When accounting goes unaccounted for
Sounds like CFO Geoff Chatas and state auditor Dave Yost wanted to figure a way around a 15-year limit but it was to no avail, “Ohio State CFO Geoff Chatas said Yost discussed with him the possibility of letting Ohio State be the first to stick with the same audit firm, but the school opted to put the contract out for bid.”
A likely story. If you ask me, this has everything to do with the fact that Deloitte’s main color is blue while PwC has opted for slightly more appropriate hues.
Twenty-four hundred lucky boys and girls will descend on Orlando, Florida to traipse around Disney World in “living classrooms” which sounds a little strange if they’re going to somehow incorporate assurance, advisory and tax services. No one wants to see Minnie Mouse in pantsuit, do they?
“This is a high energy, unforgettable experience that helps prepare interns for their full-time career,” said Paula Loop, US and Global Talent Leader, PwC. “We emphasize the importance of individual contributions to the entire team and how the skills taught at each phase help them advance through the challenges.” Presumably, part of this experience will include persuasion skills that will convince the interns’ best and brightest friends (mostly those interested in tax) who are currently planning to intern with KPMG to defect to PwC at a moment’s notice. [PwC]
The affiliates – Lovelock & Lewes, Price Waterhouse Bangalore, Price Waterhouse & Co. Bangalore, Price Waterhouse Calcutta, and Price Waterhouse & Co. Calcutta – must pay $6 million to the SEC, $1.5 million to the PCAOB and are barred from accepting U.S.-based clients for six months. The SEC fine is the largest ever levied against a foreign-based accounting firm in an SEC Enforcement Action and the PCAOB fine is the largest in the regulator’s history. PW India must also “establish training programs for its officers and employees on securities laws and accounting principles; institute new pre-opinion review controls; revise its audit policies and procedures; and appoint an independent monitor to ensure these measures are implemented.” The SEC’s press releas ilures “were not limited to Satyam, but rather indicative of a much larger quality control failure throughout PW India.”
More from Bob Khuzami & Co.:
“PW India violated its most fundamental duty as a public watchdog by failing to comply with some of the most elementary auditing standards and procedures in conducting the Sataym audits. The result of this failure was very harmful to Satyam shareholders, employees and vendors,” said Robert Khuzami, Director of the SEC’s Division of Enforcement.
Cheryl Scarboro, Chief of the SEC’s Foreign Corrupt Practices Act Unit, added, “PW India failed to conduct even the most fundamental audit procedures. Audit firms worldwide must take seriously their critical gate-keeping duties whenever they perform audit engagements for SEC-registered issuers and their affiliates, and conduct proper audits that exercise professional skepticism and care.”
For the PCAOB, Chairman James Doty:
“The reliability of global capital markets depends on auditors fulfilling their obligation to investors to perform robust audits, resulting in well-founded audit reports. Two of the PW India firms, PW Bangalore and Lovelock, repeatedly violated PCAOB rules and standards in conducting the Satyam audits. These confirmation deficiencies contributed directly to the auditors’ failure to uncover the Satyam fraud.”
And Claudisu Modesti, the Director of Enforcement:
“Accounting firms that audit U.S. issuers, including affiliates of international accounting networks, provide an essential bulwark for investors against issuer clients that are committing fraud. PW Bangalore and Lovelock repeatedly failed to meet their obligation to comply with PCAOB standards, and these failures contributed to PW Bangalore and Lovelock failing to detect the fraud committed by Satyam management.”
You can see both the enforcement actions on the following pages. As for the firm, here’s a portion from PW India’s statement:
The SEC and PCAOB orders found that PW India’s audits of Satyam did not meet US professional standards and, as a result, did not discover the fraud underlying Satyam’s 2005-2008 financial statements. The orders make clear that Satyam management engaged in a years-long fraud, going so far as to create scores of fictitious documents for the purpose of misleading the auditors.
These settlements, in which PW India neither admits nor denies the U.S. regulators’ findings, apply only to the U.S. regulatory enquiries into Satyam. Neither of the orders found that PW India or any of its professionals engaged in any intentional wrongdoing or was otherwise involved in the fraud perpetrated by Satyam management. The settlements mark the end of the Satyam-related U.S. regulatory enquiries concerning PW India and are a positive step and important milestone in putting the Satyam issue behind PW India. PW India remains hopeful of resolving the outstanding enquiry with the Indian market regulator.
