Tag: Big 4

Big 4 Firms Score Perfect on 2011 Corporate Equality Index

Yesterday The Human Rights Campaign Foundation released their Corporate Equality Index for 2011. If you’re not familiar with the survey, it “assesses American workplaces on lesbian, gay, bisexual and transgender equality.”

We’re happy to report that the Big 4 are perfectly gay friendly which probably surprises no one (or not?). The firms go to great lengths to be inclusive, especially in public eye and a ranking like the HRC’s is a perfect opportunity to call attention to their efforts.

This is the ninth year for the survey and its largest – with 844 companies being rated. Scores are determined based on the following criteria:

Criterion 1a Prohibits Discrimination Baation (15 points)

Criterion 1b Provides Diversity Training Covering Sexual Orientation (5 points)

Criterion 2a Prohibits Discrimination Based on Gender Identity or Expression (15 points)

Criterion 2b Provides Diversity Training Covering Gender Identity OR Has Supportive Gender Transition Guidelines (5 points)

Criterion 2c Offers Transgender-Inclusive Insurance Coverage for at Least One Type of Benefit (5 points)

Criterion 2c+ Offers Transgender-Inclusive Insurance Coverage, Including Surgical Procedures (4 )

Criterion 3a Offers Partner Health Insurance (15 points)

Criterion 3b Offers Partner Dental, Vision, COBRA and Dependent Coverage Benefits (5 points)

Criterion 3c Offers at Least Three Other “Soft” Benefits for Partners (5 points)

Criterion 4 Has Employer-Supported Employee Resource Group OR Firm-Wide Diversity Council (15 points) Would Support ERG if Employees Express Interest (half credit)

Criterion 5 Positively Engages the External LGBT Community (15 points)

Criterion 6 Responsible Citizenship Employers will have 15 points deducted from their score for a large-scale official or public anti-LGBT blemish on their recent records (-15 points)

Big 4 spin-off Accenture also scored a perfect 100 while Capgemini scored a 60, receiving no points for any of the #2 criteria or criterion 5. We took a quick glance through and didn’t notice any more accounting firms, although McGladrey parent H&R Block is on the list, scoring at 65, missing on criteria 2a, 2c and 5.

This seems like a pretty easy diversity win for most firms. Prohibiting discrimination is a piece of cake (enforcing it is another discussion) while providing training and benefits is simply good business. Likewise, if a company has an “employer-supported resource group” or “diversity council,” engaging the LGBT community should be a natural progression.

Where firms may get tripped up is the “Responsible Citizenship Employers” criterion. “[A] large-scale official or public anti-LGBT blemish” consists of the following:

Scores on this criterion are based on information that has come to HRC’s attention related to topics including but not limited to: undue influence by a significant shareholder calculated to undermine a business’s employment policies or practices related to its LGBT employees; directing corporate charitable contributions to organizations whose primary mission includes advocacy against LGBT equality; opposing shareholder resolutions reasonably aimed at encouraging the adoption of inclusive workplace policies; revoking inclusive LGBT policies or practices; or engaging in proven practices that are contrary to the business’s written LGBT employment policies.

While it isn’t likely that any firm would fall victim to this, law firm Foley & Lardner was dinged for representing clients that opposed gay marriage even though they provided many services to many LGBT causes.

As much as we don’t like it, bigoted, well-funded nonprofits need professional services and they pay accounting firms lots of money to provide them with services. As of now, the HRC doesn’t seem to be holding that against professional services firms but this is a divisive issue, not matter how you slice it. And until total equality is achieved, the HRC will likely keep a close eye on companies that assist groups it opposes.

Workplace Equality Takes Center Stage with Record Number of Companies Rated in HRC’s 2011 Corporate Equality Index [HRC]

Indecisive Econ/Accounting Major Needs Help Plotting the Next Move

Ed. note: I’ve been called to an emergency meeting in an undisclosed location, so here’s a guest post from your friendly human resources professional, DWB.

