Plus, a Massachusetts accountant pleads guilty to tax fraud, and a Toronto accountant gets prison time for stealing from charity.

Oregon CPA who ripped off Olympic snowboarder and spent trust fund of porn shop heirs headed to prison [The Oregonian]
Nathan Wheeler was sentenced to four years and three months in federal prison on Oct. 24 for stealing about $4.5 million of his clients’ investments to support his “Playboy lifestyle’’ of booze, drugs, and money, and bolster his large marijuana business.

The Oregon CPA, who owned the Portland-based accounting firm Bridge City Advisors, ripped off more than $900,000 in earnings from Olympic snowboarder Daniel Kass, misappropriated the trust fund of two porn shop heirs, and bought his fiancee an engagement ring using the investments of a retired law enforcement officer, according to prosecutors.

Wheeler, 43, pleaded guilty to wire fraud and attempted tax evasion in May 2018. He must surrender to authorities on Jan. 24, 2020.

Former IRS employee sentenced to prison for tax evasion [Justice Department]
Craig Orrock, a former IRS employee and attorney, was sentenced on Oct. 22 to 32 months in prison in Las Vegas for tax evasion and obstructing the IRS.

Orrock, 72, filed tax returns for the years 1993 through 2015 but didn’t pay the income taxes due. He attempted to prevent the IRS from collecting the reported income taxes by using entities, bank accounts, and trusts in other names to hide his income and assets, filing frivolous bankruptcy petitions and filing an offer-in-compromise falsely representing to the IRS that he had virtually no assets.

For example, Orrock used an entity known as Arville Properties LLC to conceal from the IRS his ownership of real property that he sold in 2007 for $1.5 million. In all, Orrock evaded the payment of more than $500,000 in federal income taxes.

Orrock was also ordered to pay $923,666.73 in restitution and to serve three years of supervised release.

Albany accountant charged with stealing from former firm [Albany Democrat-Herald]
Richard Perdue, a prominent former accountant in Albany, OR, was charged with three counts of first-degree aggravated theft and one count of first-degree theft on Oct. 16 for allegedly stealing at least $31,000 from his former accounting firm, now known as Koontz, Blasquez & Associates but previously named Koontz, Perdue, Blasquez & Co.

His next hearing is scheduled for Nov. 18.

Tax preparer sentenced to 15 months in federal prison [Justice Department]
Gelin Sterling, who owned the tax preparation business Sterling Tax Plus LLC in Berlin, CT, was sentenced on Oct. 28 to 15 months in prison, followed by one year of supervised release, for preparing false tax returns.

For the 2014 through 2017 tax years, Sterling prepared tax returns for numerous clients that included false mileage expenses, false charitable donations, and other false income items, authorities said.

Sterling was ordered to pay the IRS restitution of $250,000. As a result of his actions, many of his clients’ filed tax returns will need to be amended. The amount of Sterling’s restitution may be reduced as his clients resolve their own tax liability with the IRS, authorities said.

He pleaded guilty to one count of aiding in the preparation of false tax returns on May 2. Sterling is required to report to prison on Dec. 30.

Worcester accountant pleads guilty to tax fraud, allegedly over $1M [Worcester Telegram & Gazette]
Sebastian Adzadi, who operated Skylimits Tax Service in Worcester, MA, offered a guilty plea on Oct. 23 in U.S. District Court to a single count of aiding and assisting the filing of a false income tax return.

He allegedly fabricated expenses and charitable donations in order to get clients as much as $1 million in fraudulent tax refunds, although his attorney argued that the amount of loss for which Adzadi is responsible is less than $1 million.

An undercover agent had asked Adzadi’s firm to prepare a tax return, and the filed return contained fictitious deductions that weren’t based on responses the agent had provided. If the return had been properly prepared, the agent would have owed the government $43. Instead, the return resulted in a tax refund of $1,045.

Adzadi is scheduled to be sentenced in January 2020.

New Hartford accountant sentenced to 12 months for failure to file tax returns [Justice Department]
James Becker, who operated Becker’s Accounting Services in Whitesboro, NY, was sentenced on Oct. 23 to 12 months in prison, to be followed by one year of supervised release, for failing to file his personal income tax returns for the years 2012 through 2015.

He also was ordered to pay restitution to the IRS of $162,049.

Becker, 53, pleaded guilty in June to four counts of failing to file his tax returns notwithstanding having gross income in excess of $100,000 in each of the tax years.

Toronto charity thief jailed, ordered to repay $1M [Ottawa Sun]
Marcia Motayne, an accountant who stole almost $1 million from New Vision Toronto, was sentenced on Oct. 23 to six and a half years in jail.

“For unexplained but obvious reasons of greed, you smoothly and carefully stole a million dollars,” said Justice Michael Quigley of the 51-year-old ex-accountant.

“You did that through a callous and calculated payroll robbery plan that you knew would be immune to detection, and you also knew it would deprive some of the most vulnerable and needy of our fellow citizens of the monies they needed for a subsistence day to day level of survival with the disability weights they carry.

“You ignored your obligations you had to the disabled persons who relied on you in committing this cold, duplicitous, greed-driven offence.”

She used some of the money she stole to fly with her two sons to Brazil to watch the World Cup.

The post Accountants Behaving Badly: Ripping Off Olympian, Ex-IRS Employee Jailed, Stealing From Your Own Firm appeared first on Going Concern.

KPMG duo who quit amid bullying fallout make senior hires at new firm [Financial News] Two ex-KPMG partners, who set up their own consultancy after leaving the Big Four accounting firm over its handling of complaints of bullying, have lured two former executives from their old employer to the new venture. Maggie Brereton and Ina Kjaer set up Eos Deal Advisory in September following six months of gardening leave. They have now appointed Shilpa Thanki-Green as Eos’s chief operating officer and Tomas Zalagenas as chief financial officer.

Is the American Tax System Regressive? [NPR] [T]he American tax system, taken as a whole, and including state and local taxes, is not progressive, meaning it does not tax the rich more than the middle class or working poor. Instead, they write in their book, when you include the totality of taxes, “The US tax system is a giant flat tax—except at the top, where it’s regressive.” That is, the rich now pay a smaller tax rate on their income than everyone else.

EY again rated #1 most attractive professional services employer by Universum [In-cyprus] Well this is awkward, considering that whole “pancake brain” thing: “EY scored highest among other professional services employers for professional training and development, opportunities to take on challenging work and for being a good reference for future careers.

Competition for talent drives CPA firms to start early with offers, internships [Buffalo Business First] Subscription required to hear about how hard firms are gunning for top talent.

Meet the 2019 Best Firms for Young Accountants [Accounting Today] Each year, Accounting Today and Best Companies Group recognizes the 100 Best Firms to Work For in the U.S. — and this year we also picked the 10 Best Firms for Young Accountants from among those based on the responses of their younger staff to a comprehensive employee survey.

Deloitte Peeks Into The Future, Details Four TV/Video Scenarios [TV Technology] Overall, Deloitte’s scenarios paint a picture of digital platform companies being the major disruptors in the industry, while broadcasters and content producers face the most potential change. They argue that broadcasters and content producers can’t rely on their current market positions. Instead, they need to be open in creating alliances, even with direct competitors. Investment in technological skills will also be critical.

PwC grows its mental wellbeing commitment with partnership [Consultancy.com.au] Mental health technology company Medibio is helping out PwC employees with their psychological welfare following an agreement signed between the two firms. Medibio’s support will come in the form of access to its data-driven corporate mental wellness application Ilumen.

Stitch Fix’s Material Weakness Over IT Controls Spotlighted Under New Audit Rule [Wall Street Journal] Stitch Fix Inc. is expanding its internal information-technology controls after identifying weaknesses in how the online personal-styling service reported financial performance. The issue, related to outsourced information-technology service providers, was flagged by the San Francisco company’s independent auditor in October—one of the starkest examples of how a new audit rule is training a spotlight on companies’ hairiest internal issues.

The post Friday Footnotes: Don’t Go Nuts at PwC; Bullied KPMGers’ Fresh Start; Best Firms For the Youths | 11.1.19 appeared first on Going Concern.

Plus, tax preparers plead guilty to preparing fraudulent returns, and the owner of a tax preparation business failed to file his own taxes.

Gambling accountant gets 14 years for $396M Ponzi scheme [Law360]
Texas CPA Jay Ledford will serve 14 years in federal prison for his supporting role in a Ponzi scheme that netted $396 million.

Ledford, 55, spent five years working with Maryland salesman Kevin B. Merrill on the scheme, pitching investors portfolios of defaulted consumer debt that they claimed would be profitably collected or flipped, Maryland U.S. attorneys said.

