BNY Mellon to take $850 million profit charge in U.S. tax court defeat [Reuters]
BNY Mellon Corp (BK.N) said on Monday it will take an $850 million hit against first-quarter profit, a move that also will erode some of its capital after losing a high-stakes tax case to the U.S. Internal Revenue Service. The world's largest custody bank announced the hit against capital and earnings just hours after the U.S. Tax Court rejected BNY Mellon's bid to keep $900 million in tax benefits. The after-tax charge against profit is about $850 million, the bank said. The bank claimed a benefit that stemmed from a $1.5 billion loan from Barclays Plc (BARC.L), funding so cheap, in fact, that at one point Barclays actually paid BNY Mellon to take Barclays' money, according to court papers. The IRS challenged the benefit and won after the court ruled that the transactions lacked "economic substance," meaning they were done solely for tax purposes.
On Jan. 28, 2013, U.S. Tax Court Judge Kathleen Kerrigan decided Soni v. Commissioner. This case can be viewed as another in a surprisingly short line of taxpayer defeats involving listed transactions. See, for example, the 2010 case, McGehee Family Clinic, P.A., et al. v. Commissioner, involving a welfare benefit plan. However, in the Soni case, the fact that the IRS could have charged the taxpayers with harsher penalties may be helpful in other matters involving listed transactions. It may also forecast the IRS’s approach to the non-willful penalties in the Offshore Voluntary Disclosure Initiative; and help reassure the public that the IRS uses penalties to promote compliance, not raise revenue. Metrolink executive quits after report cites accounting problems [LAT] Metrolink officials said Monday that Nancy Weiford, the regional commuter line's chief financial officer, stepped down after a special committee assigned to look into the railroad's business practices revealed its findings at Friday's board meeting. They declined to comment further on Weiford's departure, saying that personnel matters are confidential. In a statement, railroad officials said: "Metrolink takes very seriously the recent findings of Metrolink's Ad Hoc Finance Committee regarding the agency's financial management. As one of the nation's largest commuter rail systems, Metrolink has been, and continues to be, committed to sound financial practices."
KPMG picks Sprong to succeed Fowler in Kansas City office [KCBJ]
Brad Sprong will be the new office managing partner for KPMG LLP in Kansas City, succeeding David Fowler on March 31, according to a letter sent to employees Thursday. Sprong has been a partner in KPMG’s Chicago office for the past two years but spent a majority of his career at KPMG in the Kansas City office. He is the National Diversified Industrial Tax leader and co-leader of the Tax Outsourcing Center of Excellence. He also plays a significant role on KPMG’s Tax Transformation and Outsourcing leadership team. Standard & Poor's in the Gunsights: High Noon at the Triple-A Corral [Re:Balance]
The parallels between rating agencies and the Big 4 aren't exactly subtle. NYC Valentine's Day sewage tour back by 'demand' [AP] Lovers of the unusual are getting another chance to impress their Valentines this year in New York City. The Department of Environmental Protection is again offering Valentine's Day tours of the Newtown Creek sewage treatment plant in Brooklyn's Greenpoint section. The DEP says it's offering three tours this year due to "overwhelming demand." The 9:30 a.m. and 1 p.m. tours were quickly filled. So another was added at 11 a.m. Thursday. Highlights include the plant's giant egg-shaped digesters, which break down noxious waste into harmless sludge and gas.
You'd Be Surprised at What's Tax Deductible [WSJ]
What's a more valuable tax deduction, a deadbeat boyfriend or a vicious guard dog? It depends on how big a deadbeat the boyfriend is.
UNL accounting student arrested on suspicion of 29 counts of theft [DN]
Rummaging through rec center lockers is so much easier than manipulating repurchase accounting.
Police: Body armored man stalked Emmaus woman with knives, gun, brass knuckles [TMC]
And a really creepy V-day card.
CPA convicted for role in $40 million Ponzi scheme [WCNC]
With accounting system ‘on the ropes,’ Arizona moving forward with upgrade [Cronkite News]
Fort Collins accountant allegedly stole more than $300,000 from local companies [Denver Post]
Investing in Water Good Long-Term Bet, Goldman Head Says [Bloomberg]
Watchdog’s report raises concerns about SEC’s revolving door [Washington Post]
Tips on disputing errors on your credit report [AP]
The Age of the Permanent Intern [Washingtonian]
From the tip box:
Fuck busy season. I haven't had a wax in like 9 weeks. Not that it matters since I don't get home before my husband is asleep. My roots look like shit and I haven't bothered with makeup for weeks. I look like Gary Busey.
Well... it could be worse?
This guy on Reddit is a tad upset (not to mention a bit preoccupied with fellatio as it pertains to earning brownie points in public accounting):
I hate the corporate accounting world, and small private firms suck too. I don't want to get too into depth. Just a long rant and hoping someone can offer advice. Please tell me I'm not the only one that sees this BS going on in the workplace.
