Tag: Auditors

Future Big 4 Associate Needs Help Choosing Between Commuting Hell and a Happy Marriage

Ed. Note: DWB was sober long enough today to pen this post for the Friday edition of Accounting Career Couch. If you’ve got a question for us email us at advice@goingconcern.com. We’ll dispense with further pleasantries and get right to it.

I just received three offers from two Big 4 firms in San Francisco (Deloitte and KPMG) for audit and one Big 4 firm for advisory internal audit in San Jose. I really like the idea of going into advisory but the problem is that I live in San Francisco and the advisory clients for this firm are all located around San Jose and the Silicon Valley. This would likely mean at least a one hour and 15 minute commute every day each way from SF to SJ and back againlients I would likely be working on from SF are all located within 20 minutes of my apartment in the city. Moving to San Jose is out of the question for me because my wife works in SF and I’m not ready for a divorce just yet. My question to you and Going Concern readers is should I take the advisory job despite the crazy commute or should I take one of the audit positions?

I’d still be very happy taking one of the audit positions but I’d be lying if I didn’t say that the more consistent working hours of advisory internal audit didn’t appeal to me much more than audit (no insane busy season in advisory). Much of this benefit would be negated by my much longer commute though. Also, if I choose advisory I would be likely getting reimbursed $0 for my commute since the job is based out of the SJ office and I am based in SF. Although $0.50 a mile doesn’t sound like a lot, it really does add up to several thousand dollars in missed reimbursement expenses for such a long commute (assuming 80 miles a day in reimbursable driving). Also, the advisory position pay is slightly less to begin with (approximately $1,500 less) than my audit offers. Other considerations that I am thinking about are that many people from the Deloitte office (mostly associates) have said that the Deloitte SF office is understaffed. To me this means more opportunity for advancement but also more hours of work. Also, I feel that if I started in audit I could do two years of audit and if I didn’t like it then could jump ship to advisory in SF rather than having to start at advisory in SJ and beg to get a transfer to the SF advisory practice in a year or two. So what should I do? Should the lengthy and costly commute for advisory versus audit be a deal breaker? Will I struggle to break into advisory after two years in audit if I decide to make the switch?

Hopefully I’ve given enough info about my choices so that DWBraddock will stop complaining about us not saying enough in our requests for advice.

Kudos to you and your detailed email. Peons of the accounting world – take note [Ed. note: but there is something to be said for brevity. Yeesh.].

First off, my advice is from the “this is usually how it works” camp. Are there exceptions? Of course, and I’m sure that commenters will point them out.

Are you sure you will be reimbursed for every single mile that you travel? The HR policy is typically the net difference between your home to the office and your home to the client site. For example if you live 50 miles from the office and the client site is 53 miles from your home, you are reimbursed for the three mile difference. I strongly encourage you to consult HR before you go re-adjusting the all-in value of the advisory offer with thousands of dollars of mileage.

Now that I crushed your dream of banking $1,000’s, let’s discuss the audit vs. internal audit battle. You make a lot of assumptions in your email, but I think these bullets cover everything you discussed:

• Internal audit should not be looked at as a green-lighted pass to jump around the advisory practice. Many advisory roles are target recruited and are very specialized from a work capacity point of view. The name “advisory” doesn’t mean the roles are similar; it’s simply a nicer way of saying “everything that’s not audit and tax.”

• You will not be fast-tracked at Deloitte just because they’re short staffed. You will work your ass off.

• It’s easier to go from internal audit to external audit, not the other way around (the way you mentioned).

• Don’t think a transfer is a simple process. There has to be a need in the office you want to transfer to, and considering you’re contemplating and office and practice switch-a-roo in one swift motion…really? This is not a game – this is business and not everyone gets what they want.

• PS – I forwarded this to your wife. She said you’re sleeping on the couch for the next week.

Is Citi Getting Bad Advice from KPMG?

John Carney wonders aloud if Citigroup’s low reserves (approximately $1b reserve for $500b in exposure) for its repurchase risk is thanks to the guidance provided by KPMG. Citi has said that they are, “comfortable with this level of reserves because historically realized repurchase risk has been quite small.” Carney explains, “In short, they haven’t had to pay out much on these claims in the past, so they figure they won’t pay out much in the future.”

