Tag: Deloitte

Deloitte Touche Tohmatsu Limited, commonly referred to as Deloitte, is a international professional services network headquartered in London, United Kingdom.

Here you’ll find news about Deloitte salaries and raises, promotions, press releases, and lawsuits.

Marcum Has Some Doubts About American Apparel’s Ability to Continue Selling Gold Lamé Leggings

Bad news for Dov Charney’s hipster retail paradise as Marcum – who replaced Deloitte last summer – has issued its auditor’s opinion with the language that no one likes to see.


But before we get to that, if you take a quick glance at the balance sheet you’ll see that the company barely has enough money to keep the lights on as their working capital is a measly $3 million (current assets of $216 million, current liabilities of $213 million). This shockingly bad number is mostly due to the $138 million in revolving credit facilities the company has included in its current liabilities. The company is also shows an accumulated deficit of over $73 million in its equity section. APP also bled over $32 million in cash from operations, according to its cash flow statement. All this bad news has lots of people talking about bankruptcy and that doesn’t touch the thirteen (that’s Gawker’s count, I only saw twelve) ongoing lawsuits against the company. Plus there’s the subpoena the company received from the U.S. Attorney General for SDNY last August over their auditor switcheroo.

We could go on and on but you get the pic. Here’s the final paragraph from Marcum’s opinion in APP’s 10-K:

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred a substantial loss from operations and had negative cash flow from operations for the year ended December 31, 2010. As a result of noncompliance with certain loan covenants, debt with carrying value of approximately $138.0 million at December 31, 2010, could be declared immediately due and payable. Notwithstanding the foregoing, the Company has minimal availability for additional borrowings from its existing credit facilities, which could result in the Company not having sufficient liquidity or minimum cash levels to operate its business. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Obviously the bad news is that investors are really spooked but the good news is that there could be a serious fire sale on hoodies and t-shirts in our future. Silver lining!

In Case You Forgot, the Big 4 Are Hiring a Small Army of People This Year

CNN/Fortune managed to dig up this corpse of a story: “Bean counters wanted: Why the Big 4 are in a hiring frenzy.”  This refers to the hiring bonanza that Deloitte announced last September that was followed by various announcements by the rest of the Big 4:

[T]here’s one unlikely place where the help wanted sign is up, big time: Accounting firms.

Deloitte plans to hire 17,000 professionals in the U.S. and India in 2011, according to Cathleen Benko, its chief talent officer. It’s seeking accountants, auditors, consultants, and IT staff. Hiring is split evenly between experienced and entry-level applicants.

Ernst & Young has stepped up recruiting. It’s looking to hire 7,000 employees from college campuses — 4,500 full-time and 2,500 interns — and 6,000 experienced staff, totaling 13,000 people in 2011, says Dan Black, its director of Americas Campus Recruiting. Experienced staffing is up 80% from last year and campus recruits are up 20%.

Both firms compete for talent against PricewaterhouseCoopers, KPMG, and large consulting firms such as McKinsey and Bain. The hiring confirms a 2011 Bureau of Labor Statistics report that predicted employment in accounting and auditing would spike 22%.

For starters I don’t know why accounting firms are an “unlikely” place for the “help wanted sign” but don’t forget that this is the same outlet that told us that the firms were making money hand over fist back in the Fall of ’09. Also, why CNN/Fortune is now reporting Deloitte’s India’s hiring numbers as part of this story is a little confusing. Plus, if “hiring is split” between experienced and new hires that is a change in the breakdown from what was reported last September. Again, maybe the India numbers change things up a bit and I lost my 10-key long ago.

And we’ll also mention that the E&Y numbers are slightly better than what they initially reported last September so make of all these stats what you will, the rainbow and unicorn PR machine is in full force and CNN is happy to scoop them up spit them out.

Bean counters wanted: Why the Big 4 are in a hiring frenzy [CNNMoney]

Deloitte Is Lending Michigan a Helping Hand

Did I say lending? Sorry, that’s not technically accurate. Deloitte Consulting is monitoring Michigan’s welfare computer systems and that involves billable hours. Lots of them. $15 million worth.

The state of Michigan is spending millions of dollars on a contractor to run its welfare computer system partly because it doesn’t offer enough money to attract new hires. A system called Bridges keeps track of welfare cases in the Department of Human Services. In February, Deloitte Consulting was given a one-year contract for about $15 million to maintain it and make regular updates.

