Deloitte leapfrogs PwC to become top accountant-global survey
A survey by the International Accounting Bulletin found that Deloitte has surpassed fellow Big Four firm PwC as the world’s top accounting operation according to revenue, Reutersreported on January 29.
Deloitte reported income of $32.4 billion last year, just ahead of PwC with $32 billion. The two other Big Four firms, EY and KPMG, came in third ($25.9 billion) and fourth ($23.4 billion), respectively.
However, according to the article, Deloitte's lead may be temporary as PwC awaits regulatory approval for its takeover of Booz & Co., which would bump up its revenues by more than $1 billion.
The state of the federal budget is opaque
Ryan Alexander, president of Taxpayers for Common Sense, wrote a column for US News and World Report on January 28 about why federal budgeting and accounting should use the accrual method of accounting instead of the current cash-based system.
“What is the difference and why does it matter? The short version is this: Cash accounting simply tracks money in and money out, while accrual accounting takes into account all outstanding obligations,” the column stated. “This difference matters because, under cash accounting, it is possible to ignore or underplay outstanding obligations the government must pay under existing contracts and laws. Moreover, cash accounting makes it more difficult to plan and budget for infrastructure upgrades and other major investments.
“For decades, accounting professionals, presidential commissions, and the Congressional Budget Office alike have recommended changing to accrual accounting as a means to make the federal budget more transparent and to encourage fiscal responsibility,” Alexander continued. “The Securities and Exchange Commission requires that publicly traded companies use accrual accounting and otherwise follow the so-called Generally Accepted Accounting Practices. The reason accrual accounting is favored is simple: It encourages large entities to reflect and plan for long-term fiscal health rather than simply looking at today's cash flow, which is the accounting principle version of living paycheck-to-paycheck.”
Holder: No decision on charges in IRS case
US Attorney General Eric Holder assured lawmakers on January 29 that no final decision has been made about whether to file any criminal charges in the IRS targeting controversy, Bernie Becker of The Hillreported.
During a Senate Judiciary hearing on Wednesday, Holder pushed back against media reports that said the US Justice Department was unlikely to press charges against anyone over the IRS's singling out of Tea Party groups seeking tax-exempt status.
“All the options that we have are on the table, given the fact that there has not been a determination, either to bring charges or to decline the case,” Holder said, according to the article.
Holder also defended a Justice Department attorney, Barbara Kay Bosserman, who is playing a key role in the investigation into the IRS and has donated thousands of dollars to Democratic causes in recent years.
Ted Cruz, Eric Holder mix it up at hearing
But Holder’s update on the IRS investigation was not satisfactory enough for Senator Ted Cruz (R-Texas), who said during the Senate Judiciary hearing he finds what has transpired in the last eight months of the probe “astonishing,” Mackenzie Weinger of Politicoreported.
“In the 280 days since that inspector general report, nobody has been indicted,” Cruz told Holder, according to the article. “Not a single person. In the 280 days since that inspector general report, it’s been publicly reported that no indictments are planned. Today in this hearing, you were unwilling to answer a question whether even a single victim of targeting has been interviewed.”
Cruz also criticized Bosserman’s involvement in the investigation, in large part because of her past donations to the Democratic Party.
“The characterization of this lawyer as the lead lawyer on the case is not correct,” Holder said, adding that, “I don’t know anything about the political activities of any of the people who are involved in this investigation.”
[Click here for AccountingWEB’s coverage of the Tea Party scandal.]
There’s no accounting for China
In a column for the Wall Street Journal, Joseph Sternberg wrote about last week’s ruling by a US Securities and Exchange Commission (SEC) administrative law judge who suspended the Chinese branches of the Big Four accounting firms from practicing at the SEC for six months.
Sternberg, who edits the Wall Street Journal Business Asia column, said the case “ostensibly turns on the fact that the firms have been less than cooperative as the commission investigates a flood of alleged accounting frauds at US-listed Chinese companies.”
But the real problem, according to Sternberg, is that the accounting firms, which would almost certainly prefer to comply with the SEC’s demands, worry that Beijing will punish them if they do.
“Partly this is a simple attempt by Beijing to assert its sovereignty over companies operating on its soil,” he wrote. “But there's also plenty of reason to suspect more cynical motives for obstructionism. Fraud investigations often implicate various forms of corruption, especially unduly close relationships between companies and officials at state-owned banks. A thornier question yet is what kind of access the SEC might gain to audit records at state-owned enterprises that are partially listed in New York – including major banks.”
Chicago CPA charged by SEC for insider trading on his wife’s account
The US Securities and Exchange Commission (SEC) on January 29 filed a civil enforcement action against Stephen Dombrowski, CPA, former director of corporate audit at Allscripts Healthcare Solutions Inc., for violating the federal securities laws against insider trading, according to our sister site, Going Concern.
According to the complaint, filed yesterday in federal court in Chicago, in April 2012, Dombrowski allegedly learned through his job that Allscripts’ first quarter 2012 financial results were much worse than had been expected and the company would miss its earnings target for the quarter.
“Despite a company-imposed blackout period on trading its securities, Dombrowski determined to use this nonpublic information to his advantage by trading in Allscripts securities using his wife's account,” the complaint stated.
Read Going Concern Managing Editor Adrienne Gonzalez’s take on the SEC complaint here.