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Let’s Get to Know KPMG’s New International Chairman, Michael Andrew

Yesterday we learned that new KPMG International Chairman Michael Andrew doesn’t think too highly of second-tier accounting firms. Sure, they might have fancy ad campaigns, or offer Starbucks cards for being tattletales but could they audit a global bank? No. Hell no. Rubes. According to Andrew, those firms are “quite lazy” about investing in their businesses which means you couldn’t trust those audits as far as you could throw them.

But perhaps that wasn’t the best introduction for the man replacing Tim Flynn (who is, frankly, irreplaceable). Luckily, in addition to the FT piece we mentioned yesterday, there was also a much longer profile of MA that will give you a better idea of the man who has to fill T Fly’s shoes.


For starters, being the chair of an international accounting behemoth can be a quite the harried job, it’s important that Drew be afforded the quickest transport possible:

Holding court in a hotel at London’s Heathrow airport, Michael Andrew is boasting about how easy it is to get from his desk to the runway back home in Hong Kong. “I basically walk out of the office and they guarantee me to be sitting on the plane in 45 minutes,” he says.

The new chairman of KPMG International is not trying to rub salt into the wounds of harried air travellers in the UK and US. Rather, the 55-year-old Australian is explaining why he recently became the first head of a major global accounting network to be based in Asia.

And since he is based in Asia, this should put everyone on notice that the House of Klynveld isn’t caught up in the old world thinking of being centered in New York or London like other firms:

The bosses of KPMG’s three bigger rivals – PwC, Deloitte and Ernst & Young – are all based in New York or London: “We are trying to say we are a much more globally balanced firm.”

Okay, so PwC had over $29 billion in revenue. And Deloitte’s results were nothing to sneeze at. Even E&Y managed to put up a decent number. But do their respective Chairmen reside in the eastern hemisphere? I think you know the answer.

But just because he is the new Chairman of one of the largest accounting firms on Earth, you might expect that Drew is caught up in the high-flying lifestyle of a rockstar accountant. Sure, he golfs like the rest of you but that shouldn’t give you the wrong idea about Mike:

Mr Andrew’s hobby of racehorse breeding suggests he is more unbuttoned than the stereotypical accountant, even though three of his horses are called Discretion, Tactfully and Chatham House – the latter a reference to the famously off-the-record UK forum. But Mr Andrews himself is certainly willing to make punchy comments.

That’s right. This means stomping through shit. Bossing stable boys around. Firing trainers when necessary. Clearly, he’ll get down in the mud if he has to.

An accountant betting on Asia [FT]

How Do Big 4 Exiles Get Their CPE?

File this one under first world problems.

Hello,

I’m starting to think about post-Big 4 opportunities and I am wondering how people maintain their CPE credits after leaving the Big 4. Since we need to take 80 hours of CPE credits every 2 years to maintain a CPA, do most employers offer trainings that give CPE credits? If not, will they give you time off and pay for the classes? I’d be very interested in hearing from you, and from the Going Concern community.


Well considering so many of the country’s employable CPAs somehow manage to meet their board of accountancy’s CPE requirements year after year, there’s got to be a trick to stay current that doesn’t involve firms forking out the cash for “experts” to school their staff on all things billable to the CPE time code. Are you telling me you have somehow escaped the wrath of NASBA and don’t get emailed weekly with new CPE offers? Congratulations.

I spoke to one of my favorite HR people at a reasonably-sized but definitely not Big 4 firm to find out what their CPE policy is and found out that most firms above 50 people pay for CPE in one way or another. According to a national survey conducted by the AICPA and the Texas Society of CPAs, 42 percent of the smallest firms paid for CPE in 2010. So unless you end up working out of some ancient CPA’s basement, you will probably not be expected to pay your own way.

Obviously, smaller firms will not be able to provide in-house CPE but you can likely get your online CPE comped, or get reimbursed for any travel associated with in-person CPE you attend. But seriously?! In-person CPE? Get with the times, man.

If you do end up needing to pay your own way (again, totally unlikely as long as you stay gainfully employed by a real accounting firm, even a tiny one), your state society of CPAs can probably provide information on their CPE offerings, or there is always NASBA (as anyone on their email list will tell you) or the AICPA.

Remember too that if you are attending conferences like AICPA Council, you get CPE for doing so, so maybe those dumb meetings aren’t so pointless after all.

