Tag: KPMG

KPMG – Masters of Thursday’s PR Powerhouses

Forget the fact that what’s-her-name can’t hit the links, let alone join the Old Man’s Club that is Augusta; this weekend is all about Tiger Woods and, if you’re from the KPMG Kamp, Phil Mickelson. Not a resident of the KPMG Kamp is Chris Rock:


Don’t get me wrong – I love Phil, and so should you. What’s not to love? Big goofy smile, overweight just enough to make the average golfer feels connected to the lovable pork chop of an athlete. And he’s left handed, so you just know the world is out to get Golf’s Favorite Underdog. Golf and chainsaws, a lefty’s biggest fears.

But I digress. Back to Uncle Peat.

Phil currently sits tied atop the leader board at five under par, tied with three others. But who cares about those knicker-wearing chumps?! UNCLE PEAT IS IN FIRST PLACE!!!

Us regular peons can only imagine the jubilation amongst KPMG leadership in attendance this weekend. T-Fly and The New Guy back slapping each other and clients-to-be. But are they nervous? After all, Phil is much like KPMG – always the hopeful underdog, their supporters praying that their fearless leaders don’t slice it and end up in the rough (or court). There are rough patches in every round, but coming out ahead of the game is key, is it not?

Hopefully the Philster can keep himself and his catchy hat on top of the leader board going into the weekend. For the tax crew out there, you can follow your favorite Tiger Slayer’s weekend rounds live on Masters.com. Hopefully streaming video isn’t blocked by the Kamp Kounselors.

KPMG Survey: India is a Hotbed for Fraud Due to Competition, Diminishing Ethical Values

In this morning’s Roundup, we told you about the ICAI belly-aching about the Big 4 circumventing the rules in India to the point of extreme annoyance but technically not breaking said rules.

Strangely enough, BusinessWeek has a story today that cites a KPMG report that found that fraud is on the rise in India due not to shifty international accounting cooperatives but rather to, among other things, the pressure of increased competition in the last two years.


As you might expect, fraud due to financial reporting is the biggest problem. The report cited, “weak rules and the inability of authorities to enforce regulation.” Other things mentioned as opportunities for chicanery:

• “Volatile economic conditions”
• “Increasing business and technological complexities”

So does that mean opportunities for fraud are ubiquitous? Do the respondents really believe that India is the only place where this is happening?

And the attitude/lack of self-control part of your triangle:

• “Diminishing ethical values”
• “Failure on part of managers to act against deviations from established policies and processes”

Diminishing ethical values? Deviating from established policies? Again, the respondents can’t think this is unique to India so shall we just assume that it’s more widespread there?

Some other contributing factors cited were “executives vying for higher pay, weak internal controls and increasing competition…for market share.” But wait! KPMG’s survey said that there were “’encouraging signs’ that mechanisms for detection of fraud through internal audits had improved.” That’s nice despite the fact that sounds similar to something that Overstock management said in their earnings call yesterday.

If you have “weak rules” accompanied by spineless bureaucrats that won’t even enforce those rules, of course you’re going to have some problems. ICAI seemingly wants to blame everything on the Big 4 probably because that’s the going trend these days. We’re not saying you can’t throw some blame towards PwC for missing the phantom $1 billion at Satyam but if your financial reporting regulatory infrastructure is akin to the something out of Deadwood, circa 19th Century, then maybe you should be more consider making some fundamental changes.

Fraud Rises in India as Competition Increases, KPMG Study Says [Bloomberg BusinessWeek]

Holiday Weekend Accounting News: KPMG Bolts Iran; Financial Statement Reader App for iPad?; IRS Job Creation; Another Koss Fraud Theory; Toni Braxton Tax Trubs; Illegals Bilk IRS for $13 mil; Job of the Day | 04.02.10

See you Monday, capital market servants. It’s okay, tax warriors – Just think, two weeks from today and you’ll be sleeping in.

• KPMG severs Iran ties [FT]
T Fly and Co. has pulled the plug on Iran after big pressure from the UANI, “Tom Wethered, KPMG International’s general counsel, wrote to UANI on Thursday that the accountancy network had terminated the membership of Bayat Rayan, one of Iran’s biggest accountants.” The FT reports that the firm cited “serious and escalating concerns,” about the country’s government.

