Going Concern

CFOs

USANA Health Sciences Hits the Superfecta as President, CFO, COO and EVP of Sales All Bolt

Caleb Newquist
May 10, 2011

Nothing like this to get your investors a little worked up:

USANA Health Sciences, Inc. […] today announced that Fred W. Cooper, President and Chief Operating Officer; Jeffrey A. Yates, Chief Financial Officer; and Mark H. Wilson, Executive Vice President of Sales have each stepped down from their respective offices to pursue other business endeavors. […] Continuing on the realignment of the executive team, [CEO Dave] Wentz said “I also want to offer Fred, Jeff, and Mark our sincerest appreciation for their years of service to USANA. We wish them well in their future endeavors.”

Of course it could be that these guys had a foursome at Pebble Beach they weren’t about to reschedule OR they knew there was going to be openings at Novartis. Other theories are welcome. PwC’s Salt Lake City office serves as USANA’s auditor so if you’ve got the scoop or heard something interesting, email us.

Deloitte

New Leadership Appointment Causes Unrest Inside Deloitte Advisory

Caleb Newquist
May 10, 2011

As we’ve discussed, there has been a bit of controversy around the leadership election process at Deloitte. We first reported this news to you in January with a follow-up story on the candidates, the sorry turnout that was expected, and finally the news that the three candidates had been elected to their respective positions.

Today we have more controversy from inside the house of D but this time it is from a sub-group in the Enterprise Risk Services (aka Advisory or “ERS”) practice. There have been a number of recent leadership appointments within ERS but one in particular that caused a Deloitte partner to reach out to GC. This individual belongs to the Security and Privacy Practice (“S&P”) which consists of approximately 80-90 partners and has been recognized as one of the “12 leading global information security & risk consulting service providers” by Forrester Research Leader for their expertise in this area, according to the Deloitte website.

According to our source, the issue that has caused concern amongst many partners in the S&P group is that the new leader does not have extensive experience in the Security & Privacy area. Our source explained to us that a recent theme inside the firm has been “leading from the front” best encapsulated by leaders like Theodore Roosevelt, Winston Churchill and others who lead based on setting an example. The feeling of the S&P partners is the most recent appointment is based more on cronyism rather than qualifications and past performance.

The leader of the ERS group who makes the appointments is Owen Ryan, a Deloitte veteran who has held several leadership positions at the firm and has led ERS for the past 2-3 years. Our source told us Mr. Ryan has run the advisory practice creating an environment of cronyism and nepotism by appointing individuals, including family members, closest to him and that this appointment in S&P has partners saying this is the latest example of “the emperor having no clothes.” S&P supposedly has many qualified partners who have held leadership positions in the past who could lead the group but were passed over. This has many of them worried about what will become of their reputation as a top service provider in the area and how clients will perceive this appointment.

We spoke to a former Deloitte partner who worked in the Securitization and Structured Products Group (also part of ERS) who confirmed these allegations of nepotism and cronyism. “I wouldn’t go so far to extrapolate what occurred in our group to others,” the former partner said, “but that was certainly my experience.”

Despite this, one insider who is familiar with the leadership at Deloitte described Mr. Ryan as a “results-oriented businessman” who is cognizant of how “his decisions will reflect on him.” This source further told GC that “[Mr. Ryan] would not compromise the potential success of the ERS group by appointing someone to a leadership position who wasn’t qualified.”

Mr. Ryan’s no-nonsense style has manifested itself into some interesting behavior. Our original source told us that he takes attendance at ERS partner meetings and fines individuals $20 for using their BlackBerrys or speaking to neighbors during them. Our source said the money collected goes to charity.

Mr. Ryan did not respond to our voicemail requesting an interview.

The concern in S&P is understandable; an outsider leading a niche group would rankle the feathers of the most laid back partner. However, these decisions are rarely made in a vacuum and Mr. Ryan has his own superiors to report to. The other aspect to consider is the difference between technical leadership and what one source called “visual” leadership. There are many partners capable of leading a practice based on technical merits but the vision and flexibility needed to keep a group progressive in a fast-paced market does not always accompany technical expertise. Quite simply, if the leadership appointments that are made on Mr. Ryan’s watch do not prove successful, he will certainly be held responsible, but there is a lot of concern that the reputations of many of the firm’s best service lines may suffer in the process.

Does Interning Count as Experience Towards a CPA?

Adrienne Gonzalez
May 10, 2011

Today’s CPA exam question has little to do with the actual CPA exam and more to do with your career thereafter, or before if you’re already working in ~~indentured servitude~~ public before taking the exam.

