Question:

Top US Official Blasted for Anti-Saudi Remarks : Saudi Arabia yesterday reacted angrily to a tendentious

blah, blah, blah Richard Perle notes ‘big problems’ with Saudi Arabia and Syria * Says Riyadh qualifies for membership in the ‘axis of evil’ WASHINGTON: An advisor to Defence Secretary Donald Rumsfeld Richard Perle told CNN on Sunday: "The Saudis qualify for their own membership in the axis of evil," which President George W Bush described as Iran, Saddam Hussein’s Iraq and North Korea. "I hope that those who believe that we are now getting full cooperation are right," he added, referring to Saudi Arabia’s role in the war on terror following the September 11, 2001 attacks on the United States. "I have yet to see the evidence," Perle charged in the latest assault on the kingdom by influential US neo-conservatives. He said that the United States had "big problems" with Syria which allowed terrorists to enter Iraq via its territory. "One of the things they’re (the Syrians) doing is facilitating the entry into Iraq of terrorists who are there to kill Americans," Richard Perle told CNN. "They’re holding on to money that belongs to the people of Iraq. And they’re building chemical weapons, at least. So we have big problems with the Syrians." On January 5, Syrian Foreign Minister Faruq al-Shara said he wanted to see improved relations between Washington and Syria following the US adoption of legislation paving the way for unilateral sanctions against his government. Syrian media on Saturday called for Washington to wield its influence and help revive peace talks with Israel that collapsed in acrimony four years ago. But, said Perle, the Syrians "from time to time, will throw us a crumb, a piece of intelligence here, or they’ll take a minor step there. And they hope, and in the past they’ve sometimes been right, that that that will deflect us from what ought to be our course, which is a real change in their policy." -AFP

Response:

Saudi Arabia

The Plan to Overthrow the Saudi Royals http://www.meib.org/articles/0311_saudii.htm Vol. 5   No. 11  - November 2003 Interview: Dr. Saad al-Faqih PICTURE: http://www.meib.org/images/ff_faqih_saad.jpg Head of the Movement for Islamic Reform in Arabia (MIRA) Saad al-Faqih was a professor of surgery at King Saud University until March 1994. He was jailed for his heavy involvement in the country’s reform movement. Upon his release from prison, he became director of the London office of the Committee for the Defense of Legitimate Rights (CDLR), then the leading Saudi opposition group. He left CDLR to form MIRA in 1996. The interview was conducted by Mahan Abedin at Dr. Faqih’s private residence in North-Central London. Abedin is an analyst of Middle East politics, educated at the London School of Economics and Political Science. You frequently state that Saudi Arabia is facing a dire crisis. What do you mean by this? What are the roots of this crisis? The regime is facing several major challenges that it is incapable of dealing with. The challenge of violence has already started and is increasing. Once it shifts towards the royals, rather than Westerners, the collapse will be imminent. In addition, there are mounting socio-economic problems: increasing poverty, unemployment, domestic crime, social disintegration and sky-high national debt. In the background, there is the crumbling of the regime’s Islamic legitimacy since the 1991 Gulf War, which has significantly weakened its foundations. To make matters worse, the regime does not have the proper command system to deal with these crises. There is neither a central, powerful figure in the royal family [to impose his will] nor a collective decision-making mechanism, so the regime is not capable of surmounting these challenges. The dispute within the royal family about succession is kept artificially hidden by the living body of the king. Once King Fahd dies, the dispute will flare up. How did the Gulf War precipitate the breakdown of the regime’s religious legitimacy? Since the time of King Abdulaziz, the regime has understood that it cannot, on its own, convince the public that it is a legitimate government – legitimacy had to be conferred by the ulama [clerics]. Abdulaziz wanted people to obey him as the representative of God’s will. It is well known in Islamic discourse that when the ruler is implementing Islam, he should be obeyed. Abdulaziz was not implementing Islam in the proper political sense, but he knew that he could convince the people by securing the loyalty of the ulama. Abulaziz’s successors followed the same principle and hence were very tolerant towards the ulama, even though their own behavior and the way they have run the country is un-Islamic. During the 1990-1991 Gulf crisis, the official ulama sanctioned the entry of 500,000 non-Muslim forces into the kingdom

Question:

Hi all, I am a french MBA student. We are currently working on a case study about ENRON.Could any of you let me know where I can find detailed (but not too complex) info about Enron’s high risk accounting practices ? I know lots of stuff has been written in the press about Enron, but I am looking for an accounting point of view showing Annual Reports, Balance Sheets, Income statements, and explaining what really happened. Many thanks Xamba

Response:

Try the AICPA website.  There is a special section about Enron and links to other sites.  Also, check the SEC 10-K filings for financial statements and auditor’s reports.

Response:

Question:

everytime I rest my palm the pitch changes,

Don’t rest your palm so heavily on the bridge. However, if you’ve convinced yourself that it’s not bad technique, then you can try moving your palm as close to the line between the two support posts. If you rest your hand there, then you shouldn’t rock the trem as much. as well as every time I bend a string

Before I got my tremsetter, I would deal with this by actually rocking my pick hand back toward the back of the bridge, where I’d get more leverage to keep the trem from rocking forward during bends. So, bends became a two-handed deal where, as I bent the string with my fret-hand, my pick-hand would roll back slightly to counter the increased tension in the string(s). I’ve heard mention of a device called a trem-setter. would this help and are they expensive ?

They’re about $50. Yes, they do help. If I ever guy another guitar, it’ll have a floating trem. As soon as I get off of the phone to order the guitar, I’m going to make the call to order the tremsetter for it. They should be standard issue…. they should come pre-installed on all floating-trem guitars (and they ARE on some Ibanezes now… sort of). The tremsetter makes the trem have a certain spot that it "likes" to be. It takes a certain amount of extra tension to get it to budge out of this "home" position. String bends or sloppy picking-hand palm-rest technique aren’t enough to get it to budge. However, it doesn’t contribute too much to the stiffness of the normal operation of the trem. However, tremsetters are very tricky to setup right. Many people buy them, set them up improperly, and then announce that they suck. Personally, it took me about 3 weeks of experimenting and one call to the company before I had it all setup. That was about 11 years ago. I haven’t adjusted it since then and I make SURE that I don’t have to by NOT CHANGING my brand or gauge of strings. In short, a properly adjusted tremsetter will make a WORLD of difference. However, adjusting it is a tricky affair and can take a few weeks of systematic experimentation. However, once you get it right, you won’t have to futz with it again. This shit trem also means its a bastard to tune. You tune one string, and then the tension from tuning the next string pulls the trem down a bit making it close to impossible to tune properly.

Ah… I remember having this problem… 11 years ago. Now, with the trem-setter, I make about 2 or 3 passes through the tuning knobs and I’m ready to rock. Incidentally, if you end up not getting a trem-setter, you can try this: Bring all of the strings up to enough tension so that it starts floating the trem. Then, tune the low-E string artificially high (basically accounting for the fact that it’s going to drop when the other strings are brought up) by about 2 half-steps. In other words, tune it to an F#. Then, do the same for the A-string, but don’t go quite so much over (because you only have four more strings to bring up to pitch). Then, do the same for the D-string… but don’t go quite as much over the proper pitch as you did with the A-string (because now you only have three more strings that are going to be brought up to pitch that you need to account for). Get the idea? Once you get to the high-E, you just tune that to E normally. It’ll probably be chaos at first. However, with a little practice, I was able to tune my pre-tremsetter floating trem in about 3 or 4 passes. The trick is all in accounting for the pitch drop on the first few strings that you tune. And don’t even mention trying to put different gauge strings on the thing.

Why in the world are you changing string gauges? any advice would be greatly appreciated.

Well, you can get a new Ibanez with the cool built-in trem-centering system that they showed at NAMM this year. – Joe

Response:

Thanks Tim! You’ve put a smile on my face Carl

– Hide quoted text — Show quoted text – It’s not a bad trem. The Ibanez Lo-pro edge (what you have) is (as far as floyd’s go) very stable and reliable. As another poster said, block it up with some wood. Other than that sell the guitar or trade it in for another model that isn’t routed for pull-ups. If you don’t like floyd’s that float then you bought the wrong guitar! If you only bought it recently then I’m sure you could get a deal done with the place you bought it. Daniel C. Hi all.  have an Ibanez RG570EX, which has the supposed best locking trem out of the RG range.. I can’t remember the exact model, but it’s a floating trem which allows you to ‘pull-up’ two whole notes, as well as down obviously. My problem with this is that it is shite. I dont want it to ‘float’. I like floyd roses that are locked tight to the body, with say 4 highly tensioned springs. I dont use the trem at all really, and certainly not for pulling up. What can I do ? everytime I rest my palm the pitch changes, as well as every time I bend a string (really really puts me off picking this thing up) I’ve heard mention of a device called a trem-setter. would this help and are they expensive ? This shit trem also means its a bastard to tune. You tune one string, and then the tension from tuning the next string pulls the trem down a bit making it close to impossible to tune properly. And don’t even mention trying to put different gauge strings on the thing. any advice would be greatly appreciated. I dont play much any more, but bought this thing in the hope that I’d want to pick it up because of its niceness, and this isn’t happening! thanks, Carl Please, reconsider. The Floyd Rose is the 8th Wonder Of The World. As you have obviously selected an electric guitar, you would be SEVERELY restricting yourself, musically, if you were to hamper/replace it in any way. I realize that you don’t play that much anymore, but, what the heck; start by trying to live with it and then progress to the art of trem (because it is an art). I trust that you shall make the right decision Regards, Tim Durban, South Africa

Response:

– Hide quoted text — Show quoted text -It’s not a bad trem. The Ibanez Lo-pro edge (what you have) is (as far as floyd’s go) very stable and reliable. As another poster said, block it up with some wood. Other than that sell the guitar or trade it in for another model that isn’t routed for pull-ups. If you don’t like floyd’s that float then you bought the wrong guitar! If you only bought it recently then I’m sure you could get a deal done with the place you bought it. Daniel C. Hi all.  have an Ibanez RG570EX, which has the supposed best locking trem out of the RG range.. I can’t remember the exact model, but it’s a floating trem which allows you to ‘pull-up’ two whole notes, as well as down obviously. My problem with this is that it is shite. I dont want it to ‘float’. I like floyd roses that are locked tight to the body, with say 4 highly tensioned springs. I dont use the trem at all really, and certainly not for pulling up. What can I do ? everytime I rest my palm the pitch changes, as well as every time I bend a string (really really puts me off picking this thing up) I’ve heard mention of a device called a trem-setter. would this help and are they expensive ? This shit trem also means its a bastard to tune. You tune one string, and then the tension from tuning the next string pulls the trem down a bit making it close to impossible to tune properly. And don’t even mention trying to put different gauge strings on the thing. any advice would be greatly appreciated. I dont play much any more, but bought this thing in the hope that I’d want to pick it up because of its niceness, and this isn’t happening! thanks, Carl

Please, reconsider. The Floyd Rose is the 8th Wonder Of The World. As you have obviously selected an electric guitar, you would be SEVERELY restricting yourself, musically, if you were to hamper/replace it in any way. I realize that you don’t play that much anymore, but, what the heck; start by trying to live with it and then progress to the art of trem (because it is an art). I trust that you shall make the right decision Regards, Tim Durban, South Africa

Response:

Hey I’ve got no problems with Floyd Roses! Hell I love them – I think they look cool and when they’re tensioned up and tight-smack to the body, the strings stay in tune thanks to the locking nut. Just these ‘floating’ ones I hate. My uncle put together a guitar using, I think a Floyd Rose licensed trem made by ESP (or maybe that was the body..) and this thing was fantastic. It was so tight against the body that unless you pushed real hard on the trem-arm, it never moved. And of course there was no up-pull possible because it was flush against the body. This I like. Ibanez ‘floater’ I hate. Thanks for the suggestions so far. I may try the wooden block thing once I’ve read it again and understand what you’re saying more clearly (i’m in a rush to go out now so have only quickly read these replies) once again thanks thus far Carl

– Hide quoted text — Show quoted text – Hi all.  have an Ibanez RG570EX, which has the supposed best locking trem out of the RG range.. I can’t remember the exact model, but it’s a floating trem which allows you to ‘pull-up’ two whole notes, as well as down obviously. My problem with this is that it is shite. I dont want it to ‘float’. I like floyd roses that are locked tight to the body, with say 4 highly tensioned springs. I dont use the trem at all really, and certainly not for pulling up. What can I do ? everytime I rest my palm the pitch changes, as well as every time I bend a string (really really puts me off picking this thing up) I’ve heard mention of a device called a trem-setter. would this help and are they expensive ? This shit trem also means its a bastard to tune. You tune one string, and then the tension from tuning the next string pulls the trem down a bit making it close to impossible to tune properly. And don’t even mention trying to put different gauge strings on the thing. any advice would be greatly appreciated. I dont play much any more, but bought this thing in the hope that I’d want to pick it up because of its niceness, and this isn’t happening! thanks, Carl

Response:

It’s not a bad trem. The Ibanez Lo-pro edge (what you have) is (as far as floyd’s go) very stable and reliable. As another poster said, block it up with some wood. Other than that sell the guitar or trade it in for another model that isn’t routed for pull-ups. If you don’t like floyd’s that float then you bought the wrong guitar! If you only bought it recently then I’m sure you could get a deal done with the place you bought it. Daniel C.

