WASHINGTON - Google's Chairman Eric Schmidt plans to sell 3.2 million
"A" shares, currently worth $2.5 billion, over the next year, Google
said Friday in a filing with the Securities and Exchange Commission.
The sale amounts to 42 percent of Schmidt's 7.6 million Class A and
Class B shares in the company, a 2.3 percent stake in the company, but
8.2 percent of voting power.
The sale is part of a pre-arranged trading plan for Schmidt's
"long-term strategy for individual asset diversification and liquidity,"
according to the filing.
"Using this trading plan, Eric can diversify his investment portfolio
and can spread stock trades out over a period of one year to reduce
market impact."
Google's share price climbed 1.5 percent Friday to a new all-time
record of $785.37, putting the value of the shares Schmidt will sell at
$2.51 billion.
In its September 2012 billionaires list -- when Google shares crossed
the $700 line for the first time -- Forbes ranked Schmidt 138th in the
world, with his fortune worth $7.5 billion.
Saturday 9 February 2013
1 Critical Marketing Rule Steve Jobs and Marc Benioff Taught Us, and Google Helps Us Apply for Free
Divert a river, don’t dig a well.
Simple.
Find existing need, tap into it, shape it. Don’t try and create need.
Now to really divert a river, you shape need. Steve Jobs was a master at diverting a river, shaping need… anticipating the future. He used innovation and human ingenuity.
Look at his iPod.
Everyone loves music. That’s the river. Sony built the Walkman for portable listening, first on cassette, then CD. They dug a well. MP3 players were around, but not exciting, no ‘sizzle’. Too hard to dig a well. It took some innovation… flash memory, simple interface, iTunes, deals with record labels, Bono and U2, and finally, The Beatles.
Steve Jobs diverted a river, he didn’t dig a well.
Look at his iPad, and the iPhone. They are relegating desktop computers to a support device. They diverted the river around them. Steve saw portable and mobile devices as bigger than the Internet. He was right.
I’ve heard more people have a mobile device around the world than a toothbrush. Really?
We learned this ‘divert a river’ rule again when we invested in the domain name for our company, InsideSales.com, in late 2004.
Why was this so powerful?
If you go to Google and type in the phrase ‘inside sales’, you see 277,000,000 results. Tens of thousands of companies hiring inside sales people. And we appear first, and second, and third. Then Wikipedia shows up. Then something about us appears fifth, sixth, seventh, eighth, ninth, tenth…
Ok, so what?
Now go to the Google Keyword Tool and type in the keyword ‘inside sales.’
It is searched 60,500 times a month globally, 40,500 times monthly locally. That is over 60,000 searches with 9 ads appearing for our business every month. What would that cost? To us, it’s free.
Divert a river, don’t dig a well.
My grandfather, William E. (Bill) Baker, was over the water department in St. George, Utah. He found and developed most of the water sources that helped put St. George on the map. St. George is the thriving retirement community in southern Utah that wouldn’t be nearly what it is today.
Bill knew the value of water.
They have irrigated lawns and gardens with streams of flowing water in the gutters throughout all of St. George for the last half century. You lift the gate on the ditch to your yard and put a gate down in the main ditch and divert the flow during your watering time. If your yard is angled well, it even flows back into the gutter at the end of your property. When your time is up, you switch the gates again.
There was a little lady up stream who would sneak and steal my grandfather’s watering time. She would divert the water before it even got to him in the middle of the night. He often had to stand guard by looking out the window. Talk about feuding neighbors!
Bill usually won. I miss him.
Salesforce.com, the dominant player in the SaaS cloud computing software industry learned this early on. Marc Benioff knew that Seibel had already started a river flowing of demand for a customer relationship management (CRM) database package for businesses, but they were a traditional software model. They had invested incredible time and money to start the flow. They had already dug the well. It was like plowing the deep snow (we know that metaphor well in Utah.) For the person walking behind it’s easy. No effort. No money. Little time.
Marc Benioff, diverted the river by offering a much better model, he didn’t have to dig a well.
As Harvard Business Professor Clayton Christensen says, he ‘disrupted’ an entire industry, never to be the same. In Benioff’s case, the water never came back to the ditch. Too many great things are growing and
My #1 Most Popular article on Forbes was called The Death of SEO: the Rise of Social, PR, and Real Content. I knew what I wanted to say. But before I wrote it, I went to Google Keyword Tool, and found that the phrase ‘death of seo’ had some pretty good recurring traffic: 880 searches globally a month, 480 in the US. I get 2-3 comments a week and hundreds of readers a month… still. I wrote it on July 20, 2012 from Philmont, the Boy Scout camp in New Mexico. In the arid country of New Mexico you really think about water. Trust me.
