Going Concern

KPMG

KPMG’s Investment in Phil Mickelson Is Working Out Pretty Well, Sayeth KPMG’s Leadership

Caleb Newquist
June 4, 2010

We just assumed that we had heard the last of the cubicle-side chats with KPMG’s leadership but lo and behold, this morning we find yet another convo with KPMG’s three amigos – T Fly, JVeih, Keizer Soze – sitting in the mailbag.

And yes, Phil comes up.

KPMGconversation

Okay, some thoughts –

In response to Inquisitor #1, Johnnie V. says “our goal is to make sure to not sell services into a company” but then qualifies by saying, “[Making] sure we’re bring the full suite of..services to help them deal with those issues and those problems.” In other words, there is a very fine line between hustling clients for more business and actually serving them to suit their needs.

Re: “Mid-market” – This can be summed up by saying: KPMG is having the most success winning smaller clients from the next tier firms.

And finally to the most important question – Inquisitor #3 thinks Phil is great and all but for the love of everything that is good and holy, are there any other plans to get the name out there? This Five Guys obsession has him worried.

Since Tim and Phil are BFFs, he’ll take this one…except he doesn’t say anything that really means anything. JVeih jumps in (no doubt give him the “WTF are you talking about?” look) to say that KPMG’s Mean Girls strategy is working and the firm is getting far more attention from CFOs than it was just one year ago. The rest of the Big 4 have plateaued and Phil has been instrumental in the glad-handing and back-slapping efforts.

One IRS Agent Needs to Work on His Bribery Technique

Caleb Newquist
June 4, 2010

An Internal Revenue Service agent is charged with accepting a bribe from two business owners in exchange for lowering their taxes.

The U.S. Attorney’s Office says 40-year-old Roger Anthony Coombs met with the two owners on May 8 to discuss an IRS audit of their businesses. Prosecutors say Coombs offered to reduce the $60,000 the business owners owed in taxes to $11,000 if they would pay him $9,700.

Coombs was arrested Wednesday after the business owners reported the offer to law enforcement officers.

How does a $49k reduction in taxes equate to a $9,700 pay off? Were these business owners more interested in greasing him $9,700 for a $0 tax liability? Because if that was the case, this happened in Minnesota, not the South, where that sort of thing could go unnoticed.

Or maybe they got pissed after he turned down their offer to seal the deal with a Starbucks?

IRS agent charged with soliciting bribe [AP]

How to Avoid ID Problems at the CPA Exam

Adrienne Gonzalez
June 4, 2010

Although the instructions are pretty clear, this question comes up fairly often so let’s make sure everyone is on the same page when it comes to ID that works at Prometric when taking the CPA exam.

Prometric is very clear about what you should have before you get to the testing center (at least half an hour early, of course, and smokers should make that an hour so they can get in as many as they can before they start – you don’t want to waste those breaks).

First and foremost, check in with them 24 hours before your exam to confirm your appointment. The night before your exam date, set out your NTS and make sure you have two forms of exactly matching ID ready so you aren’t scrambling to find it in the morning.

At least one of your forms of ID must have a recent photograph and both must be valid (i.e. not expired) and signed. Try a credit card and a driver’s license, forget about a Social Security card or a student ID as Prometric will not accept these. A passport is OK but must be accompanied by a secondary ID (like a credit or debit card).

The name on your primary photo ID must match your Notice to Schedule exactly. If you show up and both names are different (foreign candidates who use both an English name and their native name sometimes run into this problem), Prometric will not allow you to test and you will forfeit exam fees. If there are any issues with your ID, contact them in advance to see if an exception can be made or make sure you will be okay come test day. Make sure to do this within your NTS timeframe and no less than 15 days before your exam date so you can at least reschedule without losing your exam fee if need be.

Got it?

Adrienne Gonzalez is the founder of Jr. Deputy Accountant, a former CPA wrangler and a Going Concern contributor . You can see more of her posts here and all posts on the CPA Exam here.

