Going Concern

BREAKING: At Least One PwC Employee Isn’t Sold on the Rebranding

Caleb Newquist
September 22, 2010

It’s been just over a week since we broke the story on PwC’s rebranding. Now that everyone else has caught up to the story, we’ll share with you some fresh news on the makeover.

Since today marks the first day of u’re warming up to the new team colors. Then again, you may share the feelings of one P. Dubs employee that took the time to email Bob Moritz to chime in on the new look. Apparently (not really sure how these things happen) the email is making the rounds at PwC and it just so happened to find its way into our mail bag:

To be perfectly honest, I’m not a fan of the new branding. In your email you wrote “…we are altering what we believe is an outdated visual identity to better express the kind of vibrant and relationship-based firm we have evolved into.” I find it ironic that you referred to our former visual identity as outdated when our new brand looks like a throwback – a 70s color scheme meets an IT startup.

I completely agree with the comments on the website where the brand is repeatedly referred to as child-like and unprofessional. I feel like the explanation for the symbol is also very complex. The *connectedthinking brand was simple and easy to understand. With the new symbol, everything has a meaning, from the colors to the solid blocks to the transparent blocks. A symbol should be fairly self explanatory – this one requires too much explanation.

I love the fact that the company has been focusing more on changing behaviors and placing a greater emphasis on building relationships. However, I fail to see where a new brand would affect this. Colors and symbols don’t represent PwC, the staff does. In one of the online discussions it was pointed out that following a salary freeze one year and layoffs the following year, it almost seems foolish to spend so much money to “reinvent” ourselves. To quote a wise PwC employee, “A new brand isn’t going to win business, motivated people will.” I find it hard to believe that this new, colorful symbol will be the motivation that people need to help expand our business and improve relationships with clients. A better way to motivate the staff would be more incentives – bonuses, rewards, raises – positive reinforcement. Pavlov was definitely on to something with the concept. Interactive gallery stations complete with iPads to show off the brand? Activities revolving around the launch of this new brand? Is this really the best method of spending funds?

Also disturbing to me is the environmental impact this could have. I can’t imagine that this won’t set back the Firm-wide goal of reducing our carbon footprint. Letterhead, business cards, report covers, envelopes (to name a few paper products) all need to be reprinted. It seems like an incredible waste to discard everything we already have in favor of this new brand (we received an email letting us know that after October 4th we are not to use any of the old paper products). I hope we are at least planting a bunch of trees to help compensate Mother Nature for the amount of paper that will be wasted with this change.

It’s disappointing to feel like we have taken two steps forward and three steps back. I realize that it is what it is, but I felt that I should voice my opinion from down here on the totem pole.

It’s been suggested that October 4th will be the great PwC Shredding Day that will no doubt involve a convoy of Shred-it trucks out 300 Madison (and offices nationwide for that matter) along with employees dropping their old business cards into every fish bowl they can find.

So mark it on your calendars and definitely document the shredding in action or perhaps a bonfire (done safely and in full accordance with the law) and send us the pictures.

Why Are Milwaukee Accounting Professionals So Afraid of Social Media?

Adrienne Gonzalez
September 22, 2010

Having grown up in Milwaukee I can’t imagine 2/3rds of Milwaukeeans are jumping into social media, let alone 2/3rds of the financial and accounting population. If they are, it appears as though they’re not really listening to our advice and should be taking this “transparency” in new media thing a notch or two up.

The Milwaukee Business Journal says that two-thirds of Milwaukee area accounting professionals use LinkedIn and Facebook but not necessarily for business. Trying to balance their professional personas with their real lives as protectors of the public interest, they’re understandably sketchy when it comes to diving head first into the Twitter.

There are really no excuses at this point. Plenty of brands have figured out how to gently skirt the line, stand way back behind a wall of professionalism, interact with just about everyone, make it entertaining with self-deprecating stabs at the “boring accountant” stereotype and completely push the envelope until it falls off the cliff. It’s fine, everyone’s doing it and so far no one’s getting sued.

That statement isn’t entirely true, some companies have taken to suing complainers which is always a great way to drum up business and make people want to give you their money. For those of you afraid of social media, that translates into behavior not to engage in. Being a “sue first, ask questions later” sort of company is always a bad idea so don’t do it.