Caleb interrupted my weekly Wednesday tradition with the following reader submitted question:

I am an undergraduate at a pretty big school and recently decided I want a job when I graduate so I switched my major from History to Economics with the intent on minoring in Accounting (it is too late for me to officially major in Business Economics but I plan on taking all the relevant classes anyway).

I am entering my junior year this fall but right now, my accounting academic career puts me with about a freshman level of re my belt.

Normally, next summer would be the internship phase of a student’s life but I’m wondering if I should put off graduation by a quarter and/or go to grad school so that I might also push off my internship applying to a different summer when I have more than GC-provided gossip to offer a firm.

If I do this, are there Big 4 or mid-tier firms who would look at me for summer leadership programs (and other sophomore-oriented recruiting) or have I missed the boat on that?

I’d appreciate anything you have to say on the matter — snarky or otherwise.


Dear History Buff,

You wanted a job, so you decided to major in Economics. That statement is so conflicting I can’t tell whether it induced my headache or I simply need a third cup of coffee. The reason I say this is because I see my fair share of 3.95 GPA Econ majors from “pretty big” schools every day, and they’re desperate for work. Your accounting minor is a start but like you pointed out, it’s lacking in worthy experience. Your consideration of internships/grad school demonstrates that you’re looking beyond the remaining cup on the beer pong table and thinking about your future. Kudos.

I’m going to assume you’re considering a career in public accounting, because why else would you be on GC in the first place? You’re certainly not here for the chicks (“Chicks, man.”). If I am wrong on this assumption, follow up with me and we’ll discuss.

So, assuming the above, I suggest a few things:

1) Start talking to recruiters: They should be all over campus by this point in the semester. Make it known to them that you are pursuing a Masters in Accounting following your undergraduate degree. Ask questions about leadership programs and internships. Remember, the general timeline for Big 4 programs is leadership program two summers before graduation (for you – summer ’11); internship the summer before graduation (summer ’12).

2) Make it easy for the recruiters: Want to make a recruiter’s day easier and better position yourself in their pool of candidates? List all of your ongoing and anticipated education on your résumé, like this:

Education
“Pretty Big School” – Anywhere, USA
• Masters in Accounting – XYZ School of Business Anticipated Graduation: May 2013

• Will be CPA eligible upon graduation

• Bachelor of Science – ABC School of Economics Anticipated Graduation: May 2012

• Economics major, Accounting minor Overall GPA: X.Y | Major GPA X.Y

Formatting your résumé in this fashion provides the reader with answers to key questions – what is this candidate majoring in; when are they done with their education and ready to work; what is their CPA eligibility.

3) Follow up: Your educational path is not the road heavily traveled by most students with dreams of Big 4. Keep yourself in the conversation with recruiters by occasionally updating them through your process. Tell them when your GPA improves after a strong semester, when you get into grad school, etc. Don’t expect a response right away but rest easy knowing that they’re updating their records. Sharing this information can be done formally over email or informally during a conversation with a recruiter while they’re on campus.

4) Talk to Career Services: Be sure you’re taking the right classes to become CPA eligible in the state where you want to be licensed. Nothing worse than taking a counselor’s word on Ballroom Dance 201 counting toward the 150 credit requirement.

Go forth…and one more piece of advice if you’re following college football: Stanford over Oregon this weekend. Do it.

Big 4 Still Dominate Vault’s Prestige Rankings

This morning we’ll take a break from Vault’s Accounting 50, and bestow their prestige list upon you since style trumps substance in just about every facet of society these days.

