Category: Firms

H&R Block Was Pretty Eager to Dump RSM McGladrey

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This morning we learned that H&R Block would be selling RSM McGladrey to McGladrey & Pullen for $610 million. This reunion of the two firms is interesting because just a couple of years ago they couldn’t stand the sight of one another. These days, you might conclude that since they opted to rebrand under the name “McGladrey” that everyone has kissed and made up but we all know better.

In all likelihood, there are partners on both sides who would rather set their CPA certificates on fire than work with the other side. The problem for the partners in these firms is that they probably had little choice in the matter, as H&RB seemed intent on cutting off the weak link:

[T]he top U.S. tax preparer looks to jettison the underperforming division and focus on its core business. H&R Block will finance about $65 million of the deal value as it looks to push through the sale of RSM McGladrey.

[…]

In June, H&R Block’s new Chief Executive William Cobb told analysts that RSM’s falling profit and revenue were a drag on the company’s earnings, and that the unit and its troubles were on his “radar screen.”

“(The sale) should improve overall corporate margin, as Tax Services margin in FY11 was 27.1 percent and RSM McGladrey’s was 9.3 percent,” Oppenheimer analyst Scott Schneeberger said in a note to clients.

And despite the Blockheads eagerness, the gang at M&P seems perfectly okay with it. From the firm’s press release:

“The Board’s objective is to reunite the assurance, tax and consulting practices under an integrated McGladrey & Pullen partnership structure,” said Jerry Bourassa, Chairman of McGladrey & Pullen’s Board of Directors. “The anticipated transaction will not impact the quality and timeliness of services to our clients. Our partners and employees remain focused on meeting and exceeding client expectations.”

[…]

“This is all about what we believe to be in the best interests of our clients, our employees and our partners. We see great opportunities for success and growth for McGladrey & Pullen as a firm reunited in a traditional partnership structure,” said Joe Adams, Managing Partner of McGladrey & Pullen. “Our relationship with H&R Block has served us very well but we both agree that it is time to move on.”

So it sounds like there may be cake and punch but it probably won’t be a lively affair.

Of course we’d rather hear from the people on the ground (i.e. the McGladrey partners, employees, Natalie) about what they make of this shitstorm. I can’t imagine anyone missing the used car dealership of the tax prep world but is this reunion going to work? Will C.E. and the gang now be able to turn Mickey G’s into the next accounting powerhouse? Can we get one name for the combined firm, for crissakes? All important questions. Please enlighten us below.

H&R Block to sell consulting unit for $610 mln [Reuters]
McGladrey & Pullen, LLP signs letter of intent to acquire RSM McGladrey, Inc. [McGladrey]

*Dustin Bradford

Grant Thornton Dodges the Koss Bullet, Is Dismissed From Shareholder Lawsuit

U.S. District Judge Lynn Adelman has dismissed Grant Thornton as a defendant in a class-action shareholder lawsuit against GT, Koss Corp. and CEO Michael J. Koss, filed in January 2010 on behalf of plaintiff David Puskala and other Koss shareholders.

In his ruling, Adelman stated that the plaintiffs failed to make a case for GT’s epic failure to detect former Koss executive Sue Sachdeva’s $34 million embezzlement/hoarding scheme. Reasonable, considering GT auditors scared the crap out of old Sue, even though they were sticking newbies on the gig.  “Fear was one thing. I thought it was imminent,” she said in a court deposition last year. “Their auditors, every time they walked in, I’d say, ‘This is it. They’re going to catch me.’” Shareholders’ issue – we assume – is that they didn’t. Year after year after year after year until 2009 rolled around and the whole house of cards came tumbling down.

The judge also dismissed claims of willful or reckless behavior against Michael Koss, saying “I conclude that the innocent explanations are more compelling than the inference of recklessness.” Meaning Mike couldn’t possibly have known Sue had been siphoning off millions in company money over a six year period, absent hanging out at her house and noticing all the fancy new shit she had strewn everywhere. And stashed in closets. And bursting out of her garage.