And if you’re going to put someone in charge of handling social media, make sure it isn’t someone overworked and angry at your company who might tweet that they want to stab the client. Other than that, I’m not sure where this fear of social media comes from but it appears that many Milwaukee accounting professionals don’t understand that your brand is only what you present it to be. As long as no one is threatening to physically harm anyone in your stream, you’re pretty safe as far as whatever else you decide to do. Share links, talk to other professionals, really grow a pair and send a photo of your awesome cube arrangements. Whatever, just get involved and stop acting like it’s a larger, more frightening deal than it actually is. It’s just another way to get business done.

Accounting professionals who lack the non-mandated-by-the-AICPA cojones to jump into the new media game are sort of underestimating their own professional ability to judge what is appropriate and what isn’t. That’s an individual choice for brands, firms and representatives of companies as they interact online but it’s disrespectful to the profession to imply that we as a whole don’t act right on the Internets. Please. The niche is large enough that one may bring whatever they want to the table and mostly not get rejected nor the shit sued out of them for tweeting client Social Security numbers. Don’t we know how to behave?

I’d hope so.

So stop being afraid, Milwaukee accounting professionals, it isn’t going to bite (you in the ass later) because you know what’s right and what’s wrong. You’re a fucking professional, dammit. Let me know when you’re on Twitter, I might follow you.

Accounting News Roundup: The End of Summers; KPMG Adds More Restructuring Talent; Back to Basics | 09.22.10

Caleb Newquist
September 22, 2010

Summers exit lets Obama retool team and message [Reuters]
“The departure of economic adviser Larry Summers opens the way for President Barack Obama to shake up leadership of his economic team and show he is taking seriously growing public frustration over the sluggish economic recovery.

Whoever replaces Summers ions constrained by a record $1.47 trillion budget deficit and the possible Democratic loss of control of the House of Representatives in November 2 congressional elections.”

The Obama Tax Plan: Who’s in the Crosshairs? [TaxVox]
“President Obama’s plan to raise taxes on the nation’s highest income households may not quite mean what you think. A closer look suggests that fewer people may get whacked than either Obama or his Republican critics suggest. And for many of the victims, the club won’t be the president’s plan to raise rates to 36 percent and 39.6 percent. Those rate hikes may be getting most of the attention, but the real cudgel would be higher taxes on capital gains and dividends going to high-earners.”

H&R Block Announces New Chief Financial Officer [MarketWatch]
“H&R Block (HRB 12.82, -0.08, -0.62%) announced today the appointment of Jeff Brown as chief financial officer. Brown has been the company’s interim CFO for the past five months. As an eight-year veteran of H&R Block, Brown has played an important role in a variety of financial functions.

‘I am very pleased with the leadership Jeff has provided me and the organization in his interim role,; said Alan Bennett, H&R Block’s president and chief executive officer. ‘Jeff has all the talent and personal characteristics needed to be highly successful as the permanent CFO. He has earned my full confidence, as well as that of the board of directors.’

Most recently, Brown served as H&R Block’s corporate controller. Prior to that, he was the corporate controller and vice president of finance (Americas) at Bacou-Dalloz, now Sperian Protection, and served in key positions at KPMG. Brown has a business administration degree from the University of Nebraska and is a certified public accountant.”

Sentencing of Petters’ accountant is postponed [Minneapolis Star-Tribune]
“Tuesday’s scheduled sentencing of James Wehmhoff, the accountant who helped Tom Petters file false tax returns, has been postponed until sometime in October. The postponement was ordered by U.S. District Judge Richard Kyle at his own behest.

Wehmhoff faces a prison sentence of between 70 and 80 months on tax charges, but federal prosecutors have asked Kyle to consider Wehmhoff’s cooperation in the Petters investigation and his previously “unblemished” career before he hooked up with Petters Group Worldwide. The government also noted that Wehmhoff was not part of the $3.65 billion Ponzi scheme that Petters and others orchestrated for more than 10 years.”

KPMG Continues to Add Restructuring Talent With Appointments of Tony Murphy, Tom Bibby [PR Newswire]
The House of Klynveld must be counting on more companies falling prey to their massive debt loads with the appointment of Tony and Tommy who both have “proven track records” as restructuring professionals.

Accounting Basics: A Guest Post From Robert B. Walker [Re:The Auditors]
“[New Zealand] follows an American model in which people who are to become accountants are ‘educated’ in Universities. There is minimal emphasis on double entry. Most of the courses are dedicated to theory, bullshit sociology, complex management accounting, auditing and so on. None of this makes any sense to a student if they first do not know the basics of accounting and that can only be gained by actually practicing the discipline.”