Ledford’s role in the scheme included creating fake documents, sales agreements, tax returns, portfolio overviews, collections reports, bank statements, and merchant account reports.

The two men were arrested in September 2018, and earlier this year both pled guilty to the lucrative long con in Baltimore federal court. Merrill was sentenced to 22 years in prison last month.

Accounting firm sentenced and fined $15,000 in connection with pot bust [Lewiston Sun Journal]
Leonardo & Co. was ordered to pay a $15,000 fine and forfeit $12,500 in U.S. District Court in Portland, ME, on Oct. 28 for failing to file cash transaction forms. The firm was also sentenced to one year of probation.

[I]n 2017, agents with the U.S. Drug Enforcement Agency and the IRS Criminal Investigation Division learned that Leonardo & Co. wrote four $12,500 checks to Brian Bilodeau, described as a member of a marijuana trafficking organization operating out of Androscoggin County in court records.

Court records show the checks written to Bilodeau were drawn on accounts associated with Leonardo & Co. and that the payments “did not involve a tax refund or payment for any services Bilodeau provided to the firm.”

“Instead, on each occasion, (Leonardo & Co.) exchanged the checks for $12,500 in cash,” according to the court records.

[S]ince the checks involved the receipt of more than $10,000 in U.S. currency, Leonardo & Co. were required by federal law to file a Form 8300, which they failed to do.

Bilodeau was one of more than a dozen people indicted on numerous felony drug charges stemming from federal raids on an illegal medical marijuana-growing operation in February 2018.

Accountant accused of embezzling more than $200,000 pleads guilty to charges [WCHS-TV]
Reneda Welch pleaded guilty on Oct. 28 to two counts of felony embezzlement for allegedly embezzling $203,000 from the city of Dunbar, WV.

Welch was arrested in April 2018 after Dunbar city officials told Kanawha County deputies they suspected the accountant was keeping deposits and embezzling the money.

So far, Welch has paid $50,000 back to the city.

Tucson tax preparer pleads guilty to preparing false tax returns
Adan Ramirez pleaded guilty on Oct. 25 to two counts of aiding and assisting in the preparation and presentation of a false tax return, according to a press release from the IRS Criminal Investigation Phoenix field office.

From April 2012 through March 2015, Ramirez, 36, prepared and filed 44 false individual federal income tax returns with the IRS for clients. Authorities said Ramirez used false and fraudulent claims for false wages, withholdings, dependents, Earned Income Credits, and Additional Child Tax Credits to obtain false and fraudulent tax refunds. The false and fraudulent claims resulted in a tax loss of $183,803, authorities said.

The false and fraudulent claims that Ramirez willfully filed on the federal income tax returns were filed to increase his client’s federal income tax refund amounts, to reduce their tax liability, and/or so that Ramirez would receive increased fees for income tax preparation. Ramirez intentionally omitted his name, signature, and a tax preparer identification number on the tax returns to conceal his identity as the tax preparer.

Ramirez agreed to pay restitution in the amount of $100,479. He will be sentenced on Jan. 17, 2020.

Owner of New Jersey tax return preparation business sentenced to prison for tax fraud [Justice Department]
David Patterson was sentenced to 29 months in prison on Oct. 28 for filing false tax returns on behalf of clients and failing to file his own tax returns.

Patterson, 38, who owned D&D Tax Service LLC, prepared fraudulent tax returns for tax year 2012 in which he knowingly falsified his clients’ medical and dental expenses, gifts to charity, and unreimbursed employee expenses, authorities said. At times, he took portions of his clients’ tax refunds and deposited them without authorization into bank accounts he maintained or controlled.

He also failed to file individual income tax returns for himself, and to pay federal income taxes, for 2013 through 2015.

In addition to his prison sentence, Patterson was sentenced to one year of supervised release and was ordered to pay restitution of $290,321 to the IRS.

Tax preparer pleads guilty to filing fraudulent tax returns [Justice Department]
Louisiana tax preparer Carlanda Allegra Isaac pleaded guilty on Oct. 29 to conspiring to defraud the United States with regard to tax returns.

Isaac, who worked for Pelican Income Tax and Bookkeeping Services LLC, located in Bridge City, LA, and Kenner, LA, and then later at Taxes by J.A.D.A. in New Orleans, falsified client tax returns to include false income, withholding, and education credits in order to fraudulently inflate clients’ tax refunds. Isaac charged a fee for preparing these returns, which was often deducted from the client’s refund, authorities said.

Isaac faces a maximum sentence of five years, three years of supervised release, restitution, and other monetary penalties.

The post Accountants Behaving Badly: Jailed Over Ponzi Scheme, Firm Fined In Pot Bust, Embezzlement Admission appeared first on Going Concern.

OK look, I’m old and spent my entire 30s in the same relationship so I don’t know a thing about Tinder other than what I’ve heard from friends and seen posted in meme form. There’s swiping involved, I know that. Man, you kids don’t know how good you have it. Back in my day, we had to walk uphill in the fog both ways just to hook up with some grungy guy of dubious sexuality with too many roommates we met at some San Francisco bar reeking of peanut shells and regurgitated Fernet.

Whew, bad memories. Back to modern day. So, it’s already been established that although jobs in accounting are as plentiful as greasy bisexual guys at an SF bar, the competition is heating up. I never thought I’d see the day when firms would start requiring more than a heartbeat and a degree, but here we are. While we could argue all day long how realistic it is for firms to want accounting grads who are fluent in no less than three programming languages and also double as a motivational speaker, that’s not what we’re here to discuss. We’re here to talk about this genius.

This enterprising senior at Cal State Dominguez Hills is totally prepared to take you to dinner tonight, provided of course you bring an accounting firm partner with you. Can anyone help him out?

The post This Accounting Student Is So Desperate For an Internship He’s Hitting Tinder to Find One appeared first on Going Concern.

Maryland Association of CPAs CEO and Going Concern favorite Tom Hood has been chosen as one of Maryland’s most admired CEOs [Daily Record] Go Tom!

Deloitte Private to be cut amid low profit, low growth [Financial Review] Big four consulting firm Deloitte is set to dissolve one of its six business units, Deloitte Private, an advisory arm aimed at small and medium enterprises and high net-worth individuals, and move its partners, staff and clients to other divisions. move, which staff are scheduled to be told about on Friday, has been in the works for the past year and is driven by the low profit per partner unit and low revenue growth at Deloitte Private.

How audit committees can improve disclosure [Journal of Accountancy] The percentage of audit committees providing public disclosure on many key metrics has increased in recent years, but opportunities for greater transparency remain, according to a yearly report published Wednesday by Audit Analytics and the Center for Audit Quality (CAQ), which is affiliated with the AICPA.

KPMG looks to close private members’ club [Financial Times] KPMG has instructed property agents JLL to seek a new tenant for its private members’ club in Mayfair after the accounting firm’s UK chairman personally pushed to offload the property. The lavish club known as Number Twenty was opened in 2015 in one of London’s most exclusive areas and offers free membership to partners, executives and clients.

Post-#MeToo, Ernst & Young Grapples With Diverging Views Of Its Culture [NPR] Your Boomer uncle will finally understand those waffle memes you’ve been posting on Facebook.

IRS Announces Higher Estate And Gift Tax Limits For 2020 [Forbes] You probably already know this.

Complaint data: Millennials more likely victims of fraud, especially online [KOMO] Based on complaints, the Federal Trade Commission says digital natives (as the tech industry calls them) are actually twice more likely than people over 40 to report losing money while shopping online.

Square is dropping an accounting metric after the SEC said it’s not allowed [MarketWatch] Square Inc. is making a change to its accounting after receiving a comment letter from the Securities and Exchange Commission in a move that has implications for other U.S. companies. The payment company is abandoning its practice of offering an adjusted revenue number, a metric that does not conform with Generally Accepted Accounting Principles, or GAAP, the U.S. standard, and that the Securities and Exchange Commission does not allow.

Thomas the Tank Engine was allegedly the engine for an accounting cover-up [Quartz] Headline of the Week goes to…

The post Friday Footnotes: Deloitte Tightens Its Belt; KPMG Kuts; Square Gets Square With the SEC | 11.8.19 appeared first on Going Concern.

Plus, a bunch of tax preparers are going to be spending some quality time in jail.

Kentucky man charged with sex trafficking, drug conspiracy [Associated Press]
Mark Milslagle, a former Kentucky accountant accused of paying for sex with young women who were addicted to drugs, faces federal conspiracy charges.

Milslagle, 49, was charged on Nov. 4 in federal court with conspiring to distribute drugs and conspiring to engage in sex trafficking.

Authorities claim that Logan Ray Towery, 72, provided drugs to young women who were then passed on to Milslagle for sex. Towery has been indicted on similar conspiracy charges and a gun charge.

