When accounting goes unaccounted for
Tweeth John Carney:
Board spokeswoman Colleen Brennan didn’t answer her phone, so we can only assume everyone is still filing back in or just turning this into a nice opportunity to grab the afternoon pick-me-up. If your office was evacuated, tell us below.
UDPATE: she does have email, thank the maker, and she responded to us so we assume everything is hunky dory. We’ll keep you updated with other news.
Welcome to the East Coast Earthquake edition of Help! My Accounting Career Is Doomed! In today’s edition, a young auditor is curious how much of an advantage a good golf game will give you on the road to partner/CFO. Not honed soft skills. Not a preternatural talent for Microsoft Excel. A laser-straight drive and wicked short game.
Are you one of those bounders? Looking to come up some ambitious career goals? Skeptical of your co-worker’s charm? Email us at advice@goingconcern.com and we’ll put together a quick psych profile.
Back to our young duffer:
Konnichiwa,
I am a first year audit employee for a large accounting firm. My question is this; how much does your golf game factor into your ascent to partner, or perhaps ascent to CFO after jumping ship to a private company? Thank you.
Sincerely,
Not Tiger Woods
Dear NTW,
I’ll try to articulate my thoughts on golf as succinctly as possible for you: IT’S STUPID. The clothes are stupid (it’s double stupid that people can wear an outfit to work that also functions as a golf outfit). The rules are stupid. The announcers are stupid. The fact that you even have to ask this question is stupid because it just goes to show how shallow the accounting industry can be. “You’re a scratch handicap? Great! We’ve got some WASPy clients that value someone who knows their way around a double-dog leg par 5.” STUPID.
But back to your question – how much does exceptional short game combined with dazzling iron play factor in putting you on the fast track to partner? Simply put: Zero. Zero times Zero. Zero cubed. ZERO FUCKING INFINITY. On the scale of importance, your golf game ranks far below your ability to actually do something productive and far, far below your personal hygiene. Will it function as a nice ice-breaker with your senior/manager/partner who is also interested in what Davis Love III shot over the weekend? Possibly but will they think, “Ol’ Joe has some game, let’s promote him!”? HELL NO. If that does happen at your firm, then you work for shallow assholes. I’ve seen above-average employees with exceptional golf games get passed over for promotion. I’ve seen above-average employees with exceptional golf games get laid off. IT. DOES. NOT. MATTER. if you can shoot in the 60s on a regular basis. Plus, what the hell are you doing at an accounting firm if you can shoot scores like that?
How golf became one of those things that “makes a difference” is beyond me but it has sure fooled a lot of people. In reality, golf is one of those things that accounting professionals think will give them a leg up on the guy who prefers to practice Brazilian Jiu Jitsu but in reality that guy is WAY SMARTER than you and, believe it or not, that still counts for something.
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This morning we learned that H&R Block would be selling RSM McGladrey to McGladrey & Pullen for $610 million. This reunion of the two firms is interesting because just a couple of years ago they couldn’t stand the sight of one another. These days, you might conclude that since they opted to rebrand under the name “McGladrey” that everyone has kissed and made up but we all know better.
In all likelihood, there are partners on both sides who would rather set their CPA certificates on fire than work with the other side. The problem for the partners in these firms is that they probably had little choice in the matter, as H&RB seemed intent on cutting off the weak link:
[T]he top U.S. tax preparer looks to jettison the underperforming division and focus on its core business. H&R Block will finance about $65 million of the deal value as it looks to push through the sale of RSM McGladrey.
[…]
In June, H&R Block’s new Chief Executive William Cobb told analysts that RSM’s falling profit and revenue were a drag on the company’s earnings, and that the unit and its troubles were on his “radar screen.”
“(The sale) should improve overall corporate margin, as Tax Services margin in FY11 was 27.1 percent and RSM McGladrey’s was 9.3 percent,” Oppenheimer analyst Scott Schneeberger said in a note to clients.
And despite the Blockheads eagerness, the gang at M&P seems perfectly okay with it. From the firm’s press release:
“The Board’s objective is to reunite the assurance, tax and consulting practices under an integrated McGladrey & Pullen partnership structure,” said Jerry Bourassa, Chairman of McGladrey & Pullen’s Board of Directors. “The anticipated transaction will not impact the quality and timeliness of services to our clients. Our partners and employees remain focused on meeting and exceeding client expectations.”
