“Can you imagine a second-tier firm auditing a global bank at a time when there is already a lack of confidence in the marketplace?” He added: “They simply don’t have the skills or the market expertise.” He also accused some smaller rivals of being “quite lazy” about investing in their businesses. [FT]
Author: Caleb Newquist
Founding editor, Going Concern.
Layoff Watch ’11: Cuts a Comin’ at Deloitte?
From the mailbag:
Heard this from a Director in the firm: Deloitte layoffs coming. Lists are made…cuts coming soon. Said a lot of it has to do with thinning out the ranks (too many people jumping ship because their level is top heavy and promotion nowhere in sight) as well as letting go underperformers.
As you probably noticed, 2011 hasn’t had much in the way of layoff news with the exception of some support staff that were cut at McGladrey, Grant Thornton, and KPMG. That said, this seems like an opportune time to kick a few people to the curb. If you wait until November, well, that just looks bad.
Keep us updated with any news and if you’re in the know, get in touch.
Accounting News Roundup: KPMG Puts Silvercorp in the Clear; Groupon Hits the Road; Romney’s Fair-weather Flat Tax Fandom | 10.24.11
Swiss Banks May Pay Billions to U.S., Disclose Client Names [Bloomberg]
Swiss banks will likely settle a sweeping U.S. probe of offshore tax evasion by paying billions of dollars and handing over names of thousands of Americans who have secret accounts, according to two people familiar with the matter. U.S. and Swiss officials are concluding negotiations on a civil settlement amid U.S. criminal probes of 11 financial institutions, including Credit Suisse Group AG (CSGN), suspected of helping American clients hide money from the Internal Revenue Service, according to five people with knowledge of the talks who declined t ause they are confidential.
Silvercorp says KPMG report shows books are clean [Reuters]
Anonymous short sellers had accused Silvercorp of inflating earnings and the size of its mineral resources, among other allegations, sending the company’s stock price as low as C$5.81 in September. The shares remain below an April high, but they have recovered to levels before the allegations were made public. The company, which operates silver mines in China, has denied all the allegations against it, describing them as part of a “short and distort” scheme. Silvercorp said the KPMG report showed its financial records to be substantially correct.
Olympus scandal: KPMG quit over Gyrus accounts [Telegraph]
Olympus has been in crisis since its former chief executive, Michael Woodford, revealed that $687m (£431m) in “fees” had been paid to two companies in the Cayman Islands during the purchase of Gyrus. Gyrus documents show that years before Mr Woodford’s revelations, accountants from KPMG flagged up “circumstances connected with our resignation that should be brought to the attention of the company’s members or creditors”.
Auditors In China: A Whole Lot of Posturing Going On [Forbes]
FM: “[A]ll this posturing is preposterous.”
Groupon Takes to the Road [WSJ]
The road show for the Chicago Internet firm’s upcoming initial public offering begins on Monday. In a roadshow, company executives try to convince mostly institutional investors such as mutual funds to buy a company’s shares. The roadshow for the daily deals company will focus on the Eastern seaboard the first week, with stops in New York on Monday, the Mid-Atlantic region on Tuesday, and Boston on Wednesday, according to an email reviewed by The Wall Street Journal that was sent Friday by an executive director of institutional equity sales at a bank to potential buyers of the shares. Then the show returns to New York on Thursday and Friday, the email says.
Perry to pin his hopes on ‘flat tax’ [FT]
Mr Perry, who has struggled to get his footing in the race for the Republican presidential nomination, is likely to argue that the flat tax is the best way to jolt the nation’s sluggish growth. Flat tax proponents say it would unleash private capital through a lower top tax rate and better incentives for savings and investment rather than consumption. The political case for the flat tax is its potential appeal to conservative primary and caucus voters, who are scheduled to kick off the voting in Iowa in little more than two months. The idea of abolishing the “progressive” tax system has been high on the wish list for many rightwing policymakers since the 1980s, but it has never caught on with mainstream voters.