Accounting News Roundup: Ernst & Young Expresses ‘Sympathies’ to Equitable Policyholders; ABA: Fair Value Will Result in ‘Craziness’; Annoying Is a Vital Accountant Trait | 06.04.10

Caleb Newquist
June 4, 2010

E&Y pays out almost £3m following Equitable verdict [Accountancy Age]
“E&Y successfully contested a claim they were not objective in their audit of the firm. However the JDS finding that the 1999 Financial Statements from Equitable did not show a true and fair view, still stand. The firm extended ‘our sympathies’ to policyholders of Equitable Life, who have been impacted by the near-collapse of the company.” Is expressing sympathy a new strategy for E&Y?

FASB Exposure Draft Alarms Bank CFOs [CFO]
What kind of alarm you ask? So alarming that a lobbyist spoke out against it with statements like, ‘aw-dropping’ and ‘You don’t want that craziness in your financial statements.’ That’s the words of the American Bankers Association’s Senior VP of Tax and Accounting who was hospitalized with cardiac trouble.

CFOs were a little less sound-bitey, but still aren’t jumping for joy over the proposal, telling CFO “I don’t see how that improves transparency” and “[FASB] they will end up with is a situation where there is a ton of judgment involved.”

Field narrows in race for top Deloitte job [Times Online]
The Times Online is having fun speculating about the new Deloitte CEO in the UK, now that Vince Niblett, “The early favourite” has been appointed as the head of audit there. It’s a three horse race according to the Times, with David Sproul, head of tax, and Martin Eadon, a senior audit partner also rumored to be taking the head spot after John Connolly retires next year.

TaxProf Blog Crosses 10 Million Visitor Mark [TaxProf Blog]
And counting…congrats Paul!

Friday tip: embrace your annoying accountant [AccMan]
“In order to be a successful accountant you do not need to be ‘born dull.’ But you do need to be born annoying.”

Memo to the World: You’ll Just Have to Live with the Big 4 Whether You Like It or Not

Caleb Newquist
June 4, 2010

“[T]here are plenty of industries where there are four big players. The world just has to get on with it.”

~ John Griffith-Jones, chairman of KPMG in the UK and co-chairman in Europe on the concern that four accounting major accounting firms are not enough.

State Governments, Seeking to Be Less Popular, Delay Tax Refunds

Caleb Newquist
June 4, 2010

Taxpayers in Hawaii, Iowa, North Carolina, New York, and Rhode Island expecting a refund may have to exercise some patience, as these states have already declared their intentions to delay cutting those checks to its citizens. And don’t get to excited about receiving any interest on your already interest-free loan you gave them; many states have to withhold refunds for at least 60 days before interest has to be paid.

Pulling this type of a stunt will get you nowhere in a popularity contest but hell, they don’t really have much of a choice:

Scott D. Pattison, the executive director of the National Association of State Budget Officers, said that it was “exceptionally unusual” for so many states to delay refunds, as they have throughout the current economic downturn.

“I think it’s just an indicator of how bad things have been,” Mr. Pattison said in an interview. “It’s politically, obviously, a problem. Also, I think from a policy standpoint, it’s a little hard to justify — this is the taxpayers’ overpayment that is due them.”

Obviously this is going to cause some tea-baggish belly aching but it is pointed out later in the article, if taxpayers really want to do something about this problem, they have the ability to make some changes themselves to avoid this in the future:

Verenda Smith, a spokeswoman for the Federation of Tax Administrators…said she hoped the troubles would prompt more taxpayers to file earlier; file electronically, which allows for much quicker processing time; and change their withholding status with their employers so they would not overpay so much. “You really shouldn’t give it to your state government as a no-interest loan, and then have to cool your heels while you wait to get it back,” she said.

We’ve mentioned this before but it bears repeating – adjusting your withholding to get a big refund is stupid. We’d say that the states keeping it out of your hands was probably a good thing but then again, the state can waste the money just as well.

