Tag: PricewaterhouseCoopers

Accounting News Roundup: Audit Committee Chair Resigns from WellCare Health; PwC, E&Y Officially Cut Iran Ties; Repo 105 = Pointless, Repugnant Practice | 04.26.10

Director Resigns at Wellcare Health [WSJ]
Regina Herzlinger was the chair of the audit committee of WellCare Health Plans, Inc., a Tampa-based provider of Medicaid and Medicare plans, but resigned last week amid controversy around the company’s accounting practices. The Wall St. Journal reports that Ms Herzlinger said that internal audits discovered the company overbilled the Illinois Medicaid program by $1 million “and potentially overcharged states for almost $500,000 worth of maternity care.” She also stated that the company “ran afoul of Georgia’s requirements that it account for eachhich it paid providers, resulting in a $610,000 fine.”

WellCare also paid an $80 million fine to the State of Florida last May for a criminal investigation “into allegations that it had defrauded Florida benefits programs for low-income adults and children” as well as $10 million to the SEC for an investigation into its accounting. At least they’re keeping some attorneys busy.


Ms Herzlinger alleges that she was not renominated to her position on the board of directors for raising questions about the accounting practices at the WellCare as well as corporate-governance issues.

The Company claims that “good corporate-governance practices require it to bring in new board members periodically to provide a fresh perspective,” so at least they’ve got that point covered. The Journal also reports that the company is pulling the materiality card, saying that the “accounting errors Ms. Herzlinger identified were relatively small and the company’s own internal controls indentified them, indicating that its processes are working well.”

Lehman Investors Add Auditor Ernst & Young to Suit Over Deals [Bloomberg]
Charlie Perkins, the Lucas van Pragg of Big 4 accounting firms, has to be getting sick of repeating himself:

“Throughout our period as the auditor of Lehman, we firmly believe our work met all applicable professional standards, applying the rules that existed at the time.”

Countrywide Investors Said to Settle Lawsuit for $600 Million [Bloomberg BusinessWeek]
KPMG is listed as one of fifty defendants in the lawsuit in California.

Companies Feeling More Pressure to Cut Iran Ties [NYT]
PricewaterhouseCoopers and Ernst & Young have both cut their ties with Iran, following KPMG, the Times reports. This results in grand total of zero Big 4 firms with affiliates in Iran.

United Against Nuclear Iran (“UANI”) President Mark Wallace received letters from both PwC and E&Y:

This week, Mr. Wallace’s group received letters from both PricewaterhouseCoopers and Ernst & Young assuring the group that they had cut ties with Iranian firms. PricewaterhouseCoopers wrote that the Middle East member of the company’s global network had had a “cooperating firm relationship” with Agahan & Company, an Iranian firm, but that it expired last year. Ernst & Young said it cut its ties in 2001 to the Tadvin Company, one of Iran’s largest accounting firms, even though Tadvin was still listed on its Web site this year.

Mr. Wallace called that a breakthrough because by publicly avoiding Iran, the American accounting firms that audit so many other companies send an important signal. “What it says is if it’s too risky for the Big Four accounting firms,” he said, “it should be too risky for other companies.”

It’s pretty obvious Mr Wallace doesn’t know anything about Big 4 accounting firms re: risk.

A manifesto for accountants [Tax Research UK]
Richard Murphy has some suggestions for the Accountancy Age manifesto.

Repo 105 Explained With Numbers and Detail [The Summa]
“Right now, I just don’t see what the big fuss is all about. The number differentials are just too small. Although a repugnant practice, Lehman didn’t accomplish much of anything with Repo 105 use.”

Compensation Watch ’10: PwC Puts a Number Out There

Multiple sources have told us that Bob Moritz has put a number out there for comp adjustments during the firm’s webcast today :

Sitting in the Bobby Mo Firmwide Townhall Webcast. Raises: 5% to 8%.

But don’t start high-fiving just yet:

PwC expected to be 5% to 8% raises this year, but still a “quarter to go” per Moritz on today’s townhall webcast.

