~ Update includes quotes from Financial Accounting Foundation spokesperson. FEI (via BNA Bloomberg which requires a subscription) reports that the search is on for a successor to Leslie Seidman as the head of the FASB. The Financial Accounting Foundation (FAF), which oversees the FASB, has launched a search for a successor chair to current FASB […]
Deloitte partner Daniel Pirron's suicide is terrible. Anyone that has had to cope with a loved one taking his or her own life knows the helpless feeling you have in the aftermath of such a tragedy. If someone at your company committs suicide, the emotional level is obviously different but it is no less shocking regardless […]
The word on the street is that the pace of accounting firm mergers will increase in the coming year. That's pretty fun for all of us because we occasionally like to spoil the surprise for everyone. Plus, the new name game is everyone's favorite. In the past few years, there have been several notable mergers […]
Someone who's a little short on billable work felt compelled to share this with us on the tip line: The girl who sits next to me just got her REG score and passed. Of course there could be any number of reasons that this person would share this news with us. Among them: 1) In […]
This just in: Just wanted to let you know that there will be a McGladrey webcast from Joe Adams tomorrow. Last time we checked in with McGladrey, they were experiencing technical difficulties that drew the concern of many employees. Luckily, it was all a mix-up and things have, as far as we know, returned to […]
Earlier today we were informed that Deloitte CEO Joe Echevarria was a commencement speaker at the University of Miami, his alma mater, this morning. A quick search confirmed Joe E's gig, however, our tipster had this to add: Said he had just come from a meeting with SEC, didn't mention what it was about, lol. This could […]
Newly-minted KPMG billboard, Stacy Lewis is defending her title at the Kraft Nabisco Championship, and as luck would have it, she's been paired with fellow accounting firm check casher, Natalie Gulbis: Off at 12:46 today with @natalie_gulbis! Perfect pairing for the day, can't wait for the first tee! — Stacy Lewis (@Stacy_Lewis) March 29, 2012 […]
We’ve heard from a couple people that Ernst & Young had an “all hands webcast” of some kind today but so far, no one has given us any details as to what was discussed.
Of course there were probably kind words about all your hard work this busy season, your commitment to the firm and so on and so forth but we want to get to the crux; this calls for speculation on our part, until we get something more solid. Possible topics include:
1. Hazing methods for the folks from LECG Corp.
2. The announcement of special screenings of In a JIT.
3. Two minutes’ hate for a certain Governor.
4. Mysterious references to “exciting changes” to the compensation structure that won’t be revealed until “details” are sorted out (i.e. management knows what PwC is doing).
5. Your input.
This just in:
I’m surprised no PwC’er has posted this yet. Earlier this week, Bob Mortiz hinted into “exciting changes” as to compensation structure and transparency, with details to be provided this upcoming Monday on a webcast. It might be worth posting this on your website to get some reactions from fellow PwC’ers about what this means, or to facilitate blind speculation, which is always fun.
If this communiqué from BoMo is, in fact, a few days old, we are a little disappointed it took so long to reach our inbox. Regardless, we’re grateful for the tip now and let’s get on to the important matter of speculating about what ‘exciting changes’ entails, shall we? The possibilities are endless but we’ll try to kick things off:
A. Option to receive entire compensation package (including health benefits) in Omaha Steaks.
B. Spot bonuses given to employees with abnormally high utilization who manage to not die.
C. Elevator speeches will have bearing on employees’ merit increases.
E. Various competitive poaching payouts: KPMG Partner: $10,000; All other KPMG employees: $5; Ernst & Young Banking Partners: A punch in the face; Deloitte partner: $20,000; Deloitte partner with a full head of hair: $100,000 (hey, they’re hard to come by).
F. Your ideas.
As we mentioned this morning, Accounting Today reported – in an exclusive with Stephen Chipman! – that Grant Thornton is “planning a major marketing campaign later in the year to reposition the Chicago-based firm around the world.” Having had the luxury of watching a rival firm go through the process, we can’t help but think that GT won’t make as bold of a change but we’d love to be wrong about that.
Chipman told AT that GT wasn’t trying to jam into the Bigs saying, “We made it clear that we’re not building a firm to audit GE. Let’s get clear about the verticals and the skills.” So if you take SC at his word what exactly will this major brand repositioning involve? Some initial thoughts:
1. Underpants Gnome Accounting will become a specialty advisory service.
2. Poaching a certain golfer from a competitor.
3. Opting for pastel pinks and blues in a new logo to provide an “alternative.”
4. Four words: Gary Busey, Tax Partner.
5. Your ideas.
McGladrey has announced that this busy season will be managing partner Dave Scudder’s last. Technically, Scudder is the MP of McGladrey & Pullen but honestly, we were confused about the whole situation after the rebranding.