Half a Dozen States Delay Tax Refunds [NYT]

Three Things Accounting Firms Can Learn from Jim Joyce

Daniel Braddock
June 4, 2010

Chances are good that at this time yesterday you didn’t know anything about James Joyce III. Today, America can’t stop talking about the poor sap. His Wikipedia page has been frozen and he’s a trending topic on Twitter.

BP sent Joyce a bottle of tequila this morning, the card reading, “Thank you for taking the heat off of us. Enjoy the spotlight. Remember to wear sunscreen. XOXO – BP”

Experts have varying opinions on what this means for baseball and the implementation of instant replay. What is easier to agree on is that Joyce deserves respect not for his poor call but for the fact that he was humble enough to admit that he was wrong, saying, “I just cost that kid a perfect game. I thought he beat the throw. I was convinced he beat the throw, until I saw the replay. Biggest call of my career, and I kicked the shit out of it.”

If nothing else, Little Leaguers everywhere can learn from this moment. But the lesson doesn’t need to end there. What can every accounting firm take away from this situation in hopes of never pulling a JimJoyce* themselves?

Admit when you are wrong – Listen to your mother, George Washington, or whatever truth-telling role model you have in your life and fess up when you are wrong. Deloitte did just that back in April when they admitted to handling the “headcount adjustment” in poor fashion.

Don’t point fingers – I don’t know if you’ve noticed the bickering going on between E&Y and PwC recently, but it’s kind of…what’s the word for it…pathetic? First there was the “our raises are bigger than yours” spout from E&Y leadership. Boys, boys, keep it in your pants. Size doesn’t mat…oh wait, what? It does in this case? Well then. Brag away. Then PDubs’ London arm decided to pull a Joe McGinniss and set up camp a mere 10 meters from E&Y’s fish ‘n chips office. Awkward love affair or uber-competitive personalities? Either way it’s immature to act like this. Grow up.

Hide – Joyce is probably in the process of doing this (don’t expect him to return to the field anytime soon). But the newly branded McGladrey is leadership’s efforts to mask the fact that cuts are affecting morale and staff ranks. Perhaps no one commented on Caleb’s putting green post because no one is left. Just sayin’.

What else can your firm learn from Jimbo? Comment below.

*you heard that phrase here first.

Marin County Accuses Deloitte of, Among Other Things, Using ‘Neophytes’ on SAP Project

Caleb Newquist
June 3, 2010

Deloitte is being sued by Marin County in California, who is alleging fraud by misrepresenting its “skills and experience.” In other words, the County says that D used their ERP project as more or less a training ground for its newbie consultants. And no client likes it when you bring the blades of grass on site. They can’t even turn on their laptops without causing some sort of scene, amiright?

Channel Web has some of the particulars:

The County in April 2005 hired Deloitte to implement its SAP ERP system. However, the County alleged in the court document, “rather than providing the County with SAP and public sector expd the County’s SAP project as a trial-and-error training ground to teach its consultants — many of them neophytes — about SAP for Public Sector software, all at the county’s expense.”

Plus! The County claims Deloitte promised their very best people. From the complaint: “Deloitte further represented that for the County’s SAP implementation, Deloitte had assembled a team of its ‘best resources’ who had ‘deep SAP and public sector knowledge.’ “

A Big 4 firm promising their best and brightest on the job in an RFP? There’s a shocker. “Best” being relative, as we all know but Marin County (obviously not familiar with a Big 4 sales pitch) must have been expecting a team to fly in from hyperspace that could slap this thing in lickity.

Thankfully, Michael Krigsman explains over at ZDNet that this isn’t exactly rare:

1. The court filing describes sales practices that are common through the consulting and systems integration industry.

For example, the complaint alleges that Deloitte committed to “dedicate our best resources and bring tailored implementation strategies to meet [Marin’s] long-term needs.” Many IT customers complain their system integrators do not follow through on such commitments and use inexperienced labor in attempts to reduce their own costs and increase profits.

We’d be so bold to say that this true of many Big 4 engagements, whatever the service line. Newbies have to get their teeth cut somewhere – why not on a public service job where money obviously grows on trees?

