Author: Caleb Newquist

Founding editor, Going Concern.

Ernst & Young Advisory Intern Wants to Get an Idea of What the Overtime Gravy Train Will Be Like

From the mailbag:

I will be a full time Advisory intern at Ernst and Young in Manhattan this coming summer. The duration of the internship is 7 weeks starting mid June. We just received a raise in our salary which has me thinking about compensation.

As you know, interns receive overtime which can contribute significant weight to overall pay. After researching the internet and the GC archives, I have not been able to find a clear answer regarding what I can expect for overtime hours. I know this varies by firm, workload, work groups etc but can you estimate an average of overtime hours per week? If any?

Right you are, grasshopper – it will depend on various factors you mentioned as well the clients you are assigned to, and what kind of expectations your superiors have (maybe that’s what you mean by work groups?). ANYWAY. In all likelihood, you’ll see some overtime hours which will probably result in some nice paychecks this summer but don’t be surprised if managers are staying on top of the hours you’re working. The Big 4 and other accounting firms aren’t quite as loose with the wallet as they used to be so I’d guess your hours will top out somewhere in the 50s on a weekly basis. That puts you in the range of 10 to 15 hours of OT a week (20+ only for those who work for lunatics). If your senior isn’t a headcase then you can expect 40-50 hours a week.

If you fancy yourself a intern hour handicapper, throw some numbers out there. And, interns, when things get rolling, get back to us with your numbers.

Accounting News Roundup: Picking Lehman’s Bones; IRS Picking on Dispensaries; Pick Up Some Will & Kate Condoms | 04.26.11

Fight for Lehman’s Remains Heats Up [WSJ]
A three-way battle over the remnants of Lehman Brothers Holdings Inc. is coming to a head, as the defunct investment bank’s estate fights with big-name hedge funds and Lehman’s former archrival Goldman Sachs Group Inc. over how to divvy up $61 billion in assets.

10 Things Your Coworkers Won’t Say [SmartMoney]
“Your good attitude makes me hate you,” and “You’re disgusting,” among others.

Oracle replaces CFO as Safra Catz gets the job again [Reuters]
Oracle Corp has replaced its chief financial officer less than three years after he joined the company, tapping its president Safra Catz to do the job. The company said on Monday that CFO Jeffrey Epstein resigned, but did not give a reason. Epstein, who joined Oracle in September 2008, could not immediately be reached for comment. Epstein had little visibility with investors. During quarterly earnings conference calls, it was Catz who read the company’s closely monitored profit forecasts and not Epstein. Epstein reported to Catz and not to Chief Executive Larry Ellison. “The CFO role at Oracle is different from the CFO role at other companies. It’s not as high profile,” said Jefferies & Co analyst Ross MacMillan.

IRS opens audit of Denver medical-marijuana dispensary [DP]
The Internal Revenue Service has opened an audit of a Denver medical-marijuana dispensary, the latest action in what one observer calls a “guerrilla campaign” by the federal government to push back against the cannabis industry. The audit is believed to be the first of its kind in Colorado and follows audits of numerous medical-marijuana dispensaries in California and other states.

Monday Map: State Income Tax Rates [Tax Foundation]
Oregon and Hawaii are your big winners at 11%.


Mergis Group Accounting & Finance Worker Confidence Index Slips Despite Increased Economic Optimism [Mergis Group]
The Accounting and Finance Employee Confidence Index, a measure of overall confidence among U.S. accounting and finance workers, dropped 4.0 points to 52.1 in the first quarter of 2011, according to a recent survey of 3,654 U.S. adults among which 156 are employed in Accounting and Finance commissioned by The Mergis Group®, the professional placement division of SFN Group, Inc. The survey, conducted online by Harris Interactive®, shows that although workers gained confidence in the strength of the economy more workers believe to be fewer jobs available.

Will and Kate Toilet Seats, Condoms Join Tacky London Souvenirs [Bloomberg]
The April 29 royal wedding has flooded London with trinkets, baubles, books and DVDs. The marriage could add as much as 620 million pounds ($1 billion) to the economy in tourism revenue and sales of food and drink, according to Verdict Research, a retail analysis unit of Datamonitor Plc.

