Kill 'Em With Kindness

     Playing nice at work may have its benefits. In a Robert Half survey, 48% of workers said that being nice

 to co-workers may help carry you through the ranks in the workplace. Another 41% said that proper

 etiquette also plays an important role in the workplace.

     The survey was developed by staffing firm Robert Half International. It was conducted by an independent

 research firm and is based on interviews with more than 430 workers 18 years of age or older and

 employed in office environments. Workers were asked, “In your opinion, to what extent does being

 courteous to coworkers positively impact a person’s career prospects?” In their answers, 48% said

"Greatly, it can accelerate advancement." 41% said "Somewhat, but skills play a greater role." 10% said it

 has no impact at all, its who and what you know, and 1% did not know.
    
“In most cases, a minor etiquette slip up won’t be career-limiting if you quickly acknowledge it and learn from

 your mistake,” said Brett Good, a senior district president for Robert Half International. “But continual

 missteps have a cumulative effect that can chip away at your professional reputation and get in the way of

 advancement.”

     Robert Half has four etiquette tips to use in the workplace. These include; Good Language: potty mouth

 language such as swear words, politically incorrect jokes, and off- color comments should be avoided.

 When you wonder if you should say something or not, that’s your internal voice telling you to zip it. Play it

 safe and watch your words. Avoiding Conflicts Publicly: Harshly criticizing colleagues in front of others or

 gossiping behind their backs typically only makes you look bad. Address problems with coworkers head-

on, but do it respectfully and in private. Taking a Deep Breath: Although coworkers may do things that

 irritate you, take a minute to collect your thoughts before raising your voice or firing off a rude email. Losing

 your cool will exacerbate your problems. Finally, Get Ready Before Work : Confine your grooming

 activities to your home, or at least the restroom. The goal is to win over — not offend — your fellow

 employees.
     In my case, I have seen behavior play a role in the workplace as far as how employees are treated. I have

 witnesses people talking poorly of their co-workers to other co-workers, and have seen conflicts arise

 because of it. In one situation two employees got caught in a verbal disagreement that they put on display for

 everyone to witness. Both parties involved in the disagreement ended up getting disciplinary action and

 looking petty in front of their fellow co-workers. In another situation, one employee lost his cool over a

 disagreement and started yelling and shouting obscenities for everyone to see. This actually led to his

 immediate termination on the spot.

     I believe that good work behavior and a good attitude will carry you far in the workplace, and in life as

 well. I think it is important to have the necessary skills and requirements to advance in the workplace, but

 those alone might not always be enough. If you can't demonstrate the ability to get along and work with your

 fellow co-workers, future employers will be leery of hiring you. I think that a positive attitude and good

 work behavior are two very important attributes to have in the workplace.

AICPA Awards Scholarships to Minority Students

     This year there were 272 eligible applicants, a major increase from previous years. Scholarship recipients

 

 included students in both undergraduate and graduate accounting degree programs who maintained a

 

 minimum grade point average of 3.3.

 

     Adilene Mercado, an accounting major at the University of Washington in Seattle, said, "Being an AICPA

 

 scholarship recipient is an honor that will provide me with opportunities my parents never had. The

 

 scholarship is helping me live my dream of being the first in my family to go to college and, ultimately, to use

 

 my education to give back to my community."

 

     Rick Hernandez, a senior accounting major at the University of Connecticut, said, "To be honest, this

 

 scholarship means everything to me. My parents are trying their best to put me and my sister through college

 

 right now, which is no easy feat, so I try to do everything I can to help them. The scholarship helped pay for

 

 all of my books and most of my board for this semester."

 

Scholarship funding is provided by the AICPA Foundation, with contributions from the Accounting

 

 Education Foundation of the Texas Society of CPAs (TSCPA), the New Jersey Society of CPAs

 

 (NJSCPA), and Robert Half International. Each student receives an individual award ranging from $1,500

 

 to $3,000. 

 

     The American Institute of Certified Public Accountants (AICPA) Scholarship for Minority Accounting

 

 Students. The scholarship program began in 1969, with the aim of increasing ethnic diversity in the CPA

 

 profession. Since the program's inception, the AICPA Foundation has awarded more than $14.6 million in

 

 scholarships to approximately 8,000 accounting students.

