Going Concern

Quote of the Day

Imagine a Future Free of Questions on Revenue Recognition

Caleb Newquist
June 25, 2010

“It is an important step towards a single global principle-based standard that would make it absolutely clear when revenue is recognised-and why.”

~ Sir David Tweedie is pretty happy with how the converged revenue recognition standard turned out.

News

Grant Thornton Sheds Another Office – Albuquerque Sold to Moss Adams

Caleb Newquist
June 25, 2010

GT follows up with the news of its disposal of its Honolulu office last month, the closure of its Madison, WI location in April and Greensboro, NC earlier this year with this latest sale of its Albuquerque, New Mexico digs.

According to the Moss Adams press release Chipman & Co. wanted out of the Land of Enchantment after “evaluating its strategic direction”:

ALBUQUERQUE, N. Mex. (June 24, 2010)—Moss Adams LLP and Grant Thornton LLP announce the planned acquisition of Grant Thornton’s Albuquerque practice by Moss Adams on July 31, 2010. In evaluating its strategic direction, Grant Thornton senior leadership determined it will exit the New Mexico market.

Kim Nunley, the Grant Thornton office managing partner, will join Moss Adams as a partner along with many of the client service staff and employees. Wayne Brown, Moss Adams Albuquerque office managing partner, will continue to provide local leadership. He said, “I have known and respected Kim for many years and look forward to working closely with her. She is highly regarded within the profession and the Albuquerque community.”

This acquisition demonstrates Moss Adams commitment to the Southwest and overall firm growth. According to Chris Schmidt, Moss Adams president, “Moss Adams is focused on growth and the Grant Thornton practice blends well with our Albuquerque industry group specialization in areas such as financial institutions, credit unions, employee benefit plans, technology/life sciences, and manufacturing companies.”

Moss Adams is the largest accounting and consulting firm in New Mexico and the 11th largest firm in the United States. With more than 1,700 employees and 230 partners, the firm serves its clients from 21 offices in Washington, Oregon, California, Arizona, and New Mexico.

Our email to a Grant Thornton spokeswoman was not immediately returned.

Technology

Credentials for Accountants – Your Wheelbarrow Barrel Needs Tech Tools

GoingConcern
June 24, 2010

Over the last couple months, GC has been profiling various accounting-related credentials. CPA, CFP, CMA, CIA, CFE, CVA, CFA… it’s a veritable alphabet soup of designations and employers are more and more likely to ask for a second helping these days. And you might want to pick up an MBA while you’re at it too. Y’know, in your spare time. In Canada, you can go ahead an//www.cga-canada.org/en-ca/Pages/default.aspx”>CGA, CA, and CBV to the mix as well.

Another day, another designation for yet another self-regulating body.

We’ve all heard of “grades inflation.” Well, in my view, we’re currently subject to “credentials inflation” at a rate that would make a Banana Republic cringe. In contrast, Zimbabwe Ben would likely nod in approval.

Beyond credentials though, there’s another critical piece in the employment puzzle that you would be well advised to consider as you venture into the field. Tools.

What are an accountant’s tools?

I’m not talking about the wheel barrel you’ll need to cart all those credentials to your job interview. I’m talking about the business software that more and more employers want pre-installed on their prospective employees.

At the entry level, it tends to be more of a ‘nice to have’ than a ‘must have’. But more and more, your progressive career path is affected by the type of tools you learn early in your career. There’s just no way to separate accounting and finance from the technology that facilitates accounting and finance work.

In the small business space, this is less of an issue. One small business accounting package is much like another. The “canned” reports (built in) will largely suffice, point and click. Just get yourself a healthy functional skill level with MS Excel and you’re ready to go.

Moving up into the enterprise, it’s a different story. The difference between having experience with Quickbooks versus SAP is akin to the difference between a degree from Eastern Michigan University and Princeton.

Think about that when you are venturing out into the job market for the first time. What are your aspirations? Where do you want your career to take you?

It’s difficult to blame employers for this predilection. Enterprise software is complex, subject to cryptic reporting languages, and training is expensive. The expertise is seldom institutionalized within the enterprise instead residing in the head’s of one or two key people. The “gurus.” Sometimes the expertise just walks right out the front door. It’s just way, way easier for everyone when “the new guy” can hit the ground running.

We may see this sad reality change in time.

Marc Benioff, CEO of Salesforce.com, is a key person leading the charge for change. He is an out-spoken advocate of the “consumerization” of enterprise software. In Benioff’s view, enterprise software should be as easy to use as Facebook and we’re seeing this manifest with every iteration of the Salesforce.com platform.

