ACCOUNTANTS IN THE MOVIES

In Hollywood, accounting can seem like a retty glamorous profession, or not.

Rick Moranis played Sigourney Weaver's accountant neighbor and admirer Louis Tully in the 1984 comedy classic "Ghostbusters." Possessed by a demonic ghost, Louis is transformed from a mild-mannered accountant into the "Keymaster" and needs the help of Bill Murray, Dan Aykroyd, Harold Ramis, Ernie Hudson and the rest of the ghost-busting crew (along with their Proton Packs). Moranis reprised the role in the 1989 sequel "Ghostbusters II" and hopefully will come out of retirement to appear in "Ghostbusters III," which is set to be released next year.

D-DAY FOR BRAZILIAN BLOWOUT

Following a letter sent to parent company GIB, September 13 was judgment day for Brazilian Blowout to respond to a letter sent from the FDA, which questioned the safety of the products and threatened legal action if demands were not met.

The FDA is asking Brazilian Blowout to reduce the level of formaldehyde from its products and change the misleading labels and advertising, which state that the products are formaldehyde-free.

In a letter to Mike Brady, CEO GIB, the FDA gave its first official warning, giving the company until September 12 to comply with the FDA’s directives, otherwise the products could be taken off US shelves and further injunctions could be filed against the company.

In tests, conducted by both the FDA and the Occupational Safety and Health Administration dangerous levels of the liquid form of formaldehyde, ranging from 8.7% to 10.4%, were found.

Industry debate
Formaldehyde is commonly found in a number of “Brazilian style” keratin-based hair straighteners, and has been listed as a carcinogen by the FDA, although Brazilian Blowout denies unsafe levels in its products.

Michael Roosevelt, acting director in the FDA’s Office of Compliance states in the letter to the company: “Brazilian Blowout is an adulterated cosmetic because it bears or contains a deleterious substance that may render it injurious to users under the conditions of use prescribed in your labeling.”

He continued: “Brazilian Blowout contains the liquid form of formaldehyde, methylene glycol; however, the product label declares that the product contains ‘No Formaldehyde’ of is ‘Formaldehyde Free.’ This declaration renders your product misbranded because it is a false and misleading statement.”
In a string of controversy lasting over a year, the FDA has been urged to recall Brazilian Blowout and similar products.

However, the FDA can only issue a “voluntary recall,” meaning that the government cannot mandate the removal of dangerous products from the market. These regulations are under scrutiny, and are being rectified in the Safe Cosmetics Act of 2011, which is currently being debated in Congress.

Brazilian Blowout’s plant-derived cousin

Meanwhile Brazilian Blowout has launched its latest hair straightening product, the Zero smoothing treatment which it states is a plant-derived Kerasafe bonding system which contains no formaldehyde.

It is applied in the same way as the original Brazilian Blowout treatment and the company claims the result is exactly the same.

When questioned on whether this launch means the original treatment will be discontinued or whether it questions the safety or integrity of this treatment, the company states it is 100% confident of the original treatment and is backed by its worldwide popularity, and will remain on shelves.

However, according to the FDA letter, GIB will only be able to keep selling the product if the ingredients list is specifically modified to exclude any form of formaldehyde. Failure to do so could result in the seizure of Brazilian Blowout products, and legal proceedings against the company.

LONGTIME PARTNER

I have to take a few minutes and pay tribute to Bob Sylvester CPA who died September 23, 2011.

Bob Sylvester was a former partner of mine and a close friend. Bob had been ill for some time and he was in hospice for the past few weeks. Bob and I go way back. In 1972, Bob gave me a chance and hired me as new junior accountant with the firm of Lindell, Sylvester Lindell. He was my mentor and taught me a lot about business. Eventually we became partners to form Kopsa, Swanson & Sylvester accounting firm. In 1999, Bob became sick and retired to enjoy his family. Much of the success that I have had is attributable to valuable lessons from Bob. He will be missed.

To read more about Bob's life: Robert Sylvester

YOU MAY WANT TO UNWIND YOUR ROTH CONVERSION

Many taxpayers elected in 2010 to convert their regular IRA to a Roth and either pay the tax in 2010 or spread it out over 2011 and 2012. If you converted your Roth as long as you timely filed your income tax return or got an extension to October 15, 2011, you have until October 17th “unwind” the conversion and treat it as if it never happened.

The primary reason for considering this is the drop in stock prices from 2010 until now. By unwinding the conversion, you may be able to then redo the conversion and save substantial tax this year.