Romney, Once a Critic, Hedges on Flat-Tax Plans [NYT]
As several leading Republican presidential candidates embrace a flat tax as a core campaign position, one contender stands out in not doing so: Mitt Romney, who has a long record of criticizing such plans and famously derided Steve Forbes’s 1996 proposal as a “tax cut for fat cats.” Lately, though, his tone has been more positive. “I love a flat tax,” he said in August. Flat-tax plans have come and gone before, and analysts note that they have tended to lose support once they come under scrutiny. But Mr. Romney’s support of the concept of a flat tax underscores the tightrope he is walking as taxes become a larger focus of the Republican presidential race and he faces rivals’ accusations of inconsistency on the issues.
True Confessions from the Server Room: Why “Good Enough” Isn’t Good Enough in Practice Management
Are you in your office? Good. Then take this article with you back to your server room. Look around. Then ask yourself the following questions:
1. Do you see any floppy disks?
2. Is there a stack of printouts in the corner?
3. Does it take more than one hand to count the anagement applications you have running?
Don’t be embarrassed. Tech anachronisms like these are the mullets of the IT world, but most of us have a few of them lying around. And chances are they’re not part of your zoomy new secure client portal, your mobile-friendly website, or any other client-facing piece of technology. No, the skeletons in your server room are probably related to the ugly stepchild of tax and accounting technology: practice management.
If you’re like a lot of firms, your practice management technology has languished for years in an ugly jumble of disparate systems that has been “good enough” since the early Clinton administration. I feel your pain. But the sad fact is, “good enough” just isn’t good enough anymore.
You can’t afford to have staff entering the same data over and over. You can’t afford to wait overnight for updates to run. You can’t afford to tell clients “I’ll check the printout and get back to you.” You can’t afford to ask your employees “How long do you think that took you?” And you certainly can’t afford their answers.
The good news is, you don’t have to. Not with the new crop of integrated practice management software that integrates thorny components like time and billing, a/r tracking, and management reporting onto one slick platform. Your staff will enter data once and make it available across the entire firm in real time. You’ll be able to see the status of all your projects, who’s working on them, and who isn’t working on much of anything, all on one convenient dashboard. You’ll have the information you need to give your clients the instant answers they demand. And since your new practice management application will be capable of operating in the cloud, it will all be available to you anytime, from any Internet connection, and even on your smartphone.
Like a lot of the recent advances in cloud-based computing and mobile technology, you’ll wonder how you ever got along without it. But it’s more than just cool. Instant, anytime-anywhere access to practice management information is an essential survival tool in the lean new reality of tax and accounting. And so are the reduced IT expenses that come with cloud-based software.
There’s never been a better time to exorcise the skeletons from your server room, particularly with the advances being made in integrated practice management technology. “Good enough” just might be costing you more than you think.
Learn more about what the new generation of integrated practice management software can do.
Herman Cain Wants You to Try the New 9-9-9 Recipe
Godfather of gold ties and GOP Presidential candidate Herman Cain has taken a lot of heat for his 9-9-9 tax plan. While it has a nice ring to it, not too many people are crazy about 9-cubed including his fellow GOP hopefuls, their tax taskmaster Grover Norquist, and every tax wonk within the DC delivery area.
Sensing something needed to be changed, Cain got his economics advisor accountant and whomever else is crunching the numbers to go back to the drawing board. And what did they come up with, you ask? Are they throwing in free bread sticks? Fresher ingredients? A gluten-free crust stuffed with cheese? Nope! That would just cause more confusion, so they just dropped a nine:
For people living under the poverty line, “your plan isn’t 9-9-9, it’s 9-0-9,” Mr. Cain said in a policy speech in Detroit. “Say amen, y’all. If you are at or below the poverty line…then you don’t pay that middle 9” – i.e. the individual flat tax.
Mr. Cain’s bold 9-9-9 plan – which includes a 9% individual flat tax, a 9% business flat tax, and a 9% national sales tax – has helped vault him into the top tier of GOP presidential candidates.
But free bread sticks would still be nice.
Herman Cain Tweaks 9-9-9 Tax to Remove Flat Tax for Poorest Americans [WSJ]
Brits To Give Big 4 the Full Monty
Britain’s top accountants are to have their own books scrutinised after the consumer watchdog referred the business of checking companies’ figures for a full-scale competition inquiry. The Office of Fair Trading (OFT) said it had been concerned for some time that the audit market is highly concentrated with low levels of switching and substantial barriers to entry. The watchdog estimates that in 2010 the “big four” firms, PwC, KPMG, Deloitte and Ernst & Young, earned 99% of audit fees paid by FTSE 100 companies, while between 2002 and 2010 only 2.3% of FTSE 100 firms changed their auditor. [UKPA]
Congressman Jeb Hensarling Still Confused About the Meaning of the Expression “Everything is on the table.”