Unfortunately, Salesforce is the exception rather than the rule and the incumbent systems are deeply rooted in business. The technology “stack” as it’s called is built up over time and choices of enterprise systems are traditionally big, capex decisions. Change is rarely proactive and technology is normally kept well beyond the end of its useful life.

The complex enterprise systems will continue to be persistent for sometime to come. So be prepared to factor this into your career calculations. When you’re out there looking for work, ask the question of prospective employers. What systems do you use? Then, research that system to figure out its prevalence in the market: Are they using some niche software product built upon an ancient architecture? Is it a proprietary system that you’ll never see again? Is it a “legacy system”? Is it vertical specific?

Don’t underestimate the importance of these questions. No one has the bandwidth to learn all the tools currently offered. Examine your career aspirations carefully within the context of these technology tools because it can be difficult to backpedal. The tools you learn have just as much bearing on your career as the credentials you chose.

And inflation is a fact of life.

Geoff Devereux as been active in Vancouver’s technology start-up community for the past 5 years. Prior to getting lured into tech start-ups, Geoff worked in various fields including a 5 year stint in a tax accounting firm. You can see more of his posts for GC here.

News
Tax

A Few Senators Would Like Billionaires to Pitch in with the Deficit Problem

Caleb Newquist
June 24, 2010

The latest act in the ongoing circus known as the estate tax debate has three “liberal” senators – Bernard Sanders (I-VT), Tom Harkin (D-IA), and Sheldon Whitehouse (D-RI) – calling for billionaires to help close the $13 trillion some-odd federal deficit that these über-rich people ate.

Forbes reports that the Messrs. Sanders, Harkin and Whitehouse sent a letter to their fellow Senators laying out their case, “According to Forbes Magazine, there are only 403 billionaires in the U.S. with a collective net worth of $1.3 trillion. Clearly, the heirs to these multibillion fortunes should be paying a higher estate tax rate than others.”

The champs of the bill also go to the trouble of singling out Dan L. Duncan whose family stands to inherit his $9 billion fortune tax free. It’s a good thing those staffers pointed out that article in the Times to their respective Senators!

Anyhoo, TaxProf summarizes the details of the “Responsible Estate Estate Tax Act”:

• Exempts the first $3.5 million of an estate from federal taxation ($7 million for couples), the same exemption that existed in 2009. Doing this would mean that 99.75% of all estates would be exempted from the federal estate tax in 2011 alone.

• Includes a progressive rate structure so that the super wealthy pay more. Under our bill, the rate for the value of the estate above $3.5 million and below $10 million would be 45%, the same as the 2009 level. The rate on the value of estates above $10 million and below $50 million would be 50%, and the rate on the value of estates above $50 million would be 55%.

• Includes a billionaire’s surtax of 10%. Our bill also imposes a 10% surtax on the value of an estate above $500 million ($1 billion for couples). According to Forbes Magazine, there are only 403 billionaires in the United States with a collective net worth of $1.3 trillion. Clearly, the heirs to these multi-billion fortunes should be paying a higher estate tax rate than others.

• Closes all of the Estate and Gift Tax Loopholes requested in President Obama’s Fiscal Year 2011 budget. These loophole closers include requiring consistent valuation for transfer and income tax purposes; a modification of rules on valuation discounts; and a required 10-year minimum term for Grantor Retained Annuity Trusts (GRATS). OMB has estimated that closing these loopholes that benefit the super-wealthy, would raise at least $23.7 billion in revenue over 10 years.

• Protects family farmers by allowing them to lower the value of their farmland by up to $3 million for estate tax purposes. Under current law, the value of farmland can be reduced up to $1 million for estate tax purposes under § 2032(a) (Special Use Valuation). Our bill increases this level to $3 million and indexes it to inflation.

• Benefits farmers and other landowners by providing estate tax relief for conservation easements. Our bill provides tax relief to farmers and other landowners by amending estate tax rules for conservation easements through an increase in the maximum exclusion amount to $2 million and increasing the base percentage to 60%.

Nice work on those last two Senator Harkin; you couldn’t be more obvious.

In case you didn’t catch it in there, the estate tax on the billionaires will be 55% PLUS! an additional 10% surtax. Sounds crazy right? Congress royally fucks things up by letting the estate tax expire in the first place and then has the stones to throw the double whammy on the rich because of it. Had they simply extended the estate tax (which seems to be a popular solution, btw) this political pigskin wouldn’t even be an issue.

