Bramwell’s Lunch Beat: Bad Day for Ex-Dewey & LeBoeuf Executives
Accounting’s Big Data problem
Reality is swiftly outpacing the ability of accountants to gauge Big Data. In an article for CFO, David M. Katz asked, “What needs to happen for them to start to catch up?”
According to a recent editorial in the Journal of Information Systems that was published by the American Accounting Association, unstructured data – such as the plain text found in the Management’s Discussion and Analysis sections of company 10-Qs and 10-Ks, and in corporate press releases and interviews with corporate executives – represent the largest proportion of existing data and the greatest opportunity for exploiting Big Data.
“Valuable as such data may be, they’re outside the grasp of most accountants and finance executives,” Katz wrote. “Thus, while traditional corporate accounting and auditing ‘are essential for economic production activities and will continue to be performed,’ the authors write, ‘current accounting and auditing methods are in danger of becoming anachronistic’ in the face of an economy increasingly being driven by Big Data.
“Yet before diving into such difficult waters,” Katz continued, “finance and accounting professionals might do better to learn from peers who actually work in the world of data analytics.”
Four accused in law firm fraud ignored a maxim: Don’t e-mail
Four former top executives of the once-high-flying law firm Dewey & LeBoeuf apparently violated a cardinal rule that lawyers always tell their clients: Don’t put anything incriminating into an e-mail.
The firm’s former chairman Steven Davis, former executive director Stephen DiCarmine, former CFO Joel Sanders, and former client relations manager Zachary Warren were charged by New York prosecutors yesterday with larceny and securities fraud after orchestrating a nearly four-year scheme to manipulate the firm’s books to keep it afloat during the financial crisis, and talked openly in e-mails about “fake income,” “accounting tricks,” and their ability to fool the firm’s “clueless auditor,” according to an article by Matthew Goldstein of the New York Times.
“One of the men even used the phrase ‘cooking the books’ to describe what they were doing to mislead the firm’s lenders and creditors in setting the stage for a $150 million debt offering that was supposed to solve the firm’s financial woes, according to the messages,” the article stated.
A parallel civil complaint was also filed yesterday by the US Securities and Exchange Commission (SEC). You can read that here.
[Several other articles were written yesterday and today about the charges against the four former leaders of Dewey & LeBoeuf, including here (Going Concern), here (Wall Street Journal), here (Jonathan Weil of Bloomberg View), here (Matt Levine of Bloomberg View), and here (The Economist).
Silencing the truth at the IRS
Ron Fournier of the National Journal wrote yesterday: “[T]he ‘investigations’ of the IRS – self-serving inquiries conducted separately by the GOP House and the Obama administration – are partisan jokes. We still don't know the facts. We still have no reason to trust the Republican Party, the Democratic Party, the IRS, Congress, or the White House.”
In his article, Fournier provided four steps that Republicans and Democrats could take to restore the public’s trust in the IRS – and why they probably won’t.
How big is the ACA tax penalty?
The Tax Policy Center unveiled an online calculator that estimates the potential Affordable Care Act (ACA) penalty for individuals and married couples who don’t have health insurance coverage as required by the law. Click here to access the calculator.
Darrell Issa apologizes to Elijah Cummings
House Oversight and Government Reform Committee Chairman Darrell Issa (R-CA) apologized to fellow panel member Elijah Cummings (D-MD) for cutting off the microphone Cummings was using to make a statement during a hearing on Wednesday on alleged IRS abuses, John Bresnahan of Politico reported yesterday.
According to the article, Issa called Cummings on Thursday evening to offer his apologies, Cummings said in a statement released by his office.
“This evening, Chairman Issa telephoned me and apologized for his conduct, and I accepted his apology,” Cummings said. “My sincere hope is that as we move forward, we will respect the opinions of all members of the committee, we will proceed in a deliberate and considered manner to obtain the facts, we will refrain from making accusations that have no basis in fact, and we will seek resolution rather than unnecessary conflict.”
Issa admitted that he should have been “more sensitive” to Cummings’s request to offer a statement during an appearance by Lois Lerner, an IRS official at the center of the scandal, Bresnahan wrote.
Darrell Issa: GOP’s resident thug
Joan Walsh, editor-at-large for Salon, gave her thoughts yesterday about the Issa/Cummings spat at the House Oversight and Government Reform Committee hearing on Wednesday.
“I especially loved Issa’s little gesture pulling his finger across his throat like a knife, to cut the mic as second time. I called it ‘thuggish’ on Politics Nation, and folks on the right aren’t happy. That’s OK; it was thuggish.
“Issa had once again called former IRS supervisor Lois Lerner to testify before the committee, knowing she was going to again use her Fifth Amendment right against self-incrimination,” she continued. “But what Issa didn’t reveal is that Lerner’s attorney had offered last month to share her answers to the committee’s questions via what’s called a ‘proffer.’ That’s when the subject of an investigation reveals the rough outlines of what they know, which can also help determine whether they deserve immunity from prosecution (in order to get them to share more). But Issa rejected the proffer and staged a show trial designed to have Lerner take the Fifth again, in front of television cameras and a packed hearing room.”
- US economy added 175,000 jobs in Feb., unemployment up to 6.7% (Forbes)
- The tax code: Make it flat (Forbes)
- Tax revenue from legalized marijuana may not meet expectations (Washington Post)
- Deferred taxes and VIEs revisited (China Accounting Blog)
- Credit Suisse’s US clients in limbo amid tax prosecutions (Bloomberg Businessweek)
- Improving the Earned Income Tax Credit to better serve childless adults (Center for American Progress)
- Man chokes H&R Block employee over his tax situation (KTVI St. Louis)