The McGladrey & Pullen, LLP Board of Directors announced today that Dave Scudder, managing partner and member of the Board, has decided to resign as the managing partner of the Firm effective April 30, 2011.
“Dave is highly respected by the partners and has lead the Firm through significant change,” said Jerry Bourassa, Chairman of the McGladrey & Pullen Board of Directors. “He has contributed tremendously to the success of the Firm and has been an exemplary leader.”
The Board has commenced a selection process to ensure a smooth and timely succession and transition.
“I believe the Firm is well positioned to continue its success in serving our target markets including private equity groups and their portfolio companies along with our public and international companies practice,” said Scudder.
Scudder will continue to assist in the transition through at least June 30, 2011, and will continue to represent the Firm in various professional and industry organizations during this time.
So you could easily conclude that DS just figured it was time to move on after spending the last 24 years at the firm. You could also easily conclude that with all the excitement that has occurred at firms with various forms of “McGladrey” in the name may have taken its toll with Scuds or perhaps with the McGladrey board. Then again, they could be making room for another golfer that isn’t Natalie Gulbis.
Reactions and speculation are welcome at this time.
President Obama is darn sure that a deal will get made on the expiring tax cuts before the end of the year despite the ‘logjam’ between the two political parties.
He’s confident because hard-working families need it, the economy is fragile yada yada yada and now that Tim Geithner and OMB Director Jack Lew are on the case, this thing is a shoe-in.
While the next Speaker of the House, John Boehner, is not quite on the same page as the President, he’s pretty much in the same chapter:
“Republicans made the point that stopping all the looming tax hikes and cutting spending would, in fact, create jobs and get the economy moving again,” said Representative John Boehner, who will become Speaker of the House next year.
“We’re looking forward to the conversation with the White House over extending all of the current rates, and I remain optimistic,” he said.
Well, as close as to the two will likely get in public anyway. However, this a slightly more optimistic stance than what some people have for Nancy Pelosi, who would, presumably, rather give up her Armani suits than hand the wealthy a tax cut:
“There is some thought that the last thing that Nancy Pelosi wants to do on her way out of the Speaker’s office is to have Congress approve an extension for tax cuts for the wealthy,” said Brian Gardner, an analyst for investors at Keefe, Bruyette and Woods.
“She could muck things up a little bit.”
Well! This should be fun! Stay tuned.
Namely, Roland Berger Strategy Consultants based out of Munich.
Supposedly the two will have their minds made up sometime next month but by the sounds of it, the two companies are flippin’ stoked about the possibilities:
“A merger opens up a unique opportunity for growth for both firms,” [Deloitte Germany Chief Executive] Plendl said.
Roland Berger confirmed the talks.
“Discussions with Deloitte are taking place to open new and fascinating growth prospects for our company,” Roland Berger Strategy Consultants said in an e-mailed statement today.
While that’s what is going in the foreground, Adam Jones over at the Financial Times was so bold to suggest that this just another step in Deloitte’s quest to “overtake McKinsey as the market leader in strategic advice for managers.”
Now we hadn’t heard about this McKinsey-slaying goal prior to today and it seems a little credulous to think that Deloitte is jockeying with McK, especially when you consider the domination of McKinsey in the eyes of those who work in the industry.
However, on paper Deloitte derives $7.5 billion from its consulting business which is nothing to sneeze at. Considering that and the fact that they haven’t exactly made their desire for mergers a secret, Deloitte this very well could be a step in earning another #1 notch in their belt (with matching suspenders).
The long-awaited PCAOB inspection report of KPMG came out on Friday and while we were excited for this unveiling, the Board managed to issue the report at around 4 pm on Friday. Since the Board lacks any sense of timing whatsoever, we opted to punt on our respective post until today because well, we’re human and not a soulless blogging robot as likely perceived by TPTB at the PCAOB.
It’s worth mentioning that this is the first PCAOB report that has been issued since the SEC’s final rule on the inspections that allows audit firms to postpone the release of the report simply by taking issue with any of the findings. Since any appeal could reportedly delay the report by “30 to 100 days,” it’s safe to assume that, with a report date of October 5th, KPMG didn’t have a beef with the findings. You could also assume that since the SEC is taking a peek at these reports now, there’s going to be a ten day lag on the release of the report to allow the Commission enough time to give it their extra-special sniff test.