But guess what? There are people behind this thing lock, stock and barrel. For one, the United for a Fair Economy (“UFE”) more or less says that this legislation is the catalyst to fixing everything, “The Sanders-Harkin-Whitehouse Responsible Estate Tax Act is an important step on the road to an economic recovery that benefits all Americans.”

Well, not all Americans.

Career Center

Job of the Day: Fannie Mae Needs a Financial Reporting Manager

GoingConcern
June 24, 2010

Fannie Mae is looking for an experienced professional to fill a Financial Reporting Manager position in its Washington, D.C. office.

This person will be responsible for managing a team tasked with compiling and reviewing accurate financial reports for both internal and external purposes.

Qualifications include 6 – 8 years experience either with an audit or financial services background. A CPA license is required.

Company: Fannie Mae

Title: Financial Reporting Manager

Location: Washington, D.C.

Description: Manage a team engaged in compiling, reviewing, and/or transmitting accurate financial results internally to the firm points of contact or externally to regulatory bodies (e.g., FHFA, SEC) for inclusion in board reports, news releases, and public financial reporting. Hire, manage, train, develop, and evaluate staff. Develop, implement, document, and ensure adherence to practices and procedures. Participate in or lead special projects.

Responsibilities: Manage daily team activities related to accounting, control, and financial reporting for responsible areas. Ensure that monthly, quarterly, and annual financial reporting is accurate, timely, and based upon internal and external reporting requirements; Plan, review, and/or support preparation of internal and external reports, journal entries, account reconciliations, tables, and schedules; Review, establish, and monitor financial controls. Identify opportunities to streamline and automate. Improve efficiencies to reduce costs; Document accounting procedures. Complete necessary testing and remediation; Provide customer service by responding to inquiries and requests from internal and external customers. Advise senior management regarding business, internal programs, and activities as they relate to financial reporting matters; Support senior management and new business initiatives; Coordinate and administer assignments, monitor team progress, and maintain schedules; Develop team members and provide ongoing professional guidance and direction.

Qualifications/Skills: Bachelor’s Degree or Equivalent required; 6-8 years of related experience; CPA;
Access and SQL knowledge; Audit background; Financial services industry experience; Strong people manager.

See the entire description over at the GC Career Center and visit the main page for all your job search needs.

Audit
Big 4

FERF Survey: Audit Fees Down, Big 4 Still Dominate Public Company Filers

GoingConcern
June 24, 2010

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

It looks like audit fees are stabilizing.

The 150 publicly-held companies responding to a recent survey paid an average of $4.8 million in audit fees in 2009, down 2.4 percent from the total shelled out by these respondents the prior fiscal year.

The 197 privately-held companies responding to the survey paid an average of $291,200, roughly even with the prior year.

Drilling further down, the survey found that total audit fees for 83 large accelerated filers-those with market capitalizations over $700 million–averaged $7.8 million, 3.6 percent less than what they paid the prior year. What’s more, this average of $7.8 million was possibly skewed to the high side this year due to the total audit fees reported by the 19 respondents from companies with more than $25 billion in annual revenues.

On the other hand, the average audit fees paid by the 22 non-accelerated filers were $579,900, 3.3 percent more than what they paid in the prior year.

These are some of the highlights of a newly-released annual report from Financial Executives Research Foundation (FERF), the research affiliate of Financial Executives International. It stresses that the averages reported in this year’s Audit Fee Survey are not comparable to those reported in the 2009 survey because this year’s respondents are not necessarily the same as last year’s respondents. In fact, FEI stresses that this year’s average was skewed slightly higher due to representation from more companies with revenues of $25 billion or more.

The survey also found that the total number of audit hours averaged 21,458 for all public companies, and-not surprisingly–was directly proportional to both the size of the company and to the number of legal entities comprising the company. Of the 19 respondents from companies with more than $25 billion in annual revenues, the total hours averaged 108,571.

The average hourly audit rate was $218 for all public companies–$186 for nonaccelerated filers and $220 for the large accelerated filers. Surprisingly, the survey found that the lowest hourly rate ($110) and the highest hourly rate ($400) were both reported by large accelerated filers. It said the $110 rate was reported by a large multi-national consumer goods distributor and the $400 rate was reported by a large multi-national financial services firm.

Other interesting findings:

• 88 percent of public company respondents used Big 4 audit firms compared to 36 percent of private companies.

