It's time once again for circle of CPA chaos known as Open Items.
Want to show off some accounting-related artistic skills? A tax haiku, perhaps? Are you seeking unfiltered career advice from some seasoned CPAs? Are you an auditor looking to air some grievances about your client? Are you a controller looking to air some grievances about your auditor? This is the place to do it.
Just think before you speak. Enjoy.
Only 61% of CGMAs Surveyed Think the Second Most Important Person in America After the President is Important
You guys probably didn't watch Janet Yellen's confirmation hearing yesterday but I did because Janet has long been one of my least favorite Fed characters, since before she returned to Washington to serve as Fed Vice Chair. Frankly, I'm horrified that she'll be running the show over there but that's not important right now.
The AICPA helpfully surveyed a group of CGMAs in mid October to get their input on this very important matter that will no doubt affect us all, from clients to businesses, kids to cats. Yes, cats. My cats are directly impacted by the decisions of the Federal Reserve since someone has to work and buy all that cat food; the Fed's moves can be the difference between eating well and eating the only slop I can afford. My cats already know this because I believe it is important to teach basic economics, monetary policy and financial literacy young, as early as kittenhood in fact.
I wonder, though, why a large chunk of the CGMAs surveyed don't know what my cats know. Here's the press release from the AICPA:
Janet Yellen’s comments at her confirmation hearing to become Federal Reserve chairman reverberated beyond the Senate Banking Committee on Thursday, and could influence the planning and decision making of nearly two-thirds of the nation’s CFOs and finance chiefs.
Sixty-one percent of senior Chartered Global Management Accountant designation holders surveyed by the American Institute of CPAs said the comments and actions of an individual Fed chairman have at least moderate influence on their business planning. That’s due in large part to the role they see for the Fed chairman on the world stage. The majority, 58 percent, say the person in the position has significant influence on the world economy. Already, some CFOs and other senior finance leaders are rethinking investment strategies, borrowing strategies and hiring strategies, according to the survey.
“As leader of the central bank for the world’s largest economy, the Federal Reserve chairman has considerable sway over the cost of capital, the strength of the dollar and other facets that affect how we do business,” said James R. Blake, CPA, CGMA and CFO of Morey’s Piers in New Jersey. “Finance teams across the country and around the world are monitoring the confirmation process for any hints of shifts in policy direction that could have repercussions for business planning.”
I was totally on board when they acknowledged that an individual Fed chairman only has so much power -- since the Fed largely functions as a committee -- until they said "the majority, 58 percent, say the person in the position has significant influence on the world economy" considering the position of Fed chair is pretty much the most powerful slot in America after the president. Think about it: if the U.S. economy goes bust and the government goes "bankrupt," the chairman of the Fed will still have a job and now need to hire a collection agency to get all the money we owe them.
The survey continues:
The majority, 59 percent, of CGMA designation holders surveyed don’t think change in Fed leadership will hasten the economic recovery. The change does little to alleviate one of the biggest obstacles they face – uncertainty in Washington. Indeed, those finance leaders surveyed said uncertainty in the nation’s capital is the biggest external challenge they face, ahead of shifting customer demands, access to capital and the pace of technological change
This I mostly agree with. Janet is basically just Bernanke with lipstick on in some areas. Putting her in as Fed chair changes nothing as to the impossibility of a true Fed exit strategy, and the Fed has been nothing but consistent in the last few years so any uncertainty in Washington isn't their fault.
All said, I'm highly disappointed by this survey. If CGMAs want to appear to be authorities on global business, then understanding the basics of the Fed is sort of required. That James guy quoted above gets it. A decent majority of CGMAs surveyed seem to get it. But what about the rest?
Accounting News Roundup: A Self-merger for Tax Purposes; Check Stubs Left on Desk Bust Accountant's Scheme; Boeing's Break from Washington State | 11.15.13
Tax Wizardry Accomplished With an Offbeat Merger [DealBook]
This past July LIN Media merged with itself. Uh huh. Here's Vic Fleischer: "From a business standpoint, the deal was nonsensical. LIN’s shareholders exchanged their shares in the old company for shares in a new L.L.C., but the business was otherwise unaffected. The deal cost several million dollars in fees paid to bankers and lawyers and countless hours of time and attention from the company’s executives and advisers." But! It did create half a billion dollars in tax losses. What's the difference between this and old tax shelters of the 80s and 90s? Here's VF again: "[I]t has enough economic substance to possibly survive an audit."