– Hide quoted text — Show quoted text – Hi all.  have an Ibanez RG570EX, which has the supposed best locking trem out of the RG range.. I can’t remember the exact model, but it’s a floating trem which allows you to ‘pull-up’ two whole notes, as well as down obviously. My problem with this is that it is shite. I dont want it to ‘float’. I like floyd roses that are locked tight to the body, with say 4 highly tensioned springs. I dont use the trem at all really, and certainly not for pulling up. What can I do ? everytime I rest my palm the pitch changes, as well as every time I bend a string (really really puts me off picking this thing up) I’ve heard mention of a device called a trem-setter. would this help and are they expensive ? This shit trem also means its a bastard to tune. You tune one string, and then the tension from tuning the next string pulls the trem down a bit making it close to impossible to tune properly. And don’t even mention trying to put different gauge strings on the thing. any advice would be greatly appreciated. I dont play much any more, but bought this thing in the hope that I’d want to pick it up because of its niceness, and this isn’t happening! thanks, Carl

Response:

I dont think you should since I love my trem, but if you ever do feel of getting rid of it ive me an email.

– Hide quoted text — Show quoted text – Hi all.  have an Ibanez RG570EX, which has the supposed best locking trem out of the RG range.. I can’t remember the exact model, but it’s a floating trem which allows you to ‘pull-up’ two whole notes, as well as down obviously. My problem with this is that it is shite. I dont want it to ‘float’. I like floyd roses that are locked tight to the body, with say 4 highly tensioned springs. I dont use the trem at all really, and certainly not for pulling up. What can I do ? everytime I rest my palm the pitch changes, as well as every time I bend a string (really really puts me off picking this thing up) I’ve heard mention of a device called a trem-setter. would this help and are they expensive ? This shit trem also means its a bastard to tune. You tune one string, and then the tension from tuning the next string pulls the trem down a bit making it close to impossible to tune properly. And don’t even mention trying to put different gauge strings on the thing. any advice would be greatly appreciated. I dont play much any more, but bought this thing in the hope that I’d want to pick it up because of its niceness, and this isn’t happening! thanks, Carl

Response:

I dont want it to ‘float’. I like floyd roses that are locked tight to the body, with say 4 highly tensioned springs. I dont use the trem at all really, and certainly not for pulling up.

That’s the same problem I had with my RG550.  Even when I do a pull up on fretboard, all the other strings go flat so I can’t play them simultaneously. What can I do ?

Nothing I’ve tried will lock it in place. everytime I rest my palm the pitch changes, as well as every time I bend a string (really really puts me off picking this thing up)

This is another gripe I had with floyd-rose. I’ve heard mention of a device called a trem-setter. would this help and are they expensive ?

I don’t think that’s what you think it’ll do…  I think it’s a device which stabilizes the tremolo even greater than it already does. This shit trem also means its a bastard to tune. You tune one string, and then the tension from tuning the next string pulls the trem down a bit making it close to impossible to tune properly. And don’t even mention trying to put different gauge strings on the thing.

Yep..  that was a long and hard trial and error for me to finally be able to put in new strings with consistency.  For heavier gauge strings, forget about it.  The bridge will float ridiculously high it’s unplayable. any advice would be greatly appreciated. I dont play much any more, but bought this thing in the hope that I’d want to pick it up because of its niceness, and this isn’t happening!

I finally had it with my Ibanez, and picked up a Fender Fat Strat.  It differs from people to people but to me it sounds way better, and the flexible bridge which lets it rest on the body is also a big plus. I have to hand it to floyd-rose though, even while it floats mid-air all the time, it remarkably stays in tune relatively well no matter how hard the whammy punishment.  I still won’t go back to it though, I’m happy with my new fender.

Response:

I sold my Ibanez RG because I got sick of the floyd rose. Plain and simple. I own set bridge Schecter guitars now and I’m very happy. – Hide quoted text — Show quoted text – Hi all. have an Ibanez RG570EX, which has the supposed best locking trem out of the RG range.. I can’t remember the exact model, but it’s a floating trem which allows you to ‘pull-up’ two whole notes, as well as down obviously. My problem with this is that it is shite. I dont want it to ‘float’. I like floyd roses that are locked tight to the body, with say 4 highly tensioned springs. I dont use the trem at all really, and certainly not for pulling up. What can I do ? everytime I rest my palm the pitch changes, as well as every time I bend a string (really really puts me off picking this thing up) I’ve heard mention of a device called a trem-setter. would this help and are they expensive ? This shit trem also means its a bastard to tune. You tune one string, and then the tension from tuning the next string pulls the trem down a bit making it close to impossible to tune properly. And don’t even mention trying to put different gauge strings on the thing. any advice would be greatly appreciated. I dont play much any more, but bought this thing in the hope that I’d want to pick it up because of its niceness, and this isn’t happening! thanks, Carl

Response:

– Hide quoted text — Show quoted text – Hi all.  have an Ibanez RG570EX, which has the supposed best locking trem out of the RG range.. I can’t remember the exact model, but it’s a floating trem which allows you to ‘pull-up’ two whole notes, as well as down obviously. My problem with this is that it is shite. I dont want it to ‘float’. I like floyd roses that are locked tight to the body, with say 4 highly tensioned springs. I dont use the trem at all really, and certainly not for pulling up. What can I do ? everytime I rest my palm the pitch changes, as well as every time I bend a string (really really puts me off picking this thing up) I’ve heard mention of a device called a trem-setter. would this help and are they expensive ? This shit trem also means its a bastard to tune. You tune one string, and then the tension from tuning the next string pulls the trem down a bit making it close to impossible to tune properly. And don’t even mention trying to put different gauge strings on the thing. any advice would be greatly appreciated. I dont play much any more, but bought this thing in the hope that I’d want to pick it up because of its niceness, and this isn’t happening! thanks, Carl

If you never use the trem, it’s easy, fast, and cheap to simply block it. This is done by setting up the guitar as desired. Then, remove the backplate and measure the distance between the spring-side of the bridge block and the cavity wall.   Cut  a piece of hardwood to fit snugly in this space. Loosen the strings, remove the springs, insert the block.   Add all the springs you can and tighten the claw so that the springs are fully tensioned.   Retune, remove the bar, and you’re done. With the bridge blocked this way, it will shift neither sharp or flat. Since no physical modifications have been made to the guitar, it can be restored to original condition in minutes. HTH -pk

Response:

Hi all.  have an Ibanez RG570EX, which has the supposed best locking trem out of the RG range.. I can’t remember the exact model, but it’s a floating trem which allows you to ‘pull-up’ two whole notes, as well as down obviously. My problem with this is that it is shite. I dont want it to ‘float’. I like floyd roses that are locked tight to the body, with say 4 highly tensioned springs. I dont use the trem at all really, and certainly not for pulling up. What can I do ? everytime I rest my palm the pitch changes, as well as every time I bend a string (really really puts me off picking this thing up) I’ve heard mention of a device called a trem-setter. would this help and are they expensive ? This shit trem also means its a bastard to tune. You tune one string, and then the tension from tuning the next string pulls the trem down a bit making it close to impossible to tune properly. And don’t even mention trying to put different gauge strings on the thing. any advice would be greatly appreciated. I dont play much any more, but bought this thing in the hope that I’d want to pick it up because of its niceness, and this isn’t happening! thanks, Carl

Response:

Question:

- Hide quoted text — Show quoted text – I recently acquired a copy of the WSCPA proposed uniform certified public accountants practice act of 2001.  It is the expectation of the WSCPA that this proposal is  TO BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON. I have read it through once, and find certain provisions to be a bit chilling. I read it.  It sounded pretty decent to me, I can only hope CA doesn’t decide to get creative when we adopt UAA and go beyond what WA is proposing. Based on past experience, I think the mandatory peer review for attest is a good idea.

My problem is not with peer review per se, but with this proposals lack of definition, oversight, and appeals.  Not even the board of accountancy can see the details of the process. 11 (8) (c) Require the peer reviews to be conducted in a confidential manner and any documents generated or disclosed during the peer review to be maintained in a manner designed to preserve confidentiality, and that neither the board nor any third party, other than the oversight body, shall have access to documents furnished or generated in the course of the peer review. Peer review documents shall not be subject to public disclosure under chapter 42.17 RCW. I leaving for my father’s funeral in North Carolina in about an hour.  I’ll be back Saturday late.  I won’t be able to respond further until Sunday. — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

The powers of the state are used to support reporting conventions which are really nothing but a commercial franchise, by AICPA and its members.

That appears to be the intent, but it isn’t law yet. Thanks for the post. — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

I recently acquired a copy of the WSCPA proposed uniform certified public accountants practice act of 2001.  It is the expectation of the WSCPA that this proposal is  TO BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON. I have read it through once, and find certain provisions to be a bit chilling.  

I read it.  It sounded pretty decent to me, I can only hope CA doesn’t decide to get creative when we adopt UAA and go beyond what WA is proposing. Based on past experience, I think the mandatory peer review for attest is a good idea.

Response:

I recently acquired a copy of the WSCPA proposed uniform certified public accountants practice act of 2001.  It is the expectation of the WSCPA that this proposal is  TO BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON. I have read it through once, and find certain provisions to be a bit chilling.  I am particularly concerned regarding the power and secrecy granted to "peer review", and to certain sweeping powers granted to the board.  As I read this document, becoming a CPA in the State of Washington would pretty much require the surrender of certain civil rights. I am deliberately no including any specific references in this post in the hope that some of you will actually read and comment on the document at large.  I will have specific comments in a later post. I have posted the entire document on my web site.  The url is: http://home.att.net/~jdhcpa/uaa.htm — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

Thanks Jim,    NEW SECTION. Sec. 2. It is the policy of this state, and the purpose of    this chapter, to promote the reliability of information that is used for    guidance in financial transactions or for accounting for or assessing    the financial status or performance of commercial, noncommercial, and    governmental enterprises. The public interest requires that persons    professing special competence in accountancy or offering assurance as to    the reliability or fairness of the presentation of information shall    have demonstrated their qualifications to do so… Barf.   Probably written by a bunch of CPAs. Isn’t that ridiculous, that a few underpaid bureaucrats in Olympia,WA should take up such a huge intellectual and social challenge? Obviously they have no means to achieve such lofty goals other than to delegate the whole process to professional bodies like AICPA, or unelected bodies like NASBA, NCCUSL, etc.   Is this democracy?  No.  It is state legislatures getting sold a bill of goods, legislating into law the rules crafted by elites in the accounting profession for their own enrichment, and rules churned by entrenched interests within those unelected rulemaking bodies for no other reason but to perpetuate their own salaries and hegemony over rulemaking. If the State of Washington has any authentic, indigenous concerns about the state of accounting services in their state, they should debate those reporting problems directly instead of bundling up the entire problem and delegating it to the private and unelected bodies. Look at one of the results in the laws;    (6)(a) Persons or firms who do not hold certificates or permits shall    not use language in any statement relating to the financial affairs of a    person or entity which is conventionally used by certificate or permit    holders in reports on financial statements.    (b) A person or firm not holding a valid certificate or permit issued    under section 10 or 11 of this act shall not assume or use any title or    designation that includes the words "accountant," "auditor," or    "accounting" in connection with any other language, including the    language of a report, that implies that the person or firm holds a    certificate or permit or has special competence as an accountant or    auditor    10) Nothing in this chapter prohibits any person…from offering or    rendering to the public bookkeeping, accounting, or tax services,    the devising and installing of financial information systems    …as long as …. do not issue any    written statement which expresses assurance on financial statements    which have been reviewed. Isn’t that ridiculous?  Only the AICPA and NASBA can make up the CPA exams, and only the FASB and AICPA can define all of the terms of GAAP, and they can write them anyway they want, however inappropriately for small business, and yet, *nobody else* can even use the words "accountant" or "presents fairly", or even say "These statements are cool"!! The powers of the state are used to support reporting conventions which are really nothing but a commercial franchise, by AICPA and its members. Take the metadata pledge, posted today here on alt.accounting.   Let’s get completely out of this infantile business of extracting super-high fees from small business for "accounting services."   * Todd F. Boyle CPA    http://www.GLDialtone.com/altcpa.htm * XML accounting, web ledgers, BSPs, ASPs, whatever it takes

Response:

Question:

I took a quick look at your site and ordered a copy of your check fraud prevention tip sheet.