Gird Your Loins, Unscrupulous Tax Preparers

The IRS is on you like white on rice.

The Internal Revenue Service is taking steps to stop tax preparers with criminal tax convictions or permanent injunctions from preparing tax returns. This is just one of several recent moves to improve the quality and oversight of the tax preparation industry.

More than 700,000 tax preparers nationwide have registered with the IRS and obtained Preparer Tax Identification Numbers (PTINs). This nine-digit number must be used by paid tax return preparers on all returns or claims for refund. Paid preparers must renew their PTINs annually to legally prepare tax returns.

“We owe it to all taxpayers and the many honest tax return preparers to remove the relatively small number of bad actors from the tax preparation industry,” said Doug Shulman, IRS Commissioner. “Just one unscrupulous tax return preparer can cause a lot of financial damage to both taxpayers and the tax system.”

Nineteen ne’er-do-wells have already gotten word that they’ll be stripped of their PTINs for unseemly behavior of some kind or another. Best get that CPA so you don’t have to mess with the whole thing…until you the IRS lumps them in too.

IRS Begins Enforcement of New Return Preparer Rules [IRS]

Center for Audit Quality Thrilled That SEC Study Recommends Auditors Continue Auditing

I am pleased that the SEC’s Office of the Chief Accountant’s thoughtful study recommends retention of Section 404(b) of the Sarbanes Oxley Act for companies whose market capitalization is between $75 and $250 million. Section 404(b) requires independent auditors to attest to management’s assessment of the effectiveness of its internal controls over financial reporting […]. The study concluded that costs of Section 404(b) compliance have declined and financial reporting is more reliable when the auditor is involved with ICFR assessments. Importantly, the study found that investors generally view the auditor‘s attestation on ICFR as beneficial. [Cindy Fornelli/CAQ]

Deloitte Announces Joe Echevarria as New CEO, Punit Renjen Chairman

Deloitte has announced today that Joe Echevarria will become the new CEO and Punit Renjen (who is oddly well-coifed for a leader at Deloitte) the new Chairman Board of the firm effective June 1. None of this is really news to anyone that frequents this site since we reported who the candidates were back in February. Joe takes over for Barry Salzberg who will assume the global CEO position and Punit will assume the Chairman role from Sharon Allen who is retiring.


This officially marks the end of the Deloitte election process that we brought to light after a partner reached out to us over concerns that the process is seriously flawed (or in that partner’s words, “broken”). Whether or not the rumored poor turnout had any effect on the timing is not known but the results remain the same, much to the chagrin of many partners at the firm who share the frustration of a unrepresentative election process.

[caption id="attachment_29175" align="alignright" width="150" caption="Renjen"][/caption]

Both guys seem genuinely pleased with the result, “I am deeply honored to be elected by my partners and principals to be CEO of this great firm. As the largest professional services organization in the U.S., we have an obligation to lead,” said Echevarria. “Excellence in all of the professional services we provide constitutes the foundation of our success. As markets were shaken and major players disappeared overnight, we’ve made a clear choice to focus on superior performance, innovation and growth across all our practice areas. Great firms are growth firms.”

And Renjen, “This is a great privilege, and I deeply appreciate the partnership’s confidence in me,” he said. “I share Sharon Allen’s vision for Deloitte – to be the ‘Standard of Excellence.’ Setting this standard demands effective governance, transparency, accountability and uncompromised quality. I am committed to leading the board in providing valuable oversight and strategic guidance to management, and also to representing our exceptional organization and culture with external stakeholders.”

Congratulate your new leaders, green dots; these are the men you’ll be receiving a monstrous number of emails from for the next four years.

[via Deloitte]

Auditor Made Nauseous By Computer Screens Needs Some Options

Welcome to the Trump-backlash-has-begun edition of Accounting Career Emergencies. In today’s edition, a young associate has been humming a long except is have a strange physical reaction to staring at a computer screen (no, seriously) and needs some options. Luckily I can stare at a MacBook screen for about as long as I can gaze at pictures of Minka Kelly. Along with your help, I’m sure we’ll come up with something.

