The vanished grandeur of accounting
Boston Globe correspondent Jacob Soll wrote this over the weekend: “In Washington’s National Gallery of Art hangs a portrait by Jan Gossaert. Painted around 1530, at the very moment when the Dutch were becoming the undisputed masters of European trade, it shows the merchant Jan Snouck Jacobsz at work at his desk. The painter’s remarkable gift for detail is evident in Jacobsz’s dignified expression, his fine ermine clothes and expensive rings. Rendered just as carefully are his quill pen, account ledger, and receipts.
“This is, in short, a portrait of not only wealth and material success, but of accounting,” he continued. “It might seem strange that an artist would lavish such care on the nuts and bolts of something so mundane, like a poet writing couplets about a corporate expense report. But the Jacobsz portrait is far from unique: Accounting paintings were a significant genre in Dutch art. For 200 years, the Dutch not only dominated world trade and portrayed themselves that way, but in hundreds of paintings, they also made sure to include the account books.”
Soll wrote that nowadays when we see accountants in art or entertainment, they are marginal figures – comically boring bean-counters or fraudsters cooking the books.
“Accounting is almost a synonym for drudgery: from the hapless daydreamer Walter Mitty to the iconic nerd accountant Rick Moranis plays in Ghostbusters. Accounting is seen as less a moral calling than a fussy brake on the action,” he added.
Charlotte’s Mike McGuire prepares to lead accounting firm Grant Thornton
The Charlotte Observer had a Q&A with Mike McGuire, who will become the new CEO of Chicago-based accounting firm Grant Thornton LLP on January 1, 2015.
Last week, the privately held firm announced the promotion of McGuire, its Charlotte, North Carolina-based COO, to CEO. He replaces outgoing CEO Stephen Chipman.
Holding key senior leadership roles at Grant Thornton has helped prepare McGuire to become CEO. He served as head of human resources and sales and marketing for the firm before becoming COO.
“I think the way our firm operates and the way we do transition planning … it’s not like being thrown in the deep end,” said McGuire, 55, according to the article. “I think it’s really about planning and really building my skills along the way.”
Speaking of planning, McGuire said building a plan for the firm’s future is what he is doing as CEO-in-waiting.
The plan, he said, “was like 160 pages … a very executable plan that covers a lot of areas around our strategy and what we’re going to do, who’s going to do it, when we’re going to do it. I wasn’t going to share a 160-page plan with all of our partners because that’s obviously overkill. I summarized it all the way to basically a five-page plan and white paper.
“I’ve also … developed a plan for my first 90 days, my first six months, and my first year,” McGuire continued, according to the article. “I’ve developed that in close collaboration with people inside the firm and some folks that I have as mentors outside the firm.”
Israel’s Bank Leumi to pay $289 million in US tax probe deal
Steven Scheer of Reutersreported yesterday that Bank Leumi, Israel's second largest bank, said it was close to a deal to pay nearly 1 billion shekels ($289 million) to the US Justice Department in relation to its investigation into possible tax evasion by the bank's American clients.
The settlement, likely to take weeks or months to complete, marks another step in the United States' wide-ranging efforts to crack down on Americans using offshore banks to evade taxes. Last month, Credit Suisse agreed to pay more than $2.5 billion in penalties for helping Americans dodge taxes.
Scheer noted that the investigation covered the period between 2002 and 2010. “Leumi is the first bank in the Israeli banking system expected to reach an agreement with the US Justice Department,” the bank said. A source familiar with the negotiations said Leumi was notified of the offer by US authorities last week. The United States did not want the offer size published but Leumi had no choice but to inform its shareholders under Israeli law.
Leumi has urged US clients to disclose information about their accounts to the US authorities.
Illinois parts-maker fights US IRS over cross-border tax deal
Reuters also reported that the IRS and manufacturer Illinois Tool Works Inc. are battling in US Tax Court over a $356.8 million dispute that highlights a type of cross-border tax-avoidance strategy facing increased scrutiny worldwide.
The IRS is asserting that a loan used by Illinois Tool to bring foreign cash from a Bermuda-based subsidiary into the United States was not a tax-free transaction, Patrick Temple-West wrote on Monday. Instead, the IRS argues that the transaction was a repatriation of foreign profits equivalent to a taxable dividend-style distribution.
