Author: Caleb Newquist

Founding editor, Going Concern.

Sir David Tweedie Would Appreciate It If You Quit Complaining About the New Accounting Standards

This means you PricewaterhouseCoopers. You’re acting like this convergence/IFRS adoption is just happening too fast, well, Tweeds isn’t having it.

As for you companies out there that actually have to keep their books in tiptop shape, Sir Tweeds isn’t so amused by your bellyaching either. And for the love of God, would everyone quit playing dumb:

“Let’s look at what we’ve got out there at the moment – leases, revenue recognition and insurance. If you’re not an insurance company you’ve got two. Big deal,” he said.

“I’m not terribly sympathetic. It’s not as thought these have sprung out of no where, we’ve been working on these, they’ve seen the drafts coming, they know what we’re doing.

Furthermore, maybe if you got some of your people on this instead of writing a comment letter every two seconds, this wouldn’t seem like such monumental task.

“It’s tough, but goodness it’s tough for us too. We can’t keep getting all this advice. We always get conflicting advice. ‘You must have these done by June 2011, but don’t give them to us all at once’,” he said.

Tweedie “not terribly sympathetic” to concerns of standard-overload [Accountancy Age]

My GPA Sucks! Is My Accounting Career Over?

Today in “My life is falling apart and I’m an accountant” we have another poor sap that is plagued by a low GPA. Are they doomed for mediocrity? We’ll get to that, right after…

Are you wondering what your next career move is? Are you an auditor trying to put the moves on someone in tax and have no idea what to say? Wondering whether you should put the kibosh on your vegan lifestyle at your next partner lunch/dinner since you think it’ll make you look like a complete weirdo? Email us your inquiry to advice@goingconcern.com and we’ll put you at ease.

Back to our slacker du jour:

My undergrad GPA was a 2.99 cumulative and that’s been a killer in my application and job process. I’m currently with a very small CPA firm. Is there a point on continuing even if I pass my CPA? It seems no one really cares about any accounting experience for public unless it’s big 4 or mid-tier. My 2.99 has been a killer since the majority of firms are looking for a 3.00+. I’m looking at options at grad school, but I’m not sure if it would help if I wanted to go Big 4 still. I also believe I should pass my CPA first if I’m looking to go for a one year MBT or MACC (Masters of Accounting) program, but honestly I don’t know that I would get in considering my GPA unless I got stellar GMAT scores.


First of all, we’re not quite sure why you’re looking for a job when you already have a job. Do you intensely dislike this “very small CPA firm”? Our guess is yes since you’re writing us but take a serious look at your current situation and consider the experience that you are getting at your current firm. It may not be exactly what you’re looking for but the work experience you obtain will be valuable.

That being said, you then moving on to “Is there a point on continuing even if I pass my CPA?” Do we need to call the suicide hotline for you? Get your CPA. That will go a long ways to bolstering your career prospects, 2.99 GPA or not.

We definitely take exception with your “no one really cares about any accounting experience for public unless it’s big 4 or mid-tier.” There are plenty of Big 4 whores around these parts that might say that but don’t forget that small firms differ from the Big 4/second tier in some positive ways, so don’t dismiss the opportunity you have right now.

As far as Grad School goes, wait until you’ve got some work experience and CPA. Do you really want to rush right back to school? If you get some good work experience and you have some decent professional accomplishments, the graduate schools will take that into account. Yes, killing your GMAT will help your chances but you’re not doomed, friend; you’ve just got an uphill climb.

New Jersey Appeals Court Deals ‘Devastating Loss for KPMG’ Over Malpractice in Cast Art Merger

We briefly mentioned this case on Monday but since everyone seems to have checked out mid-week, we’re sure you won’t mind.

Way back in the dawn of the Clinton Administration, some financial reporting chicanery went down at Papel Giftware, Inc. so that Cast Art Industries of Corona, California would run into the company’s outstretched arms. More specifically, chicanery that consisted of ” ‘systemic, organized, improper accounting practices at Papel.’ ” Cast Art failed in 2003 which made everyone sad/mad.

KPMG was on watch as this all went down and a jury found the firm negligent in 2008 under the Accountant Liability Act.

The bitch of it is, the KPMG partner was thisclose to pulling out of the engagement, “[A] July 2000 letter by KPMG partner John Quinn that said Papel Chief Financial Officer Rick Wasserman gave an ‘unfair and misleading characterization of the accounting and auditing issues.’ Quinn said he was ‘very much inclined’ to recommend ending work with Papel after that year’s audit, according to the opinion.”