Be that as it may, JC and his colleague, Ash Bennington are pret-tay sure Citi has it wrong (they lay out their case in full) and speculates that KPMG is, at the very least, an enabler here.


Carney points out that Francine McKenna has been following KPMG’s not so stellar guidance on this particular issue for years. Starting with New Century in 2007, Wells Fargo last year and Countrywide who was purchased by Bank of America.

Carney then writes that Bank of America is “widely assumed to have the largest repurchase risk, largely thanks to the acquisition of Countrywide.”

So that’s a helluva trail to be sure and Carney wraps up:

So is the advice of KPMG part of the reason for Citi’s complacency when it comes to repurchase risk? Given the history of companies audited by KPMG missing repurchase risk, perhaps Citi should rethink that complacency.

Of course Carney forgets that Dick Bové would take exception with everything he’s saying, since this firm is perfectly acceptable. Even if he doesn’t know who they are.

We’d like to get anyone familiar with the matter (read: Citi audit team members) on the record, so get in touch and we’ll put it out there. Or you can chime in below.

The Guy Responsible for Informing Us About Christine O’Donnell’s Pubic Hair Was an Auditor at the Federal Reserve

We’re just catching up to this little twist in the story so keep your pieholes shut. Plus, it’s election day, making it completely appropriate.

Hard to believe that it was just last Thursday when the anonymous first-hand account of a sexless one-night stand with Senate candidate Christine O’Donnell was published over Gawker, grooming details included.

Aside from Christine O’Donnell’s stance on masturbation, witchcraft and her inability to assign anyone to fill out a postcard for her nonprofit organization, we could have done without this particular exposé. An anonymous douche probably thought he would make off with Gawker’s ‘low four figure’ sum and he would be an anonymous anti-tea party hero.


The Smoking Gun immediately was on the case to identify the pube peeker in question and it really didn’t take much effort on their part, as they came to a pretty solid conclusion late on Thursday after speaking with the author’s former roommate, Brad Kursiko:

While Kurisko refused to out “Anonymous,” some online activity this evening may point to the author’s identity. Shortly after his last phone conversation with a TSG reporter, a single name disappeared from Kurisko’s list of Facebook friends.

The man with whom electronic ties were abruptly cut is Dustin Dominiak, a 28-year-old buddy who attended Albion College with Kurisko. Records show that Dominiak has previously shared a Philadelphia address with Kurisko. One online posting reports that Dominiak, a Michigan native, has worked as an auditor at the Federal Reserve in Philadelphia.

TSG finally got Kurisko to confirm Dominiak as the blathering broheim, thus providing him with the unenviable distinction of being “that guy who wrote about Christine O’Donnell’s pubes.” Especially if she manages to pull off the huge upset today.

But more interestingly this whole story has only reiterated our contention that the sex lives of accountants (and by extension, auditors) is completely random and scattered. This particular encounter – Senate candidates and their grooming habits; Philly Fed auditors that will do anything for a buck – might be the apex of the theory.

On The Trail Of “Anonymous,” Christine O’Donnell’s Sex-Free Pal [TSG via DI]

Will the Solution to the Big 4 “Too Few to Fail” Problem Come Out of China?

Adam Jones at the Financial Times takes a look at the Big 4’s too few to fail problem, noting that the recent green paper from the European Commission is a combination of A) lame ideas:

Its flakier suggestions included getting a regulator or another third party to appoint auditors to ease fears about their independence – a move that would disenfranchise shareholders to an unacceptable extent. A European quality certificate for auditing was also mooted as a way of helping second-tier firms show they could handle the biggest jobs. Such a badge would have limited credibility.


And B) points of discussion that need to be explored further, “[A] call for international talks on a contingency plan for the possible failure of one of the Big Four,” “enforced work-sharing also merits further discussion,” and “Brussels says it may also loosen rules requiring auditors to own the majority of an audit firm.”