From the mailbag:

Hi Adrienne,

I’ve been trying to look this up, but I keep ending up with vague responses. Can you get your “accounting hours” or whatever work related experience needed for a CPA license (1-2 yrs) before you pass the exam? Do summer internships count (say you interned on an audit)? Which states make you get audit work experience as opposed to states that just ask for accounting experience?

Thanks.
A bit confused.

For future reference, you guys can really help me out here by letting me know what state you are in (or applying for licensure in) as all states are different. Generally speaking “experience” is defined as work performed under the supervision of a licensed CPA in that jurisdiction. Even if you are unsure of which state you will be applying to, a general idea is helpful for my purposes.

You should be able to get your experience before, during or after taking the CPA exam. In some states, you have a limited amount of time to actually complete the requirements once you have passed, in others you will have to take some CPE to “refresh” passing scores after quite some time has passed (5 years).

States like Oregon, Virginia, Georgia and Kentucky will accept general experience in lieu of direct accounting work, meaning you can work in corporate finance and still get your experience requirements met.

States like Colorado and Oregon will accept work performed under the supervision of a Chartered Accountant as well. Colorado will also waive the work experience requirement completely if you meet certain additional educational experience requirements (150 units), check with the Board for exact details on this. Illinois and Massachusetts may also allow you a license without actual work experience. In Mass, you can receive a non-reporting license if you do not meet the 1 year of overall experience and 1000 hours of attest experience, meaning you can do everything but issue reports on financial statements.

States like Alabama, Florida, Illinois, Montana, and Nebraska will give you a CPA certificate instead of an actual CPA license if you have passed the exam, meaning you can put it on your résumé but will not actually be able to practice as a licensed CPA in that state until you meet the additional work experience requirements.

Currently, California does not require audit hours and you can always add them later if you decide you want to perform audits in the state.

Your best bet is to cough up $10 to access NASBA’s Accountancy Licensing Library to search through the different requirements based on which you might meet. You don’t have to know where to look, just plug in what you have (or expect you will have by the time you are ready to apply for licensure) and figure out which state would work best.

Hope that helps!

Accounting News Roundup: Deloitte’s Latest Acquisition; Ditching Loser Clients; Is IFRS DOA? | 05.10.11

Caleb Newquist
May 10, 2011

Microsoft to Acquire Skype [WSJ]
Microsoft Corp. agreed to buy Internet phone company Skype Technologies SA for $8.5 billion in cash—the most aggressive move yet by Microsoft to play in the increasingly converged worlds of communication, information and entertainment. “Skype is a phenomenal service that is loved by millions of people around the world,” said Microsoft Chief Executive Steve Ballmer in a statement announcing the deal Tuesday. “Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world.”

Boehner Outlines Demands on Debt Limit Fight [NYT]
Speaker John A. Boehner said Monday that Republicans would insist on trillions of dollars in federal spending cuts in exchange for their support of an increase in the federal debt limit sought by the Obama administration to prevent a government default later this year.

Deloitte Makes Acquisition to Strengthen its End-to-End Analytics Portfolio of Services [Deloitte]
Deloitte today announced it has purchased substantially all of the assets of Oco, Inc., a provider of enterprise-class software as a service (SaaS) business analytics solutions.

Being Expedient: PwC Settles Satyam U.S. Class Action [Re:The Auditors]
Satyscam, we barely knew you.

11 Clues a Client is a Loser and 4 Keys to Finding a Winner [AW]
A stripped down version of risk management.

IFRS Adoption is Dead! (I Think) [The Accounting Onion]
Tom Selling is quite ready to call for time of death, “Way back in November 2008 when Christopher Cox was calling the tune, the SEC issued its proposed ‘Roadmap’ for achieving a ‘single set of globally accepted accounting standards.’ That was the point at which the ‘IFRS adoption is inevitable’ pot banging reached deafening levels. Thankfully, however, it has been mostly downhill from there.”

SEC Cracking Down on Foreign Shell Cos. [CFO]
While the Securities and Exchange Commission has recently stepped up its enforcement efforts against allegedly fraudulent U.S. shell companies in greater China, those efforts aren’t limited to that region, according to James Kroeker, the SEC’s chief accountant.

Madoff Trustee, Fairfield Liquidators Join Forces [WSJ]
The trustee for investors hurt by Bernard Madoff’s fraud reached a settlement with liquidators of the Fairfield Greenwich Group funds, the biggest feeders of money into the Ponzi scheme, in which they resolved claims against each other and agreed to jointly pursue the fund owners, including Connecticut financier Walter Noel.