As for Grant Thornton, the judge wrote that the occurrence of fraud and failure to detect it doesn’t imply recklessness on the part of the accounting firm, but rather that the firm was negligent. While it is clear that Sachdeva used her position with Koss to bypass the company’s not-rock-solid internal controls, it is also believed that the controls were sufficient so as not to be obviously unreliable to a reasonable person (or auditor fresh out of accounting school). We’re looking forward to hearing how audit professors use this decision to emphasize the cavernous depth between “negligence” and “recklessness” on the part of auditors.

Sachdeva is still a defendant in the Puskala lawsuit and is currently serving 11 years for the fraud.

Grant Thornton dismissed from Koss shareholder lawsuit [Milwaukee Journal-Sentinel]

Promotion Watch ’11: Grant Thornton Admits 26 New Partners and Principals

Apparently everyone’s email at the Purple Rose of Chicago is broken because I had to learn about this from a press release.

Grant Thornton LLP, the U.S. member firm of Grant Thornton International Ltd, one of the six global audit, tax and advisory organizations, admitted 26 new partners and principals to the firm, effective August 1. These partners and principals are based throughout the firm’s offices across the country.

Partners and principals admitted to the firm are thought leaders upon whom the firm relies to provide personalized attention in serving clients. These professionals have demonstrated consistently their extraordinary ability to understand and meet the needs of client companies and industries. They have also demonstrated long-term leadership in the accounting profession and the community.

“These professionals have demonstrated extraordinary client service, driving value for the dynamic firms we serve,” said Stephen Chipman, Grant Thornton’s CEO. “These leaders exemplify Grant Thornton’s mission of making a difference – to our colleagues, our clients, our profession and our communities.”

It’s also strange that no one from GT has dropped any news regarding compensation discussions as this is about the time we should start hearing it or sayeth comments from the last post on the subject. Anyway, give the new partners a slap on the back or at least a nice note.

Jeremy Newman’s Blogging Career Is Coming to End

Related: he’s also stepping down as BDO International’s CEO on September 30:

[After] 33 years in total with BDO UK and BDO International, I will be stepping down on 30 September 2011.

I have had a fantastic career and have been privileged to lead BDO UK for 7 years and BDO International for the last 3 years. I have had some great colleagues, worked with some brilliant people and, in my earlier career, been involved with some terrific clients.

Martin van Roekel, the firm’s Managing Partner in the Netherlands, will officially be the new International Chief on October 1.

Newman says “it is time for a change,” but he “[doesn’t] know what I will do but after 33 years in this business, I am looking forward to seeking new opportunities outside the accounting profession.” He is promising to keep blogging through September, so hopefully he’s still working on his delicate sensibilities.

Moving On [CEO Insights]

One Might Get the Idea That Glen Rose Petroleum Corp. Fired Its Auditor in Favor of a Firm That’s Less Likely to Issue a Going Concern Opinion

It’s not entirely clear why Jonathon P. Reuben’s services are no longer needed but you could easily conclude that the GCO wasn’t appreciated.

On June 20, 2011, the Audit Committee of the Board of Directors of Glen Rose Petroleum Corporation (the “Company”) approved the termination of services of Jonathon P. Reuben CPA, An Accountancy Corporation (“JPR”), effective immediately.

JPR was the independent registered public accounting firm for the Company for the fiscal years ended March 31, 2010 and 2009. The reports of JPR on the Company’s financial statements for the years ended March 31, 2010 and 2009 did not contain an adverse opinion or disclaimer of opinion, and such reports were not qualified or modified as to uncertainty, audit scope, or accounting principle, except that the reports of JPR on the Company’s consolidated financial statements as of and for the years ended March 31, 2010 and 2009 contained an explanatory paragraph which noted that there was substantial doubt as to the Company’s ability to continue as a going concern due to a deficit in working capital and incurring significant losses.

