is that their lenders had a clear picture of their liabilities the whole time. Banks are such sticklers about the whole “you owe us money” thing.

[WSJ]

Image: iStock/solar22

The post Off-Balance Sheet Liabilities: Still Got It! appeared first on Going Concern.

Elsewhere: Elon Musk Wanted to Buy ‘The Onion,’ Now His Team’s Hiring Its Staffers for a Secret Project

Inside the Fight for More Female CFOs [CFO]
Jenna Fischer of Russell Reynolds writes that Despite female majorities for both bachelor’s degrees in accounting, and accountants and auditors in the workforce, less than 12 percent of the CFOs of the 1,000 largest U.S. public companies are women.

No One’s Sure Who Qualifies for This $415 Billion Tax Deduction [Bloomberg]
People are getting anxious for the IRS and Treasury to explain what’s what about the 20 percent pass-through deduction. Guidance is expected in June.

Should Congress Act Before SCOTUS On Online Sales Taxes? [Tax Foundation]
Joe Henchman writes that “states are creating the scenario that the Commerce Clause sought to avoid: unlimited tax authority that burdens interstate commerce,” and suggests Congress pass legislation that would replace the physical presence standard.

Previously, on Going Concern…

I wrote about the SEC fining foreign affiliates of some BIG AUDIT firms that skirted PCAOB oversight.

I interviewed Megan Scheiderich, the Director of Internal Audit at PulteGroup.

From the archives: Ohio Mistakenly Notified a Woman That She Was Due a $200 Million Tax Refund. See also: Nearly One in Four of Your Co-workers Is Not Down with March Madness Pools

In other news:

• Ten Years After the Bear Stearns Bailout, Nobody Thinks It Would Happen Again
• Demand for Anti-Harassment Training Videos Surges in #MeToo Era
• Monks angry about beer price.
• Godspeed Stephen Hawking.
• Happy Pi Day.

The post Accounting News Roundup: Another Finance Exec Breaks With Tesla; Female CFOs; Who Gets the Pass-through Deduction? | 03.14.18 appeared first on Going Concern.

After speaking to Megan Scheiderich, director of internal audit at PulteGroup, we have a different outlook on the benefits and potential of a career path in internal audit. She discussed the path to her position at the company, the transition from a Big 4 position to industry, what makes for a good internal auditor, and more.

This interview has been edited for length and clarity.

GC: First, we should get some background — What’s the arc of your career been so far?

Megan Scheiderich: Going way back, I started at University of Tennessee as an engineering major, but switched to accounting due to the ability to see and understand businesses. I got a double major in accounting and international management and skipped the masters since I had the CPA hours.

I was with Deloitte for ten years, and left as a senior manager. I worked solely in our real estate group, with clients ranging from homebuilders to public and private REITs in multifamily, office, industrial, and retail. My favorite Deloitte experience is still working on Augusta National, which was in the real estate group.

I loved public accounting – I had great clients and teams. But, I needed to take a step more for my personal life and achieve more balance. I started a program at Deloitte (WIN -Women’s Initiative Network) that helps high performing senior managers prepare for the partner process. It was going through that program that helped me clarify that, while I truly enjoyed what I did, I didn’t want to be in public forever. That was a really difficult choice because I enjoyed public accounting and I always saw myself as a partner at Deloitte. However, when I looked up to those I worked with as partner, they worked just as hard as I did. The balance didn’t seem to come with the partner promotion and with that, I didn’t see myself being able to achieve my personal goals staying at Deloitte.

Before I truly pulled the plug with Deloitte, I took nearly six months off (through a leave of absence program with Deloitte) and traveled, did volunteer work… it is a huge benefit of being with a large firm. I spent a month in Spain.

When I left, I wasn’t sure exactly what I wanted in my next role, but defined my search by what I didn’t want: a public company in SEC reporting or internal audit. My goal was to find a private company in real estate with a role that wasn’t siloed within the accounting function. I wanted to get to know the business and operations within my next role. I found the perfect role (after a lot of looking) at a small regional homebuilder as the corporate controller. There, I was able to help take a small private accounting function and help transform it into a more timely and accurate department. I was also able to get my hands into other areas – sales and purchasing, to name a couple. The builder had been purchased by outside investors from its original founder. The investors knew they wanted an exit event eventually, and upgrading the accounting was part of this.

