It’s probably the same one that Doug Shulman’s been “[using] for years.”
[HuffPo]
Tag: Awkward Conversations
The PCAOB Proposes Ideas on How Auditors Can Better Communicate with Other Human Beings
Last week the PCAOB announced that it was getting serious about audit committee communication after it was revealed that Ernst & Young kinda sorta didn’t think the Repo 105 sitch was worth brining up to the Lehman Brothers audit committee. Granted, Dick Fuld is pretty scary dude and has probably eaten plenty of Big 4 partners for breakfast in his day but avoiding the awkward convo this time around almost resulted in everyone fighting over stale hot dog buns in the street.
Oh sure, the PCAOB has been kicking this around for awhile but something needed to happen to get their motors going and it appears that the LEH/E&Y fallout has done the trick. We might be completely wrong on this but it’s becoming increasingly obvious that the PCAOB has lost faith in auditors to do their jobs and will continue to inundate them with rules until they get an “Uncle.”
How about that statement? It’s the typical press release whathaveyou including quotes from the bigshots:
“The proposed standard on audit committee communications is intended to enhance the relevance and effectiveness of the communications between an auditor and audit committee throughout the course of an engagement,” said PCAOB Acting Chairman Daniel L. Goelzer.
“The proposed standard contains appropriate requirements to achieve effective, two-way communication between the auditor and the audit committee, which we believe would improve audit quality,” said Chief Auditor, Martin F. Baumann.
So if we take Goelzer and Baumann at their word, audit committee communication has been pretty ineffective up to this point? That’s good to know.
And here’s the gist of the required communication:
• Communication of an overview of the audit strategy, including a discussion of significant risks, the use of the internal audit function; and the roles, responsibilities, and location of firms participating in the audit;
• Communication regarding critical accounting polices, practices, and estimates;
• Communication regarding the auditor’s evaluation of a company’s ability to continue as a going concern; and,
• Evaluation by the auditor of the adequacy of the two-way communications.
So there’s your checklist people. Sorry to ask but were these items not being discussed previously? One could assume that since these items are on the list, they weren’t always being discussed in practice. Does standard audit committee communication revolve around Gossip Girl? Tiger Woods’ mistresses?
This really appears to be an example of the PCAOB taking away auditors’ “professional judgment” and making them “professional inquisitors.” Further, as Jim Peterson has pointed out, checking off required communication will do nothing to protect auditors from liability in the future, “there is no legal defense or ‘safe harbor’ in American law based on proof of compliance with professional standards – box ticked or otherwise.”
In other words, make all the professional requirements you want, auditors are still going to get sued and claiming “But we checked the box!” will not work as a defense. So the rationale must have been checklists are fun and easy to follow? Sigh. You’ve got until May 27th to get your thoughts in on this thing before it gets rubber stamped. Get on it.
Press Release [PCAOB]
RSM McGladrey Does the PGA a Solid, Sponsors Golf Tournament
RSM McGladrey’s C.E. Andrews was on CNBC today to plug the The McGladrey Classic, the new PGA Tour event that has NOTHING TO DO WITH TIGER WOODS.
C to the E to the A also isn’t too worried whether or not his firm got a deal sponsoring the tournament at the rumored $3 – $3.5 million since the wheels were already in motion before the “Tiger event” (read: everyone on Earth knows that he’ll screw anything). He’s just stoked that the firm has their name on a tournament (although it’s not so obv from his demeanor).
As for PGA commish Tim Finchem, he hasn’t talked to him and he says he won’t until T Dubs is ready. According to the commish, they’ll prepare appropriately at that time which will probably involve having local hookers on site at the events.
Basically the unspoken element here is how grateful the PGA is to have RSM do them a favor in their time of need.