Early reports also are that internal firm services (IFS) will be getting 3-5%.

Thoughts? Your move, KPErnstDeloitteMG.

Accounting News Roundup: Over 50% of CFOs Aren’t Planning on Salary Increases; Americans Don’t Trust Politicians; PwC Cleans Up on Lehman Bankruptcy | 04.19.10

National survey finds employee wages and bonuses to remain stagnant over next six months [GT Press Release]
All the excitement (or lack thereof) amongst the Big 4 about raises this year will, at least for the next six month, will be rare compared to other companies. Grant Thornton’s survey of CFOs revealed that 53% don’t expect any salary changes in the next six months while 32% plan for decreases. That leaves a whopping 15% of those left in the survey that are planning wage and bonus increases over the next six months.


Poll: 4 out of 5 Americans don’t trust Washington [AP]
So if you’re interested in running for office, this may be the year to do it.

PwC’s Administration of Lehman Translates to $24,000 Per Hour! [The Big Four Blog]
Naturally in most situations, there are winners and there are losers. While Ernst & Young is looking like a giant loser in the Lehman Brothers bankruptcy, the whole thing seems to have worked out well for PricewaterhouseCoopers.

TBFB reports that, as the administrator for the UK piece of Lehman, the firm has gained control of over $48 billion in assets. Costs associated with these services (in the 18 months since the bankruptcy) are 0.65% of the assets recovered. A quick punch of your 10-key reveals that this is around $312 million or $24,000/hour.

Some People Would Like to Know Why PwC Is Mum on The Alleged Morgan Keegan Fraud

Last week, the SEC continued its “Bustin’ Up Fraud” tour by charging Memphis-based Morgan Keegan & Company, Morgan Asset Management, and two employees, James C. Kelsoe, Jr. and Joseph Thompson Weller with “fraudulently overstating the value of securities backed by subprime mortgages.”

The long/short of it is that SEC’s Enforcement Divish alleges that Kelsoe “arbitrarily instructed the firm’s Fund Accounting department to make ‘price adjustments’ that increased the fair values of certain portfolio securities.” Weller didn’t do a damn thing to remedy this, Morgan published fraudulent net asset values (NAVs) based on these valuations and investors ended up losing something like $2 billion. Typical stuff in this day and age.


While Khuzhami and Co. gave the usual spiel about “lies” and whatnot, Jonathan Weil over at Bloomberg is wondering why PricewaterhouseCoopers is being totally left out of this ordeal (our emphasis):

Now that the Securities and Exchange Commission has accused Morgan Keegan & Co. of fraudulently overvaluing subprime-mortgage bonds in several of its mutual funds, there’s still one major player in this saga that hasn’t uttered a peep.

That would be PricewaterhouseCoopers LLP, the Big Four auditor that blessed the funds’ year-end financial statements for fiscal 2007. Funny thing is, officially at least, PwC is still clinging to its position that there wasn’t anything wrong with the funds’ numbers. That’s a lot harder to believe now than it might have been before last week.

Not to take issue with Jonathan Weil (who we think is great, btw) but we aren’t surprised at all that PwC is standing by their audited numbers. “Deny ’til you die” is Big 4 101, even if that denial is through complete and utter silence. They’re better at holding out on guilt than Pete Rose.

JW ends up addressing his own inquiry saying, “Perhaps PwC is awaiting the final outcome of the SEC’s case, which might take years to litigate. While the SEC didn’t name PwC as a defendant, the firm is being sued in court by fund investors. So PwC has a clear incentive to avoid acknowledging that any of its audit conclusions may have been wrong.” Jackpot! And if there’s one advantage that PwC and the rest of the Big 4 have on the road to failure, it’s time.

Ultimately, this detecting fraud. The public want auditors to find it. Auditors claim that’s not their job. The “expectations gap” as the leadership likes to say. And while Big 4 leaders cling to this “gap” like a security blanket, Weil brings up the question that more people have been asking lately, “if auditors can’t detect fraud, what good are they?”

