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  • Professor Elam

    San Antonio Counselor Pleads Guilty to Medicare Fraud

    11/7/2024

    SAN ANTONIO – A San Antonio woman was sentenced in a federal court in San Antonio to five years of probation and six months of home confinement for health care fraud.

    According to court documents, Lucinda Perez, 57, had been a licensed professional counselor since 2003 and worked as a sole practitioner performing home visits beginning in 2011. From no later than April 2015 through at least January 2023, she defrauded the Texas Medicaid program by submitting claims for child counseling services she did not perform. In some cases, Perez was out of town or in other states visiting various casinos during the time periods she had claimed in Medicaid filings. Billing records show Perez fraudulently received approximately $267,400 from service claims from Aug. 1, 2015 to July 31, 2019.

    Perez was indicted for five counts of health care fraud and five counts of aggravated identity theft on Nov. 3, 2021. She was arrested Nov. 15, 2021. In addition to the probation, Perez was ordered to pay $267,402 in restitution.

    “Not only did this defendant defraud the government out of hundreds of thousands of dollars, she also abused the trust of families to whom she provided services,” said U.S. Attorney Jaime Esparza for the Western District of Texas. “My office will continue to pursue cases of fraud, waste, and abuse of public health systems.”

    The Texas Medicaid Fraud Control Unit and the Health and Human Services Office of the Inspector General investigated the case.

    Assistant U.S. Attorneys Justin Chung and Kelly Stephenson prosecuted the case.

     

  • Professor Elam

    Super Micro Stock Falls Again

    Thursday 11/74/2024

    Here is what happens when the external auditor disclaims an opinion, reading this day by day melt down of an AI darling makes the reading

    in the audit text come alive

    From Today's WSJ Super Micro Comes Up Short

    Super Micro Computer SMCI -18.05%decrease; red down pointing triangle says it would be selling a lot more servers—if only it had Nvidia’s NVDA 4.07%increase; green up pointing triangle

    latest chips. Unfortunately, investors can no longer afford to take the company at its word. 

    The specialized server maker that began the year as one of the hottest names in artificial intelligence has now become too cold to touch. In an unaudited “business update” Tuesday afternoon, Super Micro reported preliminary revenue between $5.9 billion to $6 billion for its fiscal first quarter ended September, which was below the company’s prior forecast range of $6 billion to $7 billion. The numbers are preliminary because Super Micro has no auditor after Ernst & Young bailed last week in one of the more colorful exits in memory. The Big Four accounting firm said it was “unwilling to be associated with the financial statements prepared by management” in its resignation letter, according to a filing by Super Micro. 

    That filing alone took nearly 33% off Super Micro’s stock price, which was already down 59% from its peak in March. The latest update came out on election night, which didn’t stop investors from voting with their feet again. Super Micro’s stock slid more than 21% in early trading Wednesday, putting the share price below its level from a year ago—before AI hype more than quadrupled its value. 

    o

    2024Nov.-50050100150200250300350%DellHewlett Packard​Enterprise Super Microo

    Such a plunge suggests Super Micro may be a cheap AI play again. But while its current multiple of less than seven times forward earnings is indeed now at a discount to main rivals such as Dell and Hewlett Packard Enterprise, Super Micro is no bargain. The company has been under a cloud since famed short-selling firm Hindenburg Research issued a report in late August claiming “glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export-control failures, and customer issues.” 

    Super Micro declined to comment on the report at the time, but the next day announced it was delaying its annual 10-K filing, saying it needed time to “complete its assessment of the design and operating effectiveness of its internal controls over financial reporting.” That 10-K still hasn’t been filed, and the recent loss of its auditor suggests it likely isn’t coming soon. Super Micro said Tuesday it is working “diligently” on the matter, but the company that was just added to the S&P 500 in March now stands in danger of being delisted from the Nasdaq. 

    And what of Super Micro’s actual business? Demand for AI components remains hot. The biggest tech companies made clear last week that they are still spending a boatload—and planning to spend boatloads more—on that very technology. 

    But while even $5.9 billion in revenue for the September quarter is more than double what Super Micro managed in the same period last year, it would also be the first time the company has missed the low end of its guidance range in at least five years, according to FactSet data. 

    Screenshot 2024-11-07 at 8.01.51 AM

     

     

  • Professor Elam

    Super Micro Falls Another 20%

    Wed 11/6/2024

    Super Micro Computer falls another 20%, iinability to file financials on time.

     

    Recall that EY walked away as the company auditor last week.

    Screenshot 2024-11-06 at 11.02.26 AM

  • Professor Elam

    KPMG Lays Off 4$ US Workforce

    Tuesday 11/5/2024

    he Big Four accounting firm last week notified about 330 people, or nearly 4% of its roughly 9,000-person U.S. audit workforce, that they would be let go in the coming weeks, people familiar with the matter said. The cuts have focused on employees such as associates and managers, and included no partners, the people said.