That ‘very much inclined’ didn’t result in “we withdraw from the engagement.”


However, since the KPMG is a professional services firm with the necessary means and a reputation to protect (according to some, anyway) they appealed the ruling and on August 26th a three-judge panel of the New Jersey Appellate Division still said, “yep, it’s accounting malpractice.”

This was a thrilling result for plaintiffs who are looking to squeeze more damages out of the firm:

“This is a huge win and no matter how KPMG wants to spin it, it’s a devastating loss for KPMG,” plaintiffs’ attorney Michael Avenatti said in an interview. “KPMG’s appeal of this case may go down as Exhibit A of ‘Be careful of what you wish for.’ Now, we have the ability to go collect potentially $10 million to $20 million more in additional damages.”

Right. The spin.

A KPMG spokesman, Daniel Ginsburg, said the firm is “considering our available options” after the ruling.

“We are pleased that the court affirmed dismissal of the plaintiff’s fraud claim against us, and also reversed the jury’s verdict by ordering a new trial on the issue of damages,” Ginsburg said in an e-mail. “We are disappointed, however, with the court’s ruling on legal issues regarding the plaintiff’s negligence claim.”

Actually, not much spin there. Just one of those kiss your sister/brother moments.

KPMG Committed Malpractice Tied to Cast Art Merger, Appeals Court Rules [Bloomberg]

Accounting News Roundup: More Tax Cuts for Small Business?; Scenes from a SaaS Meltdown; SEC Files Charges Against Sachdeva | 09.01.10

No Charges for Moody’s in Ratings Violation [NYT]
“The Securities and Exchange Commission said Tuesday that it had declined to charge Moody’s Investors Service for violating securities laws by failing to comply with its own procedures for rating complex derivative sece decision followed an S.E.C. investigation, and the commission used the opportunity to warn all of the national credit rating agencies that it would use new powers under the Dodd-Frank banking law to take action against similar conduct, even if it occurred outside the United States, as the Moody’s case did.

The S.E.C. said it had declined to pursue a fraud enforcement action in the case because of jurisdictional issues. The securities in question originated in and were rated and sold in Europe, the S.E.C. said.”

Tax Cuts Weighed to Spur Economy [WSJ]
“The Obama administration is considering a range of new measures to boost economic growth, including tax cuts and a new nationwide infrastructure program, according to people familiar with the discussions.

The president’s economic team has met frequently in recent days to list ways to bolster the struggling recovery, according to government officials.

On the list of possible actions: additional tax cuts for small businesses beyond those included in a $30 billion small-business lending bill before the Senate. It’s not clear what those tax breaks would target or how much they might cost in lost revenue to the government.

Also in the mix: a possible payroll tax cut for businesses and individuals, as well as other business tax breaks, according to people familiar with the discussions. Currently, income taxes are scheduled to rise with the expiration of Bush-era tax cuts at the end of this year.”

Lessons from ClearBooks failure [AccMan]
What happens when a SaaS provider has a blow-up? Well, it depends.


“Non-Combat” Troops Remaining in Iraq Will Still Receive “Combat Zone” Tax Treatment [Tax Foundation]
The troops that remain in Iraq will still receive combat zone treatment (i.e. ‘designated hostile fire or imminent danger pay areas’).

Brainiest Cities [The Daily Beast]
Boulder #1; DC #3; Boston #4. Austin comes in at a paltry #16 behind Ames, IA. What’s up with that?

Former Rothstein CFO Stay Gives Up Boat [SFBJ]
Convicted Ponzi Schemer Scott Rothstein’s CFO had to give up her 28-foot 2008 Southport boat in order to settle a claim against her for the $154k loan she received from the firm to buy said boat.

SEC Charges Two Accounting Professionals at Milwaukee-Based Company with Fraud [SEC]
The SEC got around to filing civil charges against Sue Sachdeva. The Commission also charged Senior Accountant Julie Mulvaney with helping S-square conceal the fraud through bogus journal entries.

Boeing CFO Reiterates Delivery Target of 787; No One Believes It

Confidential to BA: Everyone is sick of the defense contractor who cried “the jumbo jet is ready!”

Boeing Co is confident it can deliver the first 787 Dreamliner in the middle of the first quarter of 2011, the chief financial officer of the world’s largest aerospace and defense company said on Tuesday.

Speaking at a conference hosted by Morgan Stanley, James Bell reiterated the updated delivery target for the long-delayed carbon-composite commercial aircraft.

Last week, the company announced another Dreamliner delay — this one related to a a delay in the availability of a Rolls-Royce Plc(RR.L) engine needed for the final phases of flight testing. The plane is already more than two years behind schedule.