BDO will take it from here. Perhaps a nice welcome to the partnership gift for one of the newbies?

8-K [SEC via Citybizlist]

Promotion Watch ’11: BDO Admits 13 New Partners

Jack Weisbaum is letting a baker’s dozen join the club, although with the new national heads recently announced, there’s an new extra layer between the newbies and the most interesting accounting CEO in the world.

Here are the lucky 13:

John Barkmeyer (Orange County – Assurance), Doug Bekker (Grand Rapids – Tax), Elliott Binder (San Jose – Tax), Sofia Blair (New York – – Assurance) and Mike Campbell (San Francisco – Tax), Demetrio Frangiskatos (New York – Assurance), Nania Gopal (Orange County – National Assurance Office), Mike Hottel (Washington, DC – Assurance), Joel Mitchell (Chicago – Tax), Stathis Poulos (Raleigh – Assurance), Jennifer Quaglino (Woodbridge – Tax), Chris Tylka (Chicago – Assurance) and Andy Zaleski (Detroit – Tax).

Congratulations and stay thirsty, new partners.

[via BDO]

Promotion Bonus Watch ’11: Grant Thornton

The latest from the moneymailbag:

Hi Caleb,
Can we get a thread opened about Grant Thornton raises and promotions. We started finding out promotions yesterday and the raise info came along with it. Thanks,

Not much news out of Grant Thornton lately so thanks for reaching out. The last we heard from Purple Rose of Chicago was that auditors were wanting their raises and bonuses to rival the Big 4 after a hellish busy season. I’d still be willing to be that Michelle Bachmann has a better chance of becoming President than GT’s raises keeping pace with the Big 4 but I do like a good longshot.

So if you’re in the House of Chipman and got news about a promotion, let us know and share the details of your newfound riches.

Chili Cook-offs, Thank You Notes Probably Keep Grant Thornton IT Team From Sabotaging the Whole Firm

As we know, your information technology teams can be what holds things together at your firm in times of strife. If you’re good to these people, they’re good to you. And if you treat them poorly, well…good luck to you.

Grant Thornton has been recognized as one of Computerworld’s best places for IT professionals to work, the only accounting firm on the list. It’s a typical ranking with the general buzzword descriptions along with examples of why you should be hella-jealous that you don’t work there. For the IT gang at GT, not only do they get to show off their culinary talents at “annual chili cook-offs and dessert competitions” but when they go above and beyond the call of duty, there seems to be a Hallmark system in place.

To encourage employees to thank their co-workers and recognize a job well done, the IT department developed a way to voluntarily track the sending and receiving of thank-you notes. The names of both senders and recipients are submitted for drawings in which the winners receive a gift cards.

What’s not entirely clear is if these “thank-yous” are inspired by Stephen Chipman’s past communications or if was simply another way that the IT team was able to avoid human contact. Either way, it sounds like they enjoy a decent gig at the Purple Rose of Cairo and that will keep anything catastrophic from happening.

BDO Slims Down to Four Regions, Names New National Heads of Assurance and Tax

Jay Duke will head up the assurance practice while Doug Sirotta will lead tax. They’ll both report to the most interesting CEO in the world.

The business line regional heads (chart below), who formerly reported to Jack Weisbaum, will now report report to Duke and Sirotta. Speaking of those regions, the Southeast Region (Florida, Georgia) will merge into the Atlantic and the Southwest (Texas and Tennessee) will join the Central. It all goes down on July 1. Messrs. Duke and Sirotta will give up their seats on the BDO Board of Directors to take their new national roles (demotion?).

