Author: Caleb Newquist

Founding editor, Going Concern.

The Two Best Comment Letters Written to the FASB You’ll Ever Read

Last month we told you about how the American Bankers Association encouraged anyone that disagreed with the FASB’s proposed fair value rule to write a letter telling Herz & Co. how much the proposal suind enough to provide a template for said “FASB Blows” correspondence so the anti-fair value crowd could get the gist of what needed to be said.

The ABA did warn, however, that the FASB hates, loathes, DETESTS form letters, so in order to make a valid point, it was advisable to not simple slap your name in the appropriate place but to articular your own special brand of hatred for the FASB.

As you may recall, many ABA groupies did not heed this warning, which no doubt resulted in Bob Herz and the rest of the Norwalk team using the letters to stoke their mid-summer weenie roast bonfire.

As disappointed as the ABA must have been with the lack of originality, we were sent this shining example that has been making the rounds at the Big 4 (or so we’re told). Our guess is that this is more of what the ABA had in mind:

FASB1

Bravo, James C. Blaine. Bravo. You are most definitely into the brevity thing. You have, presumably, made the ABA proud. But wait, there is a pro-fair value letter worthy of these pages.


Granted, it was written back in May but Brian Cowell is no less passionate than Mr Blaine:

FASB2

Nicely done, both of you. Everyone take note.

Who Leaked the MLB Financial Statements?

This morning we mentioned the Deadspin story that presented leaked financial statements of several Major League Baseball teams. This included the Pittsburgh Pirates who have had 18 straight losing seasons yet remain profitable – making $14.4 million and $15 million in net income for the fiscal year ended October 31, 2008 and 2007 respectively.

The Seattle Mariners financials are also now available and the Texas Rangers numbers will be rolling out tomorrow, so there’s plenty of financial analysis treasure hunting for you to engage in, if that’s your thing.

Fis is unprecedented access to the teams’ financial position and performance, PLUS! all the wonky details of their Summary of Significant Accounting Policies – everything from revenue recognition to prepaid signing bonuses, guaranteed contracts, so on and so forth.

However, it also includes details that give insight into MLB controversial revenue sharing program, such as the Pirates using $44 million in ’07 and ’08 to develop players, as reported by the New York Times. With the lowest payroll in baseball and perpetual loserness, baseball fans in the Steel City might rather see that money spent on some free agents so they have something to discuss between the hockey and football seasons.


But perhaps more importantly, the Times reports that MLB is not taking this breach lightly. Since these teams are privately held, the information is not widely shared and the suspects are few:

Access to the teams’ audited financial statements is usually limited to the commissioner’s office; baseball’s lead bankers, Bank of America and JPMorgan Chase; and two accounting firms, Ernst & Young and PricewaterhouseCoopers. But [Florida Marlins President David] Samson said that “in the course of business, other entities have access.” Teams do not see one another’s financial reports, but receive a general accounting of where they rank compared with the other 29 clubs in profitability.

Of course this is the point in the post where you’d expect us to point the finger at E&Y or PwC but in reality, it seems unlikely that the leak would come from either firm. Likewise, it doesn’t make much sense for it to have come from BofA or JP Morgan. All these firms no doubt boast the services they provide to Major League Baseball and any professional servicing those clients wouldn’t dare risk damaging their firm and their career by exposing sensitive financial data of such a high profile client. Does it really make sense for an E&Y/PwC/BofA/JPM employee to leak the financials to Deadspin on a whim?

The leak has to be from within the commissioner’s office. First of all, someone there has the access to all these records and it is extremely more likely that Deadspin has sources in the commissioner’s office that would be willing to leak the information (especially teams no one gives a shit about). Secondly, we shouldn’t forget that baseball has had its share of squealers. There’s no reason to believe that the whole sport isn’t infested with them.

