PCAOB Fined RSM US $15,000 for Taking Its Sweet-Ass Time to File a Form 3
Say a PCAOB-registered accounting firm is a defendant or respondent in an administrative or disciplinary proceeding that was initiated by another regulator. That firm has to let the PCAOB know about this by filing Form 3, Special Report, within 30 days after the event. The firm also has to let the PCAOB know that it […]
McGladrey Is Glad to Have McGladrey Back, Says McGladrey Partner
Back in August, we learned that 1040 factory H&R Block was putting RSM McGladrey (aka McGladrey) out to pasture. By all accounts, H&RB was pretty excited to get rid of RSM (aka McGladrey), as the business was a bit of a drag on the rest of the company.
Crain’s reports that the deal finally closed today and at least one McGladrey (aka McGladrey) partner is equally excited to have their old RSM (aka McGladrey) back:
The move means the reunited McGladery, which has 6,500 employees—600 of them in New York—should be better positioned to compete against such industry-leading firms as PriceWaterhouseCoopers and Deloitte. “We are a great alternative to the Big Four,” said Tom Ferreira, who heads McGladrey’s Northeast practice. […] “We’re happy to be independent again, all together under one roof,” he said.
Your loss, H&RB (not aka McGladrey).
H&R Block Was Pretty Eager to Dump RSM McGladrey
[caption id="attachment_40127" align="alignright" width="150" caption="Photo credit*"][/caption]
This morning we learned that H&R Block would be selling RSM McGladrey to McGladrey & Pullen for $610 million. This reunion of the two firms is interesting because just a couple of years ago they couldn’t stand the sight of one another. These days, you might conclude that since they opted to rebrand under the name “McGladrey” that everyone has kissed and made up but we all know better.
In all likelihood, there are partners on both sides who would rather set their CPA certificates on fire than work with the other side. The problem for the partners in these firms is that they probably had little choice in the matter, as H&RB seemed intent on cutting off the weak link:
[T]he top U.S. tax preparer looks to jettison the underperforming division and focus on its core business. H&R Block will finance about $65 million of the deal value as it looks to push through the sale of RSM McGladrey.
In June, H&R Block’s new Chief Executive William Cobb told analysts that RSM’s falling profit and revenue were a drag on the company’s earnings, and that the unit and its troubles were on his “radar screen.”
“(The sale) should improve overall corporate margin, as Tax Services margin in FY11 was 27.1 percent and RSM McGladrey’s was 9.3 percent,” Oppenheimer analyst Scott Schneeberger said in a note to clients.
And despite the Blockheads eagerness, the gang at M&P seems perfectly okay with it. From the firm’s press release:
“The Board’s objective is to reunite the assurance, tax and consulting practices under an integrated McGladrey & Pullen partnership structure,” said Jerry Bourassa, Chairman of McGladrey & Pullen’s Board of Directors. “The anticipated transaction will not impact the quality and timeliness of services to our clients. Our partners and employees remain focused on meeting and exceeding client expectations.”
“This is all about what we believe to be in the best interests of our clients, our employees and our partners. We see great opportunities for success and growth for McGladrey & Pullen as a firm reunited in a traditional partnership structure,” said Joe Adams, Managing Partner of McGladrey & Pullen. “Our relationship with H&R Block has served us very well but we both agree that it is time to move on.”
So it sounds like there may be cake and punch but it probably won’t be a lively affair.
Of course we’d rather hear from the people on the ground (i.e. the McGladrey partners, employees, Natalie) about what they make of this shitstorm. I can’t imagine anyone missing the used car dealership of the tax prep world but is this reunion going to work? Will C.E. and the gang now be able to turn Mickey G’s into the next accounting powerhouse? Can we get one name for the combined firm, for crissakes? All important questions. Please enlighten us below.
