Tag: Grant Thornton

Bonus and Compensation Watch ’10: Grant Thornton Delivers the Goods

Grant Thornton has been on strict radio silence lately which makes us wonder if Stephen Chipman had given up on blogging or if they had simply given everyone the summer off.

The blog remains a mystery but we do have some news on GT bonuses (the jury was out for awhile) and merit increases and it seems to be good news but extremely short on details and extremely long on Chipman prose:

Leadership announcement
Additional guidance on bonuses and compensation

On our last all-employee call, I told you that I was optimistic that the firm would award bonuses this year. I am pleased to share with you that we are now in a position to say with certainty that we will be paying bonuses for 2010.

As you know, the overall level of bonuses is dependent on our financial results at year end. We are currently working on this modeling based on our economic forecasts and will have the final numbers next month. However, I can let you know that we plan to pay the bonuses in the mid-September timeframe.

Similar to our merit increases, our bonus payments are based on our pay-for-performance philosophy, where we strive to recognize and reward individuals commensurate with performance. We’ve held this philosophy for a number of years, but could have done better executing on it. You reminded us of this in our Voice Your Experience pulse survey, and we are striving to do better. This year — and even more so going forward — we will be giving larger merit increases and bonuses to our top-rated performers to ensure greater differentiation.

Merit increases should be finalized in the next couple of weeks and your local office will begin communicating with you in early July. New compensation is effective on August 1. The increases are based on extensive market information for each of our practices and your individual contributions.

As we work to differentiate our firm through providing consistently distinctive client service, we will continue to move towards a model that rewards each of our people relative to their contributions to the success of the firm.

I’m excited about our direction as a world-class firm that truly makes a difference, and hope you are too. Thank you for all that you have done, and continue to do, for Grant Thornton.

Stephen

So whether or not this puts your anxiety to rest is another matter. Discuss and keep us updated in the coming weeks.

Grant Thornton Survey: More Bank Execs Think the Economy Will Suck Less Eventually, Maybe

No! It’s true! Forty-five percent think things are going to be WAYYYY better in the next months, just in time for Christmaskuh!

That’s up from 24% in December ’09.

John Ziegelbauer, national managing partner of Grant Thornton’s Financial Institutions practice, testifies:

Bankers across the country are starting to become more optimistic about both the U.S. economy and their own local economy…Their optimism about the economy is spilling over into their own banks, with bankers reporting that they are also cautiously optimistic about the number of people they expect to hire in the coming months. Overall, it appears that bankers believe that the economy has finally turned a corner.

Except that 55% of those surveyed expect to be the same (i.e. sucks) or get worse and don’t forget, no one is hiring.

On with the jobless recovery!

Big jump in number of bank execs that expect the economy to improve in next six months [GT]

Accounting News Roundup: Grant Thornton Moves DC Office; CPAs Are Less Clueless on IFRS; The IRS Wins Twice | 05.25.10

Grant Thornton moves D.C. office [Washington Business Journal]
GT DC is moving from its cushy confines of 19,450-square-feet at 1900 M St. NW to 15,190-square-feet at 1250 Connecticut Ave. NW.

Mary Moore Hamrick, the company’s national managing principal of public policy thinks this move is crucial saying, “Grant Thornton’s public policy group is taking a more proactive role in shaping the dialogue on accounting issues. This move will support the public policy group’s expansion as we seek to do our part in restoring confidence in the capital markets.” Better feng shui probably.


AICPA Survey Shows US CPAs Gaining in Awareness of International Financial Reporting Standards [AICPA Press Release]
CPAs are less clueless on IFRS, sayeth the AICPA:

The latest AICPA tracking survey shows a sustained shift toward greater awareness of International Financial Reporting Standards (IFRS) among U.S. accountants. Nearly half, 47 percent, of CPAs in the survey conducted April 20 to May 7 said that they already have basic knowledge of IFRS, an advancement from 39 percent who had basic knowledge in October 2008. At the same time, there has been a continuing decline in the number of CPAs who say they have no knowledge of IFRS; 16 percent in the latest survey, down from 30 percent in October 2008.