Divert a river, don’t dig a well.
I applied this ‘divert a river’ rule when I wrote an article for my blog, KenKrogue.com, called What is Inside Sales? Our Definition of Inside Sales. My goal was to try and put a definition around this new up and coming industry that would stand the test of time. It has. It’s been quoted in several books, hundreds of blogs, and at inside sales industry events even a few days ago.
How will it stand the test of time?
Continual traffic, long after the newness wears off.
I started by going to the Google Keyword Tool to find rivers that were continually flowing:
I’ve written hundreds of articles. This article generates more traffic, even today, than almost all the others combined.
Why?
I diverted a river rather than digging a well.
Try it!
Simple.
Find existing need, tap into it, shape it. Don’t try and create need.
Now to really divert a river, you shape need. Steve Jobs was a master at diverting a river, shaping need… anticipating the future. He used innovation and human ingenuity.
Look at his iPod.
Everyone loves music. That’s the river. Sony built the Walkman for portable listening, first on cassette, then CD. They dug a well. MP3 players were around, but not exciting, no ‘sizzle’. Too hard to dig a well. It took some innovation… flash memory, simple interface, iTunes, deals with record labels, Bono and U2, and finally, The Beatles.
Steve Jobs diverted a river, he didn’t dig a well.
Look at his iPad, and the iPhone. They are relegating desktop computers to a support device. They diverted the river around them. Steve saw portable and mobile devices as bigger than the Internet. He was right.
I’ve heard more people have a mobile device around the world than a toothbrush. Really?
We learned this ‘divert a river’ rule again when we invested in the domain name for our company, InsideSales.com, in late 2004.
Why was this so powerful?
If you go to Google and type in the phrase ‘inside sales’, you see 277,000,000 results. Tens of thousands of companies hiring inside sales people. And we appear first, and second, and third. Then Wikipedia shows up. Then something about us appears fifth, sixth, seventh, eighth, ninth, tenth…
Ok, so what?
Now go to the Google Keyword Tool and type in the keyword ‘inside sales.’
It is searched 60,500 times a month globally, 40,500 times monthly locally. That is over 60,000 searches with 9 ads appearing for our business every month. What would that cost? To us, it’s free.
Divert a river, don’t dig a well.
My grandfather, William E. (Bill) Baker, was over the water department in St. George, Utah. He found and developed most of the water sources that helped put St. George on the map. St. George is the thriving retirement community in southern Utah that wouldn’t be nearly what it is today.
Bill knew the value of water.
They have irrigated lawns and gardens with streams of flowing water in the gutters throughout all of St. George for the last half century. You lift the gate on the ditch to your yard and put a gate down in the main ditch and divert the flow during your watering time. If your yard is angled well, it even flows back into the gutter at the end of your property. When your time is up, you switch the gates again.
There was a little lady up stream who would sneak and steal my grandfather’s watering time. She would divert the water before it even got to him in the middle of the night. He often had to stand guard by looking out the window. Talk about feuding neighbors!
Bill usually won. I miss him.
Salesforce.com, the dominant player in the SaaS cloud computing software industry learned this early on. Marc Benioff knew that Seibel had already started a river flowing of demand for a customer relationship management (CRM) database package for businesses, but they were a traditional software model. They had invested incredible time and money to start the flow. They had already dug the well. It was like plowing the deep snow (we know that metaphor well in Utah.) For the person walking behind it’s easy. No effort. No money. Little time.
Marc Benioff, diverted the river by offering a much better model, he didn’t have to dig a well.
As Harvard Business Professor Clayton Christensen says, he ‘disrupted’ an entire industry, never to be the same. In Benioff’s case, the water never came back to the ditch. Too many great things are growing and
My #1 Most Popular article on Forbes was called The Death of SEO: the Rise of Social, PR, and Real Content. I knew what I wanted to say. But before I wrote it, I went to Google Keyword Tool, and found that the phrase ‘death of seo’ had some pretty good recurring traffic: 880 searches globally a month, 480 in the US. I get 2-3 comments a week and hundreds of readers a month… still. I wrote it on July 20, 2012 from Philmont, the Boy Scout camp in New Mexico. In the arid country of New Mexico you really think about water. Trust me.
