Category: News

PwC Doubling Headcount in China

All the other Big 4 firms have gotten some digital ink hyping their hiring plans for the next fiscal year and beyond. Before today, PwC had only mustered some rumored poaching which isn’t ideal PR.

The rest of the firms have already made it known that they are doing their part to create jobs here and abroad – Deloitte’s numbers are dumbfounding, KPMG’s spree includes Europe and asking its alumni come crawling back, while E&Y is picking up 6,000 recruits off campus.

P. Dubs finally gets puts some hiring news out there announcing that they will double their headcount in China over the next 5 years to over 20,000 employees.

PricewaterhouseCoopers LLP plans to double its headcount in China to more than 20,000 people within the next five years to meet rising demand for professional services as the nation’s companies become more international.

“We expect more Chinese companies to expand their presence overseas, and we’d like to be part of that growth,” Silas Yang, the firm’s chairman for China and Hong Kong, said today in a statement.

PwC to Double China Headcount to More Than 20,000 Over 5 Years [Bloomberg BusinessWeek]

Accounting Firms Dodge Bullet in NY Court’s Kirschner v. KPMG Ruling

Francine McKenna was the first to opine (strongly we might add) on the ruling in Kirschner v. KPMG (along with the derivative suit Teachers’ Retirement System of Louisiana and City of New Orleans Employees’ Retirement System v. PricewaterhouseCoopers) that was announced yesterday.

The New York Law Journal reported on the ruling first:

Ruling on certified questiirschner v. KPMG LLP, 151, and Teachers’ Retirement System of Louisiana v. PricewaterhouseCoopers LLP, 152—a 4-3 majority held that accountants who allegedly should have detected malfeasance by executives of Refco in Kirschner and American International Group Inc. in Teachers Retirement System cannot be sued under state law.

The Court held that the principles under which the suits were dismissed—in pari delicto and imputation—are “embedded in New York law” and “remain sound.”

Like we said, Francine had some thoughts on this and she did not hold back:

A majority of the New York Court of Appeals bought the self-serving, selfish and unjust arguments of the defendants and their flunky amicus brief toadies supporting criminal corporate fraudsters and, get this, the shareholders of the accounting firms (!!). The New York Court of Appeals abandoned the shareholders and creditors of Refco and AIG for criminals and incompetents.

If I were writing this decision as a novel of corporate cronyism to the extreme in a Utopian nirvana for capitalist parasites, I could not have imagined more contemptible excuses for judicial cowardice.

Those “flunky amicus brief toadies” include the AICPA, the New York State Society of CPAs and the Center for Audit Quality, who argued that our very capital market system was at risk if accounting firms (and other professionals) could be held responsible for fraud perpetrated by management.

We share Francine’s passion for holding accountants responsible for their culpability (plus, claiming “we were duped” does nothing for the industry’s reputation) but the ruling hardly comes as surprise. Judge Susan Phillips Read wrote for the majority:

The speculative public policy benefits advanced by the Litigation Trustee and the derivative plaintiffs to vindicate the changes they seek do not, in our view, outweigh the important public policies that undergird our precedents in this area or the importance of maintaining the “stability and fair measure of certainty which are prime requisites in any body of law” (Loughran, Some Reflections on the Role of Judicial Precedent, 22 Fordham L Rev 1, 3 [1953]). We are simply not presented here with the rare case where, in the words of former Chief Judge Loughran, “the justification and need” for departure from carefully developed legal principles are “clear and cogent” (id.). Finally, to the extent our law had become ambiguous, today’s decision should remove any lingering confusion.”

[…]

We are also not convinced that altering our precedent to expand remedies for these or similarly situated plaintiffs would produce a meaningful additional deterrent to professional misconduct or malpractice.

In other words, these particular cases didn’t present a situation that demonstrated a desperate need for change in the law nor would it prove to be a helpful deterrent of fraud in the future. Bottom-line seems to be that Francine is upset at the majority’s pragmatic attitude but what do you expect from a panel of seven judges? It’s a long shot that you come across more than a couple of judges who are willing to turn years of case law inside out and upside down just because a company went bankrupt or a pension fund lost value.

That being said, there was a very enthusiastic and compelling dissent that basically calls auditors a bunch of pansies when it comes to accepting professional responsibility, “[I]t seems that strict imputation rules merely invite gatekeeper professionals ‘to neglect their duty to ferret out fraud by corporate insiders because even if they are negligent, there will be no damages assessed against them for their malfeasance.’ ” You can check out more over at RTA.

