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Accounting News Roundup: #Envelopegate and Enron Litigation | 03.02.17

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To absolutely no one’s surprise, the PwC partners responsible for the mix-up at the Oscars will not return to work the ceremony, according to both the Academy of Motion Pictures Arts & Sciences and PwC. And also not surprising, sadly, they need protection:

PwC told NBC News that personal information and the pictures of the homes of Brian Cullinan and Martha Ruiz, the Oscars’ envelope guardians, had been posted online. The company said it was providing security to protect Ruiz and Cullinan, who remain with the company and “are not going anywhere,” a PwC official said.

So it appears that both Cullinan and Ruiz will stay with the firm, although it’s not clear whether or not the firm will keep the Academy engagement. It’s hard to imagine PwC losing the gig — they’ve had it for 83 years and the Academy doesn’t pay much for their services. Francine McKenna reports that the Academy’s 990 states it paid $145,000 for “accounting services” in 2015. Turns out, that’s cheap:

That’s not much for doing PwC’s real job — auditing the financial statements and preparing the tax return. Smaller organizations like the Hollywood Foreign Press Association, which produces the Golden Globes, and Screen Actors Guild/AFTRA, which is the industry union, are charged comparably more for their tax return preparation alone.

And it’s not nearly enough to additionally cover the 1,700 hours PwC said in a 2010 press release was the approximate number of “person-hours” the PricewaterhouseCoopers team needs every year to count and verify the ballots. At an estimated average hourly rate for all staff of $300, the ballot counting and safeguarding process alone would have cost more than $500,000, said James Ulvog, a CPA in Los Angeles whose firm focuses on not-for-profit audits.

Whatever the Academy decides to do, Jim Peterson reminds us that no matter they pay, “any system designed and run by fallible human beings has a non-zero chance of catastrophic failure.” This sounds like another opportunity for the robots!

What’s everyone else doing?

So while PwC flounders, what are its rival Big 4 firms up to? KPMG, for one, seems to be throwing more money around on its facilities. This North article says the firm is renovating an empty building to add to its Montvale campus:

KPMG bought the building last year for $5.7 million, according to borough tax assessor Michael Leposky. That purchase price was about $2 million less than the assessed value of the property, Leposky said.

Elsewhere, EY is “seeking Canada’s most daring entrepreneurs” which sounds like the beginning of a terrible reality show and Deloitte is making pointless comments on President Trump’s tax reform ideas.

Enron litigation

If you didn’t think it was possible for anyone to still be chasing money from Enron’s bankruptcy (the Oscars flub of its day) then you would be wrong:

A federal judge in Houston has thrown out a lawsuit accusing UBS Group AG of hiding fraud by its client Enron Corp from retail customers, a decision that may end a 15-year legal battle stemming from the energy company’s December 2001 bankruptcy.

Does anyone think that people will pursue civil justice over the Enron bankruptcy in the afterlife? I imagine there’s a small corner in hell where people sit as jurors listening to accounting-related litigation for all eternity.

Previously, on Going Concern…

Paul Gillis wrote about the harm the Oscars fiasco will do to PwC’s recruiting. Greg Kyte’s Exposure Drafts cartoon touched on getting to CPA talent early.

In other news:

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