So enough chit-chat, here are the top ten firms whose shit stinks the least (prior year ranking in parenthesis):

1 PricewaterhouseCoopers LLP New York, NY (1)
2 Ernst & Young LLP New York, NY (2)
3 Deloitte (Accounting Practice) LLP New York, NY (3)
4 KPMG LLP New York, NY (4)
5 Grant Thornton LLP Chicago, IL (5)
6 BDO USA LLP Chicago, IL (9)
7 McGladrey & Pullen LLP/RSM McGladrey Inc. BloomingtonAdams LLP Seattle, WA (6)
9 Plante & Moran, PLLC Southfield, MI (8)
10 J.H. Cohn LLP (Accounting Practice) New York, NY (11)


You’ll note the “NR” behind PwC, E&Y and KPMG. It appears the reason for this comes from last year’s prestige list that shows only the “consulting practice.” We’re awaiting the clarification from our friends at Vault and we’ll update you just as soon as we know the story. Just a glitch, sayeth Vault. We’ve updated above.

But if you make the assumption that the consulting practices were the accounting firms, As you can see, the top five firms are exactly the same. You probably also noticed that the top ten in the prestige list is vastly different from the top ten in Vault Accounting 50. With the exception of Deloitte and PwC, none of the firms in the prestige top ten appear in the Accounting 50. So if you’re a prestige whore and work/life/culture is meaningless, the Big 4 and the rest of the usual suspects will be your taskmasters of choice.

As for the rest:

11 Eisner LLP New York, NY (10)
12 Clifton Gunderson LLP Milwaukee, WI (19)
13 Crowe Horwath LLP Oak Brook, IL (12)
14 Rothstein Kass Roseland, NJ (16)
15 BKD, LLP Springfield, MO (20)
16 Reznick Group, P.C. Bethesda, MD (22)
17 Weiser LLP New York, NY (18)
18 Baker Tilly Virchow Krause, LLP Chicago, IL (17)
19 Cherry, Bekaert & Holland LLP Richmond, VA (15)
20 Amper Politziner & Mattia, LLP Edison, NJ (13)
21 Dixon Hughes PLLC High Point, NC (25)
22 LarsonAllen LLP Minneapolis, MN (14)
23 CBIZ & Mayer Hoffman McCann P.C. Cleveland, OH (26)
24 Anchin, Block & Anchin LLP New York, NY (21)
25 Novogradac & Company LLP San Francisco, CA (29)
26 UHY Advisors, Inc. Chicago, IL (31)
27 Marcum LLP Melville, NY (30)
28 Wipfli LLP Milwaukee, WI (44)
29 ParenteBeard LLC Philadelphia, PA (24)
30 Beers + Cutler PLLC Vienna, VA (23)
31 Friedman LLP New york, NY (58)
32 Elliott Davis, LLC Greenville, SC (28)
33 Marks Paneth & Shron LLP New York, NY (35)
34 Berdon LLP New York, NY (36)
35 Citrin Cooperman & Company, LLP New York, NY (38)
36 Eide Bailly LLP Fargo, ND (39)
37 WithumSmith+Brown, PC Princeton, NJ (41)
38 Margolin, Winer & Evens LLP Garden City, NY (40)
39 Stonefield Josephson, Inc. Los Angeles, CA (34)
40 Blackman Kallick Chicago, IL (69)
41 Aronson & Company Rockville, MD (59)
42 Schneider Downs & Co., Inc. Pittsburgh, PA (51)
43 Burr Pilger Mayer, Inc. San Francisco, CA (45)
44 Watkins, Meegan, Drury & Company, L.L.C. Bethesda, MD (53)
45 Frank Rimerman & Co. LLP Palo Alto, CA (47)
46 Goodman & Company, LLP Virginia Beach, VA (46)
47 SS&G Financial Services, Inc. Cleveland, OH (NR)
48 Habif, Arogeti & Wynne, LLP Atlanta, GA (37)
49 RubinBrown St. Louis, MO (27)
50 Kaufman, Rossin & Co. Miami, FL (43)

Notables: Top 3 firm Rothstein Kass drops in at 14 here; recently merged Eisner and Amper fall in at 11 and 20 respectively; familiar names like Clifton, Crowe, BKD, Reznick, Weiser, BTVK and CB&H fill in the rest of the top twenty.