As far as the audit firms are concerned, they have to breathing a huge sigh of relief. Considering all the lawsuits out there, firms are already slowly bleeding to death by paper cuts. If this case had gone the other way, it could very well have been a mortal wound for the firms.

Kirschner v KPMG LLP [NY Court of Appeals]
Third-Party Liability Ruled Out in N.Y. Suits for Corporate Misdeeds [New York Law Journal]
New York Court of Appeals Stands By Corporate Man: In Pari Delicto Prevails [Re:The Auditors]

Grant Thornton CFO Survey Reminds Everyone That the Job Market Still Sucks

But don’t just take the CFOs word for it, Stephen Chipman is hearing the same thing from the dynamic companies that GT is rubbing elbows with these days:

In a national survey of U.S. Chief Financial Officers (CFOs) and senior comptrollers conducted by Grant Thornton LLP, the U.S. member firm of Grant Thornton International Ltd, only 29% plan to increase hiring in the next six months, while 21% plan to decrease hiring.

A vast majority (79%) believe that the U.S. economy will not recover until the second half of 2011 or later, and more than half (59%) are concerned with a double-dip recession.

“These findings are consistent with what we have been hearing from our dynamic-organization clients,” said Grant Thornton LLP CEO Stephen Chipman. “Indecision stemming from a weak economy and the unknown impact of governmental tax policy and new regulation on business and individuals is causing paralysis, particularly as it relates to major business decisions, including expansion, expenditures and hiring.”

In related economic shitshow news, Fannie Mae and Freddie Mac are probably going to need more bailout cash. As you were.

How Dissatisfied Are Accountants? An Unscientific Poll

On Tuesday we shared with you an article from Crain’s that quoted executive recruiter (and maybe former astronaut?) Buzz Patterson, “I’d say the dissatisfaction index would probably be at a 10-year high, in the high 60s or low 70s,” with respect to the accounting profession.

If this statement is even remotely true, this means those of you just getting your chops are seeing the worst morale in a decade. We’re talking pretty flippin’ epic misery here. For those of you that have been around for years (or even a decade or more) is this really the worst time you remember? If you’re a veteran of the biz, share your perspective in the comments below.

Also, to get things rolling on this second-to-last Thursday of October, we thought it might be interesting to gauge the crowd here at GC. After the jump, pull the lever for your level of satisfaction with your job. Use these explanations as a guide: 5 – “Hand me a cigarette”; 3 – “Take it or leave it”; 1 – “About to go postal.”

Former Accountant’s Ability to Make Small Talk, Save Lives Wins Him Doorman of the Year

Residents at 305 E. 86th St. are pretty lucky.

If You Never Write Another FASB Comment Letter In Your Life…

… please answer this with your best explanation of your position. I’ll go on record saying I am expecting comment letters stuffed with expletives, paranoia, panic and conjecture and personally can’t wait to read some of them.

“Quirky” representatives of the Profession, you know who you are. I want long rambling anti-IFRS manifestos dammit, don’t disappoint me.

Your mission:

The Financial Accounting Standards Board (FASB or Board) is issuing this Discussion Paper to solicit information from stakeholders about the time and effort that will be involved in adapting to several anticipated new accounting and reporting standards and when those standards should become effective. The FASB will use that information to develop an implementation plan for those new standards that helps stakeholders manage the pace and cost of change. The FASB requests comments on this Discussion Paper by January 31, 2011.

The question FASB would like answered is “how the fuck are we going to pay for this convergence thing?” and they’re asking the profession to come up with solutions. I imagine some pockets of the profession couldn’t care less how much it will cost as they are only thinking about learning the new rules because, well, someone’s got to do it, right?

Don’t misunderstand it, they would also like to know if they should transition all at once or gradually, if effective dates should be different for various entities and just how many billable hours might be lost to figuring all of this out. So basically they need you guys to get on this ASAP because they’ve had several years to do it and are still lost.

The request is simple:

“Our joint workplan supporting the Memorandum of Understanding with the IASB identifies targeted completion dates for various projects, but does not address when the standards would be effective,” notes Acting FASB Chairman Leslie F. Seidman. “We issued this Discussion Paper to gather the information we need to create a realistic, cost-effective plan for transitioning to the new standards.”

