Category: KPMG

KPMG, Ernst & Young Sneak on to U.S. News Tax Firm Ranking

You may or may not be aware that U.S. News & World Report is the shot caller when it comes to ranking law schools (much to the chagrin of some) and now (to even more chagrin) the magazine is delving into extensive law firm rankings and the Big 4 will enjoy a little bit of perceived prestige that comes along with these rankings.

Christ. We’re barely into rankings/list season and they’ve already chalked up working moms and consulting rankings and U.S. News is now throwing around its weight with this new list.

Granted, virtually no accounting firms will even get a whiff of this list but something tells us that because U.S. News has decided to dive head first into ranking law firms by practice are the Big 4 will be jockeying to make the tax list, even though it is a sliver of a much larger and broader ranking that they won’t be included on at all.

Excuse us while we choke down the vomit that we caught making it’s way out.


Why the hell not?!? U.S. News figured that the world couldn’t do without it’s rankings-for-hire in one more area for the legal field but this time the Big 4 will enjoy a bit of a ride on this wave.

Right. The list. The two of Big Four of course, make their way on the ranking for tax firms: Ernst & Young falls into the coveted Tier 1 (includes 36 firms) and KPMG drops on Tier 2 (47 firms). There were a total out of 119 firms across three tiers.

Admittedly, this is an opportunity for both KPMG and E&Y to boast their tax practice prowess over Deloitte and PwC who don’t appear on the list at all. That being said, Deloitte and PwC enjoy higher spots on the consulting rankings so they’re probably not overly concerned although no one turns down a notch on the bedpost if they can get it.

What this new ranking ultimately will be is one more marketing tool for the firms to use on the impressionable recruits and experienced hires who want to work in top notch – TOP NOTCH! – tax practice. Be it lawyers or CPAs, the firms will tout this ranking to their tax professionals (if not firm-wide) to throw around ONE. MORE. LIST. to impress the trousers off the masses but now people will be saying, “Oh, this is a U.S. News ranking.”

So for the Big 4 to be included in this “prestigious” ranking is a little bit, as Elie Mystal states, like “Christmas morning – if only Santa were a jolly red prestige whore.”

U.S. News Tax Firm Rankings [TaxProf Blog]
Best Law Firms [U.S. News & World Report]
U.S. News Launches First Official Law Firm Rankings [ATL]

Extreme Big 4 Makeover: KPMG Edition

Yesterday we told you about Extreme Big 4 Makeover: PwC Edition. Today we’ve learned that KPMG is getting into the act, although the House of Klynveld had the sense to avoid changing their team colors to match the autumnal palette (Braddock says it reminds him of Pizza Hut).

But more on colors later. We feel that the motivation for the rebranding is likely twofold: 1) They got wind of PwC sexing themselves up and 2) They’re pissed about Dick Bové playing dumb and they’re trying to get the old girl’s attention.

Naturally, it makes the Masters Champ who, after coming of his video extravaganza on Phil Mickelson’s KPMG website, is appearing in this ad in Golf Magazine (or so we’re told, we don’t have a subscription):

Phil m Golf World


In addition to His Leftness being included in the campaign (reminiscent of T. Dubs with Accenture) apparently the firm took out an ad in today’s Financial Times that rocks their new slogan, Cutting Through Complexity™:

KPMGCuttingThroughComplexityprintadvertising


Last but not least, the firm rolled out this internal Brand Book that tells you everything you don’t want to know about the rebranding including the firm’s commitment to it’s favorite hue, ” To bring our brand to life we have a refreshed visual identity and tone of voice which reinforces the essence of our brand. It builds on our current brand equity and the strong ownership we have of the color blue, while placing greater emphasis on the warmth of our wider color palette.”

KPMGBrandBook

One of sources already weighed in saying, “I’m so excited about the opportunities that will be generated by these HUGE changes I don’t know how I will contain myself.” We invite you to share your own thoughts on blue, Phil or whatever you think about KPMG’s new do.

KPMG Pleased That Premature Audit Sign-offs Weren’t on Failed Audits

If you’re the partner on an engagement and you know, deep down in your plums, that the numbers are fine, you probably get pretty anxious to sign off on this bad boy. You want to go on vacation or a golf date with Phil or – if they’re lucky – spend some time with the family. With that in mind, it’s not so unusual that he/she might jump the gun a little and slap down the Johnnie Hancock before all the work gets done.

Unfortunately, as anyone studying for the audit section of the CPA exam will tell you, this is against the rules.


But hey! If the numbers are hunky-dory, there’s not much cause for concern and everyone has a good laugh:

In the case of KPMG, the FRC’s Audit Inspection Unit looked at 15 audits and found that in three cases the auditor’s report had been signed too soon. Significant changes were subsequently made to the accounts in one case.

Paul George, director of auditing at the FRC’s Professional Oversight Board, which includes the AIU, said the early sign-off problem was not limited to KPMG: “It is a profession-wide challenge to some degree.”

KPMG said it accepted the AIU’s comments. “We are pleased to note that in no case did they think that the audit opinion we issued was incorrect,” said Oliver Tant, head of its UK audit arm.