Big Moves: Wipfli, Friedman, Blackman Kallick and Aronson & Company all experienced double-digit moves up while Habif, Arogeti & Wynne and RubinBrown dropped the furthest.

Feel free to discuss any of these firms from a prestige standpoint (or lack thereof) and definitely get in touch with us with sterling examples which may or may not include partners who have the tendency to get into fisticuffs. It doesn’t appear to affect a firm’s ranking all that much.

Accounting Firms Rankings 2011: Prestige [Vault]
The 50 Most Prestigious Accounting Firms [Vault]

Aspiring Big 4 Intern Needs Questions to Impress Pants Off Interviewers

We’ll kick things off a little early today as a young inquisitor has to prep for a big interview today.

Have a question about your career? Wondering if you should go back to your old firm after they dropped you like a sack of spuds? Concerned that the hours you’re working may cause you to blackmail your lover? Stop! Email us at advice@goingconcern.com before you do anything so we can put your problem before the masses prior to you doing something stupid.

Back to our interviewing intern:

What would you say could be a stomping question for these Big 4 kids? Got the internship interview Monday! I think I need/want one of those.


We had no idea what “stomping” meant, so we asked for a clarification:

I’m looking for a thought provoking question regarding the industry or the big 4 in particular. I would like an astute question to ask.

Okay, then. You want to smart, up-to-speed on the world around you, without coming off insincere or patronizing. We can help.

Despite your curiosity, you must avoid questions about money, hours you’ll be working, drug tests, hooking up with superiors and so on and so forth at all costs. We realize the temptation to inquire about the frequency of happy hours and what the hottie ratio is but please refrain from broaching these subjects.

Now, then. It’s extremely important that you ask questions that are specific to the firm with whom you’re interviewing. There are tons of thought-provoking questions out there but if you really want to grab someone by their pin-striped ass and get them to look impressed, it will help for you to devise a question that is specific to that firm, as well as the local business environment of the office’s city that you’ll be living in.

This could require some research on your part. For example, find out if there are some local charities that the firm partners with regularly and inquire about what activities employees participate in (this is where the sincerity helps) and if there are any events scheduled during your internship. This will demonstrate your desire to participate in extra-curricular activities and your interest in giving back to the community.

Another example is to be familiar with some of the major players in the business environment in your city. If you brush up on the local business news and ask a relevant question to a recent event, your interviewers will recognize that you’re cognizant of the business environment and that you’re interested to see what the angle is from the firm’s perspective.

And posing the question to the appropriate person is important. Asking the second-year associate that’s greeting you at the interview about the potential in the venture capital space probably isn’t be as effective as asking a manager or partner the same question. Also, be careful with wonky technical questions. Sure, it may help you look smart but it could also backfire if the question comes off manufactured and awkward.

Bottom line – your questions need to be sincere and detailed. It will show your interviewer that you’re genuinely interested in their firm (and not thinking about the next firm you’re meeting) and also that you took the time to prepare. Oh, and smile for crissakes. It will make your question sound far more pleasant.

Deloitte Isn’t Buying This Big 4 Oligopoly Nonsense

Over the last 20 years or so, for one reason or another, accounting firms that were able to provide audit services to largest companies on Earth have been whittled down from 8 to 6 to 5 to 4. During this time, it became the concern of many (read: anyone not in the “Big” club) that the firms were too concentrated and audit quality was deteriorating due to the lack of competition.

Naturally, the firms at the top have dismissed this argument as bupkis. And because the public accounting industry is one that elected representatives and their constituents could give a rat crap about, the cries of the less fortunate firms have gone unheard.

Until recently that is. A report this summer that revealed the existence of “Big Four clauses” in credit agreements in the UK and that allowed the Grant Thorntons and BDOs of the world to have their “A-HA!” moment.

Deloitte, however, is not impressed with revelation and would like everyone to know that the audit biz is regular dog fight:

The audit market is “fiercely competitive and transparent” according to Big Four firm Deloitte, which sees no reason to open the top-heavy industry to greater competition.