I used to be in the Marines, and it wasn't anything like the movies. The bad asses that do tons of crazy heroic shit and are great fighters and leaders are overlooked, its the ones that do the ass kissing that advance. It was fucking stupid, I was happy when my time was up and I'm never going back to that. People that will risk others lives in order to get a promotion is fucking stupid. If war was fought at the ground level with no bullshit, things will go alot smoother with alot less going wrong, but thats another story. The red tape is lethal, and I mean that literally when you're in this line of work. When a superior gives a crazy retarded order and there is a much better way of doing it and still insists on doing the highly dangerous mission. He should be on the ground with his troops, actively engaged in it, unless of course he is a highly proven and respected general. This is why alot of Marines respect the officers that they serve with alot more than the higher command and theres alot of rabble about how dumb and disconnected the higher ups are.
I thought this bullshit was over once I left, boy was I wrong.
I got my degree and my CPA and went to work for small firms during college, then McGladrey then PwC.
The culture at all of them suck, the kiss assing is back and even worse then before.
People suck up to the bosses and backstab each other all the time. And its done at ALL levels, it was done at the small firms too, you just have to be really tactful about it.
McGladrey and PwC were a giant dick sucking contest everyday. Its so fucking petty that I can't imagine being in this environment any longer. Girls will stop and get cookies for everyone after lunch, then the bosses will joke about how they liked certain cookies better and thats how they're handing out promotions. Good looking women will get more attention and praise then other women who do just as good of a job if not better.
Guys will constantly sit there and nod like robots smiling at the bosses, even when its a completely stupid idea or new process of doing things. When you correct them in a completely tactful way in a private setting, they tell you its wrong, and then when their plan fails they use the way you did it without acknowledging you and giving you credit.
People taking credit for others work, bosses having favorites and put shit onto the people they don't like. The dumbfucks that constantly ask me about the "army" and how the transition is to accounting. I tell them the story a million times that the marine corps is completely different from the army in our purpose and how the transition to accounting isn't that bad. I didn't bust my ass and put in 200x the work of a soldier to earn the title of Marine to be associated with the army. No one outside of the military understands there is a huge difference between a soldier in the Army and a Marine. Its a completely legitimate question but I tell the story 10x a week.
Promotions are given to completely incompetent people at times instead of the folks who deserve them. THEY GOSSIP, OH MY GOD DO THEY GOSSIP. All people do is talk shit. Not so much about me, I'm just known as the military dude with the hot wife that he doesn't deserve or some shit.
Every fucking day its a contest to see who goes home last. Why the hell would you want to keep sitting in this office is beyond me. I'm a combat veteran, I know everything there is to know about long hours with no sleep. However, sitting here doing stupid fucking audit shit that was shoveled on to me while listening to people gossip about who is leaving early and enjoying life is actually 100x worse then having to anxiously await the order to move into battle.
At least in the marines everyone knew what we were doing sucked and weren't afraid to complain to one another. Everyone constantly has a stick up their ass in accounting, scared of saying something negative about the firm.
I express disdain about a 80 hour work week and everyone else just smiles and says its not so bad.
Yes it is bad motherfucker, half of it is fucking downtime, if you just worked instead of gossiping and sucking dick for promotions we would be done in half the time.
One of the big partners at PwC is a complete dickhead and grills the shit out of people when he comes in. Everyone in the office hates him and he has yelled at and berated me on several occasions. But I really like the guy in all honesty. He's like Batman, girls flirting with him doesn't work, guys sucking up doesn't work, he grades you solely on performance and not anything else.
THATS HOW IT SHOULD BE. If everyone ran their firms like this guy, things would be alot less annoying. Maybe more terrifying for the idiots who like to kiss ass and substitute sucking up for actual work, but getting yelled at and berated actually works to motivate people to work harder.
Yes the guy is a douchebag, but he is very very very fair and highly efficient. He will yell at and berate the nerdy people just as badly as he will yell at and berate a hot girl with DDs.
The high ranking officers that did what was efficient and didn't give a shit were also the most respected. The ones that sucked dick into their positions were pretty much despised. This rings true in corporate too, at least for me.
I'm sorry about the rant, no one probably cares, but its good to type it out. Now back to the grind, I gotta find a way out of this shit.
TL;DR: "McGladrey and PwC were a giant dick sucking contest everyday."
If there is one rule all financial advisers should follow, it's to keep your damn mouth shut. Tell that to Prince Rupert Loewenstein - the man credited with helping the Rolling Stones go from broke losers to multimillionaires in the 40 some years he advised the band - who has just published a book about his "interesting" history as the Stones' trusted financial adviser.
