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November 30, 2022

Huron Consulting

Grant Thornton Is Done Selling: Acquires Huron’s Disputes & Investigations Practice

If you had to judge the state of Grant Thornton based on the activity over the past year, you might assume that the firm was headed downhill because of their disposal of several offices around the country. Despite the haters and accent conspiracy theorists out there, Stephen Chipman was confident about the future. So much so that he sent hand-written notes to all of you encouraging you to become GT evangelists.

Now this morning, we learn that this unleashing of dynamic potential clients could be taking shape:

Grant Thornton LLP said Monday it has acquired the assets of Huron Consulting Group’s disputes and investigations practice in a deal that will bring 60 people to Grant Thornton’s offices in Boston, Chicago, New York and San Francisco.

The acquisition is part of Grant Thornton’s strategy to double revenue in the next five years. Huron Consulting has divested itself of its disputes and investigations practice. Huron’s D&I employees will join Grant Thornton’s economic and advisory groups in four cities, including Boston.

Well! This is quite the acquisition. Since GT and Huron are both Chicago-based, there is likely a lot of connections here that helped make this deal happen. Huron’s press release states that the D&I group (the smallest inside the company) had been on the block because the overlords wanted to focus its efforts on “businesses [with] a more substantial market presence”:

The Company stated previously that it was evaluating the long-term prospects of its D&I service line, which had accounted for approximately 5% of the Company’s overall revenue for the first six months of 2010. “The Disputes and Investigations practice has been a part of Huron since our formation in 2002. We recently conducted a comprehensive assessment of all of our businesses and concluded that the divestiture of the D&I practice would enable management to devote more of its energies and financial resources to businesses where we have a more substantial market presence,” said James H. Roth, chief executive officer, Huron Consulting Group.

[…]

Huron is also revising its 2010 revenue guidance based on the divestiture of the D&I practice and other market factors impacting two reporting segments. When the Company announced second quarter results in July 2010, it provided a 2010 revenue guidance estimate between $600-$620 million.

Based on the divestiture of the D&I practice, the 2010 Company revenue guidance would have been reduced by $35-$40 million. In addition to the D&I divestiture impact, the Company is reducing its annual guidance by an additional $25-$30 million to reflect contract and project delays in two of its service lines: Healthcare and Accounting Advisory.

On the surface, it may look like a good deal for both companies but in reality it feels like Huron was desperate to sell a good revenue-generating unit (19% as of June 30, 2010) and since GT is definitely shopping for acquisitions, the firm was more than happy to take it off their hands.

This acquisition will allow GT access to a sexy area of advisory work (D&I consists of “business disputes, forensic accounting and investigative services, tax controversies and intellectual property disputes”) in key markets and presumably, they can hype the new group internally to expand it and compete for more business.

The only possible downside is that some inside GT may be concerned (we’re speculating here) about taking on more Andersen refugees but ultimately it looks like a good move and the first example of the firm making good on its new strategy. If you’ve got a different opinion, chime in below.

Grant Thornton buys Huron operation [Boston Business Journal]
Huron Consulting Group Announces Divestiture of Disputes & Investigations Practice to Continue Focus on Core Businesses [EON]

Do Recessions Cause Accounting Irregularities?

Thumbnail image for Cooking the Books.jpgSome people think so. Emily Chasan at Reuters discusses the perceived rise of accounting irregularities today:

“Corporate balance sheets may be showing signs of the wear and tear from the prolonged U.S. recession as accounting irregularities are starting to surface at growing numbers at U.S. companies.”
Okay but don’t accounting regularities happen all the time? If the economy is humming along nicely does that mean that less companies are engaging in accounting hocus-pocus? Hmmmmm.


But there’s more argument for “it’s the economy stupid”:

“Statistically you can show any time you have a recession or some type of tremendous decline in an economy you’re going to see financial pressures on companies,” said Bruce Dorris, program director at the Association of Certified Fraud Examiners, noting that corporate employees can sometimes be motivated to be overly aggressive with accounting or commit outright fraud to meet targets, particularly in difficult economic times.

The article cites Apollo Group’s stock dropping 18% yesterday after announcing that the SEC was starting an “informal inquiry” into its revenue recognition policies. It also lists Overstock.com, Town Sport International Holdings (owns NYSC), Zale Corp and also Huron Consulting whose stock price is still down 40% since the announcement of the SEC investigation. All these companies have delayed earnings reports or had investigations into their accounting practices.

So feel free to discuss your clients and their creative nature in this economy. Are their hard-nosed GAAP puritan ways caving to earnings pressure or are your partners the ones caving in the name of client service? Nobody wants a to be working on a client that’s going through a restatement. Nobody.

Accounting irregularities may be on the rise in U.S. [Reuters]

Huron Consulting Beats the Numbers, Cooked Books and a Bunch of Other Shadiness Notwithstanding

Cooking the Books.jpgIf you’re an accountant and you see a company’s name in the same sentence as “accounting irregularities”, “alleged cooking of the books”, or “SEC investigation”, your likely advice to any person would be to run away from said company like it was a band of lepers.

