Watchdog

Tax

Deloitte’s Navistar Audit Being Investigated

Deloitte & Touche LLP is being investigated by the Public Company Accounting Oversight Board (PCAOB) for auditing discrepancies in their 2003 audit of Navistar Financial Corporation. The two-page order, issued in May, was inadvertently disclosed by the Securities and Exchange Commission (SEC) which oversees the PCAOB. Navistar Financial is a unit of Navistar International Corporation. “The order was misdirected to the public file,” said SEC spokesman John Heine in a statement to Bloomberg News.
Tax

FEMA Wants $27M Back from Floridians

The Federal Emergency Management Agency (FEMA) says it has overpaid more than 6,000 Floridians whose homes were damaged by last summer's four hurricanes, and the agency wants more than $27 million back.FEMA is trying to recoup overpayments from 6,579 people who received federal aid after Hurricanes Charley, Frances, Ivan and Jeanne hit Florida last August and September. FEMA said it paid for items like generators and appliances that were later covered by property-insurance policies.
Tax

AICPA Warns of Possible Pretexting Calls

The American Institute of Certified Public Accountants (AICPA), recently alerted members that someone posing as an AICPA employee has been contacting accounting firms requesting employee lists for various purposes. Depending on the type of information being requested, this type of call may be pretexting and it is illegal.The Federal Trade Commission (FTC) defines “pretexting” as the practice of getting personal information under false pretenses. Pretexters will use a variety of excuses in an attempt to gain personal information.
Tax

Indian Leaders Outline $27.5B Settlement Proposal

American Indian leaders have outlined a legislative plan that could settle a lawsuit over government mismanagement of Indian lands for $27.5 billion.The price tag is just one part of the complicated 50-point plan that was created at the request of U.S. lawmakers looking for proposals to settle the divisive, nine-year-old class-action lawsuit. More than 300,000 Indians accuse the Department of the Interior of losing royalties collected from leasing their land for oil and gas drilling, grazing or logging.Indian leaders announced the plan on Monday.
Tax

Kozlowski Blames Accountants For Excesses and Oversights

Although they are free on bail for the moment, former Tyco International CEO Dennis Kozlowski and former CFO Mark Swartz have been convicted of looting their corporate cow of more than $150 million. Both men are awaiting sentencing tentatively scheduled for August 2nd. To remain free until sentencing, each paid $10 million bail. Kozlowski and Swartz were convicted last week on 22 counts of conspiracy, falsifying business records, grand larceny, and securities fraud. After a trial lasting more than four months, the jury reached their decision in only eleven days.
Tax

HealthSouth’s Legal Odyssey Continues

On June 22, 2005, the federal appeals court in Atlanta, Georgia, vacated the probation sentences of former HealthSouth executives Mike Martin and Richard Botts sending the case back to a lower court for resentencing.
Tax

KPMG's Admission May Hurt Civil Tax Shelter Case

KPMG's acknowledgement of “unlawful conduct” in selling questionable tax shelters may help the firm it in its negotiations with criminal prosecutors, but it may make big civil fines more likely.Big Four accounting firm KPMG, in a statement last week, said it “deeply regrets” tax shelter abuses and “takes full responsibility.” Its admission may hurt the other defendants who also worked on selling the tax shelters and were sued by investors along with KPMG, the Wall Street Journal reported.The other firms include: Sidley Austin Brown & Wood, which provided advice to investors;
Tax

Federal Contractors Owe Billions in Back Taxes

Last week, the Government Accountability Office (GAO) released a report “Financial Management: Thousands of Civilian Agency Contractors Abuse the Federal Tax System with Little Consequence” that found 33,000 firms and individuals contracted to provide goods and services to a variety of federal agencies owed more than $3 billion in unpaid federal taxes as of September 30, 2004.The report, according to The Hill, was requested by the Senate Governmental Affairs’ Permanent Subcommittee on Investigations and made public during hearings held Thursday, June 16.
Tax

SEC Begins Probe of OfficeMax Accounting Problems

The Securities and Exchange Commission has started a formal investigation into accounting irregularities at the third-largest office supplies retailer.OfficeMax Inc., headquartered in Itasca, Ill., had conducted its own investigation after a supplier alleged that OfficeMax employees acted “inappropriately” in requesting payments. Six employees were fired earlier this year.The company revealed that employees had falsified $3.3 million worth of rebates allegedly owed to OfficeMax by suppliers, The Chicago Sun-Times reported.
Tax

