Category: Firms

Grant Thornton Is Nearly Done ‘Transitioning’ Offices

Earlier this week, Grant Thornton CEO Stephen Chipman sent an email out to the troops, letting everyone know what’s been going at GT has been over the last 6 months or so. Turns out, quite a bit has been going on! Never mind the blogging for a second, we’re talking about the offices that have been closed or sold around the country. Namely Albuquerque, Honolulu, Madison and Greensboro.

SC gets to all those and he does mention the sale of the “Manufacturing Transaction Services practice, based in Detroit” which, we’re pretty sure, is the Supply Chain Advisory practice they sold to KPMG. The email doesn’t really tell you anything that we haven’t already but it is in some nice Chipman prose, if that’s your fancy.

But for good measure, we also learn that the firm has “transitioned out of our regional community hospital practice in Wichita,” which is news to us.


BKD picked up GT’s community hospital practice and everything should be finito by August 31st. But that’s the last of ’em! The only other news is that August, apparently, is going to be an exciting month for Grant Thornton because that’s when SC & Co. are going to communicate the “full details of [the firm’s] new strategy.” We have no idea what means but it’s sure to make August considerably more exciting than normal.

As many of you know, Grant Thornton’s Senior Leadership Team has been deeply engaged in the process of refining the strategic direction of our firm. Our strategy unleashes our potential as a global provider of distinctive client service and includes focusing on our “chosen” markets—those markets that offer the greatest opportunities for the growth of our business and the development of our people.

During experienceAugust, when we come together as one firm, I will be communicating to you the full details of this new strategy. Today, I want to personally share with you the news that, as part of implementing the strategy and better positioning us for growth in our chosen markets, the firm’s senior leaders have made the difficult decision to transition from a few locations and practices.

The firm will be closing and transitioning offices located in Albuquerque, Greensboro, Honolulu and Madison. Additionally, we have transitioned out of our regional community hospital practice in Wichita and our Manufacturing Transaction Services practice, based in Detroit. We expect all six of these transitions to be completed by August 31, 2010.

Beyond these, I want to assure you that the firm has no additional planned office or practice transitions. Below, I share with you details about each of these changes. Additionally, I will be providing you with more information during the August 10 all-employee video conference.

Transition plans for affected offices
In Albuquerque, Grant Thornton has signed a letter of intent for Moss Adams LLP to acquire our practice. Moss Adams LLP is the eleventh-largest accounting and consulting firm in the U.S., and its Albuquerque office is the largest accounting practice in the state of New Mexico.

Our Greensboro office will consolidate into our firm’s Raleigh and Charlotte offices, where we will continue to serve our Carolinas-based clients.

In Honolulu, two former Grant Thornton partners—Patrick Oki and Lawrence Chew—have purchased the office. Patrick and Lawrence will be the partners in their newly-formed firm, PKF Pacific Hawaii LLP. PKF Pacific Hawaii will assume Grant Thornton’s office space, transition existing employees in Honolulu and continue to provide audit, tax, and advisory services in Hawaii.

Our Madison office will merge with our Milwaukee office, where—in conjunction with our Appleton office—we will continue to serve the greater Wisconsin marketplace.

Transition plans for affected practices
In Detroit, we completed a transaction for KPMG to acquire our Manufacturing Transaction Services practice, a provider of a highly specialized niche service offering to the automotive sector. We continue to have a growing and successful Detroit office and we remain fully committed to providing audit, tax, and advisory services to the automotive industry.

In Wichita, we completed a transaction for BKD to acquire our regional community hospital practice.. We are fully committed to our practice in Wichita and are excited about the opportunities for growth under our new managing partner, Lori Davis.

