Going Concern

Deloitte

Comp Watch ’11: Deloitte Auditor Has PwC Bonus Envy

Caleb Newquist
May 12, 2011

Caleb,

I am reading about PWC getting some spring love in the form of a bonus, and other firms already openly discussing compensation with their employees. Apparently Big D missed that memo.

Everybody at Deloitte had a terrible busy season, that is no secret. We changed our audit methodology, and then in December the powers that be decided to do some last minute tweaking, aka destroy any hope of a bearable busy season. I am a senior working out of Boston and have been pretty busy since October. To reward my hard work Deloitte has given me absolutely nothing. There was no post audit dinner, no monetary reward, not even a free cup of coffee. I did however (and so did everyone else in Boston) receive emails from every executive partner in the NE thanking us for all our hard work, reminding us how much money we made the firm, and telling us to reward ourselves by taking some time off. Apparently being rewarded now means using our own PTO to take a day off. I have had to work both firm holidays up to now (one in January and one in April for the Boston Marathon), so I am not sure when they think we can reward ourselves by using the PTO we already earned. Usually engagement teams hand out “Applause Awards” to their people for hard work, and maybe I am just on a few teams with Ebenezer Scrooge Partners, but I think it is crazy that either Deloitte, or the Boston Office, or one of my engagement partners couldn’t scratch together a few dollars as a thank you for the long hours.

Partners and HR continue to wonder why people leave, but we are continually asked to do more and more and never rewarded for it. With the other firms opening up the piggy banks already, what are the chances that Deloitte follows suit? They missed the mark last year on the compensation, and everyone suffered as a result with the crush of seniors headed for the door. As a result they ended up giving a mid-year raise just to stem the bleeding. Are partners too busy looking to next year or playing golf at their fancy country clubs to remember the little people?

Of course our writer is referring to the PwC bonuses we wrote about on Monday. Don’t know if this is a Deloitte problem or a Boston Deloitte problem but it sounds like Green Dots in Beantown are wicked pissed. How’s your office faring? Tell us below or email us.

Accounting News Roundup: KPMG Appoints New Global Chairman; Big Oil on the Hill; Dems Walk the Tax Hike Line Carefully | 05.12.11

Caleb Newquist
May 12, 2011

KPMG appoints Michael Andrew as global chairman based in HK [Reuters]
Accounting giant KPMG has appointed Michael Andrew as global chairman to be based in Hong Kong, the firm said on Thursday. Andrew, a 27-year veteran at the accounting firm, was previously chairman of KPMG Asia Pacific and Australia, KPMG said in a statement. He replaces Tim Flynn, who will retire at the end of September.

Oil CEOs on the Hot Seat [WSJ]
With gas prices above $4 a gallon in much of the country, Democrats and Republicans are ether to cut tax credits for oil companies enjoying a banner profit year. Senate Democrats plan to grill the CEOs of Exxon Mobil Corp., Chevron Corp., ConocoPhillips and the U.S. units of BP PLC and Royal Dutch Shell PLC about the taxes they pay at a Finance Committee hearing on Thursday. Republicans, who have criticized the Obama administration for not acting faster to approve more offshore drilling, won passage of a House bill Wednesday that would require decisions to be made about offshore-drilling permits within 60 days.

Next Up, a Crackdown on Outside-Expert Firms [DealBook]
With the government securing a conviction against Raj Rajaratnam of the Galleon Group on Wednesday, federal prosecutors will shift their focus to expert networks — the intricate web of money managers, corporate executives and consultants at the center of another wave of insider trading cases.

The $8,000 Credit Cost Some Home Buyers Much More [WSJ]
If you missed out on the $8,000 tax credit for first-time homebuyers that expired just over a year ago, you might be better off for it. Numbers released Monday suggest typical recipients have lost twice as much to falling house prices as they gained from the incentive.

Democrats Embrace U.S. Tax Increase Versus Medicare Cut in Debt Talks [Bloomberg]
Democrats in Congress are gaining new confidence in promoting tax increases to reduce the national debt by presenting them as the alternative to Republicans’ proposed cuts in Medicare health-care coverage for the elderly. Democratic leaders are avoiding any call for tax increases on the middle class, a key voting bloc, and limiting their proposals to those that would affect wealthy individuals, oil and gas companies, and businesses accused of sending jobs overseas.

