At least that’s what we’re guessing.
Bloomberg:
“EBay Inc., owner of the most visited U.S. e-commerce Web site, reported second-quarter profit that beat analysts’ estimates, a sign that Chief Executive Officer John Donahoe’s turnaround efforts are working.”
Whatevs. We’d argue beauties like this are the reason for the good Q.
EBay Profit Beats Estimates in Sign That Turnaround Is Working [Bloomberg]
Letter from the Editor – Welcome to Going Concern
Working in accounting or finance has a certain stigma associated with it. More times than not, when someone asks you the ubiquitous getting-to-know-you-at-a-party question, “What do you do?” and your response is, “I’m an [enter accounting/finance related position here]” the reaction is typically in some form of pity.
Whether it’s a look that says, “bor–ing” or the inquisitor having to go through your painful explanation of what it is you actually do, it’s rarely a gr��������������������n.
Unless you embrace the stigma of boring, nerdy, introverts that are constantly swimming in spreadsheets, and delve into some self-depreciating humor, bitterness and ranting.
That’s what Going Concern is all about. We’ve embraced everything that makes accounting and finance so painfully dull and we’re going to turn it on its green eyeshade-wearing head.
We’re going to mock, maim, gossip, chastise, rant, and yes, maybe a little advocating, of everything associated with crunching numbers. We will bring you all the latest happenings around the world of the largest and well known firms and our analysis will be anything but accountant-like.
Check out our reoccurring features after the jump
Here are some regular features we will have (and definitely check out our archives):
Tchotchke Contests – Accounting firms love to hand out tchotchkes. There doesn’t seem to be any discernable reason for it but inevitably, your cubicle ends up filled with stress balls, Rubik’s cubes, umbrellas, etc. Some of this stuff handed out is a downright mind job. We want you to send us pictures of your strangest firm schwag.
Guess What I Got Asked to Do Today? – Every number-cruncher, at some point in their career, has asked themselves, “What did he/she just ask me to do?” Whether it’s picking up late-night dinner, footing the phonebook, or cleaning out a closet, we want your stories. The bad, the demoralizing, the thing that made you flip out.
Guess What My Intern Did? – Because having your first job or internship can be nerve racking, staff and interns sometimes do hilarious things unwittingly. Did they run out of gas picking up dinner? Shred workpapers that were signed off on by a partner? Come in hung over and puke on the client’s super-secret, there’s-only-one-copy-of-these files? We know you have these stories and you know you want to share them.
Stupid Auditor Questions – Don’t worry non-public accountants, you won’t be left behind on Going Concern. We know you have to deal with auditors. We know that auditors ask stupid questions. We want to hear what those stupid questions are. Don’t hold back, we know you want to cut loose. This is the place to do it.
What Job Would You Rather Have? – It’s 10 pm, you’re sitting in your beige cubicle, staring at a spreadsheet that has thousands of rows that are starting to blend together and you think to yourself, “How did I get here? Should I be doing something else? Anything other than this?” We feel your pain. Tell us what you would rather be doing. Picking up elephant dung? Window-washer? Artificially inseminating farm animals? Tell us your dreams of what you would rather be doing than working with Excel.
This is just the beginning but we need your help. We need your gossip, rumors, and story ideas for what you want this blog to be, because it’s for you, our loyal Going Concern readers. Send all tips via email to tips@goingconcern.com. We’ll always keep you anonymous unless you want to be named and if you want to tell us something off the record, that’s cool too, just let us know.
Now get back to your spreadsheets!
Trying to Decipher the Awkward and Scattered Sex Lives of Accountants
The blog Energized Accounting asks if accountants make better lovers. Now before you all squawking about how you’re an animal in the sack, let’s try to be realistic about this question.
First of all, this makes the assumption that accountants are getting laid in the first place. This is mostly farcical for a couple reasons: A) Lots of accountants have to choose between sleeping and eating already because of the hours they work. You throw in boot-knocking and some excel wizards are going to start starving to death; and 2) Unofficial statistics have shown that seven out ten accountants have no game. You may not know who you are but your friends do.