Annoyed with a know-it-all in your office? Looking to step up your competitive poaching? Concerned about disappearing act going on all around you? Email us at advice@goingconcern.com and we’ll explain how this thing called “life as accountant” works.

Back to our patient:

Hi Caleb,

I’ve been lurking on Going Concern for almost a year now. I must say thanks for keeping me entertained during stretches of unassigned time.

About me: I’m a first year auditor at a quickly growing mid-size firm. I’ve passed two parts of the exam, and life would be great if it weren’t for one thing – I’ve become unable to work in front of a computer monitor for long stretches of time. For the past 5 months or so I’ve dealt with daily nausea, dizziness, sweatiness, etc. in front of the screen. It typically begins around lunch time. In the past I’ve had no trouble with long days in front of a monitor, but now even scrolling through a PDF or toggling between excel sheets is too much.

I’ve tried everything I can think of to solve this problem and my doctor is stumped as well. I exercise, eat right (no, really), and have seen two optometrists who both came to the same conclusion – “your eyes are fine, take more breaks.” I don’t believe it’s stress induced, as I get the same effect browsing at home for fun. A weekend away from screens doesn’t help a bit. An MRI of the head/neck turned up nothing.

But I’m not here for medical advice (unless other heavy computer users have experienced this). My question is what the hell to do with my life. Dealing with this daily isn’t possible much longer, and it pretty much guarantees I won’t make it as a senior anyway.

I see lots of career advice on this site, but it’s always people looking for similar work. Do I have any hope of finding a new situation that won’t put me in the poor house? Has anyone made a drastic jump from accounting and landed on their feet?

I know it’s strange to ask about non-accounting careers, but perhaps people with accounting-type personalities have found other niches.

-Nauseous Staff

Dear Nauseous Staff,

This has to be the strangest reaction caused by a spreadsheet allergy that I’ve ever heard. I understand that you’e got a bit of problem though, however, so I’ll cease with the jokes (but no promises).

You say you don’t want to end up in the “poor house” and you’re certainly not doomed but this may take some creative thinking. The first possibility that came to mind is to get a job on your firm’s recruiting team or a professional recruiting job. You know the accounting business, the people and what it takes to be in it, so why not apply that knowledge to those trying to get into or change gears within it? You’d get a lot of human interaction (in person and on the phone) rather than staring at Excel all day and you’d spend a little more time on your feet (especially if you’re in campus recruiting). Obviously as a professional recruiter you’d earn much, if not all, of your comp based on commissions so you have to be cognizant of that change but you already know tons of accountants and so why not use your network to your advantage? You know they’re going to leave public accounting eventually.

The other possibility that came to mind is that of a sales job with a software company that offers accounting/auditing/tax/etc. software. This could range from the enterprise stuff (e.g. Oracle) to the basic (e.g. Intuit). You’ve probably had exposure to a few different applications and again, what you want out of software is probably similar to what other accountants want. Plus you speak their language so there would be very little disconnect when you’re discussing specific needs. Accountants hate amateurs. Because of your work experience, you’re anything but.

Obviously the problem is that these jobs will involve some time in front of a computer but it should significantly reduce the number of staring contests with your computer. If this doesn’t sound like your cup of tea, just go back to school and get liberal arts degree. You’ll meet cooler people and getting high will pretty much be mandatory. You’ll have to get over the money thing but you may end up happy just the same (no, it’s not impossible).

Anyone got experience with a similar malady? How did you deal with it? Are you now a street performance artist or do you simply take 30 minute breaks every 30 minutes which results in 16 hour days? Help this kid out.

PwC Provides Background, Q&A in Response to Reports on Shanghai Associate’s Death

It’s been just over two weeks since the death of Angela Pan, an audit associate in PwC’s Shanghai office. One report of her death have quoted doctors stating that “Based on her symptoms and her low white blood cell count, it’s reasonable to conclude that overwork led to a weakened immune system, which makes her more vulnerable to infections.” It was also reported she told a friend she was working 18-hour days and about 120 hours a week prior to her sickness and death. However, Shanghaiist (yes, that’s the Gothamist for Shanghai) published a portion of a statement from PwC that stated that Angela died from viral encephalitis not acute cerebral meningitis as had been reported. An internal email from PwC in China found its way into our inbox late last week and it seems to echo the press release and provides other details.