Accounting News Roundup: Rick Perry’s Awful, Awful Tax Plan; Audit Firm Talking Points Translate Well; Don’t Hesitate to Shout into a Speaker Phone When on with the IRS | 10.25.11

My Tax and Spending Reform Plan [WSJ]
In addition to giving us a “choice” between a 20% flat rate or their current tax rate, Texas carnival barker Rihis: “ObamaCare, Dodd-Frank and Section 404 of Sarbanes-Oxley must be quickly repealed and, if necessary, replaced by market-oriented, common-sense measures.” Whatever that means.

Murdochs shunned in News Corp vote [FT]
Just 20 per cent of voting shareholders not aligned with News Corp’s founding family voted for James Murdoch to be re-elected, reflecting concern about the deputy chief operating officer’s response to the UK phone hacking scandal that scuppered the group’s bid for British Sky Broadcasting. He faces a separate re-election battle as chairman of BSkyB next month. Family votes saw James Murdoch re-elected with 65 per cent of all votes cast, but this was down from 89 per cent last year. Given the family’s holding, “a big protest vote would be anything over 20 per cent” against the board, Paul Hodgson of GovernanceMetrics International said before the figures were released.

Olympus chairman lashes out at ousted CEO [FT]
In perhaps the most personal attack, [Olympus Chairman Tsuyoshi Kikukawa] suggested that [Former President Michael] Woodford “did not like Japan” because he spent much of his time as president abroad. “At a time when he was imposing strict cost cuts on frontline employees, director MCW travelled around Europe and to his home [in the UK] by private jet,” he said.

Keynote Address: A Fresh Look at Auditing [PCAOB]
Jim Doty’s keynote from NASBA’s 104th Annual Meeting.

Audit Chief Faces China Risks [WSJ]
KPMG’s top auditor in China sounds an awful lot like a top auditor in the States.

Big 4 Audits: A Thing of the Past? [GOA]
The Grumpies are thinking about the future.

Fairfax neighbors head to court over unscooped dog poop [WaPo]
A dispute between neighbors in Fairfax County over that perennial suburban pet peeve — unscooped dog poop — has grown so big that the case is set to go to a jury Tuesday. A dog walker invested $1,200 in her defense, and a supposed eyewitness will testify. A photo of the offending pile will be admitted as evidence. The fluffy 19-pound Westie-bichon frise mix will stay home. The case is just one flash point in an increasingly sophisticated, expensive and acrimonious battle over dog waste in the Washington suburbs and beyond. Two Northern Virginia apartment complexes have signed on for PooPrints, a service that collects DNA samples from pooches, taking a “CSI”-style approach to find the culprits of unclaimed messes.


The Republican Idea of Tax Reform [Economix/NYT]
Bill Clinton, in his budget for fiscal year 1997, which was released in early 1996, projected a federal budget surplus by 2001. It turned out that the tax increases initiated by George H.W. Bush in 1990 and by Mr. Clinton in 1993, which were strenuously opposed by virtually all Republicans, did exactly what they were supposed to do and sharply reduced federal budget deficits. Nevertheless, Republican dogma insists that tax increases just fuel spending and never reduce the deficit. As the Republican tax guru Grover Norquist put it last week, when taxes are on the table there are no spending cuts. “When taxes are off the table, you get spending cuts,” he said. My friend Grover is factually wrong. Spending as a share of the gross domestic product fell after both the 1990 and 1993 budget deals, in large part because of tough budget controls that Republicans abandoned in 2002 so that they could cut taxes without restraint. And contrary to Mr. Norquist’s theory, the tax cuts of the George W. Bush years did not constrain spending, which rose as a share of the G.D.P. almost every year of his administration (as the raw data confirms).

IRS Reminds Workers They Can’t Demand Turning Off Speakerphone [Dow Jones]
The tax agency agreed to remind its employees that they can’t threaten to withhold telephone help from taxpayers using speakerphones, after the Taxpayer Advocacy Panel raised the issue in its 2010 annual report, released Monday. In one of 30 of the panel’s recommendations agreed to by the IRS, the tax agency conceded that the Internal Revenue Manual does not prohibit the use of speakerphones and will issue an alert reminding its employees who provide telephone help to taxpayers.

Burned Out KPMG Associate Looking to Extend Stay in Public Accounting Purgatory with Another Big 4 Firm

Ed. note: Have a question for the career advice brain trust? Email us advice@goingconcern.com.

