Going Concern

Here’s What Big 4 Accountants Need to Know About the Current Job Market

Daniel Braddock
April 21, 2010

Ernst & Young’s red alert email that was shared by GC yesterday should not be taken lightly. Doesn’t matter where you work – your job is about to get harder.

Chances are your most recent busy season was relentlessly terrible. A year removed from rounds of cuts and going on two years with zilch for a raise, the masses at the Big 4 are getting antsy, as they should. It’s now or never. Raises are coming. People are leaving. What should you do?

Consider it professional osmosis – Remember high school science labs? Same theory applies to today’s financial services job market. In one Petri dish there are overworked and underpaid public accountants; the other has job openings and cash flow. It doesn’t take a lesson from your high school chemistry teacher (or me) to explain how this one works. The back offices of financial markets are increasing their numbers as investments begin to flow in again.

Better than a tax refund – The job market for tax professionals will hopefully see its typical action this summer. According to a recent FINS article, interest in making a change is at an all-time high, “43% of tax professionals are hoping to change jobs when the economy evens out, according to a survey by the large U.S. finance headhunter Ajilon Professional Staffing. ‘That’s a large number — one of the largest numbers than we’ve seen in years,’ said Jodi Chavez, a senior vice president at Ajilon.”

Does this mean 43% of your staff is jumping ship? Hell no. The job market is warm not on fire. But it does mean that you should expect to see more “Farewell” emails like this one. If your buddies skip town in a similar fashion to that letter, please share with us.

What about this E&Y thing? Well…I don’t know. Desperate times sound like they’re wrapped up in a formal message with a $7,500 ribbon on top. KPMG made a similar request for advisory reinforcements a few weeks back but they didn’t go so far to make a public plea for external hires. The E&Y situation is probably not as bad as it’s being played out here at GC; it could be a pre-emptive move to protect the practice from layoffs. How bad is it really? We need to know. Get on the horn and tell us in the comments.

Accounting News Roundup: Arguments Against the VAT; PwC Donates $500k to Expand Diverse Talent Pipeline; Tax Documentary Needs a New Name | 04.21.10

Caleb Newquist
April 21, 2010

Conservatives and the VAT [TaxVox]
Howard Gleckman at TaxVox explains that the two main arguments that conservatives have against a Value Added Tax (“VAT”) is that 1) it will put trillions into the Treasury that liberals will spend with reckless abandon. Plus the American people would not realize that they were paying so much to the Feds and 2) that it’s “too efficient.”

Re: #1 he essentially says (and we agree) “how is this different than the current situation?” and Americans are already clueless about how much they pay in taxes:

Americans seem entirely unaware of how much they pay in income taxes. The Tax Policy Center estimates that a typical American remits less than a dime in income tax for every dollar he or she earns. Ask the next 10 people you see how much of their income they paid in taxes just a week ago and I suspect none of them will get it right.

As far as #2 is concerned, he cites the idea “tax law distorts economic decision making,” and explains that “the worst possible tax system is good because it will punish the economy to the maximum possible extent.” That is, some argue that a complex system prevents more wasteful spending (chew on that for awhile).

He concedes that it wouldn’t be a perfect system but in case you haven’t heard, our government has a revenue problem (yes, he says spending needs to be cut too) and raising income taxes is about as popular as Al Gore at an Oil Barons Ball.

PricewaterhouseCoopers Announces $500,000 in Grants to Expand Diverse Talent Pipeline [PR]
PwC will shell out $150k to Bryant University, The University of Southern California and Wake Forest University and $50k to Florida International University to help spread the good word of tax careers to minorities, “[The Universities] will use the funds for scholarships and hands-on career exploration programs for students from groups that have historically been underrepresented in the accounting field, including African-Americans/blacks, Latinos and Native-Americans.”

An Inconvenient Tax: Philadelphia Premiere! [Tax Girl]
While this looks like a moderately interesting documentary, the title is terribly unoriginal.

An Inconvenient Tax – Trailer from Life Is My Movie Entertainment on Vimeo.

Big 4
EY

Ernst & Young Pulls Its “We Are Las Vegas” Sing-a-Long (cry)

Adrienne Gonzalez
April 21, 2010

Editor’s note: Caleb is at some Si Se Puede rally with other pissed off Big 4 expatriates or something so I’m forced to bring you this news. Surely he’ll return shortly to continue keeping E&Y’s “Internet Reputation Team” in a job.