And as we mentioned – who gives a shit about the Pirates, Mariners or Marlins? These are low payroll teams whose financial information doesn’t cause much of a stir other than the fact that this is first time the data has been available to the public at large. If someone really wanted to bomb the hell out of us, the Yankees, Red Sox and Cubs financial statements would have been leaked and then the disparity (financial and thus, competitiveness) between the teams would really on display.

Baseball Chases Leak of Financial Documents [NYT]
MLB Confidential, Part 2: Seattle Mariners [Deadspin]

Will the Big 4 Take a “Late Bloomer” with a Low Undergrad GPA?

Today from the mailbag we have a Big 4 hopeful that – like many of you – enjoyed the splendors of undergrad life to the detriment of their GPA and want to know if this will dash their Big 4 hopes and dreams.

If you’ve got questions about your career, a problem at work (romantic, political or otherwise) or what you should have for lunch, shoot us an email at advice@goingconcern.com. We will ignore pension accounting questions with extreme prejudice.

Back to our friend:

I just started an MSA program this summer after graduating with a BA in Economics. My cumulative undergrad GPA was 2.78, which is certainly not helping me attain my goal of Big 4 employment. I’ve been told that talking to recruiters now would be certain career death and I’m hoping on using the “late bloomer” story whenever I do begin the recruiting process. I can honestly say my attitude towards academics has improved tremendously over the past year or so. In the two graduate summer classes I’ve taken so far, I’m pulling a 3.85 GPA.

My question is, how long will it take for my improved academic performance to become substantial evidence of my matured academic attitude? Should I hold off on fall recruiting? Go for an internship instead of FT? Any advice would be greatly appreciated.

While a 2.78 isn’t the end of the world, you are correct in your thinking that most Big 4 recruiters will turn their nose up at you. That being said, talking to recruiters is not “certain career death.” Quite the opposite, in fact. The more face time you get with these Big 4 types, the more they will remember you. Your “late bloomer” story certainly holds water now but you admit that you’ve only taken two classes. If you can maintain the GPA, then great, you’ll be in good shape. And yes, recruiters will see this is as a positive direction. If you revert to your keg standing ways (some people never get over it) then hopefully your guessing skills on exams have gotten better.

In the meantime, here are a couple of things you can do to hopefully marginalize that 2.78:

• List your summer course GPA on your resume – leave the undergrad GPA off, but be honest if and when you’re asked about it.
• Major GPA vs. Cumulative GPA – We’re assuming the 2.78 is your overall, or cumulative, GPA. Calculate your major-specific GPA (the classes that differentiate you from another business degree) – if it is above a 3.0, list it on your resume.

The problem with your situation, Late Bloomer, is that you don’t know what the thought process of the Big 4 recruiters, employees and partners that you meet are. Some of them may love you and others will take one look at your undergrad GPA and will respond not with “no” but “hell no.” Typically when a recruiting team is split on a candidate, the hierarchy trumps and if you didn’t impress the pants off that partner, you’ll be out.

Considering all that, you should absolutely attend the fall recruiting events and meet as many different firms and make as many contacts as possible. Also, be realistic with them – it’s okay to admit that you faltered a bit during your undergrad – just know that you’re going to have to prove it to them in the long run that you can keep things on the up and up.

Whether or not you should go for an internship or FT is your call. Will you be graduating in spring or summer of ’11? Then going for full time is probably the best move, regardless of the not-so-stellar undergrad GPA. If your MSA program can be stretched out, go for the internship. Even if you don’t get it, you’ll make plenty of contacts in the Big 4 so that when recruiting comes around for next year, you’ll be a familiar face and the recruiters will get a sense that you’re committed to academics and that you are a solid candidate for their firm.

Accounting News Roundup: Wells Fargo Comes Out Against FASB Fair Value Proposal; PwC Buying Diamond Management; MLB Teams Financials Leaked | 08.24.10

Wells Fargo “Strongly” Opposes Accounting Board’s New Rules on Loan Value [Bloomberg]
“Wells Fargo & Co., the largest home lender in the U.S., said it disagrees with an accounting board’s plan that would require banks to report the fair value of loans on their books.

