Author: Caleb Newquist

Founding editor, Going Concern.

Big 4 Aspirant Wants Help Choosing a City

Welcome to the way-to-double-bogey-18-Phil edition of Accounting Career Emergencies. In today’s edition, a prospective Big 4 associate wants help deciding between a large or mid-market city. Let’s see what we can do to get her out of the sticks.

Have a spotty past that may hurt your career aspirations? Need help spending some tools? Email us at advice@goingconcern.com and we’ll point you to some sharper folks.

Meanwhile, back on the farm:

Hello,

I am preparing for recruiting season this Fall, and I attend a heavily-recruited university on the east coast. Recruiters from the Big 4 (as well as other firms) recruit nationally from my school, so I pretty much have my pick of what city I would like to work, if I were to get hired by one of them. I know that they ask us for our preference in location, and that is my current dilemma – I am not sure yet which one to pick.

I know for sure that I want to leave my current city, as it is mostly a college town. I have family in both Miami and Phoenix, so I am considering those options, but those are middle markets. My dream has always been to live in a big city, so I am considering NYC and possibly Chicago. Obviously there are big differences in size, both in terms of number of employees and clients. However, I have no family in any large city, so I would have to live on my own or find a roommate. But wouldn’t working in a bigger city provide me with a greater advantage, career-wise? There are a lot more possible clients and industries to pick from when you work out of a large city. I would really like to know the advantages and disadvantages of working in a middle-sized office versus a really large one (Big 4 firm specifically). I would truly appreciate any feedback that you may have on this matter – maybe even post it as a blog on the website so that the readers can share their insight.

Dear Big City Dreamer,

Live on your own?! Roommate?! Is it possible that you’re becoming an adult? That may have a – gasp – job in the very near future? This can all be very scary, I realize so I’ll stop with the jokes…for now. Lucky for you, I’ve lived and worked in both a mid-sized and a large city, so I’ll share my personal experience and then we’ll throw it to the group.

When choosing where to live it’s important to know what you want to get out of that city. You’re going to be living there after all and believe it or not, you will have free time occasionally to do some things other than work. You say that living in a big city is your “dream” so I’d encourage you to go for a big market so you can enjoy everything that they offer. I lived and worked in New York for about two years and while the hours were long, I still had the great opportunity to experience everything the City has to offer. Plus, I made a lot of cool friends in a part of the country where I didn’t previously know anyone. Professionally speaking, it’s true that you’ll be exposed to a wider variety of clients and a bigger network of people. All good things for someone who’s looking for options.

The main disadvantage to a larger office is that it’s easy to get lost in the shuffle. If you’re not hell-bent on being Ms. PwC, just want to do your job and go enjoy your life outside of work, sometimes that can work against you. It’ll be important for you to foster good relationships with people that will go to bat for you when it comes to performance reviews and staffing you on clients. If you’re always billing and you’ve got a good relationship with your superiors, you should be fine. If you find yourself floating around, you may end up being a name no one recognizes and that makes you expendable.

A mid-sized office, on the other hand, is a little more familial. You’ll get to know everyone, including the support staff who can be lifesavers when you inevitably find yourself in some kind of jam where they can help. Mid-sized cities can be fun because they have a different feel from the big city. Denver, for example, has a great music scene and amazing weather so you spend a lot of time outdoors. No, you don’t have the Met or a grip of five-star restaurants but you make the most of wherever you go.

The main problem with a smaller city is that because it can feel familial, there’s always familial problems. It can feel a little bit like high school at times and most people will know your business one way or another. If there’s a beef amongst team members or someone else, EVERYONE WILL KNOW ABOUT IT. Also, because line-of-business groups are smaller, it can make the promotion process and the internal politics a little trickier. There are fewer clients to chase and so the higher up you go, the fewer manager and partner spots are available. As a staff you won’t really be affected by this but if you want to stay with your firm for awhile, it may become an issue later.

Ultimately, go with your instincts. If you want to live in New York, Chicago, Los Angeles, you should go for it. You’re young and eager, so you may as well use that high energy on those high-energy places now. Good luck.