• Imagine: iPad App l Statements [XBRL Business Information Exchange via CPA Trendlines]
Someone make this happen ASAP. “Imagine it. Everyone connected by the Web, not the current Web but the Semantic Web. iPads, iPods, iPhones, Androids, Smartphones; maybe a few PCs will still be around. IFRS used globally. Financial information in XBRL making it dynamic like a pivot table, rather than static like the legacy paper statements.”


• Is Hiring More IRS Employees ‘Job Creation’? [The Atlantic]
There’s a lot of hysteria over the 16,000-some odd new IRS agents that will be running around the country trying to steal your freedom. Those are real jobs though.

• Koss Fraud: Unrecorded revenue? [Fraud Files Blog]
Tracy Coenen kicks around another theory of how alleged shopaholic Sue Sachdeva hid her embezzlement from Grant Thornton, “I’ve heard from a few sources who I consider to be very reliable that Sachdeva hid her theft by not recording revenue. This would mean that Koss’s revenue was understated by $31 million during the time she was committing her theft.” Tracy points out that this method would be “messy” but “There is almost no chance that the auditors will discover the theft and the cover-up. The bulk of the auditors’ work is spent on the balance sheet. So long as transactions related to the theft don’t show up in the ending balances of the balance sheet accounts, she’s pretty safe there.”

• Singer Toni Braxton bobbles tax bill [Tax Watchdog]
Toni Braxton really needs help. She now owes the IRS nearly $400k after a $71k tab from last summer. We’ll say it again – Get Ludacris on the phone.

• 10 illegal aliens in S.C. admit to bilking IRS out of $13 million [Greenville Online]
Who do the teabaggers get mad at for this one? Don’t they hate the IRS and illegal aliens equally? We can only hope that this will cause their heads to explode. Oh, and because it’s in South Carolina we can probably expect a lynching of everyone involved.

• Job of the Day: Fannie Mae Needs a Experienced Accountant [GC Career Center]
Four to six years experience, CPA required. Responsibilities include: Compile, review, analyze, and record financial information to the general ledger. Complete monthly closings. Prepare balance sheet and profit and loss statements, consolidated financial statements, and other accounting schedules and reports. Located in DC Metro. You!

Compensation Watch ’10: KPMG Back to Raises and Bonuses

KPMG’s newly announced Chairman John Veihmeyer knows that you’ve been anxious, so in a message to Klynveldians, Johnny gets right to the point, “I want to take a moment to address a question that I know is on the mind of every KPMG employee: Will there be raises and bonuses this year? The short answer to this question is ‘Yes.'”

For the “vast majority of our people” and bonuses will be available, “our goal is to enhance our variable compensation pool from last year—meaning higher bonuses than last year.”

How’s that for a Friday morning message?

As we reach the midpoint of FY 2010, I want to take a moment to address a question that I know is on the mind of every KPMG employee: Will there be raises and bonuses this year?

The short answer to this question is “Yes.”

As we communicated during this year’s town hall meetings, the business environment is showing measurable signs of improvement. In fact, I am pleased to report that thanks to your efforts the firm is slightly ahead of plan. So by year-end, we fully expect that the pickup in market and business conditions will drive compensation increases for the vast majority of our people. Also, assuming we meet our plan, as we are on track to do, our goal is to enhance our variable compensation pool from last year—meaning higher bonuses than last year for EP performers as well as bonuses for deserving SP performers. Assuring that we recognize and reward our best performers is an integral element of our compensation philosophy and a critical ingredient of the high-performance culture we intend to maintain.

We are optimistic. But along with this optimism, we must maintain realistic expectations. Keep in mind that our FY10 plan is more challenging in the second half, and reliant on significantly improved performance in the spring and summer.

What does this mean? It means that now more than ever, we must come together as a team to do our best work and make 2010 a successful year—one that brings the improved business results that enable us to restore the financial rewards that we all desire. If you’re in Audit, Tax, or Advisory, it means driving business and providing the highest-quality service to clients. If you’re in a Client Service Support role, it means providing our professionals and teams with effective tools, resources, and information they need to win business and deliver excellent service to clients. And all of us need to continue our Spend Smart efforts and do our parts to drive efficiencies in the way we operate.