Anyway, back to the matter at hand –
KPMG had eight issuers noted in the Board’s inspection report and the first two are doozies. “Issuer A” runs approximately two pages and includes failure on testing of “allowance for loan losses” to “test[ing] the issuer’s estimates of fair values of financial instruments” and goodwill impairment.
“Issuer B” is a little more interesting since one of the failures the Board found was related to deferred tax assets which makes us wonder if this is Citi, since analyst Mike Mayo was loudly questioning the bank’s treatment of its DTA. Francine McKenna not-so-subtly solicited guesses on Friday as to who this “bank” might be (even though no issuer is identified as such) but it does make us wonder.
The Board cites run-of-the-mill failures for the rest of the issuers (e.g. fair value testing, pension plan testing, failure to confirm cash[!]) and the House of Klynveld’s response letter was cordial and anticlimactic.
But if you’re KPMG, do you really care what the PCAOB thinks when you’ve got an adorable gnome-ish looking analyst giving you the tepid thumbs-up (despite not knowing your name)? That’s the only endorsement we would need.
The latest twist in this seemingly unending logo-mama drama was brough to our attention by a reader who saw an eery resemblance between
PwC pwc’s new look at the new look of recently rebranded and ridiculed retailer The Gap.
Does is strike you as odd that soon after PWC changes their logo the GAP changes theirs to a similar style? Although Deloitte is currently GAP Inc. auditors, the company may be opinion shopping. Changing the company logo to look like their would be auditors’ is a surefire way to get the desired opinion.
This may be a total coincidence. However should GAP grab headlines in the style of the Universal Travel Group and hop over to PWC, at least now you won’t be surprised.
Our reader brings up an excellent point. We admit that the new logos aren’t identical but there’s more than a slight chance that they are brothers from another mother. So what’s the deal here? Maybe it is a coinky-dink. But then again, you would think that the cheap denim, khakis and plain t’s business would be thriving in this economy. If our reader is to be believed, Gap may be trying to find an auditor that’s willing to look the other way on [ideas on financial reporting chicanery are welcome]. And it just so happens that a certain professional service provider has also been recently taken some heat for their rebranding.
The only thing we can be sure of is that if Ernst & Young is serious about their makeover, they should resist the temptation to stick with squares.
Like we said, the motives here are not obvious and it’s imperative that we get to the bottom of this mystery, so that involves getting your ideas. Nothing is too crazy.
Because what else could it be?
Police are trying to figure out who sprayed racial slurs in the parking lot of a Hall County building that includes offices for the Internal Revenue Service. The messages invoking the Ku Klux Klan, and obscenities directed at African-Americans were discovered by employees as they arrived to work.
Odds aren’t that bad; approximately 1 in 6. Still doesn’t explain why invoking the Klan was necessary.
The building on Oak Street in Gainesville is home to nearly a half-dozen businesses, including an IRS office. Police told Channel 2’s Diana Davis they had no evidence linking the slurs to one person working in the building.
One employee speculated that the vandals may have a beef with the IRS. “Probably someone was being audited and they were frustrated with the situation and process they were going through. More than likely this is the result of that,” said Christian Saslo.
~ Update includes comment from IFAC President Robert Bunting of Moss Adams
Maybe! After all, anything’s possible. The Herz retirement wasn’t exactly expected but since Roberto had two years left in his terms but it’s been suggested that it’s been a rough two years since Barney Frank gave him the tongue lashing of his life over the whole mark-to-market thing.
Regardless, The Journal put it out there that the timing of Herz’s departure causes hella handwringing, most notably on the convergence efforts:
FASB will now have to replace Mr. Herz at the same time that the IASB is already cessor to its chairman, David Tweedie, whose terms expires in June 2011. This means that both bodies will have new heads as they enter what could prove to be the end game for the often-thorny process of converging two accounting standards.
This, of course, causes the U.S. GAAP Hawks to squeal with glee and those in pro-IFRS camp to get anxious and will likely lead to heavy lobbying for a replacement that will keep Tweeds dream alive for “one high quality set of global standards” or whatever they’re calling it these days.
Despite the Journal’s anxiety, International Federation of Accountants President Bob Bunting sees the change as an opportunity and things will continue to progress, “While the changes of leadership at the FASB and the IASB offer the opportunity for a fresh look at the convergence process, I would be surprised if any radical change in direction occurs,” Mr Bunting wrote in an email to GC, “The financial market forces and public interest arguments for convergence of the two standards, and possible eventual adoption of IFRS as a single standard continue to be very strong.”
