Category: Uncategorized

McGladrey & Pullen Sued for Helping Bad Guys

fraud.jpgMark this suit in the “Accountants are Crooked” column as opposed to the “Accountants are Stupid” column.
McGladrey & Pullen, its predecessor auditor, and the partner on the audit engagement, G. Victor Johnson, are being sued by the Sentinel Management Group Trustee for being a knowing participant in the fraud put on by Sentinel who collapsed in 2007.
More, after the jump


M&P is accused of “knowingly and substantially assisted and participated in the fraud by [Sentinel], and as a result, committed and are liable for fraud themselves.”
Many suits against accounting firms accuse negligence related to technical mistakes that were made so we’re impressed see a lawyer say “To hell with it, these guys are crooks, I’m taking them down like Arthur Andersen.”
On a more personal level, between this suit and the messy divorce with RSM McGladrey, we’re expecting to M&P to have the CPA firm equivalent of a nervous breakdown any day now. Feel free to speculate as to what that might actually be.
Collapsed Financial Company’s Trustee Claims Accountants Knew About Fraud [Chicago Bar-Tender]

Huron Consulting Beats the Numbers, Cooked Books and a Bunch of Other Shadiness Notwithstanding

Cooking the Books.jpgIf you’re an accountant and you see a company’s name in the same sentence as “accounting irregularities”, “alleged cooking of the books”, or “SEC investigation”, your likely advice to any person would be to run away from said company like it was a band of lepers.

This is just conventional wisdom, nothing ground breaking. However, since Huron Consulting reported big second quarter numbers, the stock price is up more than 30%.
Now some of this is short sellers getting burned but according to one analyst quoted by Reuters, some investors may be going long because of “confidence in the underlying business”.

We’re not too crazy about the “underlying business” for a lot of reasons:


1. The Company said in a filing that they are likely going to take a goodwill impairment charge that will put it in noncompliance with a financial covenant of its credit agreement.

2. It’s worried about “‘reputational issues’ that may affect the company’s ability to retain its senior managers and attract new talent and new business”.

3. Can’t predict the outcome of the SEC investigations or private lawsuits (P. Dubya take note).

4. They warned that their current numbers may not be legit since the new management has no idea what the hell else is out there in the way of kickbacks payments made to Huron Management, questionable allocated billable hours (but don’t worry, this won’t affect client billings) or anything else for that matter that may call for another restatement of its results.

5. The whole Arthur Andersen connection creeps people out.
Far be it from us to speculate on a company’s future but this place seems doomed. We might just listen to tomorrow’s earnings call to see if there’s anything worth mentioning but in the meantime, put your money in…WTFK?

Huron Consulting fights to stay alive [Greg Burns/Chicago Tribune]

Huron shares rally after restatement, SEC filings [Reuters]

Presented Without Comment

“The CPA profession had a great run for these past six years,” said Marc Rosenberg, creator of the Rosenberg Survey. “The post-Enron climate created a huge surge in demand for CPA firm services, allowing firms to virtually become order takers. Throttled by a historically low supply of experienced staff, partners worked harder than ever before, and the benefits showed up in their paychecks: Income per partner rose 50 percent since 2003.”

CPA Firms Hit Wall on Fee Growth Last Year [Web CPA]

Ready to Do the Unthinkable and Work for Less Money?

office-space-402a-061907.jpgWith all the blood being spilled in the past year, you don’t have to be a math wizard to know that: Fewer People + Same Workload = People Working Like Dogs
It has gotten to the point that many of these people that are doing more work, for the same amount of money are ready to move on for, GASP, less money.
More, after the jump


Rick Telberg, at CPA Trendlines quotes a recent survey they did that says that nearly half of the people polled so far were ready to move on to a different job, ‘even if it meant a paycut’. No surprise really since doing the work of two or three people loses its luster pretty much instantly, especially when it becomes the expectation.
He also mentions that regardless of this emerging trend of people willing to turn down big (or mediocre) bucks to get their lives back, the enrollment on campus in accounting programs is at record levels.
So after giving it very little thought we came up with the following approximate timeline: Everyone in college thinks accounting is sexy; It takes 1-2 years to find out that it’s not; 3-6 years to actually get out (one way or another); Then, well, WTFK? Become a hack blogger?
Recession Adds to Workloads, Stress; Sends CPAs Looking for New Jobs [Rick Telberg/CPA Trendlines]

Good Luck Today KPMGers

Received word last night that a known executioner (and we’re assuming others) at the Dallas office has reserved several conference rooms from 7 am to 3 pm today and that some had already received emails setting up with their meetings last night. Let us know when the shooting starts in your office and drop us any details, including where you’re getting bombed tonight. Go with God (and for the atheists, just go).