Divert a river, don’t dig a well.
I applied this ‘divert a river’ rule when I wrote an article for my blog, KenKrogue.com, called What is Inside Sales? Our Definition of Inside Sales. My goal was to try and put a definition around this new up and coming industry that would stand the test of time. It has. It’s been quoted in several books, hundreds of blogs, and at inside sales industry events even a few days ago.
How will it stand the test of time?
Continual traffic, long after the newness wears off.
I started by going to the Google Keyword Tool to find rivers that were continually flowing:
- ‘inside sales’ – 60,500 searches
- ‘what is inside sales’ – 60,500 searches
- ‘definition of inside sales’ – 880 searches monthly
I’ve written hundreds of articles. This article generates more traffic, even today, than almost all the others combined.
Why?
I diverted a river rather than digging a well.
Try it!
And it helps that the river keeps growing. Inside sales as an industry is growing significantly faster than traditional outside sales, or field sales.This article was written by Ken Krogue, a contributor of Forbes.
By the way, Google Trends tells you if your river in increasing or ebbing. Let me know your thoughts and comments! – Ken
The Power Of 'What If'
What if? What if you could reinvent your business? What if you could change the perception of your brand? What if you could break from the status quo? What if you could attract better talent? What if you could reenergize your corporate culture? What if you could make the changes you know you need to make? What if? To the one, great leaders aggressively pursue what if – do you?
I’ve always said status quo is mediocrity’s best friend. While static thinking is the best short cut to obsolescence you’ll ever find, why would you want to travel that path? The sad thing is, I observe many more people willing to travel a path of ruin than I do people willing to change their thinking. While companies destined to fail reward average thinking, successful companies reward the bold thinking revealed through the microscope of what if.
Much has been written about the power of creative thinking, ideation, disruptive innovation, etc., but little has been written on how to successfully implement these processes. If you’ve ever wondered how to find those “ah-ha” moments, they all begin through observations inspired by asking what if. Just because what I’m espousing today is simple doesn’t mean it isn’t effective.While many so-called business gurus sell profit through complexity, the reality is leaders rarely profit from complexity – real profit is found in the pure elegance of simplicity.
Change doesn’t need to be complex. In fact, what’s more simple than using the filter of what if? It doesn’t require any special skills or ability, just the willingness to look beyond what presently exists. Let me be as clear as I can – there is simply no reason to continue to do things that make no sense. Leadership and herd mentality should have nothing to do with one another. If you want to become a better leader stop doing things the way they’ve always been done – don’t copy create.
What if Larry Page and Sergey Brin didn’t ask what if search could be more simple and relevant? What if Steve Jobs failed to ask what if you combined technology and design to create the ultimate customer experience? What if Richard Branson didn’t ask what if about almost everything? Real leaders are open to the possibility that most things not only can, but should be improved upon. They understand it’s the ability to innovate and change which creates competitive advantage, adds value, and ensures sustainability.
The process of unleashing what if begins with not painting yourself into corners. Perhaps the single greatest barrier impeding the transition from what is to what if is allowing yourself to fall into the trap of either/or thinking. The best leaders realize there’s rarely a good reason to juxtapose one option against another. This is simply a false paradigm created by intellectually dishonest rationalizations. The use of A/B frameworks as a decision making model unnecessarily limit opportunity by impeding creative thought and innovation. The job of a leader is to create, expand and preserve options – not limit them.
Utilizing what if thinking allows you to maximize the present while securing the future. The best leaders know how to attain desired outcomes while remaining discovery driven. It’s clearly important to achieve short-term hurdles, but not at the expense of long-term sustainability. Smart leaders understand the present is simply a springboard to the future. Absent an aggressive forward leaning bias, short-term wins will represent little more than pyrrhic victories as the innovators, the what if thinkers, pass you by.
My recommendation is a simple one – not only do I suggest you put everything you do through a “what if audit,” but ask your team to do the same thing. Question: What if you challenged everything, slaughtered a few sacred cows, and stopped holding false truths as real? Answer: creativity would be inspired, innovation would occur, and things would change for the better. Remember, conventional wisdom usually isn’t.
Source: www.forbes.com
Thursday 31 January 2013
Top Ten Famous Accountants
The first true written evidence of accounting come from a man named
Luca Pacioli, a Franciscan monk and contemporary of Columbus. His
seminal work, Summa de Arithmetica, Geometrica, Propotioni et
Proportionalite, published in 1494, contained a section, "Particularis
de Computis et Scripturis" (Details of Accounting and Recording) that
described "the system used in Venice".