PulteGroup purchased the builder in January 2016, and I came along with it to help lead the integration. As Director of Finance for the Southeast Area, my role was very different from any I previously held, primarily in that I went from having a team of direct reports, to having nearly none as we completed the integration. Additionally, the role was very opportunistic, as I was able to define and work through projects in the area, even acting as an interim VP of Finance for two of our divisions as theirs were out on maternity and paternity leaves, providing direct exposure to the division’s operations.

Originally, my plan was to find a VP of Finance role in a division after about two years. Two things changed – (1) I met my husband, who isn’t able to relocate right now; and (2) the internal audit job became available. I never would have considered this role from the outside – but I’ve been nothing but impressed by the tone of the organization and the level of respect for the finance function. Within Pulte, the finance function has a seat at the table.

Check out available jobs with PulteGroup here.

GC: We recently interviewed a slew of controllers about their transition from public accounting to an industry job? How would you describe your experience of moving on to a career outside the Big 4?

Scheiderich: It’s a huge transition – My biggest surprises in a small accounting shop at a private company were the ability of my team to shift and change. In public, if you ask your team to shift gears and explain why, it’s a matter of how long it takes to do it. In a small private company (in this case, with some of my staff tenured over 30 years), change can be difficult. I found change management was one of the biggest obstacles I had to work through as you didn’t have the immediate buy-in like in public, you had to paint the picture of why things had to change.

Second, the perspective – I think as public accountants we can lose sight of what is important to the operators of the business. Yes, the numbers are important – but as a controller often my hottest fire was finding a new staff accountant and training them versus ensuring the audit team had the debt rollforward the minute they needed it.

GC: What attracted you to the internal audit position?

Scheiderich: A few things. First, the ability to shape a team once more. At Deloitte, I was highly involved in training our new hires to seniors. I missed having a team where I could have an impact on their development. Additionally, exposure to senior leadership. This role is highly visible in the organization. I have more opportunity to meet with the leadership throughout the company, not just the region.

GC: What attributes make for a good internal auditor?

Scheiderich: We look for the skills of the auditor, but we look ahead to people who can be successful in the next role as well. The audit role isn’t a far leap from what someone would see in public, so that’s the basics for me – having some audit experience.

So, in addition …I look for people who are intellectually curious. I want a team who wants to really understand the business – who wants to not just understand the audit role, but wants to jump in the car with the VP Of Construction and go see what we’re doing in the field. I look for people who are creative and dynamic. For example, people who can bring their experience to the table and make connections to our company and department, bring new ideas to the group, good problem solvers.

GC: Can you talk about the culture of your internal team and how that fits into the broader company?

Scheiderich: Culturally, we are similar to an engagement team in public accounting in that we work in a smaller team and work closely with each other. We travel together, so there is a lot of opportunity to get to know one another. Because the group is rotational, we always have new ideas coming in with new people. Again, because of the rotational nature, I think the group doesn’t get complacent as well. As the leader of the team, I try to give the group opportunities to see more than just the audit, for example – working with a division on an M&A project, or filling in at a division in an area where they are interested to gain experience.

In terms of how our culture fits in – two responses: Finance is key to the organization, as we talked about, so there is a lot of respect for what we do and a desire to get to know the audit team;

Internal promotion isn’t limited to finance – when we have openings, the company first looks internally to see if it can be filled, so there is a desire to build the skillset of our team members so they can be attractive choices to fill those roles.

GC: What kind of questions should a person ask themselves before considering an internal audit position?

Scheiderich: I would focus on the career path and the goals of the individual – some internal audit groups are more long-term in nature. That’s a wonderful path for those who want it, they can become experts in the company and the field – and many of the groups offer the opportunity to do many types of audits which can keep the variety and ability to grow high. These roles can offer work/life balance, but perhaps the trajectory gets a little shallower from public.