According to his LinkedIn page, Milslagle was the owner of MJM Tax & Accounting Services in Lexington, KY.

Washington state bookkeeper charged in embezzlement case [Associated Press]
Sara Ann Greenleaf, president of Greenleaf Bookkeeping and Accounting Services in Bellingham, WA, was charged on Nov. 5 with eight counts of first-degree theft and 27 counts of second-degree theft for fraudulently obtaining about $200,000 from a client’s accounts, authorities allege.

Greenleaf, 45, turned herself in to Bellingham police on Nov. 4 and was later released on personal recognizance.

Dozens of transfers totaling $197,100 were made into Greenleaf’s account between June 5 and Aug. 3 when she had access to the client’s accounts, authorities said. Another eight transactions were made for more than $5,000.

She is scheduled to be arraigned on Nov. 15.

L.A. federal grand jury indicts lawyer and accountant in visa fraud case [MyNewsLA.com]
Young Shin Kim, a naturalized U.S. citizen who previously operated an accounting firm in Diamond Bar, CA, and is now a farmer in Hesperia, was one of two men indicted by a Los Angeles federal grand jury on Nov. 4 for their roles in a scheme to obtain lawful permanent resident status for South Korean nationals by submitting fraudulent visa applications that falsely claimed American businesses wanted to hire skilled foreign workers.

The indictment alleges that Kim and licensed California attorney Weon Keuk Lee exploited the EB-2(a) visa program by submitting bogus Alien Worker Petitions on behalf of companies—some legitimate, some created specifically for the scheme—that purportedly wanted to hire foreign nationals after exhausting attempts to find suitable workers in the U.S.

According to court documents, those South Korean visa applicants paid between $30,000 and $70,000 to Kim and Lee in the hopes of obtaining a visa.

Collier County (FL) tax preparer convicted in multimillion dollar tax fraud scheme [Justice Department]
A federal jury on Nov. 5 found Augustin Dalusma guilty of 12 counts of filing false claims against the IRS and three counts of making or subscribing to false tax returns.

He faces a maximum penalty of five years in federal prison for each count of filing a false claim and up to three years’ imprisonment for each count of making a false tax return. His sentencing is scheduled for Jan. 27, 2020.

Between 2012 and 2015, Dalusma, a tax preparer, falsified information in tax returns for 630 of his clients, fraudulently qualifying them for thousands of dollars in tax refunds that they weren’t lawfully entitled to collect. In total, the false claims filed on behalf of his clients exceeded $4 million over the four-year period.

Dalusma also falsified his own tax returns from 2012 through 2014, significantly underreporting his own income to evade more than $30,000 in taxes for each of those years.

Vegas tax preparer gets 14-month sentence in fraud case [Associated Press]
Trixa Belloso Rivas, a Las Vegas tax preparer who pleaded guilty in May to conspiracy to present false claims, was sentenced to 14 months in federal prison on Oct. 29 and ordered to pay $2 million in restitution to the IRS.

Authorities said Rivas, 55, helped file at least 500 false tax returns that caused the IRS to issue approximately $2 million in fraudulent refunds.

Tax preparer pleads guilty to filing false tax returns [Justice Department]
William Pamintuan Craig, who operated a tax preparation business in Las Vegas, pleaded guilty on Oct. 28 to making and subscribing a false tax return.

When preparing his own tax returns, Craig, 59, underreported his taxable income for tax years 2012 to 2017 by approximately $439,000 in total, causing $143,237 in tax loss.

Furthermore, when preparing his clients’ tax returns, Craig purposely and fraudulently claimed sham “deductions” to which his clients were not entitled. Between 2012 and 2017, Craig caused at least $128,000 in tax loss by filing false returns on behalf of his clients.

Tax preparer charged with fraud in 36-count indictment [Justice Department]
Shawree Hagins, a tax preparer from Millen, GA, was charged with 36 counts of fraud and false statements on Oct. 10 for preparing fraudulent federal income tax returns that resulted in illegally excessive refunds for multiple clients.

In addition to fines and asset forfeiture, the charges carry a possible sentence of up to three years in prison, followed by a period of supervised release.

Hagins is charged with preparing 36 tax returns on behalf of 12 clients, fraudulently claiming deductions in excess of the amount to which the taxpayers were entitled. The fraudulent claims resulted in excessive refunds of $162,890.

The post Accountants Behaving Badly: Drugs and Sex Trafficking, Bookkeeper Busted for Embezzlement, Visa Fraud appeared first on Going Concern.

Calibre CPA Group, Notice of Data Privacy Event [PR Newswire] Clients of Bethesda-based Calibre CPA Group, consider yourselves warned that the haxz0rs may have your personal information.

In Hong Kong, an accountant by day becomes street fighter by night [Washington Post] “We have started to realize we need to arm ourselves. We are in a war — there is no other choice,” said Kelvin, a 33-year-old accountant, who like the others in the group provided one name for fear of official retribution. “We can’t just be sitting ducks anymore.”

Under Armour defends accounting practices amid federal probes and media reports [Baltimore Sun] Under Armour again Friday defended its accounting practices that have come under scrutiny amid federal probes and media reports that the brand manipulated sales numbers to mask weakening demand for its athletic apparel. The Baltimore-based athletic apparel company confirmed earlier this month that its accounting methods are being investigated by the U.S. Securities and Exchange Commission and the Justice Department.

Accountant, 26, is horrified to discover a handwritten note embedded INSIDE the batter of his KFC chicken order [Daily Mail] And you thought team pizza was bad.

10 M&A questions to ask in a buyer’s market for accounting firms [Accounting Today] The volume and pace of CPA firm M&A over the past 10 years, along with the current age demographics of firm owners, has created what appears to be a buyer’s market — that is, one in which there are more potential sellers than buyers. And those sellers are increasingly concerned about who will buy their firms.

Subprime Lender’s Warning Reflects Aim of New Accounting Rule [Bloomberg Tax] Investors who believe in the company’s earnings potential—like Randy Heck, partner at Goodnow Investment Group—will focus on these adjusted metrics. The new, official accounting does not reflect the true economics of the company, Heck said. Heck has owned stock in the company for 21 years, he said. “I don’t care,” he said of the accounting change. “Because the company, as it’s done in the past 10 years or so, has reported level yield accounting or adjusted earnings. And that’s what the management team reports and what we focus on, regardless of the knucklehead sell-side analysts out there.”

FASB proposes clarifying hedge accounting standard [Journal of Accountancy] The proposed Accounting Standards Update (ASU) issued Tuesday primarily addresses the change in hedged risk in a cash flow hedge. The standard issued in 2017 allowed the risk causing variability in cash flows of the forecasted transaction to change (for example, from one variable interest rate to another, or from one commodity index to a different index for the same commodity) if certain criteria are met. Under the proposal, FASB would clarify whether that change can happen both prospectively (before the forecasted transaction occurs) and retrospectively (after the transaction occurs). The proposal also addresses how hedge accounting guidance should be applied if the change can happen both prospectively and retrospectively.

FASB officially delays 4 major standards [Journal of Accountancy] And more FASB news hot off the presses from the JofA…

The post Friday Footnotes: Subprime Accounting Magic; A Street Fighting Number-Cruncher; FASB Gets Busy | 11.15.19 appeared first on Going Concern.

Plus, healthcare accountant sentenced to two years in jail for embezzlement, and tax preparer gets three years for filing fraudulent tax returns.

Auditor detained after saying devil told him to kill his sister [Metro U.K.]
Khalid Ashraf, who had worked as an auditor for KPMG for eight years until October 2018, pleaded guilty to manslaughter on Nov. 14 for killing his sister and was detained in a mental health facility.

Ashraf, 32, who has paranoid schizophrenia, was arrested by police on Jan. 5, 2019, after he strangled his older sister, Sarah Ashraf, 35, in his flat in East Ferry Road, Docklands, East London after a fierce struggle.

Ashraf, originally from Pakistan, was arrested on suspicion of murder and later told police: “Satan asked me to murder her.”

A psychiatric report said Ashraf was “suffering from an abnormality of mental functioning” at the time of his sister’s death, and found the killing was “entirely attributable to the defendant’s mental illness.”

They hired him to pay their taxes. He stole $300,000, Largo police say [Tampa Bay Times]
Dennis Maxey, who police say has a “history of fraud,” was arrested on Nov. 14 on charges that he stole more than $300,000 from clients who hired him to pay their taxes.

Maxey, 72, is accused of stealing the money over the course of several years from a handful of people. Arrest affidavits say the victims gave Maxey money to pay their taxes, “but it was recently discovered that he never actually paid the IRS for them and when confronted he gave them varying excuses but could not provide proof that the IRS was actually paid and it was later confirmed by the IRS that no taxes had been paid on the victims’ behalf.”

