Author: Caleb Newquist

Founding editor, Going Concern.

PwC Canada Wants Everyone to Know That They Didn’t Audit Bernie Madoff’s Funds

pwclogo.thumbnail.jpgWith all the D talk out there re: anything Madoff, and most recently possible hotboxing and manscaping we’d hoped that maybe this whole story had taken a turn towards smut for good. Alas, we find ourselves back to a litigious story, this time it’s P. Dubs of the Canadian variety that are getting their asses sued:
More, after the jump

The Canadian arm of PwC has been named in seven separate lawsuits claiming as much as $2bn in damages for investors who lost almost everything in the largest fraud in history…PwC Canada has been accused of negligence for failing to spot that Fairfield Sentry’s $7.2bn of assets simply did not exist. The firm signed off accounts in 2007 that stated 97.3pc of Fairfield Sentry’s assets were held in short-term US treasury bills – an asset class that should be safer than cash.

PwC, obviously quite aware that a sex scandal wrapped inside a financial scandal may confuse anyone that is both distracted by copulation and financially illiterate, issued this statement:

“PwC Canada provided auditing services to the Fairfield Sentry fund, but was not the auditor for Bernard Madoff Investments where the alleged fraud occurred. PwC Canada’s auditing of the fund’s financial statements fully complied with professional standards.”

Now, to some, this may seem unness for P. Dubs to explain that they didn’t audit Bernie’s funds since this never would have gotten past any reputable firm. However, since we now have a sex scandal mixed with the biggest financial scandal ever, involving thousands of duped investors, PwC decided to err on the side of caution.
Madoff victims to sue accountants PwC over feeder fund audits [Telegraph]

Our Invitation to Big 4 CEO’s to Start Blogging

jnewman.jpgWe’d like to think that we encourage free and open discussion here. Everyone is welcome to join the conversation.
And by everyone, we mean if Dennis Nally, Tim Flynn et al. were to tell us in the comments how we deserved a life sentence of footing the Brooklyn phonebook because of our butchering of the English language, we’d be thrilled. Sadly, this is probably nothing more than a pipe dream.
Jeremy Newman, the CEO of BDO International, is by far the closest to fulfilling this dream. J. New, you’ll be interested to know, has his very own blog.
More, after the jump


Not surprisingly, the blog doesn’t seem to have the class or brilliant readership of other accounting/finance blogs that we know about but we give the dude credit for putting himself out there. Granted, if someone calls him a “hack loser” it probably won’t get published in the comments but you’ve got to start somewhere.
So this is our invitation to the rest of the Big 4 CEO’s and, yes, you too, Grant Thornton, to make the unprecedented leap into the blogosphere. Think of the transparency these firms would have as a result. The need for the annual survey about how these firms are such great places to work would become unnecessary because there would be constant real-time updates based on every decision made.
The best part is that, if GC happens to say something that they find offensive, unfair, blown out of proportion, or just plain obnoxious, then they’ll have the opportunity to talk shit respond directly. Then we can have feuds in the blogosphere that will be significantly more direct than any confrontation that has ever occurred between two people in a Big 4 firm.
Let’s help these guys out as I’m sure this will be a difficult task for them. Leave your suggestions of what your favorite CEO’s blog would be called or what kind of questions you’d like to ask them in the comments

Preliminary Analytics | 08.24.09

hummer-h2-accident001.jpg• GM Said to Be Close to Agreement on Sale of Hummer to Chinese – Because that’s EXACTLY what China needs. [Bloomberg]
• IMF set to decide on Serbia loan – “The 800m euros instalment is dependent on the government making reforms to comply with IMF conditions set out when the original loan was agreed.” Oh, Serbia. Take that money and you’re doomed. [BBC]
• Humour is an act of aggression, claims German academic – This guy obviously saw Inglorious Basterds over the weekend. [Telegraph]
• Common Sense 2009 – Larry Flynt says we all strike. It’s not the worst idea we’ve ever heard. [Huffington Post]
• Senator Seeks Broad SEC Market Study – “In a zero-based regulatory review, each part of the current market structure would be reviewed comprehensively, as opposed to a traditional review of one particular type of market structure.” Which is what Senator Kaufman is requesting. Sure. Why not? [WSJ]

Review Comments | 08.21.09

geithner-tim-4.jpg• Geithner: U.S. Dealings With Goldman Were Appropriate – “We have been forced to do just extraordinary things and, frankly, offensive things to help save the economy,” Mr. Geithner said. “I am completely confident that none of those decisions…had anything to do with the specific interest of any individual firm, much less Goldman Sachs.” We’re done here. [WSJ]
• Informant in UBS Case Gets 40 Months in Prison – That was worth it. [DealBook]
• Humble pie for bust billionaire – He called Russians not in the bil-club ‘losers’. Classy. [BBC]
• Meredith Whitney Predicts More Than 300 Bank Failures – Meh. [Bloomberg]