Comparing the Ethics Codes: AICPA and IFAC [JofA]
“Sharp increases in the number of multinational audits being performed by U.S. accounting firms means that more CPAs are performing services under the International Federation of Accountants (IFAC) audit and attest standards. Although auditors must comply with the specific standards adopted in each jurisdiction, familiarity with IFAC’s International Ethics Standards Board for Accountants (IESBA) Code of Ethics for Professional Accountants (IESBA Code) in addition to the AICPA Code of Professional Conduct (AICPA Code) is a critical first step. When specifications differ, members should comply with the more restrictive of the applicable standards.”

Quote of the Day

Paul Krugman Doesn’t Like Being Included in GOP Tax Cut Talking Points

Caleb Newquist
September 22, 2010

“The point is that I’m not a real small businessman, but I play one in anti-tax propaganda.”

~ The Professor was a little too sarcastic the first go round.

The IRS Isn’t Interested in Delaying the Issuance of Potentially Bogus Refund Checks

Caleb Newquist
September 22, 2010

The Treasury Inspector General of Tax Administration sole purpose is giving the IRS shit about anything and everything under the sun. This is known.

We here at Going Concern have a tendency to find the more ridiculous feedback that IG digs up and share it with you. Today however, the TIGTA might be on to something:

WASHINGTON- The Internal Revenue Service (IRS) should make better use of the third-party data it receives from employers, government agencies and financial institutions to reduce erroneous refunds, increase revenues and promote voluntary compliance, according to a new audit report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).

TIGTA found that the IRS:

• Could make better use of available third-party data to identify and prevent more than $1 billion in potentially erroneous refunds;
• Does not have a centralized control point for third-party data requested or received from outside sources; and,
• Lacks a standardized procedure for validating data.
• The report also found that additional validation of taxpayer information using third-party data is needed to validate claims for the Earned Income Tax Credit (EITC) and other credits.

“These problems allow a substantial number of erroneous refunds and credits to be granted that are not allowable by law,” said J. Russell George, the Treasury Inspector General for Tax Administration. “For example, I am troubled that we found a lack of adequate corrective action by the IRS to address improper claims in the EITC Program, which is particularly vulnerable to fraud.”

TIGTA recommended that the IRS freeze refunds for those taxpayers with potentially invalid EITC claims, require valid responses before allowing the EITC claims, and adjust the returns if taxpayers do not respond within a specific time period.

The IRS disagreed with TIGTA’s recommendations to freeze potentially invalid refunds and to create a centralized control point for all third-party data.

Apparently the IRS can’t handle the flood of angry calls from washed up models, degenerate gamblers and dead people demanding their refunds RFN.

Full Report [TIGTA]
TIGTA: IRS Refuses to Stop Issuing $1 Billion in Erroneous Refund Checks [TaxProf Blog]

CFOs
Video

Sign of the Times: CFOs Living on Franks and Beans

Caleb Newquist
September 22, 2010

Or ones that soon will be:

Look at the bright side, you were on the front page of the Post!

[via Gawker]

IRS’s Employment Tax National Research Project Just Getting Started

GoingConcern
September 21, 2010

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

About 2,000 firms around the US have received audit letters from the IRS as part of the agency’s Employment Tax National Research Project (NRP). If your firm isn’t one of them, you can’t breathe easy just yet – the agency has indicated that it include a total of 6,000 firms over three years. What’s more, the “examinations will be comprehensive in scope,” and “employers should have all of their records available to expedite these examinations,” the IRS saidhe project last November.

The NRP is the first the IRS has undertaken in 25 years. During that time, the agency noted, business practices regarding employment taxes may have changed significantly, prompting the need for study. In particular, the IRS is looking for data that will allow for a better understanding of just how well corporate tax filers comply with regulations. That way, they can focus their efforts on areas of greatest non-compliance.

Equally important, the agency is looking to boost its knowledge of the “employment tax gap.” The tax gap is the difference between the amounts that taxpayers should pay, and the amounts they actually pay on a timely basis. A gap can come about in several ways: non-filing or failure to file a return; underreporting income or overstating deductions; and underpaying the amounts actually owed.

In 2006, the IRS estimated a gap of $290 billion for the year 2001. The bulk of the gap — 80 percent — was due to under-reporting income, the IRS said.

In an effort to close the gap, the National Research Project will focus on several subject areas, noted the law firm of Morgan Lewis:

Worker Classification: The question of whether a worker is an employee or an independent contractor keeps rearing its head. From the IRS’ point of view, that’s probably because they see a fair amount of misclassification of employees at contractors – which means lost tax revenue. An August 2009 GAO report on the topic referred to a DOL study in 2000 which found that between 10 and 30 percent of firms audited in nine states misclassified at least a portion of their employees. In 1984, the IRS estimated that the misclassification of employees meant a revenue loss of $1.6 billion.