Maxey faces charges of scheme to defraud and grand theft, both first-degree felonies.

Florida Keys accountant accused of ripping off his boss [Miami Herald]
Adam Ibrahim Moore, who worked as an accountant for a Key Largo plumbing company, was arrested on a grand theft warrant on Nov. 14 after an investigation showed he stole $21,200 from his employer.

Moore, 32, allegedly began stealing the money in May 2018, after his employer, Seaway Plumbing, discontinued his monthly vehicle maintenance bonus because the company provided him a take-home car.

However, Moore, who was in charge of payroll, continued to pay himself the extra money, authorities said.

Pearl accountant charged with embezzlement [WJTV]
Brandy Hales, the owner of Hales CPA Firm PLLC in Pearl, MS, was arrested and charged with felony embezzlement on Nov. 14 for allegedly taking $47,120.33 from her clients for her personal use.

Hales, 48, is scheduled to appear in court on Nov. 21.

KC woman sentenced for embezzling $547,000 from health care foundation [Justice Department]
Kathleen Frederico, who was employed as the accounting and special projects manager at Saint Luke’s Foundation in Kansas City, MO, was sentenced on Nov. 12 to two years and three months in federal prison without parole for embezzling almost $547,000 from the healthcare foundation.

Frederico, 52, who pleaded guilty to wire fraud on June 4, admitted that she conducted two related fraudulent embezzlement schemes over a 14-year time period while employed at Saint Luke’s Foundation.

She began embezzling from the foundation in June 2003 and continued to embezzle until March 29, 2017. The investigation has revealed Frederico’s spending of the embezzled funds included:

• More than $150,000 on shopping and retail.
• More than $67,000 in cash.
• More than $30,000 in travel.
• More than $21,000 in internet purchases to support her illegal drug habit.
• Mortgage payments, utility bills, and other living expenses.

In the primary fraud scheme, Frederico created unauthorized checks made payable to herself. To conceal the embezzlement, she entered a different payee into the general ledger and created or falsified corresponding invoices. Through this method, Frederico embezzled at least $441,268.

Frederico also created unauthorized checks in which the foundation paid her personal credit card bill, and on two occasions, a relative. Through Frederico’s second fraud scheme, she embezzled at least $105,333.

Owner of Winter Park tax business sentenced to 36 months in federal prison for filing fraudulent tax returns [Justice Department]
Leslie Muniz, owner of Royalty Tax Services in Winter Park, FL, was sentenced to 36 months in federal prison on Nov. 14 for aiding and abetting the filing of false federal income tax returns.

Between 2012 and 2016, Muniz prepared, or caused her employees to prepare, hundreds of fraudulent tax returns for clients claiming false itemized deductions and fake Schedule C businesses and business losses in order to inflate her clients’ refunds. Muniz then used tax preparation numbers assigned to her employees to file the fraudulent tax returns with the IRS to avoid having the returns traced to her. When employees at Royalty Tax Services questioned Muniz about her tax practices or her use of their tax preparation numbers, she fired them.

The total loss to the U.S. as a result of Muniz’s fraud was more than $1.6 million.

The post Accountants Behaving Badly: Ex-KPMG Auditor Detained, Stealing From Clients, Ripping Off Boss appeared first on Going Concern.

Security lapse exposes personal data of 6,500 Singapore accountants [ZDNet] A folder containing personal data of 6,541 accountants in Singapore was “inadvertently” sent to multiple parties, in a security lapse that was uncovered only months after, when it implemented an email protection tool as part of a government-wide deployment. The incident exposed personal details such as names, national identification number, date of birth, and employment information.

Democrats Call American Investment Council And Ernst & Young Private Equity Report A Sham Study [Forbes] Today, nine Democratic members of Congress sent a letter to consulting and accountancy firm, Ernst & Young (EY), questioning the methodology and results of a report on private equity firms contributions to the U.S. economy, that it published together with private equity industry group, American Investment Council (AIC).

Automation means better jobs, not fewer [Accounting Today] Update: robots are (probably) not coming for your job.

SEC may be set to crack down on companies that adjust revenue [MarketWatch] The Securities and Exchange Commission may be closer to cracking down on companies that adjust their revenue, according to a MarketWatch analysis of comment letters sent by the regulator in the last two years. It’s a development, if one still slowly taking shape, that could go a long way toward clearing up earnings reporting confusion for investors.

Grant Thornton announces digital tie-up [economia] The UK’s sixth-largest accountant firm and Vonage are teaming up to help digital transformation at financial services businesses. “Digital transformation represents one of the most significant and current opportunities in business, to deliver growth and increase value across an organisation,” said David Royle, partner at Grant Thornton.

IRS will fail to collect trillions of dollars over the next decade, researchers estimate [Fox Business] The tax gap, or the difference between what the IRS is owed and what it collects, is expected to swell over the coming decade, according to research by former U.S. Treasury Department official Lawrence Summers and assistant professor of law at University of Pennsylvania Natasha Sarin. The pair generated their forecast based on recent estimates from the tax agency. The IRS estimated it failed to collect $380 billion in taxes per year, between 2011 and 2013. Using those figures, and accounting for inflation and income growth, Summers and Sarin estimated the IRS would not collect nearly 15 percent of total tax liabilities in 2020 alone — or $630 billion.

PwC’s NewLaw team partners with ThoughtRiver on legal screening AI [ICLG] London and Cambridge-headquartered ThoughtRiver, an artificial intelligence (AI) legal pre-screening automation start-up, has been chosen by Big Four accountant PwC to provide technology to its NewLaw client programme. The announcement followed an 18-month tender process and will see PwC use ThoughtRiver’s platform in its document pre-screening technology. The pre-screening platform is driven by AI, and, among other things, is able to summarise contract data into actionable recommendations and can be activated within Microsoft Word for speedy remediation work.

At rare open meeting, PCAOB says it’s on path to change [Compliance Week] At the Public Company Accounting Oversight Board’s open meeting last week, board members said outreach to all stakeholders over the past year indicated that transformational change was needed, but they also affirmed that their 5-year strategic plan is still relevant and their 2020 budget supports their continued commitment to making the necessary changes.

The post Friday Footnotes: Accountants Exposed; EY’s ‘Sham’ Study; A Word About Robots | 11.22.19 appeared first on Going Concern.

Plus, no more lavish lifestyle for part-time accountant, and an accountant gets busted for stealing grocery gift cards.

High-flying PwC accountant, 24, who was caught with 1,700 upskirting images after he was spotted behaving suspiciously in Topshop on Oxford Street store is spared jail [Daily Mail]
Leon Chan got a suspended prison sentence.

On Friday he was sentenced to eight months imprisonment, suspended for two years and ordered to complete 100 days of the probation service’s Horizon programme for adult male sex offenders.

Chan must also complete 60 days of a probation-ordered recommended activity requirement and he was made subject to a five year Sexual Harm Prevention Order, prohibiting him from ‘upskirting’.

Chan, who worked in PwC’s London office, was fired following an internal disciplinary hearing, Financial News reported in September.

Ex-accountant pleads guilty in sizable embezzlement case [Times of Northwest Indiana]
Debra McCall pleaded guilty to charges of bank fraud and tax evasion on Nov. 20 for embezzling hundreds of thousands of dollars over a period of several years as an accountant for a company in Highland, IN.

McCall signed a plea agreement in which she is giving up her right to a trial and is admitting her responsibility for the theft of $708,972.

The U.S. Attorney’s Office will recommend that she receive a sentence of no more than 27 months in prison in return for her guilty plea and her promise to pay restitution.

Judge hands former accountant 18 months in prison for stealing from St. Francis [Newark Advocate]
Amber McCracken, a former St. Francis de Sales Catholic Church accountant, was sentenced to 18 months in prison on Nov. 18 after she admitted to stealing more than $172,000 from the parish.

McCracken, 39, of Newark, NJ, pleaded guilty to one count each theft, a third-degree felony; and tampering with records, a fourth-degree felony.

Between November 2010 and Aug. 8, 2016, McCracken served as the church’s bookkeeper, and during that time, she used the parish credit card for personal items, including a swimming pool, took cash donations intended for the parish, increased her children’s cafeteria funds without supplying the money, increased her salary by not deducting mandated deductions, and gave herself extra paychecks.

Lincoln part-time accountant stole almost £90k for lavish lifestyle [The Lincolnite]
Elizabeth Cullen, a part-time accountant who stole £87,000 from B Eyre & Son, a car dealership in Tattershall, Lincolnshire, to buy clothes, a new kitchen, health and beauty treatments, and to take vacations, was sentenced to two years and four months in prison.