H&R Block to sell consulting unit for $610 mln [Reuters]
McGladrey & Pullen, LLP signs letter of intent to acquire RSM McGladrey, Inc. [McGladrey]
(UPDATE 3) McGladrey’s Giant Putting Green Cake Will Ensure That Everyone Gets to Celebrate Their Rebranding
In the best example that we’ve seen of accounting firm make-up sex, today the RSM McGladrey and McGladrey & Pullen announced that they will now be branded under one name…McGladrey. Since the deciders on the name checked imagination at the door, the firms make it up to all of us with the best possible solution – building a giant putting green cake.
One of the duffers sponsored by McGladrey, Chris DiMarco, will attempt to chip in on the green later today and with any luck you’ll be able to watch it above as it happens.
As exciting as that is, it isn’t entirely clear whether or not this also serves as a tasty distraction from the layoffs and restructuring that is going on McGladrey. Kick that around if you like but also consider the fact that Natalie Gulbis doesn’t seem to be jumping out of this thing at any point in time, and that is a travesty that cannot go unnoticed.
UPDATE: We’ve been assured that the cake’s tastiness or lack thereof will be communicated to us later today. Whether or not there will be pre-cake jays, gallons of Vitamin D milk to wash it down or couches to pass out on has not been determined. Discuss and keep us updated. Spare no details – flavor, frosting, texture, etc.
UPDATE 2: Okay you guys – who witnessed this sorry-ass display? Natalie wouldn’t have disappointed the crowd like these losers. And then someone skulls one right into the camera? Video is completely gone right now. Unbelievable. Get back to us on this cake.
UPDATE 3: The report on the cake is in:
1) The cake is, actually, pretty big. And, it’s all cake, except for the part of the logo, which is made of rice krispie treats.
2) As for a slice of that cake…quite good, actually. The cake part is marble, and very soft and tasty. I nabbed what might be a corner piece with the “rough” frosting. It’s a lot of frosting. A lot.
I’d give the cake a solid A-. There will be a lot to save in the next few days!
Two minutes later we got his follow-up:
I had to stop eating it halfway through — I think I’d go into diabetic shock if I ate any more of it. The grade gets downgraded to a B+.
RSM McGladrey and McGladrey & Pullen, LLP, Launch New “McGladrey” Brand [McGladrey]
Layoff Watch ’10: McGladrey Makes Nationwide Cuts
Over the past month, we have heard lots about layoffs at RSM McGladrey/McGladrey & Pullen but we didn’t have much for details.
Frankly, we still don’t know a lot but we’ll go with what we’ve got. So far we know about reductions in the New York, Chicago, Quad Cities, Florida and Seattle offices and everything we’ve been told indicates that they are occurring elsewhere.
First the Emerald City:
I was am ple. There is a new geographic restructuring going on. Instead of multiple “economic units” there will be only three regions. Many HRs and CFOs from different offices are losing their jobs. Consulting people talk about 100 positions that will be eliminated across the country. 10 people were let go from Seattle Economic Unit which includes Seattle, Tacoma, and Olympia offices. We were informed about the reorganization somewhere around 04/12 and laid off at the end of the month. I think everybody received severance.
We’re not that familiar with past cuts in the RSM/M&P world but the big cuts in consulting seem to trail the Big 4’s by a year or two, although if some of these smaller clients are giving into the Big 4 lowballing then perhaps this is the natural progression.
Their Florida Private Club operations group closed the Club IT Consulting Group and layed off the staff. Some of the staff have been part of the firm for more than 20 years and were profitable.
Chicago just layed off the Operations Consulting Staff yesterday, [approximately] 10 people. This group was left to dangle in the wind, sink or swim on their own without marketing or sales assistance or access to the firm’s client-base Naturally it failed.
This firm’s actual layoff numbers are always reported low because they chase people out prior to layoffs in an attempt to camouflage the numbers. Their tactics to accomplish this include poor performance evaluations for staff, unreasonable margin requirements, constant peer pressure meetings regarding performance and head to head comparisons. This creates a dysfunctional relationship between groups and actually motivates groups within their own company to compete with one and other. Only so much people can take and then they leave. Just what the firm wanted.