Honoring our colleagues
The decision to transition these locations and practices was not an easy one. We determined our course only after lengthy deliberation, and with the greatest consideration for the best interests of our business, clients and our people. To those of you who sit in the affected offices, and who are leaving the firm as a result of these transitions, it has been a privilege and honor to work with you. On behalf of the entire firm, I want to express to you my heartfelt gratitude for your service and wish you the greatest success going forward. Your contributions to Grant Thornton have been enormous, and your offices and practices will stand as proud parts of the firm’s history.

Investing for growth
As we look ahead to executing on our strategy, this realignment of our resources and geographies will better position us for growth and will help us to build greater market share in our chosen markets. It enhances our ability to focus on the development of our people and providing our clients with an exceptional and distinctive client experience. I look forward to sharing more details—and my excitement— about the new growth strategy next month, when unleashing our potential will launch in tandem with our new fiscal year.

In closing, I want to thank you for all that you do to make a difference at Grant Thornton. I am confident that August is the start of one of the most exciting times at our firm to date, and I look forward to beginning this new chapter together.

Stephen

Jeremy Newman and BDO Will Not Be Taking Part in Your Lowballed, Low Quality Audits

BDO International CEO Jeremy Newman is a little concerned about the trend of lowball audit fees out there. Now, those aren’t his exact words, in fact he calls it ‘‘extreme downward pressure on fees’ which still seems far more than honest than “my US colleagues call ‘fee compression.’”

He’s worried because he thinks that all this slumming around for any little opining job will lead to shoddy audits:

There is increasing evidence that fees are being forced down to such an extent that one worries this will encourage audit firms to ‘cut corners’ to reduce their own costs and thereby reduce audit quality – particularly given that the buyers of audit services (ie clients) do not monitor or determine audit quality which is a role taken on by regulators who are not involved in the pricing discussion between the client and the audit firm.

Yes, the man has evidence, courtesy of:

Canadian Public Accountability Board – “CPAB has learned that certain audit committees are pressuring firms to significantly reduce audit fees. This stance may be incompatible with the audit committees’ important role … in helping to ensure the integrity of financial reporting.”

Australian Securities and Investments Commission – “We will also focus on audit quality for new or existing audits where audit fees appear low or appear to have been reduced for reasons other than changes in the underlying business of the entity being audited.”

And he rounds it out with a quote from a speech given by Stephen Hadrill, the Chief Executive of the UK’s Financial Reporting Council, “There is a role for the market in setting higher expectations of auditors. So far the market has not played that role. Quite the opposite. It is more likely to applaud lower audit fees than higher quality.”

So if you’re desperate to retain some business or provide “client service” through the Wal Mart method, you’ll be on your own. As long as Newman is running the ship at BDO, they will be choosing quality over quantity, “despite the pressure on us to reduce costs,” no matter what other firms (read: Igbay Ourfay) are doing.

A Bizarre Market [CEO Insights]

BDO Does Some Ribbon Cutting, Opens Raleigh, NC Office

More good news out of B to the D to the O as the firm announced today that it is opening an office in Raleigh, North Carolina (full press release after the jump). This will be the 39th office in the U.S. and fourth in North Carolina. The firm also has eight affiliate offices in the state.

In the process, the firm managed to pick up former Ernst & Young audit partner Michael Dannar (a refugee perhaps?).


The good times at BDO have been aplenty lately as the firm just admitted five partners on July 1 and was given a mulligan on the Banco Espirito lawsuit. Oh and don’t forget that the firm fka BDO Seidman is celebrating its 100th birthday all year.

No word if there will be cake or freakishly large scissors at the celebration but nevertheless, it’s good to see some expansion in the Tar Heel state for a change.

