Going Concern

Review Comments

Review Comments | 10.08.09

Caleb Newquist
October 9, 2009

• LandAmerica: The final days appeared like a Ponzi scheme – Adrienne’s opus on LandAmerica’s shiesty last days. [The Mortgage Lender Implode-o-Meter]
• Ethics Committee Expands Rangel Investigation – You might have a rent-controlled apartment if it wasn’t for this guy hoarding them all. [NYT]
• Obama Has Lunch With Bezos, Business Leaders – C’mon Bam, no JT? [WSJ]
• IFRS Returns to the Front Burner – Tweedie says they’re working hard, working weekends and ordering in to get this done. [CFO]

Big 4

KPMG’s Report on the Atlantic Yards Project Didn’t Impress Some People

Caleb Newquist
October 9, 2009

We might be going out on a limb here but it seems like a lot of studies that the large accounting firms put out don’t get much attention. There might be a press release and a mention here and there but otherwise not too much excitement.

That being said, KPMG must be thrilled that the Atlantic Yards Report is taking such exception with thlantic Yards Project:

KPMG’s Atlantic Yards market study, conducted on request of the Empire State Development Corporation (ESDC), backs up the assertion that Atlantic Yards might be completed in the announced ten years, rather than, as then-ESDC CEO Marisa Lago said in April, “decades.”

Well, not only are projections about condo values questionable, as I wrote earlier today, but KPMG’s report has some very shoddy research. Consider that the report (dated August 31) claims that Richard Meier’s On Prospect Park is 75% sold. (Only rental buildings are pre-leased.)

However, the New York Times reported September 27:

While the developers say half of the building’s 99 units have been sold, the real estate Web site StreetEasy.com documents only 25 closings through public records.

KPMG claims that the Oro Condos are also 75% sold. But just this week Crain’s reported that prices at Oro had been slashed 25%.

If you’re not familiar with the Atlantic Yards Project, you’re lucky. Let’s put it this way, it’s a $5 billion project that involves moving the New Jersey Nets to Brooklyn courtesy of Nets owner Bruce Ratner and sixteen new high-rise buildings and will be finished long after we get global accounting convergence.

So yeah, a developer’s paradise. Problem is that all the hype has transformed into a giant argument that pretty much involves everyone. As NoLandGrab points out, “if the Atlantic Yards project is so great, why does everyone pushing the project forward, and every alleged ‘study’ extolling its virtues, have to stray so far from the truth to make it appear viable?”

~~The obvious benefit we foresee is that the project may get rid of the worst Target on Earth but we may lack vision.~~

As for the Radio Station, they probably had the best of intentions when preparing their report but now, for better or worse, KPMG, who has yet to respond to our request for comment, is near the center of the rage. Enjoy.

What was KPMG smoking? Report claims 75% of Meier’s On Prospect Park has been sold; other statistics are way off [Atlantic Yards Project via NoLandGrab]
KPMG Atlantic Yards Market Study.pdf

UPDATE – July 13, 2010: Hey gang – a bit of belated correction/clarification here. Norman Oder, who writes the Atlantic Yards Report got in touch with us about our little quip about Target. He wrote to us “I know you’re trying to be entertaining, but that’s not close to true. The Target is across the road from the project site.”

So I guess our wishing out loud for the big Brooklyn bullseye to be destroyed won’t be happening (it’s not part of the plans at least) but we stand by our assertion that the Target is a hellhole and needs to be destroyed.