But history aside, there are many famous folks today who started out in accounting. You’ll find a few surprises on this list.
1. John Grisham. While this red-hot novelist is well known for being a lawyer prior to his writing career, what is less well known is the fact that his first degree was in Accounting from Mississippi State University. It wasn’t until later that he went to law school and watched a 12-year-old rape victim testify and inspire his first novel.
2. Kenny G. The famous soprano saxophone player graduated Magna Cum Laude from the University of Washington with a degree in accounting. Although he’d already been playing semi-professionally since high school, he wasn’t sure he’d make in the music world so accounting seemed like a much safer bet.
3. Bob Newhart. This funny man got his first job out of the army working as an accountant in downtown Chicago. He claims to have invented his own system for balancing the petty cash—when the drawer was short, he replaced any missing money from his own pocket. When his boss accused him of not using sound accounting practices, he decided to try something else. Ironically, it was while he was working as an accountant that he began doing his famous telephone routines.
4. Gibby Haynes. It might be hard to believe, but this outrageous lead singer of the hot punk band The Butthole Surfers went to Trinity University and earned his degree in accounting. In fact, he was captain of the basketball team, president of his fraternity, and was voted Accounting Student of the Year. After graduating, he worked for over a year at an accounting firm before starting the band.
5. Tim DuBois. You might not know this name right off the bat, but he’s known as The Singing Accountant. He’s written many a hit country song, including “Love In The First Degree”, “She Got the Goldmine, I Got The Shaft” and the Vince Gill hit “When I Call Your Name.” While currently the head of Arista Records, he taught accounting at Owen University for many years.
6. Walter Diemer. Another name you might not recognize, he worked as an accountant for the Fleer Corporation in the 1920’s. But in his spare time he tinkered with recipes until he invented a little something we know today as Bubble Gum.
7. J. P. Morgan. This famous financier and banker began his early career as an accountant on Wall Street. But after his father died and left him the family business, J.P. Morgan went on to become a banking and corporate pioneer. He began buying distressed businesses, in particular railroads, and merging them—a common business practice still today.
8. Walter L. Morgan. A name well known in the business world, Walter L. Morgan was a CPA—and is considered the father of the mutual fund industry. His fund—The Wellington Fund—became the flagship fund of the Vanguard Group, the second largest mutual fund company in the world. When he died in 2000 at the age of 102, he was the oldest living accountant and CPA.
9. Arthur Blank. Today best known for owning the Atlanta Falcons football team, he started his early career as an accountant. But he worked part-time in a hardware store and along with another employee went on to found Home Depot, the famous chain of hardware stores. This little company made him a billionaire—and his accounting know-how taught him how to spend it.
10. Josiah Wedgewood. Yes, that Wedgewood, the famous potter—he invented what we now call Cost Accounting. Thanks to a lucky combination of an embezzling clerk and a depression, Josiah was forced to come up with a system of tracking bottom line costs and profit. He used this system to determine the costs of his product, and was only one of hundreds of potters to survive the depression.
Source: www.topaccountingdegrees.com
But history aside, there are many famous folks today who started out in accounting. You’ll find a few surprises on this list.
1. John Grisham. While this red-hot novelist is well known for being a lawyer prior to his writing career, what is less well known is the fact that his first degree was in Accounting from Mississippi State University. It wasn’t until later that he went to law school and watched a 12-year-old rape victim testify and inspire his first novel.
2. Kenny G. The famous soprano saxophone player graduated Magna Cum Laude from the University of Washington with a degree in accounting. Although he’d already been playing semi-professionally since high school, he wasn’t sure he’d make in the music world so accounting seemed like a much safer bet.
3. Bob Newhart. This funny man got his first job out of the army working as an accountant in downtown Chicago. He claims to have invented his own system for balancing the petty cash—when the drawer was short, he replaced any missing money from his own pocket. When his boss accused him of not using sound accounting practices, he decided to try something else. Ironically, it was while he was working as an accountant that he began doing his famous telephone routines.
4. Gibby Haynes. It might be hard to believe, but this outrageous lead singer of the hot punk band The Butthole Surfers went to Trinity University and earned his degree in accounting. In fact, he was captain of the basketball team, president of his fraternity, and was voted Accounting Student of the Year. After graduating, he worked for over a year at an accounting firm before starting the band.