Bond-Fund Fraud Suits Leave Auditor Speechless [Bloomberg/Jonathan Weil]
SEC Charges Morgan Keegan and Two Employees With Fraud Related to Subprime Mortgages [SEC Press Release]
SEC Complaint

Jim Quigley Takes Exception with the Notion That Deloitte Isn’t the Biggest Firm in India

You don’t need to tell Jim Quigley that it’s only a matter of time before Deloitte is the largest accounting firm ON EARTH.

In a Q&A with India’s Business Standard, Quigs was asked about the shrinking gap and you better believe the man is all over it like a hard-hitting interview at Davos:


After five years, we have eliminated the gap. They were once $2 billion larger than us.

At $26.1 billion for FY ’09, Deloitte is all over PwC ($26.2 billion in FY ’09) for the Biggest of the Big 4 in terms of revenue. However, JQ was a little more defensive when asked about the firm’s presence in India.

But if one looks at India, the perception is that you are the smallest amongst the Big Four.
I think we are the largest in India when you look at the number of people. We have 12,000 Deloitte people in India and we are on our way to 20,000 people.

In other words, “Thanks for bringing that up but since India revenue isn’t known, head count is how we’ll measure this. And in that particular case, we’re the largest. Next question.”

But a lot of them are your [Business Process Outsourcing] employees at Hyderabad.
Yes, we have about 8,000 people there. And we are growing that towards 15,000. They are focused on serving the global market place.

We have the number one audit share in India. Our audit share of the listed companies is larger than any of the competitors. My goal is to go for balanced growth in India. I want to be one-third audit, one-third tax and one-third consulting. Growing the tax and consulting businesses is easier than it is to move the audit share because companies don’t change auditors often. The fact that we start with the largest audit share is a terrific foundation for us. My aspiration is that I want to be the absolute leader in professional services, especially in important emerging markets like India.

Translation: “Are BPO people not employees? Why wouldn’t we count them? And since we are counting them we’re going to double that number, FYI. Oh, and we have the biggest audit share in India and it we’ll eventually be biggest in everything so then they’re won’t be room for ‘debate’ (making the air quotes).”

In how many years?
In three to five years, I want to be the absolute leader here. I have more people here than anyone else today.

That is, “Deloitte numero uno by 2015! Did I mention that we have the most people here?”

Then the best part, comes a little later when Quigs gets the Satyam question:

How has Deloitte strengthened its internal controls after the Satyam scandal?
I don’t think you can say that if one firm has had an issue with Satyam, therefore all professional services firms have a problem.n the aftermath of that fraud, and it was a management fraud first, to make sure that we did not have comparable circumstances, we went back and reviewed our 50 largest audits. We challenged our partners and thinking. We were satisfied that we have completed procedures that will reduce to a relatively low level the risk that an undetected error could occur. Our commitment to quality is tireless. And that is what you want the market leader to be.

So it sounds as though Satyam will be NBD for Deloitte, unlike some firms. We know India is a fraud paradise so it wasn’t was their fault; they were duped. Deloitte is undupable.

‘Deloitte wants to be the absolute leader here’ [Business Standard]

Accounting News Roundup: EU Threatens Convergence; IRS Is Not Hiring 16,500 Agents to Enforce Mandatory Healthcare; Charges Look Unlikely in AIG Probe | 04.05.10

• Accounting convergence threatened by EU drive [FT]
Somewhat of a bombshell was dropped over the weekend when an EU politician suggested that funding for the IASB could be subject to its willingness to buckle to political pressure, according to the Financial Times. Michel Barnier, the EU’s new internal market commissioner would like ‘issuers – more banks and more companies – and more prudential regulators represented on the governing board [of the IASB],’ and suggested that it was too early to determine if the IASB’s scant budget of $6.5 million would be increased.

The FT reports that the EU pols “believe prudential regulators should be morovernance so that accounting can be used as a tool for financial stability,” despite the feeling of other countries (e.g. U.S. and Japan) that accounting rules “should not be the subject of regulatory intervention but should focus on providing an accurate snapshot of a company’s value.”


