Author: Caleb Newquist

Founding editor, Going Concern.

Accounting News Roundup: Deloitte Names Van Arsdell as New Chair, CEO of AERS; Maryland Might Be Figuring Out This Fiscal Responsibility Thing; Frank Navigates the Waters | 08.12.10

Stephen C. Van Arsdell Named Chairman and CEO of Deloitte LLP’s Audit and Enterprise Risk Services Subsidiary [PRNewswire]
Thtte vet Steve Van Arsdell replaces Nick Tommasino as the head of Deloitte’s AERS.

As is the wont of these particular announcements, SVA seems pretty flippin’ stoked about the new gig, “I am excited to take the helm of Deloitte & Touche during such dynamic times. We know that to succeed we must always be a leader in quality. This is a shared commitment from all within our organization. The goals we set for ourselves will raise the bar for quality throughout the profession.”

Barry Salzberg got in a few words too, “I am fully confident in Steve’s ability to lead Deloitte & Touche through the myriad challenges and opportunities presented by the economic recovery and regulatory environment changes. His extraordinary talent, experience and leadership style will help further the practice’s primary mission to conduct the highest quality audits. As a continuing and integral member of our senior leadership team, I know his contributions will be considerable. Nick Tommasino has demonstrated a deep sense of partnership and commitment to our organization, and we thank him for his leadership. We’re delighted to bring his client service skills back to the marketplace.”

So, Stevey. Time to get down to brass tacks – everyone’s wondering about those raises.

Microloans Helps Some Small Businesses Survive [WSJ]
“When President Barack Obama signed the American Recovery and Reinvestment Act into law in February 2009 to create jobs and promote spending, the law included $56.1 million for microloans for small businesses, to be doled out through the Small Business Administration through September.

While some critics complain about the government’s economic stimulus efforts, some lenders and borrowers say the stimulus spending that focused on helping small businesses is working.

Targeted toward start-up, newly-established, or growing small businesses, the microloans are short-term loans up to $35,000 each for working capital or inventory and equipment purchases. The intermediary lenders who distribute the loans can choose to lend more than that limit.”

China’s Rich Have $1.1 Trillion in Hidden Income, Study Finds [Bloomberg]
“China’s households hide as much as 9.3 trillion yuan ($1.4 trillion) of income that is not reported in official figures, with 80 percent accrued by the wealthiest people, a study showed.

The money, much of it likely “illegal or quasi-illegal,” equates to about 30 percent of China’s gross domestic product, the study, conducted for Credit Suisse AG and published last week by the China Reform Foundation, found. The average urban disposable household income in China is 32,154 yuan, or 90 percent more than official figures, according to the report.”

It’s Time to Give Up Spreadsheets for Tracking Carbon Emissions [Green Biz via AccMan]
Give up on spreadsheets? The horror. “CFOs, CIOs and sustainability teams at large companies have used spreadsheets for years to track corporate carbon emissions.

We are now, however, at a tipping point where the benefits of carbon management software, also known as enterprise carbon accounting (ECA) software, outweigh the benefits of spreadsheets.

With many large companies recently completing their Corporate Social Responsibility (CSR) reports and Carbon Disclosure Project (CDP) questionnaires, and entering budget planning in the fall, it is time to move away from spreadsheets to reduce risk, save money, increase productivity, and establish an enterprise-class source of record for carbon emission data.”


Budget surplus in Maryland? Believe it. [CPA Success]
California, New York – Pay attention.

Do I Owe My Employees a Career Path? [You’re the Boss/NYT]
“Being responsible for your workers’ jobs is hard. Being responsible for their careers is harder.”

TrueBlue Named to Top of Forbes’ “Most Trustworthy Companies” List [Business Wire]
“TrueBlue, Inc. ranked at the top of the list of companies with the ‘most transparent and conservative accounting practices and most prudent management,’ according to a new ‘Most Trustworthy Companies’ list compiled for Forbes by Audit Integrity, an independent financial analytics company.