Deloitte believes audit quality is “higher than ever” and said it has seen “no evidence of anti-competitive behaviour”, according to its submission to the upcoming House of Lords inquiry into audit competition.

“Our experience is that the listed-company audit market is one of the most competitive,” the firm said.

“The firm” presumably said this with a straight face.

Audit market is “fiercely competitive” Deloitte argue [Accountancy Age]

Can My Firm Force Me to Change Brokers Even Though There Are No Independence Conflicts?

Today in accountant anxiety, a new Big 4 audit manager is perplexed as to why the firm is requiring the movement of their brokerage accounts, which on the surface, don’t result in any independence conflicts.

Have a question about your career? Is your favorite gridiron powerhouse affecting your work? Concerned that you may be allergic to your job? Shoot us an email at advice@goingconcern.com and we’ll help alleviate your problems.

Back to our muddled manager:

I’m a new audit manager at a Big 4 firm. As a new manager, my firm is requiring me to move all of my brokerage accounts (even those for which I’m the trustee but have no beneficial interest in) to a firm approved by the company and which participates in their daily transaction import program so they can keep daily track of all of my holdings. How is this legal? I’m not allowed to do business with a brokerage firm of my choice, even when there are no independence conflicts? Doesn’t this violate some law or something!?!?! Advice please!


Frankly, we’re a little surprised that you’re surprised about your firm’s requests in this matter. After all, you’re a manager. In the audit practice. We realize it’s been awhile since you’ve cracked an audit textbook but we’re curious if you’re delegating your annual independence refresher to a lowly staff because you can’t be bothered with it.

As you may recall, audit firms have to be independent in fact and appearance. Your brokerage accounts – both your personal and the accounts that you serve as a trustee – are a huge risk to your firm’s ability to maintain that independence. Your personal accounts are a no brainer – a firm simply cannot have anyone with assets with a broker that your firm has some sort of professional relationship with that could be perceived as conflict of interest.

As far as the accounts that you serve as the trustee for – Wiktionary defines trustee as follows:

A person to whom property is legally committed in trust, to be applied either for the benefit of specified individuals, or for public uses; one who is intrusted with property for the benefit of another; also, a person in whose hands the effects of another are attached in a trustee process.

So in other words, you are legally obligated to invest on behalf of the beneficiary in their best interest. This could possibly put you in direct conflict to act in a manner that would risk the independence of your firm.

And as everyone knows, an audit firm’s reputation as an independent third party that provides an objective opinion is paramount to the industry. Whether they are truly independent is a matter that Francine McKenna would be happy to take up with you on any day of the week but all the firms have a platoon of attorneys and other professionals that monitor the risk of independence violations for their respective firms constantly.

And as long as you’re an employee of the firm, the firm’s interests will trump yours. We suggest paying closer attention at your next ethics training.

FRC Raps Big 4; Pressure to Perform Non-Audit Work Remains High

This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

The Financial Reporting Council of the UK has released the annual results of its inspection of the Big 4 accounting firms. Its verdict? They can do better.

Each of the Big Four – KPMG, PwC, Deloitte and Ernst & Young – were found to have been less than perfect. Each firm had its own specific offenses, but the common thread running through the report was that auditors faced too much internal pressure to do non-audit work, so that the quality and independence of the audits were in danger of slipping.


Ernst & Young was rapped for linking its auditors’ pay and promotion to their non-audit work. Deloitte and PwC were both castigated for sending employees to advise companies both firms were auditing.

The inspector said that audit firms should take more “sufficient professional skepticism in relation to key audit judgments.” In other words, the firms should not take the CFO’s word at face value. In particular, this skepticism should be applied to forecasts, impairment tests, revenue and the confirmation of claimed assets.

The regulators are in a difficult position. There has never been more demand for the services of the Big 4. This week, Deloitte CEO Jim Quigley said that his firm was planning on hiring 80,000 new staff globally over the next five years, taking its total roster to 250,000.