“Call me old fashioned, but I don’t think your ex-bank manager should be discussing your financial dealings and personal information in public,” Mick Jagger told the Mail on Sunday. “It just goes to show that well brought-up people don’t always display good manners.”
Like any good adviser, Prince Rupert considered himself a "bank manager, psychiatrist and nanny" and claims he never really liked the Rolling Stones' music that much.
Here's a "fascinating" tidbit from A Prince Among Stones:
Towards the end of 1968, I received a telephone call from the art dealer Christopher Gibbs. ‘Could you look after the financial side of these friends of mine, Mick Jagger and The Rolling Stones?’
I said, politely: ‘Let me call you back tomorrow morning,’ not having heard of The Rolling Stones in any connection with anything that I might want to do.
I asked my wife Josephine to tell me about them. She reminded me of the famous Times editorial that had been written the year before by William Rees-Mogg following Mick and Keith’s conviction for drugs possession, the leader article headlined ‘Who Breaks A Butterfly On A Wheel?’. I did remember the piece. I, of course, had been on the side of the wheel.
On the surface the Stones and I might have been seen as unlikely associates. My father was Prince Leopold zu Loewenstein-Wertheim-Freudenberg, from a family that can trace itself back to Luitpold Markgrave of Carinthia and later Duke of Bavaria (who died repelling the Huns in 907).
My family is a branch of the Bavarian royal house. My mother, Countess Bianca Treuberg, was also Bavarian, although she had once owned one-sixth of the Brazilian crown jewels, because one of her great-grandmothers was a daughter of Emperor Dom Pedro I of Brazil.
At that time, I was the managing director of the merchant bank Leopold Joseph. Christopher knew Mick Jagger, and Mick had asked him to find somebody to advise The Rolling Stones on their financial situation, which was not good.
It had become clear to Mick that something was wrong. He knew the group was doing well and had a good contract with Decca. Their singles and albums were selling and they were playing to enthusiastic crowds. He couldn’t understand why they weren’t seeing a penny.
Christopher could find no one interested in looking at the finances of what virtually everyone in the City viewed as degenerate, long-haired, and, worst of all, unprofitable layabouts.
Could anyone else get through that self-serving drivel? You'd think a book about a Bavarian royal helping a bunch of high-flying rockstars avoid taxes would be... um... I don't know, a bit more readable? Yawn.
ANR: Accounting Pitfalls for U.S. Business in China; FRC Investigating Autonomy; Leave Tax Enforcement Dollars Alone! | 02.11.13
Accounting risk clouds big U.S. business bets in China [Reuters]
Tales of shady business practices abound in China - fake revenues, phony invoices, sham factories - but until recently, the problem seemed confined mostly to Chinese companies. No longer. Concern is growing about risks to U.S.-based multinationals in a country where American audit regulators are locked out by the Chinese government and bribery and fraud are routine. Questions about transparency and integrity weigh heavily on China, the world's second-largest economy, as it assumes greater economic leadership and responsibility. These doubts test its ability to adhere to international standards.
A revolving door blurs the lines between one of the nation’s most important regulatory agencies and the interests it regulates. Former employees of the Securities and Exchange Commission (SEC) routinely help corporations try to influence SEC rulemaking, counter the agency’s investigations of suspected wrongdoing, soften the blow of SEC enforcement actions, block shareholder proposals, and win exemptions from federal law. POGO’s report examines many manifestations of the revolving door, analyzes how the revolving door can influence the SEC, and explores how to mitigate the most harmful effects. KPMG To Donate 5,000 Books To Children In Need For Each Phil Mickelson And Stacy Lewis Tournament Win In 2013 [KPMG] Seems like a better idea than relying on Phil to stick chip shots in a football stadium. PCAOB’s Franzel Sees Progress on China Audit Inspections [AT] The PCAOB has been signing audit firm inspection agreements with other countries, including France and Finland earlier this month, but China has remained a sticking point, particularly when it comes to inspections of Chinese companies that are trading on U.S. markets by doing a reverse merger with a U.S. shell company. “Unfortunately we have seen a lot of fraudulent activities in those companies, and beginning in 2010 and since then, about 67 of those companies have had their auditors actually resign, and 126 of those issuers have either been delisted from the U.S. exchanges, or they’ve gone dark and are no longer tapping into capital,” said [Jeanette] Franzel. “We don’t know how many more are out there and may need to remove themselves from the U.S. markets. Both we and the SEC are trying to negotiate with the Chinese government right now. We’ve been negotiating for quite some time, so there could be some more out there. It is a serious issue for investors who have invested in these companies if we and the SEC do not have oversight, so we continue to work on that.”
Law and Order: Tax Squad [Tax Notes via TaxProf]
[David Cay] Johnston discusses why it is a bad idea to cut dollars from tax enforcement, and he is skeptical that declining numbers of criminal tax prosecutions are the result of increased voluntary compliance.
