A few links and comments of interest to auditors –
2-1 – CPA-Scribo – Code of Ethics Codification Approved by AICPA – Charles Hall has the news flash that the codified rewrite of the ethics rules has been approved. Will be effective 12/15/14. See his post for a summary and link to the current version, which is subject to editing.
This article is cross-posted from my other blog, Nonprofit Update. It is posted here as well because it might also be helpful for your business clients. The article is focused on charities, but the same ideas apply to for-profit businesses: please try to stay out of court.
In my journeys as a CPA serving the nonprofit community, I’ve been able to observe one (or more) charity/charities that have been in court because of their involvement in civil litigation. The time and costs involved can be substantial if you find yourself in civil court.
I can’t talk about those situation(s) because of confidentiality rules.
There are several things an auditor would routinely do in such situations. The auditor would see the costs incurred from looking at the general ledger. Because of the possible financial impact, the auditor would have discussed the status of the case and possible outcomes with management, looked at legal invoices, and read the legal confirmation letter received from outside counsel. I can’t tell you what steps I took in any particular situation.
What I can say after seeing one/some specific situation(s) is that you should try really, really hard to stay out of court.
The costs can be high. The distraction for your leadership (and membership if you have members of some sort) can be significant.
One situation I can talk about
Previous post explained Mr. Scott London surrendered his CPA license as a consequence of his guilty plea to insider trading. This discussion will go through the timing of the disciplinary process and outline a few more well-deserved consequences Mr. London has earned.
California Board of Accountancy’s Update #74, sent by email this morning, had the following news:
LONDON, SCOTT IAN
Agoura Hills, CA (CPA 46174)
Surrender of CPA license, via stipulated settlement.
Mr. London shall pay the CBA its costs of investigation and prosecution in the amount of $1,637.50 prior to issuance of a new or reinstated license.
Effective December 27, 2013
CAUSE FOR DISCIPLINE
The suspense and wait continues – Scott London sentencing for insider trading rescheduled from February 27 to April 21
Since there has been so much traffic today checking out posts about the scheduled date for Scott London’s sentencing for his admitted insider trading (thank you for the mention, Going Concern!), I thought to check the federal document system before turning in for the night.
Guess what I found?
The sentencing has been continued from February 27 to April 21.
Previously mentioned there were four documents filed under seal.
As of yesterday morning, all four entries had a date of 2/18/2014 and said:
SEALED DOCUMENT- Under Seal Document (mat) (Entered: 02/19/2014)
When I looked a few minutes ago, item #45 still had a date of 2/18/2014 but the comment has been changed. It now reads:
SEALED DOCUMENT- Under Seal Document – Sentencing hearing set for 02/27/14, continued to 04/21/14 at 8:00 a.m. (mat) Modified on 2/24/2014 (jag). (Entered: 02/19/2014)
That means the sentencing which had previously been scheduled for February 27 has now been moved to April 21, 2014.
Everyone who had been looking forward to a generous serving of popcorn and schadenfreude on Thursday will have to wait another 2 months.
Update: According to the comments on the docket, sentencing has been continued to the following dates: 10/21/13, 12/9/13, 1/27/14, 2/6/14, 2/27/14, 4/21/14.
Other tidbits: Passport was surrendered on 4/17/13. Turned in $50K on 4/19/13, which is presumably the estimated proceeds of the then-alleged insider trading.
Since we are all anticipating the expected sentencing on Thursday for Mr. Scott London, regional audit PIC, lately of KPMG, here’s two tidbits I’ve noticed over the last few months but haven’t mentioned previously. Cost of re-auditing Herbalife will drop into the category of earned consequences when KPMG gets around to suing Mr. London. In older news, Mr. London updated his LinkedIn profile.
Sentencing is scheduled for former KPMG regional audit PIC Scott London on February 27, 2014 regarding his plea agreement admitting insider trading. That’s the latest visible information in the federal system that shows filings.
Previous post mentioned on 2/13 that Something in London case about to go under seal.
On 2/18 there were four documents filed under seal. Obviously the contents of those filings aren’t visible on the PACER system. My completely wild, uneducated guess would be those are arguments from the defense and prosecution about sentencing. Could also be recommendations from the federal group that provides sentencing guidance to judges.
If you are really interested, keep your eyes open on Thursday. If you are only slightly interested, check back here. I’ll keep you updated.
Update: Next post – minor updates, including LinkedIn profile and cost of reauditing Herbalife
UPDATE on sentencing date here.