Google’s Mysterious Retroactive Charge [CFO Journal]
Google’s surprise $500 million charge against first-quarter earnings for an ongoing government investigation related to online advertising raises an interesting question: Why is Google applying the charge retroactively to the first quarter?

H&R Block Tax Services sues Arizona franchisee [KCBJ]
The division of H&R Block Inc. (NYSE: HRB) claims in U.S. District Court in Kansas City that Phoenix-based XL Wealth Management LLC signed an agreement on July 20, 2010, to open franchise locations in Arizona in preparation for the height of the 2011 tax season. But according to the lawsuit, that’s as far as things got in H&R Block’s relationship with XL Wealth Management. Despite H&R Block’s agreement to provide $550,000 in startup money and the company’s subsequent visits to Arizona to check on XL’s progress, the franchise locations never opened.

News

Grover Norquist Advises Obama on How to Win Texas in 2012, Reaffirms Ability to Get Sassy

Caleb Newquist
May 12, 2011

As we’ve noted before, you’d be wrong if you thought Ronald Reagan worshipper and ATR President Grover Norquist and his merry band of anti-tax orcs weren’t capable of a pinch of sass:

Obama should focus on winning the electoral votes of Texas. He could highlight his ongoing efforts to destroy the oil and gas industry through taxation and regulation. Also his hostility to the Second Amendment. And spending binges and tax hikes. The small-minded will not see the opportunity for Obama in Texas, but with enough money spent in the state and not frittered away in Virginia and Florida good things can happen for America.

Or a punch of sass.

[via Politico via ATR]

Conoco Execs Don’t Appreciate These ‘Discriminatory’ Tax Plans

Caleb Newquist
May 12, 2011

ConocoPhillips CFO Jeff Sheets is warning the U.S. Senate that repealing tax credits for oil companies will make it more difficult for his company and their U.S. counterparts to compete internationally and “higher taxes will mean that oil companies will have less money to reinvest, which could lead to a decline in the supply of hydrocarbons.”

Conoco’s CEO Jim Mulva, who will be testifying before the Senate Finance Committee tomorrow, agreed saying, that these plans are “discriminatory” and “If there is less investment, there is going to be less production and less production means higher prices for consumers.” So, Max Bauchus et al., go right ahead with your plan if you can sleep at night knowing that you’re nothing but a bunch of prejudiced jerks that want to hurt the American people. [WSJ, Reuters]

How Does an Overachiever Stand Out From Other Overachievers During Big 4 Recruiting Season?

Daniel Braddock
May 11, 2011

Ed. note: Got a question for Dan Braddock or anyone else on the GC advice team? Email us at advice@goingconcern.com and we’ll get to your query in due time.

Dear Going Concern,

I am currently a sophomore in college and am interested in a Big 4 internship (Chicago) for the summer of 2012. This means that I will be
involved in the heavy recruiting season this coming fall. I have a 4.0 GPA, am on my way to becoming Executive VP of Beta Alpha Psi, am a member of the Accounting Club, and have done some volunteer work. Any tips on how to stand out from the sea of other students just like me? Should I do anything else before recruiting season besides networking? Any advice would be appreciatedver

Big 4 Lover,

Glad to see that GC has some young people in the audience. Take what you read here with a grain of salt and shot of tequila – adulthood makes people cranky, not just public accounting.

Be cognizant of the fact that there are two versions of you that every recruiter sees: the version of you on paper and the version of you in real life. Either version can make or break your candidacy. Let’s break it down:

You on paper: At first read, the “résumé” you describe seems just fine – you’re maintaining strong grades while being involved in extracurricular activities outside of the classroom, even holding a leadership position. I wonder if your “volunteer experience” was only due to the Beta Alpha Psi volunteer requirement or if you do it on your own; either way, this is minor and I’m nitpicking for the sake of nitpicking. Any Big 4 recruiter will have your résumé sitting in their “yes” pile going into the fall recruiting season.