[Ed. note: the second paragraph included HR and press contacts for those needing them so I’ve omitted those here. It did state that the information should only “be communicated verbally.”]

The date on the email was April 20th and the Shanghaiist article is dated April 15th, so whether this communiqué provides additional details, it isn’t entirely clear. The most confusing statement for me in this email is “as a sign of respect to Angela and her family, we have made a decision not to clarify the misreporting in the media at this time.” Seems to me that the respectful thing would be to correct the “misrepresented” facts if they are in fact correct. Of course this is happening in China where we can only assume what qualifies as a “respectful” action might differ from what is respectful in the U.S. Regardless, it’s terribly unfortunate that a young woman’s death had to serve as a reminder for everyone to take a closer look at their own health and behavior, as well as how culture and working environment may cause some to feel pressure to be at work when they shouldn’t.

Accounting News Roundup: PwC Appoints Head of Reputation in UK; Dems Ready to Raise Taxes on Wealthy; SEC Releases Study on SOX for Small Filers | 04.25.11

Royal Wedding to Give London $177 Million Boost, PwC Says [Bloomberg]
PwC forecast that 560,000 people will travel to London from other parts of the U.K. and that 550,000 people will head for the Westminster area where the wedding is held, while nearly 1 million people will watch it on big screens.

PricewaterhouseCoopers creates new role to boost its public image [Telegraph]
[PwC], the accountancy giant, is to appoint its first-ever head of reputation in de House of Lords inquiry into the lack of competition among auditors. Richard Sexton, head of the accountant’s assurance division which includes its audit arm, will take the role. He will manage a small team focused on how the firm is perceived and its interaction with politicians and regulators.

So You Want to Use Your iPhone for Work? Uh-oh. [WSJ]
For lots of workers, the company BlackBerry just doesn’t cut it anymore. As people pack increasingly sophisticated smartphones in their personal life, they’re clamoring to use those gadgets in the workplace as well. And many of their bosses are loosening up. They’re ditching the traditional BlackBerry-or-nothing policy and allowing a wider range of mobile devices, including tablets such as the iPad.

With public’s backing, Dems to push tax hikes for the wealthy [The Hill]
Congressional Democrats say they will aggressively push for allowing taxes to rise for the wealthiest Americans – a move they say is not only widely popular, but sets up a stark contrast with Republicans who want to keep the tax rates the same but make broad changes to entitlement programs.

Slippery People: Corporate Governance at Berkshire Hathaway [Re:The Auditors]
The Buffet/Sokol/Lubrizol timeline plus Francine announces that she is going to Omaha for the annual meeting on Saturday.

SEC Releases Special Study On Sarbox 404(b) For Smaller Public Co’s [AW]
[T]he SEC released a special study on implementation of Sarbanes-Oxley Section 404 (b) – the auditor’s report on internal control over financial reporting – with respect to smaller public companies (specifically, accelerated filers with market cap between $75 million and $250 million). The SEC study, required by Section 989G(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, examined existing studies and included a call for public comment.


FASB Issues Goodwill Impairment Proposal [JofA]
FASB issued an exposure draft of a proposed Accounting Standards Update intended to simplify how businesses are required to test goodwill for impairment. “Nonpublic companies have expressed concerns to the Board about the cost and complexity of performing the goodwill impairment test,” FASB member Daryl Buck said in a press release. “The proposals contained in this Update are intended to address those concerns and to simplify and improve the process for public and nonpublic entities alike.”

Six Flags says arbitrator rules in favor of former CFO [Reuters]
Theme park operator Six Flags Entertainment Corp (SIX.N) said an arbitrator ruled in favor of certain claims made by its former Chief Financial Officer Jeffrey Speed. The arbitrator has directed the company to pay $23.7 million, plus interest and attorney’s fees, the company said. Six Flags replaced Speed as the CFO in September last year, and later terminated his employment, without cause, in October, the company said in a regulatory filing.

