Accounting News Roundup: What If the Big 4 Aren't Too Few to Fail?; Deloitte Takes Another Hit; Opposition to More Detailed Audit Reports | 12.13.13
What would happen if the Big Four became the Big Three? [Capital Ideas]
Francine McKenna writes about a study from the University of Chicago's Joseph Gerakos and Chad Syverson that estimates the cost of a major accounting firm failure. "The researchers conclude that another failure would cost the US clients of the disappearing firm at least $1.2 billion–$1.8 billion per year in lost “consumer surplus.” That describes the net value lost by a company when forced to switch auditors, and the value a company places (if any) on an extended relationship with its audit firm." FM also writes, citing a calculation by Jim Peterson, that the "breakup threshold" for a global firm could be as low as $2.2 billion and as low as $675 million for a U.S. firm. This makes Gerakos and Syverson's study, she writes, "a lot less like theory, and more like preparation."
AmTrust Falls as GeoInvesting Challenges Accounting [Bloomberg]
GeoInvesting believes AmTrust is "taking advantage of discrepancies in U.S. and Luxembourg accounting practices to minimize losses" as well as "'assigning unrealistically high valuations to life-settlement contracts" and the company's stock price was crushed as a result. Jon Weil is a little perplexed by the situation since the individual author of the report isn't even known, but whatevs, it's still a good read.
Problems hinder site Deloitte made in Fla. [BG]
The Boston Globe continues looking under every single rock for anything it can find on Deloitte. "Deloitte Consulting was fined $1.5 million this week by Florida labor officials after numerous problems in a new unemployment benefits system it created for the state, similar to the one Deloitte unveiled this summer in Massachusetts. Both systems have been riddled with technical glitches that left some unemployed people without benefits and unable to pay bills."
Getting to Yes on Tax Reform [Bloomberg]
I don't recommend reading this if you're tax reform optimist.
Robust Auditor Reports Lure Investors: PCAOB Audit Chief [CFO]
HOWEVAH! CFOs, like Carol Tomé of Home Depot, are less convinced that auditors have any value to add: "[Auditors are] not well suited to independently report information about the company beyond what is required to be disclosed by management under GAAP and [Securities and Exchange Commission] regulations."
Bring Drunken Santas Under Control [NYT]
Down with SantaCon, says guy.
Rescuers Near Icy Pond Find Naked Checotah Man Inside Guitar Case [Newson6 via Gawker]
An impressive display of both survival and stupidity: "Police say [Zackery] Aders was trying to walk 26 miles from Gore to Checotah in brutally cold conditions to see a woman. But he got lost, fell through the ice on a pond or creek, and spent 24 hours disoriented, wet and cold in the woods." After he fell in the pond he stripped off his clothes and got himself into the guitar case where he as found by a man working nearby.
Ed. note: tomorrow is my birthday and as such, I will be dropping off the face of the planet as is tradition. Despite any rumors you may have heard, I am NOT celebrating with Ben Bernanke, who just so happens to share the same day of birth although he was born like a bazillion years before me. Anyhoo, I leave you all in the very capable hands of that Colin guy who you may still remember. I have full faith in his ability to keep you entertained in my absence and I will see you all on Monday for business as usual. As happy as I am to get a day off, know that I will think of you all while I'm eating 15 different kinds of cake and not working. XOXO ~AG
Accused scam artist apprehended in Peru Eric Bartoli, the accused mastermind of a $65 million scam featured on "American Greed: The Fugitives," has been apprehended by authorities in Lima, Peru, after 10 years on the run. The former securities broker is on the FBI's most wanted list for his alleged involvement in a Ponzi scheme. [CNBC]
KPMG has turned over China documents to US regulators [WSJ]
10 former IRS folks are getting in trouble for (alleged) unemployment fraud [KSHB]
We retweeted this because we stalk Emily Chasan repeatedly (even in IRL sometimes SHOUT OUT EMILY, SUP GIRL?) but we'll just put this here because accounting red flags are totes our shit, yo [CFO Journal]
We're sure support for John Koskinen has absolutely nothing to do with the fact that acting IRS commissioner Daniel Werfel is basically like "can I just GTFO now, guys?" [WaPo]