However, your résumé is strong on the “I am just trying to land an internship at a Big 4 firm.” What are your interests outside the realm of debits and credits? Unless you are a living, breathing calculator, I’d like to think that you have hobbies other than what is described above (this is assuming you did not leave any experiences out when describing your background above). I encourage you to diversify your experiences in college – not just for the sake of your résumé but for the sanity as well. VP of the Wiffle Ball Club? Great. Part of the campus sewing circle? Fantastic. Genuine, non-accounting extracurriculars will not only enrich your life but they’ll be great conversation starters when you begin meeting with recruiters and Big 4 professionals on campus.

You in real life: As you mentioned, you’ll be in the thick of the recruiting process this fall. Being that you’re only a sophomore (and probably on the 5 year track due to Illinois requiring 150 credits for the CPA), you’ll be interviewing for the “leadership” programs at the Big 4. These lead to internships which lead to job offers which lead to high-fives and back slaps for everyone. Here’s what you need to do when you meet the firms:

Do not regurgitate your resume – let your strong résumé speak for itself. No one likes a bragger, not even your mother.

Do not be too transparent – 99.99997% of Beta Alpha Psi members join the society because it looks good on a résumé. DO NOT TELL THE RECRUITER THAT. Unless you want to come across as an internship-chasing fool, then by all means go ahead and say so.

Do not suck up – There is a subtle difference between saying, “I’m only a sophomore, but I have heard positive things about your firm from my professors and older classmates and I’m hoping to learn more,” and “OMFG your company is so cool!!!”

Be yourself – you are more than accounting. The best people you’ll ever work with in the industry will also be much, much more than debits and credits.

News

Sitting At Your Desk Is Killing You

Adrienne Gonzalez
May 11, 2011

Did you need more proof that your job sucks? How about this infographic:

According to the graphic, we now sit 9.3 hours a day, far more than the 7.7 hours we spend sleeping. Our hunter/gatherer bodies just weren’t built for this lifestyle.

Sitting for more than 6 hours a day makes you 40% more likely to die within 15 years versus someone who sits for fewer than 3 hours a day. Exercise does not offset this increased risk of premature death.

Those who sit in front of the TV for 3 hours or more a day are 64% more likely to die of heart disease.

So what can you do besides quitting your job to roam the fields for buffalo day in and day out? Try some of these busy season exercise tips from AccountingWEB for starters. My favorite is working at my desk while sitting on an exercise ball; it helps correct my posture and offers a core workout while I’m humming away at my laptop.

Enjoy!

Infographic courtesy Medical Billing and Coding

Is Everyone Aware That There Is a Chicken Sh*t Tax Credit?

Caleb Newquist
May 11, 2011

Tax wonk Len Burman wrote a letter-cum-blog post to Jon Stewart today over at TaxVox explaining how there really is spending in the tax code through tax credits. You see, Stewart gave President Obama a hard time last month about “reducing spending in the tax code” which JS wrongly interpreted as Newspeak. Burman then goes on to give an ~~shitty~~ perfect example of just how ridiculous tax credits have gotten (in case you weren’t aware already):

You don’t believe there’s spending in the tax code??? Here’s a real life example: the chicken-s**t tax credit. Really, section 45 of the Internal Revenue Code. You can look it up. The late Senator Roth of Delaware (home of lots of chickens and “poultry manure,” as it’s euphemistically called) put this little goody into our tax laws. Here’s the backstory: the EPA said that enormous chicken farms could no longer put their poultry waste in pools or bury it because it poisoned the ground water. One of the best options to meet the new requirement was to dry the vile effluent and burn it to make electricity, but that was still costly. Roth didn’t want chicken farmer profits to plummet or chicken and egg prices to rise just because farmers couldn’t use the earth as a giant toilet, so he pushed through the chicken s**t tax credit to create a profitable market for that (as well as all sorts of other crap).

Burman not only explains to Stewart that using tax credits to keep chicken feces out of the water isn’t a good thing but by mocking the President, he also may have inadvertently helped tax executioner Grover Norquist:

Arch-conservative Oklahoma Senator Tom Coburn, leader of the bipartisan “gang of six,” has said that he’d support tax increases so long as they didn’t include rate increases. That is, he wants to rein in subsidy programs run by the IRS.