    The move follows several rounds of KPMG cuts in the U.S., including an audit-centric round in March. Last year, KPMG laid off about 5% of its U.S. staff over the summer—including advisory, tax and back-office workers—after cutting some advisory personnel, or almost 2% of U.S. staff, earlier in the year.

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    KPMG is among the large accounting firms that have continued to experience slower-than-expected levels of voluntary attrition after aggressively hiring people during the pandemic. Layoffs at several firms have focused on the advisory side, for which revenue growth has generally slowed as corporate clients pull back on certain services, as opposed to audit.

    KPMG’s global audit revenue grew 6% to $12.6 billion for the year ended Sept. 30, 2023, compared with 3% the previous year. The firm hasn’t yet reported global revenue for its 2024 fiscal year. 

    The firm is expanding its U.S. audit business while sustaining quality, KPMG said. “The actions reflect our ongoing focus to align the size, shape and skills of our workforce to the market, while addressing continued low levels of attrition,” the firm said in a statement, referring to the latest job cuts. “We remain focused on investing in our people to grow our business with quality.”

    SHARE YOUR THOUGHTS

    Will accounting firms need to make more layoffs? Join the conversation below.

    PwC’s U.S. unit recently laid off about 1,800 workers, some of which worked in audit, The Wall Street Journal reported. 

    Meanwhile, audit firms have struggled to find sufficient skilled accounting personnel, part of a deepening shortage in the profession. KPMG, which has said it isn’t experiencing a shortage, last month supported allowing prospective accountants to bypass a fifth year of school to make the path to a state accounting license less expensive. Many states are exploring changes to certified public accountant licensing laws to provide an alternative.

    “Today, we can recruit the talent we need, but the shortage is already impacting our profession, as well as businesses,” Paul Knopp, chief executive of KPMG’s U.S. unit, said in a LinkedIn post at the time. 

    Auditors are also facing a threat from their firm’s increased use of artificial intelligence. While AI could provide opportunities to gain new skills for auditors who continue working at the firms, the technology may reduce how many of them are needed.

    Fifty-nine percent of U.S. and U.K. companies say that AI will reduce the number of college graduates needed at the firms that audit the businesses, according to a new survey from consulting-research provider Source Global Research. “To that extent, clients and audit firms are aligned that technology is going to replace some of these people’s work,” said Fiona Czerniawska, chief executive of Source.

  • Professor Elam

    William Tell Overture Never Done Better

    11/4/2024

    Click for Glenn Campbell does it best'

     

     

  • Professor Elam

    Student SA TXCPA Panel Nov 8

    Friday 11/1/2024

    Screenshot 2024-11-01 at 1.15.34 PM

  • Professor Elam

    Audits Matter Says Appeals Court

    Friday Nov 1, 2024 WSJ

    A federal appeals court has changed its mind and decided that accounting firms’ audit reports really do matter to investors after all.

    In a case brought by investors against the accounting firm BDO, the Second U.S. Circuit Court of Appeals on Thursday released an amended version of an opinion it originally decided in August 2023. Back then, the court ruled in favor of BDO in a shareholder lawsuit over its audit work for the insurance company AmTrust Financial Services.

    In explaining its reasoning at the time, the court said the firm’s audit report was so general that an investor wouldn’t have relied on it. Consequently, the court said the audit report wasn’t material—meaning it didn’t matter—and upheld the dismissal of fraud claims against BDO.

    After the ruling, a trio of former Securities and Exchange Commission officials filed a brief with the court asking it to reconsider the decision. The court then asked the SEC to submit a brief expressing its views on the subject. The SEC did so and it, too, asked the court to reconsider, writing in a brief last February that “audit certifications convey crucial information to the investing public” and “audit certifications are not too general to be material.”

    The appeals court on Thursday reissued its decision with amendments and ruled the investors’ claims against BDO could proceed. “Although the challenged audit certification reflects standardized language, it is not so general that a reasonable investor would not depend on it as a guarantee,” the court’s amended opinion said.

    BDO in a statement said the firm continues to believe the original decision was correct and that “we are in the process of evaluating the path to seek reconsideration of the decision.”

    Samuel Rudman, a lawyer for the plaintiffs in the case, called the amended ruling “a sentinel decision for investor protection” and said: “The message here is simple, but increasingly important—auditors need to do their jobs and will be held accountable to investors when they don’t.”

    The appeals court’s original ruling last year prompted new debate within the accounting profession and among investors about whether audit reports serve a useful purpose. Audit reports operate on a pass-fail model, and their language is standardized.

    Nonetheless, investors still pay attention to what auditors say. This week, shares of Super Micro Computer plunged after the server maker disclosed that Ernst & Young had resigned as its outside auditor and told the company in its resignation letter that it no longer could rely on management’s representations.

    The SEC in a 2018 order had accused three BDO accountants of signing off on their audit work for AmTrust’s 2013 annual report without completing all the required audit procedures beforehand. They agreed to be suspended from auditing public companies, without admitting or denying the agency’s misconduct claims. The SEC didn’t allege any violations by BDO.

