Sam Antar “It takes one to know one” and He Knows Patrick Byrne
By Stacie Clifford Kitts, CPA
I’ve watched with interest the online clash between CEO Patrick M. Byrne of Overstock.com and a handful of bloggers and journalists. The basic issue appears to be a consensus, among this group that Mr. Byrne is (allegedly) a crook [and maybe a little unstable] who is also (allegedly) cooking the books of the company he is charged with running.
Sam Antar who has the best bio snippet I have read to date….
I am a convicted felon, former CPA, and former CFO of Crazy Eddie. There is a saying, “It takes one to know one.” I teach law enforcement, professionals, and students about white collar crime and how to catch corporate miscreants….
In my blog, I expose white collar crooks just for the fun of it…
….really really R-E-A-L-L-Y dislikes Mr. Byrne. Based on Mr. Antar’s “it takes one to know one” philosophy, Sam insists that he knows Patrick pretty well.
Mr. Antar has made this determination based on his analysis of the publically available financial information of Ovestock.com. You can read Mr. Antar’s many comments about Mr. Byrne at his acclaimed blog White Collar Fraud.
Mr. Antar’s rehash of his part in the Crazy Edie fraud scandal at his website http://www.whitecollarfraud.com is also a good read. There is no doubt that this recount should be mandatory reading for all new staff accountants.
As for my take….
I’ve always believed based on my experiences working in both public accounting and industry, that the financial statement audit process [limited to large publically traded companies]was for the most part a silly practice that boiled down to ongoing compromises made by auditors to sustain the fine line walked to keep clients. Although the audit practice has tightened up -some – over the years i.e. the PCAOB, I think we are still looking at an overriding drive for accounting firm profit over good sense.
Evidence you ask.
In my opinion, the fact that Overstock.com was able to find an audit firm amidst all the (alleged) controversy is evidence enough. It’s too bad that the audit firm’s work papers aren’t public information, because I would looove to get my hands on the Client Acceptance Form that KPMG put together to prove their acceptance of this client. If only to see how they have addressed these allegations. [I hope they have really good practice insurance.]
Anyway…What’s a Client Acceptance Form you ask?
A Client Acceptance Form is a checklist that an auditor uses to decide whether they should accept a company as a client. This document incorporates questions about whether the firm believes that they have the proper knowledge, training, and staff to handle the engagement. However, it also wants to know things about the target client too. For instance, there are questions about the integrity of the company’s management, the chances that there is fraud in the financial statements, and questions regarding whether there is evidence that management may be motivated to commit fraud.
There appears to be plenty of evidence that the management integrity of Overstock.com is at least in question [if of course you believe the many journalists and bloggers who have commented on Overstock’s current woes]. This alone should have precluded an audit firm from accepting the engagement (in my opinion). Obviously, this acceptance is profit motivated, but KPMG – people – come on -what – are – you – thinking.
If you would like to read, more about the controversy check out this recent post by Sam
Post Script: I saw fraud unfold up close and in person at a public company I worked for in the 90’s. I was not part of the fraud scandal. However, watching what happened after it was discovered makes for an interesting story. Stay tuned for more on that truly fascinating tale.
IRS Seeks Public Comment for Proposals to Boost Tax Preparer Performance Standards
[stacie says – The following is a news release from the IRS.
The IRS is seeking to regulate tax preparers including ascertaining tax preparer competence mainly for that group of people who are not CPA’s, Lawyers, or Enrolled Agents.
Many people may be shocked to discover that at present anyone (even someone with no training) can hold themselves out as a tax preparer, prepare tax returns, and charge a fee for this service. **Scary**
I-can-tell-you some of these unregulated preparers have caused serious havoc for many unsuspecting tax payers. Hence Mr. Shulman’s plan to enforce standards for these preparers.]
WASHINGTON — The Internal Revenue Service is inviting the public to contribute ideas as part of an effort to ensure high performance standards for all tax preparers.
Last month, IRS Commissioner Doug Shulman announced plans to develop by year-end a comprehensive set of proposals to ensure consistent standards for tax preparer qualifications, ethics and service.
Subsequently, the IRS announced a series of public forums, beginning in Washington, D.C., on July 30, to gather input from various stakeholder groups and organizations.
Two panel discussions involving representatives of consumer groups and tax professional organizations will take place at the Ronald Reagan Building amphitheater in Washington starting at 9 a.m. on July 30. Anyone interested in attending should confirm attendance by sending an e-mail message to: CL.NPL.Communications@irs.gov.
Notice 2009-60 issued today is an additional call for public comments and helps guarantee that all interested individuals and entities have the opportunity to contribute ideas.
“We are casting the widest net possible by seeking comment from not only tax preparers and the industry but also from the general public,” Shulman said. “All ideas are welcome at the table.”
More than 80 percent of taxpayers use either a paid-preparer or third-party software to prepare their annual tax returns. Professionals who represent clients before the IRS, including attorneys, accountants and enrolled agents are already subject to IRS oversight. But under current law, a much larger group of return preparers are not.
Written comments must be received by Aug. 31, 2009. They should be submitted to CCPA:LPD:PR (Notice 2009-60), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20044. Comments may also be e-mailed to: Notice.Comments@irscounsel.treas.gov
Please include “Notice 2009-60” in the subject line of any e-mail messages. More details can be found in IRS Notice 2009-60.
Stacie's Tax Stuff 