• After the Big 4, Grant Thornton was mentioned by four respondents and BDO and McGladrey were both mentioned once.

• 21 of the 197 private companies plan to switch auditors, compared to only 7 of the 150 public company respondents. Service issues and fees were key reasons for both groups.

• Just 16 of the 150 public companies indicated that their auditors broke out the cost of the Section 404 attestation.

PwC Will Be There for You When Your Gridiron Dreams Come to an Abrupt Halt

Caleb Newquist
June 24, 2010

PricewaterhouseCoopers understands that their employees have big dreams. But if those dreams come crashing down into a heap of flaming shit on the doorstep of your life that they’ll be there for you when you have nowhere else to turn.

Case-in-point, Danny Brannagan is a football player. A Canadian football player. And he has a dream to play in the CFL for the Toronto Argonauts. He also has an opportunity to realize his dream to become an auditor for a Big 4 firm but PwC is accommodating his desire to be a tackling dummy until his knees need replaced:

[PricewaterhouseCoopers] is willing to wait while the young quarterback sees how far his skills can take him in the Canadian Football League.

“They (PricewaterhouseCoopers) understand I have a limited window to participate at a high level in sports and they told me to take advantage of that,” the Queen’s graduate said on Wednesday.

Brannagan will get to experience the life of a CFL quarterback while on the practice roster, but more importantly continue to develop the skills that helped him take Queen’s all the way to a CIS title in 2009.

“It will give me an opportunity to learn and develop as a quarterback, get used to the system and get used to the professional aspect of the game,” he said.

Brannagan will be paid the handsome sum of $500 a week while on the practice roster, which is undoubtedly less than he would be making at PricewaterhouseCoopers, even at an entry-level position.

“I don’t know if it’s a sacrifice, necessarily,” Brannagan said.

“PricewaterhouseCoopers has been very accommodating. They have allowed to me to have a flexible start date there. I don’t necessarily look at it as giving something up as much as I’m postponing a career after football.”

Argonauts head coach Jim Barker was thrilled to be able to accommodate Brannagan on the practice roster.

“It’s a lot better than working for an accounting firm,” he said half-jokingly.

$500 a week to get crushed by the defensive starters? Picking up the starting QB’s leftovers (if you catch my drift)? Get snapped on the ass by a linebacker’s towel who may want to get to know him a little better in the shower? These are the things dreams are made of.

Fortunately for Dan-o, PwC has elevators in its offices because he probably isn’t going to be able to walk up stairs after his “football career” is over.

Plus, the nerve of this coach. There was no half-joking there. He was dead serious. Would the Argonauts be there for Danny if he was part of the next round of PwC layoffs? Not likley.

Big 4

Big 4 Rotations: Great Career Opportunity or Recruiting Gimmick?

Caleb Newquist
June 24, 2010

We touched on international rotations yesterday, albeit one that probably would be provide more risk than most accountants are comfortable taking.

That being said, rotations – either to another practice, office or international – can be a way to re-energize your career if you’re feeling stagnant or a simple distraction from the distinct possibility that you don’t like your job. We’ll discuss all three of these possibilities and then open it up for discussion:

International Rotations – Offering international rotations is an excellent recruiting tools for the firms that offer them (primarily Big 4) and most people that work in firms that offer them would state that they are “an extremely rewarding experience,” whether or not they’ve actually experienced one. It’s one of the cliché message that firms put out without mentioning the fact that the politics of negotiating one can be tricky. All that being said, those lucky few that do experience them rave about their experiences (for the most part, there are some that just can’t be pleased) on both a personal and professional level.

Domestic Rotations – Again, firms market these as opportunities for those that are interested in them. There are less politics involved in the domestic versions although a particular office may have to demonstrate a need before it would be approved. A slight twist on these the domestic “rotation” is an unsolicited one, where one office has a desperate need for warm bodies and your firm offers you up to spend a significant length of time (e.g. two to three months up to a year or more) working in a different office.

Practice Rotations – You’re sick of auditing/tax/advisory. One day the idea of a rotation to a new service line or to a support department (e.g. HR) comes along and you jump at it because, well, you’re bored out of your mind. This can be a great opportunity to do something completely different which could be the start of a new career path. Or it could be your firm filling its need for grunts in a practice that is short-handed.

From a recent thread on staying or leaving public accounting, commenter Guest had this to say regarding internal rotations.