Executive compensation: This includes non-salary compensation, like loans, travel, deferred comp, stock-based compensation and more.

Fringe benefits: The fun stuff some execs get, like the use of company aircraft or cars, club dues, and housing, among other perks, will be under the microscope. The audits may even include benefits like gift cards, employer cafeterias and athletic facilities, Morgan Lewis notes.

Payroll taxes: The agents will examine Forms 941, Employer’s Quarterly Federal Tax Return. As part of this, they will look at backup withholding, next-day deposit requirements and Form 1099/W-2 compliance, among other issues.

What can a firm do to prepare in case it receives notice that it will be part of the NRP? As a starting point, management should conduct an internal compliance review. That way, they’ll have a better idea of potential weak points, and to take steps to resolve issues that could prove to be sticking points during an audit, Packman says.

In addition, all CFOs need to recognize that this project “is the beginning of a long-term emphasis by the IRS on employment tax issues,” Packman writes. Once the NRP is wrapped up, the IRS will use the data it has gathered to focus on areas that were shown to have higher rates of noncompliance.

News

The Second Tier of Vault’s Accounting 50 Has More Familiar Names

Caleb Newquist
September 21, 2010

As promised, we’re presenting the second half of Vault’s Accounting 50, which has a lot of familiar names at the top of the second tier.

26. Plante & Moran, PLLC – Southfield, MI
27. J.H. Cohn LLP – Roseland, NJ
28. Eisner LLP – New York, NY
29. Clifton Gunderson LLP – Peoria, IL
30. Crowe Horwath LLP – Oak Brook Terrace, IL

31. BKD, LLP – Springfield, MO
32. Weiser LLP – New York, NY
33. Baker Tilly Virchow Krause, LLP – Madison, WI
34. Amper Politziner & Mattia, LLP – Edison, NJ
35. LarsonAllen LLP – Minneapolis, MN
36. Anchin, Block & Anchin LLP – New York, NY
37. Novogradac & Company LLP – San Francisco, CA
38. UHY Advisors, Inc. – Chicago, IL
39. Wipfli LLP – Milwaukee, WI
40. Beers + Cutler PLLC – Vienna, VA
41. Marks Paneth & Shron LLP – New York, NY
42. Citrin Cooperman & Company, LLP – New York, NY
43. Margolin, Winer & Evens LLP – Garden City, NY
44. Stonefield Josephson, Inc. – Los Angeles, CA
45. Blackman Kallick – Chicago, IL
46. Aronson & Company – Rockville, MD
47. Schneider Downs & Co., Inc. – Pittsburgh, PA
48. Burr Pilger Mayer, Inc. – San Francisco, CA
49. Watkins, Meegan, Drury & Company, L.L.C. – Bethesda, MD
50. Frank Rimerman & Co. LLP – Palo Alto, CA

As we said this morning, we’ll dig into some of the particulars on all these firms in a series of posts and point out any past stories we’ve done in these here pages for additional color. For now, feel free to comment on the second tier.

Earlier:
Vault’s New Accounting 50 Ranking Has Plenty of Surprises

Deloitte

Wife of Ex-Deloitte Partner: Porn-extortion Plot Saved Our Marriage

Caleb Newquist
September 21, 2010

[caption id="attachment_17969" align="alignright" width="260" caption="The happy couple. SOURCE: Jeff Day/NYP"]

[/caption]

Remember back in May when we told you about Steven Klig, the former Deloitte tax partner-cum-lawyer who attempted to extort his ex-lover with a sex tape? Klig was merely looking for some additional nude pics of his mistress after she broke it off and when she didn’t comply, Klig started with his devious-randy plot.

Klig thought to do some of his blackmailing while on vacation with the wife in kids at Disney World, which is especially creepy considering he would have been drowning in happiness.

Well, Klig is to be sentenced on Friday after pleading guilty in May to illegally accessing a computer network to threaten his mistress. Yesterday he had a whole host of people singing his praises, including his wife, who told the judge that this whole situation has turned things around for them.

In court papers filed yesterday, Steven Klig’s wife, Ellen, said she “thought our life was over” when six FBI agents showed up at their Great Neck, LI, home last year and arrested her hubby for extortion.

“Instead, it was just beginning again. I got my husband back and my children got their father back,” she wrote to Manhattan federal Judge John Koeltl, who will sentence her husband Friday.