Great! I’m just preparing to update it, so any feedback is appreciated. Some commentary here about what is happening with thermochromatic inks might be very timely, if you care to share.

I’d be pleased to. The "standard" check of just 5 years ago was reasonably well protected from tampering or counterfeiting, except for the pros who will likely overcome whatever security roadblocks are put in their way. But in the last few years, two technologies have made it relatively easy to reproduce or alter checks: color scanners with inkjet printers, and color copiers. Three security features in particular increased in popularity to fight this: 1. Microprinting – usually a signature line and/or border that looks like a line is really *very* tiny text, that used to require a printing press to reproduce 2. Void pantograph- a special ordering of dots in the background that when scanned or copied by many devices would display words such as Void on the copy 3. Embedded fibres- sometimes flourescent, that could at best be copied, but on closer inspection it would be clear that what looked like a fibre was just a copy (or if flourescent, it would not glow under a black light). Unfortunately on the fraud front, standard scanners and inkjet printers can now adequately circumvent Microprinting and Void Pantograph. It may not be a great copy, but in many cases more than adequate to get past the payee and bank tellers. And since not everyone has a black light, flourescent fibres are somewhat limited (not to mention that I have yet to see a bank teller test for the presence of them). Which is why I’m excited about the use of thermochromatic inks. The "color change" characteristic cannot be copied, at present these inks are not available for inkjet printers or color copiers, and it is very easy to test .. just rub and see if the color disappears. As with any security feature, it’s not foolproof. But the more obstacles we can present, the fewer people remain that have the ability to copy or alter checks. If anyone would like samples, please e-mail me with your mailing address and I’ll get them out to you. lcc. ASAP Checks, Forms & Supplies Computer & Business Checks, Blank Check Paper, MICR Toner and Supplies <http://www.asapchecks.com Toll Free: (888) 85-CHECK

Response:

Over the years I’ve come to reject that and, when the faud indicators are there, adopt the stance of accepting nothing unless it can be substantiated.

Skepticism is what enables you to see the fraud indicators *as* fraud indicators.  As part of an audit, I should be interested in determining whether or not a fraud has occurred, and I shouldn’t start the engagement with a preconceived notion either way. Neither do I, as often happens, look at as if it were a criminal case, where there is a presumption of innocence. However, I agree that once I’ve uncovered indicators of fraud, the evidence necessary to convince me no fraud occurred goes up rather dramatically.  Normally, I’m looking for evidence that couldn’t have been "tainted" by the party I suspect of perpetrating the fraud. Let us not forget that an audit has a wider purpose than merely uncovering fraud and skepticism carries over into those areas as well.   I should presume neither that the statements are misstated nor that they are correct–rather, they are presented for me to make a determination on.  

Response:

- Hide quoted text — Show quoted text – One of the large company attendees got into describing some of their scanning techniques; very sophisticated. There are also a couple of articles in the current issue of Accounting Today regarding scanning techniques. I ran across this recently as well. We just introduced thermochromatic ink (changes color when you rub it) on our checks as an additional obstacle for those trying to print on inkjet or copy on a color copier. In preparing samples for the press kit, I could not believe how some of the effective-until-recently security features were no longer a problem for standard scanners and inkjet printers to overcome. Frightening stuff. lcc. ASAP Checks, Forms & Supplies Computer & Business Checks, Blank Check Paper, MICR Toner and Supplies <http://www.asapchecks.com Get your *FREE* Check Fraud Tip Sheet now by visiting: <http://www.asapchecks.com/checkfraudrequest.htm Toll Free: (888) 85-CHECK

Les, Thank you for your interesting and extremely pertinent contribution to the thread. I took a quick look at your site and ordered a copy of your check fraud prevention tip sheet. Some commentary here about what is happening with thermochromatic inks might be very timely, if you care to share. — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

One of the large company attendees got into describing some of their scanning techniques; very sophisticated. There are also a couple of articles in the current issue of Accounting Today regarding scanning techniques.

I ran across this recently as well. We just introduced thermochromatic ink (changes color when you rub it) on our checks as an additional obstacle for those trying to print on inkjet or copy on a color copier. In preparing samples for the press kit, I could not believe how some of the effective-until-recently security features were no longer a problem for standard scanners and inkjet printers to overcome. Frightening stuff. lcc. ASAP Checks, Forms & Supplies Computer & Business Checks, Blank Check Paper, MICR Toner and Supplies <http://www.asapchecks.com Get your *FREE* Check Fraud Tip Sheet now by visiting: <http://www.asapchecks.com/checkfraudrequest.htm Toll Free: (888) 85-CHECK

Response:

snip I think what Jim was referring to, …

snip I’ve always take words to mean what they mean.  I see from his subsequent post, that he meant what you say. snip The proper stance really is a "healthy skepticism" …

Over the years I’ve come to reject that and, when the faud indicators are there, adopt the stance of accepting nothing unless it can be substantiated.  Everyone lies, its only a matter of degree. Psychologists have a nice term for the little lies, ego defense mechanisms.

Response:

 You want to be a lot more "Colombo"…..

snip That hollywood character is so annoying I am sure he would have been given the boot in ten minutes if he wasn’t a badged officer. I’ve found middle management gets very irritated when you keep asking the same question. snip "Mr. CEO, this is the last question, and it should be obvious why I have to ask it. Have you committed fraud or other illegal acts against the company?"  Mr. Wells continues with the admonishment, "Do not apologize for asking the question; it’s your job."

snip That (usually) only works when you have really strong evidence on the desk, in front of him, and your going for a confession at the end of the procedures. I know it sounds impressive, if a bit stilted, but it usually doesn’t happen that way.

Response:

 You want to be a lot more "Colombo"….. snip That hollywood character is so annoying I am sure he would have been given the boot in ten minutes if he wasn’t a badged officer. I’ve found middle management gets very irritated when you keep asking the same question. snip

Of course they get irritated.  That is why it is usually not done.  That also makes it easy for a fraud to go undetected. And yes, Colombo is a bit exaggerated – but you did get what I was trying to say. "Mr. CEO, this is the last question, and it should be obvious why I have to ask it. Have you committed fraud or other illegal acts against the company?"  Mr. Wells continues with the admonishment, "Do not apologize for asking the question; it’s your job." snip That (usually) only works when you have really strong evidence on the desk, in front of him, and your going for a confession at the end of the procedures. I know it sounds impressive, if a bit stilted, but it usually doesn’t happen that way.

Wells is talking about a routine SAS 82 interview of any highly placed executive.  Wells goes on to state, "As stated, the vast majority of respondents will answer "no" without hesitation, whether they have or not. Simply asking the question will give you a much more favorable posture if you are ever attacked professionally for not detecting the fraud.  At least you will be able to tell the court or any other authority that you did not shirk your professional responsibilities, that you asked each person you interviewed in connection with the audit or examination, and that you were lied to." Does it happen that way today – unusually not.  Who keeps losing fraud related lawsuits – auditors.  Maybe it is time for a change. — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

snip In order to do fraud discovery work you need the training of an auditor,

snip We found, over the years, that the training was one of the least important factors, once you pass the minimum required knowledge base level.  The most important attribute seemed to be a personal characteristic.  "Good investigators are born, not made."  <yes, I know that’s not pc

Response:

snip   I do not think it is possible for a non confrontational …

snip In fraud work, it is very important to be non confrontational.  If you go in with a confrontational demeanor, the auditee shuts down.  I found the behavioral patterns necessary to be a good investigator complex and very difficult for most accounting types <like me to act out. When I went in with an investigator, after the introductions, when things looked productive, I always turned the floor over to him. One of the reasons I passed the CFE by was I noticed that it was more geared toward the investigative types. snip

Response:

- Hide quoted text — Show quoted text – In fraud work, it is very important to be non confrontational. I think what Jim was referring to, though, was the tendency by many in the accounting profession to accept an explanation (no matter how questionable) rather than take any additional investigative action.  That is, uncovering a fraud appears to be a nasty experience to the accountant, so he/she grasps for straws to avoid that outcome. I don’t think he meant to come rolling into the office and immediately bring out "in your face" tactics.  I would agree that such tactics are likely to be counterproductive *AND* may allow the perpetrator of fraud to actually get others on his/her side against the "nasty" auditor. The proper stance really is a "healthy skepticism" about information that you receive.  That doesn’t mean assuming there is fraud sitting under every document, but it also means not assuming it isn’t there either.

Ed, Thanks.  You read my mind. — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

- Hide quoted text — Show quoted text – snip   I do not think it is possible for a non confrontational … snip In fraud work, it is very important to be non confrontational.  If you go in with a confrontational demeanor, the auditee shuts down.  I found the behavioral patterns necessary to be a good investigator complex and very difficult for most accounting types <like me to act out. When I went in with an investigator, after the introductions, when things looked productive, I always turned the floor over to him. One of the reasons I passed the CFE by was I noticed that it was more geared toward the investigative types. snip

Ron, Thanks for the comment.  I completely agree with what I think you are saying.  You want to be a lot more "Colombo" than "Rambo".  The trick it to confront reality in a non threatening manner. My comments were intended in the context of the latent potentialities of the auditor / investigator.  The auditor must be able to confront the reality before him / her without flinching. Joseph Wells, founder of the Association of Certified Fraud Examiners, writing in OCCUPATIONAL FRAUD AND ABUSE, poses the following as a necessary question with regard to fraudulent financial statement schemes.  "Mr. CEO, this is the last question, and it should be obvious why I have to ask it. Have you committed fraud or other illegal acts against the company?"  Mr. Wells continues with the admonishment, "Do not apologize for asking the question; it’s your job." That, in my opinion, is confrontation; well put, polite, but confrontation nevertheless. — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

According to The Association, most frauds come to light when someone squeals. I attended a two day Association sponsored training session … large company attendees got into describing some of their scanning techniques; very sophisticated. There are also a couple of articles in the current issue of Accounting Today regarding scanning techniques. Unfortunately, I have found that to be a statement you can take to the bank.  I have never found internal or external auditors to be very useful when it comes to fraud discovery work, it doesn’t seem to be in their character.  (note, I say discovery. once the problem is uncovered the verification work is no problem) It took me a long time to come to the conclusion there was a problem with the IA’s.