Dear GC:

I am an associate working for KPMG. During the past 13 months of my career here, I’m just tired of using their outdated office technology, audit tools (an electronic audit system that was made in 2010 when all other big 4s started at least 5 years ago), unfriendly people culture (politics and white-eyes), and stingy meal reimbursement ($14 for dinner). I often work really late hours (utilization rate more than 180%), at the year-end review, I am really unhappy for the rating and raise they gave me.

But still, I want to work in public accounting for the next 2 to 3 years. My question is, do Big 4 recruiters share their employee’s review? Does a recruiter at DTT/EY/PwC know what the employee’s performance is at KPMG (maybe a call to his/her close-friend in KPMG to find-out)? Also, while I’m choosing my next target, which Big 4 has better people-culture so that I will be motivated to work hard for the 2 or 3 years?

Thanks,

An Escaping Klynvedian

Dear Soon-To-Be-Escapee,


Oh, the woes of a being a first year associate: you think the hours/pay/bennies can be substantially better at another firm in your area, but really where you’re at now is oftentimes par for the course. Yes, the audit tools at KPMG are antiquated compared to the others (to their credit: they’re desperately playing catch up now), but with the other areas of complaint I doubt the GC crew has much sympathy for you. Your $14 Per Diem rate is not a KPMG decision but rather based on rates set by IRS. As someone who has traveled extensively for my firm (and uses the IRS rates), I’ve never had a problem ordering in or dining out within the rates set for any given city. Hellz, you could live on $14 a night in NYC if you had to (street meat, anyone?). On to your other concerns:

1. Hours – going to be bad wherever you are. 180% chargeability bad? I don’t know. Talk to anyone you know at the local offices of your competitors and ask about their busy seasons. Also ask if they’re hiring.

2. Unfriendly culture – I think we can all agree that this is different for every office, for every firm, for every city. Best way to find a better one is to look around.

3. Sharing employee reviews – it’s unlikely that one HR professional will call up his/her counterpart at your firm and inquire directly about your reviews. However, they will most likely ask that you provide copies of past reviews before making you an offer. This is a legitimate request and you should be prepared to cooperate. Based on your expressed concern, I’m going to guess that your reviews are not that…great. If this is the case, be prepared to explain any average/less than review points made by your manager(s).

GC’ers – who has some advice for our fleeing first year? Hit up the comments below.

BDO Anthem to FIU Includes Tone Deaf MCs, Bad Wigs

As you’ve probably noticed, a lot of videos come through these parts that are of various production quality with the legendary “In a JIT” widely accepted as the best effort to date. While TPTB probably don’t appreciate the creativity, it always seems worthwhile for us to promote the talents (or complete lack thereof) of those willing to put the time into a such an extensive project.

Today in CPA-inspired video is from none other than the most interesting firm in the world, BDO. The mission of this particular video was to serenade recruits from Florida International University. And seeing how it’s a firm-sponsored production, it’s clear the firm is behind it.


Some thoughts:

1. How did the casting director consciously go with the two guys in the office that are completely tone deaf?

2. Will FIU recruits even attend an office visit after this display?

3. “Running through FASBs like Drano.”

4. At 2:35 they are clearly reading the lyrics off the screen. Poor form, gents.

5. Couldn’t they get Captain Jack to throw them out of the office instead?

We will give them an ‘A’ for effort since BDO is typically pretty quiet but they’ve got a long way to go. Feel free to share your own critique below.

Layoff Watch ’11: Cuts a Comin’ at Deloitte?

From the mailbag:

Heard this from a Director in the firm: Deloitte layoffs coming. Lists are made…cuts coming soon. Said a lot of it has to do with thinning out the ranks (too many people jumping ship because their level is top heavy and promotion nowhere in sight) as well as letting go underperformers.


As you probably noticed, 2011 hasn’t had much in the way of layoff news with the exception of some support staff that were cut at McGladrey, Grant Thornton, and KPMG. That said, this seems like an opportune time to kick a few people to the curb. If you wait until November, well, that just looks bad.

Keep us updated with any news and if you’re in the know, get in touch.

CPA Exam Candidate’s Study Break Results in Caption Ingenuity

As many of you are painfully aware, accountants aren’t generally known for their sense of humor. DUIs? Maybe. Organizational skills? Definitely. Freakish ability to memorize a dictionary’s worth of FASB ASCs? Sadly, yes.

But every now and then, the world is blessed with an accountant who smashes the mold.