Whatever the remainder of 2010 brings, you can be sure that KPMG remains committed to its philosophy of providing our people with an attractive and competitive total compensation package that differentiates exceptional performers with superior rewards. And, we remain fully committed to being an Employer of Choice and a great place to build your career.

Thanks for all your contributions to our firm’s success.

Accounting News Roundup: KPMG Dodges Madoff Feeder Fund Lawsuit; SEC May Disclose More Details in Settled Lawsuits; Tax Code? Now There’s an App for That | 04.01.10

• KPMG wins dismissal of Madoff feeder fund lawsuit [Reuters]
A class action lawsuit brought against KPMG by Meridian Horizon Fund, L.P. and other investors in Tremont Partners was dismissed yesterday in New York. Tremont had more than half of its assets were Berns andKPMG audited Tremont funds in 2006 and 2007.

Judge Thomas Griesa ruled that the plaintiffs’ case did not show that KPMG had any intent to deceive the investors in Tremont. Emily Chasan reports that Judge Griesa wrote, “Merely alleging that the auditor had access to the information by which it could have discovered the fraud is not sufficient,” and that the firm would have had to botch the engagements so badly that it would have amounted to “no audit at all.” He did not rule out the possibility of Meridian re-filing their lawsuit in the future.


• SEC may require more details of wrongdoing to be disclosed in settlements [WaPo]
The SEC is thinking about disclosing more details in their civil action settlements; a move that would do away with the quick and dirty “neither admitted nor denied the charges.” This could result in a more transparent process where violations of the law are — God forbid — disclosed in detail.

Securities lawyers said a more detailed public record of cases could make defendants less likely to settle and make it easier for shareholders to file class-action lawsuits piggybacking on the SEC’s claims. It could also lead to embarrassment for executives if the agency publicized their roles in violating securities law, even if they are not personally charged.

God knows we can’t have executives embarrassed.

• The Tax Code and Regs for Your iPhone [TaxProf Blog]
Who wants to schlep around the physical tax code?

Overstock.com Turns a Profit; Patrick Byrne Writes a Very Un-Patrick Byrne Letter to Shareholders

This morning we thought the KPMG audit team working on Overstock.com would continue slaving away through the extension deadline tomorrow to get that beast of 10-K finished. Well! Turns out they’ll bet of you tonight because the OSTK 10-K has been filed and, as promised Overstock shareholders, your humble servant Patrick Byrne and Co. are reporting an annual profit for the first time ever!


After such a high, restatement or not, we’re guessing Sam Antar definitely won’t be getting an apology but Gary Weiss has already noted a couple of things:

First–stop the presses! Overstock’s auditors at KPMG says that Overstock has insufficient internal controls.

Second, the Marin County District Attorney and four other DAs in northern California want the company to fork over $8.5 million to settle consumer ripoffs by Overstock. The company disagrees and is fighting it, so …. No, wait a moment, make that read “$7.5 million.”

First off, we share Gary’s shock — SHOCK! — on the insufficient internal controls revelation. Second – AUDITORS! We talked about this, remember? Read the 10-K carefully. Overstock’s “Risk Factors” section runs 25 pages for crissakes. A million fucking clams can’t get missed!

You know what though? Mistakes happen, so we’ll let it slide.

Oh, and about that letter to shareholders. Patsy doesn’t bring up former auditor Grant Thornton once, doesn’t quote Nietzsche, compiain about short sellers, bring up Facebook, or say anything remotely antagonizing (although on page 32, the Company’s states he still might).

This makes think: 1) Is he not feeling well? 2) We want the old Patrick back! Read for yourself:

Dear Owner:

In Q4 our revenues grew 27%, twice the ecommerce industry’s rate, and we earned $12.7 million in net income. In 2009 we grew revenues 6%, earned $7.7 million in net income, generated $46 million in operating cash flow, and generated $39 million in free cash flow. It’s nice to be profitable.

I am proud that, for the second year in a row, we rank number 2 in the NRF/Amex survey of American consumers, behind only LL Bean and ahead of Amazon, Zappos, eBay, Nordstrom, and many other fine firms.