Alterra Blows Off Proxy Advisors; Recommends Shareholders Reappoint KPMG as Auditor

After all the hubbub over the PCAOB inspection report that was brought to light by Bloomberg’s Jonathan Weil, including two recommendations by proxy advisors Glass Lewis and Institutional Shareholder Services Inc., Alterra Capital Holdings has recommended to its shareholders that they vote “FOR” the ratification of KPMG as the company’s independent auditor.


From thc.gov/Archives/edgar/data/1141719/000093041311002842/c65254_defa14a.htm”>SEC Filing dated April 19th (all emphasis is original):

TO THE SHAREHOLDERS

We are writing to bring your attention to a disagreement between Alterra Capital Holdings Limited (the “Company”), on the one hand, and each of ISS Proxy Advisory Services and Glass Lewis (each, a “Proxy Advisor”), on the other hand, with respect to the recommendation by each of the Proxy Advisors to vote “against” the Company’s proposal to ratify the appointment of KPMG Bermuda as the Company’s independent auditors for fiscal year 2011 and authorize the Company’s board of directors (the “Board”) to set the remuneration of the independent auditors at the Company’s Annual General Meeting of Shareholders scheduled to be held on May 2, 2011. The Proxy Advisors’ recommendations are primarily related to a report issued by the Public Company Accounting Oversight Board (the “PCAOB”) regarding the Company’s auditors, KPMG Bermuda. The PCAOB is a nonprofit corporation established by the U.S. Congress to oversee the audits of public companies. One of the principal roles of the PCAOB is to perform inspections of the audit files of accounting firms that conduct public company audits. Each audit firm is selected by the PCAOB for inspection at least once in every three years.

In November 2009, the PCAOB reviewed KPMG Bermuda’s 2008 audit files of a public company client located in Bermuda in connection with a routine periodic inspection. In March 2011, the PCAOB publicly issued its findings in a report dated January 28, 2011 (the “PCAOB Report”). Although the PCAOB Report did not identify the public company by name, an article posted on Bloomberg News on March 30, 2011 alleged that the public company client at issue was the Company (formerly Max Capital Group Ltd.). The Company confirmed that it was the client referenced in the PCAOB’s Report in a Current Report on Form 8-K dated March 31, 2011.

The Proxy Advisors’ recommendations also cite concerns that certain of the Company’s directors and officers previously worked at KPMG.

For the reasons set forth below, the Board disagrees with the Proxy Advisors’ recommendations to vote “against” the Company’s independent auditor proposal. The Board unanimously recommends that you vote “FOR” the ratification of KPMG Bermuda as the Company’s independent auditor.

Since this decision by the Board might not sit well with a few people, they’ve carefully laid out the case as to why sticking with the House Klynveld is the right thing to do. They are as follows:

1. The PCAOB Report did not question the Company’s valuations that are reflected in its financial statements.

2. The PCAOB Report did not impact KPMG Bermuda’s unqualified opinions on the Company’s financial statements in 2008, 2009 and 2010; there was and is no restatement issue.

3. The PCAOB made similar findings regarding all four major accounting firms.

4. The Audit and Risk Management Committee was aware of the PCAOB review and made an informed decision in recommending KPMG Bermuda as the Company’s Independent Auditor for 2011.

5. KPMG Bermuda is independent from the Company.

6. The Audit and Risk Management Committee will reassess KPMG Bermuda’s qualifications and suitability in 2012.

Just a few thoughts on some of these:

• It’s not the job of the PCAOB to question the Alterra’s valuations. That’s what KPMG was supposed to do. The PCAOB said KPMG did a lousy job of getting enough evidence to support those valuations.

• Just because there wasn’t a restatement doesn’t mean the auditors did their jobs correctly.

• Admitting that “all four major accounting firms” had similar findings says a lot about what the Board thinks of auditors.

• Is point #5 supposed to be a reminder for the shareholders that have no business acumen whatsoever?

• Point #6 could be better stated as “Our Board is getting good at jumping through hoops. See you next year.”

Any other thoughts? Leave them below.

Ernst & Young Adding 30 Professionals From LECG

A little bit of fresh news from the LECG implosion as Ernst & Young announced yesterday that it was picking up thirty professionals to add to its insurance tax and life actuarial practices in the firm’s Financial Services Office.