One of the brightest new niches in the accounting industry, in my view, will be providing various internal control, monitoring, and scanning services remotely.   As systems become better automated, and labor is saved, there is almost an inherent, mechanical law that there will be fewer people looking at the average transaction.  Right?  The whole point of automation is to remove human labor and attention, in effect, reduce headcount.  YES, its true, better system design can marshall up various control totals and other control information to acheive separation of duties.  But that depends on managemnet being sophisticated and experienced enough to understand the systems, and, local data like that can always be hacked. Prediction:  as midsized businesses increasingly send and receive bills, orders, invoices, BOMs, BOLs, ASNs etc over the internet, there will be a systematic increase in several factors:  1.  there will be more and more businesses that are accessible    remotely, and become candidates for all kinds of accounting services, and  2.  those clients will have systematically fewer clerical employees, and    no matter how you slice it, they won’t have adequate numbers for    adequate separation of duties, and  3.  particularly in the early years of ecommerce, there will be a lot of    crazy shit happening, risks being taken, etc. in order to reach the    benefits of ecommerce (better access to markets, lower cost etc.) These    new risks will be fought by technical and crypto stuff, yeah, firewalls    and VPNs and so forth. But regardless of the technical fixes, there    will be systematically larger number of exposures which need some    degree of monitoring. Prediction:  all midsized companies will be quite receptive to any reasonably priced outsourced service, to observe the numbers and transactions in various ways, to keep things on track.  CPAs know their biz, and CPAs know internal control very very well.  Remember this is NOT a crypto thing: other vendors will bolt in the firewalls, encrypted links, authentication devices, and usually, leave.   The bulk of this business is plain ol fashioned diligence. I don’t think todays 500,000 CPAs will pay the least attention to this opportunity; but the business is theirs to lose, if they want it. More likely, some specialist providers will grow into this space. They will need good people. Probably a good job oppty.   HEY!  Jim Hudspeth spotted this before me! * Todd F. Boyle CPA    http://www.GLDialtone.com/ * XML accounting, web ledgers, BSPs, ASPs, whatever it takes int

Response:

In fraud work, it is very important to be non confrontational.

I think what Jim was referring to, though, was the tendency by many in the accounting profession to accept an explanation (no matter how questionable) rather than take any additional investigative action.  That is, uncovering a fraud appears to be a nasty experience to the accountant, so he/she grasps for straws to avoid that outcome. I don’t think he meant to come rolling into the office and immediately bring out "in your face" tactics.  I would agree that such tactics are likely to be counterproductive *AND* may allow the perpetrator of fraud to actually get others on his/her side against the "nasty" auditor. The proper stance really is a "healthy skepticism" about information that you receive.  That doesn’t mean assuming there is fraud sitting under every document, but it also means not assuming it isn’t there either.

Response:

- Hide quoted text — Show quoted text – Or worse, as seems to be the case in a lot of published occurrences, simply not looking or asking the questions in the first place.  SAS 82 (Consideration of Fraud in a Financial Statement Audit) is supposed to fix that, but I don’t think it will.  Until accountants develop the capacity to confront, they will not confront, regardless of the rules.  They will, however, lose more lawsuits. Thinking and asking questions??? Hmm, that wasn’t in the audit program… Seriously, there’s a state of mind problem here as well that always causes security problems.  While fraud exists out there, it will still be the case that in the majority of audits no material fraud will be uncovered, potentially because none is there (always a possibility <grin).  That constant string of no frauds builds a complacency on the part of the auditor, added to by the pressure to bring the audit in on budget for time. Reality is that if you find a potential fraud, the odds of bringing this thing in anywhere near the time budget are pretty much shot <grin.  So the fear of the false alarm becomes greater than the fear of not uncovering a fraud. Not only does the auditor not actively look for fraud any longer, but they even become *blind* to it when it stares them in the face.  I vaguely recall some studies on this effect conducted with airport security personnel where it was found that the person sitting there staring at the X-rays of luggage for hours on end eventually could essentially become "blind" to obvious contraband.  I think the same effect takes place with auditors. SAS 82 may help, but unfortunately it’s going to do so in the manner you suggested–when auditors fail to consider the possibility of fraud, SAS 82 will allow plaintiffs attorneys to hang them on that fact.  Unfortunately, that may be the only way to get their attention. Embezzlement is just one form of fraud.  There are others. I know, but I couldn’t come up with a good name for the fraud perpetrator.  The same issues will apply to anyone perpetrating a fraud, though–they will design their fraud taking into account the expected means through which it might be detected.  They also will be a position in the organization where they will clearly be able to probe for the weak points. I remember one study that showed that most fraudulent transactions have lots of "9" digits in them (like $999.00).  That’s because, almost without exception, most screens on transactions and many other controls are designed to ignore "immaterial" transactions and materiality is almost always set at nice round figures. No audit program can possibly anticipate and test for all forms of potential fraud.  The auditor can and should be alert and unpredictable. For instance, sampling not from all transactions above $1,000 each year, but perhaps randomly varying the bottom end of that range. However, that would require varying from the preprinted program and actually *thinking*–and we know accountants don’t like to do either of those <grin. How many people do you know who would describe accountants as unpredictable.  If we are going to learn to catch crooks, we must learn to "think outside the box", and that means being a bit unpredictable. I’m not advocating totally throwing away the audit program and doing a "seat of your pants" audit each time.  But, as you noted, you need to add some unpredictability into the process.  While doing the exact same thing every year may make you very efficient at handling the audit, it also helps the efficiency of those attempting to evade detection for their transactions.

A typical Ed Zollar post – all very good points. The broad consensus term for the fraud perpetrator seems to be "fraudster".  The term may sound a bit crass, but it is the word that keeps popping up. The first step, the key, in my opinion, is the will to confront.  By that I mean a willingness to face the facts, compare the words to the music.  If the words don’t match the music, find out why. This does necessarily entail extreme confrontation with individuals.  As Ron Todd points out in a related branch of this thread, too much confrontation causes auditees to shut down, and without the cooperation of auditees you aren’t likely to discover anything. — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

Or worse, as seems to be the case in a lot of published occurrences, simply not looking or asking the questions in the first place.  SAS 82 (Consideration of Fraud in a Financial Statement Audit) is supposed to fix that, but I don’t think it will.  Until accountants develop the capacity to confront, they will not confront, regardless of the rules.  They will, however, lose more lawsuits.

Thinking and asking questions??? Hmm, that wasn’t in the audit program… Seriously, there’s a state of mind problem here as well that always causes security problems.  While fraud exists out there, it will still be the case that in the majority of audits no material fraud will be uncovered, potentially because none is there (always a possibility <grin).  That constant string of no frauds builds a complacency on the part of the auditor, added to by the pressure to bring the audit in on budget for time.   Reality is that if you find a potential fraud, the odds of bringing this thing in anywhere near the time budget are pretty much shot <grin.  So the fear of the false alarm becomes greater than the fear of not uncovering a fraud.   Not only does the auditor not actively look for fraud any longer, but they even become *blind* to it when it stares them in the face.  I vaguely recall some studies on this effect conducted with airport security personnel where it was found that the person sitting there staring at the X-rays of luggage for hours on end eventually could essentially become "blind" to obvious contraband.  I think the same effect takes place with auditors. SAS 82 may help, but unfortunately it’s going to do so in the manner you suggested–when auditors fail to consider the possibility of fraud, SAS 82 will allow plaintiffs attorneys to hang them on that fact.  Unfortunately, that may be the only way to get their attention. Embezzlement is just one form of fraud.  There are others.  

I know, but I couldn’t come up with a good name for the fraud perpetrator.  The same issues will apply to anyone perpetrating a fraud, though–they will design their fraud taking into account the expected means through which it might be detected.  They also will be a position in the organization where they will clearly be able to probe for the weak points. I remember one study that showed that most fraudulent transactions have lots of "9" digits in them (like $999.00).  That’s because, almost without exception, most screens on transactions and many other controls are designed to ignore "immaterial" transactions and materiality is almost always set at nice round figures. No audit program can possibly anticipate and test for all forms of potential fraud.  The auditor can and should be alert and unpredictable.

For instance, sampling not from all transactions above $1,000 each year, but perhaps randomly varying the bottom end of that range. However, that would require varying from the preprinted program and actually *thinking*–and we know accountants don’t like to do either of those <grin. How many people do you know who would describe accountants as unpredictable.  If we are going to learn to catch crooks, we must learn to "think outside the box", and that means being a bit unpredictable.

I’m not advocating totally throwing away the audit program and doing a "seat of your pants" audit each time.  But, as you noted, you need to add some unpredictability into the process.  While doing the exact same thing every year may make you very efficient at handling the audit, it also helps the efficiency of those attempting to evade detection for their transactions.

Response:

In order to do fraud discovery work you need the training of an auditor, the nose of a street cop, and a craving for "the kill".  I do not think it is possible for a non confrontational number cruncher to do fraud discovery. Agreed that being nonconfrontational is not going to work very well in a fraud situation.  If that is the nature of the person (and, in many cases, that is true of accountants) then there will be a strong tendency to attempt to find *some* innocent explanation for the issues and/or to accept the story of the parties in question (who plainly have the incentive to lie).

Or worse, as seems to be the case in a lot of published occurrences, simply not looking or asking the questions in the first place.  SAS 82 (Consideration of Fraud in a Financial Statement Audit) is supposed to fix that, but I don’t think it will.  Until accountants develop the capacity to confront, they will not confront, regardless of the rules.  They will, however, lose more lawsuits. Additionally, those creating frauds tend to design their frauds around the weaknesses of the systems in place–and the auditor (either internal or external) is generally one of the "systems" that the embezzler gets to study.

<clarity break Auditors’ love of standardized audit programs actually work in favor of the embezzler, since the embezzler can predict what the auditor is going to look at and design the fraud around those steps.

Embezzlement is just one form of fraud.  There are others.  No audit program can possibly anticipate and test for all forms of potential fraud.  The auditor can and should be alert and unpredictable. How many people do you know who would describe accountants as unpredictable.  If we are going to learn to catch crooks, we must learn to "think outside the box", and that means being a bit unpredictable. — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

- Hide quoted text — Show quoted text – According to The Association, most frauds come to light when someone squeals. I attended a two day Association sponsored training session … large company attendees got into describing some of their scanning techniques; very sophisticated. There are also a couple of articles in the current issue of Accounting Today regarding scanning techniques. Unfortunately, I have found that to be a statement you can take to the bank.  I have never found internal or external auditors to be very useful when it comes to fraud discovery work, it doesn’t seem to be in their character.  (note, I say discovery. once the problem is uncovered the verification work is no problem) It took me a long time to come to the conclusion there was a problem with the IA’s. One of the brightest new niches in the accounting industry, in my view, will be providing various internal control, monitoring, and scanning services remotely. As systems become better automated, and labor is saved, there is almost an inherent, mechanical law that there will be fewer people looking at the average transaction.  Right?  The whole point of automation is to remove human labor and attention, in effect, reduce headcount.  YES, its true, better system design can marshall up various control totals and other control information to acheive separation of duties.  But that depends on managemnet being sophisticated and experienced enough to understand the systems, and, local data like that can always be hacked. Prediction:  as midsized businesses increasingly send and receive bills, orders, invoices, BOMs, BOLs, ASNs etc over the internet, there will be a systematic increase in several factors:  1.  there will be more and more businesses that are accessible    remotely, and become candidates for all kinds of accounting services, and  2.  those clients will have systematically fewer clerical employees, and    no matter how you slice it, they won’t have adequate numbers for    adequate separation of duties, and  3.  particularly in the early years of ecommerce, there will be a lot of    crazy shit happening, risks being taken, etc. in order to reach the    benefits of ecommerce (better access to markets, lower cost etc.) These    new risks will be fought by technical and crypto stuff, yeah, firewalls    and VPNs and so forth. But regardless of the technical fixes, there    will be systematically larger number of exposures which need some    degree of monitoring. Prediction:  all midsized companies will be quite receptive to any reasonably priced outsourced service, to observe the numbers and transactions in various ways, to keep things on track.  CPAs know their biz, and CPAs know internal control very very well.  Remember this is NOT a crypto thing: other vendors will bolt in the firewalls, encrypted links, authentication devices, and usually, leave.   The bulk of this business is plain ol fashioned diligence. I don’t think todays 500,000 CPAs will pay the least attention to this opportunity; but the business is theirs to lose, if they want it. More likely, some specialist providers will grow into this space. They will need good people. Probably a good job oppty.   HEY!  Jim Hudspeth spotted this before me!

Jim Hudspeth has been giving this a lot of thought. — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

snip The only problem I have with the above hypothesis is the notion that M$ would be so sloppy as to permit an accounts payable coordinator to get her hands on the bank reconciliation. As to "sloppy," I don’t think it is a good idea to make an assumption like that. First rule of auditing:  Make no assumptions.