BDO USA, LLP EXPANDS NORTH CAROLINA PRESENCE WITH NEW RALEIGH OFFICE

Chicago, IL – BDO USA, LLP, one of the nation’s leading professional service organizations, has announced an expansion of it’s presence in North Carolina with the addition of a new office in Raleigh. The Chicago-based firm, which now has offices in 39 cities around the country, had previously serviced clients in this market through its Charlotte practice. Pending a move to permanent office space at 5430 Wade Park Boulevard in August, the new practice, which will have approximately 15 staff, will be temporarily located at:

BDO
5410 Trinity Road, Suite 310
Raleigh, NC 27607

The Raleigh business community will now have more direct access to BDO’s full array of services which include assurance, tax, risk advisory, financial planning, business restructuring, litigation and fraud investigation services. Michael Dannar, previously with Ernst & Young, has joined the firm as a partner and will assist in serving the firm’s assurance clients in Raleigh and throughout the southeast. Mr. Dannar has significant experience working with colleges, universities and other non-profit organizations.

“We have been working with clients in Raleigh for a number of years now and the time is right for us to establish a permanent presence. This new office will enable us to better serve our clients in this growing market,” said Jack Weisbaum, CEO of BDO USA. “We are also happy to welcome Michael Danner to the partnership. His knowledge of the market will be a valuable resource to our firm.”

BDO SEIDMAN FACTS:

• BDO is celebrating the 100th anniversary of its founding in 1910.
• BDO represents companies ranging from Fortune 500 multinationals to closely-held private businesses.
• BDO had $620 million in revenues in 2009 (6/30/09). Over the past four fiscal years, the firm has averaged double digit growth (10.2%).
• As an independent member of BDO International Limited (the fifth largest global network of accounting firms), the firm can leverage the resources of more than 1,000 member firm offices in 115 countries around the world.

ABOUT BDO USA

BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. For 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through 39 offices and more than 400 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multi-national clients through a global network of 1,138 offices in 115 countries.

BDO USA, LLP,a limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. For more information please visit: www.bdo.com.

Promotion Watch ’10: BDO Names Five New Partners

Fresh off their win last week in a Florida Appeals Court, BDO announced the admission of five new partners today in a press release (in full after the jump).

The new partners are Joseph Carr (Chicago – Tax), Anthony Lawrence (Grand Rapids – Assurance), Hoon Lee (San Francisco – Tax), Bryan Polozola (Dallas – Assurance) and Julie Valpey (National – SEC) and they get their big chairs effective tomorrow.

Congrats to the new partners and remember to keep the celebration under control.

Wednesday, June 30, 2010

BDO USA, LLP, ADMITS 5 NEW PARTNERS

BDO USA, LLP, IS PLEASED TO ANNOUNCE THAT 5 NEW PARTNERS HAVE BEEN ADMITTED TO THE PARTNERSHIP, EFFECTIVE JULY 1, 2010.

Chicago, IL– BDO USA, LLP, is pleased to announce that 5 new partners have been admitted to the partnership, effective July 1, 2010. Two of the new partners are in the tax practice, two are in the assurance business line and one is in the national SEC group. BDO is a leading national professional services firm providing assurance, tax, financial advisory and consulting services to private and publicly traded businesses.

“I am very proud to welcome each of these very deserving individuals to our partnership,” said Jack Weisbaum, CEO of BDO USA. “A key to success in our profession is a commitment to recruiting, training and retaining superior client service professionals. Each of these new partners has excelled in their specific technical area while providing the highest level of client service.”

The newly elected partners include: Joseph Carr (Chicago – Tax), Anthony Lawrence (Grand Rapids – Assurance), Hoon Lee (San Francisco – Tax), Bryan Polozola (Dallas – Assurance) and Julie Valpey (National – SEC).

About BDO USA
BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. For 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through 38 offices and more than 400 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multi-national clients through a global network of 1,138 offices in 115 countries.

BDO USA, LLP,a limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. For more information please visit: www.bdo.com.

Accounting News Roundup: Financial Reform Finalized; Banco Espirito v. BDO 2.0; Small Win for Skilling, Big Loss for PCAOB? | 06.25.10

U.S. Lawmakers Reach Accord on New Finance Rules [WSJ]
By the end of this one, can’t you picture an exhausted Barney Frank with his tie loosened to mid-torso, pants undone with fly wide open open and some staffer dabbing his sweaty brow?