This difference in opinion on what the purpose of accounting is could disrupt the convergence process which won’t do much to impress the G20 chaps who demanded some progress on the global accounting sitch.

• IRS Expansion [Factcheck.org via TaxProf Blog]
Those 16,500 new IRS agents you keep hearing about, or is 17,000? Whatever it is, Factcheck.org was posed the question about this small army of tax enforcers that will be marching into your home, heavily armed and stealing your freedom by forcing you to buy healthcare that you don’t want.

Are you prepared for this shock? Turns out, it’s not true:

This wildly inaccurate claim started as an inflated, partisan assertion that 16,500 new IRS employees might be required to administer the new law. That devolved quickly into a claim, made by some Republican lawmakers, that 16,500 IRS “agents” would be required. Republican Rep. Ron Paul of Texas even claimed in a televised interview that all 16,500 would be carrying guns. None of those claims is true.

The IRS’ main job under the new law isn’t to enforce penalties. Its first task is to inform many small-business owners of a new tax credit that the new law grants them — starting this year — which will pay up to 35 percent of the employer’s contribution toward their workers’ health insurance. And in 2014 the IRS will also be administering additional subsidies — in the form of refundable tax credits — to help millions of low- and middle-income individuals buy health insurance.

Plus, Doug Shulman testified before the House Ways & Means Committee that the Service will not be auditing individuals, rather, “insurance companies will issue forms [some possibilities here] certifying that individuals have coverage that meets the federal mandate, similar to a form that lenders use to verify the amount of interest someone has paid on their home mortgage. ‘We expect to get a simple form, that we won’t look behind, that says this person has acceptable health coverage,’ Shulman said.” So maybe this is what Anthony Weiner was trying to explain to Bill O’Reilly?

• Federal Prosecutors Leaning Against Charges in AIG Probe [WSJ]
If you were thinking that it would only be a matter of time before Joe Cassano was charged with pushing the financial apocalypse button, you’re about to be severely disappointed. The Journal is reporting — citing “people familiar with the matter” eight times or so — that the former head of the AIG Financial Products unit is not likely to be charged by the Department of Justice for deceiving PricewaterhouseCoopers about AIG’s exposure to credit default swaps.

The DOJ was initially under the impression that Cassano had not informed PwC about an adjustment that AIG had made to make the losses from the CDS look just horrendous as opposed to catastrophic. When PwC came back with a material weakness on AIG’s internal controls, they abandoned the adjustment. The DOJ’s investigation turned up some notes of a PwC auditor that show that Cassano had told the firm about the adjustment thus, covering his ass. The Feds haven’t officially made up their minds about charging Cassano but this element was considered a “central issue.”

PwC Report: We’re Not Getting Sued for Accounting Issues Nearly as Much

That goes for the rest of you Big 4 and non-Big 4 too! Okay, the report doesn’t come out and state that CPA firms are the ones getting slapped around by plaintiffs but it seems like a logical conclusion since we’re talking about, ya know, accounting.


The PricewaterhouseCoopers report states that of the 155 federal lawsuits in 2009, only 37% of them were related to accounting issues, compared to 41% in 2008. To clarify just a little bit, the decline was because “many of the cases were connected to the financial crisis and tended to focus more on disclosure issues not having to do with whether the defendants followed generally accepted accounting principles.” In other words, the accounting is wrong as much but apparently people are forgetting to bring up certain important details. Like say, repos?

Plus the lawsuits that do involve accounting issues are the most expensive settlements. The reports states that out of the top ten lawsuits, seven of them had an accounting component to them. The total value of settlement in ’09 was $2.3 bil.

So what causes all the problems? Lots of bad guessing for starters. According to the report, 57% of the cases mentioned issues related to estimates, while 43% of the suits cited internal controls. Unfortunately, those two things are right in the wheelhouse of auditors. Bright side is that revenue recognition isn’t citied nearly as much. Don’t let anyone tell you different, screwing up less is a good thing.