Considering the economy in Florida, the demise of RSM’s private club operations in that corner of the over-leveraged world wouldn’t come as much of surprise. That being said, you might expect that veterans of the firm would be accommodated somehow with other internal opportunities.
As far as the “chasing” this is Jack Welch’s magical forced ranking method that the Big 4 has accepted like its own creation.
We reached out to both RSM’s corporate spokeswoman and their general counsel, both of whom have not responded to our request for comment. We also contacted an H&R Block spokesman to see if they could elaborate on these layoffs from the parent company level but again, our requests have gone unanswered. H&RB had their own layoffs last month however, there is no indication at this point whether cuts at H&RB would have anything to do with those at RSM/M&P.
We’re still accumulating details on these cuts, so get in touch with us about details on your office or discuss below. And don’t be shy, we know you McGladrey types been hesitant to call on us in the past.
Layoff Watch ’10: H&R Block Cutting 400 Positions, Closing 400 Locations
Has the risk of violence become too much?
No, it’s actually quite a bit more boring than that – cost savings. The company states that it will decrease its operating expenses $140-$150 million by 2012. CEO Russ Smyth was quoted in the Kansas City Star that “There aren’t as many people who need their taxes done when there are a lot fewer W-2s going out,” referring to the higher unemployment rate in the company’s customer base.
HRB’s headquarters in Kansas City will cut 165 of the 400 jobs lost.
The timing of this announcement is interesting because we’ve heard a few rumors (but virtually no details) about layoffs at RSM McGladrey, an HRB subsidiary, but they aren’t as forthcoming with the press releases and aren’t returning our calls. If you have any details about layoffs at RSM or its on-again off-again affiliate, McGladrey & Pullen, get in touch with us.
Full HRB press release:
KANSAS CITY, Mo. – H&R Block (NYSE:HRB) today announced a broad strategic realignment of its field and corporate support organization. Overall, the company expects these changes to decrease annual operating expenses by $140 – $150 million per year by the end of fiscal year 2012.
Russ Smyth, president and chief executive officer of H&R Block, said, “We operate in a challenging and competitive environment, and to be successful we must find new ways to provide better value to our clients. This requires that we narrow our focus and invest in a few key initiatives that will have the greatest impact on attracting and retaining clients in our retail and digital channels, while eliminating other activities and their related costs.”
Approximately 400 positions are being eliminated throughout the organization as part of the measure. The company also has closed approximately 400 under-performing tax offices out of its network of 11,000 retail tax locations.
“Changes like these are never easy and we appreciate the hard work and loyalty of the affected associates,” Smyth said.
“However, these steps are necessary to improve our business performance and better serve our clients.”
H&R Block expects to incur a pre-tax charge for severance-related costs of approximately $28 million, most of which will be incurred in the fiscal quarter ending July 31, 2010.
Despite Past Investigations and Borderline Childish Behavior, McGladrey & Pullen Takes Medifast Audit
McGladrey & Pullen/RSM McGladrey has been named the new audit/tax firm of Medifast, the company announced in a filing last Friday. The Company dropped Bagell, Josephs, Levine and Company LLP of New Jersey who was purchased by Friedman LLP, citing/blaming Sarbanes-Oxley for reducing the number of accounting firms that have the “extensive resources and experience with public companies on a national and regional basis to better serve Medifast.”
For those of you not familiar, Medifast is “an amazing weight loss program” whose products “are formulated with a
(UPDATE) RSM McGladrey, McGladrey & Pullen Officially Reconcile
– Update includes response from RSM McGladrey spokesperson
Well, it’s official. RSM McGladrey and McGladrey & Pullen are back together, having signed a new definitive agreement and putting the brief fallout behind them.
In a statement released by RSM McGladrey on Friday, both firms made good on their promise to kiss and make up after announcing there intentions to do so in December.
Both RSM President C.E. Andrews and M&P Managing Partner Dave Scudder are putting this whole misunderstanding behind them.
