Archive for May, 2012

According to an Associated Press story published in both the Chicago Tribune and Peoria Journal Star, a federal judge allowed a motion to sell some, but not all, of Rita Crundwell’s assets.  According to the AP story, the affected assets are four properties in Illinois, one property in Florida, and a $2.1 million motor home.  Her large horse ranch, Meri J, in Beloit, Wisconsin is not affected.  The horse ranch is being operated by federal marshals.

Quoting from the story:

Rita Crundwell has pleaded not guilty to a single count of wire fraud alleging she stole from the small northern Illinois city to pay for a lavish lifestyle and create one of the nation’s foremost horse-breeding operations.

Prosecutors allege that since 1990, the 58-year-old Crundwell stole more than $53 million from Dixon, where she oversaw public finances as the city comptroller since the 1980s. They say she diverted the money to an account she had set up for personal use and misled city officials.

Prosecutors say her scheme unraveled only when a co-worker filling in for Crundwell while she was on an extended vacation stumbled upon the secret bank account. Her arrest stunned tiny Dixon, a small city along a picturesque vein of the Mississippi River about a two-hour drive west of Chicago in Illinois farm country.

Photos of the luxury motor home were uploaded to the HorseForum.  I’m reposting them for readers who have never seen the interior of a motor home valued at $2.1 million.


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Today is Memorial Day in the United States.  It originally started out as Decoration Day, observed on every May 30.  The first Decoration Day was in 1868 for those killed in the American Civil War.  By 1915, when grave decoration with red poppies became popular, Decoration Day had been expanded to cover the graves of all fallen veterans.

In 1971, the U.S. Congress changed the date of Memorial Day to the last Monday in May, coupling the day to a weekend.  That changed everything.  No longer a day only for remembering fallen soldiers, it is now more comprehensive holiday.

I spent a part of yesterday reflecting on my parents, both of whom are now deceased.  I remember many extended family get-togethers with aunts, uncles and cousins.  They were great.  I also remember the many wiffle ball games in which my father played with the Albrecht kids and every other kid in the neighborhood.

This Memorial Day weekend, we focused on creating memories.  Both sons (28 & 24) were home.  They invited some of their 20-something friends.  We had an Indy 500 party, a wiffle ball game, and later on my sons and I played two games of Acquire, one of the best business games ever created.

The Albrecht boys develop a strategy to beat Dad in a game of Acquire.

Debit and credit – – David Albrecht

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Miscellany — interesting items that caught my eye during the week.

Little girl (age 9) from Scotland starts blog, NeverSeconds. It goes viral!

Gotta read, “Little Girl’s Lunch Review Blog Persuades Her School to Serve Healthier Meals.”

If blogs can be written by a 9-years-old girl and can evoke change, then why is it difficult for so many professors and accountants to get started?

Wow!  I picked a winner.  From BusinessInsider, “Google Chrome Just Passed Internet Explorer To Become The World’s Most Popular Web Browser.”

Google Chrome has been my browser of choice for the past 12-18 months.  Prior to that it was Firefox.  Prior to that, I don’t remember.  Oh, I sometimes use Opera.

No surprise here.  From Forbes, “IBM Study: If You Don’t Have a Social CEO, You’re Going to be Less Competitive.”

I’m sure the same characteristic applies both to CPA firms and individually to accounting and finance professionals.  Hint:  a firm hiring an outsider to do all social media activity is not the same as having a social CEO.

Unbelievable!  So says Francine McKenna.  So say I. From Bloomberg, “SEC Staff Ends Probe of Lehman Without Finding Fraud.”

The final item in this week’s list comes from Caleb Newquist of Going Concern. Caleb’s blog is so well done, he was named to Accounting Today‘s list of most influential people in accounting.  In his story, “The Dixon, Illinois Fraud Is the Latest Example of Why Reasonable Assurance Is Bullshit,” Newquist is highly critical of today’s audit:

See? Audits can be great and fraud can still happen! And we wouldn’t be shocked! OR audits can suck and fraud can still happen! And we wouldn’t be shocked! There’s really nothing you can do. The good professor knows, as all auditors, that most people out there don’t have any idea of what an audit really is. Fine, an expectations gap. It’s a crock, but again, there’s really not much you can do about it. You an try to explain to your cousin in Dixon why it’s not the auditor’s job to detect frauds like this and (s)he would look at you, confused, and say, “Then what good is it?” AHA!

Debit and credit – – David Albrecht

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Gene Morphis
Pic credit: Morph’s View

Gene Morphis was chief financial officer of fashion retailer Francesca’s Holdings Corp. until Monday, May 14.  On that day, he was fired for inappropriate social media activity.