U.S. Supreme Court upholds IRS power in tax case [Reuters]
Those super secret corporate legal documents that discuss contingent liabilities? The IRS may be able to request them whenever they like, as the Supreme Court upheld a First Circuit ruling by denying certiorarit in the case.

In U.S. v. Textron, Inc., the company claimed that such documentation was privileged. The First Circuit disagreed:

[I]n its ruling against Textron, set a new test, under which every party in commercial litigation whose opponents file financial statements with contingent liabilities for litigation will be able to obtain documents detailing such exposure, according to Douglas Stransky, an attorney at Sullivan and Worchester in Boston who represents corporate clients.

“The First Circuit’s decision has eviscerated the work product protection that exists to protect exactly the type of attorney analysis that was present in this case,” he said. “It’s surprising that the Supreme Court did not recognize this.”

Florida Keys inmate pleads guilty in IRS scam [Miami Herald]
Shawn Clarke, an inmate at a Florida prison, pleaded guilty to conspiracy yesterday as the ringleader to a tax fraud scam in which he requested bogus refunds from the IRS in the amount of $115,000. It wasn’t exactly a complicated scam, as the inmates and their family members submitted 1040EZ forms along with Form 4852 to request the refunds, all for around $5,000.

Clarke was convinced that this was the best idea ever, allegedly saying, “I’m through with the street crime. I’m strictly white collar from now on. I love the IRS.” He’s looking at an additional 10 years.

Details We’d Like to See in Stephen Chipman’s Blog: Partners with Self-assigned Nicknames

We enjoy Stephen Chipman’s blog as much as any casual reader inside of Grant Thornton but he often leaves us wanting more. He talks about New York, Chicago, Atlanta, London, China (God, he loves talking about China) but sometimes we’d like to know what some of the smaller offices have going for themselves.

We know what’s going on in Honolulu, Greensboro, and Madison but what about Grant Thornton Salt Lake City? Or Oklahoma City? What’s going there, Steve-o?


Fortunately, we stumbled upon a little blog that tells us about not one, but 25 things about GT’s Phoenix office. As you might expect, the office gets a place on a “Best Places” list and most of the information shared is about the volunteering the firm does in the local community or raising awareness about [insert major problem, e.g. Americans are fat and don’t exercise] which is really nice.

As much as we like – nay – love nice, we know that similar efforts are made in other offices so we’re craving something local, something unique, something that makes you say, that sums up Grant Thornton Phoenix.

Luckily, they did just that by way of an 80s slapstick comedy that some of you young GTers have probably never seen (and frankly, we don’t really remember either):

Grant Thornton tapped three friends and partners, who called themselves the “3 Amigos,” to start the Phoenix office. Ed O’Brien, Brad Preber and Ken Garrett were serving clients out of different Grant Thornton offices. Each had a unique specialized expertise – O’Brien in audit, Preber in consulting and Garrett in tax.

Mr Preber is also a tournament champion fly fisherman so we picture him as a hunky Brad Pitt in A River Runs Through It type but the rest of the amigos are a blank.

25 Things You Didn’t Know About…Grant Thornton LLP [HMA Time]

Just to Clear It Up: Grant Thornton Is an Accounting Firm Not a Law Firm

We stumbled upon this letter recently that appears to indicate that there was some confusion between the Grant Thornton Atlanta office and a Judge in Florida about what kind of services GT provides.

GT Atlanta


So it appears Mr Bowles has a little bit of responsibility here since he admits, “I did not submit a written request to appear as an other qualified representative in the form specified in [rule] which would have triggered a specific determination by you about my qualifications to go forward.” The lengthy explanation that follows kinda sorta indicates that maybe, he feels like this was his bad that the mistake got made. If you disagree and would like to blame the judge, fire away.