Deloitte Changes Its Mind on Kohlberg Capital’s Ability to Value Its Investments
A friend of GC pointed us to this 8-K filed by Kohlberg Capital Corporation yesterday. Unless we’re misinterpreting this, there are some seriously awkward conversations going on between Deloitte and Kohlberg right now (our empahsis):
Deloitte issued an unqualified opinion on the Company’s December 31, 2008 financial statements, which was included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2009. The Company is not aware of any allegation or belief by Deloitte that the information provided by the Company to Deloitte at the time of the preparation of the Financial Statements regarding the Company’s valuation methodology and procedures was incomplete or inaccurate or omitted any information requested by Deloitte at such time. On December 10, 2009, the Company and its management were advised by Deloitte that (i) the audit report issued by Deloitte accompanying the Company’s financial statements for the fiscal year ended December 31, 2008 in the Company’s Annual Report on Form 10-K for such fiscal year and (ii) Deloitte’s completed interim reviews of the Company’s financial statements for the interim periods ended March 31, 2009 and June 30, 2009 in the Company’s Quarterly Reports on Form 10−Q for those respective periods should no longer be relied upon because Deloitte had changed its position with respect to the appropriateness of the methodology and procedures used by the Company under SFAS 157 to value the Company’s investments as of the end of each of those periods and, as a result, the Company has been informed that Deloitte now believes, based upon such changed position and the additional information provided to Deloitte by the Company following Deloitte’s internal inspection process, that such Financial Statements contain material misstatements with respect to the value of the Company’s investments included therein. Accordingly, the Financial Statements should not be relied upon until the foregoing matters are resolved.
This filing followed up Kohlberg’s filing of an 8-K and form 12b-25 on November 9th to let everyone know, um, yeah, that Q is going to be late because Team D wants to take a look at this 157 stuff again. That was probably annoying enough.
But nowwwww it looks like the audit team spent the last month realizing that the pooch had been screwed on the last two 10-Qs annnnd last year’s 10-K. So yeah, don’t pay attention to the those filings. The one bright side to this is that Kohlberg had the sense to not file an unreviewed Q.
If you’ve got details on this, definitely get in touch with us, we’d love to know how the partner broke the news and how Kohlberg took it. The 8-K certainly doesn’t do that conversation justice.
Your Words Say, ‘I want this job’ but Your Body Language Says, ‘I’m really interested in my shoes’
It’s our understanding that there are still interviews to go before offers are made so we thought we’d discuss some not so good things to do while you’re sitting across from your interrogator.
U.S. News & World Report lists 15 ways to annoy your interviewer and we’ll expand on a few to get the ball rolling:
• Knee jiggling or finger drumming – Performing the Wipe Out drum solo is typically frowned upon in any social setting. Double thumbs down during an interview.
• Playing with your pen – No one is impressed by your David Letterman-esque flipping technique.
• Checking your cellphone – Um, yeah.
• Nail biting; Sniffling; Picking at, rubbing, or scratching any part of your body – Bodily functions, while a fact of life, should be controlled as much as possible. If you think you’re going to explode, just internalize and try to keep your eyes from watering.
• Smiling too much (or not smiling at all) – On the one hand, permagrin is totally acceptable if you’re planning to engage in a Seth Rogen marathon. Not so if you’re trying to get a job. If you’re totally incapable of smiling, this is also not good. Your mortician face will not go well around the office.
This is just a starting point. Since your life experiences are far more interesting, kindly discuss your strangest encounters as an interviewer or an interviewee. Since we’ve already discussed the words that are actually coming out of your mouth, we’ll ask that you stick with non-verbal faux-pas.
Jim Turley Traded F-Bombs with Rahm Emanuel Over Chicken Last Night
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]
Bean Counter Art: The Staff Inquiry
Editor’s Note: The following cartoon was drawn by Jack Britton, a former Big 4 auditor. You can visit his blog, colorcartoon.blogspot.com for more of his work. You can also follow him on Twitter @rumblebozzle.
Occasionally, being a staff auditor involves having awkward conversations with controller/CFO types. You have to ask them about fraud, legal matters, SEC inquiries, etc. etc. Regardless of the tomfoolery going on at the client, these people will not be telling you about it.
If this empty interrogation goes on long enough, the interviewee’s boredom (and possible physical reaction from lying so much) may cause uncontrollable fidgeting, as illustrated above. Discuss your awkward inquiry experiences with your clients in the comments. Especially the ones where you jumped on the conference room table and screamed ‘LIAR!’