In other words: can you guys ballpark the timeframe and how we’re going to pay for it? I’d rather see the profession spend its quality billable time writing comment letters on its opinion of the transition and/or FASB’s handling of it. I think you fringe accountants know what to do, so I thank you in advance.

AICPA Announces International CPA Exam Locations

Have you, like many foreigners, been tripping about getting into the US to take the CPA exam, battling with strict post 9/11 Visa rules and other assorted red tape? Trip no more, the CPA exam is about to go international. This is huge because the exam is also about to get an international makeover (like IFRS testing in FAR and international audit standards in AUD) but that couldn’t at all be coincidentally related to this announcement from the AICPA:

The Uniform CPA Examination will be offered outside the 55 U.S. jurisdictions for the first time in its history in 2011. The American Institute of Certified Public Accountants, National Association of State Boards of Accountancy and Prometric – the three organizations that jointly offer the CPA Examination in the United States – reached an agreement to administer the exam in international locations.

The CPA Examination next year will be offered in Japan, Bahrain, Kuwait, Lebanon and the United Arab Emirates.

The international exam will be the same as the one offered in the U.S., using the same computerized format and administered in English. As in the U.S., the purpose of taking the examination will be to qualify for licensure as a CPA through U.S. state boards of accountancy.

Security has been one issue for the AICPA in deciding where to offer the CPA exam even though it will continue to administer the exam through Prometric. International testing will be subject to the same state board or jurisdiction rules that determine eligibility for CPA exam candidates since there is no Dubai Board of Accountancy. Just as now, potential international candidates will have to meet the requirements of whichever jurisdiction they choose to apply. Which I guess makes all the residency-requirement states out of the running to be a part of this epic new spin on the computerized CPA exam?

Some have mentioned on earlier bitch sessions about the AICPA that their motivation is a monetary one. Expanding membership, for example, brings in revenue. Increasing the passing CPA exam score (thereby causing more failures and, one would imagine, more subsequent $$$ retakes after) is another example though that’s just a rumor last I heard. So if one were inclined to postulate as to the motive behind this move and approach it skeptically, you might come to the conclusion that this could equal a pretty significant payday for the AICPA as well as NASBA, Prometric, ChoicePoint and all the CPA review courses who make a living off of this exam. I’m not against it.

I guess we will find out what significance the U.S. CPA exam still holds for the rest of the world. Even if we end up looking pretty bad when international candidates do way better on the AICPA’s new international exam content in 2011.

Earning the Right to Say, “You can trust me. I’m your CPA.”

The following post is republished from AccountingWEB, a source of accounting news, information, tips, tools, resources and insight–everything you need to help you prosper and enjoy the accounting profession.

“That was strange,” I thought as I hung up the phone. I’d just spent the last thirty minutes on the phone with a client talking about, of all things, which B-school his daughter should attend and what major concentrations she should consider.

This didn’t fit my view of accounting as it did not involve auditing transactions or pushing numbers around on a spreadsheet. They didn’t teag in undergraduate school. Yet, some 25 years after receiving a diploma with a Bachelor of Science Degree in Accounting and some 22 years after earning the right to call myself a CPA, here I was being asked to advise a client on a very personal matter not even remotely related to accounting.

How did this happen? In a word – trust. Over the years, I had earned the trust of this client on enough accounting, financial, and tax related matters that he now trusted my advice on such matters as where his daughter should attend college. As I let that sink in, I was blown away by the realization that trust leads to influence.


Because CPAs usually are very active in their communities, they have a very well-developed network of contacts and referrals. And because CPA’s are trusted, when they refer a client to somebody in their referral network, more likely than not, that client will end up working with that referral.

A colleague of mine – also a CPA – related the story of sitting with a client who recently had sold his business and had in excess of $100 million to invest. The client had never seen this much cash and was unsure what to do. The CPA recommended the client talk to a wealth management specialist and the client agreed. After the wealth manager had explained his core values and approach to investing, the client turned to his CPA and asked for his thoughts. The CPA responded that he was a believer and that all his personal and retirement savings were invested with this wealth manager. The client turned to the wealth manager and said, “If it’s good enough for him (the CPA) then its good enough for me. How do I get started?”

Do you think that afternoon the wealth manager was really glad to have the CPA as a referral source? I’ll guarantee it. The endorsement from the CPA and the client’s trust of that endorsement not only gained the wealth manager a substantial client – it also greatly shortened what would normally be a very lengthy sales process.