However, since the FASB is expanding back to seven members, that will likely slow the process down (which makes some people happy) even further, especially with empty seats at the table:
The lack of a full board is likely to slow many of FASB’s projects, particularly the move to converge with international rules, said former FASB Chairman Dennis Beresford. “They’re not going to issue anything important on the basis of having only four board members,” he said, adding that Mr. Herz’s departure came as “a complete surprise.”
So, with those seeds of doubt planted, let’s put it to a vote.
We have the luxury (and giddy pleasure) of receiving more crazy ass emails than the average Tom, Dick or Harriet (see: PwC Houston Partner). Some of the stories turn out to be true, some turn out to be rumors. That’s just the way things go.
One reoccurring rumor that continually keeps us guessing though is that of a mega-merger among a Big 4 . Frankly, we take a agnostic approach to these rumors (that’s probably shocking for some of you) but they never fail to pique our curiosity. You can drop us a line with your wild-ass theory about tri-firm merger between KPMG, Moss Adams and Baker Tilly to form MGMT but we can probably debunk it with a couple of emails and phone calls. Plus, the firms will deny ’til they die on any of these rumors anyway.
EisnerAmper is a perfect example.
They played coy with rumors around their merger for about a week and didn’t roll out the BIG NEWS until Monday when they could issue their boilerplate press release on cue (the video was a nice touch, however).
Lots of accounting firms are looking to grow through combinations or purchases in this impotent economy (WeiserMazars, Marcum & UHY, hosts of regional combos) but are the Big 4? Our intuition says no but the rumor mill provides us with whispers of talks occurring between the largest firms.
It’s not completely unheard of for the largest firms, as is evidenced by McGladrey’s purchase of Caturno & Co. that C.E. Andrews was so excited about in his interview with the Minneapolis Star-Tribune’s. Also, Barry Salzberg told the Journal that Deloitte is actively looking (granted, it’s for the consulting practice) but these are small potatoes.
No, the stuff we hear about has a Big 4 firm going with a second tier firm to either leapfrog other Big 4 firms or to inch closer to them. The difference between PwC (#1 in global revenues) and KPMG (#4) is around $6 billion. Depending on how aggressive a firm wanted to be in its merging efforts, the gap could be close quickly or a new #1 could be crowned.
But forget about revenues and the auspiciousness of the being the biggest firm for a second. Can a Big 4 firm realistically merge in a second tier or top 10 firm successfully? Never mind the logistics of office location, files, people etc. What about culture? What about service methodologies? The mere thought of matching up those pieces is a mind job for the people that actually have to deal with them. The bigwigs at the top might play off the problems that such a transaction would create for those in the trenches. Make adjustments would take years.
But it’s been done! Coopers & Lybrand and Pricewaterhouse in ’98 being the most recent. KPMG and E&Y tried it in ’97 and failed so it’s unlikely that the idea of another huge merger doesn’t cross people’s minds every once in awhile.
So let’s talk this out. Are these rumors completely unfounded or are is it understood that there are talks ongoing? If they are rumors, where the hell do they come from and what’s the motivation to spread said rumor? People in the know are encouraged to bestow wisdom in the comments and get in touch with us. And if you’re a vet from a merger of any size, share your thoughts on the experience and how your firm handled it.
On Monday we learned that Deloitte Tax had a STD and now there’s more chatter about the firm’s performance that could maybe, possibly affect comp for this year:
A new set of video blogs came out from the northeast regional managing partner. He announced double digit growth in perdiods [sic] 9-13 of FY10 and a plan for “continued double digit growth through FY11”. I know everyone is getting antsy over compensation (discussions are supposed to take place beginning next week, with raises hitting on the 9/3/10 payroll), and they keep dropping comments about “substantial raises” and “double digit growth.”
So while some people remain skeptical, it appears that Deloitte is warming you up the troops for a nice surprise next week. Deride if you must but can Dr. Phil & Co. really afford to come in with lower raises than PwC and E&Y?
For a firm that talks like they’ll be numero uno in a few short years, it would be pretty embarrassing to bring in some paltry raises while the firm they’re chasing managed to make it up to at least a few of their people. Discuss the latest and keep us informed.
After coming out the near-death experience thanks to the Florida 3rd District Court of Appeal, you’d figure TPTB at BDO would continue shoveling the good news out while they could. On the comp front, a tipster tells us that while there are rumors that raises are bonuses are coming, no one has a clue as to what they’ll be:
Can you run a discussion on BDO compensation increase and bonuses? Raises would be effective 10/1, and currently there have been no formal communications from senior mgmt regarding this topic. In the local offices, there has been word that there will be raises and bonuses, but no numbers have been thrown around.
In other words, if you’ve got the goods BDO peeps, kindly spill it. It’s about time you started talking. If you’re not comfortable voicing yourself, email us and we’ll handle it.