Paying Them Back [WSJ]
Thanks to medical and technological advances, people are living longer—but more of them are outliving their savings. That is prompting their children to transfer assets to their parents, say private bankers, trust attorneys and accountants. The strategy is counterintuitive, and can invite huge tax bills and other financial hazards. Yet there are many different options available to adult children, ranging from paying bills and giving money directly to making intrafamily loans. There are even innovative "upward" trusts specially designed to transfer assets to the older generation.
Blue Ribbon Bacon Festival In Iowa Sizzles With Pork-Loving Pride [AP]
The smell of bacon was in the air Saturday as thousands converged on Iowa's capital city for an increasingly popular festival celebrating all things connected with the meat. Some people wore Viking hats and others walked around with makeshift snouts for the Blue Ribbon Bacon Festival. The annual event featured more than 10,000 pounds of bacon served in unusual ways, such as chocolate-dipped bacon and bacon-flavored cupcakes and gelato. "I love bacon more than I love my job," said Katie Nordquist, who was dressed in a tuxedo T-shirt that looked like bacon Saturday for her first time at the festival.
Footnotes: Tax Cheats Not Interested in Personal Responsibility; Connecticut's Mature Video Game Tax Proposal; Frugal to a Fault | 02.08.13
Posner: Tax Cheats Suing UBS for Not Stopping Them From Cheating Like Suing Parents for Not Raising Them to be Honest [TaxProf]
(VIDEO) Move to an S Corp to Save Taxes [Blumer & Associates]
Connecticut State Representative Proposes 10 Percent Tax On Mature Video Games [ATL]
IIA and Robert Half Present 7 Attributes of Highly Effective Internal Auditors [IIA]
Big Storm and Its Disruptions Descend on the Northeast [NYT]
At What Point Does Frugal Just Become Stupid? [LH]Bill Would Require Brevity; Wit Still Optional A California lawmaker is proposing a bill that would require online privacy policies to be short and clearly written. A measure introduced this week would impose a 100-word limit on privacy policies — a bit shorter than this post – and require that they be written in “clear and concise language” at “no greater than an 8th grade reading level.” [WSJ] Ex-Tyco CEO Wins 2nd Chance At Parole [Law360] FASB works quickly to clarify nonpublic disclosure exemption [JofA] Mailman Arrested For Drinking On The Job [HP]
PwC issued a press release today announcing their nearly eight decade run tabulating the ballots for the Academy Awards. From now until the broadcast, we'll be treated with more PwC mentions on Entertainment Tonight than anyone should bear.
Personally, I'm of the opinion that the Golden Globes is a better gig due to all the drunken shenanigans, but I understand why PwC goes on such a PR blitz for this thing. Still, it doesn't make the whole thing any less annoying. I mean, read this fluff:PwC's long-established system involves the precise tallying of every single ballot at a concealed location to maintain the utmost level of accuracy, objectivity and confidentiality. You have no idea how complex counting things in a secret location can be! [Balloting leaders Brad Oltmanns and Rick Rosas] lead a tight-lipped team of accountants who conduct the same ballot-counting method that they have used for decades. Ooooh, is it the counting method? There has never been a single security breach in the 79 years that PwC has worked with the Academy and managed the balloting process. So you're saying we're long overdue? "It's great to be working with PwC - our trusted colleague - again, for the 79th consecutive year," said Ric Robertson , Academy COO. "We look forward to continuing the tradition of PwC leading our balloting process for many years to come."
But how can they be so sure? The human element is a big factor here. Everyone is corruptible to a certain extent and I don't see why Oltmanns, Rosas or anyone else on the "tight-lipped team of accountants" would be any different.
What if Rosas or Oltmanns' pet gets kidnapped and the ransom was the leaking of the winner for best sound editing? Or what if someone promised them the celebrity of their choice for one night just for leaking the best cinematography winner? If you were hellbent on disrupting the natural order of a prestigious award ceremony, I'd think exploiting these team members would be your best bet. And this is Hollywood were talking about; anything is possible.
The only explanation that I can conjure up is some kind of omertà addendum to the team members' code of conduct agreements. I have to imagine that the firm (taking pointers from the Academy) had to taking some kind of blood-oath while holding a burning picture of Edwin Waterhouse in their hands. You'd have to turn over the addresses of all your loved ones as well as submit to naked pictures of yourself staged in the proximity of barnyard animals.
Any betrayal would obviously result in consequences too terrible to contemplate as the firm would be dismissed by the Academy and ultimately result in the firm surrendering its license, Arthur Andersen style.
In other words, fear is the main motivator here. Do you want to be the weakest link that is ultimately responsible for spoiling the news that John Williams will his 49th gold statue? I don't think so.
