September 22, 2021

Here Are a Couple of Theories That Could Explain McGladrey’s Great Lakes Leader Suddenly Leaving the Firm

On Wednesday we reported that McGladrey's Great Lakes leader David Shane was leaving the firm. It seemed a little unexpected given the fact that the announcement was on Monday and Shane would gone on August 15th, but a commenter reminded us of a story we reported on a couple of years ago:

Perhaps unrelated to his departure, but CFTC.gov shows he was named in the One World Capital audit failure a few years ago and had to pay a fine personally (the firm could not pay it for him). McGladrey had issued a clean audit opinion on a client with misstated financials. 
Of course! I completely forgot about One World Capital! McGladrey was fined $900k and Mr. Shane was fined $100k. Here's what we highlighted from the CFTC press release at the time, in September 2011:
[T]he order finds that One World’s 2006 financial statements were materially misstated in various ways including: (1) the 2006 Statement of Financial Condition states that liabilities payable to all customers were over $6.9 million, when in fact information available in One World’s records showed that it may have owed at least $15 million just to forex customers alone, for whom One World served as the counterparty; and (2) the 2006 financial statements materially misstated the nature of One World’s business by failing to reflect that One World served as the counter party to its forex customers for over 90 percent of its business, according to the order.
 
In addition, McGladrey failed to report material inadequacies in One World’s accounting system and internal accounting controls, including the lack of a customer ledger, and an accounting system that did not properly identify the number of forex customers or the amount of customer liabilities, according to the order. These material inadequacies reasonably could, and did, lead to material misstatements in One World’s 2006 financial statements, the order finds.

Or there's another possibility, as the commenter suggests:

But maybe he just wanted to retire from public accounting. More power to him.

Right! Also plausible! 

A McGladrey spokeswoman declined to comment, so this is what we've got to go on. As you were.

Earlier:
McGladrey's Great Lakes Leader Is Gonna Take Off Now
Even earlier:
CFTC Didn't Think Too Much of McGladrey's Audit of One World Capital Group

Latest Accounting Jobs--Apply Now:

Have something to add to this story? Give us a shout by email, Twitter, or text/call the tipline at 202-505-8885. As always, all tips are anonymous.

Comments are closed.

Related articles

Friday Footnotes: PwC Pays the Poors Less; Deloitte’s New Minis; BDO Brings on Audit Staff | 9.17.21

Malaysia says auditor KPMG to pay $80 million in 1MDB settlement [Reuters] Malaysia said on Thursday audit firm KPMG has agreed to pay a 333 million ringgit ($80.11 million) settlement to resolve all claims related to their fiduciary duties on auditing of 1Malaysia Development Berhad (1MDB) accounts from 2010 to 2012. PwC reports disability and […]

Private Equity Is Now Dipping Its Toes In Public Accounting Firms

In early August, EisnerAmper announced a “strategic investment” in the firm courtesy of investment management firm TowerBrook Capital Partners, the first of its kind for a firm of that size. The door is now wide open for private equity to get a piece of the accounting pie. Per the press release: TowerBrook’s significant capital infusion […]