That being said, we figured that GT had enough of a reputation as an accounting firm to be recognized as such with little or no investigation. Apparently that is not the case. We left messages with both Judge Holified and Mr Bowles to get an explanation but so far neither of them have returned our calls.

Accounting News Roundup: Adelphia’s Rigases Get Second Chance in Tax Fraud Case; Grant Thornton Purchases Avalion Consulting | 05.14.10

Adelphia’s Rigases Win New Hearing in Tax-Fraud Case [Bloomberg]
John and Timothy Rigas are both doing time for their convictions in the Adelphia fraud but the their conviction in New York doesn’t seem to have satisfied the Keystone State. The two mean have been indicted on several tax-related charges in PA. Despite the prosecutorial zealousness, the federal appeals court in Philly ruled that prosecutors must allow the Rigases to present evidence that they are getting the double jeopardy treatment, as the tax charges are directly related to their crimes at Adelphia.


FASB Codifies SEC Announcement on Foreign Currency [Compliance Week]
Occurrences in Venezuela are capable of affecting the FASB’s agenda as Compliance Week reports that this recent guidance, “focuses on foreign currency issues related to investments or operations in Venezuela.” So, if you’ve got clients or do business in Hugo Land, you should probably check out Accounting Standards Update No. 2010-19.

Sage: Paul Walker CEO’s successor [AccMan]
“Let’s be honest – Sage is in the crapper,” sayeth Dennis Howlett.

Grant Thornton LLP purchases assets of Dallas-based firm Avalion Consulting LLC [GT Press Release]
Grant Thornton’s purchase of the group, “comprises two partners; Avalion’s IT consulting staff; and its IT and governance, risk and compliance (GRC) intellectual property, including Avalion’s patented GRC software solution – ComplianceSet®.”

ComplianceSet is a SaaS solution that “serves as the technical foundation for a process-based approach” for governance, risk and compliance; SOx, internal audit, and enterprise risk management.

One Diligent CPA Forced the IRS to Use a ‘Staggering’ Amount of Resources

Sure, NYU has produced lots of fancy-pants tax lawyers. And many high-powered big-school tax accountants haunt the cubicles of the Final Four accounting firms. But if driving the IRS to distraction is a mark of tax distinction, an obscure Kansas City attorney/CPA, formerly of Grant Thornton and Coopers and Lybrand, is a true tax all-star.


Or was. A federal judge this week made it inconvenient for GT alum Allen R. Davison to pursue his tax practice by enjoining him from marketing some of his most creative ideas:

Davison is hereby enjoined from organizing, establishing, promoting, selling, offering for sale or helping to organize, establish, promote, se any tax plan, as addressed herein, involving sham parallel C management companies, sham 412(i) plans, sham flock contracts or any other illegal tax scheme, plan, or device, even if not specifically addressed herein. Additionally, Davison shall not organize, establish, promote, sell, offer for sale or assist in any financial or tax related arrangement without submitting in writing to an IRS designee, a detailed plan explaining the financial or tax arrangement and all steps necessary for the arrangement to be legal under the tax code.

That would all be rather inconvenient for a practitioner. Why are the feds so down on Mr. Davison? From the injunction order:

Davison’s numerous, complex, ever-changing, tax-fraud schemes and his deliberate efforts to disguise his true involvement in the promotion of these tax-fraud schemes have required the IRS to expend a “staggering” amount of resources on discovering and combating these schemes. If this outlay of resources continues – and it almost certainly will continue in the absence of an injunction barring Davison from offering tax advice without significant restraint, then these resources will not be available to service honest tax paying Americans. Nor will these resources be available to investigate other promoters of tax-fraud schemes.