This is just conventional wisdom, nothing ground breaking. However, since Huron Consulting reported big second quarter numbers, the stock price is up more than 30%.
Now some of this is short sellers getting burned but according to one analyst quoted by Reuters, some investors may be going long because of “confidence in the underlying business”.

We’re not too crazy about the “underlying business” for a lot of reasons:


1. The Company said in a filing that they are likely going to take a goodwill impairment charge that will put it in noncompliance with a financial covenant of its credit agreement.

2. It’s worried about “‘reputational issues’ that may affect the company’s ability to retain its senior managers and attract new talent and new business”.

3. Can’t predict the outcome of the SEC investigations or private lawsuits (P. Dubya take note).

4. They warned that their current numbers may not be legit since the new management has no idea what the hell else is out there in the way of kickbacks payments made to Huron Management, questionable allocated billable hours (but don’t worry, this won’t affect client billings) or anything else for that matter that may call for another restatement of its results.

5. The whole Arthur Andersen connection creeps people out.
Far be it from us to speculate on a company’s future but this place seems doomed. We might just listen to tomorrow’s earnings call to see if there’s anything worth mentioning but in the meantime, put your money in…WTFK?

Huron Consulting fights to stay alive [Greg Burns/Chicago Tribune]

Huron shares rally after restatement, SEC filings [Reuters]

Huron Consulting Has a New Problem

Cooking the Books.jpgHuron Consulting, after cleaning house, admitting to some book cooking, and having multiple class action suits filed against it, now has a brand new SEC investigation to look forward to. This new investigation is in addition to a separate investigation the SEC was conducting related to its chargeable hours.

The new investigation relates to the accounting hocus-pocus that led to the announcement that three years of financial results were being restated. On top of all this, the 10-Q, due yesterday, has yet to be filed. The company said everything is cool though and that it will be filed…who the hell knows as soon as possible.

Huron crossed its heart and hoped to die that it would cooperate with the new investigation. After all, they’ve won new business since the scandal dropped, so not everybody thinks they’re crooks.
SEC investigating Huron accounting errors [Chicago Tribune]

Huron Book Cooking Lawsuits Likely to Be Filed this Week

Cooking the Books.jpgHuron Consulting, who cleaned house late on Friday and is restating three years of financial statements, is likely going to be named in a class-action lawsuit, according to Reuters.
Huron, who need we remind you, is not a CPA firm and does not perform attestation services, what with all those pesky independence rules and whatnot, has seen its stock price drop from just over $44 last week to hovering around $15.
More, after the jump


Huron was founded by two dozen Andersen partners, according to the report, including the resigning CEO, Gary Holdren. So, natch, these guys were probably viewed as having not so sterling reputations, and now, well, this is a little awkward.
It’s more than likely pretty much a certainty that this particular accounting mishap will bring more heat on auditors, in this case, P. Dubya, as management seems to be able to manipulate their reporting, regardless of what the auditors try to do.
We reached out to PwC on this story, who would not comment on client matters. We thinks this might become a PwC matter before long…If you’ve got any information on this story shoot it our way at [email protected].
In Huron scandal, shadows of Arthur Andersen [Reuters]

Huron Consulting is Clearly Not a CPA Firm

iStock_000006509640XSmall.jpgFridays are great for lots of reasons. They’re especially great for announcing bad news long after everyone has left work to get their drink on.
Huron Consulting announced late last Friday that the CEO, CFO, and Chief Accounting Officer were all quitting and that their financial results for 2006-2008 were being restated. The restatements result in total net income for that period being reduced by nearly 50% from $120 million to $63 million.
According to Reuters:

The restatements are being made because Huron’s board audit committee discovered that shareholders of four businesses that Huron acquired between 2005-2007 redistributed portions of their acquisition-related payments among themselves and to certain Huron employees.

More, after the jump


Soooo, regardless of what Huron is saying, the CEO, CFO, and CAO sounds like someone might have been taking kickbacks, which we totally understand considering the economy and whatnot.
Huron was ranked 43rd on Fortune’s list of 100 fastest growing companies just last year. They help their clients “face complex matters that demand extraordinary combinations of financial, technical, and industry expertise.” Clearly they are not using any of this expertise on their own books but whatevs, nobody’s perfect.
What’s also strange is that Huron really goes out of their way to put the universe on notice that they are not a CPA firm and do not provide attestation services.
“Huron is a management consulting firm and not a CPA firm, and does not provide attest services, audits, or other engagements in accordance with the AICPA’s Statements on Auditing Standards.” This is stamped at the bottom of virtually every page on the website because THEY WANT TO MAKE THAT CLEAR.
Btw, Huron’s auditors are PwC, who really don’t need any additional bad publicity. If any of you Chicago P. Dubs peeps got any inside info on this story, shoot it our way to [email protected]. The stock is getting hammered today so we’ll continue to watch this to see how it plays out.
Huron CEO, CFO quit as restatements slash profits [Reuters]