We are ruminating, musing, cogitating, speculating, and  contemplating We are not assuming, affirming, attesting or auditing. For my two cents, I’ve always thought that M$ had all the indicators of a potential fraud magnet, high growth, huge cash flows, spread out all over the world, huge new heir flow, high pressure to make targets, etc…..

The ongoing antitrust case and the stock market dive aren’t going to improve the situation either. snip According to The Association, most frauds come to light when someone squeals. Unfortunately, I have found that to be a statement you can take to the bank.  I have never found internal or external auditors to be very useful when it comes to fraud discovery work, it doesn’t seem to be in their character.

In order to do fraud discovery work you need the training of an auditor, the nose of a street cop, and a craving for "the kill".  I do not think it is possible for a non confrontational number cruncher to do fraud discovery. (note, I say discovery. once the problem is uncovered the verification work is no problem) It took me a long time to come to the conclusion there was a problem with the IA’s.

That is doubly true when the internal audit work is being "outsourced" to the outside auditors. — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

snip The only problem I have with the above hypothesis is the notion that M$ would be so sloppy as to permit an accounts payable coordinator to get her hands on the bank reconciliation.  

As to "sloppy," I don’t think it is a good idea to make an assumption like that. First rule of auditing:  Make no assumptions. For my two cents, I’ve always thought that M$ had all the indicators of a potential fraud magnet, high growth, huge cash flows, spread out all over the world, huge new heir flow, high pressure to make targets, etc….. snip According to The Association, most frauds come to light when someone squeals.

Unfortunately, I have found that to be a statement you can take to the bank.  I have never found internal or external auditors to be very useful when it comes to fraud discovery work, it doesn’t seem to be in their character.  (note, I say discovery. once the problem is uncovered the verification work is no problem) It took me a long time to come to the conclusion there was a problem with the IA’s. snip

Response:

In order to do fraud discovery work you need the training of an auditor, the nose of a street cop, and a craving for "the kill".  I do not think it is possible for a non confrontational number cruncher to do fraud discovery.

Agreed that being nonconfrontational is not going to work very well in a fraud situation.  If that is the nature of the person (and, in many cases, that is true of accountants) then there will be a strong tendency to attempt to find *some* innocent explanation for the issues and/or to accept the story of the parties in question (who plainly have the incentive to lie). Additionally, those creating frauds tend to design their frauds around the weaknesses of the systems in place–and the auditor (either internal or external) is generally one of the "systems" that the embezzler gets to study.  Auditors’ love of standardized audit programs actually work in favor of the embezzler, since the embezzler can predict what the auditor is going to look at and design the fraud around those steps.

Response:

- Hide quoted text — Show quoted text – She is then suspected of reissuing the checks in the same amounts to people and businesses around the country and in Switzerland, none of whom were owed money by Microsoft. I am reading between the lines to assume that those "reissued" checks were not generated via normal means.  It appears she was scanning the outstanding checks for those that should have been voided (and which she was assuming had been misplaced and/or would never be cashed) and then replacing them with her own checks drawn on Microsoft accounts in the same amount.  I’m not sure a reporter would make a clear distinction over *how* she generated the checks. Given the number of transactions that Microsoft would engage in, it probably wouldn’t be difficult to find $1.2 million worth of apparently "abandoned" funds over a period of two years (which, as I recall, is the time period that it appears this fraud took place over).

The only problem I have with the above hypothesis is the notion that M$ would be so sloppy as to permit an accounts payable coordinator to get her hands on the bank reconciliation.  Normally, in a company this size, those functions would be in different departments.  Given her position it is more likely she managed to get her hands on the finished checks.  While that is also a separate function, it is fairly easy to do (I don’t want to say any more for fear of drawing a map for some wanna be fraudster). – Hide quoted text — Show quoted text – It appears she either voided or destroyed the original checks and reissued them to herself and / or her associates.  There is no mention of any alteration of further records. I suspect she allowed the checks to be issued in order to have "good" records.  It seems implied that she voided checks "that had never been cashed" which suggests to me that it might be related to checks that seemed to be uncashed.  Now, while the average balance would be over $10K given the numbers, Microsoft does have customers/vendors for whom $10K would be immaterial.  In fact, in a funny sort of way, it might be easier to get a large vendor to ignore a $10K discrepency than to get you or me to ignore a $100 one in our business <grin. She would need to pick up about 5 checks a month with the numbers involved.  She would also likely know which AR departments are "sloppy"–especially if her mode of operation was to go after the checks that a) were never cashed and b) where there was no vendor complaint about a lost check that got funds sent out earlier.  A vendor that meets those tests pretty much by definition is fouled up enough that she likely believed the issue would never be noticed. In that case, no only would she not modify records, but she has no desire to do so.  The original records show a legitimate payment to a legitimate vendor.  What is wrong in the records is the failure to record the void *AND* the failure to record the reissuance–which follows the fact that the "best" frauds don’t show up in the records.

According to The Association, most frauds come to light when someone squeals. This may be changing, however, at least where large well managed organizations are involved.  I attended a two day Association sponsored training session in May.  One of the large company attendees got into describing some of their scanning techniques; very sophisticated. There are also a couple of articles in the current issue of Accounting Today regarding scanning techniques. – Hide quoted text — Show quoted text – As I noted then, don’t confuse one internal control procedure (not being able to change entries after they are posted) with actual security. An absolutely true statement. In this case, it appears the unchanging entries on the books actually were used to provide cover for the fraud. That really doesn’t work.  What trips up this sort of scam are vendor complaints.  Given the timing (early 1999 to June 2000) she would have had to have done something to passify those vendor payees.  That is not commented on in the article. As I noted above, I think the whole point was to use those vendors that were least likely to complain due to deficiencies in their own AR departments.  That is, a check had been issued, was not cashed and the vendor didn’t complain. I suspect that, like many involved in fraud, she simply kept getting bolder when her frauds weren’t uncovered. Eventually she may have simply gotten sloppy and finally pulled this stunt with an entity that was competent enough to push the issue through to the end.  Once you understood the pattern to her fraud, it was probably easy to find the other "questionable" disbursements. This appears to be a "grab the money and run" situation.  Of course she didn’t run quick enough.  According to the article, she resigned on June 5 (Monday) and by June 9 (Friday) the FBI had her passport.  When you actually think about it, that is really pretty quick – unless M$ was onto it prior to June 5. I suspect somebody in Microsoft was on to the issue by June 5, which prompted her to resign.  My guess is that it wasn’t her design to grab the money and run, at least by the end. At that point, she probably felt she could keep doing this forever. My real point, though, was that if you can’t change the underlying accounting records retained by the company (and we’ll assume that Microsoft had that covered), you just make your changes to the documents that go outside the enterprise to actually execute the transaction.

We have so little real information we can only speculate at this point.  I’ll be interested in discussing it more when we know more. — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

According to the Seattle PI, a former Microsoft employee allegedly diverted in excess of $1.2 Million to herself, some of which she allegedly deposited in a Swiss account. It appears, based on the PI report, that this was a old fashioned low tech check tampering scheme. http://seattlep-i.nwsource.com/business/embz24.shtml — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

It appears, based on the PI report, that this was a old fashioned low tech check tampering scheme.

And, to follow up on a discussion we had here a little while back, it was also done without having to modify the accounting records.  As I noted then, don’t confuse one internal control procedure (not being able to change entries after they are posted) with actual security.  In this case, it appears the unchanging entries on the books actually were used to provide cover for the fraud. — Ed Zollars, CPA (AZ) http://www.hmtzcpas.com

Response:

It appears, based on the PI report, that this was a old fashioned low tech check tampering scheme. And, to follow up on a discussion we had here a little while back, it was also done without having to modify the accounting records.

That depends on what you mean by "accounting records".  According to the PI, "In an affidavit requesting the search warrants, FBI Special Agent Michael Kash outlined the case against Campbell: She voided more than 100 checks to Microsoft vendors that had never been cashed, totaling $1,276,462. She is then suspected of reissuing the checks in the same amounts to people and businesses around the country and in Switzerland, none of whom were owed money by Microsoft. Campbell allegedly forwarded the checks to her own bank accounts — at least one of which was in a private Swiss depository — and to friends or accomplices." It appears she either voided or destroyed the original checks and reissued them to herself and / or her associates.  There is no mention of any alteration of further records. As I noted then, don’t confuse one internal control procedure (not being able to change entries after they are posted) with actual security.

An absolutely true statement. In this case, it appears the unchanging entries on the books actually were used to provide cover for the fraud.

That really doesn’t work.  What trips up this sort of scam are vendor complaints.  Given the timing (early 1999 to June 2000) she would have had to have done something to passify those vendor payees.  That is not commented on in the article. This appears to be a "grab the money and run" situation.  Of course she didn’t run quick enough.  According to the article, she resigned on June 5 (Monday) and by June 9 (Friday) the FBI had her passport.  When you actually think about it, that is really pretty quick – unless M$ was onto it prior to June 5. — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

She is then suspected of reissuing the checks in the same amounts to people and businesses around the country and in Switzerland, none of whom were owed money by Microsoft.

I am reading between the lines to assume that those "reissued" checks were not generated via normal means.  It appears she was scanning the outstanding checks for those that should have been voided (and which she was assuming had been misplaced and/or would never be cashed) and then replacing them with her own checks drawn on Microsoft accounts in the same amount.  I’m not sure a reporter would make a clear distinction over *how* she generated the checks. Given the number of transactions that Microsoft would engage in, it probably wouldn’t be difficult to find $1.2 million worth of apparently "abandoned" funds over a period of two years (which, as I recall, is the time period that it appears this fraud took place over). It appears she either voided or destroyed the original checks and reissued them to herself and / or her associates.  There is no mention of any alteration of further records.

I suspect she allowed the checks to be issued in order to have "good" records.  It seems implied that she voided checks "that had never been cashed" which suggests to me that it might be related to checks that seemed to be uncashed.  Now, while the average balance would be over $10K given the numbers, Microsoft does have customers/vendors for whom $10K would be immaterial.  In fact, in a funny sort of way, it might be easier to get a large vendor to ignore a $10K discrepency than to get you or me to ignore a $100 one in our business <grin.   She would need to pick up about 5 checks a month with the numbers involved.  She would also likely know which AR departments are "sloppy"–especially if her mode of operation was to go after the checks that a) were never cashed and b) where there was no vendor complaint about a lost check that got funds sent out earlier.  A vendor that meets those tests pretty much by definition is fouled up enough that she likely believed the issue would never be noticed. In that case, no only would she not modify records, but she has no desire to do so.  The original records show a legitimate payment to a legitimate vendor.  What is wrong in the records is the failure to record the void *AND* the failure to record the reissuance–which follows the fact that the "best" frauds don’t show up in the records. As I noted then, don’t confuse one internal control procedure (not being able to change entries after they are posted) with actual security. An absolutely true statement. In this case, it appears the unchanging entries on the books actually were used to provide cover for the fraud. That really doesn’t work.  What trips up this sort of scam are vendor complaints.  Given the timing (early 1999 to June 2000) she would have had to have done something to passify those vendor payees.  That is not commented on in the article.

As I noted above, I think the whole point was to use those vendors that were least likely to complain due to deficiencies in their own AR departments.  That is, a check had been issued, was not cashed and the vendor didn’t complain.   I suspect that, like many involved in fraud, she simply kept getting bolder when her frauds weren’t uncovered. Eventually she may have simply gotten sloppy and finally pulled this stunt with an entity that was competent enough to push the issue through to the end.  Once you understood the pattern to her fraud, it was probably easy to find the other "questionable" disbursements. This appears to be a "grab the money and run" situation.  Of course she didn’t run quick enough.  According to the article, she resigned on June 5 (Monday) and by June 9 (Friday) the FBI had her passport.  When you actually think about it, that is really pretty quick – unless M$ was onto it prior to June 5.