‘We strongly oppose the expansion of fair value as the primary balance-sheet measurement attribute for virtually all financial instruments,’ Wells Fargo Controller Richard Levy wrote in the Aug. 19 letter. ‘It will only serve to cement a short-term focus on fair-value measures.’

Wells Fargo is the first of the largest U.S. banks to publish its p writers who named an affiliation, according to the Financial Accounting Standards Board website. The letter was written to officials at the board, which said in May that it may require banks to report the fair value and amortized cost of loans and some other financial instruments on their balance sheets.”

PricewaterhouseCoopers to Buy Consulting Firm Diamond Management [WSJ]
PwC is paying $378 million for Diamond Management & Technology Consultants, “[share]holders will get $12.50 a share, a 31% premium to Monday’s closing price. The stock, up 29% in 2010 through Monday, was last at the bid level three years ago.

‘This is an attractive all cash opportunity for our stockholders, creates exciting prospects for our people, and will provide us new and enhanced capabilities to bring to our clients,’ said Diamond President and Chief Executive Adam Gutstein. ‘There’s a clear strategic fit between PwC’s assets and aspirations and Diamond’s positioning.’ “

Return prudence to accounting [FT]
“What a pity that ultra-theoretical standard-setters around the world have chosen to jettison prudence, a generally accepted accounting convention derived from more than 100 years of experience. This high-risk approach has led to absurdly lengthy and unrealistic annual reports that are now virtually incomprehensible.”

Sex Harassment at Work Gets Weirder, Scarier [Bloomberg]
“Not that I think it’s weird that a brokerage firm chief executive would pin a female clerk on the floor by putting his shoe on her breast (the right one, if you must know), or that some insurance company guy in Fullerton, California, would put a sample of his semen in a female colleague’s water bottle. Twice.

But it did get my attention when I started leafing through this year’s press releases from the U.S. Equal Employment Opportunity Commission and found a case where a supervisor allegedly said that women should outfit themselves in Vaseline, and nothing else; one where a manager in human resources (yes, in human resources) allegedly inquired as to the color of an assistant’s panties; and a case against a company president who the EEOC says pulled a subordinate’s pants down in front of her coworkers.”


Borders CFO resigns for new job [Reuters]
Mark Bierley is moving on after 12 years for a new gig.

Businesses Add iPads to Their Briefcases [WSJ]
“Apple, which said it sold more than three million iPads through the end of June, attributes some of the device’s success to businesses. The Cupertino, Calif., company’s Chief Operating Officer Tim Cook said in July that ‘very surprisingly’ half of the Fortune 100 are testing or deploying iPads.

More than 500 of the 11,000-plus applications built specifically for the iPad are in the business category. A free app from Citrix Systems Inc., which allows people to access internal corporate programs from the iPad, has been downloaded more than 145,000 times.

‘Everyone in IT is jumping on this one,’ said Ted Schadler, an analyst at Forrester Research. ‘Rather than wait for people to start complaining they’re saying why don’t we get a few of them in and see what they are good for.’ “

MLB Confidential: The Financial Documents Baseball Doesn’t Want You To See, Part 1 [Deadspin]
Deadspin got their hands on financial statements for several Major League Baseball teams and even the lowliest of clubs – namely the Pittsburgh Pirates – make truckloads for their owners: $20.4 million in partner distributions for fiscal year ’08.

The sports rag also has financial statements for the Tampa Bay Devil Rays, Florida Marlins and L.A. Angels. And as you might expect, people (MLB and the clubs’ people) are not happy.

Sue Sachdeva Guarantees That She’ll Be Able to Watch It’s the Great Pumpkin, Charlie Brown a Free Woman

And the World Series too!

Maybe we’re unfairly assuming that Suze is a fan of the Peanuts gang or baseball but what else is going on in between October and November 18th? A few Badger football games?