Sounds a little defensive, doesn’t it? Here’s what PwC International Ltd. had to say:
PricewaterhouseCoopers International fully supports PW India’s decision to resolve these issues with the US regulators and is hopeful that an agreed resolution will also be reached with the Indian market regulator. The PwC network will continue to work closely with PW India as it fulfils its commitments to its regulators, its clients, and to the Indian and global marketplaces.
PricewaterhouseCoopers International is committed to a PwC presence in the vibrant and fast growing Indian marketplace.
“India is a key market for PwC and we are committed to working with our colleagues in India to build on a successful practice with quality at the centre of everything it does,” said Dennis Nally, Chairman of PricewaterhouseCoopers International. “The last two years have been challenging for PW India but I believe that PW India has learned the lessons of Satyam, made the right changes and is on a sound footing to move forward, dedicated to quality work.”
This may be a foreign firm but it makes us wonder if the SEC and PCAOB are just getting warmed up. Mr Doty and SEC Chief Accountant James Kroeker will be on the tomorrow’s panel that we will be live-blogging and it will be interesting to hear what they have to say.
After every Federal Open Market Committee meeting, you can peek into the Fed’s brain in a highly succinct fashion when the statement and minutes are released shortly after it ends but five years must pass before the full transcript of the meetings is released to the public. If you’re playing along at home, that means the FOMC transcripts should be full of all sorts of intriguing info specifically pertaining to the market collapse of 2008 on or around 2013.
But we’re talking about the 1999 minutes today and that’s where Adrian Douglas at Market Force Analysis comes in. He decided to read through some of the now-available minutes (hey, we all need hobbies) and look at what we have here. Did PwC help the Fed brush out a material accounting boo-boo?
Maybe when you actually create the money and the financial accounting handbook to go with your audits you can get away with sort of thing but something about this just doesn’t sit right.
This is System Open Market Account Manager Peter Fisher speaking to the committee:
Last spring, as members of the Committee will recall, we entered into a series of transactions with the ESF to re-balance our euro and yen holdings so we could come to a better split both in terms of total holdings and the currency mix. This involved a number of transfers of ownership of a series of investments and resulted in quite a significant amount of accounting activity. In the course of reviewing that, our own accounting staff identified an error that had been introduced in the prior year in our treatment of the premium on bonds held in the accrual account, overstating the accrual account by about $5 million. In the course of confirming that, they identified an additional $26.6 million overstatement in the accrual account for interest on foreign currency investments. We have had a number of staff members working full time trying to trace the source of that $26.6 million overstatement. They have worked back through the records to December 1994, before which detailed records at the transaction level just no longer exist due to the routine and appropriate destruction of documents.
The Board examiners were at our Bank to conduct an examination of the System Open Market Account in September and PricewaterhouseCoopers also has looked over our methodology to try to trace this overstatement back through time and find its source. PricewaterhouseCoopers is confident that we have traced it back as far as we can. They have tested our work papers and agree with our conclusion that we simply can’t go back any further.
After a quick back and forth over whether or not this could be a diversion involving a few folks within the Fed working together to funnel out the money and shooting that theory down, they present the solution:
The Board’s staff and our accounting function at the New York Fed have worked out an accounting treatment to correct for both the $5 million and the $26.6 million errors. That involves reducing the accrued interest asset account by the entire $31.6 million, with an offsetting reduction in interest income on foreign currency investments. We will make that adjustment before the end of the year and spread it among all the Reserve Banks. Of course, for all of us with responsibilities for SOMA this is an embarrassing, indeed humbling, event. As a technical matter, though, I understand that PricewaterhouseCoopers is comfortable with the conclusion of both our accounting and audit function and the Board staff that this is not a material event for purposes of disclosure for any Reserve Bank.
That’s right, the Fed fudged the numbers to make things add up right and PwC gave it the all clear. Perhaps I’m a bit ignorant on how things work but “working out an accounting treatment” to scrub out over $30 million in errors is no easy feat, maybe friend of GC and former criminal Sam Antar can give us some hints on how to accomplish such a task?
Notice also that no one else gets the privilege of “the routine and appropriate destruction of documents,” leading us to ask the obvious question: how is it they get away with it?