A victory for the IRS in the case would jeopardize similar transactions undertaken on a tax-free basis, tax lawyers say.
“This is foreign tax planning 101 ... . Every Fortune 500 company in America that is multinational does this,” said Jasper Cummings, a tax lawyer for Alston & Bird LLP, who reviewed the case for Reuters, according to the article. “If the IRS wins this, it will be a hell of a win.”
Illinois Tool, based in Glenview, Illinois, which makes everything from vehicle parts to food service equipment to arc welding tools, filed its Tax Court petition last month, challenging the IRS’s position. The company said it could owe $70 million if it loses the case, according to a May regulatory filing. No trial date has been scheduled.
Obama plans steps to ease student debt
Jackie Calmes of the New York Timesreported on June 7 that President Obama on Monday will take executive actions to ease the burden of college loan debt for potentially millions of Americans, in a White House event coinciding with Senate Democrats’ plans for legislation to address a concern of many voters in this midterm election year.
Calmes noted that the president’s main action will be to expand on a 2010 law that capped borrowers’ repayments at 10 percent of their monthly income. The intent is to extend such relief to an estimated 5 million people with older loans who are currently ineligible – those who got loans before October 2007 or stopped borrowing by October 2011. But the relief would not be available until December 2015, officials said, given the time needed for the US Education Department to propose and put new regulations into effect.
Obama will also announce that the department will renegotiate contracts with companies that service federal loans to give them additional financial incentives to help borrowers avoid delinquency or default. The Education and Treasury departments are to work with the nation’s largest tax-preparation firms, H&R Block and Intuit Inc., to ensure that borrowers are aware of repayment options and tax credits for college tuition.
Did Hertz CFO leave because of accounting flubs?
After Hertz announced last year that it would move its global headquarters from New Jersey to Florida, CFO Elyse Douglas was the lone member of the senior executive team to resign. She said that for personal reasons she couldn’t move. As it turns out, that might not have been the reason for her resignation, David McCann of CFOwrote on June 6.
Hertz said last Friday in an 8-K filing that it will restate three years of financials to correct at least $46.3 million worth of errors in its 2011 statements. The errors are related to a broad swath of company activities. The company’s audit committee has directed it to conduct a thorough review of financial records for 2011 through 2013. Hertz warned in its 8-K that “this review may require Hertz to make further adjustments to the 2012 and 2013 financial statements,” McCann wrote.
Hertz’s external auditor, PricewaterhouseCoopers, had given the company clean audit reports for those years.
Hertz promoted Douglas from treasurer to CFO in 2007. In a 2012 interview with CFO, she noted that treasury was “a specialized field and essentially a ‘support’ role with defined functions,” and that “becoming accustomed to having a high-level focus and relinquishing the need to know all of the details proved to be the biggest adjustment for me,” according to the article.
- Public accounting firms, ranked by CEO hotness (Going Concern)
- EY now tracking staff’s every move (Going Concern)
- On Golden’s con: Selling false hope for fundamental changes to financial reporting (Accounting Onion)
- California governor claims ‘creative accounting’ lured Apple (Irish Times)
- Britain becomes haven for US companies keen to cut tax bills (Reuters)
- Japan economic plan vows corporate tax reform, but lacks details (Reuters)
- The tax increase isn’t killing Japan’s recovery (Bloomberg Businessweek)
- Where securities trade dictates tax treatment (Forbes)
- Tax Report: The IRS wins a big offshore case (Wall Street Journal)
- Taxes and health care: How far how fast? (National Review)
- A risk-taker’s game: Insider trading (New York Times)
- Cyberattack insurance a challenge for business (New York Times)
- California tax credit plan proves popular with businesses (Los Angeles Times)
- St. Louis voters could consider back-to-back tax increases (St. Louis Post-Dispatch)
- SEC charges two firms with regulatory violations (The Hill)
- A look at the wide range of corporate US tax rates (Don’t Mess With Taxes)
- Highest property tax bill in the US comes to $1.275 million (Don’t Mess With Taxes)
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.