Deloitte CEO Barry Salzberg did a little sit down with the Journal and made it perfectly clear that he’s shopping for another acquisition. The BearingPoint transition seems to have gone as well as Dr. Phil could have asked for and now he’s ready to move on to the next one.
Mr. Salzberg declined to name specific future targets, but said he sees opportunities to build scale in areas including environmental and technology consulting.
“I would be very willing to make another and very willing to position ourselves properly for the right kind of acquisition or a combination in the market.”
The Journal article mentions the recent rumors around Booz & Co. merging with A.T. Kearney but BS wasn’t that hot on the idea (even though D could take
both either of them no prob) saying that they aren’t, “‘as high a priority for me’ as other opportunities.”
Plus, Salz is hoping that he can offering something tangible for a change rather than just billing all your hours out, “He cited a newsletter, or ‘information services,’ as an example of something that isn’t as labor-intensive as consulting but provides a complementary service to clients. Such a business ‘isn’t as dependent on the hourly production of people,’ he said.”
No target is too big or too small, according to Salzberg but like we mentioned, he’s not naming names. So let’s try and read his mind a little bit, throwing caution to the wind – McKinsey? DiversityInc Magazine? The Hair Club for Men?
Suggestions, sincere wishes and wild-ass guesses are welcome.
Maybe! The AP is reporting that KPMG is expanding its Fairfax County Office (i.e. Tyson’s Corner) by moving people from its DC office.
According to an accountant close to the situation, “The Tyson’s Corner office switched buildings, and as a result, had a large amount of available office space. The DC advisory practice (including IRM or whatever it’s called now) moved from the M Street office to Tyson’s. I used to sit on the 7th floor whenever I worked from the office, but the place was in full move-out mode when I went in on Friday.”
Residents of the commonwealth will be thrilled to know that Virginia’s governor approved a $250,000 grant from the Governor’s Opportunity Fund for the “project.” In other words, Virginia taxpayers footed $250k to move dozens of coffee guzzling, poorly dressed 10-key tramps out of the District. And it turns out, many aren’t thrilled about it, “Advisory people are bitching about moving, especially the ones who live in the District.”
But our source also says that the rest of DC office might be packing up:
There’s rumors that the entire DC practice will be moved to Tyson’s, but I don’t know if that’s true [let’s just assume it is, shall we?]. KPMG might be the only one of the big four who still has an office in DC proper, but then again, we’re the biggest of the big four when it comes to Federal clients – and there’s a certain cachet to having that office building in Dupont Circle with the big “THE KPMG BUILDING” emblazoned on the side. [O]therwise it’s been the usual hooplah from management and torrent of “OMG SO EXCITING!” emails, and the staff I know are mostly just “meh.”
If it comes to leaving the District altogether, John Veihmeyer will probably just buy the sign and slap it on the side of his summer house. Can’t let something like that go to waste.
So Patrick Byrne (via his 100% wholly owned entity High Plains Investments, LLC) sold 140,000 OSTK shares in the past five days and that has a few people talking/wondering aloud about what the hell is going on.
Barry Ritholtz, who is long OSTK (quantitative drivers) despite, “I…think it is a steaming pile of shit, that the CEO is an asshole, and that the entire company is probably corrupt,” is really curious:
Is Byrne in possession of material insider information? Would he be so stupid as to sell the shares? (I doubt anyone could be that dumb).
Perhaps he sees a favorable outcome to the SEC investigation? Maybe he is raising money to pay a fine?
These are all excellent jumping off points (although we disagree with the notion “I doubt anyone could be that dumb”) but let’s explore other possibilities:
A) Segways for the KPMG audit team.
B) Reverse Psychology – he’s done fighting the short selling crowd (or is he?)
D) He needs some cash for a Father’s Day gift.
E) Needs to feed the Farmville addiciton.
These are merely some ideas. And there’s always the possibility that PB has gone right out of his mind. Share your own, should you feel inclined.
Long OSTK, Short Byrne [The Big Picture]
Proxy Statement/Schedule 14A [SEC.gov]
Patrick Byrne Pockets $3.1 Million from Dumping Overstock.com Shares [White Collar Fraud]
Patrick Byrne Dumps His Overstocked Overstock Shares [Gary Weiss]
[caption id="attachment_10529" align="alignright" width="150" caption="But how does he feel about Charlie Weis getting fired?"][/caption]
A few weeks back we presented the BusinessWeek ranking of accounting programs that found Notre Dame at the top. At first we just figured Touchdown Jesus had something to do with it but now we have reason to speculate that a divine carpenter had nothing to do with it.