Uncategorized

Grant Thornton’s Latest Survey Reminds Everyone That Your Chances of Getting Another Job Are Still Pretty Slim

Caleb Newquist
October 9, 2009

Grant Thornton’s national survey of financial executives shows that only 1 in 4 plan to increase hiring in the next six months. That’s not great news but what’s perplexing is that the ~~meaningless~~ highly regarded Grant Thornton LLP Business Optimism Index basically told us the same thing less than a month ago.
Does GT really have to repeat the obvious message that no one wants to hear? We get it. No one can leave their job that they hate for another job that they’ll hate less right now because no one is feeling spendy on new employees.
Oh but GT isn’t purely a purveyor of bad news. Only 10% of the financial bigshots surveyed expect things to get worse. Which is a relief but not particularly interesting since the Business Optimism Index pretty much said the same thing.
It appears that GT is hellbent on reminding everyone that while things certainly can’t get any worse, they’ll probably remain craptacular for the foreseeable future. Keep up the solid work GT, we’re looking forward to next month’s reminder.
National survey of senior financial executives finds only 1 in 4 plan to increase hiring in next 6 months [Press Release]

Uncategorized

Open Thread: Accounting Firm Outsourcing

Caleb Newquist
October 9, 2009

Since it’s been nearly a year since the Presidential election, the political football of outsourcing of jobs has all but been put away. It does remain a popular topic amongst accounting firms however as more and more works is sent offshore.
Now that the programs have been in place for awhile, the pressure to utilize the staff on the other side of the world seems to be increasing. This may free you up for more fantasy football or Perez Hilton but something tells us that’s not exactly what TPTB have in mind.
Plus there’s the whole time change thing. Maybe that’s NBD but staying up until 10 pm for a 30 minute meeting to coincide with your global counterparts doesn’t really strike as a party.
We’ve reached out to the Big 4 on this and we’ll update you with any responses we receive in a separate post.
For now we want your input and experiences. Is outsourcing working for your team? Does it even affect your team? Are the firms really concerned about new associates “doing more challenging tasks” or is this purely a cost saver? What do you make of the process on the other side of the blue marble? Are they being utilized effectively or are you dealing with impossible logistics? Okay that’s enough questions. Discuss.

Big 4

Comp Watch ’10: Is PwC Phoning It in Already?

Caleb Newquist
October 8, 2009

Yeesh, we hope not. Problem is, when we reported on P. Dubs canceling Christmaskah last week, people were speculating that P. Dubs was also kinda sorta putting it out there that there would be no merit increases for fiscal 2010. We’ve received additional tips suggesting the same thing so we’ll put out to you to discuss further.
After Tuesday’s spintastic revenue results, Denny and Co. may have concluded that putting it out there that you shouldn’t get your hopes up for a super P. Dubya comeback was the best course of action.
Problem as we see it is that alluding to the idea that raises aren’t gonna happen can’t be good for morale. Plus, there are the continuing rumors of senior managers leaving en masse, via their own will or otherwise. On the bright side, that could set up for a nice little surprise come next year if things turn around and Den-Den sounded pret-tay, pret-tay, pret-tay optimistic in Tuesday’s press release.
Discuss your thoughts on P. Dubs seemingly pessimistic attitude in the comments.

Deadline Watch: October 15th

Caleb Newquist
October 8, 2009

One week until all is right with the entire world, tax preparers. Oh sure, maybe since partnership returns are now due on September 15th, the October deadline doesn’t have the same urgency as in years past but at the very least, it marks the official end to another tax season.
There are still plenty of you that are still slogging through 1040s though, so hang in there. If you’ve got any last minute meltdowns or clients that are giving you serious heartburn, let us know or discuss in the comments.
The rest of you, commence schadenfreude. Unless you like the week leading up to a deadline. Sickos.

Uncategorized

Auditors, The PCAOB Still Doesn’t Think Too Highly of the Job You’re Doing

Caleb Newquist
October 8, 2009

The PCAOB is considering ~~telling auditors how to do their jobs~~ issuing guidance on communication with audit committees and a new auditing standard on related parties, according to Compliance Week. Not to worry though, they’re going to ask the bigwigs on the Standing Advisory Group for their $0.02:

The PCAOB also plans to bounce some ideas off the advisory group for a new standard to govern how auditor should communicate with audit committees, in part to establish some new guidance regarding communication about management judgments and estimates. According to a briefing paper provided to SAG members, PCAOB is looking for ideas on how to get past boilerplate dialogue to achieve more effective, robust communications between auditors and audit committees.

