The Accountant & other miscalculations

It doesn't sound very complicated, but you have to make sure you're giving the presenter the right envelope. ~ Brian Cullinan, PricewaterhouseCoopers

It's never a good thing when the accountants take centre stage, but usually the crime is so arcane that nobody pays attention. An audit's failure to detect massive fraud? Whatever. Failure to pass the correct envelope to Warren Beatty because you were so starstruck by Emma Stone that you had to tweet about it? What a twit! Depreciate The Accountant to zero!

But wait. Was this really so bad?

From a GIF created by Julie Winegard.

Let's look at a few of PwC's other misdeeds. In the UK where PwC has its headquarters, the Financial Reporting Council (FRC) is busy auditing the auditors. So far PwC has paid ￡3 million in fines--a mere parking ticket on profits of ￡829 million--after admitting that it dropped a big accounting cow paddy in the middle of its audit of Cattles. Five other FRC investigations are ongoing.

And then there's...

• Willie Nelson didn't pay his taxes quite as often as he could have. PwC helped the country singer along on the road to financial ruin with tax shelters that weren't quite legal. Willie sued PwC and PwC responded that even if the tax shelters were illegal, the IRS settled for $3 million less than the amount Willie would have owed had he paid his taxes the right way.

Willie put out an album to pay off his tax debt and shared the proceeds with the IRS

• The Luxembourg leaks (LuxLeaks) exposed PwC's tax avoidance schemes such as the one it devised for Caterpillar where the company shifted profits to a Swiss subsidiary and avoided $2.4 billion in US taxes...

“ What the heck. We'll all be retired when this audit comes up on audit.” ~ PwC Managing Director Steven Williams makes a gross miscalculation

• This week Caterpillar had the IRS crawling up its bum with a search warrant relating to that $2.4 billion tax dodge that PwC consultants set up and its PwC auditors approved. Conflict of interest, anyone?
• Antoine Deltour, a former junior auditor with PwC who was responsible for many revelations in the LuxLeaks, was made to suffer for blowing the whistle. PwC demanded that Deltour, who insists that he acted out of a sense of injustice and concern for the public interest, be criminally charged. He received a 12-month suspended sentence and was fined €1,500 after being found guilty on charges including theft and violating Luxembourg’s strict professional secrecy laws.

“ LuxLeaks could not have happened if it was not for the whistleblower, and the team of investigative journalists...who changed the momentum of the debate about corporate taxation in Europe. I think everybody should thank [them].” ~ EU Commissioner Margrethe Vestager

“ It is in truly difficult times such as these that we can feel the unique spirit of Luxembourg.” ~ PwC's John Parkhouse

• Throwing its client into the Gulag, PwC bowed to pressure from the Russian government and withdrew its audits of oil company Yukos. The audits could have been used as evidence to defend Mikhail Khodorkovsky, a Putin foe who was jailed on charges of fraud and tax evasion.
• Petrobras is embroiled in the largest corruption scandal in Brazil's history, and PwC is right there in the thick of it. Bill and Melinda Gates Foundation Trust is suing PwC, alleging that it “willfully ignored” massive fraud at Brazil's oil giant that overpaid construction companies by more than $2 billion and used the extra money for kickbacks, bribes and other forms of executive self-stimulation.

“ The audit profession has always had a responsibility for the detection of fraud.” ~ Dennis Nally, PwC's former global chairman

“ Even a properly designed and executed audit may not detect fraud.” ~ A lawyer for PwC encourages everyone audit their expectations of audits

• Last August PwC settled a $5.5 billion lawsuit alleging it certified the existence of $1 billion in assets that did not exist and failed to catch a massive fraud leading to one of the biggest bank failures in US history. In a trial due to begin next week, MF Global is seeking $3 billion in damages for PwC's role in its collapse.
• According to the Financial Times, PwC had deficiencies in 12 of 55 audits (22%) inspected by the Public Company Accounting oversight Board, the US auditing watchdog.