For example, let’s assume a taxpayer had $500,000 in his IRA on June 1, 2010 when he converted it into a ROTH. Now, let’s assume the value of the ROTH is only $300,000. By unwinding the ROTH conversion, the taxpayer does not pay tax on the difference between the $500,000 last June and the $300,000 value now. At the highest tax bracket including applicable state income taxes, the total tax savings could approach $100,000.

Remember, you only have until October 17, 2011 to unwind this conversion

BRAZILIAN BLOWOUT BEING SUED FOR $5M OVER BEAUTICIAN CLAIMS

Hair care company Brazilian Blowout is being sued in Manhattan Federal Court for $5m by a beautician who is claiming she was sickened by using one of its hair care products, although the company has denied the allegations.

According to the article in The New York Post, Dana Lulgjuraj says she suffered ‘physical injuries’ while defrizzing hair with the Brazilian Blowout product last year at a salon in the Flatiron District in New York.

It is not the first time the hair care products have come under scrutiny, following concerns raised last year over the levels of formaldehyde omitted through use of the products. (Formaldehyde is a colorless, flammable, strong-smelling chemical that is commonly used as a preservative in some consumer products including hair care products.)

It was thought those that were most at risk of irritation were those who worked closely with the substance for long periods of time such as salon workers, and earlier this year the US government listed the substance as a carcinogen, although not in direct relation to just hair care products.

Lulgjuraj has not detailed what her ‘physical injuries’ were, and the California-based manufacturer GIB has denied the allegations. GIB was in the spotlight last year for the formaldehyde omitted from its products which it says were due to confusion between the substance and methylene glycol. However, experts from the Cosmetic Ingredient Review panel say that the two exist in equilibrium and that adding methylene glycol to water will create formaldehyde and vice versa.

Formaldehyde was then put under review by the specialist industry panel, and the US government made its announcement in June this year. At the same time GIB also filed a lawsuit against the Oregon Occupational Safety and Health Administration for damages against the company due to the claims being made, but this was later dropped.

ACCOUNTANTS IN THE MOVIES

In Hollywood, accounting can seem like a pretty glamorous profession, or not.

Charles Grodin plays Jonathan "The Duke" Mardukas, an accountant for the Mob who gets nabbed by bounty hunter Jack Walsh, played by Robert De Niro in the 1988 comedy-action hit "Midnight Run." To collect the $100,000 bounty on the Duke's head, De Niro needs to get him from New York to LA, but the Mafia and the FBI are both on their tails. Grodin made a bit of a mini-career out of playing accountants. In the 1993 flick "Dave," he appeared as CPA Murray Blum. In one scene, Murray the accountant helped President Dave Kovic, played by Kevin Kline, find an extra $650 million in the federal budget to open homeless shelters. We could use him in Washington now.

GOOD ADVICE

In the September issue of American Salon, my good friend Julie Shepperly of Milady Direct Professional Services gave the following advice. She is right on. I know from experience that those salons that are taking these steps have a great culture and are successful. If you are not taking these steps you need to consider working this into your business plan.

By the way, Julie is a great speaker. If you ever get a chance to sit in on one of her programs I recommend that you take advantage of the opportunity.

Raising the Bar
Every beauty organization, whether it’s got a staff of 30 or a team of three, needs to conduct career and performance reviews. “They are critical to the overall success and retention of employees,” says Milady Direct of Professional services Julie Shepperly. “Deep down, nearly everyone has a desire to succeed, as well as do what pleases our boss, family and friends.” Here, Shepperly sheds light on the key steps of the all-important review process.

Weekly Huddles: Conduct 15-minute meetings with the staff to discuss goals, promotions, challenges and successes.

Monthly Plan and Reviews: Each month, sit down with employees for a 30-minute mini-review to discuss their progress toward meeting quarterly and annual goals. “It’s an opportunity to receive feedback from team members on how they feel the business is progressing, as well as to toot one’s own horn on how well they are doing when it comes to accomplishing goals,” Shepperly says.

Quarterly Performance Reviews: These 60-minute in-depth reviews analyze statistics that measure success as well as those that determine whether or not a team member is eligible for a price increase and/or a salary raise.

Annual Planning Sessions: Conducted individually or as a team, this meeting is all about celebrating the successes of the previous year and making plans for growth in the upcoming year.

Finally, Shepperly suggests implementing only those steps that you can manage consistently. Once meetings are scheduled, it’s important to prepare. “Most reviews get off track and turn into complaint sessions because expectations weren’t clearly established and/or because there are breakdowns in communication,” Shepperly says. “Having clear communication and letting others know you care is key.”- K.D.