Accountant accused of stealing $1.2 million [NVR]
There's a pretty solid deer-in-headlights mugshot of the alleged perp at the Napa Valley Register. Here are some details: "Leslie Marie Krzan, 34, an accountant for Tulocay & Co. on Devlin Road, allegedly created false invoices between 2006 and October 2013 to divert money into a Citibank account under her control, according to a court filing from the Napa County Sheriff’s Office." After seven years of embezzling money, how did she get busted? Stupidity. "Tulocay & Co. owner Richard Long told the Sheriff’s Office he discovered in July two company check stubs on Krzan’s desk indicating she had used them to pay a Citibank credit card, according to the Sheriff’s Office. The company does not use Citibank, Long told a detective."
Sikh Fired by IRS Over Blade Sees Suit Revived [CNS]
As a revenue agent for the IRS, Kawaljeet Tagore worked at the George "Mickey" Leland Federal Building in downtown Houston and was thus subject to the "dangerous weapons" ban in federal buildings. Despite a letter from the Sikh Coalition explaining that kirpans are less dangerous than scissors or box cutters, the Federal Protective Service denied Tagore an exemption after finding that her 3-inch blade was half an inch over the limit for acceptable pocket knives.
Boeing gets $8.7 billion tax break to stay in Washington State [DMWT]
The largest corporate tax break given by a state, apparently.
Fugitive Comments On Own Most Wanted Photo On Facebook [Deadspin]
Another great mugshot.
Footnotes: Tax Wizardry Goes Straight Up Witchy; What's Up Tile Shop?; Free Money in Oneida! | 11.14.13
If you're a corp looking to CYA after a big gain, just merge with yourself and take a loss. [DealBook]
Penn State is trying to give the accounting program at its Smeal College of Business a bit more oomph [Penn State]
Tile Shop may not be Crazy Eddie but something crazy IS most definitely going on [MW]
On that note, Footnoted is confused too [Twitter]
The city of Oneida has a quarter of million dollars more than expected because their accountant is dumb [Oneida Daily Dispatch]
Dave Camp is still a champion for a cleaner tax code but come on, who is going to let him get anything done? [POLITICO]
The Heritage Foundation has an interesting piece on austerity in America, and how bad that hurts in the long run [Heritage]
A Minnesota couple is charged for failing to remit sales taxes collected to the state [SCTimes]
Meanwhile, in deluded CPA exam candidate land:
OK, let's put this into perspective since perspective is something you clearly need as evidenced by this tweet.
World War II: lasted from 1939 - 1945
Your CPA exam experience: will probably be over in no more than a year and a half
World War II: It is estimated that 48 million to 80 million people -- or 4% of the entire world population -- died over the course of the war and in the lead up to it
Your CPA exam experience: you're still breathing, kiddo
World War II: left parts of Asia and Europe in absolute ruin, which would take years or even decades to rebuild
Your CPA exam experience: that laundry you never got around to putting away because you were studying will be just fine in the basket until you find the time
So yes, we're sure the CPA exam is probably the worst thing that has ever happened to you in your entire life but no, you will not be telling your grandchildren about it in the same way our grandparents tell us about the war. Relax, it cannot possibly be worse than losing your family, your home, your city, your sovereignty and/or your life. It just can't be.
Are you in the UK? Are you looking for a career opportunity with a global company? Are you walking on a sidewalk? Great, have we got the campaign for you!
If you really think about it, who better to recruit than a bunch of aimless shoegazers?
Greetings, capital market servants. How's your Thursday? Good? Great.
It may have come to your attention, on Twitter or elsewhere, that our resident tattooed wench has been elevated to the position of Managing Editor of this here site. And it's true! After years of working 2-hour days and filling in for me during my infrequent escapes and inevitable recaptures, I'm happy to report that Adrienne has joined us full-time and will be your master of ceremonies here on a daily basis. I expect you'll show her all the respect that a someone who has never taken the CPA exam deserves.
Now, what that means is she'll be doing the majority of the posting here, so be good sports and drop her a line with your tips and story suggestions. It also means you'll probably see more cats and pictures of Ben Bernanke and/or Janet Yellen.
If the Ben/Jan/cat pics get out of hand, you can write me with your concerns. You see, I'll still be around to give you the morning reading list and the occasional post but I'll just be spending a little more time terrorizing the readers at AccountingWEB. (I can always use some extra help, so come hang out and rattle the cages over there if you need a break from the tabbies.)
It's been fun keeping you mildly enterained for the past four years, but TPTB have decided that I didn't have enough work to do and made me Editor-in-Chief of Sift Media. The job comes with 10 weeks of vacation, so I couldn't really pass up the chance to waste even more PTO, could I?