“With the completion of these agreements, our focus is on moving forward and building the success of our respective firms by enhancing client service and accelerating growth,” said C.E. Andrews, president of RSM McGladrey, a wholly-owned subsidiary of H&R Block. “We have a clear opportunity to enhance our competitive position by taking the collaboration between our firms to a new level.”
“We now have the framework to build on our heritage of delivering the highest quality services to all our clients, while providing growth opportunities for our people and ensuring the independence of M&P,” said Dave Scudder, managing partner of McGladrey & Pullen. “We look forward to increased collaboration with RSM McGladrey and the renewed sense of enthusiasm and commitment that both firms have brought to this process.”
In spite of the boilerplate statements, it’s not entirely clear if the new agreement between the two firms puts each of them back in the same position prior to the breakup. An RSM spokesperson did not immediately return our email seeking comment on these details. A RSM spokesperson returned our email and informed us that the new agreement is the same as the old arrangement and it is effective for five years, at that time it will automatically renew for additional five years. H&R Block, RSM McGladrey’s parent company, will be filing an 8-K this week with the SEC that will include the signed agreement.
Additionally, some developments that we ponder for personal amusement: will the recombined forces of the two firms be enough to break the absence from the Fortune 100 List? Will M&P will reap any benefits from the Natalie Gulbis ad campaign bonanza? We’ll stay on these…
At the end of the day, we’re sure everyone at both firms is pleased that the issue is resolved for the rest of busy season. Who knows, maybe it was just a distraction for partners but at least you won’t be getting any more emails about it.
Happy Birthday Natalie Gulbis!
Girl is 27 today so leave her some bday wishes in the comments.
It must be an extra special day since the RSM McGladrey and McGladrey & Pullen kissed and made up last month.
Plus, since the marketing campaign has been such an unmitigated success it might be nice for the reconciled firm to throw a little extra scratch her way. Happy Birthday NG.
Web CPA: McGladrey & Pullen Partners Vote to Go Back to H&R Block, RSM McGladrey
Well, sons and daughter of McGladrey, the reconciliation is done. Your feuding parental firms will be engaging in some awkward corporate make-up sex:
An arbitration ruling, which was handed down Nov. 24, favors H&R Block and RSM, enforcing the restrictive labor covenants involving employees of the two firms.
About 650 McGladrey partners began meeting in Orlando, Fla., on Wednesday and voted Thursday to approve the agreement after the M&P board, including managing partner Dave Scudder, had earlier approved the deal.
The whole thing has been pretty ugly as far as we can tell and according to Allan Koltin, CEO of PDI Global, a consultancy firm that advised both firms, M&P didn’t have any choice but to go back:
The enforcement of some of the terms of the original agreement by the arbitrator seems to have forced M&P’s hand. “Once the arbitration ruling came out and McGladrey & Pullen found they were prohibited from providing tax services for a couple of years, that was the end right there,” said Koltin. “There was no way they could be independent as an audit-only firm and compete effectively without also providing tax services.”
The original non-solicitation agreement said that M&P could not provide services such as tax preparation for between 18 and 24 months if it terminated the agreement, effectively limiting the firm to audit services. “Once they saw the writing on the wall, it became obvious that the two sides were going to come together,” said Koltin.
So this appears to be awkward. Did M&P think this through or even read the non-solicitation agreement before they told H&RB/RSM to drop dead? Did they legitimately think they could get by just offering the audit services for two years?
While we were rooting for the firms to make nice, there may be some of you that are less enthusiastic about the House of McGladrey being all under one roof again. We’d like to hear from the troops on the ground about this whole thing. Feel free to get in touch or just put it out there in the comments.
McGladrey & Pullen Partners Vote to Reconcile with Block [Web CPA]
UPDATE: The full press release can be seen here.
Are RSM McGladrey and McGladrey & Pullen Getting Back Together?
Maybe! For those of you looking for any ray of hope of RSM McGladrey and McGladrey & Pullen making nice, consider this your sign.