Internal rotations are also BS. They are generally looking for cheap labor to bridge them in times of need. Most people don’t get asked to stay on, in which case your peers that stayed in audit may have a leg up. If you do get asked to stay, you will be behind your advisory/tax peers since you didn’t start with them.

So it’s a bit of a mixed bag out there. On the one hand, landing one of these rotations is the first step and then you have to consider the repercussions of leaving an office/practice for a length of time. If you’ve got personal experience with any of these, discuss below for the wishers and dreamers out there mulling rotations.

Accounting News Roundup: Financial Reform Fail; KPMG Wins Latest Round of Auditor Musical Chairs; Philly Tax Amnesty Close to Reaching Goals | 06.24.10

Caleb Newquist
June 24, 2010

A Missed Opportunity on Financial Reform [WSJ]
Former SEC Chairman Arthur Levitt is none too pleased with the financial reform bill that’s likely to get approved by the Senate and he says exactly why in an op-ed in today’s Journal, “One of many bad ideas that made it into the bill: Public companies will now have a wider loophole to avoid doing internal audits investors can trust. This requirement was the most important pro-investor reform of the last decade, and it worked. Of the 522 U.S. financial restatements in 2009, 374 were at small firms not subject to auditor reviews.”

But that’s not all! Mr Levitt outlinespic failure including:

• “Chuck Schumer’s wise idea to let the Securities and Exchange Commission (SEC) become a self-funded agency will likely be killed by appropriators who are unwilling to give up the power of the purse.”

• “Barney Frank’s (D., Mass.) effort to pass a new law to overcome the legal precedent of the 2008 Supreme Court’s Stoneridge decision, which allows third-party consultants, accountants and other abettors of fraud to avoid liability. Again, another sellout of investor interests.”

• “Congress didn’t deal with the massive problems of Fannie Mae and Freddie Mac. It’s one thing to fail to see trouble before it happens. Now, there’s no excuse. The central role played by these two organizations in the financial crisis is indisputable. Congress had a chance to fully restrict these agencies from anything but the most basic market-making activities, and it didn’t.”

What does all this (and more!) mean? Oh, nothing really. Levitt says that we’ll just have to wait for the next financial apocalypse to get it right.

InfoLogix Announces the Engagement of KPMG, LLP as the Company’s Independent Registered Public Accounting Firm [PR]
McGladrey resigned on June 10th and the company’s filing stated that were no disagreements yada, yada, yada although McGladrey had identified a material weakness in the company’s internal controls and their most recent audit opinion included a going concern paragraph. It wasn’t enough to spook KPMG, who got the blessing from InfoLogix’s audit committee on Tuesday. Enjoy.

BP Relied on Faulty U.S. Data [WSJ]
“BP PLC and other big oil companies based their plans for responding to a big oil spill in the Gulf of Mexico on U.S. government projections that gave very low odds of oil hitting shore, even in the case of a spill much larger than the current one.

The government models, which oil companies are required to use but have not been updated since 2004, assumed that most of the oil would rapidly evaporate or get broken up by waves or weather. In the weeks since the Deepwater Horizon caught fire and sank, real life has proven these models, prepared by the Interior Department’s Mineral Management Service, wrong.”

Leadership changes at Wichita Grant Thornton office [Wichita Business Journal]
“Lori A. Davis is the new managing partner at the Grant Thornton office in Wichita, the company announced Wednesday.

Davis will take the place of Jarod Allerheiligen, who will become the managing partner of the Grant Thornton operations in Minneapolis. The change in responsibilities is scheduled to take place Aug. 1.”

Ex-Detroit Mayor Kwame Kilpatrick indicted by feds on 19 mail fraud, tax counts [Detroit Free Press]
“Despite Kilpatrick’s repeated claims to the contrary, the indictment says he used fund money for campaign and personal expenses, ranging from polling to yoga and golf lessons to college tuition for relatives.

Prosecutors contend he failed to report more than $640,000 in taxable income while mayor that he received in the form of cash, flights on private jets and perks paid for out of the civic fund.”

$2 million payment to Phila. tax-amnesty program [Philadelphia Inquirer]
Philly’s tax amnesty program received a $2 million payment on Tuesday, it’s biggest since the program started on May 3. Collections so far have reached $18 million, according to city officials. They also expect to reach their goal of receiving between $25 and $30 million by the end of the program on Friday.

Feinberg to quit pay czar post to focus on BP fund [Reuters]
This guy is a glutton for punishment.