Koss Corp. embezzler Sujata “Sue” Sachdeva will get a one-month reprieve on her sentencing after requesting, and receiving, an order from U.S. District Court Judge Lynn Adelman.

Adelman said in a brief order that federal prosecutors did not oppose Sachdeva’s request to adjourn the sentencing to Nov. 18 from the previously scheduled Oct. 18.

Koss’ Sachdeva gets sentencing reprieve [Business Journal of Milwaukee]

Is Philadelphia’s Tax on Bloggers That Big of a Deal?

Every state, municipality, township and hamlet is desperate to close their budget gaps. With such desperation comes a flood of bad ideas that include taxes on everything from juggling to hot air balloon rides.

The Philadelphia City Paper ran a story last week about the $300 Business Privilege Tax that the city is imposing on bloggers, freelancers and other contractors since they are engaged in the activity for profit. Seemingly, another stupid idea.


The City Paper speaks to a couple of bloggers – clearly doing it as a hobby – that are technically engaged in a for-profit activity because they have ads on their blogs. They were notified by the city that they owed the $300 for a lifetime business privilege license (you can also opt for a $50 annual license). The Philadelphia Department of Revenue argues that “simply choosing the option to make money from ads — regardless of how much or little money is actually generated — qualifies a blog as a business.”

Supposedly, changes to the city’s law are in the works to be introduced next month that would exempt the first $100k of a business’s profit.

However, there is a far simpler solution to this problem that is mentioned by Christina Warren over at Mashable which is, quit running ads on your blog. Maybe the city’s tax is excessive, annoying, desperate for reform or just plain stupid but if you don’t run ads on your blog – that wasn’t designed to make money – you avoid the business privilege license altogether. It’s as simple as clicking a mouse and the government is out of your life (at least this respect).

Or continue to be stubborn and fight the bureaucracy of the Philly City government. Your choice.

Pay Up [Philadelphia City Paper]
Philadelphia Tax Code Sparks Big Controversy with Small Bloggers [Mashable]

Ex-BofA CFO Would Appreciate It if Andrew Cuomo Got His Name Right

Andrew Cuomo must be feeling pretty good about his chances at becoming Governor of New York, even with some new competition entering the race.

However, we came across a little mistake that could worry voters that Drew doesn’t really pay attention to the little things that matter. Like people’s names.


You’d think that if Cuomo was going to traipse all over town throwing allegations at people, he’d at least know what those people’s names are.

Case in point, the first line of the response from former CFO (and current consumer banking CEO) Joe Price had to go to the trouble of pointing out that his name is not, in fact, “Joseph,” it is “Joe.”

Talk about a low blow, Cuomo. You think you can run Albany and just get people’s names wrong? They’ve threatened to shut down the whole government for less than that.

Hey, Cuomo, The Name’s Joe, Not Joseph [Charlotte Business Journal]

Deloitte Highlights Its Non-monetary Commitment to Its Talent Via Hexagon-Filled Report

Deloitte officially rolled out its Talent Annuity Report today and before you start wondering just what the hell a Talent Annuity Report is, Barry Salzberg enlightens everyone:

We published a Talent Annuity Report because we regard our talenhat generates an annuity. We take pride in the contents of the report — it is a tangible manifestation of our passion and commitment to our talent. Our people are vital to the continued growth of our business, and we are focused on fostering a quality culture where everyone has the opportunity to reach their fullest potential.

Everything Dr. Phil says may in fact be true, however when we look at the report, we see a lot of indecipherable hexagons that may or may not be used to communicate this “passion and commitment to [Deloitte’s] talent.”


