Case Law—State: American Ethanol, Inc. v. Cordillera Fund, LP In American Ethanol, Inc. v. Cordillera Fund, LP, the Supreme Court of Nevada is required to weigh in on fair market value. A lower court had judged that stockholders were fairly paid some $1.75M (about $3 per share) for American Ethanol at the time of the merger. American Ethanol appealed, claiming it was worth more. Part of its argument was that its appraiser—an unaccredited one—couldn’t be expected to perform sophisticated calculations, such as a discount for lack of marketability. Find out what the Nevada Supreme Court determines and why!
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An Unconventional Approach to Safeguarding Cash Billing schemes accounted for 23.9 percent of all payment-process fraud cases, and most of these cases go on for almost two years before they’re discovered. Here are two simple controls business owners can put in place to dramatically discourage fraud. The first is setting up a system for the owner to regularly review accounting statements each month at home.
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This is the question addressed by Richard T. Hurt, Jeffrey M. Gad, Drew LaGrande, and Megan Costa Devault in a paper you’ll find posted in PDF form at JD Supra legal intelligence web site. The authors write for Akerman Senterfit, a law firm with expertise and focus in middle market M&A. Here’s the way things stand now: For the past several years, the federal estate tax law has provided elevated exemptions and lower tax rates. The key provisions of the current federal estate tax law, which sunsets on December 31, 2012, are as follows: • $5.12 million gift and estate…
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Tracy L. Coenan published a succinct guide to fraud analysis last year in the Wisconsin Law Journal that’s very much worth reading. Excerpt:
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Metropolitan Corporate Counsel interviews Monte I. Dube, Partner, and Elizabeth M. Mills, Senior Counsel, of Proskauer’s Health Care Department in Chicago. Excerpts: What are the current trends in M&A within the healthcare industry? Dube: Increasingly and for multiple reasons, U.S. hospitals and healthcare systems of all types are looking for potential partnerships or affiliations. Financially distressed organizations are seeking capital and expertise to help them weather the storm, and governmental hospitals are looking to privatize, often for the purpose of monetizing assets or balancing the budget. We’re also seeing strong and vibrant hospitals and healthcare systems conclude that they need…
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Charles Green has posted an interesting thought-piece over at the Trusted Advisor site: When clients don’t buy what a CPA firm is selling, it’s unlikely that they don’t want what you’re selling. More likely it’s that they’re not buying how the service is being sold. For example, a potential client is talking with several accounting firms about a significant assignment. One firm has expertise in that area and understands the client’s issues, and the meeting goes well. The firm bids competitively, recognizing the value of potential future work. The final presentation is a hit, but another firm gets the engagement.…
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Roger Russell recaps the decision at Accounting Today. The Tax Court, in a recent summary opinion, ruled that an individual did not have cancellation of debt income in the year that a collection agency issued him a Form 1099-C and stopped its automated collection efforts. The IRS determined a deficiency in David Stewart’s 2008 income tax of $2,138, based on a Form 1099-C issued by the collection agency. The underlying debt was incurred on a credit card obligation in 1994, and was defaulted on in 1996. Maryland Bank National Association (MBNA) charged off the debt that same year. Find out case specifics…
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Corporate investigation may lack the glamour of Bond and Bourne, but the two worlds aren’t so far removed. Former Kroll analyst Chris Morgan Jones tells The Independent’s Tim Walker why. Due diligence and forensic accounting don’t set the pulse racing like, say, the trailer for the latest 007 movie, so it’s quite a feat for Morgan Jones to have conceived a thriller about business intelligence that is genuinely thrilling. His debut novel, An Agent of Deceit, sees corporate investigator Ben Webster sent to explore the dealings of a shady Russian oligarch. Like vintage Le Carré, it takes the reader on…
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Emily Chasan is on the spot with the latest news: U.S. and international accounting rule makers finally may be ready next month to resolve a debate over corporate lease accounting, that would bring $2 trillion worth of lease obligations onto corporate balance sheets. Members of the U.S. Financial Accounting Standards Board and the International Accounting Standards Board said Thursday they were ready to vote on a method for how new lease accounting rules will impact corporate earnings in June, which means a new draft of the rules could be finished by the end of this year. The lease…
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U.S. banks are awash with money from depositors, reports David Reilly in Wall Street Journal’s Heard on the Street, while demand for loans lags behind. The Federal Deposit Insurance Corp.’s banking profile shows that net loans amounted to 70% of deposits in the first quarter, the lowest figure since 1984. As far as problems go, this isn’t the worst to have. Deposit money is still washing over U.S. banks even as loan growth continues to prove elusive. The result: Net loans equaled just 70% of total deposits in the first quarter, according to the Federal Deposit Insurance Corp.’s quarterly banking…