Auditors? Boilerplate dialogue? Is the PCAOB questioning your ability to ask substantive questions? For shame. Obviously Peekatboobs will be able to develop much better, non-boilerplate questions than you and then you’ll be required to ask those questions of the audit committee. That’ll get the job done.
Likewise, auditors, you’ve simply dropped the ball on related parties since, “financial relationships with related parties have proved important in recent corporate scandals, and the board’s inspection and enforcement actions suggest some auditors aren’t skeptical enough when evaluating such relationships and transactions.”
The infinite wisdom of the PCAOB is clearly on display here. Auditors, it’s going to become necessary that your skepticism is going to reach a physical level or at least the threat of such. Your skepticism in words and on paper is simply not getting the job done.
You’ll have to get Chuck Liddell to beat some people down or simply laying heat out on the conference table during discussions to get your point across, otherwise, clients are going to just keep taking advantage of you.
This will be the plan until the next financial crisis of course when the PCAOB will assess that the questions and methods developed now turn out to be boilerplate and ineffective and it’ll be back to the drawing board again. Don’t get too comfortable.
PCAOB Considers Rules on Communication, Related Parties [Compliance Week]

Big 4

Ernst & Young Performance Ratings Are Super Top Secret…Most of the Time

Caleb Newquist
October 8, 2009

One of the most diabolical of human traits is wanting to know everybody else’s biz-nass. Shoe size, your number, how much money you make, etc.
Trusted friends and colleagues usually will share some of their professional details with you but several people remain prudish with their ratings, merit increases, salaries, etc.
Continued, after the jump

Then there’s your sworn enemies. These people wouldn’t tell you their date of birth if their high-flying, glamorous number crunching lives depended on it. Smug bastards think they’re so special, when YOU KNOW they suck it big time. Wouldn’t you LOVE to know how officially shitty they are at their jobs? We thought so. But dammit, being nosy is really hard work and that information is tough to get.
Well, according to one of our sources, some at E&Y didn’t have to try hard at all:

So about a month ago after the ratings for everyone’s annual review were finalized, someone in HR screwed [up] big time and sent an e-mail out to the entire Banking Capital Market mass e-mail and attached a spread sheet with EVERYONE’S rating. When I mean EVERYONE I mean from Staff 1 through Senior Manager.

We’ll go on record here to say that this was probably an honest mistake but the fallout from this had to be all sorts of awesome. Knowing how that stupid ass first year manager that totally screwed the pooch on your engagement was rated could either end up being the sweet vindication you’ve been waiting for or it could open up a basket of rage not seen since the Old Testament.
Hey, maybe we’ve misunderstood the whole thing. Maybe E&Y is considering some bizarre open door policy when it comes to ratings and this was merely a test. We’d love to see the list, btw, so if you’ve still got it, send it our way.
Feel free to discuss any additional details or your thoughts on your Firm’s ability to KEEP SECRETS in the comments.

Preliminary Analytics

Preliminary Analytics | 10.08.09

Caleb Newquist
October 8, 2009

• British Regulator Objects to Ticketmaster Merger – “Ticketmaster and Live Nation said that they would cooperate with the commission and that they remained committed to the merger. They argued that the deal would be in the public interest.” [NYT]
• IBM Faces Justice Antitrust Inquiry – “The Armonk, N.Y., giant has long held a near-monopoly position in mainframes, which are large computers that can cost $1 million or more and are designed to run accounting software and databases. For decades, the company operated under terms of a 1956 consent decree with the government that required it to license mainframe technology to competitors.” [WSJ]
• US deficit ‘hits record $1.4tn’ – Records are meant to broken. [BBC]
• Promise of free money leads to scuffle between thousands in Detroit – “Several people reportedly passed out from exhaustion and had to be treated by emergency medical personnel.” [NYDN]
• Accounting’s Patron Saint – Not Arthur Andersen. [Energized Accounting]
• A Windows to Help You Forget – Review of Windows Siete. Some of you can go geek out over this. [WSJ]