Deloitte isn’t impressed with this gnat of a lawsuit, claiming that they did exactly what they were supposed to do (not to mention to put up with the amateurs at MC that have zilch ERP experience) and the system was working just fine when they left:

As stated previously, we fulfilled each and every one of our obligations under the contract, as evidenced three years ago when all of our work was approved by the County officials responsible for the project. To be clear, the SAP (NYSE:SAP) software was working properly when we completed our work in November 2007. Not only is the complaint without merit, but we are filing our own claim against the County for breach of agreement and unpaid invoices. Although we are confident that we will prevail in court, it remains our belief that this dispute can and should be resolved in a more logical fashion that benefits the County and its taxpayers.

So Deloitte gets a little huffy basically saying, “Suck it, Marin County. MBAs love Deloitte. OH, and btw, you owe us some money,” but ultimately wants to keep things civilized for the sake of the taxpayers. Let’s hope it stays childish just for the sake of entertainment purposes. Taxpayers in California are f—ed anyway.

Marin County complaint against Deloitte Consulting on failed SAP project

California County Sues Deloitte For Fraud In SAP ERP Project [Channel Web]
Marin County sues Deloitte: Alleges fraud on SAP project [IT Project Failures/ZDNet]

Customer Relationship Management – Know Your Customer, Know Yourself

GoingConcern
June 3, 2010

The first rule of business is “know your customer.” So, how do you do that?

This is the question that brings you into the field of CRM (Customer Relationship Management). I remember working in a tax firm back in the early 2000s and all client correspondence was hardcopy in the file. Our “CRM system” was rows of filing cabinets.

A sales forecast? rked at a company where the sales forecast was an excel spreadsheet that physically gave me vertigo just looking at it. Updating that thing was like a game of Tetris.

A “real” CRM system consolidates all of your company’s customer interactions and sales activities into one database. It enables sales and marketing to detail the entire sales process from Lead to Close. And now it’s the difference between “knowing your customer” and living in the dark ages.

I only started seeing these systems spring up in mid-sized businesses a few years ago. How much are you guys seeing CRM out there now? Does your CRM system integrate with your other business systems? Or is it more of a Contact Manager?

For example, I have seen an instance where the CRM software operated as its own sphere of information. Then, we had the company financial information as its own separate sphere. To connect the sales pipeline info (from the CRM) to the financial results was a manual task.

I’m throwing it out there because my own experience with CRM in the SMB/SME space is limited to using Salesforce.com. I spoke about them briefly when I introduced Saas and Cloud Computing a few weeks ago. I must sound like a Salesforce salesperson but I’m not. I just found that Salesforce 1) put CRM on the radar for the SME I was working for at the time and 2) was inexpensive and easy to deploy.

The other main Saas CRM play is Sugar CRM. Both Salesforce and Sugar CRM have free versions. A very small business could probably operate on the free version for ever. Most mid-sized businesses could use the free version to test the fit of the product’s process flows before committing to rolling it out throughout the business.

In large enterprise, the CRM is probably big enough to just be called “the system”. Let’s say you are working for a bank or an insurance company. “The system” knows things. Next time you are speaking to a call center representative, ask for a summary of your own history. You might be surprised what details are lurking within the system. These can be simply contact histories or can also incorporate decision-making capabilities (i.e. loan or credit card approvals).

Retailers capitalize on this technology through the use of Loyalty Programs.

The real power behind CRM, for those not currently using this type of software, is the ability to clarify the sales pipeline and to consolidate customer interaction. You can detail right from Cold Call to Close and you can get the analytics to visualize the process too.

We’re right on the cusp of even bigger innovations in this field. Just look at some of the things Google is doing right now with respect to data and data visualizations (Google Trends – Google public data – Google Analytics). Sentiment analysis is appearing to gain traction as well. To blow all that out into the CRM realm means really powerful insight into customer behavior.