SOMEWHAT RELATED: Christopher Tower, the head of assurance in the West, was one of the brainchildren behind the “Tattle on a Headhunter, Win a $5 Starbucks Card” idea. [BDO]

Region Assurance RBLL Tax RBLL
Northeast Alan Selitti Robert Pedersen
Atlantic Wayne Berson Wayne Corini
Central Steve Ferrara Paul Heiselmann
West Christopher Tower Rocky Cummings

Weikang Bio-Technology Felt Compelled to Issue a Press Release Announcing that Grant Thornton Successfully Verified Their Cash Balances with Bank Statements

Chinese companies certainly have had their share of problems with financial reporting in the U.S. but I had no idea that it would come to this.

The Audit Committee of the Board of Directors of Weikang Bio-Technology Group Co., Inc. (OTC Markets: WKBT.PK – News) (“WKBT,” “Weikang” or the “Company”), a leading developer, manufacturer and marketer of Traditional Chinese Medicine (TCM), Western prescription and OTC pharmaceuticals and other health and nutritional products in the People’s Republic of China, today announced that Grant Thornton (“GT”), one of the world’s leading organizations of independently owned and managed accounting and consulting firms, has verified that the cash amounts listed on the Company’s SEC filings for 2010 and the first quarter of 2011 are consistent with account statements obtained from WKBT’s banks directly by GT.

“Given the recent change in auditors and my new chairmanship of the WKBT Audit Committee, we authorized the Grant Thornton review to take place last week, and are now releasing the results,” said Jeffery Chuang, independent director and Chairman of the Audit Committee of WKBT. “Weikang continues to advance as a U.S. publicly-traded company and we are committed to high standards in the thoroughness of our financial information,” said Mr. Chuang, a U.S. CPA who is based in Southern California.

Obviously this is completely harmless compared to, say, threatening to take auditors hostage but as far as giant wastes of time go, it’s right near the top.

BDO Rewarding Employees for Tattling on Headhunters with $5 Starbucks Cards

For whatever reason, we don’t hear a lot of gossip out of BDO. Perhaps it’s because the entire firm is too captivated by the most interesting accounting firm CEO in the world, Jack Weisbaum, and are rendered loyal to a fault, thus choosing not to share the more sordid details of what happens inside B to the D tortunate because we hear rumors that there are slew of partners who are not pleased with how things are going at firm but no one seems to want to talk. I’d encourage someone to speak up by emailing us.

But for now, we’ll take the opportunity to tell you about the efforts put forth by some inside the firm that were sensitive to the post-busy season onslaught of professional recruiters. As we all know, after people have worked their asses off for three to four months, some might feel unappreciated and opt to look for a new job. Recruiters are acutely aware of this and since it’s their job to fill positions for their clients, it only makes sense that they chase people that are looking for a change. And because professional recruiting is a competitive business, sometimes the emails can clog your inbox like offers for ED drugs. Some partners at BDO thought that in order to help people stave off this bumrush, they would invite employees to simply forward the emails and voicemails received and voilà! $5 of Starbucks burning in your pocket. Oh, and did I mention that there’s no limit for how many you submit? So if you’re a hot piece of public accounting talent, getting tons of calls, you can really clean up. Not only that, the person that submitted the most unique names of headhunters and agencies would receive a $250 AMEX gift card. Yes. Sound petty? Sound pathetic? Sound desperate? Read for yourself and decide.


I split up original screenshot sent to me so that it would be easier to read, hence the narrow break.


So you might expect such an attempt to bribe employees with corporate caffeination would fall flat. That tipping off firm leadership about PEOPLE THAT ARE SIMPLY DOING THEIR JOBS (and maybe change a few professional careers for the positive) would fall on deaf ears. Well, you would be wrong. DEAD WRONG. A follow-up on the firm’s internal website (next page) stated that over 200 submissions were made and one SA in Spokane submitted 15 alone.

That’s right, the effort was so successful that they are extending it through July 8th. Not really knowing what the protocols are, I don’t know what to tell the recruiters to expect in terms of retaliation from the TPTB at BDO but at least you’ll know that if you receive some kind of nasty correspondence, the person who gave you up was baited with the siren’s call that is the white and green coffee cup.