Tag: Marcum

American Apparel Subpoenaed Over Auditor Switcheroo

American Apparel’s downward spiral continues as Bloomberg reports that the company has been subpoenaed by the U.S. Attorney for the SDNY over the company’s “change in accounting firms.”

If you’re justl started with Deloitte quitting as the auditors of APP late last month. At that time, Deloitte warned that the ’09 financial statements may not (read: definitely are not) reliable and that they were getting the hell out of Dov.

Former APP auditor Marcum – for reasons unbeknownst to us – went back to their old client to try and help them straighten things out. Here’s the latest from the “preliminary results” for the second quarter, while thetardy 10-Q remains elusive. These prelims (i.e. a wild stab?), that were filed today warn that things are likely to get worse before they get better:

Potential Restatement of previously issued financial statements

Effective July 22, 2010, Deloitte resigned as our independent registered public accounting firm. On July 26, 2010, we engaged Marcum as our independent registered public accounting firm. On July 28, 2010, we reported on a Form 8-K that we had been advised by Deloitte that certain information had come to Deloitte’s attention that if further investigated may materially impact the reliability of either Deloitte’s previously issued audit report or the underlying consolidated financial statements as of and for the year ended December 31, 2009 included in our Annual Report on Form 10-K for the year ended December 31, 2009. Deloitte has requested that we provide Deloitte with the additional information Deloitte believes it is necessary to review before any conclusions can be reached as to the reliability of the previously issued consolidated financial statements as of and for the year ended December 31, 2009 and auditors’ report thereon.

Depending on the outcome of this review, a restatement of our financial statements as of and for the year ended December 31, 2009 could be required. Any restatement may subject us to significant costs in the form of accounting, legal fees and similar professional fees, in addition to the substantial diversion of time and attention of our Chief Financial Officer, our other officers and directors and members of our accounting department in preparing and reviewing the restatement. Any such restatement could adversely affect our business, our ability to access the capital markets or the market price of our common stock. We might also face litigation, and there can be no assurance that any such litigation, either against us specifically or as part of a class, would not materially adversely affect our business, financial condition or the market price of our common stock.

But that’s not all! The company discusses a few more issues, “We are subject to regulatory inquiries, investigations, claims and suits. We are currently defending one wage and hour suit, one sexual harassment suit and responding to several allegations of discrimination and/or harassment that have been filed with the Equal Employment Opportunity Commission or state counterpart agencies.”

At that point, the filing finally gets to the problem du jour:

In addition, in connection with our previously disclosed change in auditors, on July 30, 2010, we received a grand jury subpoena from the United States Attorney’s Office for the Southern District of New York for the production of documents relating to the circumstances surrounding the change in our auditors. We have also received inquiries from the Securities and Exchange Commission regarding this matter. We intend to cooperate fully with these requests and any related inquiries.

If consider all that, plus the fact that the company is spending cash like Pacman Jones at a strip club and that they’re likely to be in noncompliance with a major debt covenants at September 30th, it’s no surprise that the stock is off even more than when Deloitte first quit as auditors.

American Apparel Drops After Receiving Subpoena on Change in Accountants [Bloomberg]
10-Q [SEC]

Deloitte Resigns as American Apparel Auditor; Hotness of Engagement Team Presumably Not an Issue

So for those of you that aren’t too fashion conscious, you probably don’t the name Dov Charney. He’s the Chairman and CEO of American Apparel and you’d be hard pressed to find something in one of his stores that qualify under your firm’s dress code.

Nevertheless! AA is a publicly traded company and is subjeities laws as everyone else. Last year they opted to drop Marcum as their auditor for Deloitte. One year later, the firm has apparently had all they can stand of AA because they resigned today, citing possibly unreliable financial statements for 2009, sending the company’s stock reeling.


The 8-K has the usual language that you would expect from a typical auditor/client break-up but here are the gory details for those you that enjoy that sort of thing (citations omitted and extra fun stuff is bolded):

During the period from April 3, 2009 through July 22, 2010, there were no “reportable events” except that (i) in Deloitte’s report dated March 31, 2010 (which was included in the 2009 Form 10-K) on the Company’s internal control over financial reporting as of December 31, 2009, Deloitte identified material weaknesses in internal control over financial reporting related to the control environment and to the financial closing and reporting process, which are further described under Item 9A in the Company’s 2009 Form 10-K, and advised that the Company has not maintained effective internal control over financial reporting as of December 31, 2009; and (ii) Deloitte advised the Company that certain information has come to Deloitte’s attention, that if further investigated may materially impact the reliability of either its previously issued audit report or the underlying consolidated financial statements for the year ended December 31, 2009 included in the Company’s 2009 Form 10-K. Deloitte has requested that the Company provide Deloitte with the additional information Deloitte believes is necessary to review before the Company and Deloitte can reach any conclusions as to the reliability of the previously issued consolidated financial statements for the year ended December 31, 2009 and auditors’ report thereon.