Marc Jacobs Says Former CFO Was Fired Because He Was Cooking the Books Not Because He Complained About a Pole Dance, All the Porn Floating Around

Marc Jacobs International claims that its former COO and CFO, Patrice Lataillade, got a little fancy with the company’s numbers in order to give himself “hundreds of thousands of dollars” in bonuses. The Post reports that court documents state that audits revealed “false and inflated entries” for about $20 million or so. The company says Lataillade was fired from his job for all this financial hocus pocus,

This all came out because Lataillade sued the company alleging that he was fired for entirely different reason altogether. Apparently MJI co-founder and President Robert Duffy likes to have a little fun around the office that wasn’t appreciated by everyone, namely Mr. Lataillade.

“Examples of Duffy’s conduct which created a hostile work environment include his displaying gay pornography in the office and requiring employees to look at it; his production and dissemination of a book which includes photos of MJI staff in sexual positions or nude; his requirement that an MJI store employee perform a pole dance for him,” the suit said.

Accounting/finance types can be get a little stuffy, that’s a given but seeing co-workers in various compromising positions and/or working a pole at the boss’s behest could make for some awkward looks/conversations later. Not that it excuses running through some bullshit journal entries for your own personal financial benefit but I suppose there may be a legitimate beef in there.

Marc Jacobs COO fired for ‘cooking books’ not harassment: court filings [NYP]

Accounting News Roundup: China Regulator ‘Aware’ of Sketchy Accounting at Chinese Companies; More on PwC’s Win in 9th Circuit; No Riots After IFRS Adoption in Canada | 06.17.11

China Regulator ‘Aware’ of Concerns on Chinese Firms’ Accounting [Bloomberg]
“We have been in touch with other foreign regulators regularly as usual,” Yao Feng, deputy director general of the CSRC’s department of accounting, said today while attending a conference held by the Hong Kong Institute of Certified Public Accountants. “We are aware of the concerns.”

PricewaterhouseCoopers Will Go To Trial In California Overtime Case [Forbes]
Francine’s take on this week’s decision in the 9th Circuit.

Ramseyer & Rasmusen: IRS Had No Authority to Waive NOL Rules for GM [TaxProf]
GM did not make many cars anyone wanted to buy, but it did have $45 billion in NOLs. Unfortunately for the firm, if the Treasury now sold the stock it acquired in bankruptcy it would trigger those § 382 NOL limitations. Suppose the newly reorganized GM did start making cars that consumers wanted. It would be able to use only a modest portion of its old NOL’s — if any.

House Panel Endorses Budget Cuts at IRS, Consumer Bureau [Bloomberg]
A U.S. House Appropriations subcommittee approved a spending bill that would cut funding for the Internal Revenue Service, limit the budget of the Consumer Financial Protection Bureau and deny a spending increase sought by the Securities and Exchange Commission. The $19.9 billion bill was approved today in Washington on a voice vote by the subcommittee on financial services and general government, and heads to the full committee. It includes funding for the Treasury Department, the White House, the District of Columbia, the federal courts, the Consumer Product Safety Commission and the General Services Administration.

No Parties After IFRS Adoption in Canada [CFO Journal]
If U.S. regulators want to get a sense of what the transition to International Financial Reporting Standards might be like, they may only have to look to their neighbors to the north where companies were required to switch from Canadian GAAP this year. But they should be prepared for some rather negative reviews.

IFRS doubters stung by government audit report verdict [Accountancy Age]
Haters gonna hate. Or something.

Plaintiff in PwC Overtime Lawsuit Made a ‘Serious Error’ on One Engagement, Was Eventually Fired for Poor Performance

Yesterday we learned that the 9th Circuit Court of Appeals ruled in favor of PwC in the matter of Campbell v. PricewaterhouseCoopers, the wage and hour class-action lawsuit filed in California. It’s a pretty major win for P. Dubs and the decision remands the case back to district court for trial. I was skimming over the 9th Circuit’s Decision in case over at Leagle and found some interesting things that I thought were worth sharing including some details about the named-plaintiff’s performance. The following anecdote seems to support the firm’s argument that unlicensed associates must “exercise discretion and independent judgment” and if they don’t, they will be held responsible:

PwC […] argues Plaintiffs perform analytical work “integral” to PwC’s Attest services. To the extent Plaintiffs do not regularly exercise discretion and independent judgment during an audit engagement, PwC says they are failing to meet the firm’s expectations. PwC emphasizes the variety of duties performed by Plaintiffs during an engagement and claims the failure to perform those tasks adequately can have “significant consequences” for PwC’s clients. During one engagement, for example, named-plaintiff Campbell overlooked approximately $500,000 in the client’s unrecorded liabilities. This oversight, which Campbell himself described as a “serious error,” was ultimately discovered by another team member. The error required a late financial adjustment and made the client unhappy.