Which Accounting Firm Will Risk the Label ‘Stoner Firm’?

marijuana-herb.jpgMedical Marijuana, Inc. who, “is the first public company to recognize the vast and unequaled opportunities that exist in the rapidly expanding medical marijuana industry,” wants to get listed on the OTC Bulletin Board in order to demonstrate it’s desire to become a fully transparent corporation.
The company now needs a PCAOB-registered CPA firm to audit its books, preferably one that’s cool with a little Maui Waui prior to lunch.
More, after the jump


Our thought is that the Big 4 are way too prudish to take on such a progressive client. We’d go so far to say that not even Grant Thornton or BDO Seidman would touch this one. That being said, we’re sure there are a few partners out there that have grow houses that rival anything in High Times.
If you’re sure your partner is a regular Willie Nelson when it comes to kush maybe throw this post their way. In the meantime, feel free to handicap the odds of your respective firm picking this client up. We’d give the edge to any firm from the Santa Cruz area.
Medical Marijuana, Inc. Begins Procedures to Be Quoted on OTC Bulletin Board [Press Release]

Bank Failures by the Numbers

empty-2dpockets-small.jpgThis isn’t mathleticism, this is simply truth in numbers. With Colonial Bank officially R.I.P. and torn to shreds (North Carolina-based BB&T has picked up the branches, the garbage will likely be marked down and sold off to whichever sucker the FDIC can find) this past week, it might be a good idea to look at the mathematical reality of the situation.
Lately, bank failures seem to lead tangentially to accounting in that banks often point the finger at mark-to-market as the key piece which sent them hurtling toward doom. Sure, blame the accounting, that’s always a classy move. But all’s fair in love and value right?
In an era where the word “trillion” hardly raises an eyebrow, let’s put this into perspective and look at the 5 largest bank failures of all time (in terms of costs to FDIC):
More, after the jump


5. BankUnited, Coral Gables, FL: $4.9 Billion
4. American Savings and Loan, Stockton, CA: $5.7 billion – at the time, the amount to cover American S & L cost the FDIC 10% of its “fund” and was one of the largest failures of the savings and loan crisis.
3. Continental deserves its whole epic tale
2. Washington Mutual (we can’t discuss costs to the FDIC for this one since JP Morgan swooped in to get it and there are still active lawsuits around the deal)
1. IndyMac: $10.7 billion. That wasn’t too long ago so you should still remember the tale.
In one day (this past Friday), the FDIC found itself on the hook for an estimated $3.68 billion, and surely that’s a positively-doctored number. Move along now, nothing to see here.

Authorities on August 14 closed down five banks — Colonial Bank; Dwelling House Savings and Loan Association; Union Bank, National Association; Community Bank of Arizona and Community Bank of Nevada.
As per the Federal Deposit Insurance Corporation (FDIC), which is often appointed as the caretaker of failed entities, the collapse of these five banks would cost the agency a staggering USD 3.68 billion.

Maybe now would be a good time to express a doubt.

New Accounting Firm Name Challenge

merge.jpgWe read about an accounting firm M&A specialist who is predicting what he calls a “mega-merger” between two of the top 25 firms. Since this guy is probably getting greased on the deal we’ll take him at his word but unfortunately he’s not naming names.
So for the pure sport of speculation, we need your best and worst guesses of what firms will be getting together and what the new combined firm will be called.
We’ve taken the liberty of listing the top 25 firms for you:
The list, after the jump


• Deloitte
• PricewaterhouseCoopers
• KPMG
• Ernst & Young
• BDO Seidman
• Grant Thornton
• RSM McGladrey/McGladrey & Pullen (divorce nothwithstanding)
• CBIZ/Mayer Hoffman McCann
• Crowe Horwath
• BKD
• Moss Adams
• Plante & Moran
• Clifton Gunderson
• J.H. Cohn
• UHY Advisors
• Reznick Group
• Virchow, Krause and Co.
• Dixon Hughes
• LarsonAllen
• Marcum & Kliegman
• Rothstein Kass and Co.
• Weiser
• Eisner
• Eide Bailly
• Wipfli
Try to use your number crunching brains for some creative combinations. Call your friends in marketing if necessary. If we get enough good suggestions, we’ll put together a poll to vote on the best.
We’ll get it started: Hughes Dixon Moss
Think about it. Work with us people. Just charge your time to an administration code, it’ll be fine.

