Even though Accounting Today’s area of coverage includes what unfolds within the regulatory arena, I’ve seldom watched any Senate or congressional hearings on C-span even when the proceedings involve the accounting profession.
The Enron inquiry, however, being the rare exception.
It’s not that I’m not interested in what goes on. It’s just that I equate C-Span programming with watching a production company film a movie on location — something you see on a fairly regular basis if you work in New York City as I do.
For those who’ve never had the privilege, the best way I can describe it is roughly four hours of laborious setup before you’re treated to about 30 seconds of action.
In fact, I once saw two women at one particular shoot obsessed with meeting George Clooney leave in disgust after cooling their heels for several hours when they discovered stars like Clooney actually remain in their air-conditioned and fully stocked production trailers until the scene is ready to shoot.
But I digress.
It would however, be fairly entertaining to tune into C-Span and watch the Senate Governmental Affairs Subcommittee grill several of the Big Four firms including Ernst & Young and PricewaterhouseCoopers, and KPMG in particular, about their aggressive sales tactics in pushing tax shelters.
Accused of using “Have I got a deal for you” strategies that would make a salesman-in-training at Honest Ira’s Used Cars blush, KPMG raked in, according to reports, about $124 million in fees from tax shelters that, according to one report, siphoned about $1.4 billion in revenue from the government.
Committee member Sen. Carl Levin, D-Mich., apparently frustrated after several hours of questioning KPMG executives, was quoted as wondering whether he and the committee would “ever get an honest answer” from the Big Four firm.
Well, apparently yes and no.
KPMG has subsequently stated that it made substantial improvements and changes to its tax practices, policies and procedures over the last three years.
Specifically, the firm said it has discontinued offering “aggressive tax strategies designed to be sold to multiple clients such as FLIP, BLIPS OPIS and SC2.”
The firm also said that it eliminated two practices — Stratecon and Innovative Solutions — that were responsible for developing tax strategies, and jettisoned the Tax Innovation Center, a unit that was charged with packaging and marketing tax strategies.
The SEC has launched a formal investigation into KPMG audit client Wachovia Corp. regarding client referrals, which the regulators assert were used as “leads” for potential tax shelter customers.
In addition, KPMG has found itself the defendant in several lawsuits from plaintiffs charging they received bad tax advice. KPMG countered by claiming the suits are without merit.
If I were a television executive, I probably wouldn’t pitch this story as mid-season replacement. But for C-Span I have a feeling that it would be more palatable to viewers than say, the recent spate of filibusters.
Nor would fans have to wait for George Clooney. Unless of course he was in the market for tax products.
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