See? It happens everywhere! Plus, it’s not like accounting and auditing are based on rules that anyone takes that seriously, anyway.

Okay, sure signing off early on 20% of the audits sampled sorta looks bad but at least the numbers weren’t wrong. It would be really awkward to explain that.

Watchdog raps KPMG over early audit sign-off [FT]

(UPDATE) Which One of You Left Your Benz Parked In Front of KPMG HQ?

Because you’ve caused a ruckus.


It’s an especially nice touch that the Shred-it truck is outside. Coincidence?

UPDATE: Said Benz has been towed and NYPD has re-opened Park Ave. Apparently it “appeared to be weighed down in an unusual way,” which leads to believe that the Shred-it truck was completely packed and some partner had pull around front to help get some sensitive docs out of 345 Park.

New Jersey Appeals Court Deals ‘Devastating Loss for KPMG’ Over Malpractice in Cast Art Merger

We briefly mentioned this case on Monday but since everyone seems to have checked out mid-week, we’re sure you won’t mind.

Way back in the dawn of the Clinton Administration, some financial reporting chicanery went down at Papel Giftware, Inc. so that Cast Art Industries of Corona, California would run into the company’s outstretched arms. More specifically, chicanery that consisted of ” ‘systemic, organized, improper accounting practices at Papel.’ ” Cast Art failed in 2003 which made everyone sad/mad.

KPMG was on watch as this all went down and a jury found the firm negligent in 2008 under the Accountant Liability Act.

The bitch of it is, the KPMG partner was thisclose to pulling out of the engagement, “[A] July 2000 letter by KPMG partner John Quinn that said Papel Chief Financial Officer Rick Wasserman gave an ‘unfair and misleading characterization of the accounting and auditing issues.’ Quinn said he was ‘very much inclined’ to recommend ending work with Papel after that year’s audit, according to the opinion.”

That ‘very much inclined’ didn’t result in “we withdraw from the engagement.”


However, since the KPMG is a professional services firm with the necessary means and a reputation to protect (according to some, anyway) they appealed the ruling and on August 26th a three-judge panel of the New Jersey Appellate Division still said, “yep, it’s accounting malpractice.”

This was a thrilling result for plaintiffs who are looking to squeeze more damages out of the firm:

“This is a huge win and no matter how KPMG wants to spin it, it’s a devastating loss for KPMG,” plaintiffs’ attorney Michael Avenatti said in an interview. “KPMG’s appeal of this case may go down as Exhibit A of ‘Be careful of what you wish for.’ Now, we have the ability to go collect potentially $10 million to $20 million more in additional damages.”

Right. The spin.

A KPMG spokesman, Daniel Ginsburg, said the firm is “considering our available options” after the ruling.

“We are pleased that the court affirmed dismissal of the plaintiff’s fraud claim against us, and also reversed the jury’s verdict by ordering a new trial on the issue of damages,” Ginsburg said in an e-mail. “We are disappointed, however, with the court’s ruling on legal issues regarding the plaintiff’s negligence claim.”

Actually, not much spin there. Just one of those kiss your sister/brother moments.

KPMG Committed Malpractice Tied to Cast Art Merger, Appeals Court Rules [Bloomberg]

(UPDATE) Dick Bové: The KPMG Citi Team Is ‘An Exceptional Acceptable Group of Auditors’

And you know he’s not messin’ because that’s what he told Charlie Gasparino and God knows you best not lie to the Fox Business Network’s ace reporter. Sure Bové didn’t actually say “KPMG” (hell, he’s probably never heard the name) but he’s giving credit to auditors which is about as unheard of as Tiger Woods using Trojans with hookers.

Bové may have mentioned some other things about Mike Mayo, Citi, Deferred Tax Assets so on and so forth but we’re sure you’re not worried about that.


Btw, if you need to get caught up on just who Dick Bové is, go here. Courtesy of FBN:

On Citi’s apparent cold shoulder towards analyst Mike Mayo:
“It’s totally wrong. Mike Mayo is a brilliant analyst. He’s been in this business for a long period of time and does a superb job of following the industry. To say he can’t come in and speak to the company in my view is absolutely and totally incorrect.”

On whether Mike Mayo’s accusations against Citigroup’s risk management lapses are accurate:
“Absolutely. In September of 2008, Citigroup was effectively bankrupt. The reason why it was bankrupt was the reason that Mike cites. It was that the risk management procedures had completely broken down and it was not effectively managing its portfolio. Mike is right on that comment.”

On why we should believe Citi on its accounting reports:
“We don’t have to take Citigroup’s answer to Mike Mayo. We can take a look at the fact that this company is audited by an exceptional group of auditors. They are regulated by a large number of bank regulators…and they actually are being audited for their tax issues right now by the IRS. All three of these groups agree with the public statements of Citigroup concerning DTAs.”

“What is the basis for saying that these three groups which have seen the numbers don’t know what they are talking about, whereas people that have not seen the numbers, do know what they are talking about.”