Ellen — who said Klig had “withdrawn from our family” due to job-related stress — noted that they’ve been seeing shrinks “individually and as a couple,” and “really work at keeping the lines of communication open.

“As a couple, we have rebounded to the point that after 20 years of marriage, we renewed our wedding vows and our commitment to each other and to our family,” she wrote.

Oh sure lady. Blame Deloitte! It’s bad enough that they have to take shit from the likes of Marin County California. But now you’re saying your marriage troubles were the fault of a firm that is going to (supposedly) create a quarter of a million jobs and the arrest of your husband for plan he concocted in order to get his rocks off are what turned it all around?

Even Klig himself claims that he was somewhere in between mild-mannered tax attorney and something out of a David Lynch film:

Klig — who has never revealed if he actually had the sex tape — blamed his shameful scheme on a sleep disorder, saying, “I really have no explanation other than I strongly believe . . . I was in a world that existed somewhere between insanity and sanity.”

Several former Deloitte co-workers also penned missives in support of Klig, who left the firm in disgrace after his arrest.

Former colleague Monte Jackel wrote that he “heard no mention of any misconduct of any type on Steve’s part . . . until the story broke in the New York Post.

“I was truly shocked at the allegations . . . but view them as out of character with the Steve Klig that I knew then and know today,” Jackel wrote.

The guy in between, well, who’s to say?

Lusty lawyer bust turned marriage around [NYP]

KPMG

KPMG Advises Tulsa Police to Get into Arms Dealing

Caleb Newquist
September 21, 2010

The strangest thing about this story is that KPMG had to tell the City of Tulsa, OKLAHOMA that, you know, maybe they could sell some of these guns to OKLAHOMANS for money.

Selling the hundreds of guns that Tulsa police confiscate each year instead of melting them down is one of several revenue-generating ideas included in the KPMG efficiency report.

But city and police officials said that would have to be done cautiously, if the idea makes it past the evaluation process.

“What (KPMG) is essentially saying is that we are destroying assets that could bring us revenue,” Mayoral Chief of Staff Terry Simonson said.

The report recommends the firearms be sold to certified dealers through the already-established city auction process, rather than incurring $80,000 per year in costs to dispose of them.

Once you’re able to get the idea of Oklahoma actually having firearm dealers around your skull, we will admit that we’re being a tad harsh on Tulsa.

You see, they used to sell confiscated guns until some freedom-hating police chief decided that occasionally these guns end up in the hands of bad people and that destroying them was a better solution. The fact that this even occurred in the Sooner State without a populist uproar and nightly vigils for all the destroyed Smith & Wessons is beyond comprehension.

But never mind that. Here we are, 20 years later and KPMG suggests they get back in the gun trade. God knows municipalities need the money these days and spending $80k melting down perfectly fine weapons is just silly. Sadly, not all guns are created equal:

If the city began selling guns again, [Capt. Jonathan] Brooks said, there are still many of the confiscated weapons that would have to be destroyed.

“Obviously, we wouldn’t be able to sell guns that have been modified or altered from the original manufacturer’s specifications, such as sawed-off shotguns,” he said.

“We also wouldn’t want to be selling any assault-type weapons.”

This guy also probably voted for Obama.

KPMG finds asset in guns [Tulsa World]

News

Vault’s New Accounting 50 Ranking Has Plenty of Surprises

Caleb Newquist
September 21, 2010

This year our friends and Vault took a different approach to this year’s ranking for accounting firms. Rather than focus primarily on prestige of a given firm, many working in the industry voiced other aspects of their firms that were more important.

Vault Finance Editor Derek Loosvelt said in a press release, “In the past, our primary accounting ranking was based solely on prestige, but when we asked accounting professionals what the most important determining factor was when choosing an employer, they told us, overwhelmingly, that firm culture was most important.” How important??

“In fact, 36 percent of all accounting professionals we surveyed told us that firm culture was most important, while only 11 percent cited prestige as most important. Vault created its new ranking with this feedback in mind.”