5. Tim DuBois. You might not know this name right off the bat, but he’s known as The Singing Accountant. He’s written many a hit country song, including “Love In The First Degree”, “She Got the Goldmine, I Got The Shaft” and the Vince Gill hit “When I Call Your Name.” While currently the head of Arista Records, he taught accounting at Owen University for many years.
6. Walter Diemer. Another name you might not recognize, he worked as an accountant for the Fleer Corporation in the 1920’s. But in his spare time he tinkered with recipes until he invented a little something we know today as Bubble Gum.
7. J. P. Morgan. This famous financier and banker began his early career as an accountant on Wall Street. But after his father died and left him the family business, J.P. Morgan went on to become a banking and corporate pioneer. He began buying distressed businesses, in particular railroads, and merging them—a common business practice still today.
8. Walter L. Morgan. A name well known in the business world, Walter L. Morgan was a CPA—and is considered the father of the mutual fund industry. His fund—The Wellington Fund—became the flagship fund of the Vanguard Group, the second largest mutual fund company in the world. When he died in 2000 at the age of 102, he was the oldest living accountant and CPA.
9. Arthur Blank. Today best known for owning the Atlanta Falcons football team, he started his early career as an accountant. But he worked part-time in a hardware store and along with another employee went on to found Home Depot, the famous chain of hardware stores. This little company made him a billionaire—and his accounting know-how taught him how to spend it.
10. Josiah Wedgewood. Yes, that Wedgewood, the famous potter—he invented what we now call Cost Accounting. Thanks to a lucky combination of an embezzling clerk and a depression, Josiah was forced to come up with a system of tracking bottom line costs and profit. He used this system to determine the costs of his product, and was only one of hundreds of potters to survive the depression.
Source: www.topaccountingdegrees.com
Saturday 26 January 2013
The Best-Paying Tech Companies for Interns
Most tech industry internship-seekers would do anything to work at Facebook, Google, Amazon or Apple. In fact, they’d probably even do it for free.
But as it turns out, all of these companies offer paid internships. And they compensate remarkably well.
Facebook interns earn an average monthly base pay of $6,056, according to Glassdoor. Interns at Google rake in $5,678 per month, on average—while those at Amazon and Apple make $5,366 and $4,914 per month, respectively.
“It’s no secret that the war for tech talent continues to be fierce, and this even includes the internship level,” says Glassdoor spokesperson Samantha Zupan. “Companies are fighting for the best and brightest tech minds coming out of college, and handsome compensation packages during an internship are just one way to entice a talented young tech employee to potentially stay with the company upon graduation.”
While interns at the Internet’s “Fantastic Four” are bringing home heaps of cash each month–those at VMware are making even more. The Palo Alto-based software giant pays its interns a base salary of $6,536 per month, on average, making it the best-paying tech company for interns.
One former VMware technical staff intern wrote on the Glassdoor site: “I was making more than any of my classmates.”
A software engineering intern at Facebook, the second hightest-paying tech company, said: “The benefits and pay are obviously great, and since it’s a well-known company it’s a good place to start if you’re looking to get recognized at other tech companies and startups.”
Microsoft rounds out the top three. Interns there earn $5,936 per month, on average.
“The process varies from company to company–but generally, it’s not easy to land a coveted internship at a major tech company where interns earn a higher monthly base pay,” Zupan says. “On Glassdoor, interns at several of these companies talk about an interview process that can include three different interviews, technical problem solving questions, and in some cases, personality tests. Because internships can often translate to job opportunities, several of these companies tend to treat the intern interview process similar to any other job candidate. HR’s goal is to always identify the very best talent at all levels.”
If you’re interested in one of these positions, you’ll want to start by doing some research to find which company is the best fit for you, Zupan says. “Also, it’s never too early to network,” she adds. “Check out who you already know at the company, who your friends, parents and professors might know, and see if there is an inside connection to help get your résumé noticed.”
If you’re not offered an internship position the first time around, keep applying and stay in contact with the intern coordinator. “It just might pay off and set you apart if you show that you’re really serious about contributing to the company,” she concludes.