I think our group offers the best of many things – you can continue to see a path to some exciting roles to keep career momentum for those who want that, but you can get more work/life balance than public, and (perhaps) a little less travel. Our audit charter includes that we are a pipeline of finance talent for the organization. Graduates of the internal audit group include Division Presidents, VP of Finance, Land Managers, Controllers, among many others.

GC: You’ve mentioned the importance of the internal audit group as a pipeline to the rest of the company. Can you explain this in more detail and how it developed?

Scheiderich: It goes back to the founding of the company. When Bill Pulte started the company, he began surrounding himself with a finance team at the suggestion of his first CFO. That team took more and more progressive roles throughout the company, including Division Presidents, at the time. Leadership continued to find that finance talent were great leaders all around and solid business people. When the audit group started, it was a natural fit to continue to develop and train finance professionals to maintain a pipeline for talent in the organization, as we continue to promote extensively from within. As an example, our CEO and COO both started as controllers in various markets, and continued onto progressively larger roles until they ended up in the C-suite, something I think is very unique to our organization.

Check out the open corporate auditor positions at PulteGroup in Atlanta, Chicago, and Detroit.

The post At PulteGroup, Internal Audit Opens Many Doors appeared first on Going Concern.

According to the SEC’s orders, the Zimbabwe affiliates of Deloitte & Touche and KPMG improperly audited the majority of assets and revenues of a publicly traded company without registering with the PCAOB. The two principal auditors – KPMG’s affiliate in South Africa and BDO’s Canadian affiliate – were registered with the PCAOB but improperly relied upon the work of the two unregistered foreign component auditors to complete their audits of the company. This violated PCAOB standards requiring sufficient analysis and inquiry when using the work of another auditor.

You follow? KPMG South Africa relied on the work of KPMG Zimbabwe (an unregistered firm) and BDO Canada relied on the work of Deloitte Zimbabwe (an unregistered firm). They should not have done that. In each case, the work of the Zimbabwe firm constituted more than 20 percent of the assets or revenues. In fact, the orders give examples of years audited where the work of the Zimbabwe firms accounted for 100 percent of the issuer’s revenues. That’s significant!

I confess that I am ignorant of how big audit firms keep all these international audit relationships above board, but couldn’t the KPMG South Africa guy just call the KPMG Zimbabwe guy and say, “Hey, are you registered with the PCAOB?” And if the response turns out to be, “Nope, sorry, I don’t even know what you’re talking about,” the KPMG South Africa guy knows that he has to go back to the drawing board. Nothing even remotely close to this appears to have happened in either case. Great job, everyone.

Is the fact that this didn’t happen a result of poor communication? Laziness? Corruption? All three? None of the firms admitted or denied the findings, so we’re left to our imaginations. See you for the next one.

[SEC, BDO Canada, Deloitte Zimbabwe, KPMG Zimbabwe, KPMG South Africa]

The post Foreign Affiliates of Big Audit Firms Screwed Up Some Stuff appeared first on Going Concern.

Sexual harassment is a bigger problem than accountants think [AT]
In an online survey of over 3,000 professionals across multiple industries, 34 percent of women in accounting said they have been subject to some kind of sexual harassment, and 39 percent of female respondents are aware of someone who has. Men were far less likely to be harassed but were as likely to be aware of someone who has been a victim. Despite these numbers, 73 percent of men and 69 percent of women believe there is a low prevalence of sexual harassment in accounting.

At GE, KPMG Keeps its 109-Year Streak Alive [WSJ]
Michael Rapoport reports “GE reaffirmed in its proxy statement Monday that it intends to keep KPMG as its auditor for another year despite all the other issues it has on its plate.”

Elsewhere in imagination at work: GE’s Top Executives Miss Out on Cash Bonuses for the First Time

Georgia Accountant Who Stole From Houston Firm Gets 9 Years [AP]
File to Accountants Behaving Badly: Give an inch, take a mile. Daniel Nathan West resigned from Airis International Holdings as treasurer and CFO to start his own firm that kept his former employer’s books. After her left Airis, however, he still had signing authority on the accounts, allowing him to steal $3.6 million.