As you may know, at the end of Q4 we engaged KPMG as our independent auditors, and announced that we were restating our FY 2008 and Q1, Q2 and Q3 2009 financial statements. I thank you for being patient with us as we worked through the questions raised by the SEC, the transition to the KPMG team, and the extra time it took to ensure that our financial statements are accurate.

I look forward to our conference call next Monday. Until then, I remain,

Your humble servant,

Patrick M. Byrne

KPMG Gets a Less Than Desirable Photo Op

This month students around the world have been celebrating spring break. That usually means one thing – young people get cop-slugging drunk and maybe, if you’re really unlucky ruin your chances of employment.


The Daily Mail reports that 5,000 British students descended upon the seaside Spanish town of Salou, getting over-served, running around in their birthday suits and pissing off the townies. The gem above is one of several photos that accompanies the article.

The tipster that sent us the link wondered if Phil Mickelson would approve of this. Other than the obvious, “OH HELL NO!” We think Mick’s response would be something to the effect of, “Those little bastards are lucky they aren’t wearing my hat otherwise I’d rearrange their face with my LW.” But forget Lefty for two; now that Tim Flynn is focusing his efforts on being the international chair of KPMG this is the type of crap that causes T Fly to grit his teeth into dust.

“Saloufest” is described as a “sporting event” so maybe these shirts/jerseys are KPMG giveaways and no one is in danger of poorly representing the House of Klynveld. That being said, this probably isn’t what TF and Co. had in mind when they slapped the four squares on a shirt. Btw, if you’ve happen to have some extras, get in touch.

(UPDATE) John Veihmeyer to Succeed Tim Flynn as Chairman of KPMG’s U.S. Firm

UPDATE/Correction, Wednesday 3.24.10 – Previously, headline stated that John Veihmeyer was succeeding Tim Flynn as Chairman and CEO. John V. has actually been the U.S. CEO since 2008. Sorry JV, for not giving you credit there.

The suspense is over. Johnnie V. has been serving as th the U.S. Firm since 2005 and he has the full confidence of TF, “There is no finer individual to lead the U.S. firm and build upon the progress that has been made over the last five years…John is equally passionate that KPMG continues to be a great place for our people to build their careers, in a culture that embraces diversity.”

JV will be succeeded by Henry Keizer in the Deputy Chairman role. Hank will also be the U.S. firm’s Chief Operating Officer. Timmay is also excited for Keizer Soze’s promotion, “His leadership and professionalism will be vital to ensuring the firm meets the challenges and capitalizes on the tremendous opportunities ahead…he has championed the use of technology and off shoring to enhance our operational effectiveness and efficiency in an increasingly competitive marketplace.”

Tim will be focusing on his roles as the Chairman and Senior Partner of Klynveld International, dashing our wishes for him to be the next Secretary of the Treasury. He was “strongly endorsed” by the Global Board to get down to business in this “unprecedented global economic and regulatory environment.” You can probably plan on more Davos interviews next year, chatting up royalty, caddying, etc.

I am extremely pleased to announce that the partners have ratified the election of John Veihmeyer as Chairman and CEO, and Henry Keizer as Deputy Chairman and COO, of the U.S. firm. John and Henry will assume their new responsibilities on June 10, 2010, when my term ends as U.S. Chairman. John and Henry bring strategic insight, deep leadership skills and extensive experience in serving clients to their new roles.

While it was a difficult decision for me not to continue in my role as Chairman of the U.S. firm, it has become increasingly clear to me that my additional role of Chairman and Senior Partner of KPMG International requires a full-time commitment. Last week, the Global Board strongly endorsed that I serve full time as Global Chairman in this unprecedented global economic and regulatory environment and period of tremendous opportunity for our member firms and people.

Having the privilege to work side by side with John during our five-year term as Chairman and Deputy Chairman, I have seen first-hand his professionalism, leadership and commitment to KPMG, its people and clients. There is no finer individual to lead the U.S. firm and build upon the progress that has been made over the last five years.