Case in point, 24-year-old David Woodbridge. A native of Lake Forest, IL, Woodbridge just won the New Yorker’s caption contest for his chortle-worthy caption which appeared in the magazine’s October 10th issue. Odds of winning the contest are estimated at 1 in 10,000 due to the large number of submissions, according to the magazine’s cartoon editor. Anyone care to take a guess on the odds that an accountant could win the contest?

The best part of the story? He came up with the winning entry while taking a break from studying for the CPA exam:

Woodbridge said he first tried the contest about three years ago but gave up after not winning after several attempts. Upon graduating from college, he decided to try the weekly contest again this summer while studying for the CPA exam.

Now I know what you’re asking… what was this hilarious caption?

Woodbridge’s winning caption was “Looks like they’re making cuts at the top” to a drawing of two janitors standing in the lobby of a building with headless corporate executives entering the building around them. He beat out “I dare anyone to say we missed a spot” and “It seems a bit extreme, but it does keep the zombies away” to win an original drawing of his captioned cartoon (valued at $250).

Uhhh… congrats?

Accounting News Roundup: KPMG Puts Silvercorp in the Clear; Groupon Hits the Road; Romney’s Fair-weather Flat Tax Fandom | 10.24.11

Swiss Banks May Pay Billions to U.S., Disclose Client Names [Bloomberg]
Swiss banks will likely settle a sweeping U.S. probe of offshore tax evasion by paying billions of dollars and handing over names of thousands of Americans who have secret accounts, according to two people familiar with the matter. U.S. and Swiss officials are concluding negotiations on a civil settlement amid U.S. criminal probes of 11 financial institutions, including Credit Suisse Group AG (CSGN), suspected of helping American clients hide money from the Internal Revenue Service, according to five people with knowledge of the talks who declined tause they are confidential.

Silvercorp says KPMG report shows books are clean [Reuters]
Anonymous short sellers had accused Silvercorp of inflating earnings and the size of its mineral resources, among other allegations, sending the company’s stock price as low as C$5.81 in September. The shares remain below an April high, but they have recovered to levels before the allegations were made public. The company, which operates silver mines in China, has denied all the allegations against it, describing them as part of a “short and distort” scheme. Silvercorp said the KPMG report showed its financial records to be substantially correct.

Olympus scandal: KPMG quit over Gyrus accounts [Telegraph]
Olympus has been in crisis since its former chief executive, Michael Woodford, revealed that $687m (£431m) in “fees” had been paid to two companies in the Cayman Islands during the purchase of Gyrus. Gyrus documents show that years before Mr Woodford’s revelations, accountants from KPMG flagged up “circumstances connected with our resignation that should be brought to the attention of the company’s members or creditors”.

Auditors In China: A Whole Lot of Posturing Going On [Forbes]
FM: “[A]ll this posturing is preposterous.”

Groupon Takes to the Road [WSJ]
The road show for the Chicago Internet firm’s upcoming initial public offering begins on Monday. In a roadshow, company executives try to convince mostly institutional investors such as mutual funds to buy a company’s shares. The roadshow for the daily deals company will focus on the Eastern seaboard the first week, with stops in New York on Monday, the Mid-Atlantic region on Tuesday, and Boston on Wednesday, according to an email reviewed by The Wall Street Journal that was sent Friday by an executive director of institutional equity sales at a bank to potential buyers of the shares. Then the show returns to New York on Thursday and Friday, the email says.


Perry to pin his hopes on ‘flat tax’ [FT]
Mr Perry, who has struggled to get his footing in the race for the Republican presidential nomination, is likely to argue that the flat tax is the best way to jolt the nation’s sluggish growth. Flat tax proponents say it would unleash private capital through a lower top tax rate and better incentives for savings and investment rather than consumption. The political case for the flat tax is its potential appeal to conservative primary and caucus voters, who are scheduled to kick off the voting in Iowa in little more than two months. The idea of abolishing the “progressive” tax system has been high on the wish list for many rightwing policymakers since the 1980s, but it has never caught on with mainstream voters.

Romney, Once a Critic, Hedges on Flat-Tax Plans [NYT]
As several leading Republican presidential candidates embrace a flat tax as a core campaign position, one contender stands out in not doing so: Mitt Romney, who has a long record of criticizing such plans and famously derided Steve Forbes’s 1996 proposal as a “tax cut for fat cats.” Lately, though, his tone has been more positive. “I love a flat tax,” he said in August. Flat-tax plans have come and gone before, and analysts note that they have tended to lose support once they come under scrutiny. But Mr. Romney’s support of the concept of a flat tax underscores the tightrope he is walking as taxes become a larger focus of the Republican presidential race and he faces rivals’ accusations of inconsistency on the issues.