How Should a Ex-Big 4 Intern Explain That He Snubbed a Full Time Offer?

Caleb Newquist
May 9, 2011

Welcome to the Animal-Kingdom-to-Win-in-the-Preakness-edition of Accounting Career Emergencies. In today’s edition, a former Big 4 intern who turned down a full time offer wants to know how best to explain this snub to his new prospective employers without dragging his old firm through the mud.

Need help with a busy season break-up? Dealing with some crazies at your job? Do you feel ignored for your effohref=”mailto:advice@goingconcern.com”>advice@goingconcern.com and we’ll help you get some attention (or, at the very least, create a diversion).

Back to the Big 4 snub:

Hello,

I interned at a Big 4 tax recently and got a full time offer. My internship experience consisted of little work aside from fighting boredom and trying to find work. I was very disappointed with my experience, and to an extent, felt cheated. I was not expecting much as an intern, but I was expecting to learn at least a few things. Long story short, against the advice of people who say they have my best interest in mind, I turned down the offer.

I have a bad habit of not using my rear view mirrors when I drive, so I am not seeking advice as to whether I should beg for my offer back. My question relates to how I should approach recruiting in the future. Rule #1 is not to speak poorly of a past employer. Not sure how to get around that. Advice? Also, would saying that I was not happy with my internship hurt future opportunities due to the fact that it seems that few people full time seem to be happy (proven flight risk)? Should I leave this experience off my resume? My mother always told me honesty is the best answer, but then again she has been telling me I am special for the last 22 years of my life. Depends how one defines special perhaps.

Anyhoo, I am confident that I will land interviews in the coming season and I have connections with many firms who had extended me internship offers. I am just unsure how to go about explaining this little snag in a beneficial and professional way.

Thanks for any help.

Dear Momma’s Boy,

This is the first instance that I can recall hearing about an intern turning down a full time offer without another one in place. Your confidence in your decision is impressive but we can’t help but think that you had a slightly itchy trigger finger. But as you said, we’re not looking back. Onward!

You are correct that you should not speak poorly of your previous employer. Slamming your former firm for asking you to spend all day at the copy machine will make you sound petty, unprofessional and any prospects will immediately wonder how you’re talking trash about them once you’re out of their presence. Rather than get all mysterio about the experience, you should listen to your mother and be honest about it. But don’t focus entirely on the negative aspects of the internship; there has to be something you took away from it. Once you’ve described something positive (no matter how petty), you can explain why you turned the internship down. Just be careful to not make the situation personal. “It wasn’t a good fit” or “It wasn’t what I expected” is a far better than saying, “I was bored” or “I was smarter than everyone else” OR “I should be running that firm.” Keep it constructive and thought-provoking in when discussing it. Also, I would not leave the experience off your résumé simply because that misrepresents you. Best to go with honesty all the way.

So just keep your ego in check; did you turn a prestigious firm? Yes. Why? It was a decision made based a variety of factors and it wasn’t an easy one to make (even though it might have been). You’ll come off as contemplative and your integrity will be intact. Those aren’t bad qualities to have.

PwC
Salaries

Bonus Watch ’11: PwC Gives Most of the Staff a Pat on the Back

Caleb Newquist
May 9, 2011

Along with last Friday’s news of “exciting changes” coming in the compensation structure, we’ve received word a little bonus paid out PwC’s last run:

I’m a little surprised no one has emailed you about the bonuses that were paid out this last pay period to PwC associates and seniors. This wasn’t across the board to everyone like the first December bonus [Bonus Watch ‘10: PwC Holiday Payouts Coming In]. I think first years all got $500 (since they didn’t receive the first December bonus) then everyone else received a bonus that was tied to performance/utilization (and I’m told some individuals received nothing if the managers/partners thought they didn’t cut it). I’m curious what the payouts were in other markets.

I’m a second year senior in the Midwest market and got $1200. I know of another senior up for manager that received more than that. I think this is separate from whatever changes they’re going to announce this week about our pay structure. Pretty much the message I got from my partner was this was something like a down payment on the year end bonuses, which makes me believe when our year end bonuses are announced, they’re going to immediately bring up the money they gave us in December (two bonuses for some) and then this, and say that’s why our year end bonuses are lower.

The webcast is supposed to be today but we don’t have the details and haven’t heard anything yet, so keep us updated.

Woman Insists She Didn’t Rip Off PwC Because She’s a Bad Person But to Hide the Fact That She Was Having an Affair with a Married Partner

Caleb Newquist
May 9, 2011

When banging your boss, there are certain precautions one must take to ensure that the affair is not discovered. In the case of Angela Tilling, who was jailed for £33,000 in expenses fraud, she claimed “her behaviour was an attempt to prevent John Minard’s wife spotting suspicious payments on his credit card.” Mr. Minard admitted that he had sexual relations with that woman (that’s what I keep hearing in my head) but denied that they had “full intercourse.”