An investigation revealed that Cullen had been forging the owner’s signature on checks which she used to withdraw cash from the company account. Fraudulent entries were made in the company’s books to cover up what she was doing.

Cullen, 57, pled guilty to two charges of theft between January 2010 and May 2017. She also admitted to money laundering between January 2004 and May 2017.

School district employee accused of stealing wellness gift cards [Patch.com]
Susan Hawes, an accountant technician at Manchester School District in Manchester, NH, turned herself in to authorities on Nov. 15 and was charged with theft by unauthorized taking for allegedly stealing grocery gift cards, which were part of a wellness program, and using them.

The school district runs a wellness-fitness challenge for employees where the winner of each challenge receives a $25 gift card to Hannaford Supermarket as a bonus. An inventory of the cards took place earlier this year and an employee noticed that 26 gift cards, with a value of $650, went missing.

Authorities said the majority of the missing cards had been used and the same Hannaford’s loyalty rewards account, registered to Hawes, was associated with all of the purchases.

The post Accountants Behaving Badly: No Jail for PwC Peeper, Guilty Plea for Embezzler, Catholic Church Crook appeared first on Going Concern.

Ed. note: welcome to a special Black Friday edition of Friday Footnotes. Special because ain’t shit going on so this will be short. We’ll be back to your regularly-scheduled programming come Monday. From me, Bramwell, the silent TPTB and everyone else at the Going Concern team, Happy Thanksgiving! -AG

FASB proposes changes aimed at improving codification [Journal of Accountancy] FASB proposed numerous changes Tuesday as part of its annual project to address minor problems with its Accounting Standards Codification. Each year, FASB makes changes to clarify the codification or correct unintended application of guidance. The changes are not expected to have a significant effect on current accounting practice or create a significant administrative cost for most organizations that use U.S. GAAP to prepare their financial statements.

IRS New Hire Numbers Are Going Up [Forbes] Hear that noise? It’s the collective sighs of tax professionals around the country upon learning that the Internal Revenue Service (IRS) is in the midst of a hiring spree. According to IRS Commissioner Charles Rettig, the IRS is hiring thousands of new employees—the most in almost a decade. Rettig says that the IRS hired nearly 10,000 people during the 2019 fiscal year and plans to hire more than 5,000 additional workers.

Audits Are Broken. Here’s a Radical Way to Fix Them. [CFO Magazine] TL;DR here’s the radical idea proposed in the article: “kill the practice of supposedly independent auditors examining and certifying the books of public companies and give that job to the Public Company Accounting Oversight Board (PCAOB).”

The failure of audit leadership [Accounting Today] The current state of the audit is in jeopardy, and our profession has had a big stake in putting it there. As audit becomes more of a commodity, our fees are being driven down. Our clients can’t tell the difference between the audit we do and one done by the firm down the street because none of them provide relevant information. There’s not a client in the world that pays attention to what a firm says on their website about how that firm adds value to the audit.

KPMG South Africa Makes Headway Rebuilding Image After Scandals [Bloomberg] “The market is beginning to acknowledge and accept the changes that we have made,” Chief Executive Officer Ignatius Sehoole said in an interview at KPMG’s Johannesburg office. More companies no longer fear they are “taking a risky bet by doing business with us. Everyone is also concerned about their own reputation.”

PwC Probe Finds Certain Executives at South Africa’s Tongaat Overstated Profits, Assets [Reuters] South Africa’s Tongaat Hulett said on Friday a PwC probe found that certain senior executives had overstated profits and certain assets by using “undesirable accounting practices”.

The Tax Code Can’t Handle Negative Rates [WSJ] While recent comments by Federal Reserve Chairman Jerome Powell indicate that the Fed hopes to avoid resorting to negative interest rates during the next recession, without them the central bank’s ability to stimulate growth may be limited. Should negative interest rates one day become a reality in the U.S., the tax code will need to be amended.

The post Friday Footnotes: FASB Changing It Up; IRS Now Hiring; KPMG Fights Its Bad Rep | 11.29.19 appeared first on Going Concern.

Plus, two tax preparers, who as it turned out weren’t registered tax preparers, are sentenced for filing false tax returns.

Plymouth accountant charged with stealing from county retirement board [Wicked Local]
Paul Hurley, the former accountant of the Plymouth County Retirement Association, is accused of stealing money from the fund.

He was arrested on Nov. 29 on warrants charging him with larceny of more than $1,200 by single scheme and seven counts of uttering a false check.

The charges stem from allegations that Hurley, 57, reprinted already issued retirement checks for seven county retirees and signed and deposited them in his own account. Between August 2018 and last July, Hurley is accused of stealing $16,367.34 via the check scheme.

Accountant admits £1m Belfast care home fraud [Belfast Telegraph]
Michael Kinder pleaded guilty on Nov. 29 to defrauding a south Belfast care home out of more than £1 million.

The accountant is accused of defrauding Nazareth House Care Village in Belfast, Northern Ireland, by transferring £1,036,055 out of its bank account into two accounts he held with First Trust Bank and Santander on dates between April 2011 and October 2017.

Kinder, 52, also pleaded guilty to a charge that between August and September 2017 he “destroyed, defaced, concealed, or falsified” bank statements in the name of Nazareth House Care Village.

Missouri CPA convicted in $7 million fraud scheme [Associated Press]
Douglas Richardson, CPA, who was an executive for Smart Prong Technologies, was found guilty on Nov. 7 in a Missouri federal court of six counts of wire fraud and four counts of money laundering for initiating a $7 million scheme to defraud his employer and clients of the CPA firm he owned.

Prosecutors say Richardson, 46, transferred at least $4.4 million from Smart Prong accounts into his personal and business bank accounts.

He also induced several clients to provide loans or make investments by claiming the money would be used for one purpose, when some of the money was instead used for Richardson’s benefit or to pay other people.

Spartanburg woman accused of preparing false tax returns [WSPA-TV]
Annmedra Brown was arrested on Nov. 27 and charged with eight counts of willfully assisting in the preparation of a false return.

Brown, 41, of Spartanburg, SC, allegedly reported “false deductions and losses of more than $304,000” in eight tax returns for four clients between 2015 and 2017, authorities said.

She faces up to 40 years in prison and $80,000 in fines if convicted of all charges.

Prince George’s County man sentenced for filing fraudulent tax returns [Maryland Attorney General’s Office]
DiAnte Eugene Yawn pleaded guilty on Nov. 22 to one count of theft scheme greater than $100,000 for filing fraudulent tax returns.

He was sentenced to five years in prison, suspending all but six months, three years supervised probation upon release, and is prohibited from acting as a tax preparer while on probation. A lien will also be placed on his Social Security number to collect restitution.

From 2014 to 2016, Yawn, 41, who wasn’t a registered tax preparer in Maryland, prepared and filed state income tax returns, for a fee, on behalf of numerous Maryland residents. Many of the Maryland tax returns Yawn filed on behalf of his clients included false information, which reduced their Maryland tax liabilities and improperly increased their state tax refunds collectively by approximately $100,000.

The returns contained false entries concerning business income and loss, dental and medical expenses, unreimbursed medical expenses, educational expenses, false reported tax preparation fees, and a false W-2.

Anchorage man pleads guilty to false federal tax preparation for Spanish-speaking community members [KTVF-TV]
Jose Luis Arenas pled guilty in early November to five counts of aiding and assisting in the preparation of false federal individual income tax returns with a clientele primarily of Spanish-speaking members of the Anchorage community, charging them $100 to $600 per return.

Arenas, 65, had tax preparation training through H&R Block, but since 2012 has never been a registered tax preparer in Anchorage. Between tax years 2013 and 2016, he consistently failed to indicate that he had filed them as a paid, professional preparer. Instead, the returns appeared to be filed individually by the taxpayers. Arenas would obtain undue tax refunds for his clients by inflating certain Schedule A deductions, particularly medical expenses and charitable giving. Oftentimes, Arenas would fabricate medical expenses, unbeknownst to his clients.

Arenas faces a maximum sentence of three years in federal prison, a fine of up to $250,000, three years of supervised release, five years of probation, and restitution.

The post Accountants Behaving Badly: Retirement Fund Theft, Defrauding Nursing Home, Fraudster Going to Jail appeared first on Going Concern.

Right now in Canada, about 8,000 would-be CPAs are sitting around twiddling their 10-key fingers not knowing A) if they passed September’s Common Final Examination, and B) if their scores will even count after a long legal review into the disaster of an exam that plagued thousands across the country. From testing center Internet outages to late starts, there’s no question the CFE was an absolute clusterfuck. What remains to be seen is what happens from here.