Of course it would be cheaper if the Wolverine State did this themselves but there’s a small problem:

[The State’s technology department] lost 15 people to early retirement in December and had several vacancies starting at roughly $42,000 a year. Nobody applied.

Mich. spends millions on contractor [AP]

The Doomsayers at Deloitte Have Come Up With a Crisis Management App

By crisis, we don’t mean 70 hour work-weeks and diversity training in the face of that A1 in your office who likes to wear short skirts and low-cut tops just to mess with you.

In the event of a catastrophic emergency like an earthquake, it’s good to know where your co-workers are if you’ve got to evacuate the building. Deloitte Australia has addressed the issue of safety and keeping tabs on the worker bees with Bamboo™, a Business Continuity Management (BCM) smart phone application (so far released for BlackBerry and iPhone only).

How does it work?


The BlackBerry application uses the device’s unique PIN (anyone addicted to BBM knows what that is) as well as voice, SMS and email to keep the team in communication in the event of an emergency. Emergency plans are readily available with Bamboo, eliminating the need to lug along a huge contingency binder stuffed with exit plans and instructions in a crisis situation.

Bamboo automatically logs all usage on each handset and when there is network access, sends these logs to the Bamboo server. The Bamboo Administrator is able to view all logs, from all users to understand its usage, retrace all steps taken and tailor training based on this usage. This data is also valuable in post-incident reviews and audits.

Don’t try to find it in the app store, Bamboo is an enterprise application and as such is deployed by the Company through enterprise application deployment, supported by the local Deloitte office.

Follow Deloitte’s Australian BCM team at @DeloitteBCM and stay tuned, they assure us they’re working to get the kids in America hooked up with their own BCM team.

Check it out in action below:

China MediaExpress CFO Keeps Things Vague in Resignation Letter

Jacky Lam’s resignation was effective on Sunday but his letter to the CCME Board was dated Tuesday, making us wonder if he slept on it for 48 hours just be sure he was doing the right thing.

March 15, 2011

The Board of Directors
China MediaExpress Holdings, Inc.
22/F Wuyi Building
33 Dongjie Street
Fuzhou, China

Dear Sirs,

As I informed the Board on Sunday, I have resigned as a Director and as the Chief Financial Officer of China MediaExpress Holding, Inc. (the “Company”), effective as of March 13, 2011. I have resigned because of information that I have learned in the past few days, and because the Chairman and CEO did not respond to these matters in a manner that I believed to be appropriate.

Thank you for your kind attention and I wish the Company success in the future.

Yours sincerely,

Jacky Lam

Of course the “information that I have learned” could have been Roddy Boyd’s post from last Friday or the video of the sleeping staff posted Sunday or something else entirely. As far as the CEO’s inaction – should he have filled one of the broom closets with Red Bull? Maybe kept more of something else that apparently keeps people awake but otherwise uninterested in other humans? We’re not exactly sure on either of these questions but we’d love to hear theories.

As for the “Best. Period. End of Statement.” – they did their part too.

8-K [SEC via ZH]

Deloitte Resigns as China MediaExpress Auditor; CFO Quits

In the wake of Roddy Boyd’s epic post from March 11th, China MediaExpress announced some bad news today – Deloitte resigned as their auditor effective Friday and as a result the company’s CFO, Jacky Lam, quit yesterday:

China’s largest television advertising operator on inter-city and airport express buses, today announced that the Company’s registered independent accounting firm, Deloitte Touche Tohmatsu (“DTT”) has formally resigned its engagement by the Company as of March 11, 2011. Following the receipt of the DTT resignation letter, on March 13, 2011, the Company received notice of the resignation of Jacky Lam from his position as Chief Financial Officer and director of the Company, effective immediately. As a result, CME will delay its fourth quarter earnings release and will not file its Form 10-K for the fiscal year ended December 31, 2010 by March 16, 2011, its original due date.