Of course smut isn’t the only part of this story. We learn that Angie reportedly “conned” P. Dubs into spending “£50,000 celebrity appearance at a Christmas party in a bid to boost her popularity,” among other expenses that weren’t kosher. You see, it appears that Angela wasn’t too good at making friends, so she threw around a bunch of the firm’s money so people would think she’s the bee’s knees.

“Some of the money was used to provide entertainment for others because what this lady craved was the respect of others.

“She liked to be the centre of attention, providing days and nights out. She is a lonely lady who bought the friendship and affection of people with whom she worked. It was not salted away for a rainy day.”

The court heard Tilling falsely claimed £2,183 expenses for a 47-head staff lunch at Birmingham’s Hotel Du Vin on December 7, 2004 and £2,146 for a company hotel conference in June 2005.

She blew a strict £25,000 budget when organising the company’s Christmas party on December 22, 2005, fraudulently transferring two £29,375 payments to cover a celebrity guest’s £50,000 appearance fee.

Tilling also falsely claimed a £15,000 payment by lying that she had paid the sum as a deposit to secure the guest, who the prosecution and booking agency refuse to name.

She was also paid a further £5,581.25 in bogus expenses on October 17, 2006 and £3,706 in June that year for Solihull College support staff.
In December 2007 she fraudulently claimed £2,225 for 60 theatre tickets at Birmingham’s Hippodrome – another company outing she organised.

It was all for love.

PricewaterhouseCoopers PA jailed over expenses fraud [Telegraph]

Audit

Center for Audit Quality Concerned That No One, Outside of a Few Auditors, Knows What Auditors Actually Do

Caleb Newquist
May 9, 2011

The CAQ’s continuing dialogue with individual investors indicates that many in the marketplace do not fully understand the scope of the audit process and the responsibilities placed on public company auditors. The In-Depth Guide to Public Company Auditing will help to bridge that information gap. The new Guide describes how a public company audit firm decides to accept a new audit engagement, how it assesses the risk that the financial statements contain material misstatements as part of determining the audit’s scope, and then how the auditors perform and report their findings – all in plain English. [Cindy Fornelli/CAQ, Guide]

News

Canadian Accountants Are Less Social Media Savvy, More Concerned About Work-Life Balance

Adrienne Gonzalez
May 9, 2011

In February, Sage revealed some disturbing results based on a random survey of 500 U.S. members of its Sage Accountants Network. Of them, U.S. respondents were a tad behind the curve when it comes to social media (shocker) and obsessed with finding new clients.

This time around, Sage North America surveyed 200 of its French-Speaking Canadian Sage Accountants Network members and discovered the following:

Among the 947 respondents, the biggest challenge facing their firms was tied at 34 per cent for time management and work-life balance, followed by keeping up with technology at 29 per cent. This was a stark contrast to their American counterparts who reported that their biggest challenge was getting new clients (35%), tax law complexity and changes (22%) and the effect of new regulations and standards on small firms (25%).

In terms of social media, the survey indicates a slower adoption rate among Canadian respondents than their U.S. counterparts with 58 per cent stating that they aren’t using any social media tools in a professional capacity compared to 43 per cent of those in the US. In fact, only 23 per cent of respondents’ firms have a website compared to 37 per cent in the U.S. For those using social media, the survey reveals that the key tools that are being used are LinkedIn (22%) and Facebook (18%).

Although there are numerous Canadian accounting professional association publications, when asked which accounting publications respondents read, 56 per cent stated that they do not read anything compared to only 19 per cent of U.S. respondents.

It’s that last number that is most upsetting. No one is suggesting accountants have to be on top of breaking news but as financial planners, advisers and business minds, it’s sort of important that they at least attempt to keep up with the profession (*ahem*). It’s not like there’s a lot to break all the damn time.

Comp Watch ’11: Grant Thornton Auditors Want Some Love After a Tough Busy Season

Caleb Newquist
May 9, 2011

From the mailbag:

Apparently, management finally recognizes that this was a real shitty busy season and as a last ditch effort to keep hemorrhaging seniors, is going to give some large bonuses and raises. Audit is to get increased comp because of how bad it was on our side. I mean GT-Chicago lost 3 seniors right before and 3 during busy season. Plus, we had a team working on a restatement that were working 80-100 hour weeks since November. I know GT will never pay out like the Big 4, but I’m curious to see if we’re in the ballpark this time around.