“After more than 20 hours of continuous wrangling, Congressional Democrats and White House officials reached agreement on the final shape of legislation that would transform financial regulation, avoiding last-minute defections among New York lawmakers that had threatened to upend the bill.

After months of uncertainty about how the U.S. would craft new rules, the agreement offers thince the financial crisis of how markets and the government will interact for decades to come. The common thread: large financial companies are facing a tougher leash.”

Just in case you missed it yesterday, former SEC Chairman Arthur Levitt isn’t nearly as excited as some people about the bill. The President is expected to sign the bill before July 4.

Sidenote on this one: how the Journal managed to slip Maxine Waters through as one of a dozen “players” in this bill should cause you to question – if even for just a minute – the credibility of the paper.

Florida Appeals Court Turns Down Heat, For Now, On BDO Seidman [Re: The Auditors]
Francine’s take on the decision by the Florida 3rd District Court of Appeal to order a trial in the Banco Espirito v. BDO case. An event she isn’t thrilled about, “My doubts about the efficacy of a new trial are based on the disappointing, frustrating and completely unsatisfying way the court and the judges in this case have proceeded. Some of the additional comments raised by the Appeals Court do not bode well for this plaintiff’s chances next time around.”


Supreme Court Rolls Back a Law Born of Enron [NYT/Floyd Norris]
In more Congressional ineptitude (at least in the eyes of the SCOTUS), former Enron CEO Jeff Skilling won his case at the high court, arguing that “the concept of committing fraud through depriving an employer of ‘honest services’ was not adequately defined in the law,” Floyd Norris writes.

In other words, the “idea” of fraud being a kickback or a bribe is obvious and was defined. Manipulating mark-to-market and off-balance sheet accounting rules or “something else equally outrageous” were not and thus the law was unconstitutional. Long story/short, Norris writes, is that

Funny story on the way to this Skilling outcome – if the SCOTUS rules against the PCAOB (it is expected on Monday), “It will blame Congress for writing bad laws,” Norris writes. And who forced Congress into action on Sarbanes-Oxley?

BP: Oil-Spill Cost Hits $2.35 Billion [WSJ]
Has anyone handicapped this? Obviously the $20 billion reserve is a good ballpark figure but the overs have to be a pretty solid bet on that. Takers?

Caturano being acquired by RSM McGladrey [Boston Business Journal]
The firm fka RSM McGladrey purchased Caturano and Company, the fifth largest firm in Boston. The deal, if approved by H&R Block, would make RSM McGladrey…the fifth largest firm in Boston.

BDO Wins New Life as Florida Appeals Court Orders New Trial

In what amounts to a HUGE win for BDO, the Florida 3rd District Court of Appeal in Miami has ordered a new trial in the case between BDO and Banco Espirito Santo:

A Florida appeals court has thrown out a $521 million jury verdict and ordered a new trial in a dispute over audits between accounting firm BDO Seidman and a major Portuguese bank.

The Third District Court of Appeal in Miami ruled Wednesday that the 2007 trial was wrongly divided into three phases.

That meant jurors decided BDO Seidman should pay punitive damages too early in the case.

BDO Seidman was sued by Portugal’s Banco Espirito Santmed on a Miami company later exposed as a huge fraud. The bank claimed BDO Seidman was negligent for not detecting the fraud, costing the bank $170 million in losses.

Jurors awarded the bank $170 million in losses plus $351 million in punitive damages.

We reached out to the Steven Thomas, lead counsel for the Banco Espirito for his reaction:

This case has been sent back for another trial because of the procedural ‘bifurcation’ issue. We are pleased that the effort and hard work the jury put into this case was recognized by the appellate court, and we specifically note that the Court did not dispute BDO unethical conflicts of interest or its negligence. The evidence of BDO Seidman’s failures of even the most basic auditing procedures is so overwhelming that we expect a new jury will reach the same conclusion as the original jury. We look forward to trying this case and reminding everyone of BDO Seidman’s neglect of its public duty and the enormous conflict of interest they had.

