Category: News

Five Questions with Norman Marks

Norman Marks is an “evangelist for GRC” (that’s governance, risk management and compliance for those of you that can’t do a Google search). He is a CPA, a chartered accountant and vice president, governance, risk, and compliance for SAP’s BusinessObjects division, and has been a chief audit executive of major global corporations for more than 15 years.

He blogs at the IIA website and keeps a personal blog on governance, risk management and internal controls. He is also the contributing editor of Internal Auditor’s “Governance Perspectives.”

If you read a few Norman’s posts you’ll understand his passion for internal audit, GRC and helping companies find solutions for these issues. Simply stated, Norman is one of the good guys and is doing more than his fair share to help take on the challenges in these areas.


Why should accountants read your blog?
My blog is for anybody with an interest in monitoring events and sharing views around governance, risk management, and internal audit. Accountants are more than people who maintain the books: they are businessmen and women interested in advancing and protecting their organization. That makes them natural leaders in each of these areas.

What are your three must-read accounting blogs and one must-read non-accounting blog?
I read the occasional business blog (aren’t all the better so-called accounting blogs really business blogs) when the topics are interesting. Certainly reTheAuditors by Francine McKenna is interesting. But I really enjoy Mike Jacka (an auditor/humorist) and Richard Chambers, President and CEO of the IIA.

A good accounting blogger is…
Not somebody who writes about (yawn) accounting, but about the accountant’s role in business and advancing the success of his or her organization.

The biggest issue facing accountants today is…
Will the inevitable court cases around Lehman and the principle of ‘fair presentation’ change the nature of external auditing, so that compliance with the rules of US GAAP is no longer sufficient?

Best accounting firm we’ve never heard of (and why they’re great)…
The firm that John Cleese worked in Monty Python (accounting is not boring). Seriously, though, the best accounting firm is the one that puts the interests of its customers first and foremost, consistently performs quality work, exercises fine judgment, provides sound and valuable advice, and sets fees that are reasonable by eliminating unnecessary work and recognizing that fees should not rise faster than wage inflation. You have never heard of them, because I have yet to see them. Sorry, sad, but true.

Here’s Why No One Needs to Get Worked Up Over the Healthcare Reform Earnings Hit

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

The brouhaha over the hits to earnings from the new healthcare law that companies are announcing is much ado about very little.

First of all, the charge is an estimate of future costs and will have no immediate impact on cash flow. And the estimate is unusually large because the accounting rules require costs that would otherwise be reported in the future to be reported now, simply because they are the result of a change in tax treatment.


As my former colleague Marie Leone reports at CFO.com, such “true-ups” over differences in tax and book accounting practices are just that. The real cost will be spread out over many quarters.

More importantly, the hit is the result of a loss of a major taxpayer subsidy. Maybe it made sense before to provide that. But given all the concern about the federal deficit, it seems to me that asking shareholders to bear a bit more of the burden for retiree drug benefits is hardly unfair.

And in the greater scheme of things, the hit may be so small as to have little impact on companies’ valuations, as a Credit Suisse analyst pointed out the other day. General Electric didn’t even break out its estimate for that reason, calling the cost “immaterial.”

The question is whether companies will stop paying for the benefits because of the cost, and that’s unlikely unless they’re willing to compensate for the loss with higher wages, as economist Dean Baker reiterated to me in an email late last week.

“The standard economist view is that the cost of health care comes overwhelmingly out of wages,” Baker wrote. “If they have to pay more in taxes, then it will mostly come out of workers’ pay and have very little impact on their costs and ability to compete.”

If on the other hand, a decline in healthcare costs leads to higher wages, that would mean a stronger economy, so I don’t see how either taxpayers or shareholders will lose here in the long run.

Yes, that’s a big if, but as I’ve said before, the new healthcare law is the biggest effort to rein in costs undertaken to date. Of course more must be done, but the law will provide a big impetus to those efforts.

Hopefully, all this will become clearer as a result of the hearings Rep. Henry Waxman plans to hold next week on this issue, but I’m not holding my breath.

Overstock.com Turns a Profit; Patrick Byrne Writes a Very Un-Patrick Byrne Letter to Shareholders

This morning we thought the KPMG audit team working on Overstock.com would continue slaving away through the extension deadline tomorrow to get that beast of 10-K finished. Well! Turns out they’ll bet of you tonight because the OSTK 10-K has been filed and, as promised Overstock shareholders, your humble servant Patrick Byrne and Co. are reporting an annual profit for the first time ever!