Earlier today, Caleb posted a pretty awful Ernst & Young sing-a-long that I unfortunately did not get to watch before it was pulled by – well duh – E&Y. Hope you saw it while it was up, I’m sure it was fabulously lame.

It appears they have a bit of a public relations nightmare on their hands but who can say?

Here’s another excellent Uncle Ernie flick, wonder how long it takes for them to pull this one?

Damn. That makes me want to be an auditor.

Quote of the Day

Lehman Whistleblower on Ernst & Young’s Reaction to His Letter

Caleb Newquist
April 21, 2010

“They certainly didn’t support it. On the Repo 105 issue, they knew about it; they did not appear to know that the number was so large.”

~ Matthew Lee, the Lehman Brothers whistleblower, in testimony today.

EY
Video

Elvis Fails to Make Ernst & Young Singalong Less Awkward

Caleb Newquist
April 21, 2010

Any thoughts on this? The swaying needs work, that’s for sure.

[Source]

News

Layoff and Exodus Watch ’10: Grant Thornton Chicago and New York Seeing Movement

Caleb Newquist
April 21, 2010

Two weeks ago, we heard that Grant Thornton’s Cleveland office started their layoffs a little earlier than what on might expect that was followed by an emergency meeting that the content of which is still a mystery.

Now we’ve received word on Chicago and New York who are rumored to be having layoffs and some quitters respectively.

From a Chipman Blog Reader:

I work in audit at Grant Thornton and have heard through the grapevine that offices are trying to keep staff. With the job market improving, it seems like other offices are looking to see if staff/seniors voluntary leave before making any final decisions pre-promotion day. Chicago has let go a partner and 2 senior managers in the audit practice and rumors are swirling of a few staff reductions, which seems crazy given that the current A1 class and the incoming class are so small. For other offices, national is working to roll out a benefit plan practice similar to what Chicago has to help keep staff busy during the summer months but it looks like this is not moving quickly enough….[T]he GT wire is that NY saw 10+ individuals put in their notice recently.

We left messages with both the Chicago and New York offices, neither of which have been returned.

An accountant close to the situation indicated that the partner and senior manager layoffs are part of those mentioned by Stephen Chipman back in January.

At that time, SC said that many of those partners and senior managers were already being notified, so since these most recent cuts knew that this day was coming, it was awfully generous of them to stay on for this busy season (we’re guessing there was money involved).

As far as the the staff situation in Chicago is concerned, cuts at the staff level do seem crazy if the classes are small. Meanwhile, although some attrition in New York was probably expected, at this point, it’s not clear whether 10+ leaving in mid-April is a lot or a little. Keep us updated.

News

The FASB Punts Repo Accounting to the SEC

Adrienne Gonzalez
April 20, 2010

It’s not surprising that FASB’s Bob Herz was called to submit comment on the House Financial Services Committee’s hearings on Lehman – more specifically, Public Policy Issues Raised by the Report of the Lehman Bankruptcy Examiner – and it’s even less surprising that Herz stated that the FASB will be ready when the SEC is to alter repo accounting rules should this be, you know, a big deal going forward.

As many of you already know, the FASB has a history of taking a reactive stance to accounting issues during the financial crisis (case in point: mark to market) and repo accounting is no exception. Sort of like the SEC cracking down on Madoff-esque Ponzi schemes after Madoff, it defeats the purpose as financial criminals very rarely repeat techniques that have already been uncovered and prosecuted. But oh well, showing up late to the party is still showing up and proves FASB is at least paying attention.

Herz’s testimony reinforces FASB’s position as standards setter, not regulator. Working with the SEC will allow the regulators to put together a case for accounting standards that could address repo accounting should the SEC discover it is widespread among financial firms but for now, FASB will be sitting back and waiting to see what the SEC comes up with.

As it turns out, FASB isn’t nearly as reactive as it appears on the surface: plenty of guidance already exists for handling these transactions and perhaps had Ernst & Young been looking hard enough, they would have easily found something amiss.

Said Herz:

When developing the guidance for determining whether a company maintains effective control over transferred assets, the FASB noted repo transactions have attributes of both sales and secured borrowings. On one hand, having a forward purchase contract is not the same as owning the asset. On the other hand, the contemporaneous transfer and repurchase commitment entered into in a repo transaction raises questions about whether control actually has been relinquished. To differentiate between the two, the FASB developed criteria for determining whether a company maintains effective control over securities transferred in a repo transaction.

Control? Is that was this about?