Protip: if you withhold employee taxes, you should probably go ahead and get those over the IRS [The Columbus Dispatch]=
Chicago developer Laurance Freed charged with fraud Laurance Freed, a prominent Chicago real estate developer best known for the Block 37 project, has been indicted on federal fraud charges. The U.S. Department of Justice has accused Freed, 51, and Caroline Walters, 53, an executive in Freed's real estate company, with seven counts of bank fraud, one count of mail fraud and five counts of making false statements to banks in a 14-count indictment returned today by a federal grand jury. [Chicago Tribune]
Jonathan Weil explains why Yahoo should have disclosed, disclosed, disclosed. YOU GUYS. That's material and stuff [Bloomberg View]
The SEC ain't afraid of you, wrongdoers [Reuters]
We LOLd when the AICPA pinned advice on the best tie to match your generic blue shirt. Bonus points if you notice two of the three ties are basically exactly the same, which fits with the blue shirt theme [Pinterest]
Colin linked to KPMG's celebratory tweet in the roundup this morning but he failed to point out the best part. The celebration at KPMG was short-lived when they realized even if they made more money than ever, they still aren't making as much money as everyone else:
KPMG International (KPMG) today announced record-high aggregated revenues of US$23.42 billion for the fiscal year ended 30 September 2013, representing a 3.7% increase in local currency terms over the previous year.
KPMG only barely came in under EY (again), who reported revenues of $25.8 billion. And as we know, no one could touch Deloitte who trampled PwC down to #2 with $32.4 billion in revenue.
Michael J. Andrew, Chairman, KPMG International, commented:
"Over the past year we have seen the first widespread signs of economic confidence returning to clients and this has led to improving demand for services around the world, accelerating growth in the second half of the year. Continuing to make significant investments in a difficult economic period while delivering operating efficiencies has ensured we are well-placed to meet this upturn in demand, and will drive stronger growth in the future. We are delighted to report record revenues in target high-growth markets. KPMG has a longstanding commitment to supporting clients in the world's fastest growing economies and this focus drove 16.3% annual growth in revenues in India, 14.3% in Mexico, 13.1% in Africa and 10% in China."
It's OK, KPMG, keep on truckin' and maybe one day, you'll be as big as your press releases purport you to be.
Can't embed, sorry.
The McGladrey card can be found here. You will be GLAD you wasted the 30 seconds of your life clicking it.
We're feeling a strong sense of bitterness coming from the tip box today:
I'm an audit senior at Deloitte & Touche and wanted to send along this lovely E-mail every Audit staff member [in my office] received this afternoon. Note that almost everyone has 10-20 learnings due Jan 4th that we were told to book time for months ago that is now being removed, because fuck you, Deloitte has extremely urgent client work and how dare you use the time you scheduled in advance to be with your family.
Because fuck you, we're the firm! How terrible could this email be? Well, it wouldn't have been so bad if not for that jab at the end.
The Resource Management team is working to get anyone available the weeks of 12/16-1/6 assigned to client work. Please keep an eye on your schedule & do not assume if you don’t have anything on your schedule now that you will not be assigned to a client. If you want to take PTO the weeks of 12/16-12/30, you should schedule that now, don’t wait until you are scheduled on a client.
Many of you are scheduled to complete your e-learnings over the coming weeks before the deadline. You must report to the office & check in with the unassigned team captain when you have CED-E-Learnings on your schedule. If you are not able to come into the office on the days you are scheduled for E-Learnings, then you must schedule PTO.
Hope everyone has a happy & restful holiday!
Have a happy and restful holiday, only if you've already put in for PTO otherwise expect us to work you like the dogs you are. *whipcrack*
Our brother from another mother over at AccountingWEB, David Ringstrom is a CPA and Excel wizard. It's not too late to join him for his December 19th webinar "High Impact Excel," which is worth 1 CPE credit and ∞ Excel expertise.
Today, David is kicking down wisdom on how to use strikethrough in Excel... you know, for any pesky holiday lists you may be keeping that need to be checked off twice ifyoufeelme.