[…]
“This is all about what we believe to be in the best interests of our clients, our employees and our partners. We see great opportunities for success and growth for McGladrey & Pullen as a firm reunited in a traditional partnership structure,” said Joe Adams, Managing Partner of McGladrey & Pullen. “Our relationship with H&R Block has served us very well but we both agree that it is time to move on.”
So it sounds like there may be cake and punch but it probably won’t be a lively affair.
Of course we’d rather hear from the people on the ground (i.e. the McGladrey partners, employees, Natalie) about what they make of this shitstorm. I can’t imagine anyone missing the used car dealership of the tax prep world but is this reunion going to work? Will C.E. and the gang now be able to turn Mickey G’s into the next accounting powerhouse? Can we get one name for the combined firm, for crissakes? All important questions. Please enlighten us below.
H&R Block to sell consulting unit for $610 mln [Reuters]
McGladrey & Pullen, LLP signs letter of intent to acquire RSM McGladrey, Inc. [McGladrey]
Ed. note: Willing to take some advice from three strangers and peanut gallery full of overworked, underpaid paper pushers (aka spreadsheet jockeys)? Email us at advice@goingconcern.com with your problems.
Hi!
First I just want to say that this website made all the down time during my Big 4 internship bearable!! Seriously, there are no words to express my gratitude!
I’ve learned a lot from your site, and I’m kinda hoping you can give me some advice…
Right now I have a full time job offer in Tax, but lately I’ve been questioning if this is the right move for me.
Honestly, I don’t think I can handle more than 3 years of public accounting, so I was wondering what job opportunities there are in the private sector for tax professionals with only two to three years of public accounting experience? (I feel like the focus is usually on audit, so I’m finding I don’t really know a lot about the tax world outside of the Big 4).
Also, I would eventually love to work for a nonprofit…would I have better luck at finding a job in this sector with an audit or advisory background, as opposed to tax?
Thanks a million!!!!
Clueless
Dear Clueless,
Thanks for stopping by GC this summer and squeezing us into your “busy” internship days. (Shameless plug – remember to talk about this site when you return to campus this fall. We’ll be talking about recruiting on a regular basis).
Let’s assume that you are going to accept the offer for Big 4 tax. Maybe you have an MS in tax. Maybe there are not any audit positions available for campus hires. Maybe you have a crush on the lead engagement partner. Not my biz. Whatever your situation, you should be focusing on making yourself as merlo-rounded as marketable as possible. A few ideas:
1) CPA – Not even a question. Get it done immediately.
2) Request an audit rotation – As you experienced this summer, there are times when things get a bit slow for tax professionals. Request short term rotations into audit where you can receive additional exposure. This will be marginally easier to do if your CPA is already completed.
3) Seek out non-profit clients – It does not matter if your experience is on the audit or tax side; the goal here is to receive client exposure for a look at the culture/business model/workplace environment at some of your local NFP’s.
4) Volunteer – If NFP clients are not an option, try to find time in your schedule to volunteer. Like any new job possibility, you should research what life is like at a non-profit before jumping into the career move.
As for private sector jobs, with 2-3 years tax experience you’ll have little trouble, as many businesses are trying to do more tax work in-house as opposed to contracting it out to their CPAs. I’d encourage you to stick it out until Senior Associate if you can, since this will give you ample opportunities outside the firm (and maybe a nice get-away). Good luck.
GCers – your thoughts?
H&R Block selling RSM for $610 million [MW]
H&R Block Inc. said on Tuesday that it is selling its RSM McGladrey unit to McGladrey & Pullen, LLP for $610 million. The firm said the deal will result in a $53 million, or 17 cents a share, after tax charge to s expected to close by the end of the year.
Tax Break for Clergy Questioned [WSJ]
As Congress scrutinizes every nook and cranny of the budget for possible revenue, a surprising court decision is allowing clergy members to buy or live in multiple homes tax-free. The U.S. Tax Court ruled that Phil Driscoll, an ordained minister and Grammy Award-winning trumpeter who went to prison for tax evasion, didn’t owe federal income taxes on $408,638 provided to him by his ministry to buy a second home on a lake near Cleveland, Tenn. Under a provision of the tax code known as the parsonage allowance, first passed in 1921, an ordained clergy member may live tax-free in a home owned by his or her religious organization or receive a tax-free annual payment to buy or rent a home if the congregation approves.
