Going Concern

E&Y’s Entrepreneur of the Year Award Just Got a Little More Prestigious

Caleb Newquist
October 16, 2009

From what we can tell, the Ernst & Young Entrepreneur of the Year award is a BFD. If the other Big 4 have their own versions of this award, we sure haven’t heard of them.
And even if Deloitte were to start handing out the Uncle Dangle Vigilante of the Year award, it would pale in comparison to the EYEY because, now, a past winner is going to be on The Real Housewives of New York City.
Jennifer Gilbert won her EYEY in 1998 for her business, Save the Date, “A dedicated force of event planners who are in tune with the constantly evolving world of corporate events.” She’s even in the EYEY Hall of Fame. Jesus, this thing has a HoF?
J Dawg has to be bursting over this. Shamelessly up on his desk fist pumping, Tiger Woods style. A soon-to-be reality TV star that, God willing, will name drop E&Y every chance she gets on cable would be the best thing that ever happened to the firm. Sorry, NASCAR HoF.
The Real Housewives of New York Adds a Second New Non-Housewife [Gawker]

Announcements

Survey Says…

Caleb Newquist
October 16, 2009

Thanks again to everyone for humoring us and taking our survey. Some of the highlights:
• 76% of the respondents work in public accounting.
• 41% of the respondents work for a company with more than 100,000 employees.
• 44% of the respondents describe themselves as “auditors”, 22% describe themselves as “tax professionals”. Some of the “other” responses include: marketing, attorney, financial modeler, teacher, engineer, professor, and of course, unemployed.
• Nearly 84% of the respondents are CPAs, 14% have a JD (with a handful of LLMs), along with a few CIAs, CFEs, CMAs, and one CFA but no CVAs. “Other” responses include: CISA, CISSP, CGFM, FRM, CLU, and CPCU.
• 47% of the respondents answered they work in the “accounting industry”, 13% in “banking/finance”. 19% responded “other” including: publishing, oil & gas, construction, real estate, forensic and litigation consulting, federal consulting, entertainment, law, and education.
Some of the comments and suggestions we received:

• I think you should speculate more on rumors. Add some fuel to the flame. but don’t go overboard and scare everyone.
• More professionalism. the foolishness of some stories is great and well taken as a break from work, but i am interested in hearing more about the industry and the dirt accompanying layoffs.
• ATL writers know how to be witty without being juvenile. This site, not so much.
• Not as snarky/funny as, say, above the law, but accountants just aren’t (as) interesting (as almost anything that’s not an accountant).
• Stop being so negative. I know the Big 4 aren’t perfect but the constant bad mouthing is out of place on a website devoted to them.
• More focus on the big 4.
• Suggestions: It would be interesting to see posts about sexual harrassment stories and stories about times our firms have asked/encouraged us to do illegal things…
• Maybe there are too many articles?
• Please have more posts per day and more information “after the jump”
• Language formality will improve overall credibility.
• I heart Caleb and Pomeranians.
So based on some of these responses, we will try to do the following: post more, post less, avoid dick and fart jokes (or maybe just grow up), find out if ATL does workshops, and get a Pom. Got it.
Seriously, thank you for all your feedback and suggestions. We also need you to keep sending us ideas and tips. In fact, it’s imperative that you do so, in order for us to inform you about all rumors, gossip, and chicanery going out their in the bean counter universe.
Here’s where we make like your performance counselor and ask you to double your efforts, step it up, or whatever the hell it is they say to you. Let’s take it to next the level, people. Ugh, we just managed to creep ourselves out with that…
Thanks again!

Preliminary Analytics

Preliminary Analytics | 10.16.09

Caleb Newquist
October 16, 2009

• SEC, CFTC Mull Joint Enforcement Squad: Sources – “U.S. securities and futures regulators are considering a joint enforcement squad to investigate and root out fraud in the markets, two sources familiar with the matter said on Thursday.” All together now: FRAUD SQUAD. [Reuters via NYT]
• Suspicions Arise After Balloon Boy Found Safe – We’re saturated by the coverage already. [NPR]
• Obama wins first financial reform victory in months – Derivatives are no match for a debatable Nobel Peace Prize recipient. [Reuters]
• Justice Agency Resists Music Merger – “The Ticketmaster-Live Nation deal is widely regarded as a bellwether of the department’s attitude toward such potential deals as Comcast Corp.’s proposal to take a majority stake in General Electric Co.’s NBC Universal. Like the proposed Ticketmaster-Live Nation alliance, a Comcast-NBC deal would represent ‘vertical integration,’ in which several links in the chain between producer and consumer are controlled by a single entity.” [WSJ]
• On the Calendar: What Every Auditor Should Know About Litigation – Jim Peterson will be at Baruch College on Dec. 2 for Corporate Integrity’s 4th Annual Audit Conference, “Ensuring Integrity.” Check it out. [Re: The Balance]

Review Comments

Review Comments | 10.15.09

Caleb Newquist
October 16, 2009

• Is your boss honest? Hec no, say most Americans, according to Adecco Group survey – Thoughts? [NYDN]
• More Goldman Lies – Goldman Sachs: social crusader. [Naked Capitalism]
• Outgoing BofA CEO Ken Lewis to Receive No Salary, Bonus for 2009 – Our suggestion: grow the beard back Ken. [WSJ]
• Europe must stop its meddling, says FASB chief – We wish he talked that way. C’mon Accountancy Age, he’s not out of a Scooby Doo cartoon. [Accountancy Age]
And some sickos like this (click to enlarge):

Can PwC’s Week Get Worse?