Previously, on Going Concern…

Jason Bramwell writes about nonprofit controllers and all the hats they wear.

I asked people to curb their enthusiasm for CPAs running for office simply because they know tax stuff.

In Open Items: Transition from Big 4 to owning own firm

From the archives: Someone Made a Life in Audit Remix of Lorde’s “Royals”

In other news:

• Trump Blocks Broadcom’s Bid for Qualcomm
• How China’s Huawei Killed $117 Billion Broadcom Deal
• Data breach victims can sue Yahoo in the United States
• Senate banking bill rewards Equifax despite privacy breaches
• ‘Pharma Bro’ lawyer says he sometimes wants to punch his client in the face

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Tax Reform Glitches; KPMG and GE; Sexual Harassment | 03.13.18 appeared first on Going Concern.

Should CPAs run for office? According to this gushy post at the AICPA, the answer is a resounding: YAAAAS.

When you’re a CPA, you have a solid understanding of the many issues that power government: taxes, their assessment and collection and the rules that govern them; small business challenges and needs; financial literacy and responsibility; and myriad details of budgeting, responsible record keeping and the impacts of financial decisions.

CPAs’ expertise gives them a distinct advantage over other candidates, making them uniquely qualified to serve as thought leaders in government. As the country ponders the effects of the first major tax overhaul in more than 30 years, now more than ever, there’s a need for tax and fiscal expertise in our public servants. Who better to serve the community and protect the public interest than CPAs?

Oh, brother. Yes, CPAs understand taxes and spreadsheets and stuff, so that’s nice, but that does not equal MR. SMITH, CPA GOES TO WASHINGTON.

In case you haven’t noticed, the vast majority of the 535 people who make up the U.S. Congress don’t seem to care one iota about tax or fiscal expertise. They passed a sweeping, fiscally destructive tax law at breakneck speed, making parts of the system vastly more complicated that even the most knowledgeable CPAs are struggling to understand. Does any sane person think that a couple more CPAs in the House of Representatives preaching financial prudence will turn this whole thing around?

Not to mention the fact that “I’m a CPA and I’ll bring fiscal responsibility back to Washington” is a lousy platform to run on. The average American voter, while laughably gullible, is not falling for that shit anymore. If you’re a CPA and you want to run for national office, by all means, make this the theme of your campaign if you would like to lose.

Qualifications at the national level boil down to this:

1. Republican candidates should support Donald Trump.

2. Democratic candidates should oppose Donald Trump.

Now, if you are a CPA and you do fall into buckets 1 or 2, can vote how you’re told, and don’t mind grossly neglecting your family, you may have a future in national politics. Those are the essentials. Sure, your acute tax knowledge might fit nicely into arguments for either camp, but the parties already have the talking points figured out. Anything wonky will be overkill and a snoozefest.

CPAs who are serious about running for office should only consider it at the state or local level. This is where your fancy tax brains may actually come in handy and the dog and pony show is milder. Or, hey, here’s an idea — if you really want to perform a public service, go work for your local city, county, or state government. You won’t need to ask a single person to vote for you and your life won’t be ruined. If that doesn’t adequately satisfy your ego, however, then you’ll want to revisit points 1 and 2 above.

I’m glad we had this talk.

[AICPA]

Image: iStock/shironosov

The post Let’s Cool It With All the ‘CPAs Should Run for Office Because Taxes’ Talk appeared first on Going Concern.

Are You Underpaid? In a First, U.S. Firms Reveal How Much They Pay Workers [WSJ]
As companies begin to release their CEO-to-median-employee ratios, one consultant on the rule said that employees “are going to go through something akin to the stages of grief,” when seeing the eye-popping results. Marathon Petroleum, for example, paid its CEO 935 times as much as its median worker.

Paul Ryan Tax Cut Showcase Upstaged by Trump Tariff Announcement [Bloomberg]
It sucks when the boss undermines you with his stupid ideas. But since Paul Ryan is the victim here, our sympathy wanes.

IRS has more than $1B in refunds waiting for 2014 non-filers [AT]
If you have clients who didn’t file a 2014 return, they have until April 17 to speak now or forever hold their peace about the refund.