Audit Integrity’s Accounting & Governance Risk rating, or AGR, rates companies’ accounting and management practices from 0 (very aggressive) to 100 (conservative); companies with a lower rating have been more likely to suffer equity loss, issue financial restatements and face class action suits, Forbes.com says.”

Maxine Waters Whacked, Barney Frank Untouched [Jonathan Weil/Bloomberg]
JW on the Maxine Waters’ ethics violations and how Barney Frank managet to be smart enough (or just politically savvy enough) to keep himself clean-ish.

Inside Public Accounting’s Top 100 Firms List Has Few Surprises

Inside Public Accounting put out their annual ranking of accounting firms this month and like the Accounting Today list, it is based on revenues so it barely causes a stir.

Not that we don’t appreciate the distraction in the middle of August but the list doesn’t have any surprises and is nearly identical to AT’s. Nevertheless, we’ll present the top 25 firms here for your dissecting enjoyment (previous ranking in brackets):

1. Deloitte [1]
2. Ernst & Young [2]
3. PricewaterhouseCoopers [3]
4. KPMG [4]
5. McGladrey [5] (who is still calling this firm “RSM McGladrey” and “McGladrey & Pullen”? They had cake and punch for crissakes.)


6. Grant Thornton [6]
7. Mayer Hoffman & McCann/CBIZ [8]
8. BDO [7]
9. Crowe Horwath [9]
10. BKD [10]
11. Moss Adams [11]
12. Plante & Moran [12]
13. Clifton Gunderson [14]
14. Baker Tilly Virchow Krause [17]
15. Marcum [20]
16. J.H. Cohn [15]
17. UHY Advisors [16]
18. LarsonAllen [19]
19. Reznick Group [13]
20. Dixon Hughes [18]
21. ParenteBeard [35/36]
22. Rothstein Kass [21]
23. Eide Bailly [22]
24. Eisner [23]
25. WeiserMazars [24]

So then. The top 5 is a snoozer, per usual. You can see that the the firms that experienced a merger or acquisition in the past year are the ones that jumped the most (e.g. BTVK, ParenteBeard, Marcum) with the exception of WeiserMazars, a merger that was an international play as opposed to a domestic one. And since rumored mergers don’t count you don’t see the Eisner Amper effect here. Reznick Group experienced the most significant drop which can’t be explained at this point but we’d love to hear theories.

Full Report [PDF]

All This Talk of Deloitte’s “Double Digit Growth” Has People Wondering

On Monday we learned that Deloitte Tax had a STD and now there’s more chatter about the firm’s performance that could maybe, possibly affect comp for this year:

A new set of video blogs came out from the northeast regional managing partner. He announced double digit growth in perdiods [sic] 9-13 of FY10 and a plan for “continued double digit growth through FY11”. I know everyone is getting antsy over compensation (discussions are supposed to take place beginning next week, with raises hitting on the 9/3/10 payroll), and they keep dropping comments about “substantial raises” and “double digit growth.”


So while some people remain skeptical, it appears that Deloitte is warming you up the troops for a nice surprise next week. Deride if you must but can Dr. Phil & Co. really afford to come in with lower raises than PwC and E&Y?

For a firm that talks like they’ll be numero uno in a few short years, it would be pretty embarrassing to bring in some paltry raises while the firm they’re chasing managed to make it up to at least a few of their people. Discuss the latest and keep us informed.

Is the SEC Taking the “O” Away from the PCAOB?

The PCAOB has had a pretty good run of late. It all started with the SCOTUS handing them a loss that was really a win and the Board has, most recently, gotten ambitious with new risk assessment standards. What’s more is the call of acting Chair Dan Goelzer to have the Board’s enforcement inspections held publicly so audit firms can’t get all mysterio about what they did and did not do to warrant said inspection.

Well, the run of luck appears to have come to an end as the SEC issued a new rule that takes effect next month that marginalizes the Board to the benefit of the accounting firms it oversees (our emphasis).