I often find myself using the strikethrough feature in both Word and Excel to mark items as completed. This feature is fairly straightforward in Word, as a strikethrough icon appears prominently on the Home tab in Word 2007 and later. Conversely, in Excel this feature doesn't have its own icon, but it does have a keyboard shortcut, Ctrl-5. Yet there's no built-in shortcut for strikethrough in Word. In this article, I'll describe a couple of ways that you can streamline access to this – and pretty much any feature – in both Word and Excel.
Run, don't walk, over to AWeb for the rest.
Ed. note: there's another new kid in town and his name is Kai. We originally met him through a career issue of his own years ago and kept in touch all this time, so we thought he'd be a fun addition to our rag tag group of accounting dropouts and class clowns given his consulting experience. Over the next several months Going Concern will be issuing weekly posts offering perspectives into the often misunderstood and previously seldom covered world of consulting with Kai's help. Kai Kershner is an experienced consultant/CPA whom, in spite of his best efforts, has been in financial consulting for over five years. If you have a question for him specifically related to the fun world of consulting careers, shoot us an email and we'll get it to him.
“Life is divided into the horrible and the miserable” – Woody Allen
Quoting Woody Allen, the above is perhaps no better epitomized within the walls of a large accounting firm1. When it comes to undergrad accounting/finance programs I’ve found there to be limited objective advice aimed at providing guidance to those students wary of beginning a career within the audit or tax practice of an accounting firm; and perhaps more importantly, advice which could provide valuable assistance prior to these students making what is ultimately an extremely important decision2. It then comes as no surprise that this lack of advice for the audit-and-tax-career wary corresponds to a near-identical deficiency and general misinformation regarding careers in consulting, which can serve as viable alternatives for accounting/finance students seeking to do something other with their lives than audits or taxes.
In sports, it is sometimes argued whether a team won or, rather, the opposing team lost that game; within the context of accounting/finance careers, I think of this argument when classifying people as either those who:
Aspire to a long, fulfilling career in a financial services capacity and are thrilled at the prospect of beginning such career3
Dread every aspect related to a career in financial services; yet, despite of their overwhelming angst, choose to enter the field anyway – be it for financial, professional or other personal reasons
Assuming most of our accounting/finance friends can be categorized as either A or B, let’s assume this article is directed towards Category B (since Category A knows what they find fulfilling and doesn’t need the guidance). Keeping this in mind, let’s examine a set of hypothetical scenarios to which both past and present accounting/finance students can potentially relate:
- Rising Senior, Accounting Major: You recently completed a big 4 audit/tax internship; you were generally miserable; things got markedly worse over the course of the summer; you disliked your peers and superiors; the situation, however, is complicated by the fact that you received a job offer featuring, among other things, above average starting salary + signing bonus
- Rising Senior, Finance Major: You recently completed an internship with a mid-tier investment bank. You received a job offer with a very high starting salary/signing bonus relative to your peers but are less than thrilled at the prospect of working 70 hour weeks from the onset of your career all the while existing within a cut-throat environment not all that different to that of “Lord of the Flies”
- 1st Year Auditor, Big 4: You fucking hate your job; your firm; and most of all, your day-to-day existence. You live in what amounts to a NYC-high-rise-pseudo-frat-house and spend virtually all of your non-work/non-sleep time either waiting for elevators or underground in disgusting subway cars. You are currently worried your $2100/month rent-check might bounce, which would force you to take temporary shelter in the office where you already spend 80 hours/week
- Rising Senior, Accounting/Finance/Other Major: You had an internship at a large, publicly traded consulting firm and were far from sold on it as a career. You did not receive a single concrete answer over the span of a two month period and, despite your greatest efforts to abstain from, you now find yourself using cliché corporate idioms such as “don’t lose sight of the forest for the trees” and “reach out” as the exclusive phase used when inquiring into whether communication of some form has, or will, take place
Let’s allow each of the four scenarios marinate for a few days before we divulge some well-crafted, individualized advice geared at helping each of the above through their somewhat unique situations. Spoiler alert: involves consulting.