Previously on Going Concern…

Grant Hutchinson collected some reactions to IBM reversing course on remote workers from companies that are all in.

From the archives: Tweeting a Lot About Audit Stuff Can Get You a Job at Deloitte

In other news:

• Dropbox Sets IPO Target Valuation at $7 Billion to $8 Billion
• How Much Is Martin Shkreli’s One-of-a-Kind Wu-Tang Album Worth?
• HBO created a ‘Westworld’ experience at SXSW
• Warren Buffett’s makes his March Madness offer again.
• California Lawmaker Nicknamed ‘Huggy Bear‘ Told to Stop Hugging People

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Lots of Bad Audits and CEO-Employee Pay Gaps | 03.12.18 appeared first on Going Concern.

Tesla’s top accountant and controller leaves [MW]
Eric Branderiz is resigning for “personal reasons,” according to a securities filing. The company did not “specify an interim controller nor outlined a search for his replacement.” Elon Musk fanboys, act accordingly.

Georgia Fuel Tax Break Controversy Highlights Concerns over Political Aspects of Taxation [BNA]
The dustup between the Georgia GOP and Delta Airlines over the NRA highlighted the issues of 1) how punishing a taxpayer for political differences is basically blackmail; 2) most tax breaks for corporations really shouldn’t exist to begin with.

KPMG’s Gupta Auditors Could Be Stripped Of Licences Soon [HuffPo]
The South African Institute of Chartered Accountants is looking into the conduct of eight former KPMG employees who were involved in the work for the Gupta family.

Brought to you by Accountingfly

The featured job of the week is a Senior Tax Accountant with DePretis CPAs in Pleasanton, Calif. They’re looking for someone with 3+ years of recent tax experience in a CPA firm.

Previously, on Going Concern…

I reported on how some KPMG employees seeking some help with audit software might end up with phone sex instead.

From the archives: A New Species of Frog Has Been Named After Deloitte. See also: Should You Be a Freelance CPA?

In other news:

• U.S. Added 313,000 Jobs in February. Here’s What That Means.
• Twitter wants everyone to get a blue verification badge
• Why don’t we all just spring forward and stay there, like Florida?
• Tesla Driver Gets Auto-Pilot Ticket Dismissed After ‘Driving’ With Feet Out Window
• Birds Are Good

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

Image: RHL Images/Wikimedia Commons

The post Accounting News Roundup: Big 4 See, Big 4 Do; Tesla’s Top Accountant Leaves; Politics and Tax Breaks | 03.09.18 appeared first on Going Concern.

Today, we have an amusing scoop about one of KPMG’s most important hotlines and what happens when that number is perilously similar to one for a phone sex line.

A reader sent in the following screenshot with the message: “Just thought you should try dialing the KPMG support number for eAudit.”

And try it we did! The greeting went like this:

Hi! You’ve reached the home of Vivid’s hottest and horniest porn stars.

“Wait a minute,” you might be saying, “that’s not the KPMG National Support Center!” And to you we would say, “No! No, it’s not!”

Unfortunately, this isn’t much of a mystery. A source within KPMG confirmed that the actual National Support Center number is 1-800-KPMG-HEL (without the P). If you dial the number correctly, you should never end up listening to the seductive introduction tempting you to converse with Vivid’s hottest and horniest porn stars for $1.99 to $4.99 per minute.

However, if you used the number above or somehow misdialed it as 1-800-KPMG-HEP, you will most definitely end up hearing those throaty overtures, and be on an unexpectedly erotic detour on your way to fixing your eAudit problem. For anyone curious enough to try, we advise putting it on speaker phone for the maximum effect.

Going Concern’s email to a KPMG spokesman was not returned.

Image: iStock/bsd555

The post KPMG Employees Seeking Help with Audit Software Might End Up With Phone Sex Instead appeared first on Going Concern.

CFO Optimism Climbs to 22-Year High [CFO]
Yes, believe or not, corporate finance chiefs are pret-tay, pret-tay, pret-tay excited about tax cuts. More are worrying about the U.S. reaching full employment, however. So while confidence is at a 22-year high, anxiety about “hiring and retaining qualified employees” is too.