Who doesn’t love aggravated Grant Thornton auditors on a Monday morning? Frankly (and I know I’m not alone here), I’ll be floored like an Animal Kingdom Superfecta ticket holder, if GT pays out like the Big 4. However, because Stephen Chipman and GT have been on such a tear the past year – shedding less dynamic offices, making dynamic acquisitions – it’s possible some at GT may see better raises this year but it I’m guessing it won’t be the audit practice.

But our tipster’s email seems fairly optimistic (in a bitter, burned out auditor sort of way) since the attrition variable seems to be in full effect. If GT SAs are indeed heading for the exits, then perhaps there will be some pleasantly surprised GT dynamos after last year’s disappointment. Keep us updated.

Accounting News Roundup: Dems Going After Big Oil Tax Breaks; Funky Bean Counting at Green Mountain Coffee; Mom’s Earning Power | 05.09.11

Caleb Newquist
May 9, 2011

Democrats’ Plan Would Offset Deficit by Ending Big Oil’s Tax Breaks [NYT]
Linking two of the politically volatile issues of the moment, Senate Democrats say they will move forward this week with a plan that would eliminate tax breaks for big oil companies and divert the savings to offset the deficit. With high gas prices and rising federal deficits in the political spotlight, senior Democrats believe that tying the two together will put pressure on Senate Republicans to support the measure or face a difficult time explaining their opposition to voters whose family budgets are being strained by fuel prices.

Debt fund to target gap in lending [FT]
A group of former bankers and the departing global chairman of Deloitte have formed a debt fund manager in an effort to target an expected shortfall in funding to mid-cap European companies. The group is the latest European venture to start up in the wake of the credit crisis to fill a gap created in lending to smaller companies.

The Role and Relevance of Audits: PCAOB Chairman Doty Creates His Own Expectations Gap [Re:Balance]
Jim Peterson wonders if Jim Doty can pull off making real changes to the auditor’s report.

Is Green Mountain Coffee Roasters Shuffling the Beans to Beat Earnings Expectations? [WCF]
Does a negative provision for sales returns sound fishy to anyone?

What Mom should be paid [DMWT]
If you happened to blow off Mother’s Day, this should help you make up for it.

FASB Chair Answers Push for Private-Company GAAP [CFO]
Prompted by a proposal earlier this year by a blue-ribbon panel on the future of private-company accounting standards — a proposal that includes giving oversight of those standards to a brand-new board — the Financial Accounting Standards Board has heightened its focus on private-company issues, according to Leslie Seidman, the board’s chairperson.

Audit
KPMG

Today in Chinese Company Auditor Resignations: KPMG Doesn’t Appreciate Being Ignored

Caleb Newquist
May 7, 2011

The House of Klynveld resigned as the auditor Shanghai-based ShengdaTech, Inc. effective April 29th after less than three years. According to the 8-K filed yesterday, KPMG was none too impressed with management blowing off their concerns:

KPMG previously informed the Company’s Audit Committee of certain concerns arising during its incomplete audits of the Company’s consolidated financial statements as of and for the year ended December 31, 2010, and the effectiveness of internal control over financial reporting as of December 31, 2010. These concerns included serious discrepancies and unexplained issues relating to, among others: (i) the Company’s bank balances; (ii) transactions with major suppliers; (iii) VAT invoices and payments; (iv) sales and payments for sales by third parties; (v) sales to the Company’s second largest customer; (vi) discrepancies between KPMG’s direct calls to customers and confirmations returned by mail; and (vii) concerns raised by directly confirming customer sales and accounts receivables.

In a letter dated April 19, 2011, KPMG informed the board of directors of the Company that in KPMG’s view the Company’s senior management has not taken, and the board of directors has not caused senior management to take, timely and appropriate remedial actions with respect to these discrepancies and/or issues, and KPMG stated that the continued lack of resolution of the issues would materially impact the financial statements for the year ended December 31, 2010 and possibly prior periods.

And as you might expect, this resulted in KPMG taking its audit reports and going home:

On April 29, 2011, we were also informed by KPMG, our former independent accounting firm, that disclosures should be made and action should be taken to prevent future reliance on their previously issued audit reports related to the consolidated balance sheets of ShengdaTech, Inc. and its subsidiaries as of December 31, 2008 and 2009, and the related consolidated statements of income, shareholders’ equity and comprehensive income, and cash flows for the years then ended and the effectiveness of internal control over financial reporting as of December 31, 2008 and 2009.

8-K [SEC via ShengdaTech]

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