Despite the overwhelming evidence, undisputed negligence cited by Mr Thomas, the mood inside BDO is one of vindication. From the firm’s press release not yet posted on the firm’s website:

The firm is pleased to announce that the Third District Court of Appeal of the state of Florida has unanimously overturned a 2007 jury verdict against the firm and ordered that the Bankest case be retried in the 11th Circuit Court. The Court of Appeal concluded that:

• The Trial Court erred in its original decision to trifurcate the trial, ruling that it was prejudicial to have allowed the case to be presented in three phases. This made it possible for the jury to find BDO grossly negligent without, at the same time, considering the conduct of other actors, including representatives of Banco Espirito Santo.

• The Appellate Court further concluded that the evidence of reliance on BDO’s audit opinions was insufficient to sustain the claims of the Bankest investors, save for the one individual who testified at trial.

• The Trial Court improperly allowed into evidence prejudicial hearsay testimony and documents that further served to deprive BDO of a fair trial.

The Appellate Court concluded, “We have carefully considered every substantive and procedural authority that might be applied to preserve at least some of the jury’s findings. In this case, no such balm is found.”

“We are very pleased that the Appeals court has reversed the lower court verdict. We have consistently stated that we were confident that the jury’s erroneous verdict in this case would be reversed on appeal. The addition of punitive damages at the time only served to emphasize the injustice that took place at the trial court,” said CEO Jack Weisbaum. “A new trial will be in accordance with the Court of Appeal’s decision and we will prove that BDO acted at all times consistent with its professional obligations and that its audit opinions were based on the proper application of generally accepted auditing standards.”

So we’ve got a new trial with a re-energized BDO and a tenacious plaintiff. It sounds like BDO will stick with its defense strategy of “we did no wrong,” so this should be fun.

Florida Third District Court of Appeal Decision [PDF]

(UPDATE 3) McGladrey’s Giant Putting Green Cake Will Ensure That Everyone Gets to Celebrate Their Rebranding

Webcam chat at Ustream

In the best example that we’ve seen of accounting firm make-up sex, today the RSM McGladrey and McGladrey & Pullen announced that they will now be branded under one name…McGladrey. Since the deciders on the name checked imagination at the door, the firms make it up to all of us with the best possible solution – building a giant putting green cake.


One of the duffers sponsored by McGladrey, Chris DiMarco, will attempt to chip in on the green later today and with any luck you’ll be able to watch it above as it happens.

As exciting as that is, it isn’t entirely clear whether or not this also serves as a tasty distraction from the layoffs and restructuring that is going on McGladrey. Kick that around if you like but also consider the fact that Natalie Gulbis doesn’t seem to be jumping out of this thing at any point in time, and that is a travesty that cannot go unnoticed.

UPDATE: We’ve been assured that the cake’s tastiness or lack thereof will be communicated to us later today. Whether or not there will be pre-cake jays, gallons of Vitamin D milk to wash it down or couches to pass out on has not been determined. Discuss and keep us updated. Spare no details – flavor, frosting, texture, etc.

UPDATE 2: Okay you guys – who witnessed this sorry-ass display? Natalie wouldn’t have disappointed the crowd like these losers. And then someone skulls one right into the camera? Video is completely gone right now. Unbelievable. Get back to us on this cake.

UPDATE 3: The report on the cake is in:

1) The cake is, actually, pretty big. And, it’s all cake, except for the part of the logo, which is made of rice krispie treats.
2) As for a slice of that cake…quite good, actually. The cake part is marble, and very soft and tasty. I nabbed what might be a corner piece with the “rough” frosting. It’s a lot of frosting. A lot.