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PE firms have recently begun to negotiate smaller equity contributions as borrowings increase, reports Matthew Sheahan at Mergers & Acquisitions. LBO activity came to a screeching halt last summer; there were $19.7 billion issued via 34 deals to back buyouts for all of 2011, but so far this year, nine high-yield bond deals totaling $8.3 billion have been issued to back LBOs. Banks and other creditors are sticking more of their necks out when funding private-equity players’ leveraged buyouts. Equity contributions to leveraged buyouts have generally remained in the 30 percent to 40 percent area for a couple of…
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The June issue of Investment Advisor includes a story on practice management that features an interesting graphic:
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The Public Company Accounting Oversight Board found 123 audit deficiencies related to fair-value estimates and asset impairments in 2010, making asset valuation the most common audit problem. Market volatility always makes it tough to value assets fairly based on market prices. But that doesn’t mean management forecasts—and the assumptions and methodologies of financial modeling used in corporate pricing—couldn’t benefit from additional scrutiny. Emily Chasan reports at the Wall Street Journal’s CFO Report blog: The Big Number: 123 That’s the number of audit deficiencies related to asset-valuation problems found among clients of the Big Four accounting firms in 2010. Market volatility…
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Ace Accounting Today reporter Danielle Lee may well have feared decadence, aggressive and overly-medicated groupies, atonal experimentation, psychedelics, and really bad rhyme. But she braved the challenges and took on the story in any case, and it turned out to be pretty cool: An all-CPA band rocked tax day, performing a long set of classic rock during their annual End of Season Tax Bash in a Connecticut restaurant. The Connecticut-based Accounting Crows are: vocalist/bassist Reed Risteen, partner with BlumShapiro in West Hartford.; lead guitarist Alan Friedman, partner of Farmington-based Friedman, Kannenberg & Company; drummer Michael Fortunato, vice president of…
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Zach Epstein shares the scoop at BGR: Samsung has accused Apple of calling expert witnesses that exhibit “slavish adoration” to the company during an ongoing patent trial between the two consumer electronics giants. As noted by patent expert Florian Mueller of FOSS Patents, court documents filed by Samsung in California seek to exclude testimony made by a number of Apple’s expert witnesses on the grounds that they were biased. “Apple’s damages expert, Terry L. Musika, writes in his report that ‘Apple has built a considerable and at times a cult-like following to all things Apple,’ ” Samsung’s attorneys wrote in a court filing, according…
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New private company council includes FASB, but in reduced role, The Journal of Accountancy explains. “This announcement is excellent news for small businesses that have been concerned about the future of US GAAP particularly in relation to an international move toward IFRS,” adds Editor Gail Perry at AccountingWeb. Emily Chasan at the Wall Street Journal reports: The Financial Accounting Foundation’s Board of Trustees voted Wednesday to establish a new Private Company Council that will create exceptions and modifications to U.S. accounting rules as they apply to private companies. The board, which oversees the U.S. Financial Accounting Standards Board, said…
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The recession is over and entrepreneurs are looking for cash, but are banks willing to lend? The answer is a resounding yes, according to reports at OPEN Forum. OPEN Forum’s Katie Morell talks to lending and credit experts to get the tips you need to get that loan application approved. Here’s what she found out: Bankers emphasize that borrowers need to present a solid picture of their business and themselves. Here’s what they’re looking for in potential lendees. Your Posse Come into a lending meeting with your accountant or lawyer in tow to immediately establish a degree of credibility.…
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Investopedia weighs in on the pros and cons of varying approaches: Business valuation is never straightforward – for any company. For startups with little or no revenue or profits and less-than-certain futures, the job of assigning a valuation is particularly tricky. For mature, publicly listed businesses with steady revenues and earnings, normally it’s a matter of valuing them as a multiple of their earnings before interest, taxes, depreciation and amortization (EBITDA), or based on other industry specific multiples. But it’s a lot harder to value a new venture that’s not publicly-listed and may be years away from sales. TUTORIAL: Valuing Employee Stock Options…
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You can’t hold back the demographic tide. In the U.S., another baby boomer turns 60 every eight seconds. This translates into a leadership change in the near future at many CPA firms. In an important article in the Journal of Accountancy last year, John F. Raspante, CPA, and Joseph A. Tarasco, CPA explain: Thousands of partners are at or reaching retirement age now and in the next five years, putting a tremendous strain on even the best succession plans. But age isn’t the only factor affecting the profession. Factors such as increased globalization and turmoil in the general economy causing greater competition have been analyzed…
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The AICPA’s 2011 Forensic and Valuation Services (FVS) Trend Survey finds growing demand for forensic accounting services. James Schiavone breaks it down: