Going Concern

Accounting News Roundup: Audit Fees Whimper; Nonprofits No Longer; California Tax Plan Whiffs with Voters | 06.09.11

Caleb Newquist
June 9, 2011

Corporate Audit Fees Barely Budged Last Year [CFO Journal]
Public companies paid $3.3 million on average for their audit in 2010, up just 2% from 2009, according to an annual survey from Financial Executives Research Foundation on Thursday. Private companies paid their auditors an average of $222,300, which was in line with 2009 figures. Public company audit fees had actually fallen about 2.4% in 2009, according to FERF’s survey last year, so this puts them back near their 2008 levels.

I.R.S. Ends Exemptions For 275,000 Nonprofits [NYT]
The I.R.S. announced on Wednesday that it had revoked the tax exemptions of 275,000 nonprofit organizations after they did not meet legal requirements to file annual tax forms. The action shrinks the nation’s growing nonprofit sector by roughly 17 percent, to about 1.3 million charities, trade associations, membership groups and labor unions.

Dallas’s Secret Weapon: High Fives [WSJ]
Yeah, that’s what it is.

California Voters Balk at Tax Plan [WSJ]
A deadline next week is raising the pressure on talks between Gov. Jerry Brown and lawmakers over his plan to close the state’s $9.6 billion budget gap, but the proposal isn’t gaining traction with voters. The Democratic governor pushed lawmakers for months to approve his plan to ask voters to extend some tax increases in a June special election, in line with his campaign promise to seek voter approval of any tax measure. But they didn’t strike a deal in time, so he now wants them to approve the taxes and later ask voters to ratify them.

That Look, That Weiner-Spitzer-Clinton Look [City Room/NYT]
If caught in a sex scandal, this is the face you’ll make.

Engineering Consultant Lands a Big 4 Gig, Now What?

Daniel Braddock
June 9, 2011

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

Going Concern received not one but two emails from a contributor in recent weeks. Aptly named Enginerd, P.E., this fine gentleman had hopes of joying a Big 4 firm with Enginerd’s background is as follows:

I come from a technical background, 8-10yrs of consulting in engineering and regulatory roles, and am being courted by a B4 to join up with a technically minded advisory/consulting group. You may not know, but engineers are a forgotten bunch earning far less than many of our other professionally degreed brothers. I’m anticipating a very healthy offer, but I don’t have much to base it on; Bologna is better than SPAM, but that isn’t saying much.

For the doubters out there – yes, the Big 4 occasionally hires engineering experts in niche markets when expanding their advisory practices. These experts may work with Transaction Services teams in markets heavy with M&A activity (think technology, energy, environment, etc.). Even at that, they don’t hire C.A.D. experts but rather individuals with previous consulting experience, like Enginerd.

Admittedly, Enginerd’s original email sat unanswered in the advice box [Ed. note: you should see the backlog!]. He recently followed up with positive news:

No response from y’all, but I did get a response from B4. They made me an offer I couldn’t refuse.

So the last questions still hold, Any thoughts on breaking into B4 consulting (done), not getting lost when you get there, and behaviors which will help make my stay a long and profitable one? I’m listed at about 85% billable, which isn’t bad, but is still a lot of hours. Short of rereading How to Win Friends and Influence Others, what is my Modus operandi?

Thanks,

Enginerd, P.E.

Dear Enginerd,

Unfortunately, I don’t have a lot of direct advice for you as I do not work regularly with employees in your position. That said, I suggest continuing to do what made you successful up to this point:

1. Network every day of your early career. Meet with the group leaders not only in your office, but in other offices as well (as it applies). Have a regional/national meeting coming up? Make plans to connect with your peers in other offices. Connecting faces with email addresses is extremely important as your responsibilities inevitably expand.

2. Find a mentor. Chances are you are not the only person in your group/office that has a background similar to your own. Feel the group out over the first few months, evaluating who you feel stands above the rest. Find someone with a background similar to yours (and senior to you in ranking) that has a strong future with the firm, and build a professional relationship with them. You shouldn’t hesitate in asking him/her to be a mentor for you. Generally speaking, people are flattered by such a request and can become excellent resources for you down the road.

3. Read advice from the Going Concern peanut gallery. I’m sure there are people with similar backgrounds to yours that are regular readers here on the site. With that said, I open it up to the group – what advice do you have for Enginerd as he joins the Big 4 consulting circus?

News

Presidential Candidate Tim Pawlenty Doesn’t Want to Bore You with the Gory Details About How He’ll Pay for His Proposed Tax Cuts

Caleb Newquist
June 9, 2011

Former Minnesota Governor Tim Pawlenty wants to cut taxes. He’s a Republican after all and Grover Norquist probably has lewd photos and several sternly-worded letters waiting in the wings should TP give the impression that he’ll do anything but slash rates.

Pawlenty’s plan calls for two rates, 10% for on the first $50k/$100k (single, married) earned and 25% for anything above that. He’s also proposing a flat 15% corporate tax rate. He would eliminate the capital gains, dividends, interest and estate taxes.

Pretty expensive proposition so it’s got to be paid for, right? Pawlenty’s got a plan for that too:

To pay for the tax cuts, Pawlenty said he would eliminate unspecified tax loopholes and subsidies. “The Tax Code is littered with special interest handouts, carve-outs, subsidies and loopholes,” he said. “That should be eliminated.”

This is one of those instances where a reporter may ask the follow-up question, “Governor, which tax credits would you eliminate?” To which Pawlenty answers, “Yes.”

[via AT]

Deloitte

What Do We Make of the Headcount in Deloitte’s Los Angeles Office?

Caleb Newquist
June 8, 2011

Our tipster had this to say, “No wonder they are getting rid of PSW [Ed. note: he/she is referring to this], there are more partners than junior staff! Where the hell is the leverage model? This is beyond completely ridiculous.”

Posted on the Green Dot’s internal interwebs:

Did you know?

The Los Angeles office represents 55% of the PSW region in terms of headcount:

Los Angeles Headcount

Partners, Principals, and Directors 195

Sr. Managers and Managers 407

Senior/Senior Consultants 304

Staff Consultants 188

Junior Staff/Analysts 141

Client Service, Admin, and Other Support 271

TOTAL 1506

Los Angeles	Headcount
Partners, Principals, and Directors	195
Sr. Managers and Managers	407
Senior/Senior Consultants	304
Staff Consultants	188
Junior Staff/Analysts	141
Client Service, Admin, and Other Support	271
TOTAL	1506

Technically, the combination of “Staff Consultants” and “Junior Staff” exceeds the PPD number although that but that puts the ratio of 1.69 staff for every PPD. I’m no expert but that could be considered low. It’s safe to say there are a few big engagements in L.A. that demand more than 1.69 staff people which probably leaves the small jobs shorthanded. Anyone in Deloitte L.A. (or anywhere else for that matter) feeling the pain because of this? Let us know in the comments.

Doug Shulman: Cutting the IRS Budget Will Do Nothing to Help the Deficit

Caleb Newquist
June 8, 2011

“Cuts such as those in the House budget resolution would actually increase the deficit by decreasing revenue,” IRS Commissioner Douglas Shulman said to the Senate Appropriations Subcommittee on Financial Services and General Government.

He said the House proposal would cut $2 billion from the agency’s budget next fiscal year. “Cuts of this magnitude would be substantial and affect all of IRS operations,” from answering taxpayers’ questions on the phone to being able to conduct audits, he said. Shulman said that for every dollar invested in the IRS, the agency collects roughly $200 in revenue. [Dow Jones]

BDO Rewarding Employees for Tattling on Headhunters with $5 Starbucks Cards

Caleb Newquist
June 8, 2011

For whatever reason, we don’t hear a lot of gossip out of BDO. Perhaps it’s because the entire firm is too captivated by the most interesting accounting firm CEO in the world, Jack Weisbaum, and are rendered loyal to a fault, thus choosing not to share the more sordid details of what happens inside B to the D tortunate because we hear rumors that there are slew of partners who are not pleased with how things are going at firm but no one seems to want to talk. I’d encourage someone to speak up by emailing us.

But for now, we’ll take the opportunity to tell you about the efforts put forth by some inside the firm that were sensitive to the post-busy season onslaught of professional recruiters. As we all know, after people have worked their asses off for three to four months, some might feel unappreciated and opt to look for a new job. Recruiters are acutely aware of this and since it’s their job to fill positions for their clients, it only makes sense that they chase people that are looking for a change. And because professional recruiting is a competitive business, sometimes the emails can clog your inbox like offers for ED drugs. Some partners at BDO thought that in order to help people stave off this bumrush, they would invite employees to simply forward the emails and voicemails received and voilà! $5 of Starbucks burning in your pocket. Oh, and did I mention that there’s no limit for how many you submit? So if you’re a hot piece of public accounting talent, getting tons of calls, you can really clean up. Not only that, the person that submitted the most unique names of headhunters and agencies would receive a $250 AMEX gift card. Yes. Sound petty? Sound pathetic? Sound desperate? Read for yourself and decide.

I split up original screenshot sent to me so that it would be easier to read, hence the narrow break.

So you might expect such an attempt to bribe employees with corporate caffeination would fall flat. That tipping off firm leadership about PEOPLE THAT ARE SIMPLY DOING THEIR JOBS (and maybe change a few professional careers for the positive) would fall on deaf ears. Well, you would be wrong. DEAD WRONG. A follow-up on the firm’s internal website (next page) stated that over 200 submissions were made and one SA in Spokane submitted 15 alone.

That’s right, the effort was so successful that they are extending it through July 8th. Not really knowing what the protocols are, I don’t know what to tell the recruiters to expect in terms of retaliation from the TPTB at BDO but at least you’ll know that if you receive some kind of nasty correspondence, the person who gave you up was baited with the siren’s call that is the white and green coffee cup.

Technology

Chase’s New Expense Tracking App Will Cater to the Most Anal-Retentive Bosses

Adrienne Gonzalez
June 8, 2011

If finicky expense-tracking is going to evolve with the times, there has to be a way to track every dime spent from anywhere and it appears Chase is making an effort toward that goal with its newest offering: Jot.

Hot off the wire:

Jot will provide Ink from Chase customers a variety of mobile benefits, including the ability to:

— Receive text alerts within seconds of making a purchase with their Ink card;

— Immediately tag these purchases to custom categories on a mobile device or online;

— Enable employees to tag their business expenses;

— Immediately view all transactions on their account, including those of their employees, through their mobile device or online;

— Adjust employees’ card spending limits in real-time via a mobile device; and

— Create and download reports into accounting software, including QuickBooks(R) and Excel(R).

“Small business owners are innovative, passionate and hardworking, and Chase’s dedication to partnering with these business owners comes from the belief that this group of entrepreneurs is an integral part of the American economy,” said Richard Quigley, president of Ink from Chase. “Jot was designed with small business owners’ immediate financial needs top of mind. Jot will enhance the finance-savvy business practices of small business owners, allowing for additional time and an improved focus on the passion and sense of accomplishment they have for their businesses.”

Financially-savvy Ink customers who have an iPhone or Android phone can download Jot by visiting the Ink website. Once you’ve got it downloaded you and your employees’ spending will be reined in and you’ll be back agonizing over more important things in no time.

Accounting News Roundup: Tax Credits for the Dead, Gas Taxes for You; A Social Media Royal Rumble; Recipe for a Recession | 06.08.11

Caleb Newquist
June 8, 2011

Audit: IRS Erroneously Gave Out $151 Million In Auto Tax Breaks [Dow Jones]
The IRS missed 4,257 individuals who claimed more than $151 million in undeserved tax deductions as part of the 2009 stimulus package program designed to boost automobile sales, according to an audit released Wednesday from the Treasury inspector general for tax administration. In 473 cases, the tax agency erroneously allowed 439 prisoners who were in jail the entire year, 16 dead people and 18 children under the age of 15 to claim just over $1 million in deductions.

GM’s Akerson pushing for higher gas taxes [Detroit News]
General Motors Co. CEO Dan Akerson wants the federal gas tax boosted as much as $1 a gallon to nudge consumers toward more fuel-efficient cars, and he’s confident the government will soon shed its remaining 26 percent stake in the once-bankrupt automaker. “I actually think the government will be out this year — within the next 12 months, hopefully within the next six months,” Akerson said in a two-hour interview with The Detroit News last week. He is grateful for the government’s rescue of GM — “I have nothing but good things to say about them” — but Akerson said the time for that relationship to end is coming because it’s wearing on GM.

A Twitter Group Warned About Weiner [NYT]
Calling themselves the #bornfreecrew on Twitter, members of the group closely monitored those whom Mr. Weiner was following, taking it upon themselves to contact young women they believed to be “schoolgirls,” and urging them publicly to stay away from him, according to an analysis of posts on Twitter’s public stream.

IMF urges Japan to triple sales tax to steady finances [Reuters]
The acting head of the IMF urged Japan to reduce its massive debt load to boost public confidence in the sustainability of the economy, which the global lender said could be achieved by tripling the 5 percent sales tax. Japan’s economy should bounce back from a slump after the March earthquake and tsunami, the International Monetary Fund said on Wednesday, while urging lawmakers to adopt another emergency budget and start raising the sales tax from next year as the center piece of long-run fiscal consolidation.

Facebook vs LinkedIn vs Twitter vs Blogging [AW]
Place your bets.

Hatch, liberal group respond to Pawlenty tax plan [The Hill]
Oddly, they have different opinions.

