Golfer Mickelson’s role said to be overstated in insider inquiry
Phil Mickelson did not trade in shares of Clorox just as the billionaire investor Carl Icahn was mounting an unsolicited takeover bid for the company in 2011, say four people briefed on the matter, Matthew Goldstein and Ben Protess of New York Times DealBookreported yesterday.
Although Icahn and sports gambler William Walters remain under investigation over Clorox, the FBI and the US Securities and Exchange Commission (SEC) have found no evidence that Mickelson traded Clorox shares. The overstated scope of the investigation came from information provided to the New York Times by other people briefed on the matter who have since acknowledged making a mistake, they wrote.
However, Mickelson and Walters still face an investigation over separate well-timed trades they made in Dean Foods in 2012 just before the company’s stock soared. Those trades generated more than $15 million in proceeds for Walters and nearly $1 million for Mickelson, one of the four people briefed on the matter said, according to the article. Mickelson has denied any wrongdoing.
Wyden warns of tapping ‘imaginary savings’ of tax break
Senate Finance Committee Chairman Ron Wyden (D-OR) said on Wednesday that a one-time tax holiday that would encourage companies to repatriate offshore earnings likely wouldn’t yield enough money to fill the shortfall in the US Highway Trust Fund, Richard Rubin of Bloombergreported.
Wyden is trying to find a way to shore up the federal fund used to finance highway construction projects before it runs short of money as early as July. In a telephone interview with Rubin, Wyden said he hasn’t settled on a plan.
“You do not pay for roads and bridges and transit with imaginary savings,” he said, according to the article. “There isn’t any magic money sitting around on the street corner.”
A tax holiday on offshore earnings would cost the government $96 billion in forgone revenue over a decade, according to the Joint Committee on Taxation. Wyden said he’s encouraging lawmakers to look at the “hard information” that shows that a 2004 version of the tax holiday wasn’t the “repatriation rainbow” that supporters promised, Rubin wrote.
A version being considered by Senator Rand Paul (R-KY) and Senate Majority Leader Harry Reid (D-NV) raises $3 billion over 10 years, only enough to pay for a few months of highway spending, Wyden said, according to the article.
Audit regulator rebukes Ernst & Young
The Public Company Accounting Oversight Board (PCAOB) has rebuked Ernst & Young LLP by making public some of its previously secret criticisms of the Big Four accounting firm's quality controls, Michael Rapoport of the Wall Street Journalreported on Wednesday.
Rapoport noted the action taken by the PCAOB yesterday indicates the board believes Ernst & Young didn't move quickly enough to address the concerns after the PCAOB conveyed them to the firm in 2011.
The PCAOB unsealed parts of an inspection report on Ernst & Young it had issued in November 2011, saying the firm had problems in its internal “engagement quality review” process that provides a second set of eyes on each of the firm's audits. The firm wasn't performing those reviews “at a sufficient level of rigor and detail,” the PCAOB said, according to the article.
In addition, the report said Ernst & Young auditors sometimes relied heavily on evidence that supported a company's own position on its accounting and didn't sufficiently take new or contrary evidence into account.
In a statement, Ernst & Young said it was “fully committed to delivering high-quality audits” and that the PCAOB process “assists us in identifying areas where we can continue to improve,” according to the article.
PCAOB airs quality concerns for EY, Grant Thornton
According to an article by Tammy Whitehouse of Compliance Week, the PCAOB also republished two of Grant Thornton’s old inspection reports from 2008 and 2009 to publicize instances where the board's quality control criticisms were not addressed to the board's satisfaction within the one-year period that is allowed in inspection rules.
In Grant Thornton's 2008 report, the board says the firm struggled with professional skepticism.
“The nature of many of the reported audit deficiencies provides cause for concern whether the firm applied sufficient professional skepticism when performing audits,” the PCAOB wrote, according to the article.
The report also says the firm didn't adequately supervise auditors, and the firm had difficulty with auditing accounting estimates. In the 2009 report, the board says the firm didn't have adequate quality controls to assure proper testing of internal controls or proper evaluation of management's fair value measurements or other estimates.
“While we took actions that we believed at the time were sufficient and responsive to the matters in the respective inspection reports, we acknowledge the board's determinations and accept that additional actions may have been warranted in those areas now being published,” the firm wrote in a letter attached to the expanded inspection report, according to the article.
FBI returns taxpayer information it got from IRS
Devlin Barrett of the Wall Street Journalreported on Wednesday that the FBI has returned a large database of taxpayer information it received from the IRS, amid an investigation into possible political targeting of conservative groups, FBI Director James Comey told members of the House Judiciary Committee.
Testifying before the panel yesterday, Comey said FBI investigators didn't examine the database, which included private taxpayer information that isn't supposed to be shared without a judge's order.
“The only thing that was done, [was] analysts looked at the table of contents,'' Comey said, according to the article.
Barrett noted that congressional Republicans are incensed that the IRS transmitted a 1.1 million-page database of information concerning tax-exempt organizations to the FBI shortly before the 2010 election. Earlier this month, the US Justice Department turned over the database to the House Oversight and Government Reform Committee in response to a subpoena. News of the data transfer was disclosed by the committee on Monday.
The IRS identified issues with 33 tax returns out of more than 12,000 that included confidential taxpayer information. The majority of those groups did not appear to have any connection to political activity, the IRS said.
- Rothstein Kass refugees are starting fresh after the KPMG acquisition (Going Concern)
- Noted forced ranking enthusiast Deloitte declares forced ranking dead (Going Concern)
- BDO gets SALTy with latest acquisition (Going Concern)
- FASB tries to simplify GAAP, one item at a time (Going Concern)
- FASB to tweak accounting for inventories and income statements (CFO Journal)
- The failure of HKICPA regulation (China Accounting Blog)
- Terrorist nation and OFAC violations – SEC comment letters (Audit Analytics)
- PCAOB announces Standing Advisory Group June 24-25 meeting and agenda (PCAOB)
- New rules for providing written tax advice are finalized (Journal of Accountancy)
- The lose-lose tax policy driving away US business (Wall Street Journal)
- Tax treaties at standstill in Senate over privacy issues (Roll Call)
- Report: Offshoring America’s drugstore (Americans for Tax Fairness)
- A basic lesson on the US’s corporate income tax system (Tax Foundation)
- Good and bad news about the ACA penalty tax (TaxVox)
- NBA beats NHL in this year’s jock tax championship (Don’t Mess With Taxes)
- [Massachusetts] House passes sales tax holiday legislation; reprieve set for Aug. 16-17 (Boston Globe)
- Michigan Senate rejects sales tax option to fix roads ahead of planned vote on increased fuel taxes (MLive.com)
- Tax bill targeting Donald Sterling advances in California Senate (Los Angeles Times)
- Capgemini selected by Honeywell as BPO provider for finance and accounting processes (Capgemini)
- Kennedy and Coe sees opportunity to expand further into ag, food sectors through merger with California firm (Wichita Business Journal)
- Xero Practice Manager released (Xero)
About Jason Bramwell
Jason Bramwell is a staff writer and editor for AccountingWEB. He has nearly 20 years of experience in print and online media as a journalist and editor.