As you might have already guessed, Deloitte got spooked after all the fraud talk and they also came to the conclusion that management couldn’t be trusted (even if he did say great things about them):

The DTT resignation letter stated that DTT was no longer able to rely on the representations of management, and recommended that certain issues encountered during the audit be addressed by an independent investigation. DTT’s letter also stated that these issues may have adverse implications for the prior periods’ financial reports and that, in their view, further investigatory procedures would be required to determine whether the prior periods’ financial reports are reliable. Upon receipt of the formal DTT resignation letter, the Company requested the suspension of trading in the Company’s common stock on the NASDAQ Global Market to permit full disclosure of DTT’s resignation to be disseminated to the public.

So the company now needs a new auditor and a new CFO. Of course you’ll have to work around forensic accountants and a bunch of lawyers that will be helping the company through this little hiccough but otherwise, this should be a snap.

Earlier:
Apparently ‘The Purpose of Auditors Is Completely, Entirely, and Wholly’ to Look for Fraud and ‘Deloitte is the best. Period. End of Statement.’

Apparently ‘The Purpose of Auditors Is Completely, Entirely, and Wholly’ to Look for Fraud and ‘Deloitte is the best. Period. End of Statement.’

Remember China MediaExpress? That’s the company whose CEO – Zheng Cheng – responded to the accusations of fraud by evoking ‘reputable and well-known’ Deloitte to get the haters off their back. Even though the company is still taking heat, Mr Cheng will be happy to know that he’s got someone in his corner: Glen Bradford, CEO of ARM Holdings LLC, a Hedge Fund Advisory Company. The thing is, Mr Bradford seems a little confused about what an auditor’s purpose is (for fun, I added some emphasis):

I have received tons of messages that can be summarized by the belief that auditors do not look for fraud and that all they do is make sure things line up in the reports. I can say that this is not true simply by being practical. If we didn’t have auditors to verify the claims that companies make, then companies could claim whatever they want to. The purpose of auditors is completely, entirely, and wholly to look for indications of fraudulant activity — and to do their best to remove all possible doubt that the company is misrepresenting itself on its financial statements.

You can make of that what you will but then Glen continues:

Then, if things are OK, they sign off on them. Some auditors are better than others. Deloitte is the best. Period. End of Statement.

Well then! I’m sure Deloitte appreciates the ringing endorsement regardless if it comes from someone who is under the impression that “The purpose of auditors is completely, entirely, and wholly to look for indications of fraudulant activity.” At the very least, this is debatable point, so if you have a difference of opinion with anything above, feel free to share below.

China MediaExpress Holdings: All Eyes on Deloitte [Seeking Alpha]

Just So You’re Aware: A New Species of Frog Has Been Named After Deloitte

This announcement is a week old but it’s GC worthy so if you feel compelled to mention the timing of our post, don’t. Supposedly, this chap to the right is Nectophrynoides deloittei and was discovered in the Rubeho Forest in Tanzania in 2005. The African Rainforest Conservancy (“ARC”) slapped the name on him for Deloitte’s contributions to the nonprofit’s environmental efforts in the Rubeho region.


From Deloitte’s consistently awful website:

A new species of frog has been named after Deloitte, in recognition of the firm’s work in helping to preserve the Rubeho Forest in Tanzania, an ecologically distinct part of the country known as the ‘Galapagos of Africa’. Nectophrynoides deloittei was discovered in the Rubeho Forest in 2005 was named by the African Rainforest Conservancy (ARC), an agency set up to conserve and restore Africa’s rainforests.

Just such an occasion might cause someone to tweet something but there hasn’t been a peep out of Quigs. Probably plugging the book.

Former Deloitte Partner Jeff Farber Lands Deputy CFO Gig at AIG

Not only is Mr Farber a Deloitte audit alum, he also had stints as the controller at Bear Stearns and CFO at Gamco Investors. Today came the announcement that he is still winning, now as the new sidekick to David Herzog.

In this new position, Mr. Farber will provide global leadership and coordination for AIG’s Controllership and Accounting Policy functions, as well as the AIG Global Tax Department. He reports to David L. Herzog, AIG Executive Vice President and Chief Financial Officer.

It’s worth noting that as the a leader and coordinator for global tax department, Farber alone will encompass more oversight than all of Weatherford International.

ANYWAY, back to the boilerplate:

“Jeff Farber is well prepared to help take these key AIG finance functions to an even higher level,” said Mr. Herzog. “Over the past several years the finance team has worked diligently through an extraordinarily complex restructuring, and this new role provides Jeff with an opportunity to lead a great team and work closely with the finance transformation team as we roll out our new financial platform.”