Regardless, FASB is prepared to offer even more guidance on the matter should current guidance not be sufficient to make sense of future contracts that could be used in a fraudulent manner. Of course, the financial criminals have likely already discovered a new, innovative way to hide liabilities or stash nasties off-sheet but instead of looking for those, the SEC will be working closely with FASB in the future to prevent another Lehman. History always repeats itself but, sadly, financial crimes rarely do. It appears our friends at FASB never got that memo.

Source: Discussion of Selected Accounting Guidance Relevant to Lehman Accounting Practices

Ernst & Young Needs You to Beg Your Friends to Work at Ernst & Young

Caleb Newquist
April 20, 2010

Maybe beg is a stretch but the Banking & Capital Markets (they had non-Lehman Brothers clients, you know) practice needs more people ASAP.

The following email is from a partner in the FSO practice requesting recipients to get three to five of their friends to drop whatever they’re doing and join Uncle Ernie’s Army:

Hello Everyone,

Please review the following notice regarding Employee Referrals. The success of our Banking & Capital Markets practice is dependent upon the quality of our people and our ability to grow. In order to reach the goals we have put forth this year, we will need to significantly grow the size of our Practice. A key driver to that growth is Employee Referrals. I would like each person in the practice, from Staff through Partner/Principal, to come up with 3 to 5 qualified referrals who you believe would be strong additions to our practice and help contribute to our growth and success. In addition to submitting them through the Employee Referral Program website, please send the candidate’s name, contact information, resume (if you have available) to our Recruiter, [redacted].

Thank you very much for all of your help and hard work!

Does anyone that just finished up busy season even have 3 to 5 friends/acquaintances outside the firm? Anyone that was your friend prior to the beginning of the year probably assumed that you’re dead.

Anyway, here’s the original plea for Ernsters to play recruiter that includes a nice little bonus if your friend/acquaintance/frenemy makes the cut:

Your help wanted to fill critical job openings within the FSO Assurance Practice
Employee Referral Program

The Employee Referral Program encourages and generously rewards you for recommending great people to Ernst & Young. Over and above the monetary awards, we believe the ultimate satisfaction of making a referral comes from the very real difference you can make for your friends, as well as for Ernst & Young. Here’s a great opportunity for you to help a friend or acquaintance, Ernst & Young and yourself — all at the same time!

The Assurance – Banking & Capital Markets practice is looking to immediately fill positions (Experienced Staff and Seniors) in the areas listed below. You could receive a generous referral bonus (up to $7,500!) by suggesting someone you know who you think would be a good candidate and a great EY team member. All referral bonus award information is listed on the EY Employee Referral Program website below.

Banking & Capital Markets (New York, Boston, Stamford)
Asset Management (New York, Boston, Stamford)
Insurance (New York, Boston)
On-Call Advisory/FAAS (New York) *openings at Senior and Manager levels

To make a referral for one of these positions, please visit the EY Employee Referral Program website at http://chs.ey.net/Referral.

Through the referral program, you make can make a real difference for someone you know, for Ernst & Young and for you. We know for a fact that our very best hires are referred to us by our current people. So, please think about who you know that might make a great addition to our team.

Whether this means that the markets mentioned will avoid layoffs this summer remains to be seen. Happy hunting.

Career Center

Job of the Day: Bloomberg Needs an Accounting Manager

GoingConcern
April 20, 2010

Bloomberg is looking for someone to assume a leadership role in its Media Accounting Group.

This group oversees the credit, billing, collections, cash application, AR reporting and analysis for all of the company’s media products

The position requires 3 to 5 years of supervisory experience and is located in New York.

Company: Bloomberg

Title: Media Accounting Team Leader

Location: New York, NY

Description: A leadership role within the Media Accounting group whose responsibilities include Credit, Billing, Collections, Cash Application, AR Reporting and Analysis for all Bloomberg media products (Television, Radio, Online and Print).

Responsibilities: We are looking for a hands-on manager with experience in the Order to Cash process (Credit, Collections, Billing, Reporting, Reconciliation). This person will be expected to supervise the work of others while at the same time performing day-to- day job tasks in a fast paced open environment. AdMarc billing system and DART ad server experience preferred.

Qualifications: A degree in accounting is required; Possesses thorough accounting knowledge; 3-5 years of supervisory experience within the media industry.

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

Small Business

Angel Investors Continue to Shy Away from Startups

GoingConcern
April 20, 2010

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

Many startups, especially ones with high-growth potential, depend on receiving at least some of their funding from angel investors. Now, a new report sheds light on what type of entrepreneurial ventures got angel money last year.