EY becomes first big UK accounting firm to publish partners’ pay gap data [FT]
The Black and Yellow reports a “19.5 per cent median and a 38.1 per cent mean gap between its male and female staff in the UK, including all partners.” The Big 4 had previously only reported pay gaps that excluded partners until some other businesses and MPs complained.

Elsewhere: Deloitte Pays U.K. Women 43% Less Than Men (including partners)

Teladoc is having accounting problems [Axios]
The telemedicine company revealed a material weakness in its stock compensation accounting but promised its team would “undergo ‘renewed training’ on how to book stock awards.”

Geniac, the office as a service, is shutting down after Grant Thornton pulls support [TechCrunch]
The London-based startup was supposed to be “a one-stop-shop for SMEs that integrated payroll, accounting, legal and HR services into a single platform.” Grant Thornton U.K. invested £22 million in 2015, but confirmed that it would discontinue the service on April 5th.

Previously, on Going Concern…

Jason Bramwell interviewed nonprofit controllers, discussing their career paths to organizations that give back to their communities.

I noted that some people predictably freaked about a NASBA tweet regarding the timing of the release of CPA exam scores. Good news: The scores came out pretty much on schedule.

In Open Items, What comes after public accounting?

From the archives: How Can a Prospective Intern Relate to a Partner During an Interview? See also: There’s No Way Someone at Deloitte Leaked Those Carolina Panthers Financial Statements

In other news:

• Cigna Agrees to Buy Express Scripts
• The SEC just made it clearer that securities laws apply to most cryptocurrencies and exchanges trading them
• GM CEO Pushes for Renewed Tax Breaks on Electric Vehicles
• You’re not imagining it. The McDonald’s logo is upside down
• Man’s Drunken $1,600 Uber Ride Will Be Covered by a Company That’s Just Happy He Wasn’t Driving

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See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: An Expensive Tax Law; CFO Optimism; EY, Deloitte U.K. Report Pay Gaps | 03.08.18 appeared first on Going Concern.

We’ve had many ?s about the time of the score release. Since this is the first time releasing scores with the new Gateway system, we cannot pinpoint an exact time of the release. We will provide updates as we know more information. Stay tuned! Thank you for your patience .

— NASBA (@NASBA) March 7, 2018

Oh, man. The subtext of “Thank you for the your patience” screams, “HAVE MERCY ON US, YOU BLOODTHIRSTY PSYCHOS, PLEASE.”

But that silent plea for compassion fell flat for Anxious CPA Exam Taker Twitter:

Will the release still be this evening? Or sometime in the next few days?

— Maddy (@kruntzie) March 7, 2018

@NASBA
Hoping for the planned date does not sound very promising…

— Kindsey (@Lindzzk) March 7, 2018

Y does it have to be a secret? Most test takers have jobs & are anxious enough about receiving scores as it is. Gateway is a disappointment.

— Dustin Scott (@dc_scott) March 7, 2018

hoping?! after you already changed the date on us once brooooo come on this is so unfair

— bp (@b_Piks) March 7, 2018

That doesn’t clear it up. March 8th tonight? Or March 8th tomorrow?

— Stefan Linge (@stefanlinge) March 7, 2018

Is this some sort of sick joke?

— Bryce Arnett (@BryceArnett4) March 7, 2018

You guys really need to start thinking of customer service for the candidates! At this point with technology, this shouldn’t be hard!! You make this process unbearable for candidates!

— JP (@JPTweetsNYC2017) March 7, 2018

Y’all rolling out the new gateway pic.twitter.com/lW4DLQlB4N

— Miki (@MikeSlush) March 7, 2018

This whole situation is worth it just for that image.

Incredibly, we did stumble upon one compassionate user:

Thank you for your hard work and updates. I’m sure you are just as frustrated as we are since you are having to deal with the angry mobs and barrage of messages.

— Angela Hughes (@Ghostmaid) March 7, 2018

That’s about as good as it gets, NASBA. If you don’t get the scores out on time, can’t you just blame it on the snowstorm? I suggest you get creative.