Caleb Newquist
October 16, 2009

Oh sure, anything is possible. However, on top of everyone not called Fox News calling P. Dubs the most shameless whore ever to issue a report on anything, Jonathan Weil at Bloomberg is now calling out some of P. Dubs’s (and KPMG probably for good measure) banking clients’ less-than consistent use of mark-to-whatever-the-hell-we-like.
Weil names three PwC clients (Midwest Banc Holdings, First Bancorp, BB&T Corp.) as showing loans with fair values greater than their carrying values as of June 30th. Midwest and First Bancorp’s stock prices are trading far below book value while BB&T’s stock price trades above book value.
As Weil points out, WTFK if these values are right or not? What is obvious is it seem like some banks are legitimately making a run at fair value and others are still using a dart board. Oh, and the PwC audit teams are okay with that. Nevermind comparability, Dow is above 10k bitches! Onward!
Mark-to-Make-Believe Turns Junk Loans to Gold [Bloomberg/Jonathan Weil]

Tax Evasion Convictions Still Work For Chicago Gangsters

Caleb Newquist
October 16, 2009

Chicago is maintaining it’s decades-long tradition of putting mobsters in prison not for murder, not for racketeering, but for tax evasion.
Rudy Fratto pleaded guilty to tax evasion yesterdy which could result in a sentence of 12-18 months. He admitted to not paying $140,000 in taxes he owed on $800,000 earned from 2001-2007.
Despite being from a family of alleged mobsters, association with crooked cops, and an alleged threat to a government witness in another mob case, Fratto will simply take 2010 off.
It’s unlikely that this particular story will result in a historically inaccurate movie starring Kevin Costner but at least it demonstrates the consistency of Chicago law enforcement.
Reputed mobster admits tax evasion [Chicago Sun-Times via Roth & Company, P.C.]

KPMG

Rumor Mill: KPMG Restructuring Plans

Caleb Newquist
October 16, 2009

We’ve finally received some details on a possible restructuring at the House of Klynveld in the U.S.
According to our source, the plans were announced over the past week on a series of calls by Tim Flynn. The firm would be consolidated down to two regions, East and West and each would have a regional managing partner and one service line managing partner per region.
This would result in the elimination of one level of regional leadership and would transfer several partners into client-facing roles.
The restructuring would also include placing some partners on ‘profit improvement plans’ and some layoffs would occur over the next year. Additional staff layoffs would occur across all ranks over the next year as well.
The bad news is obvious. The silver lining, as some of our other sources have indicated, is that the Firm would be eliminating at least one level of bureaucracy that should allow partners to be more active in developing potential client relationships.
Messages left with KPMG were not immediately returned. We’ll update you with any response that the firm gives us.
If you can expand on of the details we mentioned on this restructuring, let us know, otherwise, discuss your thoughts in the comments.
Earlier: KPMG Atlanta Shake-up Makes Us Wonder
UPDATE, 4:45 pm: Regardless of this rumor, we learned a short time ago that KPMG admitted thirty-six new partners last month. Seventeen in Audit, twelve in Tax, and seven in Advisory. Congrats to the new partners! No, seriously. Good job.

Big 4

Life After Big 4: Open Thread

Caleb Newquist
October 15, 2009

One way or another most people move on from their Big 4 experience, regardless of practice or firm. Whether you left on on your own accord or by other means, you all have experiences of what life is like now.

Starting a career with a Big 4 firm is definitely a good way to go (yes, we said it) but shit happens and things change right?

So whatever you want to discuss: Money. Work/life. Does the Big 4 firm on the resume really impress? Did you leave and go back? If you’re still living the glamorous life in the B4, discuss your thoughts on your firm and why leaving is unthinkable. We realize that the Stockholm Syndrome is a bitch.