That was the question posed to us by our tipster. The answer: more and more defections. The latest is James Draper, per an internal email sent to us this morning.
Welcome new Risk Assurance Principal James Draper
The ranks of Risk Assurance continue to grow with the addition of accomplished professionals. These catalyst and experienced hires are helping us to evolve our services, and impress the marketplace with the expertise in which we deliver them. James Draper is our newest edition, joining us as a principle [sic, Jimbo is now a PwC “pal”] in our San Francisco office.
Jamie’s focus will be on helping to grow our IT&PA/ERP Controls services, particularly in the areas of SAP and JD Edwards. He joins us from KPMG where he has logged over 15 years experience assisting clients with technology risks. Instrumental in helping clients implement controls and security, Jamie has effectively managed the risks associated with large system implementations. In fact, he has assisted a number of global companies across a variety of industries through complex implementations, among them: Chevron, eBay, Nestle, Rolls-Royce (Aerospace) and Dolby. Jamie will help us to help our clients become more efficient in their control processes, leveraging system functionality including SAP’s Governance Risk & Compliance (GRC) module.
[The part where they talk about his personal life]
Please join me in welcoming Jamie to our firm, and to Risk Assurance.
If history is any indicator we’ll see a press release from PwC at some point but in the meantime, reactions to the latest KPMG turncoat are welcome at this time.
More competitive poaching:
PwC Lands Another KPMG Partner; Steven Tseng Joining Transfer Pricing Practice
PwC Picks Up Thomas Henry from KPMG; Will Lead Global Incentives Practice
This video appears to be from last summer but since we’ve just been made aware of it, we’re brining it to you now. Why there are multiple videos playing off the Backstreet Boys’s “I Want It That Way” is quite baffling in of itself but this particular group decided it would be best to use their own non-studio produced singing voices AND to come up with lyrics that include “351,” “Like-Kind Exchange” and “STD.”
There are a lot of directions to go with this so feel free. Make haste however, I’m sure it won’t be up for long.
In collegiate tournament basketball, a #16 seed upsetting a #1 is virtually unheard of. The only time it has ever happened was the Harvard Womens squad upsetting Stanford in 1998. It has never happened in the mens tournament. But in the Going Concern March Madness: Coolest Accounting Firm bracket, superior athletes, coaching and luck do not matter. Like most things in accounting, it comes down to numbers.
Late yesterday, PwC’s lead over Reznick Group completely vanished. I speculated to my parter-in-crime that based on the sheer volume coming out of the Virginia/Maryland region that it had to be some sort of a concerted effort on the part of Reznick Group. Turns out I was right; more right than I could possibly know.
This email went out to all Reznick Group offices. Yes. All.
And here’s the victory lap/dancing on PwC’s grave:
We knew America would land with Reznick Group accountants being the coolest bean counters around. With the underground movement of getting clients, family and friends to help vote along with a huge push from our India employees motivating a billion voters, hard to stop the Reznick Group momentum.
Bring on the next contender!
So for the firms left – this is what you’re up against. I’m not suggesting that you should undertake similar efforts but that’s because I have to remain neutral in this regard.
It should be noted that based on the numbers accumulated by Vizu, it appears very few Reznick people bothered voting on any of the other match-ups. This isn’t exactly the kind of participation we had in mind but since most of RG is probably new to the site, we’ll let it slide. The question now is whether this amounts to a “Reznick win” or a “PwC loss.” Please discuss. We’ll updated you with the match-ups for the second round later today and the voting rolling tomorrow.
This just in – more competitive poaching from P. Dubs.
PwC US announced today that Steven Tseng has joined PwC US as a partner in the firm’s Transfer Pricing practice. Tseng will relocate to China in June to focus on helping multinational companies with their transfer pricing planning in China and the Asia Pacific region. Tseng will also take the lead role for tax and transfer pricing planning for companies seeking to transform their value chain globally, in particular in Asia.
Tseng joins the firm from KPMG, where he was the Asia Pacific Regional leader for Global Transfer Pricing Services (GTPS) as well as the partner in charge of GTPS in China and Hong Kong. Prior to this role, Tseng was partner in charge of Financial Advisory Services for KPMG in Finland.
This latest pickup follows the firm snagging Tom Henry last month. Rumors have it that there will be more but the question is, who’s next? John Veihmeyer? Keep us updated if you hear anything.