Review Comments

Review Comments | 10.07.09

Caleb Newquist
October 8, 2009

• Democrats Block G.O.P. Move on Rangel – Rangs is still in charge of Ways & Means, thanks to him and his a couple hundred of his friends telling the Republicans to suck it. [The Caucus/NYT]
• Wells Fargo Will Raise Credit-Card Rates Ahead of Law – ” Wells Fargo & Co. plans to raise interest rates on a majority of credit-card customers by 3 percentage points before new rules limiting such increases take effect, according to a company executive.” Get pissed people. [Bloomberg]
• Feds sue Colorado tax preparer, alleging $55M in bogus refund claims – No criminal charges yet but Curtis Morris and his company, Numbers and Beyond, are looking at an injunction getting slapped on their asses. [Denver Business Journal]
• Dell to Build Android Phone for AT&T – Because Ma Bell has done so well handling the iPhone bandwidth sucking problem. [WSJ]

Big 4

Jim Turley Traded F-Bombs with Rahm Emanuel Over Chicken Last Night

Caleb Newquist
October 8, 2009

We’d like to think so anyway. Maybe JT isn’t a potty-mouth but Rahmbo has been known to drop a curse here and there.
JT was in DC last night with several other big wigs, at the Williard Intercontinental solving all our problems: “The participants provided updates on their businesses, discussed when the economy may rebound and offered advice on how to spur job growth.”
Right, because, in case some of you haven’t heard, we’re on a collision course with double-dig unemployment. Thank the Maker they’ve been thinking about hiring people again, “Over salad, chicken and a fruit desert, some of the business leaders said they would start hiring immediately once the economy began rebounding while others said they would wait for revenue growth in their own companies, according to one of the participants.”
This was a two hour date so it couldn’t have been all business. We’re guessing Jimbo tried to loosen everyone up with some inappropriate jokes (feel free to guess what kind) while gnawing on a drumstick like Fred Flintstone but that’s just our vision.
Give us your best ideas on what JT and Rahm talked about privately, just between buds, in the comments.
Emanuel, Jarrett Meet With CEOs From Intel, Time Warner, Dow [Bloomberg]

The JDA

Apple’s Carbon Accounting Trick

Adrienne Gonzalez
October 8, 2009

What’s next, a FASB for carbon accounting? Should companies be required to report carbon emissions and if so, who is going to audit these statements? After all, data is only as good as the substantive tests that prove its accuracy.
Apple has never been at the top of environmentalists’ list as a green company but for the first time it is now publishing corporate carbon data on its website for all to see.
Continued, after the jump

Business Week:

Apple’s real goal is to change the terms of the debate. Company executives say that most existing green rankings are flawed in several respects. They count the promises companies make about green plans rather than actual achievements. And most focus on the environmental impact of a company’s operations, but exclude that of its products.
Apple argues that broader, more comprehensive figures for carbon emissions should be used–for everything from materials mined for its products to the electricity used to power them–and it’s offering up its own data to make the case. Executives say that consumers’ use of Apple products accounts for 53% of the company’s total 10.2 million tons of carbon emissions annually. That’s more than the 38% that occurs as the products are manufactured in Asia or the 3% that comes from Apple’s own operations. “A lot of companies publish how green their building is, but it doesn’t matter if you’re shipping millions of power-hungry products with toxic chemicals in them,” says CEO Steve Jobs in an interview. “It’s like asking a cigarette company how green their office is.”

Again, I’m skeptical of any self-reported data that doesn’t go through the usual channels like financial statements would. Imagine if a company like Apple was also allowed to slap together some cash flows without the little auditors crawling all over the numbers, “Hey investors! Check us out, we made $52 bazillion this quarter in iPhone sales alone!” Yeah, ok.
I’m not even sure what this carbon argument is all about so I’ll just let this one go. Good job, Apple. I think.

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