Here is the company press release on the termination:

HOUSTON, May 14, 2012 (GLOBE NEWSWIRE) — Francesca’s Holdings Corporation (Nasdaq:FRAN) today announced that it has terminated for cause the employment of Chief Financial Officer Gene Morphis, based on an investigation by the Board of Directors with the assistance of outside counsel, which has found that he improperly communicated Company information through social media. The investigation was launched after the Company discovered this activity on May 11, 2012.

Gene Morphis is a social media type of guy.  He blogs (Morph’s View).  He tweets (@theoldcfo).  He’s on Facebook.  Apparently, his tweeting got him into trouble.  According to Rachel Emma Silverman of the Wall Street Journal in, “Facebook and Twitter Postings Cost CFO His Job,”  some of the postings that might have landed him in trouble include:


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Kenneth Leventhal
Pic credit: University of Southern California

Kenneth Leventhal died on Tuesday, May 8, 2012, at the age of 90.  He is well know for starting the respected accounting firm Kenneth Leventhal and Company.

After completing his bachelors degree at UCLA, Leventhal became a CPA in 1948.  Along with his wife,  Elaine Otter Leventhal, he started his firm in 1949.  It quickly became a leader in servicing the real estate industry.  Kenneth Leventhal and Company was eventually acquired by Ernst & Young, when it was the 9th largest CPA firm in the United States.

The Leventhal School of Accounting at the University of Southern California was named in his honor after he donated $15 million to form it.  He later donated an additional $10 million.

For more information, please read the following.

Debit and credit – – David Albrecht

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Ligia Baciu

Sorry, I just can’t resist this one.  Several California news outlets are reporting that Ligia Baciu, 35, has been arrested on several charges related to her alleged fraudulent activities at Sweet Life Enterprises.  She is due to be arraigned today.  Allegedly, she stole over $230,000.

I can’t help but wonder if she ever mouthed Ralph Krambden’s line from The Honeymooners, “How sweet it is.”  I also wonder if James Taylor in similar circumstances might have sung, “How sweet it is to stealing from you.”

According to CBS Los Angeles,

Prosecutors allege she used the stolen money to buy an engagement ring, pay for fertility treatments [emphasis added], put a down payment on an Audi, as well as paying for car insurance, groceries and other goods at Costco, Deputy District Attorney Marc Labreche said.

CBS Los Angeles had this description after interviewing  Deputy DA Labreche and hearing his allegations:

Baciu, who was responsible for the company’s credit card accounts, allegedly began stealing from the company in February 2008, Labreche said.

She managed to conceal the theft by ordering bills from the credit card companies that she could manipulate to make it look like the expenses were from various other employees, Labreche alleged.

Baciu was laid off from her job in October 2009, but allegedly kept using the credit cards. Her replacement in accounting uncovered the alleged theft in January 2010, Labreche said.

Sweet Life Bakeries, with 251-500 employees, is a subsidiary of Fresh Start Bakeries.

Thanks to Going Concern for the tip.

Debit and credit – – David Albrecht

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Kyle Dodwell is a young CPA at Brown, Smith Wallace, LLP.  I like him, a lot.  He’s active, engaged and upbeat, unlike his video persona in his series of video blogs.

His second installment has been released.  Here is the introduction from the BSW website:

As busy season winds down, Kyle was looking forward to using the frequent flier miles he received after opening a bank account for a nice trip. That’s until he received a 1099 in the mail requiring him to report the taxable value for these miles. Since 2002, the IRS has said that customer frequent flier miles aren’t taxable.

Suddenly this year, as reported by the Los Angeles Times, Citibank sent tax forms to customers that received airline miles as a reward for opening a checking or savings account. So, what’s up with the 1099? Watch what happens when Kyle calls the IRS.

Watch and enjoy.

Mike Bowlan (Marketing Director at Brown Smith Wallace) sends this along:

Kyle’s CPA Video Blog ventures into new territory next month in Vegas! [Association for Accounting Marketing’s annual conference in Las Vegas June 10-13]  It will be Kyle’s biggest, boldest adventure yet!!

For those who missed his world premier video, here it is:

Debit and credit – – David Albrecht

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Incoming AAA President Karen Pincus on AAA Ohio riverboat cruise.

On Friday (day 2 of the AAA Ohio Annual Conference), incoming American Accounting Association (AAA) president Karen Pincus addressed all in attendance.  She reviewed the evolution of the AAA over the past 50 years, and announced the theme for her 12 month presidency.