Going into effect September 7, the rule explains how accounting firms can dispute the PCAOB’s findings during its inspection process. The firms have always had this ability under the Sarbanes-Oxley Act, but the SEC lacked a formal appeals process. (Indeed, the June 28 Supreme Court decision, which affirmed the constitutionality of the PCAOB, arose out of a small accounting firm’s dissatisfaction with its 2004 inspection report.)

A key feature of the process is secrecy. If an accounting firm appeals to the SEC, the PCAOB will be prohibited from making disputed portions of its inspection report public until the commission completes its review, which could take anywhere from 30 days to over 100 days. Moreover, the SEC could decide to keep the information permanently private if its reviewers determine that the PCAOB’s findings were “arbitrary and capricious.”

Meanwhile, the public will learn nothing about the appeals process or the issues under contention, which will further cloud the results of PCAOB inspections for the accounting firms’ corporate clients who read them. “Until now, the SEC has not restricted the transparency of inspection reports pending the opportunity to seek review,” a PCAOB spokesman tells CFO.

So let’s get this straight – if an accounting firm takes issue with anything in the PCAOB’s report, the firm can then run crying to the SEC – which makes that portion of the report secret – and then the report will sit dormant until that portion reads to their liking which can take 30 to 100 days? OH! And on top of that, if the SEC finds something to be ‘arbitrary and capricious’ that issue will never see the light of day?

It’s not like these inspection reports are being issued at a rapid clip (PwC’s and KPMG’s reports for ’09 are still MIA) or filled with details that are actually meaningful to regular folks (e.g. the clients inspected) and now the SEC is going to let the firms write their own inspection reports.

So much for that small matter of “Oversight.” At least the SEC is being (somewhat) transparent about a power grab.

Auditors Can More Easily Dispute PCAOB Findings [CFO]

American Apparel Goes Two for Two: Q2 Filing Late, Q1 Still Pending

Fashion cannot be rushed people. Ask the gang at Fashionista. They’ll tell you.

However, it is still a business which sometimes includes dealing with auditors and other outsiders that want various documentation and whatnot that can simply be delayed if it hinders the creative process. That is, if you keep your company private.

But the second you want to give the American public the opportunity to invest in your skinny jeans, leggings, and thong tanks, you’re playing on the SEC’s turf. This means things happen on a schedule. Delays, excuses or pervy CEO behavior will not be tolerated if it results in late filings.

American Apparel expects to report a loss in the second quarter and requested additional time to file its financial report after the resignation of its auditor, Deloitte & Touche.

It is the latest bump for the hipster clothing chain. The company said in May that it expected a loss for the first quarter, but it hasn’t filed that quarterly report with the Securities and Exchange Commission either.

[…]

Deloitte & Touche resigned as American Apparel’s auditor after the accounting firm said it found material weaknesses in internal controls over financial reporting. Deloitte requested more information from the company to determine if there were problems in previous financial reports. American Apparel said Tuesday it was working to provide that information.

Dov! These 10-Qs are not optional! Plus, it doesn’t help that the financial data that you provide is less reliable than what the federal government issues.

Presumably Marcum was persistent (and comfortable) enough to get you to push the button before so what the hell man? You’ve got them back on your team so this should NBD. You best get the house in order before your stock gets banished to the sheets that are the same color as your undies.

American Apparel expects 2Q loss; request 2Q delay [Bloomberg BusinessWeek]

Earlier:
Deloitte Resigns as American Apparel Auditor; Hotness of Engagement Team Presumably Not an Issue

Just So You’re Aware: There Is Now a Children’s Book Featuring An Accountant…For Your iPhone

No doubt that there’s many a fine accountant that wished there was a children’s book that they could read to their 0-4 year-old to demonstrate that it was an honorable and worthwhile calling.

Similarly there are many parents these days that wished for such a book that could be read without the annoyance of your skin touching paper and also the ability to check in at the local coffeehouse on Foursquare.

The wait is over.