Anyway, I'll do my best not to ruin everything.
Thanks for your continued support of Going Concern.
You can sort of tell this is not going to end well as soon as the camera pans out and you spot Bloomberg Senior Economist Joe Brusuelas' white socks. It all goes downhill from there.
In this chaming fireside chat with McGladrey's Joe Adams and McGladrey client Shurtape Technologies CFO Don Pomeroy, Joe reminds us just how Midwestern he is and how dedicated McGladrey is to keeping its finger on the pulse of the economy. Or something. Mostly it's just a lot of awkward fidgeting.
What's odd is that this video -- posted by the McGladreyNews YouTube channel -- is unlisted, meaning I'm a jerk for somehow finding it and then sharing it here because McG clearly doesn't want this shared. Don't believe me? Look:
Maybe because Joe Adams calls it "the Asia" at 8:25?
Anyway, I thought twice about it and obviously decided to share it anyway. Sorry, guys, had to.
ANR: Does Anyone Want an Auditor's *Real* Opinion?; Competitive Poaching for 'Heavyweights' Between Accounting Firms; Chicago's Cigarette Tax | 11.14.13
The “Chilling Effect”: No One Important Wants The Auditor’s Opinion [Re:The Auditors]
This is a great read from Francine McKenna. The new auditor's report proposals are still being kicked around by the PCAOB's Standing Advisory Group and at the heart of that is the "Critical Matters" section of that proposal. FM recently did a podcast and one of the other guests was an attorney from Davis Polk & Wardell who said this: “There does seem to be an expectation on the part of the PCAOB that auditors are going to engage in a robust discussion of the areas they found most difficult that were part of that subjective judgment applied [by management]. As someone who regularly participates in due diligence calls with auditors I can tell you auditors are not the most voluble people.”
PCAOB to Propose Auditor Naming Rule on Dec. 4 [CFOJ]
Hey, it's something. And the audit firms will fight it tooth and nail. It's going to be great!
Winning The Price Is Right [Slate]
News you can use.
Guess who gets burned by Chicago's cigarette tax [Crain's]
The vice president of the 7-Eleven Franchise Owners Association of Chicagoland, apparently.
IFRS Honcho Castigates Countries for Taking “A La Carte” Approach to Accounting Standards [AT]
I love that Accounting Today went with "honcho" in this headline.
I'm sure they'll get a better offer.
Accounting firms by the numbers NO really, accounting by the numbers. Who of the firms are making the money? Check this chart and find out [Commercial Observer]
10 Things Sheryl Sandberg Gets Exactly Right In 'Lean In' This article is old but I'm writing a piece about women in leadership for the Maryland Association of CPAs and our own Amber Setter pointed me to this study and Sheryl's book for my article, so I figured you guys might like this [Forbes]
IRS Issues John Doe Summonses To Citibank, Chase, BoA, Mellon, HSBC---Tax Prosecutions Coming [Forbes]
Janet Yellen is having to defend herself to get past Congress, like they'll block her [NYT]
Oh no, Italy is getting butthurt on Apple about taxes [Reuters]
How much do you really get for the taxes you pay? Apparently CNN figured this out. [CNNMoney]
Former NHL player Bryan Berard and ex-cop help feds nail two Arizona men in massive fraud [NY Daily News]
So textbook rental company Chegg went public today. And here's sort of what happened... Chegg priced their IPO at $12.50 a share, which exceeded expectations.
Chegg said it earned $22.7 million in adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, for the nine months that ended Sept. 30, a metric that excludes certain costs like stock-based compensation. That is up nearly fourfold from results in the period a year earlier.
Using generally accepted accounting principles, the company’s loss narrowed 12 percent, to $50.4 million.
We initially were paying attention to Chegg because as the "Netflix for textbooks" for the last 8 or so years, a lot of you are probably already familiar with what they've got going.
Of course everyone was like "Chegg is going public in Twitter's shadow" blah blah as if just because they both come from the Internet, and they are going public, they must somehow have something to do with one another. NOT.
Here's what Chegg's first day looked like up until this post, and I'm going to turn this image on its side to better capture what a dick today was to CHGG:
Anyone else see it?
Anyway, basically they got hammered and tanked toward the end of the day.
As of this moment, CHGG is "up" at $9.8199 with a little bit left in the trading day today. Go ahead and start screaming "TECH BUBBLE" at any point now.
That's the problem with putting a value on tech -- how many of you benefitted from Chegg's business model? But how does Chegg turn that into profit? Guess we'll see.