Pincus is the author of Core Concepts of Accounting Information course materials for introductory accounting, published by McGraw-Hill.  In the early to mid 1990s it was very popular in the United States as accounting programs sought to make first year accounting more relevant and effective, moving to a user orientation from a preparer orientation.  I remember using it at BGSU.  It had a positive and meaningful impact on my teaching approach.

Pincus holds the S. Robson Walton Chair of Accounting in the Sam Walton College of Business at the University of Arkansas. She has prior teaching experience at U Maryland and U Southern California.

In May 2006, the American Institute of Certified Public Accountants (AIPCA) awarded Pincus the 2006 Distinguished Achievement in Accounting Education Award. Later in 2006, she was named to the Accounting Today Top 100 Most Influential People in Accounting.

Pincus started her speech by showing the changing nature of AAA membership over the past 50 years. Figure One (Pincus) shows a 20% decline in AAA total membership with a concurrent change in composition from 32%  to 82% professors.

Figure One. Changing Composition of AAA Membership

She said that this has led to a change in the AAA’s activities. Professors desire more meetings (to present papers), sections with a narrower research focus, and journals in which to publish their research.

Pincus then compared the current mix of activities (meetings, sections and journals) to those of other business disciplines: Academy of Management, American Economic Association, American Finance Association and the American Marketing Association. Accounting holds 1/6 of business faculty, yet has three times as many meetings as the other associations combined. The AAA also has more journals, and a much larger web site than the other associations. She said that the AAA is more successful of meeting needs of professors than its sister organizations.

Pincus then turned to the AAA logo, in which the AAA claims its members to be thought leaders in accounting.

She said that we are thought leaders only to ourselves. We aren’t thought leaders in tax, or in accounting/auditing.

She then moved on changes in AAA governance. She said that the Council has become a real governance body. It will now perform the following tasks:

  1. Populate all the AAA awards committees.
  2. Choose all candidates for one board position annually (total of 3 board seats in steady state) and continue to choose majority of Nominating Committee members for other board positions.
  3. Provide input on strategic planning initiatives.
  4. Review/approve advocacy positions in name of AAA.
She is especially excited about AAA’s ability now to make comments advocating one or another position.

Greg Waymire, the current AAA president, has had as his theme, Seeds of Innovation. He is responding to the established lack of diversity and innovation in research. Pincus says that his presidency addresses a significant problem area, “There is a fine line between rigor and rigor mortis.”

Pincus concluded by announcing the theme for next year is Brilliantly Disguised Opportunities.” She adds,

It was inspired by a quote (attributed to various speakers) that “all of life’s best opportunities come brilliantly disguised as insoluble problems.” Next year’s annual meeting in Anaheim will include sessions about the major changes and challenges facing colleges and universities and how they might be turned into opportunities.

She reminded us to think of today’s problems as opportunities in disguise.

Debit and credit – – David Albrecht

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Lycoming College is a small liberal arts college of 1,400 in Williamsport, Pennsylvania.  It has published an online game that is designed to teach students about what is plagiarism.

Called Gobin Threat, it is an entertaining way for students to learn what is plagiarisms and how to avoid it.  The game takes no special skills or knowledge.

It is appropriate for undergraduate students, and I will require astudents to view it prior to writing term papers for me.

Link to Goblin Threat Plagiarism Game

The Goblin Threat game was created by Mary Broussard with assistance on question writing from Jessica Urich.

Debit and credit – – David Albrecht

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The American Accounting Association is the professional organization for accounting professors.  It is divided into seven regions (Northeast, Mid-Atlantic, Southeast, Midwest, Ohio, Southwest and Western).

The primary activity of each region is to hold an annual conference.  My home region, Ohio, recently (May 10-12) held its annual conference in Covington, Kentucky, which is part of the Cincinnati, Ohio metropolitan area.  The 2012 conference was the culmination of region president Wally Wood (U Cincinnati) and program chair Akhilesh Chandra (U Akron).

Wood and Chandra deserve a ton of credit for planning and guiding a terrific conference.  If only the other regions had a conference as nice as Ohio’s.

Thursday, the first day of the conference, started out slowly for me.  I-75 road construction in northern Cincinnati led my GPS to redirect me through six miles of side streets.  Consequently, I arrived 20 minutes late.  Veteran AAA staffers Dee S and Debbie G recognized me and were able to quickly complete the paperwork so I could start my conference day.