    AmTrust in 2017 restated five years of earnings downward, and its shares are no longer publicly traded. In 2020, the company and its former chief financial officer settled SEC fraud claims covering several years and were fined, without admitting or denying the allegations.

     

  • Professor Elam

    EY Withdraws from Super Micro Audit

    Thursday 10/31/2024

    Screenshot 2024-10-31 at 7.28.59 AM

    Super Micro Computer stock tumbled after the server maker said its audit firm, Ernst & Young, had resigned.

    Super Micro disclosed the resignation in a securities filing, which included quotes from EY’s resignation letter from last week. EY said it had recently learned of information “which has led us to no longer be able to rely on management's and the audit committee’s representations, and to be unwilling to be associated with the financial statements prepared by management.”

    Super Micro shares were down 33% in afternoon trading, at just under $33. The company said it “has taken the concerns expressed by EY seriously,” and that it has hired an outside law firm and a forensic accounting firm to investigate.

    Super Micro said in August that it would be late filing its annual financial report, sending its shares plunging. That disclosure came a day after an activist short-selling firm, Hindenburg Research, published a critical report highlighting a former employee’s lawsuit against Super Micro that accused it of accounting violations.

    Super Micro in its filing today said it doesn’t anticipate having to restate past financial statements. It previously said the short-seller report “contains false or inaccurate statements about our company.”

    In September, The Wall Street Journal reported that the Justice Department was probing the company.

    __________________________

    Ernst & Young has resigned as the auditor for Super Micro Computer SMCI -32.68%decrease; red down pointing triangle

    , saying it can no longer rely on management’s representations.

    Super Micro disclosed the resignation in a securities filing on Wednesday, sending shares down nearly 31% to $34 in early trading. Shares are still up 20% year-to-date after surging with the bull market for AI-themed stocks this year, though well off a $122.90 record high from March.

    EY bowed out while conducting an audit of Super Micro’s results for the fiscal year that ended June 30. The maker of server and computer products said it is looking for a new accounting firm to step in.

    In an Oct. 24 letter to Super Micro, EY said it was “resigning due to information that has recently come to our attention which has led us to no longer be able to rely on management’s and the audit committee’s representations.” The Big 4 accounting firm is unwilling to be associated with any financial statements that Super Micro management prepares, according to the company’s securities filing.

    EY has also expressed concerns about the Super Micro’s board independence from Chief Executive Charles Liang and other members of management, according to the filing.

    Super Micro said Wednesday that it doesn’t agree with EY’s decision to resign but takes its concerns seriously. The company plans to let EY respond fully to any inquiries from whatever firm becomes its next auditor.

    Representatives for Super Micro and EY didn’t respond to requests for comment.

    EY told Super Micro in July that it had concerns about the company’s internal controls over financial reporting, as well as the transparency and completeness of its communications with EY.

    The firm said at the time that Super Micro may not be able to file its annual report on time. The company ultimately delayed the filing, saying in August that it needed more time to assess its financial reporting controls.

    The delay was announced one day after short-seller Hindenburg Research said it found “glaring accounting red flags” at Super Micro, which makes servers used for generative artificial intelligence. The short-seller accused the company of allegedly engaging in “undisclosed related party transactions, sanctions and export control failures.”

    EY earlier this year said it was cutting ties with many U.S. public companies in a move to revamp its auditing practice and improve the quality of its work. EY has dropped dozens of clients since the start of last year, including drugmaker Catalent and hydrogen truck maker Nikola.

    The firm is walking away from Super Micro about a month after The Wall Street Journal reported that the Justice Department is probing the company, seeking information apparently connected to a former employee who has accused Super Micro of accounting violations and filed a whistleblower lawsuit.

    Super Micro paid $17.5 million in 2020 to settle Securities and Exchange Commission’s allegations of widespread accounting violations. The company neither admitted nor denied the SEC’s accusations. The agency also required Liang to reimburse Super Micro for $2.1 million in stock-sale profits, though it didn’t accuse the CEO of misconduct.

    Super Micro is slated to report quarterly results Nov. 4. The company’s most recent report from August showed that revenue doubled in its fiscal fourth quarter due to strong demand for AI infrastructures, though the figure still fell short of analyst estimates.

  • Professor Elam

    A Little Dearer a little Cheaper

    Wed 10/30/2024

    There Is Nothing in This World That Someone Cannot Make a Little Worse and Sell a Little Cheaper

     

    Posted byquoteresearch

     
    Here is the origin of that quot5e

    This is classic Dr. Edward Deming. He warned against rewarding contracts based on price alone.

    Or as I think John Glenn put it

    How would you like to be blasted into outer space atop $50 M worth of low bid parts?

  • Professor Elam

    Learn about the FMAA Financial and Managerial Accounting Associate Certification

    10/27/20247

    The IMA is offering FMAA certification.

    Thisis a real certification from a recognized authority.

    It requires passing an 80 question m/c exam over a two hourn period.

    The exam costs  $299. Gleim offers review material.

    Certifiications delivered by third parties external to universities are the new calling card.

    Learn more about FMAA by clicking here