Accounting-Related Lawsuits Fall [CFO]

PwC Had Enough with Old Republic’s Sketchy Accounting

Accounting firms take a lot of grief for bending over backwards for their clients. They’re in the client service business after all and keeping them as happy as possible is priority numero uno (despite what you might hear). Considering this factoid, when an accounting firm decides to cut a client loose for a “disagreement” over an accounting practice, we feel that’s a pretty good reason for any future accounting firm to think long and hard before taking on said client (case in point: KPMG taking the Overstock.com audit).


PricewaterhouseCoopers notified Old Republic International Corp. on March 19th that they would be “declining to stand for re-election as Old Republic’s independent registered public accounting firm for 2010.” That’s nice SEC filing language for “We’re so grossed out by you that we refuse to audit you any more.”

The two firms disagreed about the accounting treatment of “certain mortgage guaranty reinsurance commutation transactions with captive reinsurers owned by lending institutions.” That description alone makes us nauseous. The gist from Old Republic’s 8-K filing:

Old Republic had concluded that, in accordance with traditional reinsurance accounting practices, funds received ($82.5 million) in excess of amounts owed to it by the captive reinsurers should be deferred and recognized in the income statements of the future periods during which the related claim costs were expected to occur. PwC believed that generally accepted accounting principles (“GAAP”) required that the $82.5 million be recognized immediately as income from a contract termination.

So you have “traditional accounting practices” versus almighty GAAP. The tradish accounting wasn’t good enough for PwC, so they brought the probelme to the attention of the audit committee. The AC ultimately decided…wait…that management was correct. Shocked? Us too. The disagreement was brought to light back in November and in a press release when the company said that the transactions in question “which resulted in little consequential effect on the pretax loss.”

Apparently PwC wouldn’t let it go and the Company called in the SEC to get their $0.02 on the matter. Lo and behold, the Commission sided with PwC. After a lot profanity-laced belly aching (that’s what we imagine, anyway) and sleepless nights for both OR’s accounting department and the PwC audit team (that’s not debatable), Old Republic filed the delayed 10-Q last month with restated financial statements.

After what was surely 5 or so months of pure hell, PwC figured that this was an awkward enough situation that a break up was warranted. This was probably the perfect opportunity for PwC to get out of this engagement. They figured Old Republic wasn’t going to change their less-than GAAP-y ways, the audit committee is obviously no help, and God knows you don’t want to get the SEC involved every single time there’s a disagreement. If you were to ask us, its seems like a pretty logical reaction.

Now the only question is, which audit firm picks up Old Republic? PwC will certainly have some interesting things to share with the firm that decides they’re up for this particular headache.

PricewaterhouseCoopers drops Old Republic [Chicago Breaking News/CT]
8-K [SEC.gov]

Compensation Watch ’10: PwC Moving Up Adjustment Date?

There’s been some whispering about PwC moving up its compensation and adjustment time frame from September to July and that’s got people curious.


At first glance this makes sense because the firm has a June 30 fiscal year-end. PLUS! Since Bob Moritz has already made it abundantly clear that there will be raises for 2010 we figure everyone would be excited to hear that the bumps would be coming a little earlier this year.

However, since everyone likes to jump to conclusions over the slightest little change, we’ll indulge. There have already been whispers of layoffs at PwC here and there but nothing that we’ve been able to confirm so people are probably antsy. And if the adjustment date is moved up we’re sure people are worried that means layoffs will be happening sooner rather than later. We can’t read anyone’s mind but we’re thinking this should be in the ballpark…

But if you’re anxiety is well founded, tell us why or get in touch.

UPDATE, a shade before 1 pm: One of our sources inside PwC shared their thoughts with us:

I think the overall feeling was positive…it will probably make some people happy (depending on the %) and hopefully limit the higher performers from going out into the market, however, it may also help some people look for jobs sooner (i.e. they don’t have to wait until September now, if the raises are low). Most people still have a lot of questions, including the estimate of the increase for each band of the rating system, what the bonus pool is going to look like, and although that is not being paid until September, whether we will know what the bonus amounts are in July.