Boeing CFO repeats 787 deliver target [Reuters]

Winner of Dallas Cowboys Tickets Wasn’t Too Worried About Peasant Fans Showing Up to IRS Auction

The big winner in this morning’s auction of some primo seats at Texas Stadium went to Hank Wendorf of Dallas-based Ticketsource.com.

There was only one other registered bidder at the IRS auction and the total damage ended up being $311,000 which was in Wendorf’s range and he’s pretty flippin’ stoked, “These seat options are not available from the Cowboys. I think it’s a great opportunity for me to add to my inventory,” he told the Dallas Morning News and saying, “In my opinion, these are the best seats in the stadium.”


The package includes seasons tickets for this year plus options to buy the same seats – located behind the Cowboys bench near the 50 yard-line – for the next 30 years, hence, you’ll never get them.

Since the starting bid was around $180k, Wendorf wasn’t too concerned about too much competition showing up to today’s auction but at least he wasn’t smug about it, “If fans want to judge the seat quality for themselves, ‘they can buy tickets from me,’ he said with a laugh before heading off to sign lengthy legal documents.”

Prime Dallas Cowboys seats go to ticket broker for $241,000 in IRS auction [Dallas Morning News]

Big 4 Have Big Presence on Vault’s Prestige List, Less So in Top 50

On with the second dose of rankings today, this time courtesy of Vault with the Vault Consulting 50 and The Best Consulting Firms: Prestige.

The Top 50 came out last week and it is new to the stable of Vault rankings. Here’s the top twenty-five firms (26-50 is here) of the inaugural breakdown:

1 Bain & Company
2 The Boston Consulting Group, Inc.
3 McKinsey & Company
4 Analysis Group, Inc.
5 The Cambridge Group
6 Deloitte Consulting LLP
7 Oliver Wyman
8 A.T. Kearney
9 Triage Consulting Group
10 Censeo Consulting Group
11 West Monroe Partners
12 Cornerstone Research
13 PricewaterhouseCoopers LLP (Consulting Practice)
14 Alvarez & Marsal
15 Trinity Partners, LLC
16 Booz & Company
17 Milliman, Inc
18 Strategic Decisions Group
19 PRTM
20 Gallup Consulting
21 Diamond Management & Technology Consultants, Inc.
22 Health Advances, LLC
23 Strategos
24 The Brattle Group
25 Monitor Group

Similar to Consulting Mag’s ranking, Deloitte and PwC (along with recently purchased Diamond) rank the highest of the Big 4 with derivatives Accenture and Capgemini landing at 32 and 45. Problem child Huron Consulting came in at 48. KPMG and Ernst & Young are MIA.

The methodology for the Top 50 breaks down this way: 25 percent firm culture; 25 percent work/life balance; 20 percent compensation; 20 percent prestige; 5 percent overall business outlook; 5 percent transparency. Practicing consultants were asked to rate what was most important to them at their firm. As you can see, while prestige still carries some weight, culture and work/life trump in this list.

Speaking of the prestige factor, a little jockeying amongst Mercer, Monitor and PwC but otherwise the top ten was unchanged from last year.

1 McKinsey & Company
2 The Boston Consulting Group, Inc.
3 Bain & Company
4 Booz & Company
5 Deloitte Consulting LLP
6 Mercer LLC
7 Monitor Group
8 PricewaterhouseCoopers LLP (Consulting Practice)
9 Ernst & Young LLP (Consulting Practice)
10 Oliver Wyman
11 A.T. Kearney
12 Accenture
13 KPMG LLP (Consulting Practice)
14 IBM Global Business Services
15 L.E.K. Consulting
16 The Parthenon Group
17 Towers Watson
18 AlixPartners, LLP
19 Navigant Consulting, Inc.
20 Alvarez & Marsal
21 ZS Associates
22 Capgemini
23 FTI Consulting, Inc.
24 NERA Economic Consulting
25 Hewitt Associates

In the prestige list you’ll find the Big 4 much more prominent which may be due to the methodology that practicing consultants at these very firms are surveyed to rank the firms on a range from 1 to 10. They cannot, however, rank their own firm.

In 26-50 range you’ll find more familiar names including Huron at #27 (dropped from 25); Grant Thornton at #28; Diamond Management at #31; BDO Consulting at #49.

So based on these, the Big 4, GT, BDO seem to be doing well from a prestige standpoint but lag a little in others, namely culture and work/life balance. Sound about right? Discuss.