1To, of course, be taken within an individualized context; people frequently ask me, “Do you like what you do?” – to which I frequently reply, “Well, I’m not a fucking rock-star…but all things considered…it’s okay”
2 Think: hitting accept on a job offer
3 Think: The girl who loved her big 4 audit internship, loved spending her summer with a big 4 firm and was truly excited to start work as an auditor. Or: The 20-year-old-guy who carried a WSJ to Fin400, asked difficult questions with large words he likely did not understand, boasted he “killed the market” with what was proven to be a fictitious investment portfolio and wanted nothing more in life than a position within the bulge bracket
YOU GUYS. This actually happened. Note it happened earlier in the month and we missed it because we generally don't do a Google News search for CGMA and rely instead on the AICPA's constant horn-tooting. The important thing is we have it now, read:
CGA sought an application for an injunction pursuant to subsection 30(1) of the Certified General Accountants Act, 2010, S.O. 2010, c. 6, Schedule A (“CGA Act ”). The Respondents were alleged to be using the acronym CGMA, which stands for Chartered Global Management Accountant, as an accounting designation in the province of Ontario. The application was dismissed as the Applicant did not show on a balance of probabilities that the Respondents were contravening the CGA Act.
Section 26 of the CGA Act provides that no individual or corporation shall use the designation CGA or C.G.A. alone or in combination with other words or abbreviations. CGA Ontario argued that CGA alone or in combination with other words or abbreviations, such as CGMA, would fall within the scope of the prohibition. The Court disagreed, finding that it was the specific permutation of letters and punctuation that was protected, as opposed to each individual letter. The M element breaks up the CGA element by being inserted into the middle, and while the Court considered that “MCGA” or “CGAM” would be prohibited, CGMA is not.
I like how it says "the Respondents were alleged to be using the acronym CGMA" like you'd say "the Respondents were alleged to have drowned a bag full of puppies" as if it's a crime or something.
Thankfully for the CGMA, they didn't go with the highly awkward Management Chartered Global Accountant or Chartered Global Accountant Manager, then we'd have a problem.
Accounting News Roundup: KPMG's Revenue; The Dumbest Bank of the Year; PCAOB Inspections SALY | 12.12.13
Hugs all around!
KPMG global revenues grew to US$23.42 billion in 2013, representing a 3.7 percent increase over the 2012 fiscal year http://t.co/uWJfurRFtN
— KPMG (@KPMG) December 12, 2013
RBS Wins 'Dumbest Bank of the Year' Award [Bloomberg]
Jonathan Weil has found a doozy. RBS will pay $100 million in fines for conducting transactions "with Iran, Sudan and other countries subject to international sanctions." The smoking gun (or at least one of them) is this excerpt from the instructions the bank gave to employees in its payment processing center: "IMPORTANT: FOR ALL US DOLLAR PAYMENTS TO A COUNTRY SUBJECT TO US SANCTIONS, A PAYMENT MESSAGE CANNOT CONTAIN ANY OF THE FOLLOWING: 1. The sanctioned country name. 2. Any name designated on the Office of Foreign Asset Control (OFAC) restricted list, which can encompass a bank name, remitter or beneficiary." In other words, a step-by-step guide in avoiding detection. FTW, RBS.
Criminal Action Is Expected for JPMorgan in Madoff Case [DealBook]
JPMorgan is trying settle with regulators over its role in Bernie Madoff's Ponzi scheme: "A settlement with federal prosecutors in Manhattan, the people said, would include a so-called deferred-prosecution agreement and more than $1 billion in penalties to resolve the criminal case. The rest of the fines would be imposed by Washington regulators investigating broader gaps in the bank’s money-laundering safeguards." In total, the fines will be close to $2 billion. This comes in the wake of JPM's $13 billion settlement with regulators over its sale of icky mortgage securities.
UK accounting watchdog to review bookkeeping at banks [Reuters]
The Financial Reporting Council will spend the second quarter of 2014 looking into banks' accounting "to find out why the lessons of the financial crisis are being applied so slowly." During these reviews, the FRC plans to "look at what action top accounting firms took to address specific issues the watchdog already raised with individual accounting firms earlier this year regarding bank audits." It's going to be a great year!