Despite being blamed for going easy on companies and banks before the crisis, companies and regulators have no option but to rely totally on their services.

This stranglehold on business looks set to continue, with more work coming from the non-auditing side. Deloitte also released results this week that showed auditing revenues had slid 1% this year over last year. But its work in the public sector had grown by 38 percent.

How Do I Get into a Big 4 Tax Specialty Group Without a ‘Preferred’ Degree?

Today in “fish my career out of the crapper,” a recent grad has started a masters program hoping to get into a speciality tax practice with a Big 4 firm. However, the reader is concerned that their program won’t be attractive the speciality groups. HELP!!

Have a question about your career? Worried that your porn star spouse might derail your path to partner? Need advice on broaching the subject of the shitty coffee in your office? Email us at advice@goingconcern.com and we’ll be sure that you get the help you need.

Back to our accountant-to-be in jeopardy:

I graduated from undergrad with a degree in accounting in April of this year and immediately began a masters of accountancy program in the Boston area. I did not have an internship since I chose to study abroad instead. I am fluent in Korean, and am interested in tax issues encountered by expatriates and multinational corporations. I am also interested in valuations for M&A. I have wanted to work in a Big 4 or other large accounting firm in the business advisory or tax divisions. However, looking at the job requirements for the positions in these two divisions, the firms prefer students with degrees in economics, finance, taxation, and even JDs and LLMs. My program, on the other hand, is more of a general accounting program geared towards auditing and preparing students for the CPA exam. So, my question is, “how can I get a job in tax or advisory–preferably dealing with tax issues–without experience or a ‘preferred’ degree?” The simple answer would be to just apply and point out the interests that I have, but would this accomplish anything more than alienating myself from potential employers and positions in assurance that could get me in the door and eventually onto the career path that I desire?


While your advanced degree will help your chances with the Big 4, we are wondering why you didn’t go with a program that would have allowed you to pursue a tax concentration, since that is your primary interest.

But never mind that, the issue at hand is how you get into these specialty groups without experience or a preferred degree. The answer is: it will be tough. You do have the advantage of being bilingual which will be extremely attractive, especially for any international speciality groups. If you can land a tax position, leverage this strength and communicate your interest in areas of expats and multinational issues. If you’re feeling really ambitious and learning a new language is easy for you, consider picking up a little Mandarin or Japanese to give you an even bigger advantage over your peers.

That may sound crazy but it will make you stand out from other people competing for these sexier jobs in specialty tax and advisory and like you said, if you just have a plain-Jane Masters and not the ideal background, you’ll need to make yourself stand out somehow. These groups are small and they don’t take on many new hires and yes, they do prefer people with the degrees you mentioned.

You also ask, “would this accomplish anything more than alienating myself from potential employers and positions in assurance that could get me in the door[?]” Again, if you’re interested in tax, why are you thinking about interviewing for audit positions? It will make your path to the speciality groups longer and even more difficult. Only pursue this if it’s the last resort.

Get into the tax practice if you can and go from there; your interest in international groups will seem less self-serving. You’ll probably have to do some time in compliance but that will serve as a good foundation for your career goals.

A Big 4 Identity Crisis?

“The Big 4 don’t even like being called AUDITORS. Rather they provide ‘ASSURANCE Services,’ and act as ‘TRUSTED ADVISORS.’ This isn’t just rhetorical. It’s a cynical PR move and an effort to limit their liability.”

~ Francine McKenna, who will be on a panel with Lehman Brothers Bankruptcy Examiner Anton Valukas, NYT Chief Financial Correspondent Floyd Norris and others, discussing the financial crisis.

Big 4 Land on Vault Consulting Firm Rankings by Practice Area

For those of you that love all-things-lists, Vault unleashed a few more rankings yesterday for the consulting folks, breaking it down to practice area. We’ll dispel with the pleasantries and get right to where the Big 4 (and their spin-offs) crash-landed on various lists.