After such a high, restatement or not, we’re guessing Sam Antar definitely won’t be getting an apology but Gary Weiss has already noted a couple of things:

First–stop the presses! Overstock’s auditors at KPMG says that Overstock has insufficient internal controls.

Second, the Marin County District Attorney and four other DAs in northern California want the company to fork over $8.5 million to settle consumer ripoffs by Overstock. The company disagrees and is fighting it, so …. No, wait a moment, make that read “$7.5 million.”

First off, we share Gary’s shock — SHOCK! — on the insufficient internal controls revelation. Second – AUDITORS! We talked about this, remember? Read the 10-K carefully. Overstock’s “Risk Factors” section runs 25 pages for crissakes. A million fucking clams can’t get missed!

You know what though? Mistakes happen, so we’ll let it slide.

Oh, and about that letter to shareholders. Patsy doesn’t bring up former auditor Grant Thornton once, doesn’t quote Nietzsche, compiain about short sellers, bring up Facebook, or say anything remotely antagonizing (although on page 32, the Company’s states he still might).

This makes think: 1) Is he not feeling well? 2) We want the old Patrick back! Read for yourself:

Dear Owner:

In Q4 our revenues grew 27%, twice the ecommerce industry’s rate, and we earned $12.7 million in net income. In 2009 we grew revenues 6%, earned $7.7 million in net income, generated $46 million in operating cash flow, and generated $39 million in free cash flow. It’s nice to be profitable.

I am proud that, for the second year in a row, we rank number 2 in the NRF/Amex survey of American consumers, behind only LL Bean and ahead of Amazon, Zappos, eBay, Nordstrom, and many other fine firms.

As you may know, at the end of Q4 we engaged KPMG as our independent auditors, and announced that we were restating our FY 2008 and Q1, Q2 and Q3 2009 financial statements. I thank you for being patient with us as we worked through the questions raised by the SEC, the transition to the KPMG team, and the extra time it took to ensure that our financial statements are accurate.

I look forward to our conference call next Monday. Until then, I remain,

Your humble servant,

Patrick M. Byrne

SEC Deadline Watch: Try Not to Make a Scene

So today marks the last major deadline for those working on SEC filers and that could mean that your life belongs to you once again. We should also mention that March 31st is a major deadline for many non-SEC clients so there are a lot auditors rejoicing today (or completely losing their shit).


Whether you plan on celebrating the end of your busy season by drinking yourself blind or sleeping at home rather than the office, is matter of personal choice. There will be no shortage of celebrations anyway – clients, team members and if you’re lucky, a firm-wide celebration after the tax trolls cross their finish line.

This also means that the talk of merit increases, promotions and layoffs will start swirling. PwC and E&Y have already re-reassured their troops that raises are coming this year. Some offices have seen the exodus begin so things will remain interesting and we definitely want to know about it.

Not everyone will be raging however. The aforementioned tax return jockeys still have two weeks of listening to ball-baby clients. For those that are still chasing their CPA, maybe you take a breather or maybe you just keep killing yourself and granted, some audit teams (e.g. Overstock.com) are still working but if you passed the finish line today, congrats, well done, yada yada yada.

Let’s Take a Closer Look at This Shia LaBeouf and InterOil Situation

There’s some funny business going on in InterOil and a lot of it is pure juvenile humor. First of all, you have Louis from Even Stevens pumping their crap stock. Then you have him in Playboy saying he’s less than well-endowed.

It’s as if the jokes write themselves but then you realize that investors are actually counting on the soundness of markets and suddenly it’s not so funny. Never mind, it’s funny.


The first problem with InterOil isn’t really that the guy from Transformers is clumsily pushing it now that he’s worked beside the real Gordon Gekko – sure Wall Street is cool again but not cool enough to rub off on Shia LaBeouf who has apparently taken to pumping stocks lately.

Yeah, we know, we’re confused too.

Getting ready to play next to Michael Douglas for Oliver Stone’s “Wall Street” sequel “Money Never Sleeps”, LaBeouf studied under the financial ninjas at John Thomas Financial (yes, JDA already made that joke. A bunch of times) and apparently turned $20,000 into $489,000 says Business Insider.