The success or failure of the CRM is linked directly to the quality of data in the system. This is where the “know yourself” bit comes into play. Where you can automate, do so. Trusting a salesperson to voluntarily do data entry is like trusting your road-trip navigation to a poet. Not good. Again, great strides continue to be made here. Between the increasing migration of transactions and activities online, and the tools allowing for Salesforce Automation (SFA), the direct maintenance on this type of system can be minimized.

For those of you unfamiliar with CRM technology, maybe you’re working in smaller companies or companies with a legacy of paper-based CRM, Saas solutions like Salesforce and Sugar CRM are worth checking out. It’s a place to start. And it’s free to start.

We would really like to hear from you on this issue as well. What has your experience been with CRM?

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.

Career Center

Job of the Day: Asset Management Company Needs a Controller

GoingConcern
June 3, 2010

An asset management company is looking for an experienced accountant to fill a controller position that will oversee its accounting department and report directly to the CFO.

The position requires a CPA with a minimum of seven years experience, including partnerships and foreign currency. This position is located in Kirkland, Washington.

Title: Controller

Compensation: $140,000

Location: Kirkland, WA

Description: The firm manages $1.8 billion of long-only funds invested in Japanese publicly-traded companies through three separate funds each having a focus area of large-cap, mid-cap or small-cap companies in Japan. The firm is planning expansion into other Asian markets in the near-term for which substantive discussions are underway. Currently located in Monterey, CA, the firm is relocating to Kirkland, Washington in July 2010. The firm is seeking a Controller based in their Washington Offices. The position will report to the CFO and work closely with the CFO on all matters.

Responsibilities: Responsible for the integrity and accuracy of the general ledgers of each fund and the fund management companies; Directly manage the Fund Accountant position, reviewing all work performed by the Fund Accountant; Oversee certain aspects of the Accounting Manager’s work with regards to payables and other general accounting matters; Manage the month-end closing and reporting for each fund, reviewing all journal entries prepared by the Fund Accountant ensuring that fund financials are prepared and submitted timely to CFO; Review all journal entries prepared by Accounting Manager for the fund management companies; Review and help prepare the computation of partner allocations; Oversee the Fund Accountant’s daily computation of NAV and daily trade reconciliation process, including the internal reporting of daily performance for all funds; Step in as a back-up for the Fund Accountant to complete Fund Accountant responsibilities as required; Prepare the annual financial statements and all supporting documentation for the auditors; Prepare tax supporting documentation for the fund tax returns; Monitor tax filing deadlines and FBAR filings and coordinate with tax firm; Coordinate and interface with auditors on year-end audits SAS 70 Type I (and possibly Type II in the future) engagement, and annual GIPS verification; Assist on special projects for internal or external reporting, as requested by the CFO.

Qualifications/Skills: CPA with 7-10 years of experience in investment management industry with strong preference for experience in public equities (including Asian public equities).; Experience in all aspects of partnership accounting for funds, including foreign currency experience; Strong experience in various financial reporting systems required. The firm currently uses Axys (Advent), Moxy and Peachtree. The firm is evaluating the potential for a technology platform for its accounting area which would integrate general ledger, investments, trade recording under a single solution. To this end, strong knowledge of financial reporting systems is a requirement; Experience in budgeting, payroll, general HR and accounting matters as they relate to fund management company; Experience supervising accounting team staff; Working knowledge of Advent Axys and Moxy software systems preferred.

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

(UPDATE 3) McGladrey’s Giant Putting Green Cake Will Ensure That Everyone Gets to Celebrate Their Rebranding

Caleb Newquist
June 3, 2010

Webcam chat at Ustream

In the best example that we’ve seen of accounting firm make-up sex, today the RSM McGladrey and McGladrey & Pullen announced that they will now be branded under one name…McGladrey. Since the deciders on the name checked imagination at the door, the firms make it up to all of us with the best possible solution – building a giant putting green cake.

One of the duffers sponsored by McGladrey, Chris DiMarco, will attempt to chip in on the green later today and with any luck you’ll be able to watch it above as it happens.