Poll Results

For the love of God has anyone started drinking yet? We figured we’d share the results of our two polls today before you all blow out for the weekend and start making bad decisions.
Get the results, after the jump


With nearly 41% of the vote, Weiner, Diner, Dicker & Dunker will be the new firm formed after the speculated super-duper mega-merger occurs.
And, risking a mistake of Election 2000-esque proportions, we’re calling the race for best/worst video for E&Y who has edged out KPMG. We’ve presented it here again for your viewing and completely off beat clapping pleasure:

Today in Big 4 Thriftiness

soda machine.jpgOur post from yesterday re: PwC’s concern over your consumption of high fructose corn syrupy beverages has struck a nerve with some.
So, being big believers in striking while the iron is hot, we thought we’d tell you that about a tip we received telling us that KPMG has also recently raised the price of soda in their offices from 50 cents to 75 cents.
Thriftiness continued, after the jump


We also learned that any perks, luncheons, birthday cakes, etc., etc. that do not benefit the entire office have been eliminated. Gourmet coffee machines apparently still remain because the coffee drinkers will not settle for freeze-dried Taster’s Choice.
Bottom line seems to be one of two things: 1) The firms are squeezing pennies until Lincoln’s beard pops off or B) The powers that be are faux-concerned about the reality of you sitting on your asses for 12+ hours a day and are attempting to get you to cut down on the calories.
Discuss your firm’s favorite cost cutting measure, unique revenue ideas, or your plans for losing the Big 4 fifteen in the comments.

PwC’s Re-thinking of the Bell Curve Ranking

pwclogo.thumbnail.jpgA tip we received yesterday mentioned that PwC has been progressively narrowing their performance rating scale. P. Dubs originally had the 1 to 5 scale, then moved down to 1 to 4, and now uses 1 to 3.
Obviously, this leaves less room for interpretation of one’s ranking as it compares to the other firms. As far as we know, E&Y and Deloitte both use 1 to 5, and KPMG has the indecipherable 9 box which is somehow combined with a 1 to 5 scale (we think?).
More, after the jump


So let’s talk about this whole mess. You don’t have to be a Elijah Watts recipient to figure out that, at the very least, PwC is making their rankings clear: 1 – you’re well connected; 2 – you’re lucky; 3 – you’re gone. On the one hand, there’s less confusion. On the other, it’s the firm’s way of squeezing people out based on “performance” rather than admitting that they are impervious to the struggling economy.
The rest of the firms are doing the same thing but due to the unwillingness or inability to make their ranking system less mystifying or subject to manipulation, forced ranking will continue. PwC seems to be the first firm to integrate a system that “legitimizes” it.
Discuss in the comments P. Dubya’s move here and why it works/doesn’t work and what the firms should be doing to improve their ranking systems because as it stands right now, it’s total bunk.

A Quick Word About Sending Us Tips

anonymous.jpgHey, it’s Caleb. I’m going to take a few minutes of your otherwise 100% chargeable day to let you know that there are several ways that you can send us tips:
• Email: tips@goingconcern.com
• Twitter: @going_concern – Send us a direct message
• Facebook: Join our group or friend me and send me a message.
• AIM: ID is CommandoL1
We also want you to know that we will always keep your tip in confidence and that all sources are unidentified when cited in posts.
We appreciate all of you reading and all the tips that you have provided so far. Keep them coming!
Thanks. Now do something billable.

Preliminary Analytics | 08.21.09

300px-Toblerone-1.jpg• Switzerland’s Profit on UBS: $1.13 Billion – “On Thursday, Switzerland converted a note that gave it a 9.3% UBS stake and immediately sold the 332.2 million shares at 16.50 francs each, a 1.4% discount to the stock’s closing price Wednesday. The government said it earned an annualized return of 30% on the 10-month investment.” No doubt they went and bought… [WSJ]
• Madoff Yacht Up for Sale – Ninety footer named Leopard Bull. Sounds like Bern might have been describing his favorite undies combined with a self assigned nickname for a certain less than spectacular organ. [DealBook]
• Sale of Chicago Cubs to Ricketts family called ‘imminent’ – Yay, nay, or meh Cubs fans? [Chicago Tribune]
• #98 Sharon Allen – Forbes most powerful women list includes the Deloitte Chair. [Forbes]