And yes, he really did tell GQ readers to grow some balls and short gold at 120 (whatever that means). 120 what? Euros?

“He’s So Money” says GQ in the April 2010 issue. Give me a break. From the mouths of garbage-stock-pumping babes:

“I thought my life was pretty wild. I’m Richie Rich. I land in New York, secretly thinking I’m like the coolest guy in the world. I’ve been on the cover of GQ! But then I met these guys, and it’s humbling. It’s the most sex-drugs-and-rock-‘n’-roll atmosphere that exists on the planet. I was hanging out with some wild human beings.”

So we’ve established Shia is a douche but what about InterOil’s “fundamentals”? I’m so glad you asked!

How about this “bad faith” bankruptcy filing by InterOil’s esteemed CEO Phil Mulacek?

InterOil also recently announced a that part of the Antelope-2 well will need to be re-drilled, greasing it up further for 14-year-old humor for months to come. For 7 years InterOil has promised awesome discoveries and for 7 years it has failed to deliver. Since we no longer have logical fundamentals (InterOil outperformed well through 2009), the best we can do is juvenile humor, I guess.

Grow some balls and short InterOil or just sit there and wait for it to implode, up to you.* Shia needs to hurry up and jump on the tax problems bandwagon like many of his fellow “stars” so we don’t have to listen to this anymore. Wonder how much his toilet seat collection would snag at IRS auction?

Earlier: QOTD: Sam Antar is Ready to Rumble

*Disclaimer: nothing here should be taken as investment advice and I don’t take back what I said about Shia’s John Thomas nor his Financials.

Five Questions with Sara McIntosh

Sara McIntosh’s (a pen name) blog is described as “Devoted To Rocking the Worlds Of Finance, Accounting and Auditing.” And if you’ve read any of her posts you’ll know that by “Rocking” she means in the carnal sense.

She is a lifelong writer and accounting/finance industry expert and entrepreneur. After earning an MBA at Northwestern, she started her own finance and accounting consulting business specializing in acquisitions, implementing worldwide accounting systems, haltingg systems malfunctions in global financial operations.

Having conquered all her professional goals she now focuses on writing, having completed her first novel Shell Games in the Summer of 2009. She is currently working on her second novel, Tricks of the Trade.


Accountants are . . .
Sexiest when thinking outside the box.

What are your three must-read accounting blogs and one must-read non-accounting blog?
• Francine McKenna’s posts here at GoingConcern and at her own blog, re:TheAuditors – There is no one else that I’ve read that tears apart the accounting essentials from complex 10Ks and 10Qs and scours board minutes to report on the indisputable facts about frauds and other financial shenanigans behind the recent financial crisis and pointing toward future blowouts waiting to happen.

• Professor David Albrecht’s The Summa – Hands-down his posts are the most interesting briefs on everything you need to know about accounting standards. That world is going through some crazy, most-likely-not-in-out-best-interest changes right now and he is one of the few voices in the industry trying to stop the decline in U.S. financial reporting standards.

• Edith Orenstein’s FEI (Financial Executives International) blog – What can I say, Edith is everywhere! If you only could go one place to find out everything going on in the accounting, finance and audit industries her blog posts would be the place to go, period.

• Chris Brogan – He blogs about blogging and other social media galore. He is an amazingly high-energy, extremely warm and witty guy—and it comes across in his posts, making them all the more memorable. He also has a best-selling book on the subject entitled, Trust Agents.

If someone had to read just one post of yours which one would it be?
According to the rest of the internet universe, “Handcuffed Without Consent.”

The biggest issue facing accountants today is . . .
How to restructure the audit industry to become a profession based upon integrity (auditors no longer selected, managed and paid for by the companies they audit) versus what we have today—an environment too often based on greed. If we get the restructuring of the audit industry right, the crooks who ruin it for the rest of the public audit professionals will leave the industry for more lucrative pastimes elsewhere—you’ll most likely find them in the executive suites of their former clients.

Best Accounting firm we’ve never heard of . . .
The Johnsson Group, based in Chicago. Their specialty is improving the internal financial operations of some of the largest corporations in the world. They’re the been-there, done-that consultants every major corporation wishes they had in their back pocket long before the regulators started knocking . . .