I overheard – and by that I mean someone sent us the gchat – the following conversation that occurred earlier today regarding friendly get-togethers that will be going down at 300 Madison starting next Thursday.
[Someone at PwC]: From my good friend [Someone else at PwC]
[Someone at PwC, quoting an email]: Take a break. Unwind. Catch up with your coach or colleagues. Enjoy refreshments. Play a game. Right here in 300 Madison at our new Post work Connections. Designed to show appreciation for everything you do — and to provide a place for you and your colleagues — to meet and get to know people. It’s a place to just have fun! Post work Connections will be open every other Thursday, from 5:00-8:00 p.m., in 300 Madison’s deck/cafeteria, from March 24 – June 16. We look forward to seeing you at our grand opening on March 24. Give it a try. There will be beer, wine, soda, snacks, games — and raffles for prizes! Get caught in the act of having fun at work! Hope to see you there!
[Someone at PwC]: Note that post work connections starts with PwC
[Someone who knows someone at PwC]: Good lord
[Someone who knows someone at PwC]: That’s epic
[Someone who knows someone at PwC]: Is the “post work connections starts with..” comment theirs or yourts
[Someone at PwC]: Mine
[Someone who knows someone at PwC]: Love it.
Personally, I’m mostly curious about the “games” aspect of these events. Are we talking Risk™? Beer pong? Scrabble™? Or we talking an Angry Birds round-robin tournament? Regardless, we’ll be interested to hear how these Thursday ragers will go. Keep us in the loop.
For any current PwC employees if you, in the off-chance, happen to run into Bob Moritz in the elevator at 300 Madison, you might say, “Hey, thanks for the iPad,” or “I don’t care what anyone says, I love the colors of the new logo,” or “You look great with your shirt off.”
On the other hand, if you’re a college student and you need a little extra cash, you might be willing to script together a few awkward sentences that you would say to BoMo or Dennis Nally if, in fact they were interested in being accosted by a wide-eyed eager beaver that is rambling on about their leadership roles in Beta Alpha Psi only to be cut off with, “Sounds great but I really got hit the john.”
If that sounds like something you’d be interested in, you’ve got until March 25th to get your entry submitted.
Making an Impression [PwC Careers/Facebook]
This is a new one.
We found out about an external recruiter impersonating PwC late yesterday and apparently it’s gotten on the nerves of the brass that they sent an email to let everyone know that you shouldn’t talk to strangers, even if they say they’re from PwC and know a bunch of internal acronyms.
External Recruiters Impersonating PwC Staff
There have been recent reports of an unethical recruiter attempting to collect PwC staffing information by presenting themselves as a PwC employee. This individual has proven to be very convincing and knows some of the PwC terminology to support their deceptive practices. One of PwC’s best defenses to this type of activity is to protect our information and to not readily disclose it without verifying the requestor and their need for the information.
What to do if you receive a request for staffing information
If you should receive a call from an individual requesting staffing information, e.g., names, staff levels, phone numbers, etc. , do not provide this information by phone and do not send it to an external e-mail address. Politely obtain the caller’s information and inform them you will look into the their request. Do not be fooled by the information displayed on your phone. The caller typically blocks their caller id and the firm has also experienced instances of phone spoofing where the phone displays a false PwC extension from a call originating from outside of the firm. You can verify if it is a legitimate caller by contacting the individual through their PwC office phone number or e-mailing their PwC account. If you determine the call did not originate from the PwC individual, please report the situation to your HR representative or e-mail the call information to security@us.pwc.com and a US Security representative will respond to you.
We’ve contacted the firm about this sly impostor and are waiting to hear back. In the meantime, if you’ve heard from this crafty character, send us the email or voicemail.
This could be what PwC’s Talent Leader was talking about she said that poaching, “[Has] always been a place we like to stay competitive.”
Mr. Henry, a tax partner who has spent more than 25 years in public accounting, most recently at KPMG, has extensive experience in all areas of state and local taxation. He is best known for his work in the credits and incentives space, both domestically and worldwide. His experience in maximizing global incentives for large multinational corporations in the United States, Europe, Asia and Africa will enable both US-based and non-US-based multinational companies to benefit from his counsel when entering into economic incentives negotiations.
Thomas Henry Joins PwC US To Lead Global Incentives Practice [PR Newswire]