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September 26, 2023

Accounting News Roundup: New York Hits PwC Subpoena; Twitter and the JOBS Act; Grant Thornton CEO Gets a Close-up | 09.13.13

2 Consultants to Banking Industry Come Under Scrutiny [DealBook]
New York State has subpoenaed two consulting firms as part of a broader investigation into the industry’s perceived coziness with Wall Street, according to people briefed on the inquiry. The two firms that received the subpoenas in recent months — Promontory Financial Group and PricewaterhouseCoopers — are among the industry’s biggest names. The subpoenas by the New York Department of Financial Services present the latest threat to the consulting industry, which is being faulted for inadequately handling recent bank regulatory problems. In another sign that the industry’s clout is in jeopardy, federal regulators are rethinking their own reliance on consultants, which are often called in to bolster compliance procedures at banks.

Promontory, PwC Said to Be Subpoenaed by N.Y. Regulator [Bloomberg]
The PricewaterhouseCoopers subpoena is related to the consulting firm’s work with Mitsubishi UFJ-Bank of Tokyo, the person said. In June, the Tokyo bank agreed to pay $250 million to Lawsky’s department to settle claims that it had engaged in improper dollar transfers to Iran, Sudan and Myanmar. Bank of Tokyo-Mitsubishi UFJ Ltd., the main lending unit of Japan’s biggest bank by market value, moved an estimated $100 billion through New York for government and privately owned entities on the Specially Designated Nationals list issued by the U.S. Treasury Department’s Office of Foreign Assets Control from 2002 to 2007, the financial services department and New York Governor Andrew Cuomo said in a statement in June.

FASB Charts New Course as Convergence Wanes [CW]
FASB Chairman Russ Golden, who assumed his post July 1 after the departure of Leslie Seidman, said it's time for the bilateral convergence movement between FASB and IASB to “evolve” to reflect the influence of national standard setters, especially those from major capital markets. “I envision a long-term global standard-setting environment in which the FASB, the IASB and other major capital market standard setters co-exist and cooperate,” he said, to issue converged standards but also meet the needs of their home markets. “FASB's first priority is to improve financial reporting for the benefit of investors and other users of financial information in U.S. capital markets.”

Why Fraudsters Should Applaud the SEC [Bloomberg]
Jon Weil writes that the SEC "isn’t waiting to see if the criminal charges stick," to Ebrahim Shabudin, the former COO and chief credit officer of failed United Commercial Bank to settle their civil case without getting Shabudin to admit guilt. JW wonders why they would do that when Commission Chair Mary Jo White said earlier this year that there would be LESS of that going on.   

An Initial Filing, in Fewer Than 140 Characters [DealBook]
One of the major benefits of the JOBS Act is that Twitter does not have to disclose publicly its registration statement for its filing. Section 106 of the law states that a registration statement for an emerging growth company can be filed and reviewed by the Securities and Exchange Commission confidentially. According to Ernst & Young, in the first year of the JOBS Act, 63 percent of eligible companies filed their statements confidentially, making this one of the new law’s most popular provisions. The document that contains all of the information about Twitter’s I.P.O. — including financial statements — only needs to be made public at least 21 days before the company’s Wall Street bankers start to pitch the planned offering to investors, in what is known as a road show. At this time, any amendments made in response to comments by the S.E.C. will also be made public.

Failed Colonial Bank's Accountants Lose Bid to Dismiss FDIC's Suit Against Them [D&O Diary]
From Kevin LaCroix: "In its complaint against PwC, the bank’s holding company’s outside auditor, and Crowe Horvath, with performed internal audit for the bank’s holding company, the FDIC alleges that while Taylor Bean was carrying out its “increasingly brazen” fraud, PwC “repeatedly issued unqualified opinions” for Colonial’s financial statements, and Crowe “consistently overlooked serious internal control issues” – and, more the point, both failed to detect the fraud. The complaint alleges that if the firms had detected the fraud earlier, it would have prevented losses or additional losses that the bank suffered at the hands of Taylor Bean [and Whitaker]."

Grant Thornton CEO to Emanuel: Keep an eye on China [CBJ]


Mexican restaurant offers free burritos to make up for bloody diarrhea outbreak [UPI]
Maricopa County, Ariz., officials believe that an E. coli breakout sickened 74 people that ate at Federico's Mexican Food in what became known as the "bloody diarrhea outbreak." Federico's will offer free burritos in its newly sparkling restaurant. The outbreak only occurred at its Litchfield Park location, which voluntarily closed after word of the sickness spread. The free burrito promotion falls on Mexican Independence Day. While Federico's Mexican Food was closed, they brought in the "Queen of Clean," a TV cleaning personality that has been featured on Oprah, to be their "cleaning consultant."

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