All this talking gives us a headache and Jones admits that by allowing all ideas on the table it allows those happy with the status quo to distract from any real solutions:

The surfeit of ideas makes the debate comprehensive. But it also creates easy targets for those who want to preserve an inadequate market structure, detracting from more sensible suggestions made by Michel Barnier, EU internal market commissioner, and his team.

Despite the haters out there, the most interesting solution mentioned by Jones is the possibility of China – albeit a longshot – coming to the rescue:

Some think the danger might be eased by a Chinese accountant teaming up with a second-tier firm to create a new rival to the Big Four. Such an entity would face suspicion in the west, though, and it may be too soon to look to Beijing for answers.

For the market enthusiasts out there, this has to be the best idea you’ve heard even though it comes at the exception of the Chinese.

Think WeiserMazars but on a much, much larger scale. Maybe BDO’s U.S. firm is a target because of their legal troubles. Maybe Stephen Chipman will use his connections in China to parlay into some mega-international merger. We realize it’s hard to use your imagination when you’re staring at spreadsheets all day but ideas are needed people.

Solutions provided by the market will be a far better than something mandated by governments. China’s economy is still growing at a ridiculous clip and some say that’s good for the us here in the States.

Bottom line – we’re happy to entertain the possibility of China getting in the mix because as Jones says, “[W]hile this risk is broadly acknowledged, I have so far seen little evidence of a plan to deal with it.” And as it stands now, the bureaucrats are leading the discussion.

Get to Know Your PCAOB Standing Advisory Group Members

The PCAOB managed to roll out some news at a time other than 4 pm on Friday, announcing new appointments and reappointments to their Standing Advisory Group.

All the major firms are represented as well as some regionals (BKD, EKS&H), academics, industry pros, and others. We haven’t had the pleasure of knowing any of these fine folks (minus Lynn Turner – probably the biggest pot-stirrer on the list) but we’ve got it on good authority that everyone can get audit wonky (e.g. broker dealer auditing, the audit report model, FASB changes affecting auditing). The ushe. So you can rest soundly knowing your audit rules are in good hands.

Standing rs

New Appointments
• Stephen J. Homza, Managing Director of Internal Audit, Legg Mason, Inc.
• Lisa Lindsley, Director of Capital Strategies, American Federation of State, County, and Municipal Employees
• William T. Platt, Deputy Managing Partner, Professional Practice, and Deputy Chief Quality Officer – Attest, Deloitte & Touche, LLP
• D. Scott Showalter, Professor of Practice, Department of Accounting, College of Management, North Carolina State University
•Dan M. Slack, Chief Executive Officer, Fire and Police Pension Association of Colorado

Reappointments
• Joseph V. Carcello, Ernst & Young and Business Alumni Professor, Department of Accounting and Information Management, and Co-Founder and Director of Research, Corporate Governance Center, University of Tennessee
• James D. Cox, Brainerd Currie Professor of Law, School of Law, Duke University
• Elizabeth S. Gantnier, Director of Quality Control, Stegman & Company
• Arnold C. Hanish, Vice President of Finance, Chief Accounting Officer, Eli Lilly & Company
• Gail L. Hanson, Deputy Executive Director, State of Wisconsin Investment Board
• Jamie S. Miller, Vice President, Controller and Chief Accounting Officer, General Electric Company
• Steven B. Rafferty, Professional Practices Partner, BKD, LLP
•Samuel J. Ranzilla, Audit Partner and National Managing Partner, Audit Quality and Professional Practice, KPMG LLP
• Lynn E. Turner, Senior Advisor and Managing Director, LECG