A public service announcement for our friends in the Northeast:
NEWS: Due to the winter storm bearing down on the Northeast, some testing centers will be closed tomorrow: bit.ly/XTvzZl
— NASBA (@NASBA) February 7, 2013
To see a full list of Prometric test centers that are closed today and tomorrow, head here.
Maybe 40 Chicken McNuggets is a square meal for some. Or maybe there was a bet involved here. We can't really know the full story, but apparently these were put down the other day:
Lunch time shenanigans, courtesy of 1 of my seniors and a staff…turns out eating 40 chicken nuggets isn't too hard... twitter.com/EYstaff/status…
— Life at EY (@EYstaff) February 6, 2013
We've tried to encourage a healthy busy season, but understand the very infrequent indulgence. Of course, if you think this amateur hour and feel compelled to share share your food conquests with us, don't hesitate to send us details with evidence.
Accounting News Roundup: Gender Discrimination Lawsuit Against KPMG Can Proceed; Tax Refund Fraud Addiction; The Mickelson Effect | 02.08.13
Gender discrimination lawsuit against KPMG can move ahead [Reuters]
A proposed gender discrimination class action against accounting firm KPMG brought by five female former employees who claim they were denied pay raises and promotions can move ahead largely intact, a Manhattan federal judge ruled. U.S. District Judge Jesse Furman rejected most of KPMG's motion to dismiss the majority of the women's claims, finding that their "allegations suffice to survive at this stage of the proceedings." In the case the women argue that the accounting firm created a hostile work environment that left female employees lagging behind in pay and promotions, particularly those with children. The lawsuit is seeking $350 million in lost salary and benefits as well as other damages.
Tax Holiday Ends, Consumers Scrimp [WSJ]
Most Americans who draw a paycheck saw their tax bill go up last month when a payroll-tax holiday expired. The question is whether that is prompting consumers to curb spending, just as the economy is struggling to gain traction. Some early signs suggest they are tapping the brakes. Surveys show the majority of Americans who are aware of the tax increase say they plan to cut spending, and consumer confidence has wavered. Companies like Target Corp. and women's clothier Cato Corp. say the tax increase has crimped sales.
Louisiana to contract with Ernst & Young to review Jindal's tax plan [NOLA/T-P]
Louisiana's Department of Revenue will bring on accounting giant Ernst & Young as a consultant as it crafts a plan that would swap the state's income and corporate taxes in favor of a higher sales tax that could be levied on more purchases, department officials said. The firm, which could charge the state up to $180,000 for its services, is intended to provide "guidance, support, analysis and clarity" to the tax initiative, according to a solicitation the department sent to top consulting firms.
Mickelsonian Reality Has Top Earners Weighing Relocation [Bloomberg]
California and New Jersey along with the U.S. government and France have turned to tax increases on high-income residents to plug budget holes. While higher rates haven’t caused a mass exodus historically, the current rates are leading golfer Phil Mickelson to say he’s thinking about making drastic changes and have caused French actor Gerard Depardieu to cross the border. Other top earners have already made moves or are calculating with their advisers whether they should.
Tax refund fraud like 'crack cocaine' for criminals, U.S. attorney says [SS]
The filing of fraudulent tax returns by money-hungry identity thieves is spreading through South Florida "like a virus" and six recent cases involving 14 defendants highlight that grim reality, federal prosecutors say. Announced on Tuesday evening, the cases reflect Florida's dubious distinction as the identity theft capital of the United States, according to federal data, and the Miami-Fort Lauderdale area's status as the worst urban center for identity theft in the country.
Ninth Circuit to Decide Amount of Mortgage Interest Deduction for Gay/Lesbian Couples [TaxProf]
Briefing is underway in the Ninth Circuit (Nos. 12-73257 & 12-73261) on the Tax Court's ruling in Voss v. Commissioner, 138 T.C. No. 8 (2012) that the § 163(h)(3) limitations on the deductibility of mortgage interest are applied on a per-residence basis (and thus limited to $1.1 of mortgage debt ($1 million of acquisition indebtedness plus $100,000 of home equity indebtedness)), rather than on a per-taxpayer basis ($2.2 of mortgage debt), as contended by celebrity psychiatrist Charles Sophy and his domestic partner who owned homes in Beverly Hills and Rancho Mirage, California, as joint tenants.
Amazon, Connecticut reach sales tax deal; Indiana wants to speed up collection [DMWT]
Kay Bell: "This November, Amazon will begin collecting Connecticut's 6.35 percent sales tax on items sold to state residents. As part of the deal, Amazon will invest $50 million over the next two years. Part of that investment is new fulfillment center in Connecticut, which should help Amazon reduce shipping times."