This is important. Coburn was willing to take on Grover Norquist, who has very effectively prevented any sensible compromise on the budget by insisting that cutting tax subsidies would violate the taxpayer protection pledge that he strong-armed most Republicans to sign. Now Grover can use your laugh line to reinforce Republican intransigence and doom any chance of bipartisan cooperation.

And to indirectly (or perhaps directly) support taxpayer funding of chicken-shitless water.

Jon Stewart’s Fake News on Tax Expenditures [TaxVox]

Deloitte

Jim Quigley Reflecting on His Time as Deloitte CEO via Twitter

Caleb Newquist
May 11, 2011

Davos regular and out-going Deloitte Global CEO Jim Quigley is reflecting on his time in the big chair on Twitter and so far he’s said that “Experience has taught me in a world that seems increasingly focused on sprints, great professional relationships are the work of marathoners,” and “I’ve learned we often allow the urgent to crowd out the important; getting in front is the way we will stay in front.” These are nice thoughts and we’re big on reflection but what do you think Jimbo is really thinking that the Deloitte Twitter filters aren’t letting through?

Luckily, we’ve obtained JQ’s copious Tweet notes, all of which were ultimately denied by Deloitte’s Ministry of Propoganda. Here are some of the denied tweets:

• Really kicking myself after turning down Queen Rania’s offer to buy me a drink at Davos last year. #IDIOT

• Disappointed that I only get 5 months to Tweet under @deloitteceo. Not sure what my new handle will be. Is @deloittekicksass taken?

• @JustinBieber how do you get ready for a big show?

• I’m just going to say it: Sharon Allen has awful taste in music.

• Good luck Barry! I guess I don’t have to warn you that this job will make you lose your hair.

Of course, many of you know Jim better than us, so feel free to speak/Tweet on his behalf below.

News

So You Want to Submit Something to Going Concern…

Adrienne Gonzalez
May 11, 2011

Since Caleb is really bogged down chasing misinformed merger rumors and babysitting his contributor(s), I thought I’d take a moment to set some ground rules for reader contributions. We get that question via e-mail a lot and, as you may notice, very rarely publish reader submissions. Let me tell you why.

First, if you expect us to publish something, how about you start by recognizing the tone of this website? We try our best not to waste our readers’ time with bullshit press releases, fluff pieces, and the usual PR crap that other accounting websites are built around. That is not what we do here and we aren’t going to start now so please, don’t bother. If you can’t take the time to acknowledge the voice of this website and respect the attention span of our readers, we aren’t going to take the time to read the crap you have sent us. If you send us an unsolicited email that looks like it could have gone out to every other accounting website out there, we know you aren’t a fan of the site and have no idea how we roll. Therefore, odds are pretty good that we will ignore your request. You’ve been warned.

Second, this ain’t no motherfucking Wiki. Meaning we are more than happy to publish reader material (still waiting for Bitter Audit Manager’s resignation letter) but beyond the comments, this is not a collaborative venture. Caleb writes, I write, you guys berate us, we adjust future content appropriately… you get the point. We invite you to contribute through criticism, suggestions and, of course, by tipping us to where the news is. And if you have a point to make and want to use this avenue to make it, you are more than welcome to do so, just make sure you come at us correctly. Which brings me to my next point…

It takes a lot of alcohol and therapy to do this day in and day out. Caleb and I try our best to bring you what you want and take our job seriously. If you have a submission, we expect that it fits with the overall attitude of this website. We have stringent quality requirements (Caleb’s rampant typos excluded, of course) related to the tone we work hard to maintain.

Self-deprecating humor earns points with us, as does bitterness, honesty, cleverness and general brilliance. We have no patience for uptight professionalism and anal-retentive seriousness, you can find plenty of that on other accounting websites.

So if you still want to submit something to us to publish, keep these things in mind. Shoot us a note and include your submission but please, save all of us the bother if you can’t respect these simple rules.