While working for PwC, Campbell and Sobek each received some criticism over their job performance. In addition to the mistake described above, Campbell earned a “Less Than Expected” rating during his 2006 annual performance review. Sobek received the same rating during her 2005 review. More generally, PwC alleges both named-plaintiffs consistently fell below the firm’s expectations for Attest associates.

Campbell was terminated by PwC in 2006 for poor performance. Sobek resigned from the firm that same year.

Obviously just because Jason Campbell and Sarah Sobek both had performance ratings of “Less Than Expected” and that Mr. Campbell was fired does not mean that all 2,000 members of the class-action were of similar ratings. Regardless, it’s an interesting little nugget of information that we were not previously aware.

The rest of the opinion is pretty analytical, labor law stuff, so if you’re into that, the whole thing is worth a read, otherwise you can discuss as you wish below.

If You Thought Grover Norquist Was Done with Tom Coburn Just Because He Got Some Republicans to Vote for the Ethanol Tax Credit Repeal, You’d Be Wrong

As we’ve mentioned, the scourge of tax policy pragmatism, Grover Norquist, has been battling anyone that utters a word about raising taxes or eliminating tax credits without corresponding tax cuts. His main nemesis in this battle has been Oklahoma Senator Tom Coburn, who was a member of the Gang of Six until he was determined the gang couldn’t get jack squat accomplished.

Today, a vote was held in the Senate that repealed the tax credits for ethanol, something that Coburn has been advocating strongly to his GOP colleagues. The idea has been floated that many Republicans who signed Americans for Tax Reform’s Taxpayer Protection Pledge would be violating said pledge by voting for the repeal, and thus incur the wrath of Grover & Co. Yesterday, Norquist insisted that the vote for the repeal isn’t a pledge violation because Senator Jim DeMint (R-SC) has an estate tax repeal waiting in the wings that would allow these Republicans to atone for their sins and thus making Coburn a loser again:

“Coburn tried. He failed. I’m sure he’ll try again,” Norquist told The Hill, asserting that Coburn had tried to trick his colleagues into voting for a tax increase. “We checkmated him.”

As we said Coburn did try again and now that the ethanol tax credit repeal has passed, Norquist will be counting on those senators wash away their ‘impure thoughts’ with a vote on DeMint’s amendment and allowing he and ATR to prevail once again, like the Roadrunner over Wile E. Coyote or Ronald Reagan over Communism.

He added that he had commitments from Senate GOP leadership to not agree to a deal with what he calls a net tax increase: higher rates or ending tax expenditures without an offset.

“Coburn’s going to be out in the cold by his lonesome,” Norquist said.

Senate kills off ethanol tax credits in possible break with tax pledge [E2 Wire]
Norquist denies he has lost momentum in tax scrap [On the Money]

(UPDATE) Can Anyone Make Sense of Ernst & Young’s Hiring Numbers?

I’ve been out of the numbers game for awhile now but for the life of me, I can’t figure out just how many people Ernst & Young will be hiring off campus for this year. Or is it last year? The firm put out a press release yesterday that states that it “will hire approximately 5,000 students from campuses across the US in the 2010-2011 academic year.” That’s all fine and good but it’s different from the report in CNN back in March that we told you about that said “It’s looking to hire 7,000 employees from college campuses — 4,500 full-time and 2,500 interns […] in 2011.”


That report also stated that “campus recruits are up 20%,” but yesterday’s press release said “campus hiring [increased] 25 percent from last year.”

All told, E&Y and the rest of the Big 4 are hiring lots of people but the numbers don’t quite add up. The nice folks at E&Y are trying to help me out, so I’ll report back when I’ve got some answers.

UPDATE: I’ve been informed by an E&Y spokesperson that “numbers referenced in the release are for the US, whereas the numbers cited in the Fortune article are for the Americas.” To clarify, the “Americas” includes the U.S., Canada, Mexico, Central America, South America, Bermuda, the Bahamas, the Cayman Islands and the Caribbean.