Eight Accountants Opt to Risk Their Professional Reputations

We kid! We’re sure it it’ll be a rocking time being a Professional Accounting Fellow with the Office of the Chief Accountant and it will get them all into their respective partnerships with no problem.

The OCA hasn’t been overtly chastised by anyone to our knowledge so maybe this wing of the Commission is idiot and porn free.

• Jouky Chang, currently a director in Duff & Phelps LLC’s Valuation Advisory Services group based in Detroit, Mich.

• John M. Donohue, currently a senior manager in Moss Adams LLP’s audit practice based in Portland, Ore.

• Rachel M. Eckstein, currently a senior manager in Ernst & Young LLP’s National Professional Practice Group based in New York, N.Y.

• Michael Keehlwetter, currently a senior manager in KPMG LLP’s Department of Professional Practice based in New York, N.Y.

• Neil J. Laverty, currently a senior manager in Deloitte & Touche LLP’s Global IFRS and Offerings Services Group based in New York, N.Y.

• Josh D. Paul, currently a senior manager in PricewaterhouseCoopers LLP’s assurance practice based in San Jose, Calif.

• Christian J. Peo, currently a senior manager in KPMG LLP’s Department of Professional Practice based in New York, N.Y.

• Jason K. Plourde, currently a senior manager in Grant Thornton LLP’s audit practice based in Chicago, Ill.

Congrats to all honored. Try to stay out of trouble.

Office of the Chief Accountant Selects Eight Professional Accounting Fellows [SEC.gov]

You Don’t Want to Imagine the World Without Sarbanes-Oxley, Says Michael Oxley

We really don’t foresee any scenario where a politician would denounce a piece of legislation with his/her name on it but since the MSM has the tendency to bludgeon the Enron/Andersen/Sarbanes-Oxley mantra into everyone’s gray matter, Ox figured he’d better get on record saying that SOx might be the most important moment in U.S. history since the Louisiana Purchase.

When asked if pols can ever stop corporate malfeasance, Ox more or less, compared it to Law & Order, “We have laws against homicide and people kill one another every day. That doesn’t mean that you back off and stop fighting.”


When asked if SOx was a success, we expected a resound, “You bet your ass it’s a success!” but he was a slightly more reserved saying that you should only imagine a world without SOx if you want to scare the bejeezus out yourself:

Sarbanes-Oxley was all about accountability and transparency and restoring investor confidence. We lost almost $8 trillion in market capitalization in 2001 and 2002 because of fraud at places like Enron and Worldcom.

Even though the recent meltdown has hurt confidence again, things could have been much worse if accounting regulations had been as lax as financial regulations.

There’s the magic E word! Maybe we should try focusing on the Tonys as opposed to being so negative when it comes to Enron?

So what about this financial regulatory reform, is this a drag or what?

Critics and the financial press said that Sarbanes-Oxley was rushed through, even though it actually took eight months from the time of the first hearing on Enron until the passage of the bill.

Now, more than a year since the financial crisis, Congress hasn’t dealt with regulation and people are criticizing politicians for moving too slowly. But by taking more time Congress has had a chance to delve into complicated and multi-faceted issues like too-big-to-fail, over-the-counter derivatives, and bank regulations. This is heavy lifting and I give the Congress a lot of credit for working hard to put something together.

Do you think Congress would work on something for eight whole months and it would end up being a failure? If elected representatives work on something for that long it’s bound to be an unmitigated success.

Is Sarbanes-Oxley a failure? [Fortune]

Stephen Chipman Begrudgingly Wore Green on St. Patrick’s Day

Stephen Chipman’s blog post from last week got lost in the shuffle but you’ll be happy to know that you didn’t miss anything. Our lack of enthusiasm is not shared however, as the daily grind for a globe-trotting CEO seems to be enough to entertain some of the GT faithful. How do we know?

He shared one reader/fan’s thoughts this week, that’s how, “So, you really don’t just drink coffee and check e-mail!” While SC neither confirmed nor denied this particular allegation, one could assume that this is a big part of his day.

Moving on…Of the near 1,000 words in this week’s masterpiece, the only thing really worth mentioning is that the GT CEO spent his first St. Patrick’s Day in Chicago last week. And guess what Chi-town? You didn’t let him down; Steve-o was impressed.