H&R Block, the parent company of RSM, announced yesterday that they, “[expect] a dispute regarding a subsidiary’s deal with an accounting firm to provide consulting to midsized businesses will be settled soon.”
Block CEO Russ Symth also told us yesterday that while nothing is official he’s pret-tay, pret-tay, prety-tay optimistic that the two firms will be able to kiss and make up:
“We are very optimistic that this is going to be settled within a few weeks,” Block CEO Russ Smyth told investors during a meeting after Block released its second-quarter financial results earlier Tuesday.
He warned, however, that while it appeared the matter would have a good outcome, “We are not across the finish line yet.”
We’ll go on record that we’re rooting for the firms to get back together. Reconciliation makes for a heartwarming story during the holiday season. Especially since we’ve learned that not even an insanely rich celebrity athlete and a Swedish model don’t seem meant to be.
Prior to any official reconciliation between the firms, several questions are worth mentioning: 1) What’s Natalie’s opinion? 2) Is RSM buying M&P a huge rock, a house in Sweden, or performing some other demonstration of materialistic love as part of the reconciliation? 3) How will the make-up sex work? Will M&P even go there? D) See #1.
If you’ve got thoughts on any of these questions or if the RSM/M&P troops have feel like talking about their firms’ chances of making it work, discuss in the comments.
H&R Block Subsidiary Nears Settlement With Auditor [AP via ABC News]
Prior GC Coverage of RSM McGladrey/McGladrey & Pullen Drama:
RSM/McGladrey & Pullen: ‘Breaking Up is Like Pushing Over a Coke Machine’
McGladrey & Pullen Might Want to Think This Whole Divorce Thing Over
H&R Block is Not Letting McGladrey & Pullen Leave Until They Talk About This
McGladrey & Pullen Doesn’t Love H&R Block Anymore
RSM McGladrey Fails to Mention Natalie Gulbis Once in Interview
Which is shameful since everyone is aware that it would be the most effective way to recruit people to their firm. Nevertheless, FINS has a nice chat with the firm’s HR chief Kimpa Moss who speaks about the firm’s current-non-Natalie recruiting process, their use of social networking, etc. etc.
According to the interview, RSM just welcomed 400 newbies this fall and is always on the look out for experienced servants of the capital markets.
She did, however, manage to dodge the layoff question:
[FINS Reporter Kyle] Stock: Did RSM downsize during the crisis?
Moss: We really match our client service work force to the demand in the marketplace, but we don’t really comment in specifics on the changes in our work force from year to year
Layoffs are simply none of your beeswax, thankyouverymuch. Accordingly, we invite the members of the RSM/M&P fam to expand on Ms. Moss’ particular account of the layoff situation. Don’t make us prod.
We also found the following exchange especially interesting (our emphasis):
Stock: Did RSM see the global financial crisis as an opportunity to grab market share?
Moss: We track closely with our clients, so as they feel the impact, we feel the impact. But it does open up the question: ‘Are there more sectors we should be focusing on?’ And on the talent side, due to circumstances at other firms, there are a lot of people who we were able to approach. We’ve definitely done a lot of experienced hiring in the past year.
Now maybe we’re taking the above statement wildly out of context but what could Ms. Moss possibly be suggesting? Circumstances like, the banishment of Google Talk, the shameful denial of live streaming music, or bonuses in the form of tighty-whities? If we’re way off base here, feel free to comment with your own interpretation.
Annnnd speaking of undies, we’re more than a little disappointed that FINS passed up on the opportunity to inquire about the potential marketing rivalry that RSM that has on its hands. For now we’ll assume that RSM is counting on PwC’s continued dismissal of advertising genius and the RSM will enjoy it’s success of effective advertising (despite not mentioning it at all).
RSM McGladrey’s Kimpa Moss: A Nonstop Talent Hunt [FINS]
Ernst & Young and McGladrey & Pullen Both Have a Petters Problem
In last Tuesday’s Preliminary Analytics we mentioned the case of Tom Petters, the Minnesota businessman accused of running a multi-billion dollar Ponzi scheme.