What were these “schemes”? Some of them used “management fees” to shift income from taxable businesses to sham S corporations owned by tax-exempt ESOPs or Roth IRAs. Others involved improper pension plans. But good old Midwestern farm ingenuity was behind what may be his most creative plan:

Davison drafts purported flock contracts for his clients. (Tr. 398:21-399:4). He argues that by executing these agreements, his clients become farmers, who are eligible to claim deductions for the cost of purchasing a flock of layer hens during the tax year in which that cost is incurred, pursuant to Revenue Ruling 60-191. (Tr. 412:10-20; PX 165). That revenue ruling provides “that farmers employing the cash method of accounting may deduct the cost of baby chicks and egg laying hens in the year of payment therefor, provided such method is consistently followed and clearly reflects income.”

The judge found that Mr. Davison has an overly-inclusive view of what “farming” means. The judge said that a guy with dirty boots who actually fed and raised chicks might be a farmer, but a “self-employed insurance salesman,” for example, who loaned money to a real farmer, did not.

There are many fascinating threads here, but let’s just hit three for now:

• Mr. Davison began selling many of these ideas while working for Grant Thornton, and according to the court order, marketed them through a network of CPA firms set up by GT alums. Networking pays!

• The elaborate system of preparer registration, testing and continuing education that IRS Commissioner Shulman is ramming through will spend enormous resources making honest and competent preparers jump through hoops; they would have done nothing to stop Mr. Davison. Shulman’s plan will spend money on driving honest preparers crazy with paperwork rather than chasing scammers.

• The cash-basis chicken flock technique that is outrageous for an insurance salesman is hunky-dory when done by a wealthy farmer. Because America Needs Farmers!

Joe Kristan is a shareholder of Roth & Company, P.C. in Des Moines, Iowa, author of the Tax Update Blog and Going Concern contributor. You can see all of his posts for GC here.

Fire at Grant Thornton Boston

May 11, 2010 – The Boston office was evacuated due to a fire in the building. All Grant Thornton employees appear to have been evacuated safely.

Sure enough, we tried calling Beantown and we were automatically re-routed to GT New York. If you’ve got details, get in touch.

Grant Thornton Saying Aloha to Honolulu Office

Over the weekend we learned that Grant Thornton was pulling up the stakes in Hawaii. According to our sources, the partners of the Honolulu office will be purchasing the business from GT and joining Pannell Kerr Forster, and international network of independently owned firms (U.S. locations).


GT Honolulu has approximately 60 professionals and according to one source familiar with the situation, all will be retained after the transaction According to our source, Doreen Griffith, the Honolulu Office Managing Partner will be moving to the San Francisco office to lead the tax practice there while Patrick Oki, an assurance partner will head up the new PKF office.

Our source told us that the reaction of the GTers was that of surprise but not upset, “I would say that employees are very happy but shocked.”

Grant Thornton’s disposal of this office follows the closure of its Madison, Wisconsin office, announced just last month and the Greensboro office that we reported on back in February. Several sources have speculated that Grant Thornton is moving out of smaller markets to focus business opportunities in larger markets.

Despite these moves, none of them had been previously mentioned on either of the the firm-wide calls held by Grant Thornton CEO Stephen Chipman held this year.

PKF North America’s President & CEO, Terry Snyder spoke with us briefly about the transaction, confirming that the partners in Honolulu were taking over the business from Grant Thornton and that Mr Oki “was the man to speak to.” He declined to comment on GT exiting the Honolulu market.

Messages left with Patrick Oki, Doreen Griffith and Grant Thronton’s national PR team were not returned. Emails to both Mr Oki and Ms Griffith were not returned.

If you have information on this transition in Honolulu, you can drop us a line at tips@goingconcern.com.

Grant Thornton Survey Shows That CFOs Might Be Ignoring the SEC’s XBRL Deadline

It has been well established in these pages and elsewhere that the SEC has had its share of problems. Take your pick: 1) missing the biggest financial fraud in the history of the world 2) hiring an army of porn-addicted accountants and lawyers to protect our markets 3) waffling on IFRS 4) did we mention missing huge frauds?