Consulting Firm Rankings 2011: Vault Consulting 50 [Vault]
Consulting Firm Rankings 2011: The Best Consulting Firms: Prestige [Vault]

Consulting Magazine Throws a Few Bones to the Big 4 with Latest “Best” Rankings

The Big 4 managed to squeeze onto a a couple different recent lists for their consulting efforts including Consulting Magazine’s 2010 Best Firms to Work For and Vault’s 2011 Consulting 50.

We’ll roll out the particulars of Consulting Mag’s lists first and give you Vault’s results later today.


Consulting Mag has several different lists but we’ll stick to the most relevant for the Big 4 . We’ll start off with the overall ranking:

1. Bain & Company
2. The Boston Consulting Group
3. North Highland
4. Point B
5. McKinsey & Company
6. Deloitte Consulting
7. Booz Allen Hamilton
8. PricewaterhouseCoopers
9. Accenture
10. Slalom Consulting
11. Milliman
12. Booz & Company
13. A.T. Kearney
14. Capco
15. PRTM

So the Big 4 really makes two appearances here with Deloitte and PwC. You could throw Accenture in there for old time’s sake. Back when we covered Barry Salzberg’s little merger chat in the Journal, two names that were thrown at him were Booz and A.T. Kearney. While this list is certainly no indication, you’ll see that based on the rankings, Deloitte ranks above both those firms despite commenters suggestion that Booz and A.T. are superior brands.

The list dominated by the Big 4 was the Business Advisory Services:

1. PricewaterhouseCoopers
2. Alvarez & Marsal
3. Ernst & Young
4. KPMG
5. FTI

You don’t see Deloitte and Accenture on this list since they fall on the “Multi-Service” list at #1 and #2 respectively and Capgemini (purchased E&Y Consulting in 2000) is numero uno on the Information Technology list.

Deloitte Consulting and PwC get dropped on a few more lists that include: Career Development, Work/Life Balance and Culture while KPMG and E&Y are nowhere to be found. A list of “Best Places to Start a Career” listed Deloitte at #3 and KPMG at #6 with PwC and E&Y MIA.

Naturally there is room for bellyaching and there are vaguely familiar frustrations in the feedback portion:

Leadership
You have to manage your career with little help from management. Here’s the rope, climb the mountain or hang yourself…

Work/Life Balance
The concept of a work life balance is talked about, but only as an afterthought.

Compensation/Benefits Satisfaction
Your work will double, but salary may not.

Those aren’t specific to any one firm but something tells us you could find someone in any of the Big 4 consulting/advisory groups griping about these issues. OH! And as far as scoring for morale goes, the Big 4 are shutout of the top ten.

So a bit of a mixed bag on this particular list but you’ll likely see a rash of press releases in the coming days and weeks along with emails and whatnot from your leadership.

So feel free to debunk the latest seemingly arbitrary rankings. We certainly expect the consulting purists of the bunch to be disgusted with the Big 4 sullying these particular grounds.

The Best Firms to Work For, 2010 [Consulting Magazine]
PricewaterhouseCoopers Named Among the Top 10 Best Firms to Work For by Consulting Magazine [PR Newswire]

For Some Unknown Reason, The IRS Confiscated a Nearly Worthless Scarface Poster in Young Buck Raid

Earlier in the month you may recall the story of hip-hop artist Young Buck being on the wrong side of a IRS raid that involved some of those shiny shotguns.

At that time, we learned that the agents seized several items – recording equipment, jewelry, furniture, his platinum wall plaques – even Mr Buck’s PlayStation (he says it was his son’s but, come on).

Anyway, we now learn that agents also confiscated a $31k Breitling Bentley watch AND a Scarface movie poster with an approximate value of…$10.


We’re not too familiar with IRS protocols, so perhaps when someone’s house is raided, the standard operating procedure is to take literally everything. The furniture. The porno collection. Worthless movie posters that there are literally tens of thousands of copies of. It all goes.

Presumably, the agents could have sold the poster to a kid on the street for a few bucks so they could get coffee but it would still be only enough money for one or two coffees. Or maybe it was enough for one (one!) cover at the local strip joint for the post-raid celebration. Or maybe on of the guys/gals really, really, really wanted that poster. Who knows?

Motivation aside, it certainly serves as another fine example of IRS shrewdness when it comes to collection efforts.

$31,000 watch among items seized from Young Buck’s home [The Tennessean]

Happy Last CPA Exam Testing Day of Q3 2010!