These LECG refugees are led by Chris DesRochers and Greg Stephenson, according to the release, and E&Y is thrilled to have them, “This represents a significant addition of intellectual capital to our insurance tax and actuarial teams,” said Carmine DiSibio, Vice Chair and Managing Partner, Financial Services, Ernst & Young LLP. “We were very fortunate to be able to add so many experienced professionals at one time — additional talent that greatly enhances the breadth and depth of the services we provide.”

E&Y is the latest beneficiary of the LECG collapse, joining Grant Thornton, WeiserMazars and FTI Consulting.

[via E&Y]

Accounting News Roundup | 04.22.11

~ It’ll be half day here at GC today, resuming a regular schedule on Monday. We suggest you do the same.

80-Year-Old Ex-UBS Client Given 2 Years Probation In Tax Case [Dow Jones]
An 80-year-old one-time UBS AG (UBS) client was sentenced to two years probation for hiding $4.9 million from the IRS, the Department of Justice said Thursday. Ernest Vogliano was also ordered to pay a civil penalty of $950,381 and a $10,000 fine for five counts of filing false federal income-tax returns and conspiring to defraud the IRS. He pleaded guilty to the charges in December. He was one of seven UBS clients charged in a probe into U.S. taxpayers concealing funds through overseas accounts and companies.

FASB, IASB Extend Timetable For Some Accounting Projects [Dow Jones]
Two organizations in charge of U.S. and international accounting standards said they could take until the end of the year to agree on unified bookkeeping rules for publicly traded companies. Officials at the International Accounting Standards Board and the U.S.-based Financial Accounting Standards Board want to see a single set of accounting standards used worldwide. The boards have been working for years on “convergence” projects to eliminate major differences between U.S. and global rules.

Nice Girls Finish Last [FINS]
And they apologize, among other things.

Business Development Skill Builders for Young CPAs [JofA]
Many firm leaders think that young CPAs lack the necessary business development skills to move to the next level or become a future leader of the firm. However, young CPAs are often not given the opportunity to develop those skills on a daily basis. Business development is a difficult thing to teach, and it’s unrealistic to expect the skills to come naturally to many CPAs.


Hatch will oppose any deficit-reduction deal that includes raising taxes [The Hill]
Sen. Orrin Hatch (R-Utah) poses a significant obstacle to any bipartisan deficit reduction deal in the Senate that would raise taxes, according to Senate aides and activists. Hatch would have significant say over any deficit-reduction as ranking Republican on the Senate Finance panel, which has jurisdiction over taxes, Social Security, Medicare and Medicaid. He told conservative activists shortly before the April recess that he would oppose any deficit-reduction package that raises taxes, period.

ATR: SAVEGO Is a No-go

If you’re like us, you’re strangely fascinated by the Americans for Tax Reform and their tax intolerant ways. ATR President Grover Norquist and his band of tax annihilating orcs have battled to get as many signatures on their taxpayer protection pledge as possible and will strike down – often through sternly-worded letter – anyone who dares break that pledge.

Because tax and budgetary policy can be a tricky game, sometimes compromises get floated out there so Democrats and Republicans might find common ground. This common ground typically consists of both sides giving a few things up and agreeing to live with a few things that aren’t ideal.

A recent compromise over the debt-ceiling debate known as SAVEGO was recently passed around some budget wonks and ATR is going on record that any taxpayer protection pledgers best not give it a second look:

ATR is warning that Republicans would be violating their Taxpayer Protection Pledge if they sign on to the deal. SAVEGO as proposed would count tax earmarks as “spending” in the tax code. ATR does not view tax breaks as a type of spending and insists that eliminating them must be accompanied by tax cuts.

SAVEGO would put in place a trigger that, if reached, would cause across-the-board spending cuts or slashing tax breaks.

“Support for a net tax increase trigger is a clear Pledge violation,” ATR Tax Policy Director Ryan Ellis told The Hill Thursday. “A vote for this is a vote for automatic net tax increases.”

“The second clause of the Pledge says that signers will oppose any net reduction or elimination of deductions and credits, unless matched dollar-for-dollar by cutting tax rates. The SAVEGO plan is in direct violation of the Pledge,” he added.

Americans for Tax Reform: SAVEGO violates tax pledge [The Hill]