Alan the Accountant is the first in a series of new books starring people in careers that are not usually associated with children’s books. Why should only builders and postmen find fame in children’s books?! Accountants are vital to the world economy, yet children are not encouraged to say I want to be an Accountant in the same way they learn about other careers. This book resets the balance.

[…]

As a student the author Jinky Fox planned to become an accountant, but was sidetracked into fine art. ‘The series of books planned for Alan the Accountant will help me examine the exciting world of Accountancy that I turned my back on,’ commented Jinky.

You see people? Jinky is giving back to the profession he left behind. Admirable to be sure. He’s so committed to the profession that there are plans to have Alan star in future books.

Now for you religious types, you may be disturbed by Alan sans pants but rest assured, this is a book for the whole family and the sanctity of your household is not at risk and it could do wonders for your personal financial management.

[via Accounting Tomorrow]

Confidential to KPMG: If Phil Mickelson Wins the PGA Championship, Don’t Send Him Omaha Steaks

[caption id="attachment_15841" align="alignright" width="260" caption="Not thinking about Five Guys...Not thinking about Five Guys...Not thinking about Five Guys"][/caption]

As we briefly mentioned this morning, KPMG Poster Boy Phil Mickelson is only about 90% for this week’s PGA Championship because he’s been suffering from psoriatic arthritis for the last two months.

While this may have hampered his game in the last couple of tournaments, there’s been a far more serious development. Phil has gone vegetarian.

We can only imagine what kind of frenzy this development this has sent the KPMG Phil-handlers into. There’s no doubt in our minds that Omaha Steaks are the go to “FTW Phil!” gift that he receives before after every tournament he wins. But now what? This veggie thing is serious.

“I know this is crazy,” he said Tuesday. “For the last two months now, I’ve been a vegetarian. Can you believe that?”

This puts Mickelson in an awkward position. Not only is he a connoisseur of all things beef, but he is part of an ownership group that has purchased the rights for Five Guys burger and fries franchises in Orange County, Calif.

“The real test is driving by a Five Guys and not stopping,” he said. “I don’t know if I can do that yet, but we’ll see.”

Since it’s only been a couple of months, we doubt that Phil has gotten over the meat sweats yet but if he happens to pull out a victory in this last major, you can expect the big guy will be dumping those Five Guys franchises ASAP.

Mickelson a Strait shooter [Milwaukee Journal Sentinel]

Accounting News Roundup: Hurd Surprised HP with PR Move; Whistleblowers Should Avoid…; Rangel Won’t Have This Resignation Talk | 08.11.10

H-P Board Surprised Hurd Didn’t Go Quietly [WSJ]
H-P’s directors ‘hoped he would move on,’ said one person familiar with the situation, adding that the board prefers to focus on ‘protecting the brand and taking the higher ground.’

Mr. Hurd resigned Friday over ethics violations related to his relationship with a former H-P marketing contractor, Jodie Fisher. His exit was immediately followed by hard-hitting comments from H-P executives and a board member. Mr. Hurd left with a separation agreement that included a $12.2 million cash payment and a promise not to disparage the company or ‘induce others’ to do so.

In the days bn, according to a person familiar with the matter, Mr. Hurd hired Sitrick & Co., a Los Angeles-based firm known for handling crisis communications for high-profile individuals, including former H-P chairman Patricia Dunn and celebrity Paris Hilton.”

What Not to Do When Blowing the Whistle [FINS]
Sure you can get paid the big bucks to sing like a canary these days but are some things you might want to consider first.

Black Accountants Group Names New Leader [Afro American]
“Calvin Harris Jr., was recently elected the 24th national president and CEO of the National Association of Black Accountants (NABA). NABA, a 501 c(3) nonprofit, is the leading association for African Americans and minorities in the accounting, audit, finance, information technology, tax, and other business related fields. Harris’s two-year term began July 1.”

Wipfli LLP: Washington state-based Michael R. Bell & Company, PLLC, joins Wipfli LLP [WisBusiness]
“Effective August 1, the partners and associates of Washington state-based Michael R. Bell & Company, PLLC, joined Wipfli LLP, an international CPA firm headquartered in Milwaukee, Wisconsin. Michael R. Bell & Company specializes in providing audit, accounting and consulting services to a variety of health care organizations and will become part of Wipfli’s full-service health care industry practice.”