“Listen, we are not keeping anything off the table but I can assure you we are not bringing tax increases to the table,” he said. [OTM/The Hill]
Accounting News Roundup: Kozlowski Prison Chat; Groupon’s Numbers; Rock, Deloitte, Hard Place | 10.21.11
Dennis Kozlowski Talks Jail, Pay [WSJ]
The former chief executive of Tyco International Ltd. was found guilty in 2005 of looting his employer and sentenced to as much as a quarter century behind bars. Now, he’s suing New York state to win work release and awaiting his first parole hearing in April. Meanwhile, Mr. Kozlowski looks out—across razor wire made by Tyco—at a world where the stumbling economy and scorn heaped on big business have a familiar feel.
Audit Flaws Revealed, at Long Last [NYT]
In theory, the board can put a firm out of business, but since the demise of Arthur Andersen reduced the Big Five to what some call the Final Four, there is general agreement that going to three would be unacceptable. So while the board can credibly threaten to close down a small firm that does a dozen or two audits each year, no such threat would be credible for Deloitte or one of the other three major accounting firms.
Groupon’s Loss Narrows, Spending Declines [WSJ]
As Groupon Inc. prepares for a roadshow next week to woo investors, the daily-deals site filed amended initial-public-offering papers that showed a narrower quarterly loss and a decline in its marketing spending. According to an amended S1 filing, Groupon narrowed its net loss for the third quarter to $10.6 million from $49 million in the same period a year earlier. The Chicago company’s third-quarter operating loss shrank to $239,000 from $56 million a year earlier.
Flat Tax Seen as Savings Booster [WSJ]
A consumption tax “has always been popular, but what makes the notion attractive in some circles now is that we’ve just been through a consumption bubble,” said Alvin Rabushka of the Hoover Institution, a co-author of the first major flat-tax proposal 30 years ago. “I think looking long-term, you’d like to have a healthy balance [of incentives] and a system that doesn’t discourage savings and investment.”
US Senate blocks key Obama jobs measure [FT]
US Senate Republicans and Democrats rejected each other’s economic stimulus bills on Thursday, underscoring their inability to craft a bipartisan solution on job creation before next year’s elections. All 47 Senate Republicans, joined by two of President Barack Obama’s fellow Democrats and one independent, stopped a key piece of Mr Obama’s $447bn economic stimulus plan.
IRS Raises Contribution Cap for 401(k) Plans [Bloomberg]
Taxpayers will be able to set aside an extra $500 in 401(k) plans and benefit from an additional $120,000 estate tax exemption in 2012, under cost-of-living adjustments announced by the Internal Revenue Service. The 401(k) contribution cap will be $17,000 in 2012, up from $16,500 this year. The 401(k) limits also affect contributions to similar accounts, including the 403(b) plans for school employees and nonprofit workers and the Thrift Savings Plan for federal employees.
Deloitte’s Quandary: Defy the S.E.C. or China [DealBook]
Not really much of a choice.
Schwag Watch ’11: Deloitte May Be Implying That Recruits Have Poor Personal Hygiene
Earlier this month our resident big man on campus, DWB, put out a call for all the schwagtacular gear that recruits were snatching up this fall. We didn’t get much for submissions at first but luckily a friend from the north passed along photos that ranged from “a bunch of junk” to Dr. Seuss to a PwC cookie describe as “soft” and “amazing.”
Things have quieted down since then but thankfully, another enterprising young recruit who is right in the wheelhouse of recruiting passed along a couple more pics that include examples of loot from Deloitte and Grant Thornton.
First our tipster’s thoughts on GT’s offering: “The GT cup is ok but the straw is totally useless.” And for the gazillionth time, purple just sucks.
According to our tipster, the Deloitte sanitizer is really the most perplexing item: “I am not sure what to think of Deloitte’s hand sanitizer.”