As we mentioned, this has spooked plenty of people, including Ed Yruma an analyst at KeyBanc quoted by Bloomberg in a letter to investors, “The company has struggled since its IPO with both its internal controls and its ability to file SEC filings on a timely basis. An ability to file SEC filings on a timely basis has been an ongoing issue.”

Back to the superficial. Dov Charney is, what you might call, a character. Here’s a brief chat we had with Nick, Breaking Media web developer and occasional contributor to our sister site Fashionista:

me: When i say the name
Dov Charney
your response is…
Nick: LECH
PERV

You only need to snoop around the web briefly (e.g. here, here, here) to pick up what Nick is referring to.

Deloitte’s letter to the SEC is brief and makes no mention about the plethora of models not wearing pants or Dov judging the young auditors’ hot or not-ness, so that likely wasn’t part of the problem. Anyhow, AA ran straight back to Marcum who might be more comfortable with, what we imagine to be, an interesting work environment.

8-K [SEC]
American Apparel Falls After Deloitte Resigns as Accountant [Bloomberg BusinessWeek]

Marcum Officially Announces Purchase of UHY New England Locations

Marcum officially announced its take over of the UHY Advisors locations in New England that we mentioned last week.

We can only assume that the 150 employees at new Marcum offices passed the due diligence with flying colors. According to the press release, the new locations will make 15 total for Marcum with over 950 total employees and 117 partners.

Marcum LLP Expands Practice into New England

Members of New England Practices of UHY Advisors and UHY LLP Join Marcum

April 16, 2010, New York, NY- Marcum LLP, one of the largest independent public accounting and advisory services firms in the nation, announced that it has acquired the New England practices of UHY Advisors and UHY LLP effective April 16, 2010. Marcum will now have offices in three of New England’s major business markets – Boston, Massachusetts, and New Haven and Hartford, Connecticut.

The members of the New England practices of UHY Advisors and UHY LLP who are joining Marcum have a 30-year history in the New England market providing audit, tax and business consulting services in the construction, high technology, financial services, healthcare, manufacturing, not-for-profit and higher education arenas. Marcum LLP, with its outstanding reputation at the national and regional levels, has strong service niches in SEC registrants, alternative investment partnerships, family office services, business valuation, bankruptcies and receiverships and services for the government and public sector.

“Expansion into the New England region increases Marcum’s presence in the Northeast and offers our clients greater resources and new areas of expertise,” stated Jeffrey M. Weiner, Managing Partner of Marcum LLP. “The new locations tie in directly with our growth plan and will help us meet the changing accounting, tax and consulting needs of our clients.”

The entire 150 plus team from the New England practices of UHY Advisors and UHY LLP will join Marcum. With this latest development, Marcum now has more than 950 professionals, including 117 partners, in 15 locations throughout New York, New Jersey, Connecticut, Pennsylvania, Florida, Massachusetts and Grand Cayman.

“The members of the New England practices of UHY Advisors and UHY LLP are looking forward to the growth opportunities this transaction will bring in New England and beyond,” stated Anthony Scillia, who will serve as Managing Partner of Marcum’s New England Region. “Marcum’s geographic footprint, devotion to technical excellence and extensive range of professional services will bring added value to our existing clients and increase our ability to serve new clients in the New England area.”

Marcum Purchasing UHY New England Locations, Tax Quizzes to Be Given?

Web CPA is reporting that Marcum, the firm best known for quizzing potential employees, is purchasing three offices of UHY Advisors (Boston, Hartford and New Haven) effective April 16th.

The addition of the three locations would make fourteenfifteen total for Marcum, who currently only has a Greenwich office in New England. After the deal is closed, UHY Advisors will have fourteen locations well.


No financial details were reported but it is reported that all the UHY employees will be retained by Marcum, pending the successful passing of a rigorous quiz given in a room with no windows, air conditioning and a one hour time limit.

A Marcum spokeswoman declined to comment and a message with UHY was not immediately returned.

Marcum to Buy UHY Offices in New England [Web CPA]

Hit the Books Before Interviewing at Marcum

If you ever get an interview at Marcum, we suggest you break out whatever textbooks you have left, find some stimulants and cram the night before:

[My friend] had some crazy ancient partner interview her and he was talking to her and asked what her favorite grad class was and she told him one…so he wrote down 3 problems gave her code sections etc. and said i’ll be back in an hour and walked out and she was left there alone to solve them. He came back in and said i give this a B+ and then they offered her a position.

Or you could just ask the Accountant of the Decade to develop a new review course.