I’d give the cake a solid A-. There will be a lot to save in the next few days!

Two minutes later we got his follow-up:

I had to stop eating it halfway through — I think I’d go into diabetic shock if I ate any more of it. The grade gets downgraded to a B+.

RSM McGladrey and McGladrey & Pullen, LLP, Launch New “McGladrey” Brand [McGladrey]

Layoff Watch ’10: McGladrey Makes Nationwide Cuts

Over the past month, we have heard lots about layoffs at RSM McGladrey/McGladrey & Pullen but we didn’t have much for details.

Frankly, we still don’t know a lot but we’ll go with what we’ve got. So far we know about reductions in the New York, Chicago, Quad Cities, Florida and Seattle offices and everything we’ve been told indicates that they are occurring elsewhere.


First the Emerald City:

I was ample. There is a new geographic restructuring going on. Instead of multiple “economic units” there will be only three regions. Many HRs and CFOs from different offices are losing their jobs. Consulting people talk about 100 positions that will be eliminated across the country. 10 people were let go from Seattle Economic Unit which includes Seattle, Tacoma, and Olympia offices. We were informed about the reorganization somewhere around 04/12 and laid off at the end of the month. I think everybody received severance.

We’re not that familiar with past cuts in the RSM/M&P world but the big cuts in consulting seem to trail the Big 4’s by a year or two, although if some of these smaller clients are giving into the Big 4 lowballing then perhaps this is the natural progression.

Meanwhile:

Their Florida Private Club operations group closed the Club IT Consulting Group and layed off the staff. Some of the staff have been part of the firm for more than 20 years and were profitable.

Chicago just layed off the Operations Consulting Staff yesterday, [approximately] 10 people. This group was left to dangle in the wind, sink or swim on their own without marketing or sales assistance or access to the firm’s client-base Naturally it failed.

This firm’s actual layoff numbers are always reported low because they chase people out prior to layoffs in an attempt to camouflage the numbers. Their tactics to accomplish this include poor performance evaluations for staff, unreasonable margin requirements, constant peer pressure meetings regarding performance and head to head comparisons. This creates a dysfunctional relationship between groups and actually motivates groups within their own company to compete with one and other. Only so much people can take and then they leave. Just what the firm wanted.

Considering the economy in Florida, the demise of RSM’s private club operations in that corner of the over-leveraged world wouldn’t come as much of surprise. That being said, you might expect that veterans of the firm would be accommodated somehow with other internal opportunities.

As far as the “chasing” this is Jack Welch’s magical forced ranking method that the Big 4 has accepted like its own creation.

We reached out to both RSM’s corporate spokeswoman and their general counsel, both of whom have not responded to our request for comment. We also contacted an H&R Block spokesman to see if they could elaborate on these layoffs from the parent company level but again, our requests have gone unanswered. H&RB had their own layoffs last month however, there is no indication at this point whether cuts at H&RB would have anything to do with those at RSM/M&P.

We’re still accumulating details on these cuts, so get in touch with us about details on your office or discuss below. And don’t be shy, we know you McGladrey types been hesitant to call on us in the past.

Accounting News Roundup: Tipsters Expose Fraud More Often Than Most Controls; What if the PCAOB Is Unconstitutional?; BDO Could Question Forensic Accountant’s Credibility | 06.01.10

Something Wicked This Way Comes [CFO]
A recent Association of Certified Fraud Examiners (ACFE) study discovered that “[o]f the top eight controls ranked by effectiveness, only one — surprise audits, which cut fraud losses by 51% — is part of the traditional accounting-based control structure. Financial-statement review, internal audits, and Sarbanes-Oxley-mandated certifications by CEOs and CFOs all ranked below the nonaccounting controls in terms of effectiveness in preventing fraud.”

Controls have no match for good old human conscience, “tips expose fraud three times as often as do management reviews, internal audits, or account reconciliations.”