But don’t fret, prestige whores – Vault’s prestige rankings will be out next week and we’ll bring those rankings to you, as well as their Quality of Life rankings. But for now, let’s get to the pecking order for the inaugural Best Firms to Work For ranking. We’ll bring you the top 25 for now and present the next 25 in a separate post. Plus, we’ll dig into the gory details in future posts. But that’s enough talk for now:

1. Deloitte – New York, NY
2. PricewaterhouseCoopers – New York, NY
3. Rothstein Kass – Roseland, NJ

4. Marcum – Melville, NY
5. Dixon Hughes – High Point, NC
6. Moss Adams – Seattle, WA
7. Elliott Davis – Greenville, SC
8. Friedman – New York, NY
9. Kaufman, Rossin & Company – Miami, FL
10. Cherry, Bekaert & Holland – Richmond, VA
11. WithumSmith+Brown, PC – Princeton, NJ
12. Berdon LLP – New York, NY
13. Reznick Group, P.C. – Bethesda, DC
14. Eide Bailly LLP – Fargo, ND
15. Goodman & Company, LLP – Virginia Beach, VA
16. CBIZ & Mayer Hoffman McCann P.C. – Cleveland, OH
17. Armanino McKenna – San Ramon, CA
18. SS&G Financial Services, Inc. – Cleveland, OH
19. ParenteBeard LLC – Philadelphia, PA
20. Schenck Business Solutions – Appleton, WI
21. Ernst & Young LLP – New York, NY
22. KPMG LLP – New York, NY
23. Grant Thornton LLP – Chicago, IL
24. BDO Seidman LLP – Chicago, IL
25. McGladrey & Pullen LLP/RSM McGladrey Inc. – Bloomington, MN

So the biggest surprise, from where we stand is Rothstein Kass lofty position in the top three. Not because we don’t suspect that they are a fine firm but it was simply unexpected. In fact, the top ten is full of surprises. Of the top ten in the list above, only Deloitte and PwC appear in the top ten in Inside Public Accounting’s Top 100. The obvious message here is – Bigger is not necessarily better.

And that particular premise is most obvious as we see two Big 4 firms – E&Y and KPMG – and three other mega firms – GT, BDO and McGladrey – rounding out the top twenty-five.

There are lots of familiar names in the top twenty-five so feel free to comment on any of them and where they fall on the pecking order.

Accounting Firms Rankings 2011: Vault Accounting 50 [Vault]
The New Vault Accounting 50 [In The Black/Vault]

Career Center

Can My Firm Force Me to Change Brokers Even Though There Are No Independence Conflicts?

Caleb Newquist
September 21, 2010

Today in accountant anxiety, a new Big 4 audit manager is perplexed as to why the firm is requiring the movement of their brokerage accounts, which on the surface, don’t result in any independence conflicts.

Have a question about your career? Is your favorite gridiron powerhouse affecting your work? Concerned that you may be allergic to your job? Shoot us an email at advice@goingconcern.com and we’ll help alleviate your problems.

Back to our muddled manager:

I’m a new audit manager at a Big 4 firm. As a new manager, my firm is requiring me to move all of my brokerage accounts (even those for which I’m the trustee but have no beneficial interest in) to a firm approved by the company and which participates in their daily transaction import program so they can keep daily track of all of my holdings. How is this legal? I’m not allowed to do business with a brokerage firm of my choice, even when there are no independence conflicts? Doesn’t this violate some law or something!?!?! Advice please!

Frankly, we’re a little surprised that you’re surprised about your firm’s requests in this matter. After all, you’re a manager. In the audit practice. We realize it’s been awhile since you’ve cracked an audit textbook but we’re curious if you’re delegating your annual independence refresher to a lowly staff because you can’t be bothered with it.

As you may recall, audit firms have to be independent in fact and appearance. Your brokerage accounts – both your personal and the accounts that you serve as a trustee – are a huge risk to your firm’s ability to maintain that independence. Your personal accounts are a no brainer – a firm simply cannot have anyone with assets with a broker that your firm has some sort of professional relationship with that could be perceived as conflict of interest.

As far as the accounts that you serve as the trustee for – Wiktionary defines trustee as follows:

A person to whom property is legally committed in trust, to be applied either for the benefit of specified individuals, or for public uses; one who is intrusted with property for the benefit of another; also, a person in whose hands the effects of another are attached in a trustee process.

So in other words, you are legally obligated to invest on behalf of the beneficiary in their best interest. This could possibly put you in direct conflict to act in a manner that would risk the independence of your firm.

And as everyone knows, an audit firm’s reputation as an independent third party that provides an objective opinion is paramount to the industry. Whether they are truly independent is a matter that Francine McKenna would be happy to take up with you on any day of the week but all the firms have a platoon of attorneys and other professionals that monitor the risk of independence violations for their respective firms constantly.

And as long as you’re an employee of the firm, the firm’s interests will trump yours. We suggest paying closer attention at your next ethics training.

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