 

    The American Institute of Certified Public Accountants, founded in 1887, is the world's largest association

 

 representing the accounting profession, with nearly 377,000 members in 128 countries. AICPA members

 

 represent many areas of practice, including business and industry, public practice, government, education,

 

 and consulting. Membership is also available to accounting students and CPA candidates. The AICPA sets

 

 ethical standards for the profession and U.S. auditing standards for audits of private companies; nonprofit

 

organizations; and federal, state, and local governments. It develops and grades the Uniform CPA

 

 Examination.

Prison Tax Fraud

      Federal Internal Revenue Service auditors now say prison inmates are stealing up to four times more tax

 dollars than they initially thought. A recently released report by the Treasury Inspector General for Tax

Administration shows potentially hundreds of millions of tax dollars are stolen every year by prison inmates

 filing tax returns for work they never did asking for tax refunds they aren’t due. Denise Platt's identity was

 stolen by a Florida inmate over a year ago. Platt became very worried when the IRS didn’t seem to

 understand what had happened to her and to the tax refund money the government was supposed to send

 her but sent to the person who’d stolen her identity. " I was very frustrated. Everything seemed hopeless,"

 said Platt. Platt eventually lost her patience with the IRS when they kept sending tax refund checks to the

 person who posed as her, the person who stole her identity. The IRS sent the refund checks to the thief’s

 address even after “Dee” formally notified the IRS exactly what was going on by filing official paperwork

 with the government.

     Prison inmates continue to file false tax returns for work they never do, often listing employing companies

 that don’t exist, then get refunds they aren’t due. Congress has now put in law in place in 2008 (Inmate Tax

 Fraud Prevention Act of 2008) to help plug holes that allow this prison tax scam while requiring the IRS to

 be more active in addressing and stopping this fraud.

     Tax crimes are not just for fraudulent individuals and tax preparers, but have now become a fixture with

 inmates as well. If a person gets caught with a tax crime there are some serious penalties that come with it.

If you are convicted of a tax crime after putting the government to the trouble of a trial, chances are eight in

 ten that you will be sent to federal prison. The Federal Sentencing Guidelines and the judge determine how

 long the sentence will be.

     In general, public figures are most likely to go to jail. Back in the 30s, President Hoover ordered that our

 income tax evasion law be used to put away the notorious Al Capone. This is the only charge ever made to

 stick on Scarface, who found his way to Alcatraz. Richard Hatch failed to pay his taxes with the $1,000,000

he won on the show Survivor, but he didn’t survive the IRS police; he was sentenced to 51 months in federal

 prison.

      Tax convicts are usually sent to a Club Fed minimum security facility filled with bankers, lawyers,

 politicians, and Wall Street sharpies. The average length of time served for a tax crime is a little less than two

 years. Tax alumni of the federal prison system all agree that it was a humiliating and crushing experience.

 And licensed professionals—lawyers, doctors, stockbrokers, and CPAs—lose their professional licenses

 after conviction.
    

Tax Preparer Gets Jail Time

     An Alabama woman has been sentenced to 18 months in prison for her involvement in a fraudulent tax

 return perpetration scheme. Judge Mark Fuller of the Middle District of Alabama sentenced Chiquita Q.

 Broadnax for the scheme, the Justice Department and the Internal Revenue Service (IRS) announced.

     Broadnax worked as a tax return preparer at a tax return preparation business, known as Flash Tax. She

 worked there from December 2004 through January 2007. While she worked at Flash Tax, Broadnax

 prepared and filed at least 900 tax returns, with most of the returns containing false information in order to

 get higher tax returns, which she kept and her clients did not receive.

     Her boss, James E. Moss trained Broadnax to prepare false tax returns in order to obtain higher tax

 refunds for Flash Tax clients by overstating or understating specific numbers and sometimes even completely

 making up false numbers to the tax return. Moss was convicted in early December for being the ring leader

 of the fraudulent tax return perpetration scheme. Broadnax's co-worker Avada L. Jenkins was also

 convicted. Lambert has plead guilty to the crime of preparing false tax refund claims. Indictments have been

 filed against Flash Tax alleged co-conspirators Melinda M. Lambert and Lutoyua N. Thomson. Each

 defendant faced a maximum jail term of 86 years for the multiple crimes.