New Accounting Firm Merger Challenge

merge.jpgWe read about an accounting firm M&A specialist who is predicting what he calls a “mega-merger” between two of the top 25 firms. Since this guy is probably getting greased on the deal we’ll take him at his word but unfortunately he’s not naming names.
So for the pure sport of speculation, we need your best and worst guesses of what firms will be getting together and what the new combined firm will be called.
We’ve taken the liberty of listing the top 25 firms for you:
The list, after the jump


• Deloitte
• PricewaterhouseCoopers
• KPMG
• Ernst & Young
• BDO Seidman
• Grant Thornton
• RSM McGladrey/McGladrey & Pullen (divorce nothwithstanding)
• CBIZ/Mayer Hoffman McCann
• Crowe Horwath
• BKD
• Moss Adams
• Plante & Moran
• Clifton Gunderson
• J.H. Cohn
• UHY Advisors
• Reznick Group
• Virchow, Krause and Co.
• Dixon Hughes
• LarsonAllen
• Marcum & Kliegman
• Rothstein Kass and Co.
• Weiser
• Eisner
• Eide Bailly
• Wipfli
Try to use your number crunching brains for some creative combinations. Call your friends in marketing if necessary. If we get enough good suggestions, we’ll put together a poll to vote on the best.
We’ll get it started: Hughes Dixon Moss
Think about it. Work with us people. Just charge your time to an administration code, it’ll be fine.

Fill Wrap Up and Final Performance Review

For you duffers out there awaiting our Fill wrap up, we’re sure that your anxiety levels have reached such a level that you gave serious consideration to holding up the nearest drug store to get your mitts on some Zoloft. Fortunately, your patience has paid off as this post will wrap up our Fill coverage and also serve as official final performance review.
Thank the Maker that this one is over. Fill managed to shoot another +4 round yesterday to finish at +12 for the tournament and lock up his quest to not finish second at the PGA Championship. The silver medal went to…Tiger Woods unexpectedly but we’ll let the sports geeks dissect that one.
As for us, we’re here to give you Fill’s final 9 box rating and to give you an idea of what his future with the Radio Station looks like.
Check out the final rating after the jump.


moneybags.jpg
As you can see, no final 9 box rating was necessary. Fill’s future is as bright as ever. He will continue to do grip n’ grins with Tim Flynn and he will need to use dumptrucks to transport all of his cash. This all will occur while he has consistently disappointed on the golf course but thrived as a billboard for the Radio Station by pulling a hat down on his melon.
Hmmm, an underachiever but consistently rewarded. Sound like anyone you know?
Earlier:
GC Weekend: Fill Has Broken the Mold
GC Weekend: Following Fill at the PGA Championship

More Money Talk

money.jpgIn another follow up, we got a decent thread going last week when we brought up starting salaries for your soon-to-be new associates that will be messing up your dinner orders this fall and winter.
We got a request to open up the discussion to number crunchers at all levels so that everyone can get a good idea of who is paying what, where.
Our requester was kind enough to give their details: First year tax senior associate, Houston, Big 4 firm, makes $67k.
More, after the jump


Anonymous Coward 49 in last week’s thread segues nicely as well, listing the amounts for audit professionals at the Radio Station Dallas office for the associate and senior associate levels. Coward notwithstanding, we would say that they are well informed, so we don’t expect all of you give that level of detail but we would request the following:
• Level – Associate, Senior, Manager, etc. We know there are partners reading so please, feel free to share and make us all jealous.
• Practice – Audit, Tax, Advisory, Transaction Services, and Consulting for you Green-dotters.
• City and Firm – We want details from every corner. If you’re a senior associate at Rothstein Kass or Miller Kaplan and you know you’re making bank compared to those Big 4 losers, let ’em know it.
All right, get on with it.

GC Weekend: Fill Has Broken the Mold

Round 3 has come and gone for the Radio Station billboard and it’s nothing but more disappointment.
After two straight rounds of +2, Fill is in the clubhouse at +6, after shooting +4 today. Obviously, he has not bounced back as many Klynveldians had hoped he would.
With this latest performance, we’re thinking that Fill has all but solidified his slot in the upcoming current RIF. This simply means that he’ll have to continue to slum it for the likes of Barclays, ExxonMobil, and Rolex.
This latest poor performance forced us to get a little creative with the rating system.
Check out our latest 9 box, after the jump


Phil_9 box_sat.jpg
As you can see, we decided that it was appropriate to modify the traditional 9 box for this special occasion. It’s no longer at NI9 for Fill, he has his own special box: the Fill NI9. This rating will now represent the most disappointing performances for Radio Station employees.
Check in with us tomorrow Monday to get the final round Fill coverage.