Whenever I see a public opinion poll about most trusted professions, the CPA always is at or near the top. There are several reasons why CPAs are viewed so favorably. CPAs are viewed as having a great deal of competence, able to remain unbiased, able to constrain emotion from affecting decisions, and possess an aura of independence and fiduciary responsibility – meaning we generally treat our clients affairs as we would treat our own.

One area where sound, practical advice is indispensible is finance. Against this backdrop of favorable opinion and opportunity, when a CPA delivers a valuable financial service and honors his word, trust is developed in spades.

During August of this year I read an article written by a business owner about the relationship with his CPA. The owner wrote that his CPA is the benchmark he uses to measure all other consultants. He goes on to explain his CPA has three attributes he appreciates as a valuable resource. Those attributes are knowledge, experience, and what he terms the “we” factor. That is, his CPA considers himself part of the team.

When the CPA makes a recommendation, such as getting rid of non-performing assets, adjusting personal lifestyles, or finding another service provider for payroll, legal services, software, investment advice, leasing agents, business brokers, or banking relationships, this business owner is going to follow that advice. He has no reason not to follow it.

In many client relationships, the CPA is counted on to be a trusted business advisor, to be available when the entrepreneur needs advice, to be the quarterback of the team of professionals who help to guide the company. Through contacts with other professionals and other clients, the CPA can be an excellent source of information when a business is unsure of the path to follow or when it needs services it has not used previously.

When a client trusts his CPA enough to entrust decisions affecting his own children – such as where to go to college and what to major in or how to invest $100 million of new found wealth – how much more do you think that client is going to trust his CPA on decisions that affect normal day-to-day business operations?

For those of you reading this article who might be potential referral sources, the ones I trust most with my client’s are the ones who put the needs of others ahead of themselves. If I receive any indication that a service provider is the least bit self-serving, they are never going to see a client through my referral… and they might even receive a negative review if overly unworthy of trust.

In this regard, actions speak louder than words. Show me that you are worthy of my trust and my client’s trust through many small actions over time. Show me the consistency of your character and that you understand putting the needs of others first is the most certain way to experience personal success. Tell me the truth, not what you think I want to hear. The world is full of yes people. We need more people willing to say what they think. If you are truthful, authentic, and trustworthy in your dealings with others, then you probably are somebody I will feel comfortable referring to a client and there is a 95 percent probability you’ll gain a new client or customer.

With a few exceptions, the CPA profession has done a good job of caring for and nurturing public trust. As a result, when public surveys are done, CPAs are viewed at or near the top of all professions in terms of honesty and trustworthiness. This trust creates influence and that influence is powerful. As such, trust has to be a highly regarded and protected asset.

Our words carry weight. As professionals and trusted advisors our words carry substantial weight. Futures can be and are changed by the words we speak. We have the ability to elevate dreams and ideas – or crush them – with the power of our words. So we must choose them carefully and make sure the substance of our thoughts and words rise to the level of fiduciary care we are sworn to uphold.

Prop 19 May Not Be Such a Great Way To Bring In California Tax Revenues After All

While California legislators may be licking their lips at the thought of taxing marijuana – should California voters go all in on Prop 19 next month – a new RAND Corporation paper points out that the revenue impact on Mexican gangs could make much less of a bang than assumed by Prop 19 proponents.

The reasoning behind 19 is simple: California prisons are already packed with all sorts of shady individuals and locking up small-time pot dealers with murderers, gang-bangers and child molesters really only creates a criminal factory that costs our already broke state way too much money. Eliminating a large chunk of the criminality surrounding pot frees up correctional resources to put rverts and killers. So far that makes sense.

Legalizing marijuana also gives our sneaky little legislators the chance to tax the shit out of a multi-billion dollar business; they have already done this in cities like Oakland where pot dispensaries are limited and closely watched by TPTB to assure they get their cut. Implement this state-wide and maybe we won’t be so desperate to get into selling our stuff off and mailing out IOUs instead of actual money.

Or were we totally high when we came up with revenue estimates that promise $1 billion in extra cash for the state?