     Fraudulent tax returns is nothing new. Tax preparers and and individuals alike get caught every year doing

 it. Individuals think that they can get away with preparing false returns if they just slightly inflate or deflate

 their tax returns. It is very important to check who your tax preparer is, and make sure they are reliable and

 trustworthy, before paying them to do your returns.

     So how do people cheat on their taxes? Most cheating is from deliberate under reporting of income to

 achieve higher tax returns. This is tax evasion, which is the most common type of tax crime. crime. A

 government study found the most under reporting of income was by self-employed restaurateurs, clothing

 store owners, and car dealers. . Telemarketers and salespeople came in next, followed by doctors, lawyers,

 accountants, and hairdressers.

     What happens if your caught cheating? Most tax crimes are caught through an audit. If you are caught in a

 tax lie by an auditor, she can either slap you with a penalty or refer your case to the IRS’s criminal

 investigation division (CID). In the vast majority of cases, the auditor won’t call in the CID. Auditors are

 trained to look for signs of tax fraud. . Using a false Social Security number, keeping two sets of financial

 books, or claiming a blind spouse as a dependent when you are single are all blatant examples of tax fraud.
     

 

How do Companies Commit Fraud?

     With all the accounting gimmicks and fraud that goes on, and goes on unnoticed, what are some

of the ways companies implement accounting gimmicks and how can investors notice them? The

CFRA has identified thirty techniques, grouped in seven categories, most companies use to commit

accounting fraud.

     The first gimmick used is recording revenue too soon or recording revenue that is not accurate.

This includes tricks such as recording revenue before a future service is met; recording revenue before

a customer's shipment takes place; recording revenue even when a customer does not have to pay. It

also includes selling to an affiliated party, grossing up revenue, or giving a customer something as a

quid pro quo. Another gimmick used is recording fabricated revenue. This includes recording

investment income as revenue; recording sales that have no real impact; recording cash as revenue in a

lending transaction, and releasing revenue that was held back because of a merger. The third gimmick

used is increasing income with one-time gains. This would be including investment income as

revenue, increasing profits by selling assets that are undervalued, and even creating income on the

balance sheet accounts. The fourth gimmick is moving expenses to a later or earlier period. This

technique involves capitalizing normal costs instead of expensing them; switching accounting policies

and moving expenses to an earlier period; the amortization of costs too slow; not writing off damaged

assets; and reducing asset reserves. Another gimmick used is not recording or improperly reducing

liabilities. This is the act of recording revenue too soon when services still remain; creating false

rebates; putting questionable reserves into income; reducing liabilities by changing assumptions, and

not recording expenses and related liabilities with services still remaining. The sixth accounting

gimmick used is moving current revenue to a later period. This technique includes holding on to

revenue before an acquisition, and creating and releasing reserves into a later period. The seventh and

final gimmick according to the CFRA is moving future expenses to the current period as a special

charge. This includes writing off R and D costs in an acquisition; improperly inflating an amount in a

special charge, and accelerating discretionary expenses to the current period.

     Investors looking to buy stock in a company should look out for several things before investing

in a fraudulent company. Some main things for investors to watch out for, include; looking for

management incentives that might increase distorted outcomes, to a company capitalizing costs instead

of expensing them, to a company investing in worthless assets. There are many other small clues

investors can look out for in a company's financial statements, but the main thing investors need to

remember is always check a company's financial statements thoroughly before investing and not

relying on every statement being audited.

The U.S. Government: Actual Budget Cuts or Just Accounting Gimmicks?

     Big corporations and companies are not the only ones who participate in accounting fraud.