[via Ernst & Young]

Paul Ryan: Payroll Tax Cuts Are Economic Red Bull

The Hill reports that Congressman Paul Ryan isn’t interested in getting the economy all hopped up like an adolescent trying to cram for a mid-term,“I’m not a Keynesian, so I don’t think sugar-high economics works.”

And that this discussion is old hat, “We’ve sort of proven this already, a number of times. Temporary tax rebates don’t work to create economic growth. Permanent tax changes do.” [The Hill]

Happy Birthday Phil Mickelson!

His Leftyness turns 41 today, as one of the favorites of the U.S. Open and of course he’ll be rocking the KPMG lid. As fans of the links know, Phil seems to come apart at the seams at the Open, not unlike certain KPMG audits. Will this year be different?

Who knows! What we do know that today is Fill’s day of birth and we send him best wishes and best of luck in the Open. Wouldn’t that be a great send off for Tim Flynn? Not that Mick needs the added pressure.

Anyway, as is (what we imagine to be) tradition for the major tournaments, T Fly and John Veihmeyer are holed up in the executive conference room watching the tournament as the rest of you are probably trying to make heads or tails of the Next Level training.

ANYWAY, leave Phil some well wishes in the comments. Don’t worry, we won’t make mention of this again, unless something hat-related occurs.

Accounting News Roundup: What Will Audit Changes Accomplish?; Rangel Dumped Vacation Home; To Catch an Accountant | 06.16.11

Europe Faces ‘Lehman Moment’ as Greece Unravels [Bloomberg]
The European Union’s failure to contain the Greek debt crisis is sending fresh shockwaves through currencies, money markets, equities and derivatives. The euro lost more than 2 percent against the dollar in the past two days and the cost of protecting corporate bonds soared to the highest level since January, with credit-default swaps anticipating about a 78 percent chance that Greece won’t pay its debts. Equities declined around the world, while a measure of fear in fixed-income markets jumped the most since November.

What Should Be Int? Would Users Know When They Saw It? [Re:Balance]
Red flags aren’t very useful if everyone is color blind.

Audit Firm Term Limits: Nothing Else Left to Try [Accounting Onion]
Speaking of things that aren’t proven useful.

Still Writing, Regulators Delay Rules [NYT]
Regulators overseeing financial reform are delaying many of the planned changes in the $600 trillion market for complex securities known as derivatives because they are running drastically behind schedule in writing their new rules. The Securities and Exchange Commission said on Wednesday that market participants would not have to comply with many aspects of derivatives reform scheduled to take effect in mid-July. It declined to specify how long the delay would be in the equity derivatives it oversees.

Rangel Sold Condo, Report Shows [WSJ]
Mr. Rangel, the New York Democrat, sold his condo at the Punta Cana beach villa for somewhere between $250,000 and $500,000 last year. He was censured by the House last year for, among other things, failing to pay taxes on rental income from the resort property over a 17-year period. Mr. Rangel was required to repay those taxes and forced to relinquish his chairmanship of the Ways and Means Committee.

Golfer Goosen’s Tax Court Case Tests Principle That Image Is Everything [Bloomberg]
The international golfers at this week’s U.S. Open in Bethesda, Maryland, will be watching for two-time champion Retief Goosen on the leaderboard. Their lawyers will be studying Goosen’s U.S. Tax Court decision. The South African native challenged the Internal Revenue Service’s analysis of the endorsement income he earned from such companies as Electronic Arts Inc. (ERTS), Adidas AG (ADS) and Rolex Group. The case will affect golfers, tennis players and pop stars from around the world who tour in the U.S., license their images for advertising and hawk perfumes, cars, and jewelry.

‘Convergence’ Hits a Bump [WSJ]
The Financial Accounting Standards Board and International Accounting Standards Board said they will issue a revised proposal to overhaul the rules on revenue recognition, updating a proposal they first made last year. The revised proposal is planned for the third quarter, and companies, investors and other observers will have 120 days to comment on it after it is issued.

Adelphia’s Rigases, Jailed for Fraud, Lose Bid to Block Criminal Tax Case [Bloomberg]
Adelphia Communications Corp. founder John Rigas and his son Timothy, who are in prison for securities fraud, failed to persuade a U.S. judge to dismiss a pending criminal tax case against them. John Rigas, 86, is serving 12 years and Timothy Rigas, 55, 17 years for looting the cable company and lying about its finances. After a federal jury in New York convicted them in 2004, U.S. prosecutors in Pennsylvania charged the two with conspiring to dodge taxes on $1.9 billion they stole from Adelphia, a cable-television company that collapsed in 2002.