Audit Failure Themes Persist in 2013, Munter Says [CW]
SALY! "Audit regulators are seeing the same kinds of problems in audits after their 2013 inspections that they've seen in recent years, although its too soon to say if the frequency of audit failures has changed."
Grant Thornton acquires Haley and Associates [TCH]
Haley and Associates is a dynamic Canadian insolvency firm.
EY: 'Bitcoin has the potential to be a game-changer' [Telegraph]
“It is more transparent and traceable than real cash,” said Roger Willis of EY’s fraud team, adding that no one has yet managed to exploit Bitcoin's transaction database.
Woman Claws Her Way Out of Locked Bathroom as in ‘Shawshank Redemption’ [ABC]
Well, sort of. She didn't crawl through a sewage pipe and there was no Raquel Welch poster. Still, it's a harrowing story.
These are the top ten most overused buzzwords on LinkedIn for 2013 [LinkedIn]
Facebook will join the S&P 500. Shareholders like this. [BB]
The sign language interpreter at Nelson Mandela's memorial service was not a sign language interpreter at all “He was a complete fraud,” Cara Loening, director of Sign Language Education and Development in Cape Town, told Agence France-Presse. “He wasn’t even doing anything. There was not one sign there. Nothing. He was literally flapping his arms around.” [NY Daily News]
Now is the time to make those end-of-the-year charitable contributions. You all may laugh at my cat herding activities but let me tell you, I get one hell of a deduction come tax time. [8 News Now]
SHOCK AND AWE: there's a gap between GAAP and non-GAAP numbers [IBTimes]
A CPA firm has billed a small town in MO extra for having to fix its crappy finances. Blame first, fix later. Mayor Troy Dickens said the errors involved mistakes made in the filing of payroll taxes, reconciling of funds and budget bookkeeping. He said many of the difficulties were because of City Clerk Cindy Leimkuehler not having a full grasp on the job when she replaced Debbie Eggers last year. “There were problems because of wrong information given the auditors by the city, but there were some problems caused by the auditors, too,” said Dickens. “The thing is, we’ve got to be able to go through an audit without issues. This was a long and arduous ordeal we went through.” He noted that not only is the city facing payment of an additional bill for the audit, but it may also have to pay a penalty to the IRS for unpaid payroll taxes. [Daily Journal Online]
I bet you're wondering whatever happened to Leslie Seidman. Now you know! [WO]
Hey Paul Ryan, Grover Norquist Would Like His Promise Ring Back [Slate]
The rich do not pay the most taxes, they pay ALL the taxes Buried inside a Congressional Budget Office report this week was this nugget: when it comes to individual income taxes, the top 40 percent of wage earners in America pay 106 percent of the taxes. The bottom 40 percent...pay negative 9 percent. [CNBC]
This is the final post in the PhD series from Dr. Emelee, who is a Big 4 refugee in the process of obtaining his PhD. You can find his previous posts here. Happy trails, Doc!
Once you finish the PhD and become an Assistant Professor at a university, it’s time to start working toward tenure. Schools vary, but profs have around six or seven years before they go up for tenure. Sometimes a third-year review is done and you could be retained or fired based upon how that goes. What happens if you get denied tenure? You get fired. Simple as that. They give you a year to find another job and you’re on your way out of there and probably to a “worse” university (one with less pay and a higher teaching load).
The tenure decision is usually based on three metrics: research, teaching, and service. Service includes things like serving on business school or university-wide committees or advising BAP. Most schools try to shield untenured profs from doing tons of this, but some is still required. The teaching part is often based on student evaluations, and the research part is based on publication record.
It is possible to go to a “teaching school” where the publication requirements for tenure are low. At schools like this, the prof will likely teach three courses each semester and make right around $100,000 a year. As you move to a “balanced school”, the teaching load is often two courses each semester and salaries start around $120,000. “Research schools” will kick off around $160,000 at the low end and profs may teach only two or three courses a year. The salary figures listed do not include summer funding for research which can be around 2/9 of the regular 9 month contract. As you move up this spectrum the publication requirements for tenure get much harder.