There are many people who believe that U.S. Government is just as guilty as some of the other notable

companies to get caught with accounting fraud. Currently, the U.S. Government has their 2011 Budget

Compromise, which consists of $38 billion in budget cuts. The problem though, is that some believe it

is all by way of accounting gimmicks. Some believe that while $38 billion in budget cuts sounds good,

it really is not what it seems. The Associated Press stated that “last weeks hard-won agreement to avoid

a government shutdown and cut federal spending by $38 billion significantly eased the fiscal pain by

pruning money left over from previous years, accounting sleight of hand and going after programs

President Obama had targeted anyway.” Examples such as legislation which included $4.9

billion from the Justice Departments Crime Victims Fund, but that money was not going to be spent

this year anyway because it was in a reserve fund. Out of the $38 billion in total cuts, $18 billion

would be cut from mandatory programs, while the remaining $20 billion would be cut from domestic

discretionary programs. The $18 billion from the mandatory programs, known as “ChIMPS”, are

permanent programs, whose money they would lose this year, would be put back into their budgets

the next year anyway. One person, Joseph J. DioGuardi, a former congressman

and CPA himself, even compared the federal government's accounting practices to those of Enron's

back in 2003. One reason he believes this is so, is because the laws of the Securities Exchange

Commission and General Accepted Accounting Principles do not apply to the books of the United

States federal government. In comparing our nations federal government to Enron, DioGuardi says

“Our federal government's ability to manipulate it's accounts and budgets is similar in many ways to

what Fastow did at Enron to cook the books and manufacture earnings.”

The Lehman Brothers and WorldCom Scandals

     Lehman Brothers Holdings Inc. had to file for bankruptcy in September 2008, following the

loss of most of their clients, decrease in assets, and losses of stock, due in part to the declining market

at the time. In March 2010, a report by a court-appointed examiner found that the financial services

firm had been participating in accounting gimmicks. Lehman Brothers took place in an accounting

gimmick know as “Repo 105”. This gimmick was used to make it look like they were cutting their

leverage levels in 2008, when in actuality they were not. They used this technique to even remove $50

billion in securities from their balance sheet in 2008. Lehman would do this at the end of each quarter.

The examiner also found that Lehman could have been insolvent for two weeks prior to their

September 15 bankruptcy filing date. The examiner stated “Lehman's small margin of equity relative

to assets meant it did not need much loss in asset value to render itself insolvent.” Of course

Lehman's auditor, Ernst and Young; did not escape the criticism from Lehman's fallout. The examiner

said that it's possible Ernst and Young could be held “negligent” in the case. Ernst and Young said in a

statement: “ Our last audit of the company was for the fiscal year ending November 30, 2007. Our

opinion indicated that Lehman's financial statements for that year were fairly presented in accordance

with General Accepted Accounting Principles (GAAP), and we remain of that view.”

     Along with the Lehman Brother's scandal, WorldCom had it's own scandal in 2002 when they

filed for bankruptcy. Just like the case with Lehman Brothers, fraud and accounting gimmicks were

found to be evident in the demise of the company. WorldCom was an American telecommunications

company, and for a time was the nations second largest long distance phone company after AT&T.

After a steady rise in the telecommunications industry, WorldCom hit a snag in 2000, and saw its stock

prices declining. The CEO at the time; Bernard Ebbers was looking for a ways to cover his margin

calls on his WorldCom stock, with pressure from banks to do so in order to finance some of his other

business expenses at the time. Ebbers achieved a rise in WorldCom's stock prices from 2000 to 2002,

by using accounting gimmicks to hide the steady drop in their earnings and by distorting their actual

profits and falsely presenting a pretty picture of the company's financial statements. WorldCom

achieved this by using two main accounting gimmicks. The first gimmick they used was improperly

capitalizing cost instead of expensing them on the balance sheet. They would under-report their 'line

costs', or the costs for inter-connection with other telecommunication companies; by capitalizing them.

Secondly, WorldCom would increase their revenues with manufactured accounting entries from

“corporate unallocated revenue accounts.” WorldCom's fraudulent financial revenue and growth was

finally discovered in 2002 by a team of internal auditors at the company. In the end, the audit team,

who did their work in secret, found $3.8 billion in fraud. On June 26, 2002, the U.S. Securities and

Exchange Commission launched their investigation into the matter. Over a year later, it was discovered

that WorldCom's assets were inflated by around $11 billion.