So based on that, 30% of you are getting some action. And since there is a rampant proclivity to date co-workers (which we will exclude for this exercise) among accountants that narrows it down to about 5% of accountants having sex with non-bean counters. As we mentioned, you’re working most of the time so where the hell is this hot sex happening? We’re thinking that national training sessions might be one spot, where you’re picking up prosties or random hot townies in whatever strange city you happen to land in? Accountants treat national training like Vegas so pretty much anything goes but what about the other 51 weeks in the year? Is that what is going on at those two hour lunches? Do some client locations have rooms set up for this like a swing-joint? Try to enlighten us without making a scene.
Big 4 Firms Will Probably Have to Cut Some Checks
Since BDO International Global Coordination was able to dodge the bullet in the Banco Espirito case, litigation against the Big 4 has been pretty quiet. Oh sure, you could bring up Schein v. E&Y but the money at stake isn’t that big and Schein is claiming Oliver Stone-type conspiracy theory so we’re hesitant to get too worked up about it.
However, if you’re craving bean counter courtroom drama it won’t be long until you’re up to your ass in Jack McCoy-types screaming about how crooked accountants are.
According to research firm, Audit Analytics, there are eight firms at risk for potential lawsuits related to King Ponzi alone along with six other potential lawsuits related to the financial clusterfuck.
Audit Analytics also was kind enough to pull together some data on who’s winning the race to pay out the most settlement. The top 50 malpractice suits against the Big 4 since 1999 break down like this, per Compliance Week:
1. E&Y – $1.92 billion
2. KPMG – $1.42 billion
3. PwC – $1.27 billion
4. Deloitte – $1.24 billion
Don’t expect the trend of the firms handing over asstons of cash to end anytime soon as settling these cases out of court seems to be best way for the firms to extend their seemingly shortening lives.
Guess What My Intern Did?
A commenter read our minds with regard to talking about interns, God bless ’em.
So today, in the spirit of the intern-season, we’re launching the first edition of “Guess What My Intern Did?” because sometimes they can do stupid things and we want to hear about it.
Examples could possibly include: any kind of shameless, awkward sexual advances on superiors; asking he/she to get a copy of an email from the asshole CFO; showing up to work hung over smelling like Ken Lewis; You get the idea.
Survey: No Confidence in Mark-to-Market
This may come as shock to some of you but mark-to-market accounting is unpopular. And when we say unpopular, we don’t mean your nerdy brother-unpopular, we’re talking George W. Bush-unpopular. Now before you go apeshit about “reality” and “economic cycles” will share some results with you from a survey provided by Valuation Research Corporation and then you can engage in your the steel-cage death dork match.
• According to the survey, 58% of respondents believe that market turmoil negates Fair Value Accounting’s validity
• Those who believed FVA was flawed and potentially not valid during market turmoil, almost 34% suggested a temporary return to historical cost accounting as an alternative
• Regarding Level 3 Assets: A full 44% believed the bank values were within an accuracy of 10% and another 40% thought those values were as much as 30% off.
• Regarding Level 3 Assets: Thirty-six percent believed hedge fund and private equity values were only within an accuracy of 10% and a full 49% thought those values were as much as 30% off.
• Respondents were split when asked if mark-to-market should be suspended for the purposes of bank regulatory capital with 50% believing it should be and 50% believing it should not be.
So the take away seems to be that MTM doesn’t work and is pretty much not legit when the shit hits the fan, everyone trying to value Level 3 assets is using a dartboard, and nobody knows how to fix the problem.
Definitely interesting results but if anyone says, “Barney Frank knew what he was talking about”, projectile vomiting is going ensue.
Survey – No Confidence in Fair Value.pdf
BDO ‘Invites’ Partners to Retire in the UK
BDO in the UK has “‘invited’ 24 partners to take retirement and is in the process of settling the details over the withdrawal of equity”, according to Accountancy Age. And by “invited”, we’re pretty sure BDO means, “pack your shit”.
According to Simon Michaels, the head honcho in the UK, the “withdrawal of equity” would not be an “unmanageable situation to deal with” which is sorta like saying “it’ll hurt for a little while but as soon as my ownership is bigger, I’ll be over it.”
This whole sitch across the pond compelled us to call a BDO rep here in the States to find out what might be going down for the American partners. We were told that there were no plans for dismissal of partners in U.S. and in fact, partners will likely to continue to be added to the firm. This jogged our hazy memory about our speculation that BDO was adding some partners last month in order to spread out some liability.
So it appears that since BDO International Global Coordination isn’t on the hook for the half a billion in liability from the Banco Espirito case, they can’t afford to keep all their partners. BDO in States, on the other hand, needs to spread out the love on the liability. Don’t you love it when everything makes sense?