The problem however, is that employees may not be getting the training about how to report fraud if they know it’s happening, “an unsupportive corporate culture and poor employee training leave potential whistle-blowers unsure of whom to talk to.” Plus the baddies are doing their best to dissuade them, as Sam Antar told CFO, “[They] don’t go down without a fight, they don’t fight fairly, and they are going to intimidate whistle-blowers — that’s the nature of their game.”

Accounting for Crisis [Portfolio.com]
Gary Weiss writes over at Portfolio about the impending decision in Free Enterprise Fund v. PCAOB and he’s not impressed with the FEF’s argument, “claiming that the board would give our Founding Fathers heart attacks because its members are appointed by the Securities and Exchange Commission and not the president and can’t be removed except for cause.”

That despite the PCAOB’s lack of fireworks in its daily activities, “The PCAOB has not exactly rocked our world—and obviously its existence did nothing to keep Lehman from its Repo 105 book-cooking scheme. But getting rid of it, particularly on specious Constitutional grounds, would be a blow to the cause of more accurate financial statements.”

The odds say that the SCOTUS will affirm the lower court’s decision but just in case, Gary agrees with Interim PCAOB Chairman Dan Goelzer that Congress needs to act fast if the Court surprises us and reverses the decision.

Clifton Gunderson buys Stockton Bates [Philadelphia Business Journal]
Philadelphia-based Stockton Bates will join Clifton Gunderson’s 1,900 employees and 300 partners effective today. Stockton has 32 employees between three offices in Philadelphia, Lancaster, PA and Haddonfield, NJ.

BDO Seidman fights claims brought by fraudster Lew Freeman [South Florida Business Journal]
Convicted forensic accountant Lewis Freeman testified in the case of ES Bankest and BDO. So it’s not outside the realm of possibility that Freeman’s conviction could call his credibility as a witness into question as well as the Bankest bankruptcy proceedings, where Freeman acted as the court-appointed receiver.

Layoff Watch ’10: H&R Block Cutting 400 Positions, Closing 400 Locations

Has the risk of violence become too much?

No, it’s actually quite a bit more boring than that – cost savings. The company states that it will decrease its operating expenses $140-$150 million by 2012. CEO Russ Smyth was quoted in the Kansas City Star that “There aren’t as many people who need their taxes done when there are a lot fewer W-2s going out,” referring to the higher unemployment rate in the company’s customer base.

HRB’s headquarters in Kansas City will cut 165 of the 400 jobs lost.


The timing of this announcement is interesting because we’ve heard a few rumors (but virtually no details) about layoffs at RSM McGladrey, an HRB subsidiary, but they aren’t as forthcoming with the press releases and aren’t returning our calls. If you have any details about layoffs at RSM or its on-again off-again affiliate, McGladrey & Pullen, get in touch with us.

Full HRB press release:

KANSAS CITY, Mo. – H&R Block (NYSE:HRB) today announced a broad strategic realignment of its field and corporate support organization. Overall, the company expects these changes to decrease annual operating expenses by $140 – $150 million per year by the end of fiscal year 2012.

Russ Smyth, president and chief executive officer of H&R Block, said, “We operate in a challenging and competitive environment, and to be successful we must find new ways to provide better value to our clients. This requires that we narrow our focus and invest in a few key initiatives that will have the greatest impact on attracting and retaining clients in our retail and digital channels, while eliminating other activities and their related costs.”

Approximately 400 positions are being eliminated throughout the organization as part of the measure. The company also has closed approximately 400 under-performing tax offices out of its network of 11,000 retail tax locations.

“Changes like these are never easy and we appreciate the hard work and loyalty of the affected associates,” Smyth said.

“However, these steps are necessary to improve our business performance and better serve our clients.”

H&R Block expects to incur a pre-tax charge for severance-related costs of approximately $28 million, most of which will be incurred in the fiscal quarter ending July 31, 2010.