Continuing Members
• John L. (Arch) Archambault, Senior Partner, Professional Standards and Global Public Policy, Grant Thornton LLP
• Dennis R. Beresford, Ernst & Young Executive Professor of Accounting, Terry College of Business, The University of Georgia
• Neri Bukspan, Executive Managing Director, Chief Quality Officer, and Chief Accountant, Credit Market Services, Standard & Poor’s Financial Services, LLC
• Douglas R. Carmichael, Claire and Eli Mason Professor of Accountancy, Zicklin School of Business, Baruch College
• Margaret M. Foran, Chief Governance Officer, Vice President, and Corporate Secretary, Prudential Financial, Inc.
• Michael J. Gallagher, Assurance Partner and U.S. Assurance National Office Leader, PwC
• Gaylen R. Hansen, Audit Partner and Director of Accounting and Auditing Quality Assurance, Ehrhardt Keefe Steiner & Hottman PC
•Patricia Ann K. (Kiko) Harvey, Vice President, Corporate Audit and Enterprise Risk Management, Delta Air Lines
•Gary R. Kabureck, Vice President and Chief Accounting Officer, Xerox Corporation
•Anthony S. Kendall, Chief Executive Officer, Mitchell & Titus LLP
•Wayne A. Kolins, Partner and National Director of Assurance, BDO USA, LLP; Global Head of Audit and Accounting, BDO International Limited
•Jeffrey P. Mahoney, General Counsel, Council of Institutional Investors
•Mary Hartman Morris, Investment Officer, Global Equity, California Public Employees’ Retirement System
•Kevin B. Reilly, Americas Vice Chair, Professional Practice and Risk Management, Ernst & Young LLP
•Barbara L. Roper, Director of Investor Protection, Consumer Federation of America
•Lawrence J. Salva, Senior Vice President, Chief Accounting Officer and Controller, Comcast Corporation
•Kurt N. Schacht, Managing Director, CFA Institute
•Damon A. Silvers, Director of Policy and Special Counsel, AFL-CIO
•John W. White, Partner, Corporate Department, Cravath, Swaine & Moore LLP

If you’re completely raptured with anyone listed, you can check out there bios over at the PCAOB’s website.

PCAOB Announces Standing Advisory Group Members [PCAOB]

Some Early Returns From Deloitte Salary Adjustment 2.0

As you’re no doubt aware, last Friday Deloitte made the announcement that the market for audit salaries had been misunderestimated and a second adjustment was going to be communicated to opiners this week.

Checking with a source inside Deloitte, we’ve heard some of the preliminary returns:

I have heard rumors of 5k in Hartford and 4k in Chicago for Seniors. But nothing to prove them out. The general range I have heard though is 2kish for 2nd years and 5k for seniors.


No word at at this point on what managers are receiving, so if you’ve gotten the news, let us know below.

The question now is – was all this hoopla worth it? Granted it’s early but if the range is in the ballpark, there’s likely a few people that are simply, “meh.” On the other hand, maybe if you got called in for another meeting to be told that you’re getting an extra $2k – $5k you might be really flippin’ stoked. However, many people will likely remind you to get some perspective.

Either way, the tax practice is feeling short-changed and advisory is too busy rolling around in their cash-filled bathtubs to care.

Discuss the situation at present and keep us updated with the adjustment news just as soon as your sit-down is over.

UPDATE – 12:45 ET: This just in:

Deloitte experienced assistant from South Florida – $2k for audit assistants, $5k for seniors.

total raise for the year with comp adjustment – 8%. Could be better but could be the original 4% I got in August…

UPDATE – crica 2 pm ET: The latest:

Miami: 2nd years: $2k, Seniors: $5k
Parsippany: 2nd years: $5K Seniors: $8K Managers: $6K

Accounting Firms Dodge Bullet in NY Court’s Kirschner v. KPMG Ruling

Francine McKenna was the first to opine (strongly we might add) on the ruling in Kirschner v. KPMG (along with the derivative suit Teachers’ Retirement System of Louisiana and City of New Orleans Employees’ Retirement System v. PricewaterhouseCoopers) that was announced yesterday.

The New York Law Journal reported on the ruling first:

Ruling on certified questiirschner v. KPMG LLP, 151, and Teachers’ Retirement System of Louisiana v. PricewaterhouseCoopers LLP, 152—a 4-3 majority held that accountants who allegedly should have detected malfeasance by executives of Refco in Kirschner and American International Group Inc. in Teachers Retirement System cannot be sued under state law.

The Court held that the principles under which the suits were dismissed—in pari delicto and imputation—are “embedded in New York law” and “remain sound.”