Quote of the Day

Bring on the Reform, Banks Will Continue Doing Just Fine

Caleb Newquist
June 24, 2010

“Despite the reality of impending financial reform, banking and financial services executives are bullish about their business prospects in the current year and 2011, with many investing for long-term growth and specifically focused on traditional services, emerging technologies and M&A as a means to generate growth.”

~ Scott Marcello, deputy leader of KPMG LLP’s Financial Services practice.

PwC Is Making Your Dream of a Rotation to Rwanda Possible

Caleb Newquist
June 24, 2010

PricewaterhouseCoopers is opening a field office in Rwanda, thus bringing the glorious PwC Experience to the African nation that has likely never known it. This means one more opportunity for anyone interested in an international rotation to country that barely qualifies as such.

Although this isn’t quite as adventurous as working the Somali engagement that the firm won last year (no pirates in Rwanda after all) but it’s nice to know that you have one more option on the continent.

The daily comings and goings still seem to be dicey enough to keep things interesting although authorities seem to be giving Americans fair warning. S’pose that’s the most you can ask for except the second you explain what an accountant does, they’ll assume you have money and you’ll get shaken down.

BDO Wins New Life as Florida Appeals Court Orders New Trial

Caleb Newquist
June 23, 2010

In what amounts to a HUGE win for BDO, the Florida 3rd District Court of Appeal in Miami has ordered a new trial in the case between BDO and Banco Espirito Santo:

A Florida appeals court has thrown out a $521 million jury verdict and ordered a new trial in a dispute over audits between accounting firm BDO Seidman and a major Portuguese bank.

The Third District Court of Appeal in Miami ruled Wednesday that the 2007 trial was wrongly divided into three phases.

That meant jurors decided BDO Seidman should pay punitive damages too early in the case.

BDO Seidman was sued by Portugal’s Banco Espirito Santmed on a Miami company later exposed as a huge fraud. The bank claimed BDO Seidman was negligent for not detecting the fraud, costing the bank $170 million in losses.

Jurors awarded the bank $170 million in losses plus $351 million in punitive damages.

We reached out to the Steven Thomas, lead counsel for the Banco Espirito for his reaction:

This case has been sent back for another trial because of the procedural ‘bifurcation’ issue. We are pleased that the effort and hard work the jury put into this case was recognized by the appellate court, and we specifically note that the Court did not dispute BDO unethical conflicts of interest or its negligence. The evidence of BDO Seidman’s failures of even the most basic auditing procedures is so overwhelming that we expect a new jury will reach the same conclusion as the original jury. We look forward to trying this case and reminding everyone of BDO Seidman’s neglect of its public duty and the enormous conflict of interest they had.

Despite the overwhelming evidence, undisputed negligence cited by Mr Thomas, the mood inside BDO is one of vindication. From the firm’s press release not yet posted on the firm’s website:

The firm is pleased to announce that the Third District Court of Appeal of the state of Florida has unanimously overturned a 2007 jury verdict against the firm and ordered that the Bankest case be retried in the 11th Circuit Court. The Court of Appeal concluded that:

• The Trial Court erred in its original decision to trifurcate the trial, ruling that it was prejudicial to have allowed the case to be presented in three phases. This made it possible for the jury to find BDO grossly negligent without, at the same time, considering the conduct of other actors, including representatives of Banco Espirito Santo.

• The Appellate Court further concluded that the evidence of reliance on BDO’s audit opinions was insufficient to sustain the claims of the Bankest investors, save for the one individual who testified at trial.

• The Trial Court improperly allowed into evidence prejudicial hearsay testimony and documents that further served to deprive BDO of a fair trial.

The Appellate Court concluded, “We have carefully considered every substantive and procedural authority that might be applied to preserve at least some of the jury’s findings. In this case, no such balm is found.”

“We are very pleased that the Appeals court has reversed the lower court verdict. We have consistently stated that we were confident that the jury’s erroneous verdict in this case would be reversed on appeal. The addition of punitive damages at the time only served to emphasize the injustice that took place at the trial court,” said CEO Jack Weisbaum. “A new trial will be in accordance with the Court of Appeal’s decision and we will prove that BDO acted at all times consistent with its professional obligations and that its audit opinions were based on the proper application of generally accepted auditing standards.”

So we’ve got a new trial with a re-energized BDO and a tenacious plaintiff. It sounds like BDO will stick with its defense strategy of “we did no wrong,” so this should be fun.

Florida Third District Court of Appeal Decision [PDF]

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