In addition, Henry will bring a tremendous amount of operating experience and energy to the Deputy Chairman and COO role. His leadership and professionalism will be vital to ensuring the firm meets the challenges and capitalizes on the tremendous opportunities ahead.

John has served as Deputy Chairman of KPMG since 2005, and he brings a unique combination of skills and experience, across all aspects of our strategic priorities, to the role of chairman. John is equally passionate that KPMG continues to be a great place for our people to build their careers, in a culture that embraces diversity.

Henry comes to his new role after serving as U.S. Vice Chair, Audit since 2005 and Global Head of Audit since 2006. In these roles, he has championed the use of technology and off shoring to enhance our operational effectiveness and efficiency in an increasingly competitive marketplace.

John and Henry’s professional depth, integrity and commitment to our clients, partners and the people of KPMG will serve the U.S. firm well as we move forward. Please join me in congratulating John and Henry and welcoming them to their new roles.

In closing, there was never a day that I was not grateful and humbled by the opportunity to lead and work with the truly exceptional people of KPMG. I have been awed by your talent, proud of your accomplishments and appreciative of your dedication. It truly has been an honor to serve as Chairman of the U.S. firm for the last five years.

Thank you for all that you do every day to support our firm and deliver on our promise of professionalism to each other, our clients and the capital markets we serve.

All the best,

Tim

KPMG’s Layoffs in Advisory May Have Made Room for Some Auditors

Happy Hangover Thursday, folks. Hopefully the green food coloring washed off easily this morning.

I was out networking with my Irish brothers last night in midtown New York, quite a few blocks north of my normal after-work locale. Second Avenue bars full of cold beer and burned out white collars, St. Patty’s Day was a welcomed Wednesday relief for those in busy season. The day was over, the night was turning late and, for once, shop talk was put on the back burner. That is, until I heard the phrase “Uncle Peat” used as the object of affection bitterness for a toast.

Obviously, I couldn’t resist.


DWB: “Are you guys auditors?”

Auditor 1: “Yeah, over at KPMG. Hopefully not for long, though.”

DWB: “Nice, nice. Moving on to better things?”

Auditor 2: “Hopefully.”

Auditor 1: “Not soon enough.”

A round of drinks later (toast to Uncle Peat not included) and these Irish-for-the-day gentlemen filled me in about an email circulating around KPMG’s NYC audit practice regarding a temporary rotation into the Transaction Services (TS) practice. TS specializes in mergers & acquisitions work and was — most likely — hit steeply by the rounds of the falling guillotine back in 2008 and 2009.

How does a practice that was hemorrhaging money and resources a year ago now have business blowing through the door at such a fierce rate? If you read anything beyond the usual busy season distractions, it’d come as no surprise to you that the markets are slowly picking up. But service firms typically lag in response, both on the positive (Woo-hoo, new business!) and negative (Sorry, this isn’t about you – this is about the numbers) sides of the equation. Nonetheless, Uncle Peat’s auditors should be leaping at this opportunity. A rotation out of audit can be refreshing, even in the quieter months of summer.

Did KPMG’s advisory shake up and realignment pay off? Is the firm’s leadership blowing smoke to perk up the down-trodden auditors currently drowning in busy season? Was a picture of a giant carrot on a string used in the email? If you received this email, I’d love to read the text. Last night’s informants promised to send it over, but they probably called in with emergency doctor “appointments” this morning.

KPMG Reinstating “Standing Ovation” Bonus Awards

Back in November 2008, KPMG suspended the highest level of its Encore bonus award, the Standing Ovation to “manage costs.” Since there is no shortage of exceptionalness at Radio City, the $500 awards were adding up so word came down that it was ixnay the tandingsay vationsoay.

The firm did keep its “Bravo” award that was good for $200 and replaced the five-hundo bonus with a $25 award and “thanks e-cards” that were way better than anything from Hallmark simply because Tim Flynn probably included a personalized message.

And you, simply, cannot put a dollar figure on that.


The most devastating part of the Standing O kibosh was that the trophies — which could easily qualify as a “blunt object” at a crime scene — were no longer handed out. These, understandably, are most coveted of all KPMG tchotchkes.