Like we said, Francine had some thoughts on this and she did not hold back:

A majority of the New York Court of Appeals bought the self-serving, selfish and unjust arguments of the defendants and their flunky amicus brief toadies supporting criminal corporate fraudsters and, get this, the shareholders of the accounting firms (!!). The New York Court of Appeals abandoned the shareholders and creditors of Refco and AIG for criminals and incompetents.

If I were writing this decision as a novel of corporate cronyism to the extreme in a Utopian nirvana for capitalist parasites, I could not have imagined more contemptible excuses for judicial cowardice.

Those “flunky amicus brief toadies” include the AICPA, the New York State Society of CPAs and the Center for Audit Quality, who argued that our very capital market system was at risk if accounting firms (and other professionals) could be held responsible for fraud perpetrated by management.

We share Francine’s passion for holding accountants responsible for their culpability (plus, claiming “we were duped” does nothing for the industry’s reputation) but the ruling hardly comes as surprise. Judge Susan Phillips Read wrote for the majority:

The speculative public policy benefits advanced by the Litigation Trustee and the derivative plaintiffs to vindicate the changes they seek do not, in our view, outweigh the important public policies that undergird our precedents in this area or the importance of maintaining the “stability and fair measure of certainty which are prime requisites in any body of law” (Loughran, Some Reflections on the Role of Judicial Precedent, 22 Fordham L Rev 1, 3 [1953]). We are simply not presented here with the rare case where, in the words of former Chief Judge Loughran, “the justification and need” for departure from carefully developed legal principles are “clear and cogent” (id.). Finally, to the extent our law had become ambiguous, today’s decision should remove any lingering confusion.”

[…]

We are also not convinced that altering our precedent to expand remedies for these or similarly situated plaintiffs would produce a meaningful additional deterrent to professional misconduct or malpractice.

In other words, these particular cases didn’t present a situation that demonstrated a desperate need for change in the law nor would it prove to be a helpful deterrent of fraud in the future. Bottom-line seems to be that Francine is upset at the majority’s pragmatic attitude but what do you expect from a panel of seven judges? It’s a long shot that you come across more than a couple of judges who are willing to turn years of case law inside out and upside down just because a company went bankrupt or a pension fund lost value.

That being said, there was a very enthusiastic and compelling dissent that basically calls auditors a bunch of pansies when it comes to accepting professional responsibility, “[I]t seems that strict imputation rules merely invite gatekeeper professionals ‘to neglect their duty to ferret out fraud by corporate insiders because even if they are negligent, there will be no damages assessed against them for their malfeasance.’ ” You can check out more over at RTA.

As far as the audit firms are concerned, they have to breathing a huge sigh of relief. Considering all the lawsuits out there, firms are already slowly bleeding to death by paper cuts. If this case had gone the other way, it could very well have been a mortal wound for the firms.

Kirschner v KPMG LLP [NY Court of Appeals]
Third-Party Liability Ruled Out in N.Y. Suits for Corporate Misdeeds [New York Law Journal]
New York Court of Appeals Stands By Corporate Man: In Pari Delicto Prevails [Re:The Auditors]

Is Citi One of the Issuers in the PCAOB’s Inspection Report of KPMG?

The long-awaited PCAOB inspection report of KPMG came out on Friday and while we were excited for this unveiling, the Board managed to issue the report at around 4 pm on Friday. Since the Board lacks any sense of timing whatsoever, we opted to punt on our respective post until today because well, we’re human and not a soulless blogging robot as likely perceived by TPTB at the PCAOB.

It’s worth mentioning that this is the first PCAOB report that has been issued since the SEC’s final rule on the inspections that allows audit firms to postpone the release of the report simply by taking issue with any of the findings. Since any appeal could reportedly delay the report by “30 to 100 days,” it’s safe to assume that, with a report date of October 5th, KPMG didn’t have a beef with the findings. You could also assume that since the SEC is taking a peek at these reports now, there’s going to be a ten day lag on the release of the report to allow the Commission enough time to give it their extra-special sniff test.