Sounds like a hoot. Best of luck to Mr Farber.

Low Voter (aka Partner) Turnout Expected for Deloitte Leadership Election

Last week we shared the Deloitte U.S. Leadership candidates with you but at the time we hadn’t confirmed that the thumbsup/thumbsdown had begun. This week, a source confirmed for us that voting had, in fact, started last week but no one should get too anxious about hearing the results:

The vote continues at least until the Firm achieves a 50% voting rate from all the partners. This is typically a struggle, and many voice messages and e-mails are sent rounding up at least the 50%. This is part of the problem (and a bit pathetic). Nobody believes their voices are heard, so they don’t care to vote. Or, if they vote NO, they fear retribution.


As we reported in January, the retribution of a “No” vote is something that many young partners may fear and you can presuppose that many veteran partners who are a little preoccupied with a little something called “busy season clients” aren’t exactly concerned with casting a vote in an election that is all but decided already. All this adds up to a pretty sad voter turnout, sayeth our source:

Ok – so then, among that paltry 50% voting rate, there needs to be a 2/3 approval for each candidate in order for them to win election. So – if you do the math…we have about 2800 partners. Only 1400 need to vote for a quorum, and only about 940 need to approve each candidate for them to get into office. So perhaps only about 33% of the partners end up approving of the people that run the firm.

Unfortunately – nobody focuses upon this fact. Unbelievable. And now we have a non-CPA being put up for the Chairman’s spot of an accounting firm. It’s insanity, really.

Oh, right; the non-CPA chairman controversy. For those of you that are unfamiliar, Punit Renjen is the CEO of Deloitte Consulting. Mr Renjen has been on the job for just over a year and by all accounts has done an acceptable job and it doesn’t surprise us that he’s up for this position. The fact that he, in all likelihood, will become the next chairman of a Big 4 firm, bothers a lot of CPAs. Despite the bellyaching of those on the audit/tax side of the house, what’s not up for debate is that Deloitte Consulting is the second largest practice, according to the this year’s revenue data. But what’s even more important, consulting is the fastest growing segment, with double digit growth in FY 2010. So if Mr Renjen’s ascension to the chairman position bothers some in a CPA puritanical sense, we can appreciate that. But from a numbers standpoint, it’s probably overdue and is definitely not surprising.

LECG Selling Off Practice Groups to FTI, Grant Thornton, WeiserMazars

LECG Corporation, a global professional services company that specializes in “global litigation; economics; consulting and business advisory; and governance, assurance, and tax expert services” is spinning off five practice groups to help pay off $27.8 million on a credit facility. Two of the expert groups are going to FTI Consulting, Grant Thornton is picking up two groups and also a third that is being split with WeiserMazars. News of this fire sale has given LECG’s stock price a serious case of the Mondays (bolding is ours).

The tenth amendment to the credit agreement is expected to tion several practice groups to other firms and determines the process for similar transactions in the immediate future. The tenth amendment also will limit how LECG may use its cash until it repays its lenders. The facility matures on March 31, 2011 and approximately $27.8 million is outstanding. Absent sufficient proceeds from the transition of practice groups, the company will not have adequate cash resources to repay amounts outstanding under the facility.

The transaction with FTI Consulting, Inc. involves the transition to that firm of LECG’s International Arbitration and Aviation Competition practices and is expected to be effective today, subject to satisfaction of closing conditions, including the consent of its lenders to the release of liens on certain assets to be transferred. Terms were not disclosed.

The company also signed a letter of intent with Grant Thornton LLP to transition the company’s tax and business consulting groups. Simultaneously, the partners of LECG Partners, LLP, which provide attest services under an alternative practice structure, will continue to provide their professional services with either Grant Thornton LLP or WeiserMazars LLP.

The announced transitions will involve approximately 350 employees in Atlanta, Albany, Cambridge, Chicago, Devon, Harrisburg, Houston, New York, Schaumburg and Washington, DC.

Doug Phillips, Managing Partner of WeiserMazars told GC that the firm is “working to close the agreement” and that it is expected to finalized this afternoon or tomorrow morning. WeiserMazars will assume five partners and 40 professionals and they will be based in their Horsham, Pennsylvania office. Messages left with Grant Thornton, FTI Consulting and LECG were not immediately returned.