Accountant accused of embezzling $392,000 [ArgusLeader]
A Sioux Falls man who recently served as a watchdog for city finances is accused of embezzling almost $400,000 while working as an executive at SDN Communications.

Florham Park accountant indicted in trying to meet two underage girls in Atlantic County [NJSL]
A 56-year-old Florham Park accountant was indicted yesterday in connection with trying to meet with two underage girls earlier this year in an Atlantic County hotel, officials said. Stephen Bubniak, was indicted on 23 counts, including attempted luring, attempted sexual assault and attempted criminal sexual contact, said Atlantic County Prosecutor Ted Housel yesterday. Bubniak had arranged to meet the two girls, ages 13 and 14, on Feb. 3 and 4, after a series of online chats, Housel said.

Accountant Claims He Was Fired After Notifying Employer About His Wife’s Cancer

After Carl Sorabella’s wife Kathy was diagnosed with stage 4 incurable lung cancer, he notified his boss at Haynes Management that he would need to work a modified schedule to care for her. One week later, his boss informed him that his services were no longer needed.

Sorabella said he and his wife of 23 years, Kathy, learned she had stage 4 incurable cancer in late April. He said he asked his employer, Haynes Management, a real estate company in Wellesley Hills, Mass., that week for a more flexible work schedule to deal with his wife’s care.

“When I told my boss, she said ‘We were thinking about laying you off.’ I thought, ‘You can’t do that,'” Sorabella told WCVB.

Oh, but they did do that, Sorabella claims, even after he offered to work nights and weekends.

“Ultimately she said don’t worry about it and come in on Monday, and when I came in on Monday I got a letter that I would be laid off,” he said. Sorabella said the letter stated he was being laid off due to “workforce modifications.” But one week after he was fired, he says he saw a listing for his job on the company website.

Because Haynes is a small company (less than 50 employees), it is protected in such situations under the Family and Medical Leave Act. The rationale being that small businesses cannot afford to let an employee take extended leave to care for a sick relative or loved one like a large company can. Legal or not, it’s probably safe to assume that Haynes isn’t much for Employer of Choice initiatives.

Man Says He Was Fired After Telling Employer His Wife Has Cancer [ABC]

Ninth Circuit Rules for PwC in California Overtime Lawsuit

Reuters reports:

The 9th U.S. Circuit Court of Appeals reversed [a lower court decision] on Wednesday, ruling that PwC is entitled to litigate whether the unlicensed accountants can be exempted from overtime laws. The 9th Circuit remanded the case back to a district court in Sacramento, Calif. for more proceedings.

So, no this isn’t over. The actual trial still hasn’t gone down but this is definitely a big win for PwC.

A firm spokesperson provided us with the following statement: “PwC is pleased that the Ninth Circuit supported its arguments in this important case. The firm greatly values these employees and considers their work an integral part of PwC’s success.” An attempt to reach counsel for the plaintiffs was not immediately returned. Will keep you updated with any new details as we learn them.

Previous Coverage:
Campbell v. PricewaterhouseCoopers

Australian Accountant’s List of Items to Spend Stolen Money on Pretty Typical with the Exception of Sequined Gloves, Autographed Thriller Albums

Rajina Rita Subramaniam seemed to be Down Under version of Sue Sachdeva until I got to “Michael Jackson memorabilia.”

A Sydney accountant is set to plead guilty to defrauding her employer of $45 million [USD 47.9 million] before spending the money on several beachside apartments, champagne, diamond jewellery and Michael Jackson memorabilia.

Rajina Rita Subramaniam was working as a senior accountant with the financial group ING Australia in October 2009 when she was arrested for allegedly siphoning tens of millions of dollars from the company into a number of private accounts.

Police allege that a search of ING’s Kent Street office uncovered a cache of luxury items, including 600 pieces of jewellery from Tiffany & Co, Tag Heuer, Bulgari and Paspaley Pearls, 200 perfume and make-up items from Chanel and a bottle of Dom Perignon champagne.

Court told of $45m shopping spree [Sydney Morning Herald]