Anyway, back to the matter at hand –

KPMG had eight issuers noted in the Board’s inspection report and the first two are doozies. “Issuer A” runs approximately two pages and includes failure on testing of “allowance for loan losses” to “test[ing] the issuer’s estimates of fair values of financial instruments” and goodwill impairment.

“Issuer B” is a little more interesting since one of the failures the Board found was related to deferred tax assets which makes us wonder if this is Citi, since analyst Mike Mayo was loudly questioning the bank’s treatment of its DTA. Francine McKenna not-so-subtly solicited guesses on Friday as to who this “bank” might be (even though no issuer is identified as such) but it does make us wonder.

The Board cites run-of-the-mill failures for the rest of the issuers (e.g. fair value testing, pension plan testing, failure to confirm cash[!]) and the House of Klynveld’s response letter was cordial and anticlimactic.

But if you’re KPMG, do you really care what the PCAOB thinks when you’ve got an adorable gnome-ish looking analyst giving you the tepid thumbs-up (despite not knowing your name)? That’s the only endorsement we would need.

2010_KPMG_LLP

Michel Barnier: The Big 4 Audit Model Is a Failure

Okay, those weren’t the EU financial services commissioner’s exact words but you get the sincere impression that he’s had it up to his silver coif with how things are going.

“The crisis highlighted failings in the audit sector,” Barnier said today. “These need to be explored and we need to see what improvements can be made. I believe it is important to approach this discussion in a frank and open manner. No subject should be taboo.”

Right! No subject is off limits. So what will be discussed? Well, for starters this Big 4 thing has to stop. The Telegraph reports, “If one of the Big Four – PricewaterHouseCoopers, KPMG, Deloitte and Ernst & Young – were to collapse the Paper suggests it could create systemic risk for the financial markets.”

Secondly, the notion of independence and “putting shareholders” first is a sham. ‘Berg reports:

Restrictions on auditor choice may reduce “distortion within the system” caused by auditing firms acting in the interests of their clients rather than shareholders when compiling reports on a companies’ financial health, the commission said in a report outlining possible measures.

[…]

The commission said it’s also considering rules that would force companies to change their auditing firms after a fixed period of time.

Forcing companies to rotate their auditors would “enhance the independence of auditors” and “operate as a catalyst to introduce more dynamism and capacity into the audit market,” the commission said.

Lastly, can a Frenchman get some choice up in this mofo?

The top four accounting firms have a market share of about 90 percent in the majority of EU member states, according to the commission’s report.

“The market appears to be too concentrated in certain segments and deny clients sufficient choice when deciding on their auditors,” the commission said.

Barnier isn’t asking for a full-blown cafeteria but for crissakes, the choices right now are chicken, chicken, and….chicken. Sure, they might have slightly different recipes (e.g. KPMG a little spicy/sweet, PwC is in a cream sauce) but it’s all chicken. And Barnier HATES chicken.

Companies May Lose Right to Pick Auditing Firms Under European Union Plans [Bloomberg]
EU markets chief Barnier plans radical overhaul of audit industry [Telegraph]

Some People Are Really Excited That MarcumStonefield Is the Auditor of Fuqi International

That or it’s because they managed to not have an adverse opinion.

Fuqi International, Inc. (FUQI) gained more than 14 percent this morning. After the close yesterday, the seller of precious metal jewelry in the People’s Republic of China filed an 8-K form with the SEC where it disclosed that:

“The principal accountant’s reports of Stonefield on the financial statements of it as of and for the years ended December 31, 2008 and December 31, 2007 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the years ended December 31, 2008 and December 31, 2007 and through October 1, 2010, there were no disagreements with Stonefield on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which if not resolved to Stonefield’s satisfaction, would have caused it to make reference thereto in connection with its reports on the financial statements for such years.”

That emphasis is the orig. Supposedly that justifies the stock being up ~17%. Personally, we feel that it’s pretty snooze-worthy but maybe people get really amped when a Chinese company actually complies with the regulations.

Or maybe everyone is gaga over the MarcumStonefield marriage. Could be anything, really.