Here are the top 10 highest-paying tech companies for interns:
VMware
Average monthly base pay: $6,536
Facebook
Average monthly base pay: $6,056
Microsoft
Average monthly base pay: $5,936
LinkedIn
Average monthly base pay: $5,808
Adobe
Average monthly base pay: $5,757
Google
Average monthly base pay: $5,678
Amazon
Average monthly base pay: $5,366
NVIDIA
Average monthly base pay: $5,215
Yahoo
Average monthly base pay: $5,191
Apple
Average monthly base pay: $4,914
Source: www.forbes.com by Jacquelyn Smith
But as it turns out, all of these companies offer paid internships. And they compensate remarkably well.
Facebook interns earn an average monthly base pay of $6,056, according to Glassdoor. Interns at Google rake in $5,678 per month, on average—while those at Amazon and Apple make $5,366 and $4,914 per month, respectively.
“It’s no secret that the war for tech talent continues to be fierce, and this even includes the internship level,” says Glassdoor spokesperson Samantha Zupan. “Companies are fighting for the best and brightest tech minds coming out of college, and handsome compensation packages during an internship are just one way to entice a talented young tech employee to potentially stay with the company upon graduation.”
While interns at the Internet’s “Fantastic Four” are bringing home heaps of cash each month–those at VMware are making even more. The Palo Alto-based software giant pays its interns a base salary of $6,536 per month, on average, making it the best-paying tech company for interns.
One former VMware technical staff intern wrote on the Glassdoor site: “I was making more than any of my classmates.”
A software engineering intern at Facebook, the second hightest-paying tech company, said: “The benefits and pay are obviously great, and since it’s a well-known company it’s a good place to start if you’re looking to get recognized at other tech companies and startups.”
Microsoft rounds out the top three. Interns there earn $5,936 per month, on average.
“The process varies from company to company–but generally, it’s not easy to land a coveted internship at a major tech company where interns earn a higher monthly base pay,” Zupan says. “On Glassdoor, interns at several of these companies talk about an interview process that can include three different interviews, technical problem solving questions, and in some cases, personality tests. Because internships can often translate to job opportunities, several of these companies tend to treat the intern interview process similar to any other job candidate. HR’s goal is to always identify the very best talent at all levels.”
If you’re interested in one of these positions, you’ll want to start by doing some research to find which company is the best fit for you, Zupan says. “Also, it’s never too early to network,” she adds. “Check out who you already know at the company, who your friends, parents and professors might know, and see if there is an inside connection to help get your résumé noticed.”
If you’re not offered an internship position the first time around, keep applying and stay in contact with the intern coordinator. “It just might pay off and set you apart if you show that you’re really serious about contributing to the company,” she concludes.
Here are the top 10 highest-paying tech companies for interns:
VMware
Average monthly base pay: $6,536
Average monthly base pay: $6,056
Microsoft
Average monthly base pay: $5,936
Average monthly base pay: $5,808
Adobe
Average monthly base pay: $5,757
Average monthly base pay: $5,678
Amazon
Average monthly base pay: $5,366
NVIDIA
Average monthly base pay: $5,215
Yahoo
Average monthly base pay: $5,191
Apple
Average monthly base pay: $4,914
Source: www.forbes.com by Jacquelyn Smith
Sunday 20 January 2013
Notable Accounting Scandals And Outcomes
NOTABLE ACCOUNTING SCANDALS |
|---|
NOTABLE OUTCOMES
The Enron scandal turned in the indictment and criminal conviction of one of the Big Five auditor Arthur Andersen on June 15, 2002. Although the conviction was overturned on May 31, 2005 by the Supreme Court of the United States, the firm ceased performing audits and is currently unwinding its business operations. The Enron scandal was defined as being one of the biggest audit failures. The scandal included utilizing loopholes that were found within the GAAP (General Accepted Accounting Principles). For auditing a big sized company such as Enron, the auditors were criticized for having a brief meeting few times a year that covered lots of material. By January 17, 2002 Enron decided to discontinue its business with Arthur Andersen claiming they had failed in accounting advice and related documents. Arthur Andersen was judged guilty of obstruction of justice for getting rid of many emails and documents that were related to auditing Enron. From this incident little less than 100,000 employees lost their jobs. Although later the ruling was overturned by the U.S. Supreme Court, the image of the auditing firm have been damaged beyond repair, and was never able to come back to its full operation capacity.On July 9, 2002 George W. Bush gave a speech about recent accounting scandals that had been uncovered. In spite of its stern tone, the speech did not focus on establishing new policy, but instead focused on actually enforcing current laws, which include holding CEOs and directors personally responsible for accountancy fraud.