BDO Breaks Barrier to Be First Accounting Firm to Land on Obscure Employer List

First off, we can’t remember the last time BDO graced these pages twice in one day. You’d think something would come out of B to the D to the O more often but whatevs. BDO 2.0 today is a little bit of good news for the firm in the form of an exclusive spot on an obscure “Best Places” list.

God forbid our lives be devoid of a ranking in the last half of May but since it’s graduation season and there are some job hunters out there that need to start paying back school loans and credit cards debts, perhaps the timing isn’t so bad. A list we might add, that did not previously have an accounting firm on it. Progress people. Progress.


BDO shattered the glass ceiling on Experience’s “Best Places to Work for Recent Grads” that “picked 20 organizations whose entry-level hiring and retention practices are exceptional.” The list is specifically aimed at those companies that are hip to the Gen Y crowd, although we don’t really know any “recent grads” list that wouldn’t be.

Regardless, BDO has some decent company on the list that includes Accenture, Kellogg’s and Morningstar but BDO is the sole accounting firm. The fact that not a single accounting firm (let alone a Big 4 firm) is on the list is a travesty of the highest order. We then realized that the list’s very nature is severely flawed.

It’s too short. Any employer list with less than 50 companies on it simply cannot be taken seriously.

And since there were no accounting firms on last year’s list, this might as well have been random list of companies thrown together for the sake of keeping communications professionals busy.

This year, the Experience folks must have recognized their gross error and that since no employer list could be taken seriously devoid of a professional services firm. Not wanting to make it too complicated, BDO’s inclusion be probably chalked up to an alphabetical advantage.

Best Places to Work for Recent Grads [Experience]
BDO Press Release

BDO Not Thrilled with the Legal Advice It Got Re: Tax Shelters

BDO’s Tax Solutions Group was going gangbusters back in the late 90s and early aughts. Unfortunately, the party more or less ended in December 2000 when the IRS served notice to the firm that some of the products were not ingenious tax planning strategies but rather illegal tax shelters. The DOJ launched an enforcement action in 2002 and just last year BDO partners started pleading guilty to tax evasion, conspiracy and some other fun charges.

BDO isn’t crazy about shouldering all the shame and embarrassment so it has decided to sue the law firm Morgan Lewis for “professional negligence, breach of contract, breach of fiduciary duty, fraud and constructive fraud.” BDO alleges that ML’s breach amounted to “disastrous results” which is likely referring to the tax shelter shitshow. They just want their $9 million back that they paid in fees and call it a day (they’re saving up!).


Morgan Lewis finds this all very amusing, stating that they advised BDO only on minor issues. ML is represented by Gibson, Dunn, & Crutcher led by James Fogelman, who made his client’s position very clear:

Morgan Lewis called the lawsuit a “sham” and contended it only advised [BDO Partners] on a few minor questions — none of which involved the questionable tax products. “There was nothing that Morgan Lewis knew about to warn BDO concerning BDO’s own conduct. … There was nothing more BDO needed to know,” Fogelman wrote.

The only time Morgan Lewis opined on a tax product, the firm contends, was in February 2000, when BDO asked it to weigh in on a tax shelter dubbed the Sentinal Transaction. Morgan Lewis responded that the tax shelter was “unlikely” to expose BDO to criminal convictions. In its motion to dismiss, the firm said, “[I]t does not appear that anybody has ever been convicted of any federal crime based on the Sentinal Transaction.”

And Morgan Lewis doesn’t simply want to be vindicated in this matter, they want to be right AND they they would like BDO and DLA Piper (BDO’s counsel) to have sanctions slapped on their asses for lying through their teeth in their complaint. ML contends that they presented evidence disproving the allegations but BDO and DLA must have decided that a bitter fight would be more fun.

And it is.

BDO Seidman Seeks $9 Million in Fees Back From Morgan Lewis [The National Law Journal via Law.com]