Economic
9. Deloitte

Energy
4. Accenture
6. Deloitte

Financial
2. Ernst & Young
3. Deloitte
4. PwC
6. KPMG
10. Accenture

Human Resources
5. Deloitte
10. Accenture

Operations
3. Accenture
4. Deloitte
10. KPMG and PwC (tie)

Pharmaceutical and Health Care
6. Deloitte

Business Advisory
5. Deloitte
6. Accenture
7. PwC
8. Ernst & Young

Oh, and because you’re wondering, McKinsey & Co. finished #1 in all but three of the practice areas. Carry on.

Earlier:
Big 4 Have Big Presence on Vault’s Prestige List, Less So in Top 50

Are Big 4 Audits in Russia Worthless?

Maybe not in so many words but this whole PricewaterhouseCoopers/Yukos situation has got some people wondering. The FT and the Wall St. Journal both published articles yesterday about the Mikhail Khodorkovsky and Platon Lebedev trial that is close (?) to wrapping up after 18 months. The two men are accused of embezzling mega bucks from Yukos, the Russian oil company.

Khodorkovsky and Lebedev’s lawyers are now claiming that PwC “acted improperly” by withdrawing ten years worth of audits under pressure from the Kremlin. Pressure, the lawyers say, in the form of “a prriminal investigations and a slew of court cases threatened to undermine its ability to operate in the fast-growing Russian market.” Basically, they threatened to throw PwC out of Russia. And it’s pretty difficult to grow your BRIC business without the “R” so PwC pulled the audits.

The firm claims that they up and changed their minds after the prosecutors showed them some evidence that led them to believe that they had been lied to by Yukos management.


Douglas Miller was the lead partner on Yukos – and who is also reportedly under investigation by the California Board of Accountancy – claims that the accusations are is more or less bullshit and that he stands by his decision to pull the audits.

However, Miller also said in his interrogation by prosecutors that “I believe these issues are being examined not so much by the
company’s Russian office managers, but by executives at PriceWaterhouseCoopers’ global, world level.” The Journal reported, “a PWC official said the decision to withdraw the audit opinions was made by Mr. Miller and others in PWC’s Russia office.” Miller is obviously speculating about what the BSDs at PwC Global were discussing over their muffins but obviously this is a problem.

As is pointed out in the FT, this doesn’t really bode well for audit firms – hell for anyone – trying to do business in Russia:

Regardless of where the truth lies, what is emerging is a situation where global audit firms operating in Russia may all be vulnerable to the double jeopardy of auditing the books of notoriously opaque companies, while being regulated by a government able to launch arbitrary attacks. This lose-lose situation could call into question the value of audits that have been hotly sought as a western seal of approval ever since Russian companies began to access international financial markets.

[…]

[I]t underlines how all who operate in Russian finance – from global audit firms to oligarchs to pension fund investors – may still be vulnerable as the legacy of the chaotic era of Boris Yeltsin and the ensuing Putin clampdown lingers on.

In other words, audits seem to have even less value in Russia than they do in the United States. And here in the U.S. more or less everyone agrees that, at best, auditors are of limited usefulness and at worst, they should be stacked alongside the Charmin™.

But as we said before, PwC (or any other firm that wants to take advantage of Russia’s expanding economy) has billions of reasons to buckle to any pressure put on them by the Russkis. And nobody blames them – not even people close to the Khodorkovsky and Lebedev defense team quoted in the FT saying, “We don’t hold anything against them: they had a gun to their heads.”

Wall Street Journal and Financial Times Expose Serious Allegations of PwC Wrongdoing in Auditor’s Reversal on Yukos [Khodorkovsky & Lebedev Communications Center]
Oil Tycoon Says PWC Caved to Pressure [WSJ]
Russia: Chain retraction [FT]
More on PwC and Yukos:
Never Say Nyet – PwC and Moscow Update [Re: The Auditors]