Obama Talks to Buffett About Economy [Bloomberg]
“The president and Mr. Buffett discussed the overall outlook on the economy and the reaction to the headwinds we’ve experienced over the last couple of months,” said Josh Earnest, an administration spokesman. “They talked a little bit about some possible measures that would spur investment and increase economic growth and they also talked about some measures that could address the long-term fiscal situation in this country.”
Mandatory Auditor Rotation: If PCAOB Sanctions Were “Case-By-Case” [Re:Balance]
JP: ” [I]f the PCAOB can sustain its proof that long audit tenure was causally related to its definition of “audit failure,” it could include rotation in its toolkit of post-inspection sanctions.”
Hate Your Job? It May Run In the Family [WSJ]
Sayeth a new study.
Sharma to step down as S&P president [FT]
Deven Sharma is stepping down as president of Standard & Poor’s only weeks after the rating agency issued an unprecedented downgrade of the credit of the US, the company said. Mr Sharma will remain as an adviser to S&P’s owner, McGraw-Hill, for four months and leave the company at the end of the year. He will be replaced as S&P president by Douglas Peterson, chief operating officer of Citibank, the banking unit of Citigroup.
Satyam Gets $463.3 Million Tax Notice [WSJ]
India’s Satyam Computer Services Ltd. Monday said it has received a preliminary draft notice from local authorities for a tax claim of 21.13 billion rupees ($463.3 million) disallowing the exemptions claimed by the company and dealing a setback to its attempt to recover from a fraud in 2009.
With firms, anyway.
It’s been quite the year for the Chinese-based, reverse-merger clients of accounting firms. There have been curious press releases, audit workpapers held hostage, and the run-of-the-mill blowing off of auditor recommendations among other things. With all that, you probably figured the fun was over.
Not so! The latest in China-doesn’t-really-know-what-the-hell-it’s-doing news is the report that Ernst & Young has walked out on Zungui Haixi, an athletic footwear and apparel company listed in Canada. Why? Well, it’s not really clear but it sounds like Zungui has some explaining to do:
Zungui said auditor Ernst & Young LLP has advised its board that its has suspended its audit for the year ended June 30, 2011, until the company “clarifies and substantiates its position with respect to issues pertaining to the current and prior year”.
Ernst & Young recommended that the issues identified be addressed by an independent investigation, the company said in a brief statement that did not provide any details on the issues.
As we all know, “issues” could be just about anything from missing cash, to a CFO resigning. Hopefully it’s nothing quite so serious and the crack squad of investigators assigned to the task will get to the bottom of it and not wait for Roddy Boyd to pick it up.
Zungui Haixi shares tumble after E&Y suspends audit [Reuters]
Perhaps it’s no accident that Joe Echevarria’s Q&A dropped in the Journal today because we also had the good fortune to have the list of new partners and directors forwarded to us earlier today. We still waiting for confirmation of the details from various Deloitte PR folks so we won’t give you names but we’re sharing a number of cities and practices after the jump.
Altogether there are 144 new partners and 190 new directors for fiscal year 2012. These numbers vary a little bit with our first report of the new partner numbers from a few weeks back. In that post, our tipster informed us that had there were 146 partners and 180 directors. These differences, for our purposes, are deemed immaterial, although we’re sure anyone directly affected would disagree.
Partners
AERS: 55 Total. Cities with the largest numbers of promotees: New York – 12; Chicago – 4; Wilton, CT – 4; Los Angeles – 3; Dallas – 3; San Francisco – 2; Orange County -2.
Consulting: 48 Total. Big winners: Atlanta – 5; Chicago 5; San Francisco – 5; Los Angeles – 4; New York – 3; Orange County – 3; Kansas City – 3; Boston – 3; Arlington – 3.
FAS: Six total: New York – 3; Dallas – 2; Los Angeles – 1.
Tax: 32 Total: New York – 6; Chicago – 5; Houston – 3; Washington – 3; Atlanta – 2.
USA: Three total: Atlanta, Washington and New York each had one.
Directors
AERS: 56 total. Show-off cities: New York – 14; San Francisco – 3; Cleveland – 3; Salt Lake City – 2; Princeton – 2; Philadelphia – 2; Parsippany – 2; McLean – 2; Chicago – 2.
Clients & Industries: Six total: New York – 3; Philadelphia, Charlotte and San Francisco all had one.
Consulting: 53 total. Notables: San Francisco – 6; Chicago – 6; New York – 5; Atlanta – 3; Boston – 3; Minneapolis – 3; McLean – 3; Washington – 3.