Uncategorized

Arnie Signs 150-Hour Rule for California

Caleb Newquist
October 15, 2009

No one panic, if you get licensed before 2014, you’re grandfathered in as substantially equivalent. So if you feel like procrastinating, don’t let us stop you but maybe keep the date in mind.
In addition to the new credit hour requirements, Ah-nuld also signed bills requiring mandatory peer review for CPA firms starting next year and requiring non-active CPAs to disclose their status. We thought those were both standard operating procedure but a couple more laws won’t hurt anything.
If you can’t bear the thought of 25-30 extra credit hours in college, move to Colorado, Puerto Rico, or the Virgin Islands as they’re the holdouts on the 150 credit-hour requirement.
California Adopts 150-Hour Rule [Web CPA]

Audit

Deadline Watch: Employee Benefit Plans

Caleb Newquist
October 15, 2009

Did Dow 10,000 get you excited about your 401k again? No? Just a psychological level? Bah. “We don’t give a damn because we’re still down from the highs you jerk.”
Fine, you kill-joys, regardless if you still consider your nest egg to be in the crapper, there are lots of people out there that ingested inhuman amounts of MSG last night to get employee benefit plan audits completed and submitted with their Form 5500s for today’s deadline. This is our tribute to them*.
Sure, EBP audits are the redheaded step-child of audits but they keep some of you employed, they’re profitable and low risk so ~~everybody~~ a few people win. Good work EBP trolls, finish up and go get your drink on.
*Maybe we were just waiting until the day of the deadline to mention EBPs. Didja ever think of that? Didja?

Audit
PCAOB

PCAOB: We’re Not Saying Perfect Audits, Just Pretty Perfect Audits

Caleb Newquist
October 15, 2009

The public understanding of what auditors actually do is, to put it mildly, frustrating. If you were ask the average dude on the street what auditors’ responsibilities were, “Find fraud” would probably be the first thing that you would hear.
With all the public outrage against everything remotely related to finance or accounting, politicians feel like they have to do something. This usually amounts to putting pressure on bureaucrats, who in turn make rules to appease said politicians who can then point to accomplishments.

The PCAOB is no exception, and regardless of its potential extinction, has a go-getter attitude that includes potentially making the public’s perception more of a reality.
FEI Financial Reporting Blog:

Although not part of the PCAOB’s formal standard-setting agenda for the upcoming year, some SAG members argued there was a need for the PCAOB to revisit the fundamental fraud standard (SAS 99) as a standalone or ‘foundational’ standard, in much the same way as the PCAOB is in the process of re-proposing its suite of risk assessment standards as ‘foundational’ standards.

You probably know where this is going:

In response to questions, Silvers said, “We should not expect that every audit is a forensic audit… that’s absolutely not what I’m saying.” However, he added, “I think we need to move the dial a little bit so auditors have some greater obligation than is currently embodied in the current fraud standard, to have an obligation to act when there is reasonable suspicion of fraud.”
“This was subject to some extensive discussion in the Treasury committee (Treasury’s Advisory Committee on the Auditing Profession or ACAP],” said Silvers, adding, “some people, Lynn [Turner], may feel my approach is not tough enough, some people felt we should move to some absolute liability standard [i.e.] if you don’t find fraud, it’s the auditors fault; but it’s also not my view that looking for fraud is not related to the audit, that doesn’t parse with the public’s [perception] of the audit profession.”

Our emphasis. So not every audit will be a forensic audit, so, just most of them? That’s a relief.
So not only do you need to get way better at auditing fair value, now the brain trust at the PCAOB is considering putting more auditor flesh on the hook when it comes to finding fraud. So not absolute assurance but it’s getting there.
PCAOB Announces Ambitious Agenda; May Be Time to ‘Dial Up’ on Fraud, Silvers Says [FEI Financial Reporting Blog]

Preliminary Analytics

Preliminary Analytics | 10.15.09

Caleb Newquist
October 15, 2009

• Stanford lawyer complains over level of care in prison – Apparently its not too good, as Stan is looking a little gaunt these days, sayeth the FT. [FT]
• Elk Grove Village man accused of stealing millions from investors in Ponzi scheme – “Authorities said that between Jan. 1, 2007, and Oct. 9, 2008, Carney duped investors by creating the false impression that he had cutting-edge software designed for buying and selling securities. According to one investor, Carney claimed the program received market information three minutes before other traders.” [Chicago Tribune]
• Limbaugh Dropped From Bid to Buy Rams – You know who’s to blame dontcha? [NYT]
• An Apartment Complex Teeters – “The sprawling Manhattan apartment complex known as Peter Cooper Village and Stuyvesant Town — acquired for $5.4 billion in 2006 by a venture of Tishman Speyer Properties and a unit of BlackRock Inc. — is running out of cash. As of the end of September, it had $33.7 million left of the $400 million in interest reserves set up to service its debt, according to the people familiar with the matter. At its current burn rate of about $16 million per month, the reserve could be depleted before the end of the year, the people said.” [WSJ]
• Goldman Shows Strength While Citi Limps Along – Moving on to… [DealBook]
• Capital One credit card defaults rise in September – “Credit card defaults usually track unemployment, which rose to a 26-year high of 9.8 percent in September. The jobless rate is expected to peak at more than 10 percent by year-end.” [Reuters]

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