And according to a recent Financial Post article, the fallout has real consequences other than anxiety.

“Most accountants would expect a raise on receiving their CFE results, so there’s a real economic cost for us every month it’s delayed,” said one candidate who wrote the exam in Ottawa.

“It also makes us put our life on hold,” the candidate told the Post, adding that the day results arrive typically “becomes an anniversary date for future promotions and increases.”

As it stands, candidates can be sure they won’t be seeing scores this year. But we already knew that, as CPA Canada said back in October that they “anticipate that results will be released in January 2020.” Anticipate being code for “hopefully but don’t count on it because look how bad this has been screwed up already.”

The Financial Post piece continues with further thoughts from understandably-frustrated CFE writers:

“It’s… a waste of money to pay people to mark exams that the legal advisors will (possibly) conclude should be thrown out,” said the candidate who wrote the final examination in Ottawa.

Another test taker, who works for a Big Four accounting firm in Vancouver, said limited information about the third-party review and how the problems experienced will affect the exam assessments has left CPA candidates across the country in an uncomfortable limbo.

“At this point, the only lens this can be seen through is one of even greater fear and heightened stress,” the candidate said. “Will the exam be thrown out? Will our careers and schedules be upended by a mandated rewrite?”

No word yet on where law firm Borden Ladner Gervais is in their extensive review of what went wrong in September. According to an earlier statement by CPA Canada, the firm has “retained a world-leading technical expert to undertake a detailed review of the software and Wi-Fi issues; and is also retaining a world-leading psychometrician (an expert in the validity, fairness and reliability of examinations).”

Given that some candidates were instructed at the testing center to use their phones as hotspots and therefore potentially given an unfair advantage in the form of access to materials they otherwise wouldn’t have had, it’s not out of the question that BLG might want to throw some results out. For now, however, all we’ve got is waiting, wild speculation, and a nebulous, not-so-firm score release date of January 2020.

Merry Christmas, Canada.

The post Santa Will Not Be Bringing CFE Candidates Their Long Overdue Scores For Christmas appeared first on Going Concern.

In a former office of mine that shall remain nameless, we had a liquor cabinet. Working long hours, it wasn’t unheard of for my colleague and me to pour ourselves a drink at 5 on the dot, sipping vodka Red Bull as we tied up the day’s tasks. The arrangement worked well as we got a buzz in exchange for squeezing out another hour or so of work without the usual resentment that comes with having to slave away at your desk past your time when an incentive other than overtime wasn’t involved.

Of course, this requires trust from management that the liquor cabinet won’t be plundered at all hours of the working day and that professional adults will exercise moderation when partaking at the office. I’d like to tell you this was the case 100% of the time, but surely there were more than a few “fuck it, 3 p.m. is close enough to 5” days, and eventually the liquor cabinet was replaced by a snack drawer. Snacks. Like that’s going to motivate anyone to stay in the office until 7.

I digress. It seems PwC, presumably in the interest of preventing EY-level sexual harassment accusations, is trying to rein in its staff and prevent any boozy misadventures before they happen.

From CityAM:

Under new rules introduced this year, alcohol can only be drunk on PwC premises when it has been supplied by the firm’s in-house catering team at specially designated events.

A spokesperson for the firm said: “As part of the regular review of our policies we recently refreshed our policy on social events.

“Only alcohol sourced from our in-house catering company can be consumed in the office.”

This is a long way from WeiserMazars’ 2013 busy season campaign featuring whiskey in a drawer. Haha because you need to daydrink to survive busy season, get it? Yeah OK everyone gets it.

I can see why firms might want to crack down on the office drinking. Any drunk worth their tequila salt has an entire folder of stories that start with “man, this one time I was so drunk I …” and end with some next-day realization that they may have a problem holding their liquor. No one wants that shit in the office, I get it. And especially now in this delicate environment when almost everyone is on their best behavior trying to avoid the next big sexual harassment lawsuit.

So what is PwC offering instead?

“We are committed to providing an inclusive environment for all of our people and develop activities for team building events in the office such as pizza making and barista masterclasses,” a spokesperson said.

Ooh! Pizza making! Coffee! What joy! Looks like the whiskey-in-a-drawer days are coming to an end for public accountants. Surely the hardcore among you will still find ways to get your drink on in the office (I recommend Irish whiskey in a Yeti myself but that’s just me) while the rest of you will just have to do your drinking in your copious amounts of free time outside the office.

Wonder how this affects /r/accounting’s black tar heroin habits? Welp, as long as they’re not drinking …

The post PwC Would Appreciate It If Staff Would Stop Getting Drunk In the Office, Thx appeared first on Going Concern.

Dunno if you heard but the Accounting Today Top 100 Most Influential People in Accounting list is out, and as is tradition, it’s jam-packed with some familiar names, including some longtime GC favorites like the Patron Saint of Value Pricing Ron Baker and my eternal ladycrush Sue Coffey. While we’re on the topic of our Lord and Savior Ron Baker, here’s a flashback to that time our own Greg Kyte nearly got punched out by Mark Lloydbottom for being a “VeraSage stooge.”

Overall, the list looks good. President Trump (regardless of your feelings, obviously the guy influences the profession, like it or not), the heads of the IRS, FASB, CPA.com, PCAOB, SEC, etc, etc. Yeah OK. Again, that’s all pretty much according to tradition and expected. However, there’s one tradition we need to point out that needs to stop: AICPA President, CEO, and Zane main Barry Melancon topping the list at No. 1.

Look, I have nothing personally against the guy. I’ve met him, he’s … fine. And a reasonable person might argue that the leader of the greatest, most powerful accounting organization in the first world is, in fact, a significant influence on the profession. But No. 1? Really? And for more than a decade?

This year AT writes:

As he has for several years, the AICPA chief dominated the polling, with more votes than the previous four people combined. In particularly, T100 candidates credited his enormous influence to his ability and willingness to lead change, his vision for the profession, and the work he is spearheading on taking the audit into the future.

How positively accounting-like for someone credited with a “willingness to lead change” to be the same person chosen as most influential for over a decade. A DECADE. Think about that. Think about how profoundly things have actually changed, spurred not by the old guard but by people daring enough to suggest billable hours are stupid and paperless offices are the future (remember those old “consider the environment” notices?). You know, those people, not the guy who oversaw the failed XYZ credential.

Barry Melancon has led the AICPA since 1995, and I bet some of you weren’t even born then. I was in high school. HIGH SCHOOL. For the record, I’m turning 40 soon. That tells you how long this dude has been at the helm.

It’s time for some fresh blood. Is it too early to start a committee for Kimberly Ellison-Taylor as AICPA president? Or Tom Hood, we’ll take Tom Hood. Unless, you know, we want to head into a brand-new decade hand-in-hand with our good friend SALY, in which case carry on I guess.

The post Boring Man Tops Boring List of Accounting Influencers For the Bazillionth Time appeared first on Going Concern.

Shh! Companies Are Fixing Accounting Errors Quietly [WSJ] Filed under: things y’all probably already know.

BDO USA, LLP NAMES KELLY JOHNSON AS BOARD CHAIR; FOUR PARTNERS ELECTED TO BOARD OF DIRECTORS [BDO] WHY ARE YOU YELLING.

PwC will consolidate as many as 1,700 jobs to DC [WTOP] Big professional services and consulting firm PricewaterhouseCoopers has signed an equally big lease for Douglas Development and Brookfield Properties’ 655 New York Avenue NW, the biggest office redevelopment project in the District this year. PwC’s 15-year lease is for more than 182,000 square feet at the 756,000-square-foot Mount Vernon Square development, which incorporates new construction with several existing buildings in the block.

Microsoft inks $5B cloud partnership deal with KPMG [SiliconANGLE] Soooo who is gonna break it to ’em? From the article: KPMG is another big win for Microsoft, since it’s known as one of the world’s “Big Four” accounting organizations, along with Deloitte Touche Tohmatsu Ltd., Ernst & Young Global Ltd. and PricewaterhouseCoopers. Its main focus is on providing tax, audit and advisory services to large global enterprises.

Ex-Celadon Execs Accused of Accounting Fraud [CFO.com] The former chief operating officer and former CFO of Celadon have been charged with orchestrating an accounting fraud that enabled the trucking company to hide tens of millions of dollars in losses. The charges against former COO William Meek, 39, and CFO Bobby Peavler, 40, came eight months after Celadon, one of North America’s largest truckload freight transportation providers, agreed to pay to settle $42.2 million to settle a federal investigation of the alleged fraud.

Nebraska banks targeted in decade long Russian bank fraud scam [1011Now] The Department of Justice unsealed documents today showing two Nebraska banks and one private business listed as targeted victims of the scheme. It outlines how two Russian nationals stole tens of millions of dollars in what a Nebraska U.S. prosecutor calls one of the most outrageous cyber crimes in U.S. history.

The IRS has a new tax form out and wants to know about your cryptocurrency [CNBC] The IRS just released a new Schedule 1 for the 2019 tax season, spelling out the details on above-the-line deductions, including the tax break for student loan interest and health savings account contributions. Eagle-eyed taxpayers will notice that the IRS threw in an extra question on the form: “At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?”

AICPA Issues New Definition of the Concept of Materiality [CPA Practice Advisor] The American Institute of CPAs (AICPA) Auditing Standards Board (ASB) has issued Statement on Auditing Standards No. 138, Amendments to the Description of the Concept of Materiality, and Statement on Standards for Attestation Engagements No. 20 of the same title to amend various AU-C and AT-C sections in AICPA Professional Standards.

The post Friday Footnotes: PwC DC; Microsoft’s KPMG Deal; Do You Even Bitcoin Bro? | 12.6.19 appeared first on Going Concern.

Plus, Kia Motors bookkeeper’s embezzlement case continued to January, and tax preparer gets 27-month sentence in scheme to defraud the U.S.

Accountant sentenced to 367 years in prison [Onlanka.com]
A court in Colombo, Sri Lanka, sentenced Hikkaduwa Liyanage Nandasiri, the former accountant of a public company, to 367 years of rigorous imprisonment [emphasis added] after he was found guilty of defrauding over Rs 2 million from the company by presenting forged documents.

It was uncovered that the accountant engaged in the fraud between January 2000 and January 2001.

He was found guilty of 19 charges by the Colombo High Court.

Newton accountant sentenced for wire fraud and filing false tax return [Justice Department]
Jeffrey Kellem was sentenced to 42 months in prison on Dec. 4 for embezzling $1.6 million from elderly clients and failing to pay taxes on the embezzled funds.

He was also sentenced to three years of supervised release, and ordered to pay restitution of $1,289,002 and a fine of $250,000.

Kellem pleaded guilty in September to four counts of wire fraud and one count of filing a false tax return.

Kellem used his position as an accountant for an elderly client, and the estate of a deceased client, to steal more than $1.6 million for his own use. He transferred his clients’ funds, without their authorization, to bank accounts he opened and controlled. He also failed to report more than $500,000 in income from the funds he took on his tax returns. As a result, in 2017, Kellem avoided paying taxes totaling more than $150,000.

Former Upper Valley accountant to plead to wire fraud; allegedly stole $1.2M from clients [New Hampshire Union Leader]
Ryan Wall, the owner of TSBS Payroll in West Lebanon, NH, is set to plead guilty after he was indicted on federal wire fraud charges alleging he stole $1.2 million from his clients.

Wall was indicted by a grand jury in Vermont on one count of wire fraud and one count of unlawful transportation of firearms. Wall now intends to change his not guilty pleas; he is scheduled for a change of plea hearing on Dec. 19 at the federal courthouse in Rutland, VT.

“(Wall) accomplished this theft by regularly issuing checks payable to himself, in excess of his authorized compensation, then cashing the checks or depositing them into a personal bank account,” the indictment states. “He also issued, without authorization, hundreds of checks to third parties. Those third parties then cashed the checks and gave the money back to Wall, or used the funds to buy [prescription] drugs that were given to Wall.”

Danbury dealership embezzlement case to resume next month [Greenwich Time]
The case of a former Kia Motors bookkeeper accused of misappropriating tens of thousands of dollars from the car dealership has been continued to next month.

Larnell Colontonio, 40, is scheduled back in court for a first-degree larceny charge Jan. 22, 2020, after her case was continued on Dec. 6 at state Superior Court in Danbury, NY.

Colontonio was arrested July 2, after police say she stole more than $100,000 from Kia Motors of Danbury over the course of nearly five years. She pleaded not guilty to the class B felony charge.

Waco tax return preparer sentenced to prison for defrauding the United States [Justice Department]
Janell Lightner was sentenced to 27 months in prison on Dec. 5 for her role in a conspiracy to defraud the U.S.

Lightner and her co-defendant, Stacey Anderson, prepared false tax returns for clients of Anderson’s tax return preparation business, Anderson Professional Tax Services. Anderson operated the business out of her residence in Waco, TX, but she and Lightner prepared tax returns for clients in Texas, Maryland, and the District of Columbia.

From 2013 through 2014, Lightner assisted Anderson in preparing fraudulent returns that inflated deductions and claimed false education credits in order to increase client refunds. Lightner’s conduct caused a tax loss of more than $1.3 million to the IRS.

Lightner was also ordered to serve three years of supervised release and to pay restitution in the amount of $1,337,800.88. Anderson was given an 87-month jail sentence on Oct. 9, and ordered to pay more than $8 million in restitution.

Richland tax preparer indicted for filing fraudulent tax returns [Tri-City Herald]
Jonathon F. Schumann, the owner of J’s Income Tax in Richland, WA, was indicted Dec. 3 on federal charges he filed individual returns for clients who claimed inflated refunds.

He allegedly prepared and filed at least 16 false and fraudulent returns for 2015 and 2016.

Federal prosecutors allege Schumann knew his clients were not entitled to the money when he prepared individual income tax returns claiming inflated refunds.

The illegal refunds were based on itemized deductions by falsely claiming things like charitable contributions, unreimbursed employee business expenses and personal property and sales taxes, the indictment states.

The post Accountants Behaving Badly: 367 *Years* In Jail, Scamming the Elderly, Wire Fraud Indictment appeared first on Going Concern.

The out-pouring of encomia for Paul Volcker, who has died at age 92, would tower over even his own formidable 6 ft. 7 in. (e.g., samples in the Financial Times and the New York Times).

His credits over more than 40 years include the taming of the rampant inflation of the 1980s as Federal Reserve chairman and, post the 2007-2008 financial crisis, the articulation of an eponymous “rule” aimed at the proprietary trading excesses of the investment bankers.

One effort for which he will be little remembered was his ill-fated aspiration to forestall the Enron-driven collapse in 2002 of the Arthur Andersen accounting firm. His proposed “rescue”—floated for three months in the winter of 2002 but effectively dead in the water from the moment of its launch—would have included a cleansing replacement of its leaders with management selected by a new outside board, shrinkage of the firm to “audit only” scope, and negotiations led by his own virtuous self to resolve the Damoclean legal exposures brought by the government and civil litigants.

The Andersen drama included hubris enough to fill a Greek theater: its leaders’ cries of innocence even amid the rubble of its reputation, voracious law enforcement agents displaying their punitive prosecutorial DNA, the plaintiff’s lawyers ratcheting upward their own demands.

And Volcker himself—boldly taking the stage to reprise a familiar role, only to discover that the script made demands beyond his repertoire.

Volcker’s quixotic effort was doomed from the outset, by a trifecta of insurmountable barriers:

• The fragility of Andersen’s organization, as a global network of national partnerships which, lacking the cohesion of a corporate structure supported by shareholder capital, was hostage to the rapid and fatal erosion of individual partner trust, confidence, and mutual commitment.
• The unwillingness of Andersen’s senior leaders to surrender their positions of stature, remuneration and accountability, to be displaced by an outsider from a different profession, however grise his éminence.
• Above all, the unsustainable impact of the multi-billion dollar litigation exposure inflicted on Andersen’s limited capital resources—a mortal blow the instant it fell, that made futile any rescue attempt as too little and too late to stop the disintegration already begun.

One legacy of Volcker’s failed mis-adventure is worth recalling today, in the currently fraught environment in which the structure and business model of the surviving Big 4 firms are under existential threat from politicians and regulators, particularly in the UK. That is, Volcker’s ambitious but benighted initiative was incorporated into the report issued on April 1, 2008, by the US Treasury Department’s Advisory Committee on the Auditing Profession—inspiring the report’s straight-faced suggestion that the audit firms’ governance should include a mandatory management-replacement program in the event of a disintegration threat.

That the Committee’s entire body of deliberations and pronouncements promptly faded without a trace—its risible Volckeresque proposal included—suffices to capture the inadequacies that inhered in the failed attempt at Andersen.

Meanwhile in its aftermath, fresh outbreaks of financial malfeasance mark the passage of the years since the disruptions of the financial crisis of 2007-2008, with intense public criticism rather than the introduction of sustainable “solutions” dominating the debate around the fitness of the current Big Audit model.

Paul Volcker himself was never heard to admit that he lacked sufficient appreciation of the issues to comprehend the futility of his efforts. A dose of that humility would have spared him a conspicuous failure. If true for a figure of his considerable stature, the same would be prudent today for those critics tempted to prescribe impracticalities far beyond their own vision and competence.