I suspect somebody in Microsoft was on to the issue by June 5, which prompted her to resign.  My guess is that it wasn’t her design to grab the money and run, at least by the end. At that point, she probably felt she could keep doing this forever.   My real point, though, was that if you can’t change the underlying accounting records retained by the company (and we’ll assume that Microsoft had that covered), you just make your changes to the documents that go outside the enterprise to actually execute the transaction. — Ed Zollars, CPA (AZ) http://www.hmtzcpas.com

Response:

Question:

 And I still don’t know if I should incorporate to save on taxes.

Probably not. The savings are not large, there is some hassle, and distributions in lieu of wages are definitely not "IRS approved". — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

- Hide quoted text — Show quoted text –  And I still don’t know if I should incorporate to save on taxes. Probably not. The savings are not large, there is some hassle, and distributions in lieu of wages are definitely not "IRS approved". — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

In addition you have the additional cost of maintaining the corporation and filing annual tax returns etc. You can do the return yourself but is isn’t easy and if you pay someone to prepare the return, the 1120S will cost a good bit more than a schedule C. Also in Texas if don’t take the profit out as wages, the profit left in the corporation is subject to the 4.5% (of income) franchise tax. Also some states have a high minimum franchise tax/annual registration fee for corporations. I don’t recommend incorporation in the situation described above. Also the basic purpose of incorporation is not to save taxes. Primary reasons are obtaining capital from more than one investor, liability limitations and continuity of life.

Response:

As provided for by the TX legislature last year, if a corp’s combined equity and gross receipts are less than $150,000 (beginning for cal. yr. 2000), there is no franchise (read income tax) due. I don’t know whether it’s been mentioned here or in the tax group, but the audit rate for a corp is considerably less than for a sole prop. This is a major consideration with my clients in their decision making process on whether to incorporate or stay solo. George – Hide quoted text — Show quoted text –  And I still don’t know if I should incorporate to save on taxes. Probably not. The savings are not large, there is some hassle, and distributions in lieu of wages are definitely not "IRS approved". — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners In addition you have the additional cost of maintaining the corporation and filing annual tax returns etc. You can do the return yourself but is isn’t easy and if you pay someone to prepare the return, the 1120S will cost a good bit more than a schedule C. Also in Texas if don’t take the profit out as wages, the profit left in the corporation is subject to the 4.5% (of income) franchise tax. Also some states have a high minimum franchise tax/annual registration fee for corporations. I don’t recommend incorporation in the situation described above. Also the basic purpose of incorporation is not to save taxes. Primary reasons are obtaining capital from more than one investor, liability limitations and continuity of life.

Response:

snip I don’t know whether it’s been mentioned here or in the tax group, but the audit rate for a corp is considerably less than for a sole prop. This is a major consideration with my clients in their decision making process on whether to incorporate or stay solo.

No, it has’t been mentioned, and it is a good point. On the other hand, the audit rate on individuals is now so low that the difference may no longer be significant. — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

I don’t know whether it’s been mentioned here or in the tax group, but the audit rate for a corp is considerably less than for a sole prop. This is a major consideration with my clients in their decision making process on whether to incorporate or stay solo. George

There is a systematically lower frequency of audit for complex entities or transaction bases, compared to simple ones having all of the other factors equal.  There is a systematically higher cost in terms of time and resources and anyways IRS’ technical depth is not unlimited.  There is a rational process of resource allocation that takes place in revenue collection (i.e. maximizing revenue over time, for a given compliance resource expenditure) This does not in any way imply that having a complex structure for a transaction will ‘evade tax’.  It just states the fact that if there is a large population (which the US taxpaying public certainly is), and that population has two reservoirs of businesses has the same frequency and magnitude of audit adjustments, viewed historically, but one takes 5 times more resource to audit, then, the complex guys are just not going to get audited as often. * Todd F. Boyle CPA    http://www.GLDialtone.com/ * 9745-128th Av NE, Kirkland WA 98033       (425) 827-3107 * XML accounting, WebLedgers, ASPs, GL dialtone, whatever it takes

Response:

Jim I agree with your method. I would however modify it a bit and ask them how much they would expect to receive if they were to work for someone else Would your approach be the same for an S-Corp with only one employee, and all income generated was from personal services performed by the single employee shareholder, and little or no capital contributions into the Corp? Allan Martin

– Hide quoted text — Show quoted text – David I can’t see how you can justify a 50:50 split between distributions and salary. Using an arbitrary allocation makes no sense. Each situation should be looked at on a case by case basis. How one defines a reasonable salary I must admit can be quite difficult if not impossible. I would argue that if 100 different accountants had to come up with an amount there would be 100 different answers. I ask my clients, "What would you pay someone else to do your job", and press them to put enough time and energy into the answer to where we feel comfortable that THEY could sit across a table from an IRS agent and defend their number. Usually that means going to some outside source – employment agency – trade association – etc. for comparative numbers.  So far I haven’t had a problem with this approach, and I know the IRS has looked at it, though never with any real enthusiasm. From first hand observation I am shocked at how many sole-proprietors incorporate and take the S-Corporation election under the misguided belief that doing so exempts them from paying Social Security Taxes. In many cases these same taxpayers add insult to injury by not reporting the distributions on their personal state tax returns. I practice in Washington, which does not have an income tax.  Most of the state reports (other states) I have had experience with require that S-Corporation profits be reported in the same manner as on the federal return, and do not ask for a reporting of the distributions. — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

I can’t see how you can justify a 50:50 split between distributions and salary.

I think he’s arguing that, as a practical matter, if there is virtually any salary the IRS doesn’t tend to raise the issue or carry the case.  Obviously, there would be some cases where it might be clear that the 50/50 split would not be seen as reasonable (the only source of income was the owner’s services and the entity has absolutely no assets of any other sort), but even then the likelihood of challenge drops. As a practical matter, the reason why the IRS will not be as likely to challenge in that case comes more from concern about getting whipsawed in an unrelated C corporation case–if the IRS wins a case that says all earnings of corporation X represented compensation by definition (and that a smaller amount wasn’t reasonable), it could be used in a C corporation case of a similar entity when the IRS was arguing there was unreasonably *HIGH* compensation.

Response:

Jim

snip Would your approach be the same for an S-Corp with only one employee, and all income generated was from personal services performed by the single employee shareholder, and little or no capital contributions into the Corp?

Sort of.  I would still want the discussion. Assuming you have one owner, one employee (same person) and no capital requirement (not exactly the same thing as no capital contribution), the reality is that all income is earned income and therefore should be salary.  As Ed points out in a prior post, however, the IRS would probably not press the issue to it’s logical extreme out of concern that their argument could be used against them in a C-Corp excessive salary case. I look at this type of situation as some combination of crap shoot / horse trade.  The objective is to end up with a livable / defendable position that is financially profitable. I love these situations (when my client has the sense, cents and stomach and for it). — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

Once again a case for accounting being an art and not a science.

– Hide quoted text — Show quoted text – Jim snip Would your approach be the same for an S-Corp with only one employee, and all income generated was from personal services performed by the single employee shareholder, and little or no capital contributions into the Corp? Sort of.  I would still want the discussion.

I have to believe the discussion would have a slightly different outcome if the client were a C-Corp. – Hide quoted text — Show quoted text – Assuming you have one owner, one employee (same person) and no capital requirement (not exactly the same thing as no capital contribution), the reality is that all income is earned income and therefore should be salary.  As Ed points out in a prior post, however, the IRS would probably not press the issue to it’s logical extreme out of concern that their argument could be used against them in a C-Corp excessive salary case. I look at this type of situation as some combination of crap shoot / horse trade.  The objective is to end up with a livable / defendable position that is financially profitable. I love these situations (when my client has the sense, cents and stomach and for it). — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

So it doesn’t make any sense in terms of taxes to incorporate if your income is less than $76,200? Jerry

– Hide quoted text — Show quoted text – Your FICA/SE tax savings in this specific example for 2000 would be: $26,200 x 12.4% + $50,000 x 2.9% = $4,698.80 You only pay OASDI on the first $76,200 of earnings. Dick K. If your profits are 100k, take 50k salary & 50k distributions.  See what that does to your taxes. So what are my saving going to be like this? Jerry

Response:

Would your approach be the same for an S-Corp with only one employee, and all income generated was from personal services performed by the single employee shareholder, and little or no capital contributions into the

Corp? That is exactly my situation–one employee. And I still don’t know if I should incorporate to save on taxes. Jerry

Response:

I would agree that the cases that I’ve seen the IRS be successful in have involved taking zero salary.  While it doesn’t follow that $1.00 in salary would have changed Spicer Accounting or Radtke’s results, it is possible the courts wouldn’t have been as harsh had some arguably reasonable amount been paid.  Additionally, it also works a lot better the less that is taken out as distributions during the year–that is, if the funds are left in the business, the IRS has a tough time arguing that they were "disguised" salary.  Of course, the problem is that most clients don’t want to do that…

The main thing is the issue would probably never have appeared in the first place in the losing cases had the taxpayers been reasonable.  But they went for broke, and wound up broke!

Response:

Your FICA/SE tax savings in this specific example for 2000 would be: $26,200 x 12.4% + $50,000 x 2.9% = $4,698.80 You only pay OASDI on the first $76,200 of earnings. Dick K.

– Hide quoted text — Show quoted text – If your profits are 100k, take 50k salary & 50k distributions.  See what that does to your taxes. So what are my saving going to be like this? Jerry

Response:

David I can’t see how you can justify a 50:50 split between distributions and salary. Using an arbitrary allocation makes no sense. Each situation should be looked at on a case by case basis. How one defines a reasonable salary I must admit can be quite difficult if not impossible. I would argue that if 100 different accountants had to come up with an amount there would be 100 different answers. From first hand observation I am shocked at how many sole-proprietors incorporate and take the S-Corporation election under the misguided belief that doing so exempts them from paying Social Security Taxes. In many cases these same taxpayers add insult to injury by not reporting the distributions on their personal state tax returns. Allan Martin, CPA

– Hide quoted text — Show quoted text – It can be an appropriate tax saving measure to use the S Corporation as you describe.  Many CPAs and attorneys will disagree, but this is a tactic I have used with many, many corporations over the years and NEVER have I had a problem with it. What I do, though, is to be absolutely certain that the shareholder takes some salary.  As a guideline, I recommend half the earnings be distributed as salary and half as distributions.  It would be VERY DIFFICULT for IRS to defeat this treatment.  OTOH, if you pay NO salary, you’re an easy mark; also, since the 1120S discloses that no salaries were paid but distributions were, you may well be "asking for it". For the most part, I believe cases that have been litigated on this matter have involved shareholders who took NO salary. The other side of the coin is that, by taking a small salary, you will be filing the necessary P/R tax reports, etc.  Thus, if you later lose your argument, you will not be subject to the nasty nonfiling penalties. If your profits are 100k, take 50k salary & 50k distributions.  See what that does to your taxes.  If you can justify a 40k salary as "reasonable", all the better.  I would think that, if capital is a material income-producing factor, you would be in an even stronger position.  While I’m not aware of anyone using this argument before the Courts, I suspect it would be a good one. David

Response:

David I can’t see how you can justify a 50:50 split between distributions and salary. Using an arbitrary allocation makes no sense. Each situation should be looked at on a case by case basis. How one defines a reasonable salary I must admit can be quite difficult if not impossible. I would argue that if 100 different accountants had to come up with an amount there would be 100 different answers.

I ask my clients, "What would you pay someone else to do your job", and press them to put enough time and energy into the answer to where we feel comfortable that THEY could sit across a table from an IRS agent and defend their number. Usually that means going to some outside source – employment agency – trade association – etc. for comparative numbers.  So far I haven’t had a problem with this approach, and I know the IRS has looked at it, though never with any real enthusiasm. From first hand observation I am shocked at how many sole-proprietors incorporate and take the S-Corporation election under the misguided belief that doing so exempts them from paying Social Security Taxes. In many cases these same taxpayers add insult to injury by not reporting the distributions on their personal state tax returns.