Dennis Nally: PwC’s Credibility with Our Clients Is Doing Just Fine, Thankyouverymuch

Awhile back we told you about PricewaterhouseCoopers Global CEO Dennis Nally admitting that the PwC brand had been damaged because of the whole Satyam fraud.

DN has done another interview with the Indian press and he says despite this litng is on the up and up in India for PwC. The long/short of it is that Dennis & Co. are going to keep giving their clients the P. Dubs experience now and forever.

Pretty wide range of questions but we’ve presented the highlights for you.


Was the PwC Magic 8ball broken?

Q: When you look back at it do you think you could have avoided all that happened?

A: I don’t know if we could have avoided it. As we all know this was probably one of the most significant frauds that suddenly has taken place here in India but even in the global market place. So I do not know how you avoid that type of situation.

Where was the P. Dubs swagger when the shit hit the fan? Did you realize that everything was f’d and didn’t know what to do?

Q: [T]he firm didn’t seem to respond in a confident manner. The impression was that it didn’t know what it had been hit by. Do you think it could have been handled better?

A: I think with hindsight you can always do things better and that is part of learning and trying to deal with issues. But quite frankly this was a major event and of course it took us time to understand the pattern and what transpired.

In fact we are still learning and everybody is still learning. Now all the facts aren’t quite out yet but I think we are in the business of being out in the public and when something like this happens and it happens in a negative way, we are part of that. That is just a reality of being in a profession that we are involved with.

Why is this PwC’s fault?

Q: What role did the auditors have to play?

A: You are into an interesting debate and discussion because what is the role on a professional standards for the detection of a fraud. That is one of the areas that has been the focus not only on Satyam but a broader profession wide issue and we certainly welcome that debate.

I think there is an expectation out there in the public that auditors uncover every single fraud that they are involved with and that is not what professional standards call for but there is the public perception that that is what we are there to do. I define that as the expectation gap. If that is the expectation then we need to make sure that we are focused on the right kind of procedures, the right kind of standards, the right kind of reporting which is quite frankly really different than what we do today.

Will you stop all future frauds in India forever and ever and ever?

Q: Can you tell us if India will never see a Satyam again?

A: I wish I had a crystal ball but I don’t. As I said when you have a situation like Satyam or a major fraud I suspect somewhere in the world of corporate reporting, you are going to see another situation like that. Our job is to make sure we are doing everything we can possibly do consistent with the standards that are out there to ensure that we play our role in that process to avoid them.

The new India managing partner came from Singapore? You got something against Indians?

Q:But he has not come from India, you didn’t appoint him from the India firm – he was brought in from Singapore?

A: Gautam is originally from India which is great so it’s little bit of coming home programme.

Q: But it’s not a vote of confidence on the India management?

A: It is not. This is all about ensuring that we get the very best talent to focus on an important market like India and that’s exactly what we have done.

You let everyone down. Speak to them!

Q: A word to all those investors who felt disappointed with PriceWaterhouseCoopers for not alerting them to what was going on in Satyam. What is your message to them today?

A: Whenever we have situation like this, right or wrong, whatever standards are we are part of that and for that we regret what has happened. But this firm is about quality. It’s about doing the right things, it’s about being here for the investor community and we are very much focused on that.

Satyam fiasco has not dented credibility with clients: PwC [Money Control]

PricewaterhouseCoopers Shutting Down Orlando Tax Practice

Yesterday, PwC tax professionals got word that the firm is discontinuing tax operations from its Orlando office effective May 3, 2010.

Mario de Armas, the South Florida managing partner, explained that lack of business, “Orlando-based tax clients has declined, and we have been forced to import tax hours from other offices to keep our people busy,” and staffing challenges, “We have also faced a continued challenge around staff development in a primarily compliance environment,” lead to the closure of the practice.