There are countless mishandled envelopes associated with PwC, but it took The Accountant at the Academy Awards distracted by his smartphone to tarnish its reputation.

Warren Buffett's annual Letter to Shareholders featured even more accountant shaming, as the billionaire railed against the unfairness of GAAP (Generally Accepted Accounting Principles) that has undervalued his insurance business by overstating its liabilities. Then he appeared on CNBC and gave us our...

“Charlie and I have a code word we use. When we've-- see some guy that we really think is a jerk, we will say to him, "Boy, you think like a CPA." And the guy kinda gets all pumped up. And--of course, our code word is crooked, psychotic, and you could fill in the last.” ~ Warren Buffett describes how he and Charlie Mungar use the accounting profession as an insult

This week he also said, “If a lady says no, she means maybe,” suggesting that Warren Buffett may not be as cute and cuddly as he appears to be.

• Using the “scuttlebutt” method where he observed the “stickiness” of Apple products among his great-grandchildren and their friends at the Dairy Queen, Warren Buffett has doubled his stake in Apple to 133 million shares worth $17 billion or 2.5% of the company. And we thought he read 500 pages per day over weeks or months before making billion-dollar decisions.
• Fly me to the Moon is one of Elon Musk's favourite songs that he played back in 2011 when he appeared as a guest DJ. Now he's playing for real, offering two spaced-out tourists a week-long round trip to the moon. Apparently the two anonymous tourists know each other and must be billionaires if they can afford a $70 million ticket.
• Starbucks finally mustered up the nerve to enter Milan with its Roastery coffee temple. In related news, Pizza Hut will be opening an Pizza Capanna in Naples.

Absent for the past few weeks (and sorely missed) JPMorgan CEO returned to the newsfeed with a vengeance. Speaking at JPMorgan's annual Investor Day Dimon, the champion of the working class, asserted that...

...though it sounds counter-intuitive, studies show that the thing that is impacted the most from lower corporate tax rates will be wages. ~ Jamie Marx Dimon

Dimon didn't name the counter-intuitive studies that would have companies passing on their tax savings to workers rather than executive pay and/or the bottom line, but it appears that higher profits that maximize shareholder value, like a relentlessly pleasurable orgy, is something companies eventually tire of.

May your weekend be an orgy of all your favourite things.

p.s. Which two billionaires would you like to see share Elon Musk's space capsule? A billionaire-worthy prize goes to the best pairing in the comment section below as determined by our panel of celebrity auditors. ;)

Congratulations to GEORGE McNAMARA who wins this freeze-dried ready-to-eat Astronaut Ice Cream Sandwich for his brilliant billionaire pairing of Donald Trump and Mark Cuban.

“This cat is ruining my credit score.” Apparently leasing pets is a thing and Wags Lending is the tail that's wagging the dog and ruining credit ratings. [Bloomberg]

“Like pigeons, we're more driven to seek feedback when it isn't guaranteed.” The psychological compulsion that drives our addiction to social media. btw, please like my article. ;) [The Guardian]

Uber's Travis Kalanick is pugnacious, Airbnb's Brian Chesky is nice and why Jeff Bezos is the smartest guy around (even smarter than Elon Musk). Kara Swisher enjoys a fanciful conversation with Brad Stone, author of Upstarts. [Recode]

The American Dream is a minefield. The battle between pyramidal Herbalife and Bill Ackman's Pershing Square is one for the ages. [The New Yorker]

The Cloud is down-to-earth. “Maybe we have mistaken the The Cloud's fiction of infinite storage capacity for history itself...the hope that history might actually end, or at least reach some kind of perfect equipoise in which nothing terrible could ever happen again.” [The Atlantic]

Boston Robotics' Handle is part workhorse, part skateboarder, part showoff and 100% the freakiest thing you'll see any other week than the week that featured The Accountant. [Recode]