Accounting Watchdog: A New Column In Forbes

I’m now writing for Forbes twice week, Tuesday and Thursday, under the title, Accounting Watchdog.

My first two columns were published this past week.

KPMG and Taxes: How Quickly We Forget

KPMG is in the news again about taxes.

Citigroup (NYSE:C), audited by KPMG for the last forty-one years, posted a profit for its third consecutive quarter after cutting its loan loss reserves.  But the bank is potentially under reserved in the event Fannie Mae ( NYSE:FNM), Freddie Mac (NYSE:FRE), and the Federal Home Loan Banks prevail in forcing significant mortgage loan repurchases.  Citigroup was heavily criticized prior to the earnings release by an analyst for, in his opinion, higher than justified balances for deferred tax assets – a “cookie jar” of sorts used to offset taxes on future profits. I’m guessing Citigroup is the unnamed “Issuer B” in the most recent inspection report for KPMGissued by the PCAOB, since one of the failures the regulator found was related to lack of scrutiny of the client’s deferred tax assets.

Auditor Failure: If I Show You Will You Believe Me?

I’d like to make the accounting industry exciting for you. Maybe even sexy. It’s a tough job but somebody’s got to do it. My own website is peppered with music videos, photography, art, and illustrations intended to poke fun, add subtle sarcasm and, occasionally, inject irony.  Truly, I’d settle for making the role and responsibility of the auditors a bit more interesting to a broader business audience.  Even better, I want you to be mad as hell about accounting watchdogs with no bite during the bubble and no bark before the crisis.

6 replies
  1. Tony Rezko
    Tony Rezko says:

    Very cool … glad Forbes considers these issues newsworthy, and glad to see you’ll have an even wider audience.

  2. Thad Cummins
    Thad Cummins says:

    Nice website and useful information about “deferred tax assets”. As a business owner I always knew there were many areas I could use in the tax code but I didn’t spend a lot of effort learning more about them. I spent most of my time focusing on current and future client demand. Is a tax asset the other side of a tax benefit in GAO terms? In other words, are “Tax Assets” actually Tax Benefits or tax revenues forgone due to policy considerations, presumably in pursuit of a quantifiable social benefit?

    I don’t think we reward business enough to promote the general welfare. I know this is not really the job of the private sector per se but if the public sector must pick up the tab for funny numbers (TARP, QE I and II) essentially transferring wealth from future generations as realized benefits now I think it’s appropriate to ask the current generation of business elite to contribute to the economic health of future generations. One could go as far to say that there is a moral obligation between the generations.

    I propose Tax Asset valuation tables based on progressive human development standards. Three variables: LE: life expectancy EI: education index (average years of schooling) and I:income.

    Where could I find a good list of most common Deferred Tax Assets?

    I am building support for this initiative.

    Thad Cummins

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