The trial is in its first week and already there has been testimony from the star witness — Petters’ former office manager — that included a recording of Petters saying ‘This is one bi his own defense counsel comparing him to a cocker spaniel:
[Defense counsel, John] Hopeman countered that while Petters was an accomplished salesman, he didn’t have the corporate skills necessary to run companies.
“He has the attention span of a cocker spaniel — about 15 seconds,” the defense lawyer told the 10-woman, six-man jury. “He couldn’t read a whole book if his life depended on it.”
Okay, a couple things before we get to the crux.
• Most cocker spaniels we know have attention spans exponentially longer than fifteen seconds. It would be much more believable if defense counsel had said, “He has the attention span of a pomeranian and you can’t leave him home alone or he’s eats the furniture.”
• Petters couldn’t read a whole book if his life depended on it? Are we talking classic literature? Because if we are, then he’s got company. What about children’s books? Do magazines count? He strikes as a guy that could at least make it through the pro football season preview.
Now that the trial is underway we’ll be following the more interesting developments in the case but we’ll be especially interested in the litigation involving the auditors of the hedge funds that cycled funds to Petters’ businesses.
There is pending litigation in Texas that involves both Ernst & Young and McGladrey & Pullen related to the audits the two firms performed for feeder funds for Petters’ businesses.
These feeder funds received purchase orders for high-end electronics from Petters’ businesses that were seemingly made by big-box retailers such as CostCo. The feeder funds then solicited money from investors, including the plaintiffs in the case, in return for promissory notes for Petters’ businesses. The merchandise on the purchase orders secured the notes. Allegedly, there was no merchandise and Petters used the money received to pay off other investors who were looking to get out and so on and so forth.
The feeder funds that are the defendants in this case are Arrowhead Capital Partners II, L.P. of Minnetonka, Minnesota, Palm Beach Finance Partners, L.P. and Palm Beach Finance Partners II, L.P. of Palm Beach Gardens, Florida, and Stewardship Credit Arbitrage Fund, LLC of Greenwich, Connecticut. The general partners and investment managers of these funds are also listed as defendants.
E&Y served as auditors for Stewardship while M&P served as the auditors of Arrowhead. A small Florida firm, Kaufman, Rossin, & Co., P.A. served as the auditors for the two Palm Beach funds. The firms are being sued, naturally, for not detecting the alleged fraud. In this case, however, the firms may have it coming since the fraud was run by someone with the alleged attention span of a canine.
We spoke with Guy Hohmann, who is representing the plaintiffs in this case, and according to Mr. Hohmann, M&P has the most significant exposure in the Petters case as they also served as the auditor for Lancelot Investors Fund and Colossus Capital Fund, L.P. both Oak Brook, Illinois based hedge funds. M&P also faces litigation from the investors of those funds in Illinois.
Lancelot’s Vice President of Finance was Harold Katz, who just pleaded guilty last month to one count of conspiracy to commit wire fraud. Mr. Hohmann was recently informed that before taking the job at Lancelot, Katz was a senior manager at M&P that worked on the Lancelot audit. M&P would not comment. It has been speculated now that Katz — who pleaded guilty September 2nd — is cooperating with authorities in the cases against Petters and Lancelot founder, Gregory Bell.
In another strange twist, Mr. Hohmann told GC that Lewis Freeman — the forensic accountant that is under federal investigation that we told you about last week — was appointed as the Chief Restructuring Officer of the Palm Beach funds. The Palm Beach funds are not currently listed as an active case on the forensic firm’s website.
We reached out to all the firms named in the lawsuit, McGladrey & Pullen declined to comment while calls to E&Y, Kaufman Rossin & Co., and Kenneth A. Welt, the current receiver listed on the Lewis Freeman website, were not returned.