So what do we make of this? It’s not a surprise that Deloitte isn’t a “If it’s brown flush it down; if it’s yellow keep it mellow” kinda place but what does this bottle of freshness really communicate? Do they simply think college students are unkempt? Is Deloitte making the assumption that all the recruits are applying there because the Occupy movement rejected their applications? Or, since there is fairly new leadership in place, does this speak more directly to the firm’s position on germs in general? Put simply: Are Joe Echevarria and Barry Salzgerg germophobes? I’m inclined to go with option 3 but would entertain other theories.
Happy (Belated) Birthday Grover Norquist!
The Godfather of Tax Policy turned 55 yesterday and since I was traveling, I wasn’t able to send out the well wishes on the day of. Sorry, GGN.
Thankfully, there were plenty of people that weren’t so careless:
You’ve got to think that Grove was expecting something from the ATR scamps. He counts their bagel and coffee consumption, after all. No way they’re missing a birthday. Got any birthday wishes for my fellow Swedish influencer? Leave them below.
Caption Contest Thursday: Deloitte’s Shade of Blue Looks Very Familiar
Deloitte CEO Joe Echevarria and former President Bill Clinton at the Middle Market Perspectives Event in New York.
Accounting News Roundup: Rick Perry Wants Fewer Words; Back to the Future of CPAs; Justifying Class Warfare | 10.20.11
Perry Takes Up Flat-Tax Banner [WSJ]
The Texas governor said in a speech Wednesday to the Western Republican Leadership Conference in Las Vegas that he would lay out details of a flat-tax plan that “starts with scrapping the three million words of the current tax code, and starting over with something much simpler: a flat tax.”
Protests Show Capitalism ‘Nearly Broken’ [Bloomberg]
The protesters camping in London in support of the Occupy Wall Street d right and capitalism risks losing its “license to operate,” Generation Investment Management LLP’s David Blood said. Blood, who worked at Goldman Sachs Group Inc. (GS) for 18 years before starting fund manager Generation with former U.S. Vice President Al Gore in 2004, said the protesters’ message is that the financial system is “broken” and “unfair.”
Groupon Discounts IPO [WSJ]
The Chicago company and its bankers will begin meeting with investors in the next few days to sell them on a deal that values the daily deals pioneer at less than $12 billion, according to people familiar with the matter. While that would still mark one of the biggest Internet IPOs since Google Inc. in 2004, it is well below the valuations that were bandied about when the company filed to go public in June.
JetBlue Falls After Finance Chief Quits Week Before Earnings [BBW]
JetBlue Airways Corp. fell the most in two weeks after Chief Financial Officer Ed Barnes resigned ahead of the carrier’s earnings report. Barnes’s departure, effective immediately, was announced after the stock market closed yesterday. The resignation was a “personal decision” that had been planned for some time, said Mateo Lleras, a spokesman for New York-based JetBlue.
Certified Management Accountant Exam Offered in Chinese [AT]
“For nearly 40 years, the CMA certification program has been the globally-recognized credential for accountants and financial professionals in business, through an exam assessment, continuing education, and compliance with the highest ethical standards,” said Dennis Whitney, ICMA senior vice president, in a statement. “Following the success of the revised two-part CMA exam curriculum in English, we are pleased to offer the exam in Simplified Chinese.”
Citigroup to Pay $285 Million to Settle Fraud Charges [WSJ]
Wall Street’s total price tag on settlements with U.S. securities regulators for allegedly misleading investors about mortgage bonds churned out ahead of the financial crisis surged past $1 billion with a deal by Citigroup Inc. to pay $285 million. he New York company agreed to the payment to end civil-fraud charges by the Securities and Exchange Commission related to a 2007 deal called Class V Funding III. The SEC claimed Citigroup sold slices of the $1 billion mortgage-bond deal without disclosing to investors that the bank was shorting $500 million of the deal, or betting its assets would lose value.
CPA Horizons 2025: A Road Map for the Future [JofA]
Good news: you won’t be extinct.
Is Class Warfare Justified? [Tax.com/Martin Sullivan]
Maybe!
Grover Norquist defends no-tax pledge [Politico]
Aka: “Dog Bites Man.”