True Confessions from the Server Room: Why “Good Enough” Isn’t Good Enough in Practice Management

Are you in your office? Good. Then take this article with you back to your server room. Look around. Then ask yourself the following questions:

1. Do you see any floppy disks?
2. Is there a stack of printouts in the corner?
3. Does it take more than one hand to count the anagement applications you have running?

Don’t be embarrassed. Tech anachronisms like these are the mullets of the IT world, but most of us have a few of them lying around. And chances are they’re not part of your zoomy new secure client portal, your mobile-friendly website, or any other client-facing piece of technology. No, the skeletons in your server room are probably related to the ugly stepchild of tax and accounting technology: practice management.


If you’re like a lot of firms, your practice management technology has languished for years in an ugly jumble of disparate systems that has been “good enough” since the early Clinton administration. I feel your pain. But the sad fact is, “good enough” just isn’t good enough anymore.

You can’t afford to have staff entering the same data over and over. You can’t afford to wait overnight for updates to run. You can’t afford to tell clients “I’ll check the printout and get back to you.” You can’t afford to ask your employees “How long do you think that took you?” And you certainly can’t afford their answers.

The good news is, you don’t have to. Not with the new crop of integrated practice management software that integrates thorny components like time and billing, a/r tracking, and management reporting onto one slick platform. Your staff will enter data once and make it available across the entire firm in real time. You’ll be able to see the status of all your projects, who’s working on them, and who isn’t working on much of anything, all on one convenient dashboard. You’ll have the information you need to give your clients the instant answers they demand. And since your new practice management application will be capable of operating in the cloud, it will all be available to you anytime, from any Internet connection, and even on your smartphone.

Like a lot of the recent advances in cloud-based computing and mobile technology, you’ll wonder how you ever got along without it. But it’s more than just cool. Instant, anytime-anywhere access to practice management information is an essential survival tool in the lean new reality of tax and accounting. And so are the reduced IT expenses that come with cloud-based software.

There’s never been a better time to exorcise the skeletons from your server room, particularly with the advances being made in integrated practice management technology. “Good enough” just might be costing you more than you think.

Learn more about what the new generation of integrated practice management software can do.

Herman Cain Wants You to Try the New 9-9-9 Recipe

Godfather of gold ties and GOP Presidential candidate Herman Cain has taken a lot of heat for his 9-9-9 tax plan. While it has a nice ring to it, not too many people are crazy about 9-cubed including his fellow GOP hopefuls, their tax taskmaster Grover Norquist, and every tax wonk within the DC delivery area.

Sensing something needed to be changed, Cain got his economics advisor accountant and whomever else is crunching the numbers to go back to the drawing board. And what did they come up with, you ask? Are they throwing in free bread sticks? Fresher ingredients? A gluten-free crust stuffed with cheese? Nope! That would just cause more confusion, so they just dropped a nine:

For people living under the poverty line, “your plan isn’t 9-9-9, it’s 9-0-9,” Mr. Cain said in a policy speech in Detroit. “Say amen, y’all. If you are at or below the poverty line…then you don’t pay that middle 9” – i.e. the individual flat tax.

Mr. Cain’s bold 9-9-9 plan – which includes a 9% individual flat tax, a 9% business flat tax, and a 9% national sales tax – has helped vault him into the top tier of GOP presidential candidates.

But free bread sticks would still be nice.

Herman Cain Tweaks 9-9-9 Tax to Remove Flat Tax for Poorest Americans [WSJ]

Brits To Give Big 4 the Full Monty

Britain’s top accountants are to have their own books scrutinised after the consumer watchdog referred the business of checking companies’ figures for a full-scale competition inquiry. The Office of Fair Trading (OFT) said it had been concerned for some time that the audit market is highly concentrated with low levels of switching and substantial barriers to entry. The watchdog estimates that in 2010 the “big four” firms, PwC, KPMG, Deloitte and Ernst & Young, earned 99% of audit fees paid by FTSE 100 companies, while between 2002 and 2010 only 2.3% of FTSE 100 firms changed their auditor. [UKPA]