Since KPMG Chairman-elect John Veihmeyer was recently named alumnus of the year by Notre Dame’s accounting department, some people might assume that JVeih did a little lobbying of the BusinessWeek folks in order to earn the top spot and perhaps this is South Bend’s thank you for the kind words.
Whether this back-scratching theory has any weight to it is up for a debate but what we know for sure is that some lucky Irish students/future Klynveldians got to hear JV speak recently at Notre Dame Stadium and some inspiring words were shared:
During his remarks, Veihmeyer used his own educational roots and career experiences to remind students what a unique opportunity they have had at Notre Dame and how it will benefit them on the road ahead. His audience listened in rapt attention. While the average college student would have paid just to have dinner in Notre Dame Stadium, these students knew that getting career advice from the Alumnus of the Year and CEO and future Chairman of a Big Four Accounting Firm was priceless.
From the sounds of it, the speech was the KPMG equivalent of this:
Because we asked around and no one has a clue.
But we’ll take a stab at it:
B) Flying all Klynveldians to watch Phil Mickelson continue his Grand Slam tour (and in the process, win back his love).
C) Pool parties at your local OMP’s pad.
D) Doing some hallucinogenics and running through a sunflower field:
E) You tell us.
Maybe! Our imagination tends to run wild so if you’ve got reason to believe that hush money paid to Tiger’s mistresses is of no interest to the IRS, please advise.
TMZ is reporting, based on “sources — and they are good” that Tigger paid Rachel Uchitel $10 million to keep her mouth shut regarding their affair.
Or maybe we’re not giving either of them enough credit. Maybe Rachel has a tremendous business acumen that we’re not aware of and she requested a 1099 from T. Dubs.
Plus, Tiger employs more people than Alaska, so someone on his team may have been looking out for this girl. TW, on the other hand, there’s NFW he considered the problems this could possibly create. Considering the fact that he has trouble communicating, we’re guessing the financial ramifications for his F-buddies slipped his mind.
If you’ve ever worked at a Big 4 firm, you’re aware that when big news hits the MSM, A) it’s never good and B) there is typically some sort of communication from management reiterating the firm’s position on the matter, everything is cool, thanks for your hard work, etc. etc.
With last week’s revelation of the bankruptcy examiner’s report on Lehman Brothers, E&Y seems to be following this protocol as it relates to the troops on the ground. As you would expect, leadership is keeping their heads about this while in the background in-house counsel is likely engaged in all-night smoky room strategy sessions.
We checked in with a few of our Ernst & Young sources to get an idea of what people were thinking and so far, there doesn’t sound like there are any signs of panic (yet!).
From one source:
Overall reaction from what I gathered is pretty muted. We did get a call from some of the higher-ups saying that we reviewed our work and that we feel that our audit was completely adequate and that Lehman’s failure was nothing more than the same systemic failure of two of the other major banks and that we plan to defend ourselves vigorously. Presumably, the examiner’s report really didn’t give any ah-ha moments….
[I]s there a possibility of a payout at some point? It’s possible. Are we worried that we’re the next Arthur Andersen? I don’t think so.
So at least on the surface, E&Y leadership is communicating that what came out in the report wasn’t surprising and that the defense of the firm’s position will be, as usual, vigorous.
That doesn’t of course stop the speculation:
I heard from a technical guy there was some concern because they didn’t issue a going concern opinion [for the previous audit].
And as you might expect, “I heard that [the firm] helped cook the books and is deep shit,” with the book cooking being arguable but pretty hard to prove and the “deep shit” aspect being a given.
Some Ernst & Young partners are probably losing sleep just thinking about the potential liability involved here but eventually they’ll get over it (until something else comes up).
No partner worth their salt got admitted to the partnership focusing on the downside. The problem is that when people use consistently use words like “deceptive” and “misleading” to describe Lehman’s accounting this reflects poorly on the firm since they were comfortable with the treatment.
And because it’s still busy season for a lot of people, they are focused on the shitstorm that currently surrounds them, not one that will likely drag on for years after they’ve left the firm (voluntarily or otherwise).
Anyone with more insight or thoughts on the matter, get in touch with us and we’ll keep you updated on the chatter inside E&Y.
Friendly reminder: >75 is here to answer your CPA Exam questions so send them over.
Sadly, JDA is technically still employed by a CPA Review course (and, of course, not a CPA) but hey, if any of you are looking to protect the public interest, have at it.