Schools have lists, whether formal or informal, about what types of journals actually count toward tenure. There also may be a little bit of substitution between quality of publications vs. quantity of publications, but this is subject to some constraints.
First, profs need a research idea. An unoriginal idea, or an idea about a topic no one cares about, means you are about to waste a couple of years of your life working on something that won’t help you get tenure. Here a few examples of papers that were published in solid academic journals.
Are time-series econometric models better at forecasting earnings than analysts?
Are accounting-based earnings correlated with stock prices?
Were lots of non-audit services fees in the pre-SOX era associated with lower audit quality?
Does the stock market reward firms for releasing earnings that are higher than what analysts expected? Or is it simply meeting the earnings expectation that’s important?
Do the Big 4 firms actually conduct higher-quality audits?
Once you have your idea, you have to figure out what level of journal you wish to target. Quality academic journals are peer-reviewed in a process that is supposed to be blind. Profs submit papers to the editor and the editor assigns two anonymous reviewers to edit the manuscript without knowing who the authors are. The reviewers make their comments on what should be changed in the paper (methodology, motivation, sample size, robustness checks, etc.) and then recommend to the editor that the paper be accepted, revised and resubmitted, or rejected. The editor will also read the paper, provide her own comments, and make the final decision about whether the piece gets published or not. A revise and resubmit is about the only realistic expectation for a first submission and papers will typically go through around three revisions, but even more are possible.
Journal quality is based on what kinds of things have been published there in the past, more importantly who has published there in the past, and who the editors and reviewers are. There are three journals every school, regardless of rank, will count as A hits. At the highest-rated research schools, you either publish in these or you won’t get tenure, but as you move down to a balanced school, publishing articles in any AAA section journal may be sufficient.
Think about the odds here. There are three journals everyone considers to be “A” hits. So damn near everyone is submitting articles there. Lots of competition at the top level. The lead time between starting to work on a paper and publication is, at a minimum, around two years and is probably closer to three or four plus. The revise and resubmits take time, and then addressing the comments and sending the draft back also takes quite a bit of time. All of this adds up and eats into that six or seven year tenure clock.
Forgive me for posting this too soon if in fact it is too soon but Christmas will be here before we know it so might as well get on this now.
We're working on a Pinterest board of gifts for the accountant in your life (email us if you have one to add) but this list to come is specific to you, the GC faithful. What do you all want under your tree this year? I have some guesses.
Moar this guy
Fun fact: Greg Kyte actually tried to walk away from GC at some point, claiming he was too busy with everything else in his life to continue bringing his unique brand of humor and insight to the GC faithful. We basically told him this place is like a gang and once you're jumped in, there's no getting out and threatened to send a van full of my crazy ex boyfriends to beat him up if he tried to get away from us. So he's still around but I think we all secretly hope he'll find the inspiration to do more than just one post every quarter. We love you, Greg. Don't ever leave us.
A new but equally awesome photo like this of Hans Hoogervorst
Bro, do something funny. We know you have it in you.
Stephen Chipman -- FOUR MORE YEARS
The guy grows on you after awhile, ya know? He's no BoMo but all things considered... uh... wait... does anyone here actually give a shit? Alright then, moving on.
To never see this guy again
My predecesor had a raging (but platonic) boner for Grover Norquist and now that I'm running the show over here, I totally get it. His tweets are pure comedy and he doesn't even realize it. Norquist is one of the best trolls in Washington and the best part is he doesn't even realize he's trolling. That said, I'm sure we all wish he'd just fuck off already.
Another firm rebranding
Preferably one as awkward as EY's. But since we're still all obsessed with PwC's minimalist autumnal theme, we'll take anything we can get. KPMG's logo looks like it was made in MS Paint back in 1986 so hopefully they've got something new stashed in Phil Mickelson's hat.