Police: Yates mom kissed son in jail to transfer drugs [RDC]
Kimberly R. Margeson, 54, of Penn Yan was charged with third-degree criminal sale of a controlled substance, a felony, and second-degree promoting prison contraband, a misdemeanor, Yates County sheriff’s deputies. Deputies also charged her son, William J. Partridge, 30, also of Penn Yan, with second-degree promoting prison contraband. While visiting Partridge at the Yates County Jail on Jan. 29, Margeson is accused of passing Oxycodone pills to her son with a kiss, deputies said. She allegedly hid the drugs in her mouth to bring the pills into the jail and passed the pills to him, from mouth to mouth.
Footnotes: Chinese Accounting Scandals Are Old Hat; Kentucky Gov Wants Some Action; Obama's Indifference for Tax Reform | 02.07.13
Chinese Accounting Scandals. Simple Is As Simple Does. These sort of accounting cheats are not by any means peculiar to China. They are cheats that have been employed again and again all around the world. Yes, Virginia, even in the United States. There is nothing new here because when it comes to fraud, there is rarely anything new under the sun. I doubt there is an auditor with even two months of experience at any big accounting firm who has not already been trained to look out for every single one of them. [China Law Blog]Kentucky Governor Steve Beshear tells lawmakers state needs tax reform [AP]
Liberals introduce bill to end tax deferral on foreign income [The Hill]
More Than an Obstacle to Tax Reform Up until now, I’ve given the President the benefit of the doubt about reforming our broken tax system. I just didn't think tax reform was a big issue for his administraiton. That certainly is an obstacle to tax reform. But now I’m beginning to think he doesn’t care about tax policy at all. [Christopher Bergin]
Crime novelist Patricia Cornwell takes the stand in suit against former accounting firm Best-selling crime novelist Patricia Cornwell testified Friday she was never aware her former financial management firm had invested her money in an “aggressive growth” fund against her wishes and that her signature on a financial document had been forged. Cornwell, taking the stand for the first time in her federal lawsuit against the firm and its former principal, said she had told Evan Snapper and his colleagues at Anchin, Block & Anchin that she was earning enough money and wanted to invest conservatively. But she told the jury she later discovered Anchin had invested some of her fortune in riskier ventures. [BG]
DCJ goes after the pharm companies using "legal restructurings" to move profits offshore. [TA]
You Will Spend $22,000 on Gas Over Your Car's Lifespan [MoJo]
Our friends at Vault have released a few more teasers from their 2013 accounting survey and this time, it's what they're calling the Dark Side of Accounting. They went with Pink Floyd art, which is fine. I personally would have chosen Palpatine or DV or even Darth Maul, but whatever. They still do a good job.
The first bit of news from Vault is that all those work-life initiatives appear to be working because the majority of their employees are satisfied with everything:
[E]mployees of the larger accounting firms, on average, appear to be very satisfied with their jobs. In fact, this year, so far (the survey is still open and can be taken here if you’re a public accounting professional), respondents give their firms an average score of 8.11 out of 10 in overall satisfaction [...]. Compare this to last year's Accounting Survey, when respondents gave their firms an average score of 7.93 out of 10, and it seems that satisfaction is improving. Also, this year, 48 percent of respondents give their firms a 9 or 10 in overall satisfaction, meaning just about half of all accounting professionals are pretty darn satisfied. And last year, just under 46 percent of accountants rated their employers a 9 or 10 in satisfaction.
This has to make the firms feel good about their efforts. There's no breakdown by firm at this point, but even for one that has experienced a bit of a work-life setback, this is welcome news.
Of course there are some employees who simply cannot be satisfied. You could spring for the Google-style cafeteria, stock the bathrooms with gold thrones, and offer free massages and people would still incessantly bitch. We all know these people. You may, in fact, be one of those people. And Vault has chosen to highlight some of those people who don't simply dislike the firms they work for, they excel at this disliking.
For example, some people are working so much they are RISKING THEIR LIVES just leaving the job:
My quality of life since starting here has been extremely poor. We eat dinner four to five nights a week at our desk. There’s no time to sleep. In fact, driving to and from work is dangerous because we’re all too tired to be driving. I think this job is terrible.
Also, if you're a victim of vast partner-wing conspiracy, then you can kiss your career and your social life goodbye:
If a partner doesn’t like you and knows other senior partners, life becomes very difficult, and lonely.
Speaking of partners, some of these people don't even bother with names, apparently. They just see you as living, breathing money-making machines:
Most partners have no clue who people are at this firm.
Then there's the bald-faced liars:
This manure factory says that it focuses on treating its people with care, but it’s a huge hoax that fools only the naïve at this firm. It’s a political stunt, much like presidential candidates focus their efforts on the middle class and small-business owners. These men and women could run for office and become serious contenders for the presidency.