This may just be some wild speculating here but I have to admit my first thought upon seeing this was that the AICPA is scared everyone will freak out when IFRS hits the CPA Exam on January 1, 2011 and bomb horribly. Does this mean it’ll be graded on a curve? If so, I’m starting to have some concerns about that “protecting the public interest” bit.
Lowering the bar, AICPA Board of Examiners style:
THE AICPA EXAMINATIONS TEAM IS SEEKING CPA NOMINEES TO SERVE ON CPA EXAMINATION PANELS
When the new Uniform CPA Examination is launched on January 1, 2011, changes in content, format, and structure will be introduced. These changes will require the current passing score to be re-examined. The process to do so will include convening four panels of CPAs – one for each examination section – to prepare the groundwork for the passing score decision by the AICPA Board of Examiners. A new passing score determination is necessary in conjunction with the new examination to ensure that legally defensible CPA Examination pass/fail decisions continue to be made in protection of the public interest.
The AICPA is seeking nominations for passing score panel membership. Nominees should be CPAs who:
• have been licensed for between 3 and 5 years
• have supervised entry-level CPAs during the past year
• have NO affiliation with CPA Examination review courses, and
• are willing to participate in an August 2010 two-day meeting in Chicago, IL at the expense of the AICPA.
The selection of panelists from among qualified nominees will be made to ensure broad representation from all segments of the profession and demographic categories. Panelists will be given training at the August meetings on their responsibilities as panel participants.
Nominations may be submitted online at http://vovici.com/wsb.dll/s/4e5ag3f124 or the forms completed and returned by FAX to 609-671-2922. Or, the names and contact information of nominees may be sent by e-mail to [email protected] The information collected about nominees will be used only for the purpose of selecting panel participants.
The deadline for submitting nominations is MARCH 31, 2010.
Like I said, JDA is out; any of you kids in on this?
It’s been a few days since we had read anything on embezzler of the year 2009, Sue Sachdeva. We figured the whole thing was on the fast track to getting resolved since her attorney started claiming that the woman has an addiction. Well today, we checked in over at Fraud Files Blog where Tracy Coenen has come up with a theory that blows the whole shop until you die argument out of the water
Since Sue had 461 different pairs of shoes that ranged from sizes 8 to 14 (!) and 34 fur coats, Tracy is thinking that S-squared didn’t have a shopping problem; she was simply working on achieving an entrepreneurial dream:
She couldn’t have worn that range of sizes, but that range would have been perfect for someone retailing the merchandise. I bet we’re going to hear soon that Sachdeva was selling this merchandise to domestic and overseas retailers at a fraction of their wholesale value.
It’s already a matter of record that SS was having garage sales at her desk, so Tracy’s logic makes sense. We’re now convinced Sue had bigger plans.
Obviously enamored with the idea of a Sachdeva Goodman’s, Suze may have gotten a little ahead of herself as Tracy notes, “[I]n late 2009 (which is fiscal 2010 for Koss) she got greedy and stole much more in a six month period than she ever had in one year.”
The indictment lists six wire transfers (total of nearly $3 mil) from Koss accounts directly to her personal AMEX accountant, so girl was definitely burning up the plastic. That’s not an addiction; that’s inventory. Besides, isn’t a shopping addiction a faux-addiction? The real tragedy here is that a dream was not reached and an accounting firm was fired. Neither makes us feel very good.
By now you’ve digested the Fortune list to the point of nausea, so we’ll dispense with rehashing the firms that we covered last week.
What we do want to address is the obvious absence of Grant Thornton, BDO, and RSM on this year’s list. Hell, they aren’t on any of the lists going back to 2006. Are these omissions meant to be a thumb in the eye to these storied firms?
Perhaps they blew their lobbying budgets on the BusinessWeek lists? OR maybe — GASP — they just don’t GAF?
We’ll dispel with that for now and assume each of these firms were dying to be on this year’s list. Accordingly, the reason for their exclusion leaves ample room for wild-ass guessing:
• Grant Thornton – We realize Steve Chipman just started his new job and he’s trying to get a blog up and going but for crissakes, how does he explain this to you? Will this regime change make a difference? He didn’t mention it on the call so should we assume this disappointment will continue in perpetuity? Could the Koss fiasco be the reason?
• RSM McGladrey – This one doesn’t make any sense at all. Does anyone at Fortune know that RSM sponsors this woman? Aaaaannddd, we realize it’s too late for this year but RSM is now helping get Yele Haiti’s house in order. Please note both of these for next year.
• BDO – They owe Banco Espirito half a billion dollars and they’ve been planning a 100th birthday extravaganza. Maybe campaigning for the list isn’t at the top of their to do list but still.