The email states “We are committed to assisting each impacted individual with this transition,” although no details were given. The email also states that there will be no other Florida practices will be shut down, “To be clear, we have no plans to close any other practice areas in any of our Florida offices.” Emails to Mr de Armas and Jorge Gross, the Florida Tax leader were not returned. An email to PwC’s national press relations was also not returned.

This practice closure follows recent office closures by both Grant Thornton and Ernst & Young (“virtual” closure) in Greensboro, NC and E&Y closing its Manchester, NH office last fall.

If you will be affected by this closure, get in touch with us and we’ll continue to update you as we learn more.

Florida Colleagues:

We are constantly evaluating our client service delivery to ensure that our clients receive the best service possible and that our people are being offered opportunities for development and advancement. Over the past few years, revenue from Orlando-based tax clients has declined, and we have been forced to import tax hours from other offices to keep our people busy. A limited number of corporations are headquartered in Orlando, and while many of those corporations have been retained as audit clients, fewer have been tax clients. We have also faced a continued challenge around staff development in a primarily compliance environment, and more compliance work will be performed at the centralized Tax delivery center over time. As a result, the Firm has concluded that we will no longer have tax professionals located in the Orlando office effective May 3, 2010.

Knowing that we will be asked about this decision in the marketplace, it is important that we have a clear message to the market. From a strategy perspective, we believe that our distinctive footprint across the state of Florida makes us uniquely positioned to service our Orlando clients from our other offices, following the One Market concept.

This has been a difficult decision, and one that was reluctantly made after considering many factors. Our Tax professionals in Orlando have served our clients well. They have contributed in many ways to our market, and their efforts are valued and greatly appreciated. We are committed to assisting each impacted individual with this transition.

To be clear, we have no plans to close any other practice areas in any of our Florida offices. Please contact me or Jorge Gross, our Florida Tax Leader, with any questions you may have.

Thank you,

Mario

Grant Thornton Was Not Impressed with the SEC’s Waffling on IFRS

We really weren’t expecting much of a reaction from accounting firms on the SEC’s conclusion that there’s no rush on the IFRS issue. The Commission statement that it supports “a single set of high quality accounting standards” was good enough for PricewaterhouseCoopers, who issued a press release the day of the announcement.


The press release sounds eerily similar to the SEC’s statement with a quote from Bob Moritz thrown in for good measure:

“PricewaterhouseCoopers continues to support the goal of moving toward a single set of high quality global accounting standards,” said PricewaterhouseCoopers LLP U.S. Chairman and Senior Partner Bob Moritz. “We believe that IFRS is in the best interest of stakeholders, including investors both here and globally. We are, therefore, encouraged by these statements from the SEC.”

So PwC is encouraged by the recent development. This isn’t shocking. P. Dubs will be on board because they don’t strike us a bunch that will rock the boat. Presumably, any a hint of discontent from the Firm could potenitally jeopardize their ubiquitous magazine list presence.

On the other hand, we were surprised to see this Tweet from Emily Chasan of Reuters that pointed us to the Grant Thornton press release that came out today.

GT was NOT IMPRESSED with the SEC’s latest commitment to non-commitment, “like many in this country and elsewhere, we were hoping that the SEC would announce a mandatory date for switching to IFRS by U.S. public companies. Instead, the Commission reaffirmed that it expected to decide in 2011, provided resolution of certain issues.”

Now in case you’re questioning GT’s sincerity in this matter, they make their case for why this feet dragging is unacceptable:

Whether the U.S. races or crawls toward IFRS could mean the difference between staying in front or falling behind. The rest of the world is moving forward, boldly. Major economies like Japan, China and India have already chosen IFRS. It is unrealistic — and risky — to think that we can stand outside looking in forever. If we don’t want our influence and opportunities stripped away, we must make sure that we keep a seat at the table.

This is probably as insubordinate as you can expect an accounting firm to get over an issue that is “largely academic” but it is refreshing to see a little public honesty out of GT.

Grant Thornton LLP statement regarding SEC and IFRS Roadmap [Press Release]
PricewaterhouseCoopers States Support for SEC Move Toward Single Set of High Quality Accounting Standards [Press Release]