On whether Citi has been given a clean bill of health by the SEC, IRS and the Fed:
“We do have an audited financial statement which is not questioning the DTAs. We do have bank regulators who could have memorandums of understating with Citigroup if they believed there was a problem. Citi is estimated to earn by Mike Mayo $9 billion this year. Next year he estimates the company to show a 33 percent increase in earnings to $12 billion. If there is a DTA problem, why is there a belief that the company can jump its earnings by 33 percent from 2010 to 2011?”

We’ve been assured by the wonderful people at Fox that we will have video of this momentous (and perhaps unprecedented) occasion just as soon as it’s available.

UPDATE: AS WE SUSPECTED! Not only was the initial report mis-transcribed, check out Dick’s reaction to Gasparino’s question, “It’s KPMG I believe, correct?” around the 2:37 mark:

Pretty obvious that the dude has never heard of KPMG in his life.

Ex-KPMG Senior Manager Convicted of Selling Tax Shelters Is 50% Less Poorer Today

A win is a win and the U.S. Second Circuit Court of Appeals handed one to John Larson, one of three defendants sentenced last year for selling illegal tax shelters. The Court “found Larson’s [$6 million] fine too high, citing a lack of jury findings to support a fine above $3 million. It returned that part of the case to the lower court to recalculate any fine.”


That’s more or less where the good news ends. The court did uphold the convictions of Larson and his two co-defendants – ex-KPMG Partner Robert Pfaff and ex-Brown & Wood partner Raymond Ruble. Larson was sentenced to a 10 year prison term last year. Pfaff received 8 years and Ruble 6-1/2 years.

Appeals court upholds KPMG tax shelter convictions [Reuters]

KPMG Ireland Associate Pleads with U.S. Counterparts to Help Him and His Bros Win Ski Getaway

The good ole US of A is always here to help its friends in times of need (whether it’s right or wrong is another matter completely). This reverberates all the way down to the multi-national companies that enjoy expansive networks in the U.S.

Getting to the point: from the mailbag:

I (along with EVERY associate and senior associate in the US) got this email this morning from some idiot staff in KPMG Ireland asking us to vote for him to win a vacation courtesy of Coors Light. I’ve never heard of this guy but apparently thinks he knows all of us well enough to ask us to vote for his stupid beer vacation.

I kid you not — he actually looked up every associate and sr associate distribution list for every region/office and practice. He’s listed as a “Trainee” in the global address book under KPMG Ireland FS Audit (whatever that means). This idiot needs to be taught some email common sense…


But when matters of utmost importance – such as a winning a ski getaway to British Columbia – there is only one place to turn…The United States:

Hey everybody!

Me and 2 friends have entered a competition to win a free ski trip to Whistler, Canada. It just depends on who gets the most votes in a week. If you could follow the link and vote for us I’d really appreciate it.

http://www.coorslight.ie/destination/profile/cde76g7p

It only takes about 10 seconds and no registration / email needed. You just enter your D.O.B to enter the main site (or any DOB that makes you over 18) then just hit the ‘vote for us’ tab on our profile –
Ri-Skii Business. If you can forward this to some friends or contacts in your different offices it could really help to put us out in front!

Thanks!

Here’s the plea from the Ri-Skii Business page:

Idiot? Or sheer genius? We’ll let you debate that one. In any case, help the dudes out and go vote. They’re just looking for the next adrenaline rush.

KPMG Decides That Travel Time Is No Longer On the Clock

A member of the Phil Mickelson fan club is a little peeved with a recent decision (or not so much, you’ll have to tell us) regarding travel time:

I am in an office that covers a significant region that includes TN, KY, GA, MS and AL. Previously, it was office policy (and in most cases area policy) that at a minimum half of the travel time to and from client was considered chargeable. Well, management in its infinite wisdom has decided that will no longer be the case. Therefore, those 40, 50 or 60 hour weeks are now 50, 60, or 70 hour weeks when the travel time is excluded for management’s purposes but included in the “real world” (which management has clearly lost touch with).


Why the change? Our source has a theory:

In this year of increased emphasis on internal profitability (which is a joke for a fixed fee revenue generating business), management needed some mechanism to make up for all the hours that are going to be wasted messing around with this “awesome” tool (which malfunctions daily) [Ed. note: he/she is referring to the new paperless audit tool]. This is also in response to the area management’s inability to win clients. So, instead of [leadership] making the tough decisions and forcing those responsible for the poor results, loss of clients, and improper planning to bear the weight of the lack of profitability (and reduce their income), it totally makes sense to squeeze the staff even further. I guess the philosophy may go something like this: “well, they are already pissed because we don’t pay them properly, we are forcing them to use this eAudit tool that doesn’t work and isn’t ready for deployment, and we are making them work ridiculous hours because we fired too many people (keep in mind the exodus is just beginning so this is just going to get worse), so we might as well just making even madder by telling them that those hours they used to spend in the air or car in the service of KPMG don’t really matter for crap either”.

Sound about right, Klynveldians? Discuss, debunk and whathaveyou.

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]

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