Category: Forensic Accounting

City of Los Angeles Wastes $1M on Cell Phones

Los Angeles City Controller, Wendy Greuel, recently conducted an audit of seven Los Angeles city departments relating to city-owned cell phones.  Greuel found that the city wastes about $1 million per year on nearly 12,000 city-owned cell phones.  Greuel’s audit revealed: The city did not have any central management of cell phone contracts No one …

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The hardest-fought license terms may be the least likely to be in compliance.

Licensors whose assets are in particularly high demand may be able to negotiate unusually favorable contract terms.  Hiring a skilled lawyer to negotiate the terms of your license agreement will help ensure you get the best deal possible.  But those efforts may be wasted if there is no one confirming that those terms are followed.  …

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Get the benefit of the government’s experience when selecting vendors.

There are many often repeated tales of the federal government being taken advantage of by vendors, such as the Department of Defense’s $640 toilet seat and the National Park Service’s $797,400 outhouse.  Therefore, it’s a pretty good bet that if a vendor you are considering is on the federal government’s vendor blacklist, they might deserve …

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SEC’s Attempted Minimizing of the Becker Conflict is Appalling

On March 10, 2011, the House Financial Services Subcommittee on Oversight and Investigations held a hearing regarding conflicts of interest by David Becker, the Securities and Exchange Commission general counsel.  Mr. Becker had recently resigned over this issue.  Since February 2009, Mr. Becker oversaw the SEC’s legal work on the massive Madoff fraud, including how …

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Hollywood Accounting: Another good reason to read (and audit) your contracts.

Hollywood accounting (or Hollywood bookkeeping) is the term used to describe how studios report profits on movies and television series. It often carries a derogatory connotation because of various common practices which don’t follow Generally Accepted Accounting Principles (GAAP) or necessarily reflect market realities.  These contractually-based practices often serve to reduce revenues, inflate costs, and eliminate …

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The IRS may get over a billion dollar windfall because taxpayers failed to ask for it.

There is no time limit for the IRS to pursue a taxpayer for failing to file a prior year’s return when money is owed to the government. The same is not true from the taxpayer’s perspective. Time is ticking for those who failed to file a 2007 tax return upon which the government owes a …

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“Too Big to Audit” is no defense

The Government Accountability Office (GAO) again reported that it cannot render an opinion on the 2010 consolidated financial statements of the federal government, because of widespread material internal control weakness, significant uncertainties, and other limitations.” This has occurred for years. Although each year the federal government states improvements are being made, the bottom line answer …

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Detest Your Boss? Call the Government

As part of the Obama administration’s “Middle Class Task Force Initiative”, the Department of Labor’s Wage and Hour Division (WHD) recently teamed up with the American Bar Association (ABA) to help plaintiffs obtain legal counsel for claims under the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA).  Under this new …

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Bear Stearns’ Defendants and Deloitte Face Significant Exposure

In a nearly 400-page opinion in January, a Manhattan federal judge (Robert Sweet) denied motions to dismiss a securities class action against Bear Stearns, Deloitte & Touche, and seven individual defendants.  As one might imagine from its length, the Court thoroughly addresses the allegations, and rebutted the defendants’ reasons for dismissal.   Here is a background …

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CFO Incentive Compensation Not a Key Factor in Accounting Fraud

This last week, the Harvard Law School Forum on Corporate Governance and Financial Regulation published an interesting paper entitled “Why Do CFOs Become Involved in Material Accounting Manipulations?.  The research was conducted by four professors from the University of Pittsburg and the University of Washington. The professors started with 2,261 Accounting and Auditing Enforcement Releases …

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