Rx for a Double-dip Recession: Cut Government Spending by 15 Percent [TaxVox]
And call me in the next decade.

PwC Falls Victim in the Competitive Poaching Game to…WTP Advisors

Caleb Newquist
June 8, 2011

As you know, the Big 4 are pretty competitive when it comes to landing the best talent. The brightest brains. The biggest, swingingest…well you know. Anyhoo, PwC has been on tear this year, luring an accounting firm equivalent of a platoon from KPMG. They’ve also managed to pick off people from Duff and Phelps and the SEC.

But now the tables have turned unexpectedly on P. Dubs. They certainly had to be wary of the likes of Deloitte, E&Y and yes, even KPMG trying to woo their partners seeking greener pastures but it’s highly unlikely they saw this coming:

WTP Advisors, an award-winning, global tax and advisory firm, announced today that it has opened a new office location in Long Beach, CA. The new site will be headed by tax expert, Jon Worden, who most recently managed PwC’s West Region International Tax Services Quantitative Solutions Team. “Jon is a terrific choice to lead WTP Advisors’ West Coast tax practice. Like all WTP directors, he has Big Four experience, combined with a drive to forge deep and lasting client relationships. His personality, talent, and ambition will represent us well with large multinational companies in this region,” says Mike Minihan, Partner and co-founder of WTP Advisors. In his new role, Worden will be responsible for serving the L.A., Orange County and Northern California markets, as well as cultivating relationships with organizations up and down the West Coast.

Or maybe they did. WTP Advisors was founded by “four PwC veterans” back in 2005 according to this Fortune blurb on the firm’s website. It also boasts that it “has retained 100% of its clients” since the founding of the firm. The clip above is also from said blurb which depicts some sort of Rumble in the Professional Services Jungle between WTP and PwC. Perhaps WTP is gunning for P. Dubs because there is some bad blood there, we don’t know (but would love to hear about it). And with only 75 employees and $12 million in revenues, they barely register on Bob Moritz’s radar but it’s clear that they can poach P. Dubs talent and they are already better at using PR to make it known than some other firms.

You Can Add ‘Hospital Staff’ to the List of Positions That Can Do the Job of a Deloitte Auditor

Caleb Newquist
June 7, 2011

A hospital in Winnipeg is suing Deloitte after an ATM scam went undiscovered for over ten years. Luckily some vigilant RN, janitor or cafeteria worker (it’s not clear from the article) noticed something amiss and alerted the proper authorities.

Police arrested a long-time hospital employee last year after she allegedly skimmed $1.5 million from automated teller machine (ATM) deposits between 2000 and 2010.

According to a lawsuit filed last week, the fraud was uncovered by hospital staff, not the auditor. The lawsuit accuses Deloitte & Touche of preparing financial statements not in accordance with “generally accepted accounting principles” and “materially misleading” the hospital about its financial position.

“MHC says that D & T owed it a duty in contract and owed it a duty of care not to act negligently or make negligent misrepresentations to MHC and to ensure that cash and liquid assets as reported in the financial statements were not materially misstated.”

According to the lawsuit, a former finance clerk deposited Worker’s Compensation Board cheques into the hospital operated ATM, understated the amount and pocketed the difference.

All this trouble and no one was even taken hostage. Not good, Green Dot.

Misericordia Health Centre files suit against auditor [Winnipeg Sun]

Democrats Ask Republicans to Blow Off Grover Norquist

Caleb Newquist
June 7, 2011

Top Republican lawmakers have said that increasing revenues was the one approach off the table when it comes to deficit reduction. But Rep. Jan Schakowsky (D-Ill.) and 108 other House Democrats, in a letter dated Monday, said that position jeopardized the chances for a bipartisan agreement.

“Revenues must be a component of addressing our deficit and debt problems,” the Democrats wrote to Speaker John Boehner (R-Ohio). “Solving our fiscal problems with spending cuts alone would be devastating to our economy, to the middle class, and to vulnerable populations like seniors and low-income families.” [The Hill]

CFOs

Memo to CFOs: Apple Voluntarily Switched Auditors and Things Are Just Dandy

Caleb Newquist
June 7, 2011

Ron Fink at CFO Journal reports that CFOs that are breaking out in a rash due to auditor rotation anxiety might be having a knee-jerk hypochondriacal reaction.

You see, the company that the media loves to figuratively fellate, Apple, opted to put their audit business out to bid every five years and not only have costs gone down, “it has reported no problems with its financial results as a result of the change.” So now Apple is also more progressive and transparent with their corporate governance processes than your company. And you don’t have the iPad. [CFO Journal]

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