This is my first time living in Chicago to experience St. Patrick’s Day; it was very interesting to see the Chicago community’s commitment to this holiday. Dutifully I wore my green tie, in respect of St. Patrick, which was very challenging to do for an Englishman. Nevertheless, I thought it appropriate…even though the Irish did beat the English at rugby a couple of weeks ago in the Six Nations Championships…which was a crushing disappointment…but I digress.

Digression! He’s really getting the hang of this. Maybe Chip’s blog readership is increasing?

The real question is what did SC see on St. Pat’s that piqued his interest? The green river? The turnout at the parade? The vast number of people vomiting in the streets? More details Stevey!

On the biz-nass front, SC did have a conference call with all the GT global leaders and he had to get up bright and early to get on the call at 8 am Chicago time. He did admit that this is NBD because when Steve-o was in China, he had to do the call in the god-awful morning hours to accommodate the BSDs in the U.S. and London.

Speaking of China (and digression), does anyone think Steve knows where mini-Madoff of Hong Kong Gabriel Azedo is? Dude has been missing for awhile.

Former Jack Bauer Nemesis Will Portray Ken Lay in Enron the Musical

So preview of Enron the musical opens in just over two weeks but most of you probably aren’t aware because busy season has been sucking the life out of you. Since we always feel your pain here at GC, it somehow slipped past us that the role of Ken Lay was announced last month and the role has gone to Gregory Itzin who played spineless President Charles Logan in one of the seasons of 24 that we can’t remember.

Anyhoo, since most of you living in New York avoid Times Square (except 5 TS peeps) like the Plague and the rest of you probably need a break, check out a few photos from the Broadhurst sent to us by readers:


Most Top Ten Accounting Firms Saw Lower Revenues, Headcount for 2009

Accounting Today put out their annual Top 100 Firms list late last week and while it focuses on the practices in United States it give us a little bit of room to speculate about who the real contenders are for the Global Six whathaveyou.

The ranking is based on net revenues from U.S. operations but it includes a lot data on each firm including # of offices, partners, total employees, and fee split.

Deloitte runs away with this list in three of the major categories – revenues, number of partners and total employees. The Casa de Salzberg had U.S. revenue of over $10.7 billion which was greater than #2 E&Y by over $3 billion.


Here are the top 10 firms along with their revenues, number of offices, number of partners and total employees

1. Deloitte – $10.7 billion; 102; 2,968; 42,367

2. Ernst & Young – $7.6 billion; 80; 2,500; 25,600

3. PricewaterhouseCoopers – $7.4 billion; 76; 2,235; 31,681

4. KPMG – $5 billion; 88; 1,847; 22,960

5. RSM McGladrey/McGladrey & Pullen – $1.5 billion; 93; 751; 7,755

6. Grant Thornton – $1.1 billion; 37; 535; 5,414

7. BDO – $620 million; 37; 273; 2,712

8. CBIZ/Mayer Hoffman McCann – $601 million; 180; 465; 4,580

9. Crowe Horwath – $508 million; 25; 240; 2,428

10. BKD – $393 million; 31; 258; 1,891

Some other interesting information from the list includes:

• Declining Revenues – Revenues for all firms dropped with the exception of CBIZ/Mayer Hoffman McCann, Crowe Horwath and BKD. KPMG had the largest drop of nearly 11%.

• Big 4 Dominate – The non-Big 4 firms’ combined revenue (approx. $4.7 billion) is still less than KPMG (smallest of the Big 4).

• Personnel Changes – E&Y had a percentage increase in partners of 8.7% while total employees dropped nearly 6%. CBIZ/MHM saw a 32% increase in partners while total employees decreased over 12%. Only PwC and Crowe Horwath saw net increases in the number of partners and total employees.

• Audit Heavy Firms – According to the list, PwC (52%), BDO (60%), Crowe Horwath (65%), and BKD (52%) all receive at least 50% of their revenues from audit fees.

So the whole Global Six thing, as much as we like to making a BFD out of it, is a non-issue. All the firms have global connections whether it’s through their own cooperative or through an international network so to cut it off at six seems a little clique-y. We’ll flip through the AT100 for any more interesting factoids but in the meantime feel to embellish any of the information presented here.

Top 100 Firms 2010 digital edition [Free registration for Digital Edition]