[Ed. note: This article was originally published on Re:Balance on Dec. 11. It has been re-published with permission.]

Jim Peterson is a 19-year veteran of Arthur Andersen’s internal legal group. He has been writing about the accounting firms and the Big Audit model since 2002, on his blog, Re:Balance, and in his two books, “Count Down: The Past, Present and Uncertain Future of the Big Four Accounting Firms” (2d ed. 2017) and, just released this May, “DOA: Can Big Audit Survive the UK Regulators?”

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Proposed CPA licensure model emphasizes core plus disciplines [Journal of Accountancy] A newly proposed CPA licensure model developed by the National Association of State Boards of Accountancy (NASBA) and the AICPA is designed to help newly licensed CPAs learn the skills and competencies they will need in the workplace of the future. The draft licensure model, which is not considered final, is designed similarly to the professional engineer licensure model, which requires all professionals to develop strong core skills and then choose a discipline in which to demonstrate deeper knowledge and abilities.

Upgrading the Engagement [CFO.com] The Financial Reporting Council (FRC), which regulates auditors, accountants, and actuaries in the United Kingdom, issued a report in July 2019 strongly criticizing firms’ auditing quality. The FRC assessed 75% of the FTSE 350 audits for December 2017 year-ends as good or requiring limited improvements. The council’s target is 90%, and no firms examined achieved that level. Overall there was no improvement from the previous year, FRC says, and 25% of assessed audits were below an acceptable standard. “Poor quality audit work remains unacceptably common,” the report opined.

Half of firms’ clients have been with them 8+ years [Accounting Today] More than half of accounting firm clients (56 percent) have been with them for eight or more years — and over a third (34 percent) have been with them a decade or longer, according to a recent survey.

TaxChat™, powered by EY, offers tax preparation directly to individual US taxpayers [PRNewswire] Ernst & Young LLP (EY US) announced today that beginning January 2020, EY TaxChat™, its award-winning, on-demand mobile tax preparation service, will be offered directly to consumers who are required to file US tax returns. Until now, EY TaxChat has been accessible exclusively as an employee benefit from participating companies.

Crypto accounting firm and CPA.com partner to roll out new software ahead of tax season [Yahoo] A partnership between crypto software company Lukka and accounting service CPA.com is building crypto tax tools for accountants, according to a joint release. The two have plans to unveil their “LukkaTax for Professionals” in mid-January, enabling companies to onboard and serve clients reporting digital transactions. The platform will provide both education and tools for accountants in the digital asset space, which Erik Asgeirsson, president and CEO of CPA.com said is of growing importance in the wake of Internal Revenue Service (IRS) activities this year.

KPMG announces drop in profits, but shows signs of positive audit investments [Accountancy Age] Big Four firm KPMG has announced a 14% drop in profits and a slow-down in revenue growth as it prepares for increased regulatory scrutiny that will likely lead to greater separation of its business.

SEC Charges Man With $42 Million Crypto Fraud Scheme [Infosecurity Magazine] The Securities and Exchange Commission (SEC) alleged that UnitedData founder Eran Eyal conducted a “fraudulent unregistered securities offering” by selling tokens for his Shopin business from August 2017 to April 2018. It’s claimed that Eyal pocketed at least $500,000 of investor funds for rent, shopping, entertainment and even a dating service.

Deloitte Has Made $42 Million Working With ICE This Year [VICE] On the “Values” section of its website, professional services giant Deloitte makes clear what kind of company it believes itself to be. “We believe that nothing is more important than our reputation, and behaving with the highest levels of integrity is fundamental to who we are,” the company states. One way to apparently operate a business with the highest levels of integrity is to make millions per year working with the U.S. Immigration and Customs Enforcement (ICE), the law enforcement agency heavily criticized by human rights organization for denying migrants basic human rights. Deloitte—one of the Big Four multifaceted consulting firms–has made more than $42 million working with ICE in 2019 alone.

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Plus, U.K. accountant charged with misleading pensions regulator, and an Isle of Man chartered accountant is banned.

Accountant, 57, and his boyfriend, 56, are jailed for total of 30 years after sexually assaulting children as young as 11 while they filmed their sick acts [Daily Mail]
Asswipes.

Richard Townsend, 57, abused children as young as 11 and even filmed his partner Mark Metcalfe, 56, sexually assaulting a teenage boy who was was ’15 at most’.

The pair, from Southampton, were convicted of a total of 17 offences spanning a decade from 1996 to 2006.

Townsend was convicted by a jury of 14 counts including rape, indecent assault, indecency with a child and assault by penetration, and was jailed for 23 years.

Southampton Crown Court heard over the course of several years he abused two boys – one aged from 11 to 15 and another from 13 to 16 – as well as an unknown male.

Townsend is a convicted sex offender, having being handed a suspended sentence in March 2018 after admitting to encouraging the distribution of indecent images and making indecent images of children.

Metcalfe was convicted of two sexual assaults and one indecent assault and was jailed for seven years.

Ex-Diamond Bar accountant pleads guilty in visa fraud case [MyNewsLA.com]
Young Shin Kim, a former accountant from Diamond Bar, CA, pleaded guilty on Dec. 9 to a federal count of conspiracy to commit visa fraud for his role in a scheme to obtain lawful permanent resident status for South Korean nationals by submitting fraudulent visa applications that falsely claimed American businesses wanted to hire skilled foreign workers.

A sentencing hearing was scheduled for Feb. 24, 2020.

Kim and licensed California attorney Weon Keuk Lee, who were indicted by a federal grand jury last month, exploited the EB-2(a) visa program by submitting bogus Alien Worker Petitions on behalf of companies—some legitimate, some created specifically for the scheme—that purportedly wanted to hire foreign nationals after exhausting attempts to find suitable workers in the U.S.

According to court documents, those South Korean visa applicants paid between $30,000 and $70,000 to Kim and Lee in the hopes of obtaining a visa.

Embassy accountant stole ‘hundreds of thousands’ from U.S. military in Haiti, feds say [Miami Herald]
Roudy Pierre-Louis, who worked for 14 years as the only budget analyst in the U.S. Embassy in Haiti’s Security Coordination Office, is accused of stealing “hundreds of thousands of dollars” from the U.S. military, according to a federal indictment.

Pierre-Louis forged paperwork for cash advances by members of the United States Southern Command, known as SouthCom. The scheme ran from 2015 until August 2018, federal prosecutors say.

The U.S. Attorney’s Office in Charleston, SC, charged Pierre-Louis with 16 counts of fraud, including wire fraud and forgery, on Dec. 11.

Pierre-Louis forged signatures of high-ranking people in the Department of Defense on cash-advance forms for Haitian nationals, the indictment alleges. He would then mark off the expenses as “office supplies” on SouthCom’s budget, according to court filings.

Accountant charged with misleading pensions regulator [FT Adviser]
Paul Rewrie was charged on Dec. 12 with misleading The Pensions Regulator (TPR) after he allegedly failed to enroll staff into a pension.

Rewrie, 58, was charged with knowingly or recklessly providing false or misleading information to TPR, an offence under section 80 of the Pensions Act 2004 which carries an unlimited fine at a magistrates court.

He could face an unlimited fine or up to two years in prison if found guilty.

The regulator alleged Rewrie, the sole director of U.K. accounting company PR Finance And Development Ltd., falsely declared staff at a Cambridge-based company had been automatically enrolled into a workplace pension scheme, despite knowing they had not.

Theft case accountant banned [Isle of Man Today]
Phillip McCarthy, a chartered accountant jailed for stealing more than £500,000 from his employer, was disqualified from acting as a company officer by the Financial Services Authority (FSA).

McCarthy, a resident of Colby, Isle of Man, was jailed in August 2018 for three years and four months for offenses carried out while working as finance manager and company secretary at yacht services company Dohle. He was also a director and company secretary of Vantage Corporate Services Ltd.

McCarthy was released from custody in November 2018, having served his time on remand.

He was banned by the FSA for eight years.

West Palm Beach tax preparer handed six-year sentence [Palm Beach Post]
Olry Maurival, a tax preparer in West Palm Beach, FL, was sentenced to nearly six years in prison last week for filing false tax returns that cost the U.S. Treasury roughly $700,000.

Maurival, 47, who operated Glory Marketing and Financial Services, was also ordered to pay restitution to the IRS.

He was convicted by a federal jury in Fort Lauderdale in September of conspiracy to defraud the United States, five counts of aiding and assisting the preparation of false tax returns, and two counts of making and subscribing a false tax return.

In addition to claiming phony deductions for clients of his West Palm Beach business, he also lied on his personal tax returns, federal prosecutors said.

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