Specifically, the report from the Center for Venture Research at the University of New Hampshire found that financing for really early-stage companies declined and a larger percentage went to more-established ventures. That is, 35 percent of investments in 2009 were in seed stage companies, a decrease of 10 percent from 2008. And new, or so-called first sequence investments, were 47 percent of all angel activity, a significant decline over the last two years.

What this means, of course, is that angels are favoring proven quantities that are less risky than newer ventures. That’s been a trend for several years now and it’s worrisome. You might not know it from press coverage, but angel funding is considerably more prevalent than venture capital financing: Many more startups receive angel money than VC dollars. So, if angels shy away from early ventures, that means the loss of a significant historical source of funding for these companies.

Then, there’s the matter of what these companies mean to the economy, which I’ve written about before. The startups that receive angel money tend to be ones with high-growth potential, the kind with at least a fighting chance of becoming a lot bigger and employing a lot of people. Thus, it’s not a positive development over the long haul if angels choose to play it safe and avoid very early-stage ventures.

On the modestly good side, the report showed a decrease in investment dollars but little change in the number of investments. Total investments in 2009 were $17.6 billion, down 8.3 percent from 2008. But a total of 57,225 ventures received funding, a 3.1 percent increase from 2008. In other words, more startups got money, although deal size was smaller.

It would be more reassuring if a larger share of the $17.6 billion had gone to a different type of venture.

News

Despite Past Investigations and Borderline Childish Behavior, McGladrey & Pullen Takes Medifast Audit

Caleb Newquist
April 20, 2010

McGladrey & Pullen/RSM McGladrey has been named the new audit/tax firm of Medifast, the company announced in a filing last Friday. The Company dropped Bagell, Josephs, Levine and Company LLP of New Jersey who was purchased by Friedman LLP, citing/blaming Sarbanes-Oxley for reducing the number of accounting firms that have the “extensive resources and experience with public companies on a national and regional basis to better serve Medifast.”

For those of you not familiar, Medifast is “an amazing weight loss program” whose products “are formulated with a

Career Center

Three Big Benefits to Getting Your PhD in Accounting

Caleb Newquist
April 20, 2010

Not so long ago, we presented you with the interesting results of the Final Four if schools advanced based the number of accounting research papers produced. This may or may not have piqued your interest in the possibility of ditching the grind of 9 to whenever you get off for the friendly confines of a college campus.

For those of you that are interested, Professor David Wood of Brigham Young University passed along a link that compiles information for anyone giving serious thought to going back to school. We also got some of his thoughts about his own experience as a professor.

Other than everyone calling you “Doctor” there are three benefits that professors enjoy that is listed on BYU’s “So You Want to Get a PhD.?” page. Granted these don’t apply to just those in accounting but to anyone looking to dive into higher ed instruction:

Professors are constantly learning – “Professors spend the majority of their time teaching and researching. Both of these acts are rooted in learning and sharing your learning with others.” Learning? You mean people enjoy learning? Constantly? Yes, it’s true that some accountants are in it for intellectual stimulation as opposed to the glamor, riches, and title. Professor Wood wrote to us in an email, “Every day is filled with exciting new challenges—from thinking about how to improve business through my research to trying to better communicate and reach students.”

Professors want to make a difference in the world – “In the classroom, professors are role models to their students and teach students how to make the world a better place.” Yes there’s some mushy stuff but that’s good, right? Being able to guide future accountants by showing them different paths that careers can take, what opportunities exist now and what the future holds is a rewarding part of a professor’s job. Professors have the amazing opportunity to inspire young minds to want to make a difference in their chosen career. As Professor Wood told us, “College students are at an important cross road in their life and professors can help provide clarity and information for students to make well-informed, good decisions.”

Life as a professor is full of flexibility – “Not only do professors largely work when and where they want, but they also choose what they do.” This is the stuff that most can only dream of in most corporate/Big 4 world – work when you want, where you want, time for hobbies and other activities. Sure you had to work hard at researching and teaching the new wave of CPAs but there’s a lot freedom that comes with it. Again, Professor Wood, “I don’t know any other career that offers the flexibility of academics without bearing substantial financial risk.”

There you have it. Lots of learning, you get to inspire young minds and you basically can live the way you want. Of course it involves some work too but we’ll touch on that later. Meanwhile, you can ponder.

So you want to get a Ph.D.? [BYUaccounting.net]

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