Accounting News Roundup: CEO Bullet Dodgers; Will S-Corps Get to e-File?; Don’t Sweat Those Stains | 05.11.11

Caleb Newquist
May 11, 2011

Why CEOs Avoided Getting Busted in Meltdown [Bloomberg]
“Fraud, it turns out, begets fraud.”

Old Mutual Hedge Fund Group Hires New C.F.O. [DealBook]
Old Mutual Asset Management, the hedge fund arm of the London-based life insurer, is set to name Steve Belgrad as chief financial officer on Wednesday. Mr. Belgrad, a graduate of Princeton and Harvard Business School, is leaving his post as chief financial officer of HarbourVest Global Private Equity, which he joined in 2008. Mr. Belgrad, who previously worked for the Affiliated Managers Group, the Janus Capital Group and Morgan Stanley, will begin at Old Mutual on June 1.

SEC to Form Small-Business Committee [WSJ]
The U.S. Securities and Exchange Commission is forming a small-business committee to review fundraising rules for small private firms that critics say hinder access to capital and are stunting economic growth. Testifying before the House Oversight and Government Reform Committee on Tuesday, SEC Chair Mary Schapiro said the new division will focus on “regulatory questions posed by new capital-raising strategies,” among other issues.

IRS Demands $6 Million More from Racing Champ Castroneves [AT]
The Internal Revenue Service has filed suit in U.S. Tax Court against three-time Indianapolis 500 champion Helio Castroneves after he won a high-profile victory against the IRS two years ago and paid $5 million in taxes.

The Top 400 Taxpayers: Incomes Fell 21.5%, Tax Rates Rose 8.2% in 2008 [TaxProf Blog]
Are the rich getting eaten?

IRS Asks for Input on Health Care Law [Forbes]
Guess who’s out of ideas?

AICPA Wants IRS to Let Small Businesses E-file S Corp Form [AT]

Sweat Protection Without the Stains [WSJ]

What Was Discussed on Ernst & Young’s ‘All Hands Broadcast’?

Caleb Newquist
May 11, 2011

We’ve heard from a couple people that Ernst & Young had an “all hands webcast” of some kind today but so far, no one has given us any details as to what was discussed.

Of course there were probably kind words about all your hard work this busy season, your commitment to the firm and so on and so forth but we want to get to the crux; this calls for speculation on our part, until we get something more solid. Possible topics include:

1. Hazing methods for the folks from LECG Corp.

2. The announcement of special screenings of In a JIT.

3. Two minutes’ hate for a certain Governor.

4. Mysterious references to “exciting changes” to the compensation structure that won’t be revealed until “details” are sorted out (i.e. management knows what PwC is doing).

5. Your input.

KPMG

First Marblehead Taking a Mulligan on Financial Statements

Caleb Newquist
May 10, 2011

More importantly, how are the KPMG auditors celebrating (because we want to know)?

From the 8-K, filed this morning:

On May 10, 2011, The First Marblehead Corporation (the “Corporation”) announced that its board of directors (the “Board of Directors”), in consultation with management, the audit committee of the Board of Directors (the “Audit Committee”) and KPMG LLP, the Corporation’s independent registered public accounting firm, concluded that certain unaudited financial statements previously issued by the Corporation should no longer be relied upon.

In order to correct errors in the recording of certain non-cash items, as described below, the Corporation will restate the unaudited financial statements contained in the Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2010 (the “Q1 Form 10-Q”) and the Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2010 (the “Q2 Form 10-Q”). The Corporation expects to file the restated Q1 Form 10-Q and the restated Q2 Form 10-Q, as well as the Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2011 (the “Q3 Form 10-Q”), no later than May 16, 2011.

If you really want to get into the gory details, First Marblehead is bringing 14 securitization trusts onto the balance sheet that were previously accounted for off-balance sheet and its deferred tax assets in Q1 and Q2 are jumping over to the liability side (and the corresponding benefits are becoming expenses). The company says this is NBD as CFO Ken Klipper said, “These restatements … do not affect our cash position and are expected to have no impact on our ongoing business operations.” But the next six days may be a little uncomfortable for the accounting department and the KPMG audit team.

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