Salesforce Customers Want Better Link to Accounting [Web CPA]
“A new survey of Salesforce.com customers found that the majority of them want to link more closely between their customer relationship management software and accounting software.

The survey, by Salesforce.com partner FinancialForce.com, found that 67 percent of those using competing packages cited a lack of integration of their current accounting software with customer relationship management software as their biggest headache.”

Rangel Says He Won’t Resign, Requests Ethics Hearing [Bloomberg]
Rangs gave a 30 minute speech yesterday to let everyone know that he’s far too old to just rollover for 13 alleged ethics violations.

Plum Benefit to Cultural Post: Tax-Free Housing [NYT]
Being a director of some of the best known museums in the world is not only lucrative (multi-million dollar salary), you can also get a pretty sweet pad – tax free!

Mickelson Has Arthritic Condition That Made Him Question His Golf Future [Bloomberg]
Rest easy T Fly, Phil says he’s back to 90% just in time for the PGA that starts tomorrow.

Memo to IRS: Regulating Tax Preparers Is Not ‘Mission Critical’

“We believe that the IRS has neither demonstrated the need for extending the non-signing preparer requirements to CPA firms nor that its proposed testing program merits shifting IRS resources away from other mission-critical programs.”

~ Thirty-one members of Congress sent a letter to Tim Geithner, asking TG, Doug Shulman & Co. to, pretty please, reconsider the requirement for non-signing CPAs.

Judge Grants Preliminary Approval in New Century Shareholder Settlement: KPMG to Pay $44.75 Million

Not to be confused with the settlement that KPMG reached with the Trustee of New Century that we reported on back in June. This particular lawsuit was brought by New York State Teachers’ Retirement System and shareholders in New Century.

Law.com reports:

A federal judge on Monday granted preliminary approval to a $125 million cash settlement for shareholders of bankrupt New Century Financial Corp., one of the largest lenders to collapse during the subprime mortgage meltdown.

The settlement involves three stipulations: Auditor KPMG LLP will pay $44.75 million; the underwriter defendants will pay $15 million; and New Century’s former officers and directors collectively will pay more than $65 million.


Along with the undisclosed sum from the Trustee of New Century, KPMG also paid $24 million to settle with the shareholders of Countrywide. Since we have no idea what the firm paid to settle with the Trustee we can’t give a ballpark number for settlements for the last 3-ish months but on the low end it’s at least $69 million.

If we put the over/under at $100 million, what are you taking? Throw in your ballpark figure just for fun.

$125 Million Shareholder Settlement in New Century Financial Collapse [Law.com]

Earlier:
A Few People Noticed That New Century Execs Settled with SEC

Eisner, Amper Politziner Playing Coy on Merger Rumors

NJBiz reports that New York-based Eisner is planning to merge with Edison, NJ-based Amper Politziner & Mattia LLP. The two firms – ranked 24th and 26th in Accounting Today’s most recent list of Top 100 firms – combined would have 1,200 employes and over $250 million in revenue.

This would shoot the combined firm – working name: Eisner Amper – to 14th on the list (based on revenues) ahead of Clifton Gunderson and hot on the heels of Baker Tilly Virchow Krause.


From the looks of it, the merger would benefit Eisner’s presence in the Garden State while APM would have much better access to the NYC market.

Eisner’s CEO Charles Weinstein wasn’t reached for comment and Amper CEO Howard Cohen told NJBiz, “We have no binding legal documents with any firm at this time,” which, as far as we’re concerned, basically means that it’s a done deal and the lawyers are still sorting out the signing pages.

Of course there’s always the slim chance for a board room blowup and the whole thing gets called off but we’re all hoping for the best.

EXCLUSIVE: Amper Politziner plans merger with Eisner [NJBiz via Web CPA]