According to the complaint, the amount lost by the plaintiffs was $24 million dollars, however, according to a October 6, 2008 Bloomberg article, the two Palm Beach Funds were responsible for approximately $1.1 billion of the alleged $3 billion the scheme while the Lancelot funds held approximately $1.0 billion with Petters. Mr. Hohmann’s understanding was that the Palm Beach funds had provided approximately $1.0 and that Lancelot held approximately $1.6 billion. Because of the complex web of companies in this case, the final dollar amounts may not ever be known.
So regardless of the fact that the case in Texas is in its early stages, future lawsuits from other investors could arise, and all three firms could continue to face significant litigation.
We’ll continue to keep you updated on any developments in the cases involving these accounting firms and will be following any noteworthy developments involving the Petters trial.
The case is SSR v. Arrowhead et al., District Court of Dallas County.
New McGladrey Directors to Check Out Natalie Gulbis?
Maybe! RSM McGladrey/McGladrey & Pullen announced new directors in their Charlotte office today which is obviously exciting for them. We also think it’s nice that the press release still has both names of the firm together.
That gets us to wondering if M&P is heeding our advice? Regardless of that whole situation, it’s nice to see them come together for the sake of the new directors. Sort of like when bitterly divorced parents show up at their son or daughter’s graduation. Very touching.
Along with these promotions, the national finals for the McGladrey Team Championship start on Sunday at Pinehurst and you-know-who is going to be there.
Obviously we’re very curious as to whether these new directors will be in attendance to get a look at Natalie’s swing. Two McGladrey directors are actually playing in the tournament, so unless NG has a clause in her contract that says she doesn’t have to golf with accountants, there’s an outside shot one of those lucky ducks might end up in her group.
So if you’re in the area, it might be worth checking out since A) Obvious answer; and B) the silent auction has some cool stuff if you’re willing to drop some coin. Oh, and it benefits the Special Olympics, so that’s good too.
This is it! [RSM McGladrey Golf Blog]
RSM/McGladrey & Pullen: ‘Breaking Up is Like Pushing Over a Coke Machine’
At least that’s one expert’s opinion. Allan Koltin, CEO of PDI Global, Inc., based in Chicago, thinks RSM McGladrey and McGladrey & Pullen will eventually be getting back together.
“I think what you’re seeing now is just the flexing of some muscles,” [said Koltin.] “What (RSM’s termination notice) does is reinforce what [RSM Parent, H&R] Block said before, which is that, if need be, they will go to the mat with them on this one.”
That’s a fine assessment but we all know what this is really about. The Gulbis factor. RSM/Block can go on and on about ‘administrative services’ and whatever hell else they think that’s in M&P’s ‘best interest’ but we understand the unmentionable factor here.
Sooner, rather than later, M&P had better come to their senses in this whole mess and realize that being associated with Natalie Gulbis is by far the best thing any accounting firm has been able to pull off since…yeah, pretty much anything.
McGladrey, RSM move to reconciliation [KCBJ (Subscription Required)]
McGladrey & Pullen Might Want to Think This Whole Divorce Thing Over
The accounting firm soap opera between McGladrey & Pullen and RSM McGladrey continues as RSM has filed notice terminating the two firms’ agreement and, under no circumstances, will they allow M&P to come crawling back to them without RSM’s involvement.
This was all included in a filing with the SEC, made by H&R Block, who is obviously the pimp in this whole love triangle.
Personally, M&P should probably consider going back to RSM’s sorry ass just to take advantage of the Natalie Gulbis exposure.
Judging by the firm’s response to our earlier mistake, they won’t be listening to us. Poor thing is caught in middle of this whole mess. Natalie, if you ever need to talk, don’t hesitate.
RSM McGladrey wants say in any reconciliation with McGladrey & Pullen [KCBJ]
McGladrey & Pullen Needs to Quit Being Nice to Us
On the one hand we feel bad about missing McGladrey & Pullen being on BW’s list of Best Places to Launch a Career. They land at #66 but the picture at right wasn’t used and frankly, our attention span is short.