To be fair, the Commission has been working hard to redeem itself by cracking down on dubious activity (from Goldman to Overstock), hiring more fraud experts and giving those tranny porn-obsessed employees a second chance.


Regardless of the turnaround-in-progress, CFOs in this country seem to have ceased taking the SEC seriously. Sure the 10-Ks and Qs still get filed but those were in place long before the wheels fell off.

In a recent survey, Grant Thornton found that, despite a SEC deadline for public companies to utilize eXtensible Business Reporting Language (XBRL), a fair amount of CFOs don’t seem all that worried about reporting their financial statements using the technology:

64 percent of public companies do not currently report financial results using eXtensible Business Reporting Language (XBRL); and of those, half have no plans to in the future even though the SEC mandated that public companies have to report their financials using Interactive Data by 2011.

“It’s concerning that almost a third of public companies still have no plan on using XBRL to report their financials despite the requirement that all public companies comply with XBRL filing requirements by mid-year 2011,” said Sean Denham, a partner in Grant Thornton’s Professional Standards Group and a member of the AICPA’s XBRL Task Force. “I foresee a lot of companies playing catch up as the 2011 SEC deadline approaches.”

Whether this lack of action can be attributed to defiance, fear of technology, or pure laziness is not explained but we wouldn’t rule out the possibility that the SEC has an outright mutiny on its hands.

A third of public companies have no plans to use XBRL – despite SEC mandate requiring XBRL use by 2011 [GT Press Release]
Also see: XBR-Lax [CFO Blog]

Compensation Watch ’10: GT Reassures Merit Increases, Jury Out on Bonuses

On Friday, Grant Thornton had a firm wide call to discuss several things including layoffs, compensation, and grab-bag questions.

Headcount Reductions – Steve-o believes that the worst is over and that “restructuring efforts are substantially behind us.” If there happens to be additional “headcount transitions” it will be to refine operations or part of the no He went on to say that the people that are GTers now will, “in very large part,” remain GTers. So can we assume the action in Cleveland and Chicago was the last of it?


Compensation: GT seems is making big push towards a “pay for performance” model for its employees which means compensation adjustments will focus on top performers (“5s” in GT world) and market based adjustments (i.e. keeping up the Joneses) won’t be happening. SC cited a downward trend of salaries in the accounting profession based on a survey that GT does with Mercer (sounds convenient) for the phasing out of market adjustments. He said there might be some exceptions to this.

The size of the merit adjustments have not yet been determined because it all depends on how well 1) GT performs through the end of the year and 2) individual performance. Chip said that enough people were belly aching about the old adjustment system that a change was warranted. This will be implemented slightly for this fiscal year (can’t get all Darwin about it 3/4 of the way through the fiscal year) and will be the main methods for next year and going forward.

Bonuses: SC cleared this whole issue up saying that it has not been determined if bonuses will be paid this year. It all depends no the firm’s performance in the final quarter of the fiscal year. He did say that he’s pre-tay, pre-tay, pre-tay optimistic about the firm “being in a position to pay bonuses” but they’re still crunching the numbers so there’s no telling if it will be a mini-windfall, pocket change, or a set of steak knives.

Not to worry though, as the top performers will certainly get something if everything goes well at the firm overall.

This “new” focus on pay for performance seems kind of familiar since all the firms assign rankings to employees (with their own bizarro methodologies) and are paid accordingly. It makes you wonder if those that fall in the meaty part of the GT curve will get such a small adjustment that it will be another twist on the forced ranking trend amongst accounting firms.

Steve-o then shared his general optimism about the direction of the economy and what it means for the firm, a few recent client wins, yada yada yada. He also updated everyone with some very vague details on the firm’s new strategy “Unleashing Our Potential” that will be rolling out in the next fiscal year. Basically all non-partners will have the chance to drop their $0.02 on this strategeroy very soon but other than that we couldn’t tell if the new strategy involved a lunar landing or full-scale assault on financial reporting fraud.