Universal Travel Group, Who Appears to Be ‘Partially a Fraud,’ Has Gone Through a Shocking Number of Auditors, CFOs

Yesterday, Henry Blodget wrote about Universal Travel Group’s auditor – Goldman Kurland Mohidin, LLP – quitting two weeks after Bronte Capital’s John Hempton issued a ress explained that the whole damn company was a fraud.

This, of course, resulted in a reactionary measure by UTA, who denied all the allegations immediately and announced that they were looking to sue Hempton because, seriously, who likes getting their feelings hurt?

So that’s the backstory. A little bird suggested to us that maybe we should look into the company’s past to see just how many auditors they’ve burned through and maybe check out how many CFOs they’ve gone through also. WELL!


Auditors
First we went back to the 10-K filed on March 31, 2008 and discovered that on June 23, 2006, the company dismissed Moore & Associates, Chartered:

On June 23, 2006, we dismissed the firm of Moore & Associates, Chartered (“Former Auditor”), which had served as our independent auditor until that date. The Former Auditor was our auditor prior to the acquisition of control of our Company by Xiao Jun.

On June 23, 2006, we retained Morgenstern, Svoboda & Baer, CPA’s, P.C. to serve as our principal independent accountant.

This seemed to be a pretty good call on UTA’s part since it turned out that Moore & Associates was issuing bogus audit reports. No cause for concern at this point.

The relationship with Morgenstern, Svoboda & Baer appeared to be going on swimmingly but ultimately, for reasons unbeknownst to all, it didn’t work out. MS&B resigned on June 30, 2009 to make way for Acqavella, Chiarelli, Shuster, Berkower & Co., LLP:

On June 30, 2009, our prior independent registered public accounting firm, Morgenstern, Svoboda & Baer CPA (“Morgenstern”) resigned and on the same day, we appointed Acqavella, Chiarelli, Shuster, Berkower & Co., LLP (“ACSB”) as our new independent registered public accounting firm.

Similar to their predecessors, ACSB & Co. was humming along just fine, getting ratified in the recent preliminary proxy statement filing until they were up and fired on September 1st:

On September 1, 2010, our current independent registered public accounting firm, Acqavella, Chiarelli, Shuster, Berkower & Co., LLP (“ACSB”), was dismissed and on the same day, we appointed Goldman Kurland Mohidin (“GKM”) as our new independent registered public accounting firm.

Anyone weirded out yet? Does appointing a new auditor the same day that the previous quit strike anyone as panicky? Maybe that’s just us. Anyway, so GKM spends four weeks on the job until:

On September 29, 2010, we received a letter dated September 28, 2010 from our current independent registered public accounting firm, Goldman Kurland Mohidin, LLP (“GKM”), informing us that they had resigned as our independent registered public accounting firm effective with the commencement of business on September 27, 2010. No reason was given as to the cause for their resignation.

Windes & McClaughry Accountancy Corporation is new auditor and has not quit at the time at the time of this writing. They way things seem to be picking up, however, it could be any minute. So for those of you not counting, that makes five different auditors going back to June 23, 2006. Probably not a record but it certainly puts the auditor musical chairs at Overstock.com to shame.

CFOs
The CFO situation is less exciting but there’s enough going on that should make any investor run screaming for the hills. Xin Zhang was appointed CFO as of July 12, 2006. After an eternity (by UTA standards anyway), on February 17, 2009, UTA appointed 27 year-old Jing Xie as CFO. Now maybe this Jing is a financial wizard but this seems, at best, fishy.

Xie lasted exactly six months, resigning on August 17th and Yizhao Zhang was appointed to the big chair the same day, again because there was no time to waste.

Yizhao was on quite a roll but then he resigned on August 16th for “personal reasons” (freaked the hell out?) and the company promoted the crafty veteran Xie back to his old position (on an interim basis). This rivals the CFO shuffle that was going on at Lehman.

So quite the riddle. Quite the riddle indeed. Maybe Hempton and Blodget are on to something with this whole “it’s a complete sham” notion. Or maybe UTA is just a bunch of jerks. Theories are welcome at this time.

Auditor Quits At Universal Travel Group (UTA) — The NYSE-Listed Company That Looks Like A Fraud [BI]