We’re also a little disappointed that the M&Pers out there didn’t jump our shit about missing it altogether. Perfect opportunity for you call us out for being a Big 4 whore or something to that effect. Probably due to the Minnesota Nice or maybe you’re all clinically depressed because your firms are getting divorced. WTFK.
Regardless, your opportunity is gone because this is the GC “our bad” statement for leaving you out of the previous posts.
However, when we probed M&P’s profile we discovered that the five year retention rate was 18%. And M&P sponsors Natalie Gulbis for crissakes. We shouldn’t have to explain how valuable she would be in the recruiting and retention processes. We just convinced ourselves that we don’t feel bad at all.
Get it together M&P.
McGladrey & Pullen Sued for Helping Bad Guys
Mark this suit in the “Accountants are Crooked” column as opposed to the “Accountants are Stupid” column.
McGladrey & Pullen, its predecessor auditor, and the partner on the audit engagement, G. Victor Johnson, are being sued by the Sentinel Management Group Trustee for being a knowing participant in the fraud put on by Sentinel who collapsed in 2007.
More, after the jump
M&P is accused of “knowingly and substantially assisted and participated in the fraud by [Sentinel], and as a result, committed and are liable for fraud themselves.”
Many suits against accounting firms accuse negligence related to technical mistakes that were made so we’re impressed see a lawyer say “To hell with it, these guys are crooks, I’m taking them down like Arthur Andersen.”
On a more personal level, between this suit and the messy divorce with RSM McGladrey, we’re expecting to M&P to have the CPA firm equivalent of a nervous breakdown any day now. Feel free to speculate as to what that might actually be.
Collapsed Financial Company’s Trustee Claims Accountants Knew About Fraud [Chicago Bar-Tender]
H&R Block is Not Letting McGladrey & Pullen Leave Until They Talk About This
So the H&R Block/McGladrey & Pullen soap opera break-up has gotten more annoying. At first, it simply looked like a firm falling out of love with its parent company because M&P didn’t want to be stuck with a loser their whole life.
Natch, H&R Block wasn’t going to just let M&P walk away from the best thing that ever happened to the firm. M&P was not going to have that conversation and said that they were still walking out.
The Block feels so strongly that M&P is making a mistake, that it was announced late last Friday, probably in order to not make a scene, that H&RB sued M&P to prevent the termination of their administrative service agreement. Essentially saying, “WE ARE GOING TO TALK ABOUT THIS!”
M&P is not impressed with this desperate attempt to be won back:
“We are disappointed that H&R Block has chosen to pursue litigation,” said McGladrey & Pullen managing partner Dave Scudder. “We are committed to respecting our legal obligations and are confident we are doing so. Thus we are confident this lawsuit has no merit. Under the terms of our shared services agreement, we have every right to terminate that arrangement. We have chosen to do so because it is the best business decision for McGladrey & Pullen LLP in order to serve our clients in the increasingly complex business and regulatory environment.”
M&P is over being held back by HR&B and wants to get out there on their own. Besides, all The Block does is sit around and prepare tax returns for people who can’t read the instructions on the tax forms. You’ve got no motivation, Block. Oh sure, you got into the online tax return prep business but now what? M&P just wants time to be alone, so please respect that.
Block Files Suit Against McGladrey & Pullen [WebCPA via CPA Trendlines]
H&R Block Still Loves McGladrey & Pullen
Earlier in the week we told you about McGladrey & Pullen falling out of love with H&R Block. Well, H&RB is not going to just let M&P walk away. The Company cares too much about this relationship:
“We believe the path proposed by certain of M&P’s leaders is fraught with significant business and financial risks and is not in the best interest of M&P partners, employees or clients,” Block CEO Russ Smyth in a release Wednesday. “Whether the full M&P partnership is willing to assume these immense risks remains to be seen.”
Nevermind the fact that H&R Block is the used car salesman of tax preparers. Nevermind that H&RB is probably responsible for the failed appointments of several Obama cabinet members. This about love lost (and probably sex lost).
H&R Block questions McGladrey & Pullen decision [Kansas City Business Journal]