Last but perhaps most importantly, Steve-o admitted to enjoying the Masters very much, however he was quite clear that he was less than thrilled to see KPMG on Phil’s lid. We’re sure it’s nothing personal against Phil but those may be fightin’ words directed straight at Johnny V.

Accounting News Roundup: Rajaratnam Claims KPMG “Tricked” Him into Illegal Tax Shelter; United, Continental Agree to ‘Merger of Equals’; Some Thoughts on iPad for Accountants | 05.03.10

Galleon’s Rajaratnam Said He Was Duped in Illegal Tax Shelter [Bloomberg Businessweek]
Raj Rajaratnam, who is awaiting trial in an insider trading case set to take place this fall, claimed that he was “tricked into investing in an illegal tax shelter,” that was developed by KPMG and “tax shelter promoter” Diversified Group, according to a lawsuit from 2005.

Rajaratnam and Galleon co-founder Gary Rosenbach won a $5.8 million in an arbitrator’s judgment against Diversified Group and its president in 2009. KPMG was not mentioned in the judgment and neither Rajaratnam’s attorney nor KPMG would comment on the current r if the firm had made a payment to Raj.

Rajaratnam and Rosenbach said they were induced to invest in a shelter called “OPS,” or Option Partnership Strategy, which was developed by KPMG and Diversified as a way to generate fees for the firms.

“The OPS shelter was essentially an illegal basis-shifting scheme which — unbeknownst to plaintiffs — relied upon a disingenuous reading of the federal tax code,” his lawyers wrote in the complaint.

Prosecutors will be interested to know what Rajaratnam said under oath in his suit against KPMG to determine if any of his statements will be useful in their insider trading case.

United, Continental Agree to Combine [WSJ]
United Airlines and Continental Airlines have agreed to combine, in a stock swap valued at $3 billion.

The “merger of equals” would create the world’s largest airline that would control 21% of the total domestic capacity and be 8% larger than Delta Air Lines in terms of miles flown, serving 370 destinations. Assuming the deal does not raise any antitrust concerns and contracts for employees are approved in a timely fashion, the companies plan to complete the transaction in the 4th quarter of this year.

iPad for business – the taste test [ZDNet]
Dennis Howlett tested out an iPad and since some of you have, at the very least, wondered about it for your own professional use, here’s his take on Numbers, a spreadsheet application that he says is “gorgeous to look at” but has several drawbacks:

I found it was possible to create a confusing error formula. Ahem. That will require fixing. While Numbers has masses of functions (see illustration), there is no ability to create Pivot Tables. Those are the accountant’s stand by for reporting and the like. It’s boring but essential stuff. Without Pivot Tables, the iPad won’t get a sniff in the hands of this powerful and influential group. There is an alternative for the future. Some smart developers out there will build reporting applications that can run over the Internet. It is one of the gaping holes in the SaaS/cloud story requiring urgent attention.

Any other thoughts on iPad for accountants? Weigh in.

IIA Proposes New Standards for Internal Auditors [Compliance Week]
The Institute of Internal Auditors is requested comment on proposals for new standards that would include a requirement for internal auditors to provide audit opinions and to additional explanation of the responsibility of internal auditors for the work of contractors.

Grant Thornton closing Triad office, moving operations to Charlotte [Triad Business Journal (subscription required for full article)]
Grant Thornton finally got around to announcing the closure of its Greensboro/Triad office. We reported on the closure back in February. The firm announced that the “vast majority” of its approximately 30 employees would be moving to the firm’s offices in either Charlotte or Raleigh. The TBJ reports National Director of Communications, John Vita’s comments: “We remain committed to the Triad marketplace, however, we believe it can be best served over the long term by attracting the highest quality professionals who wish to work out of our larger offices in Charlotte and Raleigh.”