The RAND paper argues that California accounts for 1/7th of marijuana consumption in the U.S., much of which is grown, cultivated and sold here in the state. That isn’t money that will be taken out of Mexican drug traffickers’ pockets if Prop 19 passes as we Californians are already weed snobs and don’t smoke the Mexican garbage. What we have is a large black market subsidized by semi-legal pot funneled through dispensaries. Some locales tax it while others don’t under current rules and it appears as though Prop 19 leaves the same door flapping wide open in the breeze. Not exactly the big tax boom we’d hoped for.

Opponents argue that legalization of marijuana will actually backfire as the free market price of an ounce could drop to $38; great if you’re the one buying but not so great if you’re the one trying to make money off of your crop and now forking over taxes to the state.

Is there anything in Prop 19 that would actually require growers and buyers to bypass the underground market they have known for so long and give their share of taxes to the state? Not as far as I can tell.

Think of it this way: if the state suddenly started taxing soda at 10 cents a can and you knew a guy in your neighborhood who happened to be sitting on a stockpile of Pepsi, why on Earth would you go to the store and pay the additional 10 cents a can when you could simply unload a case or two from your neighbor at a lower price? The difference being there’s already a black market for pot and introducing consistent tax issues into the matter is certainly not the way to legitimize said black market.

Governor Schwarzenegger has already signed a bill into law that makes possession of less than an ounce an infraction ($100 fine) while SFPD cops are already taught to ignore casual pot smoking on San Francisco streets (just like everything else they ignore including defecation and rampant dysfunctional drug use) so why 19?

I don’t have an answer for that. On the surface Prop 19 seems to be a no-brainer but like any other piece of California legislation, it’s all in the implementation and I don’t believe our state can pull off the tax revenue payday they are banking on should California voters vote yes on November 2nd.

Or maybe all the stoners will stay home and get high on Election Day instead, having already decided this is a bad idea and not at all what it seems to be at first glance.

More Stuff on the Young Buck Auction Block: Titans Fridge, Louis Vuitton Gun Holster, Ms. Pac Man

Yesterday we listed out some of the fine items up for bid at the IRS’s Young Buck auction. The auction is slated to go down on October 28th at 10 am Tennessee time.

The complete inventory (after the jump) runs four pagesve more interesting items for your consideration:

• Titans Refrigerated soda machine – Chris Johnson finally turned it on last week, didn’t he?

• Tattoo Kit – whenever the moment strikes you.

• Louis Vuitton gun holster – Pictured.


• Craps gaming table – Because reenacting the scene from A Bronx Tale is just embarassing.

• Ms. Pac Man video game – History lesson for the kids

If you’re looking to bid and aren’t in the Antioch, TN area here’s the mail-in form but no plastic, you’ve got to come with cash, certified or cashier’s check, etc. Good luck and good bidding.

Young Buck Inventory

And just in case you need some visuals, a few items from the Treasury’s website follow.


Keeps perfect time!


Who’s got a birthday on June 15th?


For those looking to spruce things up around the house.

Accountant Mugshot of the Day

An accountant for a Jersey City church was arrested today on charges he swindled the house of worship out of more than $40,000 by pocketing tax payments and spending some of the money in casinos and restaurants, officials said.

“A bond of trust has allegedly been broken with these parishioners,” said Hudson County Prosecutor Edward DeFazio of the charges against Hector L. Sanchez, 59, of Jersey City.

The accountant for the Fountain of Salvation Christian Church on Communipaw Avenue was arrested in South Orange this morning and charged with theft by failure to make required disposition, DeFazio said.

Wouldn’t think it to look at the guy.

Jersey City man accused of stealing $40K from church funds [NJ.com]

Deadline Watch ’10: Happy October 15th!

Along with AG’s friendly reminder about the drop-dead deadline for nonprofits today, we’d be remiss if we didn’t call attention to the significance of October 15th deadline.

Maybe you finished things up earlier in the week and today is simply a formality but for many, today is a frantic mishmash of signatures, phone slamming, desperate, last minute emails and – for the holdouts on electronic filing – trips to the post office.


Sure you’re not getting the attention bestowed on April 15th or Chilean miners but – hey! – we remembered you and that should count for something.

So whether you’re finishing up a 1040, a benefit plan’s Form 5500 or converting some poor sap’s IRA, finish up ASAP and go blow off some steam. Another year down.

Earlier:
Deadline Watch ‘10: Happy September 15th!
See also:
Don’t miss these Oct. 15 tax deadlines! [DMWT]
Extended 1040s and Individual NOL Carryback Elections Are Due Today! [Tax Update Blog]