Fortunately, if you’re not too interested in navigating through the geometric maze, the press release manages to break down why it was such a bang-up year for the talent at Deloitte:

The report chronicles a year of bold talent initiatives and historical milestones including:
• Groundbreaking of Deloitte University, a $300 million state-of-the-art center established to foster personal and professional growth at Deloitte

• Company-wide rollout of Mass Career Customization® , a career development model that enables all Deloitte professionals to dial up and dial down their careers to fit their needs at various life stages

• Launch of a voluntary sabbatical program for employees to take up to six months leave to engage in volunteering and other personal pursuits

• Presentation of Deloitte’s cutting-edge corporate lattice business strategy in a new book titled “The Corporate Lattice: Achieving High Performance in the Changing World of Work“

• Introduction of a customized approach to talent development with Deloitte professionals participating in 2.4 million learning hours

• Achievement of the 1000+ mark for women partners, principals and directors — a reflection of Deloitte’s hallmark Women’s Initiative and commitment to an inclusive environment.

• Recognition from more than a dozen national organizations, including the No.1 ranking on BusinessWeek’s “Best Places to Launch a Career” list

Whether or not spending $300 million to build the Deloitte frat house is worth it, is a matter of opinion.

As for BusinessWeek lists and whathaveyou, most employees understand that this perpetual conclusion is for marketing purposes and would be more than happy to take exception with it. As for the rest of the initiatives and milestones, you can take them for what they are worth.

But what’s especially interesting is the timing of this release. These non-monetary reasons are presumably supposed to serve as reminder of Deloitte’s commitment to employees. But since the report was issued in wake of the merit increases we saw last week, it’s almost if it’s meant to console employees after the relatively disappointing news. And if that is the case, it will fail miserably.

Deloitte Releases Talent Annuity Report [PR Newswire]

Survey: Most People Get Away with Sending Inappropriate Emails

Recent data suggests that most of you sending emails regarding the person most likely to sleep their way to partner, the hot piece of ass that isn’t pulling their weight or a recruit from a certain school that asks less-than flattering questions about your firm, are getting way with passing it along to their friends and/or colleagues.

That being said, it does happen. One in twenty to be precise. Speaking from personal experience, sometimes people are reading your emails, especially if something goes viral within a firm and happens to sneak outside the firm. That’s when TPTB get on the horn and demand that people are held responsible.


Hey, nobody’s perfect right? When my particular reprimand came down, all I could do was laugh and say, “Yep, I did send that. Hell, it’s says “From: Caleb Newquist” right there. It was a bad decision on my part and I understand you have to do what you have to do.” And I moved on. Besides, I wasn’t the only one. It was communicated to me that literally hundreds of people were being reprimanded for forwarding the message so it was largely a damage control project and plenty of people were being told, “Don’t do that again. Ever.”

But for the most part, it sounds like most of your “inappropriate messages” fly beneath the radar, including:

Inappropriate jokes, angry messages sent in the heat of the moment, and scathing email replies forwarded to the wrong people are among some of the email gaffes that have landed office workers in hot water with their employers or clients.

One in five of those questioned said they had sent an inappropriate email in the heat of the moment, while almost a third said they had accidentally hit “reply all” instead of “reply”.

More than one in 10 of the 2,000 people surveyed admitted they had mistakenly sent an email criticising a colleague to the person they were insulting.

So while the Telegraph makes a point to note that 1 out of 20 people have been reprimanded for accidentally saying “God, can you believe the partner’s B.O. today?” in the “heat of the moment” it also shows that 19 people are having a great time sending inappropriate emails and not having any problems at all.

However, if you’ve been caught red-handed sending a dirty joke and/or discussing your booze-fueled business trip that may or may not have involved a party back at the hotel room, and were later asked to explain yourself, we’d love to hear about it below. And of course, send us any and all future inappropriate emails that would be 100% appropriate for these pages.

Not that we’re suggesting that you use your work email in an inappropriate manner. You’re representing your firm after all. Have the common sense to use a different email address.

One in 20 people reprimanded for inappropriate emails [Telegraph]

Let’s Discuss: July/August CPA Exam Results

We received a simple request over the weekend:

With CPA exam results beginning to be released, could we get a thread going on how everyone is doing?