These spin-offs are occurring less than a year after LECG merged with Smart Business Advisory & Consulting, however a quick glance at their last three income statements shows drastically dropping revenues from $370.43 million in 2007 to $335.68 mil in 2008 and $263.20 mil for 2009. Cash flow from operations was also trending negatively for the last three years and the company’s equity is dwindling. By the count in the LECG/Smart press release, the company will have around 300 employees remaining after the transitioning of these practices groups is finalized. Not too good, man.

Despite all this, Deloitte’s most recent audit opinion was a clean one with no indication that the company was having problems. This fire sale of revenue-producing assets tells a very different story and we can’t say that we’d blame anyone that was thinking about rushing for the exits. If you’re in the know, email us and we’ll update you as we learn more.

UPDATE:
After poking around a little bit, we have a bit more to share (although more questions seem to persist). A source familiar with the consulting industry informed us that FTI Consulting was very interested in LECG’s European locations however, there’s nothing in the press release that indicates that this was part of the deal, despite the fact, our source said, that Paris is major hub for international arbitrage. Our source speculated that LECG would liquidate in the next 60-90 days which confirmed the thoughts shared with us by a source close to LECG.

One other interesting item of note – Grant Thornton continues its expansion, with the pickup of these tax, advisory and attest groups. It’s not entirely clear what areas in advisory GT picked up here but we’re definitely seeing Stephen Chipman’s dreams of my dynamism (yes, it’s a word) in action.

UPDATE 2:
Joseph DiStefano writes over at PhillyDeals that the deal would “[leave] about 1,000 with LECG in its remaining units.” Our previous number was based on the 650 cited in the March 2010 press release which appears to not have included the number of Smart employees that were added to the headcount.

DiStefano also published portions of a letter that LECG Managing Director John B. Stine II sent to clients:

“I am very excited to report that our tax, compensation & benefits, consulting and certain components of the audit practice of LECG (formerly SMART Business Advisory and Consulting) have joined Grant Thornton in its offices in Philadelphia, New York, Chicago, Atlanta, Portland, and London.

“Grant Thornton, the sixth largest firm globally, proved to be the best choice among the 11 accounting firms and 6 consulting firms that pursued our team.

“In only 10 days, Grant Thornton went from an initial one-on-one meeting to Board approval and sign-off of a deal that brings over 300 professionals to the firm…

So based on that it sounds like there were a bunch of firms in the mix and Stine gave clients the reasons behind going with GT: “Grant Thornton was the only firm with a similar roster of clients […] in contrast to the numerous local firms that showed enormous interest in doing transactions that cut out geographies or service lines.”

How Would You Vote on the Deloitte Leadership Candidates?

Last month, we shared with you the concerns of a Deloitte partner who has a lot of issues with the processes around electing the firm’s leadership. As the partner explained it to us, “The elected individuals are the Chairman, the CEO, and a CEO ‘Alternate.’ The CEO ‘Alternate’ is there in the event that the CEO elect is also elected as the Global CEO (which will typically happen).”

Recently, we were able to confirm the candidates and thought we’d share them with all of you since some of you might not be aware of who they are:


• Punit Renjen, for Chairman of Deloitte LLP (Current CEO of Deloitte Consulting)

• Barry Salzberg, for CEO of Deloitte LLP (Current CEO of Deloitte LLP)

• Joe Echeverria, for CEO Alternate (Current Managing Partner of U.S. Operations)

What’s not immediately known is when Deloitte partners will be voting “Yes or No” on these candidates. One of our sources speculated that the vote could be as early this week.

In our previous post, we learned that the partners vote up or down on these candidates as a group as the partner in our last post explained “The partners get to vote ‘YES or NO’ on the ‘slate’ of candidates that is advanced.” Since we know a lot of you out there in Internetland are Deloitte employees but not partners, we thought we’d get your perspective on this slate of candidates and whether you would give them a “Yes” or “No.” And since the comments box allows for further explanation, feel free to elaborate on your vote. We know of one person who will be voting no.

A message left with Deloitte spokesperson Jonathan Gandal was not immediately returned.

Earlier:
Deloitte Partner Encourages Brethren to Take Back Their Firm