In July, 2002, WorldCom filed for bankruptcy protection, in what was considered the largest corporate insolvency ever at the time.
These scandals reignited the debate over the relative merits of US GAAP, which takes a "rules-based" approach to accounting, versus International Accounting Standards and UK GAAP, which takes a "principles-based" approach. The Financial Accounting Standards Board announced that it intends to introduce more principles-based standards. More radical means of accounting reform have been proposed, but so far have very little support. The debate itself, however, overlooks the difficulties of classifying any system of knowledge, including accounting, as rules-based or principles-based.This also led to the establishment of Sarbanes-Oxley.
On a lighter note, the 2002 Ig Nobel Prize in Economics went to the CEOs of those companies involved in the corporate accounting scandals of that year for "adapting the mathematical concept of imaginary numbers for use in the business world".
In 2003, Nortel made a big contribution to this list of scandals by incorrectly reporting a one cent per share earnings directly after their massive layoff period. They used this money to pay the top 43 managers of the company. The SEC and the Ontario securities commission eventually settled civil action with Nortel. However, a separate civil action will be taken up against top Nortel executives including former CEO Frank A. Dunn, Douglas C. Beatty, Michael J. Gollogly and MaryAnne E. Pahapill and Hamilton. These proceedings have been postponed pending criminal proceedings in Canada, which opened in Toronto on January 12, 2012. Crown lawyers at this fraud trial of three former Nortel Networks executives say the men defrauded the shareholders of Nortel of more than $5 million. According to the prosecutor this was accomplished by engineering a financial loss in 2002, and a profit in 2003 thereby triggering Return to Profit bonuses of $70 million for top executives.
In 2005, after a scandal on insurance and mutual funds the year before, AIG was investigated for accounting fraud. The company already lost over 45 billion US dollars worth of market capitalisation because of the scandal. Investigations also discovered over a billion US dollars worth of errors in accounting transactions. The New York Attorney General's investigation led to a $1.6 billion fine for AIG and criminal charges for some of its executives. CEO Maurice R. "Hank" Greenberg was forced to step down and is still fighting civil charges being pursued by New York state.
Source: www.wikipedia.org
Saturday 19 January 2013
Neat Trick? Attorney-Client Privilege From An Accountant
Thanks to attorney-client privilege, if you tell your lawyer you are hiding money offshore, the IRS can’t make your lawyer talk. The IRS generally can’t even make your lawyer produce documents. See Latest Foreign Account Prosecution Fuels Fears. The privilege is strong so clients (in both civil and criminal cases) will be forthcoming with their lawyers.
Accountants, however, don’t have this privilege. If you make statements or provide documents to your accountant, he can be compelled to divulge them no matter how incriminating. Although a statutory “tax preparation” privilege was added in 1998 (IRC Section 7525(a)(1)), it is inapplicable to criminal tax cases so is of little value.
In sensitive tax matters, the answer to this quandary is the Kovel letter, named after United States v. Kovel. Your tax lawyer hires an accountant. In effect, the accountant is doing your tax accounting and return preparation, but reporting as a subcontractor to your lawyer.
Properly executed, it imports attorney-client privilege to the accountant’s work and communications. However, recent IRS lawsuits are eroding it. For example, in United States v. Richey, the Ninth Circuit refused to protect an appraisal that a taxpayer, lawyer and accountant were trying to keep from the IRS. In United States v. Hatfield, the court forced disclosure of discussions between the lawyer and accountant.
Pre-existing relationships between the accountant and the ultimate client are especially prickly. A Kovel arrangement is premised on the notion that the accountant’s communications were “made in confidence for the purpose of obtaining legal advice from the lawyer.” See United States v. Adlman. The attorney is the client in a Kovel engagement so the accountant should address all correspondence to the lawyer.
That means information acquired by an accountant under a Kovel agreement should be distinguished from information collected by the accountant as an auditor or in some other capacity. Keep things as separate and well-documented as you can. That may include using a different accounting firm for the audit or other work where possible.
Attorney-client privilege is rarely tested in this context. However, you don’t want to end up having to fight about disclosure before a judge, especially where the communications may be very revealing.
Source: www.forbes.com by Robert Wood
Robert W. Wood practices law with Wood LLP, in San Francisco. The author of more than 30 books, including Taxation of Damage Awards & Settlement Payments (4th Ed. 2009 with 2012 Supplement, Tax Institute), he can be reached at Wood@WoodLLP.com. This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.
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