And finally the sickies:
I think the firm possesses a ripe population for psychological studies in the human condition, masochism, and the aggregation of mundane disquietudes into horror.
So far all the improvements you've made, public accounting firms, you should be aware that these people are still in your employ. For your next work-life act, may I humbly suggest an in-house shrink?
The Dark Side of Accounting [Vault]
Most large accounting firms have some kind of "News" section included on their internal web sites. Headlines like "Partner Joe Quoted in Today's Wall Street Journal" and "United Way Honors Firm for Being a Strategic Partner for 20 Years" and other shallow announcements are typical. Most partners and employees couldn't care less about these things but those internal communications have to do something with their nonbillable time, don't they?
Anyway, a source at E&Y shared today's headlines with us and there are a couple of items that might actually be of interest to a wider audience (apologies for the small type):
The "Silly Season" blurbs are of marginal note since people in Chicago can actually survive with body temperatures in the mid-30s, all Canadians wear clown noses, and everything is so different in San Francisco that nothing is different. (That's our source's annotation, btw.)
However, asking employees to not upgrade to Blackbery 10 "to access your EY Lotus Notes tools" is perhaps a sign that E&Y should save a couple of those Davos invites and invest in some technological upgrades.
A Tennessee man - who became a born-again Christian a decade ago - has quit his job over the number 666 appearing on his W-2:
Walter Slonopas, 52, resigned as a maintenance worker at Contech Casting LLC in Clarksville after his W-2 tax form was stamped with the number 666.
The Bible calls 666 the “number of the beast,” and it’s often used as a symbol of the devil. Slonopas said that after getting the W-2, he could either go to work or go to hell.
“If you accept that number, you sell your soul to the devil,” he said.
Now, some might argue that you're selling your soul to the devil by participating in capitalism at all and buying into the false promises of the American Dream but we digress.
Apparently, this is not the first time the number 666 has gotten in the way of Slonopas' career ambitions at Contech Casting, which may be some kind of sign he should find a new gig:
During his first day on the job in April 2011, Slonopas was supposed to be assigned the number 668 to use when he clocked in. But the human resources department gave him the wrong number — 666 — instead.
Slonopas, who said he became a born-again Christian about 10 years ago, complained and was given a new number.
In July 2011, the company changed time clock systems, and once again Slonopas got 666. This time he quit. The company apologized and he returned to work a few days later.
A company spokesman could not believe it happened to this guy again. “I am completely at a loss for words,” he said.
(VIDEO) Watching an Accountant's Day-to-Day Activities Is Arguably More Interesting with a Skrillex Soundtrack
Dubstep is disco for the contemporary era. Some day, you'll be like, "Remember dubstep?" And one of your friends who is in the middle of sticking his/her hand into a dirty diaper will stop short, look over at you and respond, "Oh, yeah. Jesus. I'm lucky my brain didn't melt a couple of times." And you'll be all like, "I know." And then the stench of baby shit will re-invade your nostrils to shock you back to reality.
No matter how you feel about the genre, it's hard to argue that your professional lives wouldn't be more interesting to outsiders if they watched your daily activities with a dubstep soundtrack. And careful video editing, obviously.
That's what London firm Berg Kaprow Lewis figured anyway. This is one of their newbies Daniel Li doing some rudimentary things with Skrillex's "Bangarang" helping him shuffle along.
So next time some asks you what your typical day is like, you can offer this as an example and it'll change their whole perspective.
Tax meets dubstep in viral video [AWEBUK]
Accounting News Roundup: KPMG Partner Acquitted in Tax Shelter Case; Chicago's Tax Preparer Crisis; Where's My W-2? | 02.07.13
Google Plans Litigation Against U.S. Tax Authorities [Bloomberg]
Google Inc., which is being probed by several tax agencies around the world, is planning litigation against the U.S. Internal Revenue Service over the company’s 2003 or 2004 tax bill, according to a company filing. The company disclosed the potential lawsuit in its annual 10-K report with the Securities and Exchange Commission filed Jan. 29. A search of federal court records didn’t show that any lawsuit has been filed.
Audit Firm Rotation: Maybe Make A Switch When The Government Takes Over [Forbes]
"When it comes to audit firms for financial services firms, the U.K. and U.S. governments prefer the devil they know."
KPMG partner acquitted in tax shelter trial [BC, Earlier]
After a four-week trial in U.S. District Court in Cincinnati, KPMG’s Daryl Haynor was acquitted by the jury on three of four counts on Monday. Jury members couldn’t agree on one count, which was dismissed on Wednesday by Senior Judge Sandra Beckwith. Beckwith ruled that “no rational trier of fact” could find Haynor guilty based on the facts presented at the trial.