FAS: Four total – Washington 2; New York and Chicago – 1.
Field Operations: Two – Atlanta and Hyderbad
Finance: A pair in Hermitage, TN.
Markets & Offerings: Two in Chicago and nine cities with one each.
Other Shared Services: One lonely soul in Wilton, CT.
PR/Communications: One in New York and one in Wilton.
Research/Innovation: Hermitage and Wilton with one each.
Strategy, Brand and Innovation: One happy camper in Los Angeles.
Talent: One each for Chicago, Parsippany, Boston and Indianapolis.
Tax: 38 total: Chicago – 7; New York – 5; San Francisco – 4; Atlanta – 2; Boston – 2; Los Angeles – 2; Philadelphia – 2.
Tech: One each for New York, Camp Hill, PA and Hyderbad
USA: One soul in Stamford, Rosslyn, Arlington, Richmond and Wilton.
So congratulations to all the new partners and directors. Leave them some well wishes in the comments. The only question now is, which one of these rainmakers is buying Joe’s house?
The Associated Press is reporting that some Republican Members of Congress are fighting their natural inclination to extend all tax cuts to infinity. The tax cut at risk of expiration is employees’ share of the social security tax of 6.2%. Last year the rate was cut to 4.2% for one year. President Obama would like to extend this cut, while some aren’t so keen on it.
But wait a minute! Doesn’t this go against every fiber of Republican orthodoxy? Won’t Ronald Reagan be spinning in is his grave? Did Grover Norquist’s marching orders get lost in the mail?
Republicans say no, as this position is “consistent with their goal of long-term tax policies that will spur employment and lend greater certainty to the economy.”
Okie dokie, then. But if that’s the case, it’s a little strange to discover that House Speaker John Boehner hasn’t made up his mind on whether to extend this tax cut (or put another way “raise taxes”). Perhaps, that’s because he’s already said that tax hikes are off the table. So what gives?
Fortunately, we have Texas Representative Jeb Hensarling to explain it to us:
“It’s always a net positive to let taxpayers keep more of what they earn,” says Rep. Jeb Hensarling, “but not all tax relief is created equal for the purposes of helping to get the economy moving again.”
So wait…not all tax cuts are effective at “getting the economy moving”? Is that what he’s saying? Or is this simply an Animal Farm approach to tax policy? Grover needs to get involved ASAP so everyone can get on the same page. The troops seem confused.
GOP may OK tax increase that Obama hopes to block [AP via BI]
The Wall St. Journal published a little Q&A with Deloitte CEO Joe Echevarria today to get an idea of what’s been going on since he took the reins as the head of the U.S. firm. It’s been nearly 100 days since JoeE got the nod and the flaks at Deloitte probably felt as though it was as good of a time as ever to roll out their new man.
Oddly enough, it’s been about 30 days since we told you that JE’s Westchester home was up for sale and since none of you cheapskates have bothered to help him out, this gives us the opportunity to remind you that it’s still up for grabs.
Anyway, this Q&A. It’s about what you might expect – but we’ll try to jazz it up for you.
For starters, did you know Joe worked at gas station in the Bronx? Yes, he’s already tougher than you’ll ever be. But while he was washing windows and filling up the locals, he noticed that the accountant didn’t seem to do diddly squat and made WAY more money than he did:
What stood out to me was I worked all day and I was making whatever minimum wage was at the time. The accountant came into the gas station once a month, did something, and walked out with a lot more money than I made in a week.
Back when Joe started at the firm, things were a lot different. For example: email. What is this fancy crap?:
I started at Haskins & Sells, the predecessor to Deloitte. I started in the audit practice. All the tasks were hierarchical in those days, so you had to work your way up. We weren’t in an environment where everything is electronic. We had to get mail. It didn’t just come over some laptop.
In his first 100 days, what’s been Joe’s biggest accomplishment? Making important leadership appointments? Overseeing the consolidation of regions? Nope. Listening to partner complaints:
One of the goals we’re beginning to accomplish is having a conversation. We opened up a communication vehicle with our partners and our directors that I call Social CEO. It gets the partners to engage, open dialogue, ask survey questions and ask questions of me or others. I get every comment.
How about this economy? We might be looking at a double-dip which could have some Green Dotties a little worried. But have no fear, Joe & Co. are all over it:
Once upon a time there was a view that there would be a rebound. I would say now the probabilities of a rebound are diminishing and the probability of a double dip is increasing. We have a set of plans that we would undertake for any of those scenarios. This isn’t new for us.