Well now, according to accountants familiar with the matter, the firm has reinstated the Standing Ovation for reasons that we can only speculate. It will be reserved for those Klynveldians that “go above and beyond” the call of their duties. Again, we can only speculate as to what this actually entails. Considering the fact that the hours you’ve been putting in for the last month or so have been expected, it may just mean that you have to try a little bit harder.

The reintroduction is being received tepidly, as one source told us:

Kinda meaningless to me. They don’t hand them out. Except for managers that want to get laid by younger staff.

Seconded by another source:

Just because they bring them back, doesn’t mean any partners plan on approving them. – “Oh, I nominated you for a standing ovation, but it didn’t get approved! It’s the thought that counts though, amirite?”

Another source saw it as too little, too late:

“Do they really think $500 is going to stop a mass exodus of [people] from leaving? Perhaps they should have thought about that when they didn’t give raises.”

Despite the vague qualifications for the award, it’s good to see TPTB reinstating the bonus for the sake of morale/bribery/empty hope. Now go get yourself one!

Jefferies Follows Select Comfort’s Lead, Dumps KPMG for Deloitte

So this makes two SEC clients lost for KPMG in as many days. Again, Jefferies had no disagreements with KPMG yada yada yada. Jefferies didn’t even receive a GCO like Sleep Number. However, KPMG did include this language for this year’s (i.e. December 31, 2009) audit opinion:

“As discussed in Note 1 to the consolidated financial statements, in 2009 the Company retrospectively changed its method of accounting for noncontrolling interests in subsidiaries and earnings per share due to the adoption of new accounting requirements issued by the FASB.”


BFD, right? Could Jefferies really be so bent of shape over that to make the auditor switcheroo?

The other point is — and maybe we’re making a mountain out of a molehill here — this is the second example of a non-standard auditor opinion from the House of Klynveld followed by clients kicking them to the curb for the clean scalped, mustachioed comfort of Deloitte.

One thing is for sure and that is that Deloitte is clearly on the offensive here after losing so many SEC clients last year. Still, we’re curious about a few things: 1) Is Big D going after KPMG clients specifically? 2) Is there a secret weapon being employed to woo these clients (e.g. Barry does a dead-ringer Dr. Phil impression during the presentation)? 3) Are KPMG clients upset about Tim Flynn stepping down as chairman? OR are they upset that the Radio Station is still camping out in Iran?

If you’ve got concrete knowledge, crackpot theories or just want to take a shot in the dark (since most of you are probably drinking by now) on this new and emerging (?) trend, fire away.

8-K [Jefferies]
10-K [Jefferies]
Jefferies Announces the Engagement of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm [Business Wire]

UANI Goes After KPMG for Iran Ties

[caption id="attachment_6035" align="alignright" width="260" caption="There\'s no connection. See? Iran is way over here. "][/caption]

It’s hard enough to be a Big 4 firm these days that you don’t need this. New York-based United Against Nuclear Iran (UANI) is a little upset with any and all companies that are doing business in Iran and just because you claim that you are a protector of the capital markets, that doesn’t earn you a free pass.

The Financial Times reports that UANI’s latest target is none other than the House of Klynveld and the lobby group sent a letter to Tim Flynn stating their displeasure with KPMG’s ties to their independent member firm in Iran, Bayat Rayan.


Flynn, who is stepping down as the Chairman of KPMG this summer, probably isn’t too psyched to have the firm lumped into the cross-hairs of UANI, who has relentlessly pressured companies to stop doing business in Iran.

The FT reported that the UANI set its sights on KPMG “after [a] week-long campaign against Ingersoll Rand ended with the Dublin-based diversified industrial company announcing on March 8 it was instructing its subsidiaries not to sell products ultimately destined for Iran.”

We contacted KPMG for comment but have not yet heard back regarding a response from the firm.

According to the letter, UANI will take “any and all action we deem necessary to hold KPMG accountable for its inappropriate business relationships with Iran,” which sounds pretty serious. Although we’re not sure what ‘any and all action’ will entail but for T Fly’s sake, we suggest he gets this resolved sooner rather than later. If he doesn’t, he can expect calls from Bill O’Reilly and his mug next to Ahmadinejad’s on the Factor.

KPMG is latest target for activists seeking to cut corporate ties to Iran [FT]