With short months until we ring in 2011, there’s seems to be plenty of people heeding Adrienne’s advice and are looking to knock this thing out, IFRS and simulation question changes be damned.

For those of you that have been studying and working, and you managed to pass your most recent section, you should seriously consider rewarding yourself by taking an impromptu trip to Burning Man, dropping [insert mind-bending hallucinogenic of choice] just to keep that fire burning for when you return to the cube farm.

For those of you that have once suffered yet another setback, you may feel like that you’re creeping deeper into the Abyss but don’t give up! You’re not a loser for life, just in this particular instance. That being said, you’re likely in a place where you need to vent a little and since losing it on your manager/staff/client isn’t advisable, you should consider expressing yourself below.

So whatever your score is, Elijah Watts-worthy or you struggled to meet the CPA Exam Mendoza Line (we’re setting it at 50%) discuss your results. We’re here to celebrate/cry with you.

Accounting News Roundup: The Problem with American Apparel’s non-CPA CFO; Diversity Still Lags in Accounting; Patrick Byrne Denies Insider Trading Accusations | 08.23.10

Potash says in talks for superior deals [Reuters]
“Potash Corp’s board urged shareholders to reject BHP Billiton’s hostile $39 billion offer and said it was in talks with a number of potential suitors for a superior deal.

Potash Corp, the world’s largest producer of potash based in the Canadian province of Saskatchewan, said superior offers or other alternatives are expected to emerge.

Discussions are on with several of these third parties in order to generate superior offers, the company said in a statement.”

How to Shine in a Skype Interview [FINSying across the country for a second round of meetings, you may be asked to interview for a job from the comfort of your living room.

While it might sound less stressful to some than an in-person meeting, such an interview can be filled with landmines for job candidates.”

The Problem With a Non-CPA CFO [FEI Financial Reporting Blog]
Francine McKenna guest-posts over at FEI for the second time, this time discussing the American Apparel situation and noting that 31 year-old CFO might be in over his head.

Goldfarb Branham LLP Investigating Shareholder Claims Against American Apparel, Inc. [Business Wire]
Speaking of APP, investigations are starting, “Goldfarb Branham LLP is investigating American Apparel, Inc. (APP 0.75, 0.00, -0.09%) due to allegations that the company may have issued materially inaccurate statements to investors concerning its 2009 financial results and the circumstances surrounding the replacement of American Apparel’s auditor.”

Movement afoot to increase diversity in accounting industry [Pittsburgh Business Times]
“Sam Stephenson, a partner at ParenteBeard LLC, a Downtown-based certified public accounting firm, brings an interesting perspective to the equation as a black man who has worked in the profession for nearly four decades. During his long tenure, he has seen improvements in efforts to recruit and promote women in the profession, but ethnic diversity still lags behind.

‘We need to bring this issue to the attention of individuals who run local and regional firms because they may not be aware that this is a problem,’ said Stephenson, who serves as a member of the Pennsylvania State Board of Accountancy, which enforces the licensing rules for CPAs. ‘A lack of diversity often means missed opportunities to attract talent and clients.’ “


Preparer Costs Will Increase Some; Taxpayer Costs Will Increase More [Tax Update Blog]
Joe Kristan responds to fellow practitioner/blogger Robert Flach’s question of how the new tax preparer registration will affect costs for consumers more so than tax preparers.

Gays See Complex, Changing Tax Picture [Dow Jones Adviser]
“Gay couples are taking one step forward, one step back when it comes to their tax rights. Not to mention sideways.

The shifting landscape of new rules and initiatives makes it a big challenge to provide same-sex partners with good tax advice.

In Massachusetts, a successful challenge to a federal law denying gays tax breaks that heterosexual couples get could mean progress, but only if it stands up to an expected government appeal.”

Patrick Byrne Refutes Insider Trading Claims [Forbes]