See also: NASBA MAKES PEOPLE MAD

The post NASBA ‘Cannot Pinpoint an Exact Time’ of the CPA Exam Score Release and People Are Freaking Out appeared first on Going Concern.

Planned Sale of the Weinstein Company Collapses Again [NYT]
An investor group nixed the sale after it received “disappointing information,” and you might thinking, “WHOA, NOW WHAT?” But actually, it’s a far more boring Hollywood twist:

[O]nce the buyers began looking deeper into the Weinstein Company’s finances, they discovered that it had more debt than they had been led to believe, according to two people briefed on the matter, who spoke on the condition of anonymity to discuss confidential information. Additional liabilities totaling between $55 million and $65 million were discovered, including $27 million in unpaid residuals and profit participation; and $20 million in accounts payable.

Ah yes, the hidden liabilities. They’re “the butler did it” of business mysteries.

Corporate tax departments not so diverse [AT]
A Bloomberg Tax survey of 400 accounting and tax professionals found that tax departments are not so woke: “76 percent majority of corporate accounting department respondents consider diversity and inclusion as important to their departments, but only 46 percent of tax department respondents felt that way.” C

laims Court Tosses PwC VA Deal After Ernst & Young Protest [Law360 (sub req’d)]
The Department of Veterans’ Affairs didn’t consider “inherent conflicts of interest” in PwC’s proposal bid for a $110 million contract.

Previously, on Going Concern…

From the archives: No, We Can’t Help You Pass the Ethics Exam

In other news:

• Coca-Cola Plans Its First Alcoholic Drink
• Oldest message in a bottle found on Western Australia beach
• Over 500 Canadian doctors protest raises, say they’re being paid too much (yes, too much)
• The Little Lebowskis: 10 Righteous Heirs to a Coen Brothers’ Classic
• “I mean, I quoted the queen Pam Beesly Halpert in my wedding vows. I am truly a freak.”

Get the Accounting News Roundup in your inbox every weekday by signing up here.

See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Big 4 ‘Global’ Structures and ‘Disappointing’ Liabilities | 03.07.18 appeared first on Going Concern.

Where Corporate Taxes Are Poised to Rise Because of Tax Overhaul: States [WSJ]
Richard Rubin reports on an Ernst & Young study that estimates state corporate-tax bases will increase 12 percent over the next decade as a result of the new federal tax law. What a corporation’s taxable income will be in each state is another matter entirely, however. “We’ve got 50 states with 50 different ways of doing things,” an EY SALT guy said.

Drury steps down as Xero CEO [AT]
Steve Vamos, a former CEO of Microsoft Australia, will succeed Xero founder Rod Drury as CEO of the cloud accounting software company.

Kobe Steel admits data fraud went on nearly five decades, CEO to quit [Reuters]
Last year, the company revealed that it supplied products with phony specifications to over 600 customers worldwide. Apparently, this all started in the early 1970s and although the U.S. Justice Department is investigating, the company’s finances are “unscathed.”

Previously, on Going Concern…

Megan Lewczyk wrote a field guide to quitting public accounting.

Our partner, Gleim CPA Review, goes over the excel-lent changes to the CPA exam.

In Open Items: Process to become a CPA.

From the archives: Busy Season Problems: Approaching the Team Member Whose Hygiene Does Not Meet Expectations. See also: Give It Up Tax Protesters, You’re Just Screwing Yourselves

In other news:

• Washington Governor Signs First State Net Neutrality Bill
• United Airlines scraps bonus lottery plan after employee revolt
• Stephen Hawking on What Existed Before the Big Bang
• Paul Allen found the USS Lexington.
• Too many Legos.

Get the Accounting News Roundup in your inbox every weekday by signing up here.

See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

Image: Arto Alanenpää/Wikimedia Commons

The post Accounting News Roundup: Internet Taxes and 50-year Frauds | 03.06.18 appeared first on Going Concern.