An interesting piece from Accounting Today tells us that basically this guy says CPAs have to adapt or die:
Accountants face irrelevance if they don't keep up with the continuing changes in technology, according to Jon Baron, managing director of Thomson Reuters' Professional Tax & Accounting.
In his opening keynote at the company's 33rd Annual Synergy Users Conference in Miami Beach, Fla., Baron encouraged attendees to focus on business agility and take note on how new technologies are pushing accounting firms to reinvent themselves. He pointed out how a culture where data is "available anytime, anywhere, on any device, and on any user interface" is the driving force as to why businesses and professionals are causing the accounting profession to "adapt." If not, they may have to "face potential irrelevance."
Baron emphasized the importance of firms needing to move beyond after-the-fact and compliance work and adapting to a world where there are more Internet-connected devices than people.
He goes on to push certain technology we're not going to push here because no one has paid us to do it but he makes a good point. It's the guys (and gals) on the forefront of new technology and new ways of doing things that will be eating up the clients in the future.
This situation easily reads like the kind of question you might see on the ethics exam if, you know, the ethics exam were actually about ethics and not the importance of CYA:
1. You have just purchased a cheap second hand $150 desk on Craigslist. It doesn't fit through the door, and when you go to dismantle it so you can get it into your office, you find $98,000 in cash has been stashed inside. You:
A) Purchase a car wash business so you can launder the money, erasing any trail back to you
B) Go on a shopping spree, converting the bills into goods with no paper trail
C) Contact the woman you purchased the desk from, ask her if she is missing $98,000 and offer to return her money to her
D) Strip down to your skivvies, fill up the bathtub with $100 bills and swim in your new stash a la Scrooge McDuck
Rabbi Noah Muroff probably didn't expect he'd find $98,000 stashed inside a cheap desk he bought off Craigslist earlier this year, but that's exactly what happened. Instead of pocketing the money like most people might do -- even the most ethical among us would probably consider just for a moment that keeping it technically would not be stealing -- he contacted the woman he bought the desk from and returned the cash to her.
She claims she stashed her inheritance in the desk and then forgot it was there.
Muroff and his wife went back to the woman's house the following day with their four children to return the money and he said he hopes his deed sends "the message of honesty and integrity."
Heartwarming, really. Except the part about a lady forgetting she put the money in a desk in the first place and then selling it on Craigslist.
Bernie Madoff's "outside auditor" (popularly known as his "accountant") David Friehling already pleaded guilty to fraud in 2009, at which time he told judge U.S. District Judge Alvin Hellerstein "I am truly sorry for the suffering of all the victims."
It turns out among the victims is Friehling's own son, who was five years old at the time he first handed over his birthday cash:
Testifying in the fraud trial of five former Madoff Securities office workers, Friehling said that even Josh trusted the Wizard of Wall Street to double his money.
"Dad, here's a check for my Madoff account," the tyke, now 28, announced after his fifth birthday party, Friehling told a Manhattan federal court jury.
The elder Friehling was 21 himself when he first "invested" over $15,000 in cash gifts from his bar mitzvah, birthdays and the money he'd made working for his parents' hotel with Madoff.
Friehling faces up to 114 years in prison, and is spilling his guts to the court with five other Madoff peeps on trial in the hopes they'll go gentle on him when he's sentenced.
Accounting News Roundup: Madoff Accountant's Five-Year-Old Wanted to Invest; Deloitte University's Barn Hosts International Night; Ghosts of Enron at SCOTUS | 11.13.13
Sports Revenue to Reach $67.7 Billion by 2017, PwC Report Says [Bloomberg]
North American sports industry revenue will grow at a compounded annual rate of 4.8 percent to $67.7 billion by 2017, according to a report by PricewaterhouseCoopers LLP. PwC, based in New York, analyzed four key revenue streams - - gate receipts, media rights, sponsorship and merchandise -- for professional, college, minor league and some individual sports properties. Media rights are projected to increase the most, growing at a compounded annual rate of 7.7 percent to $17.1 billion by 2017. PwC cites upcoming rights deals for major properties and the media industry’s ability to make money from new platforms such as smartphone applications and streaming games over league websites for the future growth.
Top judge criticises DoJ for not holding individuals accountable [FT]
Judge Jed Rakoff, an outspoken jurist with a history of questioning regulatory settlements, said a shift over the past several years to prosecute companies and not individuals for wrongdoing “has led to some lax and dubious behaviour on the part of prosecutors”.