Reality bites for BDO Stoy Hayward [Accountancy Age]
Scoping | 07.22.09
• BlackRock chief attacks Wall Street earnings – Somebody’s jealous. [FT.com]
• Credit Card Disputes Tossed Into Disarray – “Two major arbitration firms are backing away from the business of resolving disputes between customers and their credit-card and cellphone companies, throwing into disarray a controversial system that prevents unhappy consumers from filing lawsuits.” [WSJ]
• Federal reserve chief heads back to Capitol Hill– “Federal Reserve Chairman Ben Bernanke heads back to Capitol Hill Wednesday, where he’s likely to face more tough questions about the central bank’s extraordinary actions to rescue the economy and its ability to take on even more responsibility.” [AP via Miami Herald]
• Morgan Stanley Loss Misses Estimates on Debt Costs – Creative accounting can’t help MS…[Bloomberg]
• Wells Fargo Says Bad Loans Rise in Second Quarter; Shares Drop – …Or Wells [Bloomberg]
Review Comments | 07.21.09
• Bernanke Sheds Light on Exit Strategy – “Federal Reserve Chairman Ben Bernanke shed light Tuesday on the toolkit the central bank can employ to unwind its crisis measures, but he made clear to lawmakers that the economy remains too weak to start tightening monetary policy.” Better than no exit strategy [WSJ]
• CIT Expects Loss of $1.5 Billion, May Seek Bankruptcy – “CIT Group Inc., the 101-year-old commercial lender seeking to avoid collapse, said it expects to report a loss of more than $1.5 billion for the second quarter and may need to file for bankruptcy if it’s unable to tender for notes maturing next month.” [Bloomberg]
• Apple’s quarterly profit tops forecasts – The good results… [Reuters]
• Yahoo sees drop in income from operations this quarter – …and the bad. [Reuters]
• Which Of Alan Greenspan’s More Quotable Quotes Will Bite Him In The Ass On The Big Screen? [DealBreaker]
• The Goldman Way to Celebrate: a Parody – Well played LB. Well played. [DealBook]
Promotion Watch: KPMG
Forgive us for being a little behind on this, we’re still twisting arms out there:
On July 15th, the Radio Station announced the promotion of 874 new Senior Managers and Managers. This compares to 1,228 that got the bump last year.
Some might say that there were less people up for promotion this year, hence the drop. Others might say “that’s because I got the axe and now live on government cheese”.
Click on the image below for a full-size view of the announcement (please note the crookedness as a sign of authenticity). Anyway, congrats to all the new taskmasters managers at KPMG!
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McGladrey & Pullen Doesn’t Love H&R Block Anymore
We’re deeply saddened to learn that McGladrey & Pullen and H&R Block are splitting up:
“This arrangement made sense in 1999,” said Dave Scudder, managing partner of McGladrey & Pullen LLP. “However, that operational and financial model does not serve us well as we address our future goals of client service, opportunity for our partners, and continued growth.”
Translation: It’s about the money.
“We are taking this action because we believe it to be in the best interests of our partners, our employees and our clients. We see great opportunities for success and growth for McGladrey & Pullen as a traditionally structured firm able to provide full service across all industry segments,” Scudder noted.
M&P also wanted you all to know that it’s not your fault, that they still love you but sometimes firms fall out of love.
McGladrey & Pullen News Release
Forbes: Senior Accountants Pay Rising in the Recession
Feel free to call bullshit on this because we’ve heard rumors about pay freezes at KPMG (they are getting back to us on this) but according to Forbes, senior accountants rank at #11 for “Hot Jobs Where Pay is Rising” in the recession. The list states median pay at $60,300. Not only that but apparently, there aren’t enough of you senior accountants:
There’s a shortage of senior accountants right now, and the recession has actually provided a chance for them to revive client relationships, believes Mark Koziel, senior manager of firm practice management at the American Institute of Certified Public Accountants. “As long as there’s small-business America, as long as there’s big-business America, there will still be a need to do auditing and tax returns,” he says.
This strikes us as strange as there have been layoffs at several firms. The need for auditing and is obvious but those of you left are probably doing the work of two or three people.
UPDATE, July 22, 2009: KPMG got back to us re: pay freezes and had no comment
