Two Pennsylvania CPA firms, Parente Randolph and Beard Miller Co., announced yesterday that they are merging.
The combined firm, still without a name (we’re pulling for “Beard”) will have 170 partners, over 1,200 professionals, and 27 offices in Pennsylvania, New York, New Jersey, Maryland, Delaware, and Texas(?).
The combined firm will have a stranglehold on the coveted Quaker market in Pennsylvania and will be well positioned in the New York City market. It will be focusing its growth efforts to find similarly pious and plain clothed, plain speaking business people in upstate New York, New Jersey, and Maryland.
Pa. accounting firms Parente Randolph, Beard Miller to merge [Triangle Business Journal]
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UK Code Requires ‘Independent Non-Executives’ for Big 4
In a development that will destroy the secret society of Big 4 management in the UK, a “radical” governance code has been implemented that will require the Big 4 to appoint outside “independent non-executives” that will oversee “public interest matters; and/or be members of other relevant governance structures within the firm.”
According to the code, these new independent non-executives will make us all feel way better about what audit firms by “enhanc[ing] shareholder confidence in the public interest aspects of the firm’s decision making, stakeholder dialogue and management of reputational risks including those in the firm’s businesses that are not otherwise effectively addressed by regulation.”
But that’s not all! According to the introduction, “It should also benefit capital markets by enhancing choice and helping to reduce the risk of a firm exiting the market for large audits because it has lost public trust.” In other words, everyone still is freaking out about who the next Andersen will be. Apparently this “should” help your concerns by encouraging companies to consider other audit firms.
What a coinky-dink, Grant Thornton was just asking for help on this last week! Not really sure if this what they had in mind for but hey, beggars can’t be choosers, right?
The Financial Times claims that “Accountants broadly welcomed the move, although some in the firms’ international networks were unhappy about the possibility the UK code might pave the way for ‘creeping regulation’ worldwide.” In other words, people in the U.S. don’t like it one bit.
Plus, the FT didn’t quote any accountants that “welcomed the move”. The exception, of course, is the chair of the group, Norman Murray, who said that the new code was “‘as user-friendly as possible but seen to have some teeth.'” Not sure what that means but it sounds like he’s a believer.
Another member of the board, John Griffith-Jones, co-head of KPMG Europe, was less enthused. All he could manage was that he hoped that the move would put the “‘Enron query to bed.'”
Something tells us your hopes will be dashed, JGJ. Enron is the story that never ends. Especially in the MSM. Plus it’s on the stage now. Those tunes will be in your nightmares.
Auditors required to adopt UK code [FT]
audit firm governance code.pdf
Because There is No Shortage of Criminals
Editor’s Note: Want more JDA? You can see all of her posts for GC here, her blog here and stalk her on Twitter.
Over the weekend, I had the pleasure of speaking with Sam Antar of White Collar Fraud. I won’t give him too many props (lest he think his wily criminal charms got to me) but our conversation was both relevant and disconcerting.
In case you aren’t acquainted with Sam, he’s the ex Crazy Eddie CFO who ripped them off and now does speaking tours talking about, well, crime. But there’s a lot more than that at work here, that’s just his schtick.
So what did I learn?
I believe my editor thinks I’m a doom and gloomer so here’s some good news: besides suggesting we start training more qualified forensic auditors fresh out of school, Sam insists there is a chance for real financial reform.
Do you take your reform advice from an ex-criminal? I remind you here that a tax cheat is in charge of the IRS, do with that information what you will.
Anyway, the point here is that financial statements lack integrity. Without integrity, investors are groping in the dark and criminals are able to execute their schemes. Foreign investors are scrambling to leave US capital markets, could that be because our statements are – generally speaking – unreliable?
So. Sam’s 3 step plan to restoring sanity to financial statements. Take it for what it is.
1. Redefine audit committees as truly independent. No member of the audit committee should derive a salary or other compensation from stock options or stock holdings. Period.
2. Committee members should be qualified. CPAs and securities lawyers are qualified to sit on an audit committee, not marketing managers and other “average” sections of the corporate population.
3. Forensic accounting should be standard curriculum in university accounting programs. Don’t eliminate 404(b), if a corporation can’t afford the audits required to be a public company, then don’t become one.
We’ll have to agree to disagree on that final point, I don’t think tedious audits are the solution. However, perhaps if we had more qualified auditors out in the trenches, I might be inclined to be slightly less skeptical about the effectiveness of more softcore audits.
Stay tuned as we’ll be picking Sam’s brain again soon.
GC Posts Referencing Sam Antar:
Grant Thornton: Patrick Byrne’s Pants Are on Fire
Obvious Sign of Fraud: You’re Having Sex with the Client
Look Man, Not Even Ron Paul is Buying Your Fed Conspiracy Story, So Can We Drop it?
Because we know you haven’t gotten enough of the whole Bank of America/Merrill Lynch deal-under-duress drama, we’re happy to report that Representative Darrell Issa of California (seen at left, with, we can only assume, a constituent, not a high-priced call girl or his staffer’s wife, or his Argentinean soulmate) isn’t satisfied by B-squared’s testimony and likely won’t be satisfied with Hank “Just call me Lance Armstrong” Paulson’s testimony that is scheduled for Thursday.
No, no. Issa wants more information, “[he] wrote to Treasury Secretary Timothy Geithner July 2 asking for all records surrounding an October 13 meeting and decision to use government bailout funds to buy equity in financial institutions.”
You think that’s good? He’s not done:
Issa also asked the Treasury to provide records and communications, including notes and e-mails from a range of officials, relating to the Bank of America-Merrill merger from August 1 though February 1. Issa also asked New York Attorney General Andrew Cuomo in a July 1 letter to provide transcripts of interviews with Paulson and any other communications with federal officials on the Bank of America-Merrill merger.
That’s right. Six months worth of emails and notes. Every single post-it that you did your best Jackie Treehorn sketch on MUST. BE. SAVED.
Issa, a believer in a Nixon-esque coverup at the behest of Bernanke, has clearly channeled his inner-Maxine Waters and will BE DAMNED if this is happening on his watch.
Lawmaker seeks more data in BofA-Merrill deal [Reuters]