If any of you GTBDORSMers have any idea just what the hell is going on (i.e. why this gross oversight has gone on for at least five years), fill us in.
Last week we told you about the on-going Global 6 talks between Mazars and Weiser. As we mentioned then, the copulation of the two firms would put them in the direct competition with the likes of Grant Thornton, BDO, RSM and hell, they may even snag some Big 4 clients.
Web CPA caught up with this story yesterday and we learned that not only has Mazars done business in the states with Weiser, they’ve also “relied on joint venture agreements with U.S. firms…Moss Adams and BKD.”
Maybe we’re going way out on a limb here, but if Mazars is making a play for Weiser (and it sounds like it’s all but a done deal) are they just trying to make a play on the whole IFRS bonanza that’s being unleashed OR are they looking to get closer to the likes of Moss Adams and BKD to expand their exposure and to become a bigger player in the States? Even if Mazars were to merge with Moss Adams and BKD the combined revenues still would be a drop in the bucket of the Big 4 but it would cement their presence in U.S. and allow them to compete even more directly for potential business here.
If we’re letting the cat out of the bag here, mucho apologies, just kinda thinking out loud.
Last month we told you about the E&Y Greensboro office shutting its doors to become a “virtual office”. All the client-serving professionals (around 60) are now reporting and being serviced out of the Raleigh office.
This followed the closure of the Manchester office that we reported on in October and that became official in November. In this particular case, there was no merging of sites and client service professionals (non-partners) were let go.
The latest speculation is that there are several small offices that are at risk of going virtual as opposed to out-right closing post busy season, using the Greensboro office as the model. Offices that are being serviced by nearby larger offices are of greatest risk as well as small offices that have a dwindling client base.
Although the virtual office seems to be the most warm and fuzzy of the two options, there would certainly be layoffs of support staff and service professionals that weren’t interested in working from an office that was a considerable distance from where they lived.
Whether or not this strategy will be utilized by other Big 4 firms is not clear but this story will continue to develop as busy season progresses. If you hear rumors about your office get in touch with us. We’ll keep you updated as we learn more.
Welcome back, servants of the capital markets. We’ll dispense with anything substantive this morning in order to help you combat the depression. We’ll start off by presenting you with the following:
As you can see, this is the POTUS
on vacation working in Hawaii with the entourage in tow. One member of said entourage just happens to be donning a KPMG cap and since not just anyone can get their hands on these coveted lids — and since the gentleman’s face is mostly obscured — we’re curious about a few things: 1) Is Tim Flynn leaving the Radio Station for a cabinet position and if so, which one? 2) Was Phil Mickelson joining the Prez for some time on the links and had a overwhelming urge to represent? 3) If this is just some Obama yes-man, did he receive the cap from a Klynveldian representative and is this a bold move to get KPMG representation in the President’s inner circle?
If you’ve got thoughts, theories, or wild-ass guesses, dispense them in the comments and again, welcome back.
We received word late yesterday about two audit senior mangers in the Tampa office being shown the door yesterday. This makes us wonder if more professionals in the senior manager “parking lot” will take this is as a sign to either move on or will hold out hoping to eventually get a seat at the big table.
There doesn’t seem to be any kind of uniform method to the Deloitte’s cuts so if they’ve recently gone down at your office, let us know.
Maybe! Deloitte won’t commit to that but Dallas Mayor Tom Leppert says its a done deal.
Well, sorta: “Leppert said Deloitte has not yet signed a lease, but he’s confident the company will finalize a lease to consolidate nearly all of its North Texas operations in its existing 150,000 square feet at Chase Tower.”
Hizzoner obviously doesn’t mind jumping the gun here because he’s so psyched about all the Uncle Danglers spending their hard-earned dollars in the downtown area.
Dallas Morning News:
The average Deloitte salary is $100,000, according to a city report to the Dallas City Council Economic Development Committee obtained by The Dallas Morning News. The report estimates that Deloitte would generate an economic impact of more than $3.5 billion to Dallas over 10 years. That impact includes salaries, taxes and spending by employees and clients.
An average salary of $100k? Not bloody likely if you’re including staff and support but hey, DMN, go with it. Help us out Deloitte Dallas, is that number legit or bunk?
On another note, sorry Irving, sounds like you’re SOL on some sweet Deloitte action and Dallas sure as hell isn’t being shy about dancing on your grave. We’re sure you’ll be able to screw them over somehow. Let us know how it goes.
Deloitte may move most of its local offices to Chase Tower in downtown Dallas, mayor says [Dallas Morning News]
Earlier: Apparently $2 Mil Is Enough to Keep Deloitte in Dallas