Does an 'A' in Ethics Have Any Value? [WSJ via Tony Catanach]
Four years after the scandals of the financial crisis prompted deans and faculty to re-examine how they teach ethics, some academics say they still haven't gotten it right.
The simplicity of Chinese accounting scandals [Quartz]
Rod Sutton, an insolvency expert and the Asia Pacific chairman of professional services firm FTI Consulting, says he is often baffled by how auditors miss what turn out to be uncomplicated financial irregularities at Chinese companies. ”Often, what we deal with are basic cases of inflating revenues that really do not have an Enron level of complexity.”
Paul Gillis: Three Accounting Frauds Most Chinese Companies Use To Cheat Foreign Investors [China Money Podcast]
Q: So Paul, can you use your imagination and picture what you think happened when Caterpillar's CFO told the CEO about this massive loss in their C-suit? A: I imagine that was a pretty awkward situation. It's very embarrassing for anyone at Caterpillar to be involved in a deal like this. I'm sure there is a search for the guilty parties on the way.
City cracks down on tax preparers [CST via TaxProf]
Mayor Rahm Emanuel was forced soften his plan to protect consumers against financial scams to satisfy businesses concerned about being stripped of their licenses for mere technical violations. But the mayor apparently is not backing down on his crackdown on alleged fraud by those who help Chicagoans file their annual income tax returns. Ninety-three tax preparers were recently investigated by the city. Nearly 97 percent were found to be in violation of city regulations governing their industry.
Panic, obviously. Manhattan accountant faces embezzling charges [TWE]
This time, Kansas: "Larry D. Lord is charged with 10 counts of mail fraud, U.S. Attorney Barry Grissom said in a news release. An indictment filed in federal court alleges he wrote checks to pay his and his wife’s personal credit card debts using bank accounts owned by Cheney Construction Inc., a Manhattan-based construction company. He then mailed the checks, Grissom said. Lord, an accountant, was responsible for paying the company’s bills and issuing paychecks to employees. The indictment alleges the thefts occurred between 2005 and 2012." Condoms 'too big' for Indian men [BBC] A survey of more than 1,000 men in India has concluded that condoms made according to international sizes are too large for a majority of Indian men. The study found that more than half of the men measured had penises that were shorter than international standards for condoms. It has led to a call for condoms of mixed sizes to be made more widely available in India. The two-year study was carried out by the Indian Council of Medical Research. Over 1,200 volunteers from the length and breadth of the country had their penises measured precisely, down to the last millimetre.
Debevoise Ditches Its Trusts and Estates Practice [ATL]
Accounting "trick" may help clinch EU budget deal [Reuters]
Taxes Are (Still) Not Part of the Draw for California’s Richest [NYT]
Sure You've Paid Taxes Before, But Have You Ever Paid Taxes....ON WEED? [Forbes]
Philadelphia says Yuengling beer maker owes $6.6M in back taxes [AP]
Sour charity: Ousted Ground Zero mosque leader stole millions, suit says [NY Post]
SEC Settles Insider Trading Case With Houston Man [Bloomberg]
Meet the Firms event is just around the corner. Will this resume sink or float? [/r/accounting]
Here's an interesting story about a fella by the name of Craig Haber. Craig became a partner at Grant Thornton in 1993. Around 2004, Craig decided to start helping himself to client fees that rightfully belonged to GT. This went on for a while. Approximately $4 million in fees from 2004 to 2012, to be precise.
When the firm discovered this, they were presumably upset, informed the authorities, and relieved Haber of the burden of coming to work. He was charged with his little game in New York today.
How did this alleged scam work? The Reuters report, citing court docs, makes it sound pretty simple:Beginning in 2004, Haber on multiple occasions told clients to mail checks directly to his office, rather than routing them through its Chicago headquarters as normal, the complaint said. Haber then deposited the checks into a bank account with a name similar to his firm's, the charging documents said. He then transferred the money into two personal bank accounts, the complaint said. Reuters, again citing the complaint, also reports that Haber "primarily provid[ed] tax advisory services related to investment partnerships." That's pretty vague, but you figure that some "investment partnership" clients are small enough that their billings could fly below the radar. But why would a partner with over 10 years experience all of a sudden start embezzling money? The complaint alleges that he spent the money on "among other things, the mortgage on his apartment, a gym membership, child support and a brokerage account." That's all pretty boring; there's no indication of a mistress that was trying to start a cupcake shop or anything like that, so it may just be a guy living beyond his means. This is kind of a weird story, but we'd be interested to know more. If you knew or worked with Haber, we'd love to hear from you. Email us and we'll keep you updated. UPDATE: We were informed a short time ago that this matter was discussed on a call with the New York office but nothing of particular interest was discussed except for "don't talk to the press or clients about it." In which case, think of us as your friend. Ex-Grant Thornton partner charged with stealing $4 million [Reuters]