I practice in Washington, which does not have an income tax.  Most of the state reports (other states) I have had experience with require that S-Corporation profits be reported in the same manner as on the federal return, and do not ask for a reporting of the distributions. — Jim Hudspeth, CPA – http://home.att.net/~jdhcpa/mainpage.html – Washington, USA Associate Member, Association of Certified Fraud Examiners

Response:

It can be an appropriate tax saving measure to use the S Corporation as you describe.  Many CPAs and attorneys will disagree, but this is a tactic I have used with many, many corporations over the years and NEVER have I had a problem with it. What I do, though, is to be absolutely certain that the shareholder takes some salary.  As a guideline, I recommend half the earnings be distributed as salary and half as distributions.  It would be VERY DIFFICULT for IRS to defeat this treatment.  OTOH, if you pay NO salary, you’re an easy mark; also, since the 1120S discloses that no salaries were paid but distributions were, you may well be "asking for it". For the most part, I believe cases that have been litigated on this matter have involved shareholders who took NO salary. The other side of the coin is that, by taking a small salary, you will be filing the necessary P/R tax reports, etc.  Thus, if you later lose your argument, you will not be subject to the nasty nonfiling penalties. If your profits are 100k, take 50k salary & 50k distributions.  See what that does to your taxes.  If you can justify a 40k salary as "reasonable", all the better.  I would think that, if capital is a material income-producing factor, you would be in an even stronger position.  While I’m not aware of anyone using this argument before the Courts, I suspect it would be a good one. David

– Hide quoted text — Show quoted text – Hello, Is it true that it doesn’t make much sense to incorporate if you are just trying to save to taxes? Right now I am doing business as a self-propriator, and my profits are around $100,000 a year. As I understand, in addition to the income tax I have to pay the self-employment tax which I can avoid if I become an S corporation. So my question if the saings really are 15%, why not incorporate just to save on taxes? Or am I wrong? Also, does it make any sense in terms of taxes to incorporate in places like Nevada if I am a California resident. I assume I would have to pay taxes as a CA resident anyway, but I just want to make sure.  I woud really appreciate any advise. Thanks, Jerry P.S. I am in the Bay Area, and I was wondering if somebody can recommend an accountant who would be familiar with this situation.

Response:

Incorporating in a state other than CA doesn’t make sense; in any event you still would need to pay the CA franchise tax (minimum $800 per year) plus the hassles of filing a second tax return and dealing with a corporate entity.

But what if I do my business traveling all the time, and selling "soft" products over the Internet. Although I am a CA resident, I don’t actually spend too much in California. Actually most of the time I am overseas or in some other state. Does it make any difference? Jerry

Response:

If your profits are 100k, take 50k salary & 50k distributions.  See what that does to your taxes.

So what are my saving going to be like this? Jerry

Response:

- Hide quoted text — Show quoted text -Is it true that it doesn’t make much sense to incorporate if you are just trying to save to taxes? Right now I am doing business as a self-propriator, and my profits are around $100,000 a year. As I understand, in addition to the income tax I have to pay the self-employment tax which I can avoid if I become an S corporation. So my question if the saings really are 15%, why not incorporate just to save on taxes? Or am I wrong? Also, does it make any sense in terms of taxes to incorporate in places like Nevada if I am a California resident. I assume I would have to pay taxes as a CA resident anyway, but I just want to make sure.  I woud really appreciate any advise. Thanks, Jerry P.S. I am in the Bay Area, and I was wondering if somebody can recommend an accountant who would be familiar with this situation.

Incorporating in a state other than CA doesn’t make sense; in any event you still would need to pay the CA franchise tax (minimum $800 per year) plus the hassles of filing a second tax return and dealing with a corporate entity. Remember that above $75,000 (give or take; it changes every year), the SE tax rate is only 2.9%.  You also have SDI to worry about as well as federal and state unemployment taxes which you don’t pay as a sole proprietor. While incorporation MIGHT save you a liability headache, remember that it won’t really protect you from your own actions, if the other side has a smart attorney. You can probably better cover your liability through insurance. So my advice is: consult a local tax pro to be sure of the right choice for YOUR business. My guess is that a corporation would not be optimal in CA. Tom –Solving your tax and business problems with Professional Service…Personal Attention Web: http://members.aol.com/thealycpa/Tom_Healy_CPA.html

Response:

If your profits are 100k, take 50k salary & 50k distributions.  See what that does to your taxes.  

One hitch, though, is that the nastiest part of the SE tax applies to the lower half of the distributions–that is, by taking $50K in salary and $50K in distributions, you do *NOT* reduce your SE tax by 50%. That’s because the FICA portion of the SE tax is capped–so the tax is regressive in nature (opposite of the income tax) and the first dollars earned are the most expensive ones from a tax standpoint. I would agree that the cases that I’ve seen the IRS be successful in have involved taking zero salary.  While it doesn’t follow that $1.00 in salary would have changed Spicer Accounting or Radtke’s results, it is possible the courts wouldn’t have been as harsh had some arguably reasonable amount been paid.  Additionally, it also works a lot better the less that is taken out as distributions during the year–that is, if the funds are left in the business, the IRS has a tough time arguing that they were "disguised" salary.  Of course, the problem is that most clients don’t want to do that…

Response:

But what if I do my business traveling all the time, and selling "soft" products over the Internet. Although I am a CA resident, I don’t actually spend too much in California. Actually most of the time I am overseas or in some other state. Does it make any difference?

How many states do you want to file in?  Because your argument is based on the theory that you shouldn’t be charged with having California sales if you aren’t in California.  OK, fine–but then you are arguing you earned the income in Kansas, Ohio, Arizona, Oregon, etc. and those states would like to hear from you now.   And since you’ve never likely filed with those states, they’d like back income tax returns for every year since you first started (no returns filed means no statute of limitations in most states).  And, oh yeah, you likely need to qualify the corporation in each of those states in order to do business there–which means filing with each state, paying fees, etc. In essence, I think you just opened Pandora’s box… Back to reality–you are likely going to want to argue you are really only a California corporation and you don’t have sufficient nexus to trigger filing in all those other states.  But that argument is going to throw the income back into California.

Response:

As I understand, in addition to the income tax I have to pay the self-employment tax which I can avoid if I become an S corporation. So my question if the saings really are 15%, why not incorporate just to save on taxes? Or am I wrong?

Let’s be careful here.  While S corporation income is not subject to the self-employment tax, you would have to take a reasonable salary to compensate you for your services if you are taking distributions from the S corporation.  And, on that reasonable salary you’d have to withhold FICA and Medicare taxes from the payment *AND* pay the employer portion of said taxes.  Which works out to, effectively, the same rate as the self-employment tax (amazing how that works, huh?). If you don’t pay it…well, let me introduce you to the Spicer Accounting case and Mr. Spicer: —begin quoted text Spicer Accounting, Inc., Plaintiff-Appellant v. United States of America, Defendant-Appellee (CA-9), U.S. Court of Appeals, 9th Circuit, 89-35071, 11/1/90, 918 F2d 90, Affirming an unreported District Court decision         Robert E. Kovacevich, 818 Riverside Ave., Spokane, Wash., for plaintiff-appellant. Shirley D. Peterson, Assistant Attorney General, Department of Justice, Washington, D.C. 20350, for defendant-appellee.         Before HUG, JR., NELSON and BRUNETTI, Circuit Judges. OPINION         NELSON, Circuit Judge:         Taxpayer accounting corporation seeks a refund for FICA and FUTA taxes paid to the IRS on behalf of Mr. Spicer. Taxpayer contends that payments paid to Mr. Spicer were dividends, since payments made to stockholders in a subchapter S corporation are not wages. We find that because payments received by Mr. Spicer were for substantial services rendered, these payments are "wages" subject to FICA and FUTA. Taxpayer asserts, in the alternative, that it was not liable for FICA and FUTA because Mr. Spicer was an independent contractor, not an employee. We deny Taxpayer’s claim finding that there is no evidence that Mr. Spicer was an independent contractor. Finally, we hold that section 530 of the Revenue Act of 1978 does not relieve Taxpayer from FlCA and FUTA liability for the years 1981 and 1982, because Taxpayer’s treatment of Mr. Spicer as a stockholder, not as an employee, was unreasonable. We, therefore, affirm the district court’s decision.         FACTUAL AND PROCEDURAL BACKGROUND         Mr. Spicer is the president, treasurer, and director of taxpayer corporation, Spicer Accounting, Inc. (Taxpayer). In 1985, the Internal Revenue Service (IRS) made assessments against Taxpayer for Federal Insurance Contribution Tax (FICA) and Federal Unemployment Tax (FUTA). The assessments were made for the years 1981 and 1982 in light of allegations by the IRS that Mr. Spicer was an employee of Taxpayer. The assessed amounts, including interest and penalties, were paid to the IRS. Taxpayer now seeks a refund of the amounts paid.         Mr. Spicer has been a licensed public accountant since 1957 and the president of Taxpayer since 1973. He and his wife are the only stockholders in Taxpayer, each owning fifty percent of the corporation. Mr. Spicer has never entered into an employment agreement with Taxpayer. At no time during his relationship with Taxpayer has he been paid wages or salary denominated as such. The arrangement throughout the relationship has been that Mr. Spicer would donate his services to the corporation, and that as a stockholder, he would withdraw earnings in the form of dividends. Mr. Spicer has consistently reported his income as dividend income.         Mr. Spicer performs substantial services for Taxpayer. During the period in question, Mr. Spicer worked for Taxpayer approximately thirty-six hours per week. During tax season, he would typically work six-day weeks. Mr. Spicer would not, however, go into the office when demand for accounting services was lower. Also, during the period in question, Mr. Spicer owned certain rental property, and he would often perform work relating to that property during business hours. Mr. Spicer testified at trial that work on the rental property occupied approximately ten to fifteen percent of his time during the period in question.         Mr. Spicer also testified that his accounting work for Taxpayer was crucial to the corporation’s business, and that Taxpayer could not function without him. He further testified that to hire a replacement for him would cost Taxpayer $16,000 to $17,000 per year.         Spicer was the only accountant working for the firm, although Spicer’s wife and one other employee prepared tax returns and performed monthly bookkeeping for clients of Taxpayer. However, all tax forms prepared by the firm had to be signed by Mr. Spicer, and he was the only person during the period in question who could perform financial planning and audits, sign opinion letters, and represent clients before the IRS.         Finally, Mr. Spicer testified that he believed that Taxpayer’s practice of reporting his income as dividends was proper, and that he also believed that such an arrangement would allow Taxpayer to avoid paying FICA and FUTA. He also testified that by denominating all of his income from Taxpayer as dividends, he would forego Social Security and other benefits.         The district court held that Mr. Spicer was an employee and that the payments were "wages" subject to FICA and FUTA. Taxpayer timely appealed to this court.         STANDARD OF REVIEW         The determination of whether an employer-employee relationship exists involves a mixed question of law and fact. Professional & Executive Leasing, Inc. v. C.I.R. [88-2 USTC

Question:

Anyone got info on this camera?  Just got it to do astrophoto stuff.  It was surprisingly lighter than the Pentax Spotmatics I was lookin at.  I know it’s made in East Germany but when?  The serial # is 747939 just incase.  Thanks. Greg

Response:

Anyone got info on this camera?  Just got it to do astrophoto stuff.  It was surprisingly lighter than the Pentax Spotmatics I was lookin at.  I know it’s made in East Germany but when?  The serial # is 747939 just incase.  Thanks. Greg

The Pentaflex and Pentaflex SL are the same as the Practica Nova, c.1965. To quote Ivor Matanle in Collecting and using Classic SLR’s: "(The Nova) was a case of the VEB company designing down to a cost…and as usually happens when accountants take charge, the product was a failure in engineering terms, although commercially successful in terms of numbers sold. It is not a camera to buy if you plan to use it". My own very limited experience with the Nova matched Matanle’s evaluation quite accurately. Best regards and good luck. Ed M.