Dee and Debbie greet us at every AAA conference

The afternoon is devoted to two CPE (Continuing Professional Education) sessions.  A tour of a local brewery is led by David Stott, BGSU.  A session on positive applied psychology is led by Marsha Huber (Youngstown SU).  The workshop I was to conduct has been cancelled for low attendance.  I attended the Huber workshop and was introduced to her world of applied psychology.  She has been studying and researching several areas that are unfamiliar to most accounting professors, however they have great relevance for both professional practice and accounting education.  She taught about resilience, emotion, growth, game playing and influence in informal organizational networks.  Although psychology causes me to break out in hives, I’ve offered to come on board and help write one of her papers.

John and Allie from McGraw-Hill

During breaks we head into the exhibitor’s hall for snacks and hot drinks.  I like chatting with publishers representatives who show us books to consider using in our courses.  At the right are John and Allie of McGraw-Hill.  John told me that being a publishers representative was the next best job to being a professor.

From 4 pm until 10 pm, the main social activities took place.  First, we all stood around and chatted at the welcome reception held in the hotel main lobby.  Then we took a steamboat tour on the Ohio River.   As the following collage shows, this time we sat around talking.  And eating.  My primary job at the dinner was to take photos.

Tomorrow is a very busy day.

Debit and credit – – David Albrecht

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“Mommy!” from CardinalAvenue.com

Today is Mother’s Day in the United States.  The Summa wishes Happy Mother’s Day to all mothers of accountants, mothers who are accountants, and mothers who are married to accountants.

Mommy!“, the image at right, is from Cardinal AvenueCardinal Avenue is a site dedicated to home made cards. The artist honors her mother.

Mother’s day is celebrated on the second Sunday of May in the United States and in much of the rest of the world.  Mother’s Day Central has a nice write-up of the American holiday’s history.

Debit and credit – – David Albrecht

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Andrew Martin and Andrew W. Lehren write “A Generation Hobbled by the Soaring Cost of College,” a story in today’s New York Times.  It is a sobering, yet fascinating read.  The topic is relevant for all Americans, not just families, and employers, of today’s college students=.  It leads me to call for an end the 150 semester hour educational requirement to sit for the CPA exam. 

The educational debt bubble seems positioned for a loud and messy pop.

Accrued student loan debt is over $1 trillion USD.  Large numbers (60-80%) of students graduate with a bachelors degree and holding $20,000-$40,000 of student loan debt.  If a student pursues a graduate degree, debt soars quickly because colleges have cut much of their financial assistance for graduate education.  Total student debt exceeds credit card and other consumer debt.

I see the impact of this debt on a daily basis.  My accounting students during college  struggle with the emotional impact of accumulating so much debt.  It is normal for students to have two or three part time jobs, which adversely impacts their ability to study and learn.  Many opt for getting required education (150 semester hours to qualify for CPA) at the less expensive undergraduate level instead of pursuing a more expensive masters degree that would provide more educational benefit.  At Concordia College, over 90% of graduates leave college with over $30,000 in debt.  For a typical American college student, adding a MAcc or MBA would likely add $30,000-60,000 to the personal debt level.

To a large extent, the problem today exists because society no longer wishes to shoulder the burden of providing collegiate educations to its citizens.  State legislators have cut massive amounts of aid to public colleges.  Colleges and universities have responded with increased prices and decreases in scholarships and aid.  It is unlikely that even outstanding students today will receive adequate financial assistance for graduate school.

Yet, educating one citizen benefits all of society.  Providing the capable with a college education increases the productivity and wealth of us all.

What needs to be done to fix the problem? It would be nice if the USA was wealthier.  It would be nice if the USA was not crippled by an overwhelming and debilitating national debt of its own.  But the USA is not as wealthy as it once was, and it is facing a national debt which it may be forced to default on in the intermediate future.

We need to scale back educational requirements for the CPA.  Historical analyses show the push for the 150 hour requirement came mostly from collegiate accounting programs.  For sure it was self-serving.  Requiring accounting students to enroll and pay for more classes keeps highly paid accounting professors employed.  There is some benefit from a masters education in accounting, but the USA can’t afford it, anymore.  I call on fellow accounting professors to initiate the effort to rescind the 150 hour requirement.

It is customary for accounting firms and corporate employers to skimp with low salaries for entry level positions.  Another potential fix for mitigating the problem would be for employers to help shoulder principal payments debt.  It would be more palatable if these payments were tax deductible.

But other than these two potential solutions, there are no cheap or agreeable fixes.  Any solution will require large amounts of real money, and that money is already allocated for other purposes.

What do you think?  Do you have a solution?  Please leave a comment.

Debit and credit – – David Albrecht

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