And if those plans don’t go as they should, there won’t be too many sad faces:
The first thing is we look at the costs that we incur and how much ahead we’re hiring. Maybe 18,000 [new hires] becomes 17,000.
See? No cause for concern.
Web Surfing Helps at Work, Study Says [WSJ]
Don’t feel guilty about browsing the Internet at work—turns out it may actually improve your performance. According to a new study, Web browsing can actually refresh tired workers and enhance their productivity, compared to other activities such as making personal calls, texts or emails, let alone working straight through with no rest at all. The study, “Impact of Cyberloafing on Psychological Engagement,” by Don J.Q. Chen and Vivien K.G Lim of the National University of Singapore, was presented last week in San Antonio, Texas, at the annual meeting of the Academy of Manage of management scholars.
Corporations pushing for job-creation tax breaks shield U.S.-vs.-abroad hiring data [WaPo]
Some of the country’s best-known multinational corporations closely guard a number they don’t want anyone to know: the breakdown between their jobs here and abroad. So secretive are these companies that they hand the figure over to government statisticians on the condition that officials will release only an aggregate number. The latest data show that multinationals cut 2.9 million jobs in the United States and added 2.4 million overseas between 2000 and 2009.
My Response To Buffett And Obama [WSJ]
Harvey Golub: “Over the years, I have paid a significant portion of my income to the various federal, state and local jurisdictions in which I have lived, and I deeply resent that President Obama has decided that I don’t need all the money I’ve not paid in taxes over the years, or that I should leave less for my children and grandchildren and give more to him to spend as he thinks fit. I also resent that Warren Buffett and others who have created massive wealth for themselves think I’m “coddled” because they believe they should pay more in taxes. I certainly don’t feel “coddled” because these various governments have not imposed a higher income tax. After all, I did earn it.”
Romney plans to quadruple size of Calif. home [WaPo]
A Romney campaign official confirmed the report, saying the Romneys want to “enlarge their two-bedroom home because with five married sons and 16 grandchildren it is inadequate for their needs. Construction will not begin until the permits have been obtained and the campaign is finished.”
File Under Regulatory Capture: Deloitte’s “Fireside Chats” [Forbes]
Apparently the SEC has a historical society.
Accounting Reform, Sans the Reform [The Street]
Sweeping reforms of the accounting industry are being discussed, but whether they will survive industry lobbying efforts remains to be seen. Ask the Financial Accounting Standards Board (FASB), which helps define the rules about what companies report, or the Public Company Accounting Oversight Board (PCAOB), which keeps an eye on the auditors, about any particular trouble area and they’ll point to a new rule or a speech as evidence they are on the case. Given recent history, however, it is hard to take them seriously.
Michele Bachmann’s ‘war’ on the IRS [WaPo]
Rep. Michele Bachmann (R-Minn.) used to work as a lawyer for the Internal Revenue Service. Now she’s running for president and discovering, apparently, that not everyone loves the IRS. So this week she came up with a novel explanation for the principal job she’s held outside of elected office. “I went to work in that system because the first rule of war is ‘know your enemy,’ ” Ms. Bachmann told a crowd in South Carolina [last] Thursday.
Big news this year boys and girls! PwC jumped E&Y this year in IPA’s list. Other notable moves are the result of mergers including Dixon Hughes Goodman and EisnerAmper. Previous year’s ranking is in parenthesis.
1. (1) Deloitte
2. (3) PwC
3. (2) Ernst & Young
4. (4) KPMG
5. (5) McGladrey
6. (6) Grant Thornton
7. (7) CBIZ/Mayer Hoffman McCann
8. (8) BDO
9. (9) Crowe Horwath
10. (10) BKD
11. (11) Moss Adams
12. (12) Plante & Moran
13. (20/33) Dixon Hughes Goodman
14. (13) Clifton Gunderson
15. (24/27) EisnerAmper
16. (15) Marcum
17. (14) Baker Tilly Virchow Krause
18. (16) J.H. Cohn
19. (18) LarsonAllen
20. (19) Reznick Group
21. (17) UHY Advisors
22. (21) ParenteBeard
23. (22) Rothstein Kass
24. (23) Eide Bailly
25. (25) WeiserMazars
If you want to peruse the rest of the list, check it out here.