So we heard that some but not that many of you received your scores from this window, if so congrats (we hope) and do let us know how you did. For those of you stuck in Wave 2, um, sorry about that and here’s to hoping you get your 74 before the final window of 2010 gets too filled up to schedule before the dreaded CBT-e changes take effect January 1, 2011 in case you need a retake.

Remember, Q4 2010 could be the most difficult to schedule CPA exam testing window of all time so if you are in Wave 2 and want to take another stab at it before 2011 after you get a failing score towards the end of September, you better be sure to get your reapplication in for a new NTS as soon as you get your score. Be prepared to select an alternate Prometric location or date and time that you didn’t really want as it’s going to be rough getting in for some of you.


Of course, there are those of you in remote areas or CPA dead zones that may have no problems at all but for our little future CPAs in places like Texas, Illinois, California and New York (i.e. exceptionally large numbers of CPA exam candidates testing at any given time) be open to changing your dates or location if need be and don’t flip out if you can’t schedule where or when you want.

If you are testing today on this final testing day of Q3 2010 we’d love to hear what you’re taking. Jr Deputy Accountant’s unofficial poll of CPA exam candidates (really I’ve just been asking candidates I’ve talked to lately and not even taking a tally; sue me) reveals that a large number of you are actually going after BEC either today or before the end of the year to avoid written communication in 2011. That’s a bit of a shock, I assumed most of you would try to tackle FAR before IFRS hits but hey, whatever floats your boat. For those of you who pass BEC this year, you also have the advantage of getting a BEC exam with less economics and IT to worry about, not to mention no essays.

And if you don’t pass? Remember, there’s always next window, CBT-e or not and hopefully we have already calmed your fears surrounding the 2011 changes. It’s a little more to memorize with international standards thrown in the mix but you were already going to have to memorize a metric shit ton of information anyway so what are a few more standards going to hurt?

Good luck to all of you and don’t forget to get in your last minute CPA exam questions before it all changes in a few short months!

Accounting News Roundup: Genzyme Wants Bigger Offer from Sanofi; IRS Says Ex-NFL Star Romanowski Owes $6 Mil; Convicted Tax Evader Traficant Running for Congress Again | 08.31.10

Genzyme Rejects Sanofi’s Overture [WSJ]
“Genzyme Corp.’s board again rejected an $18.5 billion takeover proposal from Sanofi-Aventis SA, although Genzyme suggested it would be open to future talks if there were a higher starting price.

Genzyme’s suggestion contrasts with accusations from Sanofi Chief Executive Chris Viehbacher that he “encountered a brick wall” in trying to begin merger talks. And with the French drug maker stressing its discipline in pursuing the Cambridge, Mass., biotech, the rhetoric from both sides hints that any deal could take some time.”

No horsing around, IRS tells ex-NFL star [Forbes]
“The Internal Revenue Service says ex-football star linebacker Bill Romanowski owes more than $6 million, primarily for claiming losses from a thoroughbred horse-breeding investment whose promoters have admitted was a fraudulent tax shelter.

Romanowski, 44, and his wife, Julie, filed a lawsuit last month in U.S. Tax Court disputing an IRS bill for $5 million in taxes, $1 million in penalties and an unspecified amount of interest. According to his complaint, for the years 1998 to 2004, the Romanowskis said their total taxable income was a negative $11 million. The IRS said it really was $14 million. The difference is a cool $25 million.”

Higher Taxes May Not Push Firms To Cut Dividends [WSJ]
“The expiration of a tax cut on dividend income wouldn’t likely spur firms to significantly cut their dividend payouts, say some scholars who study the relationship between tax rates and corporate behavior.

One big reason is that a growing share of U.S. equities are held by retirement funds and foreign investors that aren’t swayed by U.S. individual income-tax rates.

‘If there is an effect, it will be modest,’ University of North Carolina professor Douglas Shackelford said of the pending higher tax rates. ‘Pension funds, 401(k)’s, foreigners and corporations–all of these don’t care’ about the individual tax rate, he said.”

Alabama county mulling whether to keep, jettison SAP [Reuters]
Jefferson County, Alabama is the latest to have trouble with their SAP system. Unfortunately for JeffCo, they don’t have a huge consulting operation to sue, only an unnamed “third-party consulting firm.”


Guess Who’s Coming to Dinner! [Taxable Talk]
James Traficant, that’s who. Traficant was indicted in ’02 (while serving in Congress) on federal corruption charges and ultimately found guilty on ten counts that included bribery and tax evasion. Despite that track record, he has managed to get the necessary amount of signatures to run as an independent in Ohio’s 17th Congressional District.

Accounting firm raided over alleged drug network [ABC Australia]
Don’t think it can’t happen to you!