Once Beatty and Dunaway took the stage and began their presentation, one of the PwC accountants who replaced last year’s wrong-envelope accountants watched the monitor closely as “Shape of Water” was announced, shaking her head in the affirmative.

“Awesome, awesome show,” the stage manager said, embracing her as she let out a huge sigh of relief.

Elsewhere: The Academy Awards Scandal That First Got PwC Its Job Counting Oscars Votes

Taking on the Big 4 accounting giants, Paro receives $5m for its labor marketplace for financial professionals [TechCrunch]
Chicago-based Paro runs a platform that “allows companies to hire vetted financial professionals.” CEO and co-founder Michael Burdick, a Deloitte alum, described “the ridiculous economics of accounting firms”:

“I was pouring my blood, sweat, and tears into my client engagements,” he explained, but discovered through an engagement budget that “I was getting billed out at $250 plus per hour and my take home was around $30 per hour.” That difference astonished him. “It’s both impressive and infuriating as to the margins that accounting / consulting firms make on their front line staff,” he said.

Equifax breach could be most costly in corporate history [Reuters]
Total costs could be “well over $600 million” according to one expert, and somehow that doesn’t seem like all that much.

Previously, on Going Concern…

Jason Bramwell interviewed two of FloQast’s co-founders, Mike Whitmire and Chris Sluty, who started their careers in public accounting (EY and Rothstein Kass).

Grant Hutchinson had advice for remote accountants who may be feeling isolated.

In Open Items, “My accounting career has been a total disaster and I don’t know what to do.”

In other news:

• Dorm Living for Professionals Comes to San Francisco
• U.S. Orders Qualcomm to Delay Meeting for Review of Broadcom Offer
• United is cutting bonuses and asking employees to enter a lottery for $100,000
• Lots of penguins.

Get the Accounting News Roundup in your inbox every weekday by signing up here.

See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: Drama-free Oscars for PwC and An Accountants-for-Hire Startup | 03.05.18 appeared first on Going Concern.

The JUST Capital Rankings on Corporate Tax Reform [Just Capital via NYT]
Nonprofit research firm Just Capital is collecting data on how corporations’ tax savings are being spent. Boeing, FedEx, JPMorgan, and Apple say they are giving 100 percent to some combination of workers, customers, products, communities, and jobs. Bank of America, Lowe’s, Home Depot, UPS, and Wynn Resorts, meanwhile, are giving at least 98 to 100 percent back to shareholders.

Why Mad Shareholders May No Longer Get a Day in Court [Bloomberg]
A rundown on the SEC’s rumored “warming up to the idea of forced arbitration.”

1 thing every employee should do in 2018 because of the new tax law [CNBC]
I know you’re busy, but consider filling out a new W-4 when you get a chance.

Accountant enters guilty plea for wire fraud, tax evasion [KRISTV]
File to Accountants Behaving Badly: Control yourself, man! Brian Perez, a CPA in San Antonio pleaded guilty to wire fraud and tax evasion. Perez had “defrauded his employer of $162,775 between March 2015 and August 2015.” $27k a month seems like a hasty pace of embezzlement, but maybe that’s just me.

Brought to you by Accountingfly

The featured job of the week is a Remote International Tax Manager with HPC. The virtual firm is looking for an experienced tax advisor to introduce arriving companies to U.S. tax and guide these companies as part of their Global Small and Medium Business group.

Previously, on Going Concern…

I revisited #envelopegate.

From the archives: Seasonal Tax Preparers Would Be Wise to Dismiss Drug Trafficking As an Option in the Off-season

In other news:

• New Tariffs Add Heat to Steel, Aluminum Markets
• Senior Executives Get More Sleep Than Everyone Else
• Former Tesco executives to face re-trial over accounting scandal
• Is Bitcoin a Waste of Electricity, or Something Worse?
• Ultra-minimalist cellphone.

Get the Accounting News Roundup in your inbox every weekday by signing up here.

See something we missed? Have a tip, correction, comment, or complaint? Email us at editor@goingconcern.com.

The post Accounting News Roundup: CFO Backups (or Lack Thereof); Tax Cut Spoils; Check Your W-4 | 03.02.18 appeared first on Going Concern.