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Question:

We are starting to implement a new accounting program for our manufacturing company that has only used the G/L of an old dos based accounting program for the last 10 years. People are coming to me (IS Dept) to ask how they should go about implementing it. My idea was to just enter in all beginning balances and then start from there. But now the Purchasing Department wants to enter all open P.O.’s, which will mess up the beginning balances for A/P. Sales want to enter in all open invoices which would mess opening balances for A/R. And since we tracked our inventory manually and always added the beginning and ending balance at year end getting inventory up and running is a chore in itself with what sometimes seems no end in sight. Anyone have any ideas on how we should go about getting this program up and running seamlessly for a February 1 year end. TIA, Pete

Response:

Pete,     To start with, you probably will not be ready on Feb 1!!!! Sorry     Implementing is a major task (as you are finding and there should be or have been a LOT of discussion from your reseller on how to best move you from one spot to the other. It’s also probably beyond the scope of a NG answer/post.     This is a project management issue that requires knowledge about your company, the software being implemented, and what data issues are most important to your company for its operations. Each software brand has a different way to approach the answer. Luck,     Dana To reply, please remove NOSPAM from the address. http://www.tailored-computing.com

Response:

new accounting program for our manufacturing company that has only used the G/L of an old dos based accounting program

May we assume that there is no meaningful job cost or other management information presently being produced by that GL module? People are coming to me (IS Dept) to ask how they should go about implementing it. My idea was to just enter in all beginning balances and then start from there.

Sounds fine to me. But now the Purchasing Department wants to enter all open P.O.’s, which will mess up the beginning balances for A/P.

Well, if you have such eager beavers, count yourself lucky.  Run a 10-key and add up the impact, and post a summary entry.  It will save you a lot of work on the Accounts Payables, and furthermore, the monkey will have jumped miraculously, off YOUR back on errors. Sales want to enter in all open invoices which would mess opening balances for A/R.

Hmmmmm… well, still, seems like a pretty good deal for YOU.  Why don’t you let them do it? And since we tracked our inventory manually and always added the beginning and ending balance at year end getting inventory up and running is a chore in itself with what sometimes seems no end in sight.

That is a very tough area and I suspect, you may have NO ALTERNATIVE but to put a beginning physical inventory into the Items counts and valuse, and expect to post corrections as things become clearer.  There is no easy way to "Ease into" a complex inventory which is constantly changing. Anyone have any ideas on how we should go about getting this program up and running seamlessly for a February 1 year end. TIA, Pete

Plunge right in there and start rippin’ into it, you’re doing the right thing.   good luck.

Response:

But now the Purchasing Department wants to enter all open P.O.’s, which will mess up the beginning balances for A/P.

Quite reasonable.   Why should it mess up the beginning balances? Surely the software system must have some method of starting the system properly. Sales want to enter in all open invoices which would mess opening balances for A/R.

Same comments as above. And since we tracked our inventory manually and always added the beginning and ending balance at year end getting inventory up and running is a chore in itself with what sometimes seems no end in sight.

Yuppers.  Means you’re going to have to do a physical count somewhere either the day you go live with the inventory processing or shortly thereafter.  And expect to do lots of adjustments on your next physical count. Anyone have any ideas on how we should go about getting this program up and running seamlessly for a February 1 year end.

Feb 1?  You’re asking on Jan 21th.  Not a chance. Where’s the VP Finance or Chief Accountant or whatever.  They should be heavily involved in implementing and understanding this system. They’re the bean counters after all.  That person should be leading this implementation.  Not you.  No disrespect intended.  <smile Tony —- Message posted to newsgroup and emailed. Tony Toews, Independent Computer Consultant The Year 2000 crisis: Will my parents or your grand parents still be receiving their pension in January, 2000?  See http://www.granite.ab.ca/year2000 Microsoft Access Links, Hints, Tips & Accounting Systems at http://www.granite.ab.ca/accsmstr.htm

Response:

I can’t begin to tell you the number of programs I have implemented.  The following are ALWAYS a part of the implementation: 1. ALL open orders are entered. 2. ALL open invoices are entered. 3. ALL open PO’s are entered. 4. A physical inventory is taken and the count entered. 5. ALL open vendor invoices are entered. These entries are what create your opening balances, you DON’T enter the balances manually.  You check the balances to make sure they are correct, then find the entry errors and correct them.  Hopefully, your IS provider can import your customer list, vendor list, and inventory items, as well as BOM’s, if that is a part of your business.  That saves you time.  Without this detail entered, you are going to have a devil of a time entering payments against AR and checks against AP.  If that is not your cup of tea, you had better keep doing everything by hand, because you don’t understand what a computer needs to do things right. GIGO! Cary Hedrick, Accountant "You may soar with eagles, but weasles don’t get caught in jet engines."  ;)

Response:

Without this detail entered, you are going to have a devil of a time

entering payments against AR and checks against AP.  << Cary, I agree with you in principle – but due to a bankruptcy in the company that’s taking over a YEAR to get settled – and in the meantime we send the checks to the trustee and he sits on them until it’s all finished – there’s no way to keep track of the accrued interest for each account and do things the way I’d like to.  I have found, however, that simply entering the payments to the trustee without having the bankruptcy listed as an AP works just fine.  The payments show up where they’re supposed to and the books all balance.  MY headache will come in when the trustee finally starts to disburse the $$ and I have to get everything straightened out then!!  In the meantme, though, the AR and AP come out just fine. Jean

Response:

Wow –good post CARY! – Hide quoted text — Show quoted text – I can’t begin to tell you the number of programs I have implemented.  The following are ALWAYS a part of the implementation: 1. ALL open orders are entered. 2. ALL open invoices are entered. 3. ALL open PO’s are entered. 4. A physical inventory is taken and the count entered. 5. ALL open vendor invoices are entered. These entries are what create your opening balances, you DON’T enter the balances manually.  You check the balances to make sure they are correct, then find the entry errors and correct them.  Hopefully, your IS provider can import your customer list, vendor list, and inventory items, as well as BOM’s, if that is a part of your business.  That saves you time.  Without this detail entered, you are going to have a devil of a time entering payments against AR and checks against AP.  If that is not your cup of tea, you had better keep doing everything by hand, because you don’t understand what a computer needs to do things right. GIGO! Cary Hedrick, Accountant "You may soar with eagles, but weasles don’t get caught in jet engines."  ;)

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Question:

Try MYOB – cheap, good, intuitive, WIN95. I like it.Good auditable stuff. DON’T use Quicken/Quickbooks in my view – the corection functiosn can casue accounting nightmares – but there are those who don’t agree. The low end Sage packages are not worth trying. It’s a shame sage won’t issue decent WIN95 software for this end of the market, but so far their offerings are not up to scratch. Richard Murphy – Hide quoted text — Show quoted text – I am looking for some accounting software to replace our present package, Sage Accountant Plus  (DOS) which will be u/s come the year 2000.  

Response:

Martin I saw your message on the Internet.  You were looking for an accounting package for your company.  I would like to tell you about our products Painless Accounting and Painless Payroll.  Here is our web site, you can down load a free trial version of the software, read some reviews, and see some testimonials from some of our customers. http://www.computek.net/public/kpierce/ I hope to hear from you soon. Jim Ness Voice: (507) 386-1334

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Question:

Reminds me of my student days in Berkeley: ringing rhetoric utterly devoid of pragmatic information to implement it. So much smoke and fog. Robert Dagnall

Response:

: Reminds me of my student days in Berkeley: ringing rhetoric utterly : devoid of pragmatic information to implement it. So much smoke and fog. How about this:  Get some 5-minute epoxy, and wax all the locks on the NYSE, the CBOT, and every FRB.  That ought to shut things down for a good fifteen minutes.  A few billion dollars worth, anyhow. April 19th is Militia Day. "Claim of actual innocence based on newly discovered evidence is not ground  for federal habeas relief." -US Supreme Court 1/93 (prisoner executed 5/93) +Yeshua, the Messiah, suffered and died to save you from death and suffering+

Response:

My, this is being cross posted all over the place…  I hope they’re all OK.. At least I don’t see sci.bionet. |Last month I attended a speech by Bowman Cutter, the Deputy Assistant to |the President on Economic Affairs.  He seemed to think it was great that a |company’s owner could "go to sleep the owner of a private company, then |wake up and have been bought and sold twice."  I don’t think this, or any

Ouch.  Why in the world would he say something that?  That doesn’t make any sense.  Probably illegal too. If he said that, than Mr. Cutter is apparently as ignorant of the laws as is the president.

The president’s got 90 people steering the boat. Jump ship!  Jump ship! |Last week I read an article about Chips.  Chips is the mainframe computer |in NYC which controls the flow of over $1 trillion dollars EVERYDAY!  Why |are we letting these machines, and those who own them gain so much control |of money, and, thus, so much power?   Are you really this ignorant? The computer controls the flow of money in the same sense that the steering wheel controls the direction that your car is going.

I agree with this statement, Chips is what keeps our banking system so fluid… it shouldn’t be touched (and is likley a very high target of terrorists).. once Chips had a hardware problem and money was being wired, but not deposited and it really caused a lot of trouble.  Chips should be guarded as if it were 40 Fort Knox’s in one place— and I certainly hope that it is. —

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|Last week I read an article about Chips.  Chips is the mainframe computer |in NYC which controls the flow of over $1 trillion dollars EVERYDAY!  Why |are we letting these machines, and those who own them gain so much control |of money, and, thus, so much power?   Are you really this ignorant? The computer controls the flow of money in the same sense that the steering wheel controls the direction that your car is going.

Is this type or response necessary? Maybe Brian doesn’t know what CHIPS is, why not try to explain it rather than abuse him. CHIPS stands for Clearinghouse for International Payment System. It is an accounting system which allows funds to be transfered among the many different banking systems in the different countries. CHIPS itself does not control the flow of these funds — as Mark so colorfully points out. JH

Response:

|I think you’re approaching the situation in a very unsuitable way.  I |thought we learned from past experiences that a few thousand people |boycotting a corporation which serves billions is not going to make a |difference.  Any fight against the beast needs to be as big as the beast. So how do you propose to organize an organization as big as big business, if there are only a few people who care enough about your issue to even boycott it. |Last month I attended a speech by Bowman Cutter, the Deputy Assistant to |the President on Economic Affairs.  He seemed to think it was great that a |company’s owner could "go to sleep the owner of a private company, then |wake up and have been bought and sold twice."  I don’t think this, or any If he said that, than Mr. Cutter is apparently as ignorant of the laws as is the president. |Last week I read an article about Chips.  Chips is the mainframe computer |in NYC which controls the flow of over $1 trillion dollars EVERYDAY!  Why |are we letting these machines, and those who own them gain so much control |of money, and, thus, so much power? Are you really this ignorant? The computer controls the flow of money in the same sense that the steering wheel controls the direction that your car is going. — Mob rule isn’t any prettier merely because the mob calls itself a government It ain’t charity if you are using someone else’s money. Wilson’s theory of relativity: If you go back far enough, we’re all related.

Response:

I think you’re approaching the situation in a very unsuitable way.  I thought we learned from past experiences that a few thousand people boycotting a corporation which serves billions is not going to make a difference.  Any fight against the beast needs to be as big as the beast. Indeed, I think the only way to beat the beast is to use it, which is what we’re doing right now by using the highway. The main problems I see with the beast are ignorances of uniqueness.  The laws of countries are becoming secondary to the policies of "transnational corporations," some of which require drug testing, dress codes, and others of which want to require genetic mapping in the future.  Surely you see my point that a few hackers boycotting apples with wax on them is not going to make any difference on these matters. We all know how we can be the richest company/country/county.  It is simple, all you have to do is turn all your citizens into robotic PRODUCERS.  But, that is not what this country at least is about.  Yes, we are a capitalistic society, but we also have a long tradition focusing on entrepreunerial capitalism, not corporate. Last month I attended a speech by Bowman Cutter, the Deputy Assistant to the President on Economic Affairs.  He seemed to think it was great that a company’s owner could "go to sleep the owner of a private company, then wake up and have been bought and sold twice."  I don’t think this, or any other, "expert" thinks twice about what (s)he’s thinking or advocating. The loss of control that people have over their own money and own futures is being severely curbed by these monolithic institutions.  People are ignoring it. Last week I read an article about Chips.  Chips is the mainframe computer in NYC which controls the flow of over $1 trillion dollars EVERYDAY!  Why are we letting these machines, and those who own them gain so much control of money, and, thus, so much power?   No, no, a boycott will not solve this at all.  We need an entire counter institution, a counter school of thought to bring this unruly beast down. What we can do is try to assemble some minds over the net to brainstorm about how to establish such a counter assault, and how to maintain it. Let us prove that the increase in technology we have experienced increases personal and not transnational power. Brien Desilets

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