As exciting as that is, it isn’t entirely clear whether or not this also serves as a tasty distraction from the layoffs and restructuring that is going on McGladrey. Kick that around if you like but also consider the fact that Natalie Gulbis doesn’t seem to be jumping out of this thing at any point in time, and that is a travesty that cannot go unnoticed.

UPDATE: We’ve been assured that the cake’s tastiness or lack thereof will be communicated to us later today. Whether or not there will be pre-cake jays, gallons of Vitamin D milk to wash it down or couches to pass out on has not been determined. Discuss and keep us updated. Spare no details – flavor, frosting, texture, etc.

UPDATE 2: Okay you guys – who witnessed this sorry-ass display? Natalie wouldn’t have disappointed the crowd like these losers. And then someone skulls one right into the camera? Video is completely gone right now. Unbelievable. Get back to us on this cake.

UPDATE 3: The report on the cake is in:

1) The cake is, actually, pretty big. And, it’s all cake, except for the part of the logo, which is made of rice krispie treats.
2) As for a slice of that cake…quite good, actually. The cake part is marble, and very soft and tasty. I nabbed what might be a corner piece with the “rough” frosting. It’s a lot of frosting. A lot.

I’d give the cake a solid A-. There will be a lot to save in the next few days!

Two minutes later we got his follow-up:

I had to stop eating it halfway through — I think I’d go into diabetic shock if I ate any more of it. The grade gets downgraded to a B+.

RSM McGladrey and McGladrey & Pullen, LLP, Launch New “McGladrey” Brand [McGladrey]

Mary Schapiro Isn’t Too Concerned About the Convergence Delay

Caleb Newquist
June 3, 2010

Earlier in the week we heard the devastating news that the FASB and IASB’s convergence efforts, despite a good hustle, would not meet the G20’s deadline of June 2011.

FASB Chairman Bob Herz indicated that this was a serious case of the Boards having bigger eyeshades than their double-entry stomachs could handle but he tried to squelch the disappointment by assuring everyone that the mission is not a failure and the Boards would “get most if not all of [the accounting standard proposals] done by the end of 2011.”

Roberto and IASB Chair Sir David Tweedie, feeling bad about how the whole thing turned out, decided to send a letter to the G20, presumably to keep them from getting their panties in knot:

It is expected that this action by the FASB and IASB will not negatively impact the Securities and Exchange Commission’s work plan, announced in February, to consider in 2011 whether and how to incorporate IFRS into the US financial system.

We appreciate the support of the G20 for the development of a single set of high quality global accounting standards. The two boards remain committed to achieving that objective. We shall continue to provide timely updates regarding our progress.

Ohhh, right. The SEC. What do they think about all this? Judging by Mary Schapiro’s attitude of “assuming completion of the convergence projects” as a precursor to IFRS, she’s totally cool with it, making her thoughts known in a statement yesterday:

The boards believe that the modified plan will contribute to increased quality in the standards because it provides additional time for stakeholders to thoroughly consider the proposals and give both boards quality feedback. I view this as time that is well invested.

Quality financial reporting standards established through an independent process are threshold criteria against which the Commission’s future consideration of the role of IFRS in the U.S. reporting system will be based. I foresee no reason that the adjustment to the targeted timeline for certain joint projects should impact the staff’s analyses under the Work Plan issued in February 2010, particularly when that adjustment is designed to enhance the quality of the standards. Indeed, focused efforts on those standards the boards consider highest priority for the improvement of U.S. GAAP and IFRS will facilitate the staff’s analyses.

Accordingly, I am confident that we continue to be on schedule for a Commission determination in 2011 about whether to incorporate IFRS into the financial reporting system for U.S. issuers.

In other words, no rush guys. Take it from Mary, this happens all the time.

IASB and FASB update to G20 Leaders [IASB]
Chairman Schapiro Statement on FASB-IASB Decision to Modify Timing of Certain Convergence Projects [SEC]

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