Big Airline Merger Is Cleared to Fly [WSJ]
Breaking: Flying will continue to be awful.
Great international presence at The Barn tonight. #deloitteu
— Life at Deloitte (@lifeatdeloitte) November 13, 2013
Enron Revisited as Court Reviews Whistle-Blower Shield [Bloomberg]
The U.S. Supreme Court revisited the Enron Corp. collapse as the justices debated whether whistle-blower protections in a 2002 law cover employees of auditors, law firms and other advisers to publicly traded companies. Hearing arguments today in the case of two former mutual-fund industry workers, the justices tried to sort out a law that represented Congress’s response to the accounting fraud behind Enron’s 2001 failure. The fast-paced session was laced with questions about a hypothetical butler working for the late Kenneth Lay, who was Enron’s chairman, and the role of the company’s accounting firm, Arthur Andersen LLP. The case will determine the scope of whistle-blower protections that watchdog groups say are important to prevent another Enron-like catastrophe. The dispute pits business groups against President Barack Obama’s administration, which is seeking a broad interpretation of the whistle-blower provision.
FYI. Naked Hotel Guest Shoves Fire Extinguisher Up Ass, Causes a Scene [Gawker]
Life's rich pageant.
Footnotes: EU Wants More Say on Global Accounting Rules; Capital Gains > Carried Interest; EY Getting Into Crowdfunding | 11.12.13
UHY needs a Tax Senior Associate in Dallas, Texas. [GCJ]
EU seeks to increase influence on global accounting rules [Reuters]
Small-Business Partnerships to Be Priority of IRS Exams [Bloomberg]
Q deadline count: Over 600 Qs filed today, with 250 coming in after 4 pm.
— footnoted (@footnoted) November 12, 2013
Forget Carried Interest, It's All About Taxing Capital Gains [Forbes]
Narrow Tax Hikes Win Support in Several States [TaxVox]
EY in crowdfunding joint venture [Accountancy Age]
Madoff Ex-Accountant Tells Jury Aide Helped Fudged Taxes [Bloomberg]
Stamford accountant who helped hedge fund fraud cuts gov. deal [SA]
Woman charged a cursing fee by tow company [ABC]
Accounting News Roundup: More on KPMG's Venture Fund; Miami Is the Capital of Tax Fraud; Dixon Has Another Big Problem | 11.12.13
Can’t KPMG Just Do Better Audits? [Bloomberg]
Jonathan Weil reacts to the news that KPMG is starting a venture fund: "This line from the Times article, quoting a senior KPMG partner named Simon Collins, caught my attention in particular: 'Mr. Collins said that it would be "very difficult" to provide audit services to the companies it invested in -- "but we can incubate them, we can advise them." ' Let’s get this much straight: 'Very difficult' is the wrong answer here. The correct response is that it should be impossible. Any first-year accounting student can tell you that auditors aren’t supposed to audit companies in which they have ownership stakes."
Angola Names Deloitte to Audit $5 Billion Sovereign Wealth Fund [Bloomberg]
The Luanda-based fund will help diversify the economy from oil, build commercial infrastructure and support socio-economic growth, Armando Manuel, finance minister and former head of the fund, said in the statement. Deloitte’s appointment “ensures accountability to the Angolan state and citizens,” he said.
Injuries to Players Raise Questions on Athlete I.P.O. Plan [DealBook]
Standing Advisory Group Meeting [PCAOB]
Starts tomorrow at 1 pm.
Five Auditor Independence Issues PCAOB SAG Not Yet Addressing [Re:The Auditors]
And no plans to, either.
The hand-holding is getting embarrassing.
— ThisWayToCPA (@ThisWayToCPA) November 12, 2013
Estate Planning for Sex Toys [TaxProf]
This could be an exciting conversation you get to have with Mom or Dad some time soon.
GASB Offers Accounting Toolkit for Pension Plans [AT]
Your sleeping aid for this evening.
Miami Replaces Tampa As IRS Tax Fraud Capital [TBT]
Penis-Shaped Christian Science Church Doesn't Look That Much Like A Penis, Architect Claims [HP]
"We didn’t design it to be seen from above," Scott Shepherd told SaukValley.com last week. Local architect John McLane, who did not design the church, told the site he believes it's "a little bit of a stretch" to claim that the aerial view of the structure looks like a penis. [...] The church, which is located in the town of Dixon (indeed), was designed by an architect who McLane guesses "probably" designed it that way by accident, according to SaukValley.com. Shepherd noted that the shape makes sense for the needs of the church because it allows for ample natural light as well as space for a sanctuary.