HealthSouth Agrees to $100M Fine; Scrushy Jurors Remain Deadlocked

While jurors remain at an impasse in Richard Scrushy's $2.7 billion corporate fraud trial, the company he founded, HealthSouth Corp., agreed to a $100 million settlement with the Securities and Exchange Commission.Jurors adjourned Wednesday with instructions to resume deliberations Monday. Scrushy is accused of coordinating a scheme to inflate earnings from 1996 through 2003 and faces a 36-count indictment.Also Wednesday, the company settled civil charges with the SEC, which sued the company in 2003, claimed earnings were overstated by at least $1.4 billion.
Tax

AIG Restates Income with $3.9B Adjustment

American International Group (AIG), in a long-delayed regulatory filing, said Tuesday that it overstated net income by $3.9 billion for the past five years.The New York-based insurer also said that it cut its net worth by $2.26 billion through the end of 2004. The figure is less than the $2.7 billion that was previously estimated.The report, which was delayed three times, was filed with the Securities and Exchange Commission.
Tax

High Court Overturns Andersen Conviction

Calling jury instructions too vague, the U.S. Supreme Court unanimously overturned the 2002 obstruction of justice conviction of the once-mighty Arthur Andersen LLP.The accounting firm, which shredded documents connected to the fallen Enron Corp., was convicted after jurors were told that Andersen could be found guilty even if they determined that the accounting firm "honestly and sincerely believed that its conduct was lawful,” the New York Times reported.
Tax

Suit Alleges PWC Missed 'Key Warning Signs' at AIG

The decades-long relationship between PricewaterhouseCoopers (PWC) and American International Group (AIG) is being scrutinized as regulators allege the accounting firm overlooked problems and issued false audit reports.Advertisement
Tax

Florida Seeking Answers from AIG

Florida's insurance regulator has ordered American International Group Inc. to disclose information about financial misrepresentations and fire those responsible.If AIG does not comply, it faces the possibility of being barred from doing business in the state.The Office of Insurance Regulation ordered AIG, and its 43 units operating in Florida, to hand over information on the nature and extent of misrepresentations on the company's financial statements, Reuters reported.
Tax

AIG Execs Subject of State, Federal Probe

If the former chief executive is found responsible for accounting irregularities at American International Group Inc., as a Wall Street Journal report suggests, the company could try to recover some of his pay under the Sarbanes-Oxley Act.The Journal reported that former top executive Maurice R. “Hank” Greenberg and former Chief Financial Officer Howard I. Smith may have been behind some of the improper accounting that will eventually result in more than four years of earnings restatements.
Tax

Top Ten TV Moms

TV characters are not often cited as role models. Neither are mothers, though they certainly should be and more frequently than TV, movie and sports stars commonly idolized by popular culture. In honor of Mother’s Day, Fox News came up with a list of the top ten TV Moms, proving that while not all TV characters give sound advice, there are a few worth listening to and maybe even learning from.10.
Tax

FBI Begins Wider Look at Insurers' Accounting Practices

The Federal Bureau of Investigation is reviewing accounting practices across the insurance industry to determine whether it may become “the next big one,” in terms of corporate scandals, an FBI assistant director told the New York Times.The comments of Chris Swecker, who oversees the FBI's financial crimes unit, came as agents across the country were instructed to look for accounting irregularities similar to ones ensnaring American International Group, which is being investigated by multiple state and federal authorities."I'm not going to say it is the next crisis, but I will say we
Tax

States Probe AIG's Workers' Compensation Contributions

Problems at American International Group (AIG) intensified this week as New York Attorney General Eliot Spitzer announced plans to audit the insurance giant to ensure it has paid its fair share of workers' compensation premiums, the Associated Press reported.Spitzer's announcement came on the heels of news reported Tuesday by The New York Times that AIG has uncovered at least $1 billion more in accounting problems.
A&A

Fraud Hits Small Businesses the Hardest

As any small-business owner knows, fraud, waste and abuse are hardly confined to major corporations.Scandals featuring high-flying executives living lavish lifestyles can grab headlines - and in the case of Enron, scandal can even make it onto the big screen. Smaller-scale crimes, however, can also levy serious damage. According to the Association of Certified Fraud Examiners, the most costly abuses occur in organizations with fewer than 100 employees.
Tax

Apology for Accounting Failures May Have Been Premature

“I am sorry,” Daniel H. Mudd, interim chief executive of mortgage giant Fannie Mae to ld the Senate Banking Committee last week.

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