A social media meltdown from Mickelson Hat
Speaking of Phil Mickelson's hat, you know what would be rad? For the person running the Mickelson Hat Twitter account to drunkenly log in and go on a big rant like that Chrysler guy who tweeted ""I find it ironic that Detroit is known as the #motorcity and yet no one here knows how to f**king drive" from the official Chrysler account and got fired for it. Thankfully we don't have that problem over here at Going Concern, my personal tweets and work tweets are equally offensive #suckit #ujellybro
WE HEARD YOU THE FIRST 50,000 TIMES.
Yes I meant to post this twice because let's face it, you guys really, really, really, really, really want a forum. We heard you the first 50,001 times.
The best part about accounting memes is that no one else understands why they are funny. But WE do and that's all that matters. Share freely on Facebook, even if your lame high school friends with crappy, non-accounting jobs won't understand what the hell you're laughing at.
Piles and piles of money
Who doesn't want piles of money? But you, GC faithful, want piles of money more than just about anyone, and you're willing to live a miserable, thankless life slaving away for your firms to get it. It's admirable, really, and may you find a big fat bonus in your stocking next to the coal.
Jim Peterson has subjected himself to not one but two viewings of the PCAOB's December 4 meeting, so that alone makes him a hero because ain't nobody got time for that.
But on his second viewing, the delirium kicked in and he started counting how many times the PCAOB thanked the PCAOB for the PCAOB's work. We aren't entirely sure why he did this, but the result is hilarious:
On the PCAOB’s pervasive “thank-you” process, here’s a summary from my simple if tedious exercise in data gathering through the broadcast:
Including duplications, the five PCAOB members themselves thanked their staff by functional groups a total of thirteen times, and specifically recognized 16 of that staff by name – along with three individual staff members of the Securities and Exchange Commission and eight appreciations to various configurations of that agency’s personnel.
Chairman James Doty led the fulsome way, laying on hands of thanks upon all his fellow members as a group and giving an individual shout-out to member Lewis Ferguson.
At the other end of the spectrum, by contrast -- perhaps feeling unusually peckish that morning, or still suffering post-Thanksgiving dyspepsia, or just annoyed at it all -- member Jeanette Franzel managed only a single cursory and generic wave.
Meanwhile, on the staff side, hierarchy seemed to reign. A total of eight functional subordinates received individual expressions of thanks; fourteen were administered more or less laterally to those in other functions, and again, the SEC and its staff were recognized twice.
Total: 64 different mentions – all in only a two-hour meeting.
If I get around to it, maybe I'll make a dubstep remix of PCAOB thank yous one of these days. If anyone wants to beat me to it, I'd be forever grateful.
This message came in with the subject line “Offers received – URGENT.” Never fear. The GC team is here to drop everything else we are doing so we can provide this budding accountant immediate support. [Ed. note: Amber is nicer than I am. This is a lie. We are not on call for your personal issues nor do we care to turn around your urgent pleas for help overnight. However, Amber was nice enough this time to help on this urgent matter.]
Hi I have received two offers from BIG 4. One firm said you can start FT in Sept 2014. Another BIG 4 firm said you can Intern with us from Jan to March (Winter Internship). The FT firm said they would “prefer” that I don’t do that has offered an Internship for the winter as well but does not have nearly as competitively. I would prefer to the Winternship elsewhere, then come back in Sept 2014 FT as discussed.
Is this okay? Or if you Intern at one BIG 4 then you are unable to start elsewhere. It’s not in my contract, everything is at-will - it will just be “complicated” as the recruiter said. Would this be okay? I don’t want to lose my FT. Please help me! Thank you so much!
Dear Stressed Student,
First and foremost, congratulations on receiving two Big 4 offers. You done made us proud!
I am going to be frank: the writing in your request is on the borderline of awful. I know, I know. I make complaints about writing often. But I can’t help but point to it as I sit here and pontificate about careers in accounting.
Behind every complaint is a request. My request to you, and anyone considering a note to GC seeking out career advice, is that you take the time to proofread your work. In this case, your request needs to make sense for me to be able to provide a meaningful answer. I had to read your request four, five, six times and rewrote my response because my initial interpretation of your situation changed. In other words, you wasted my time. This shit will drive your future colleagues crazy. Time is money and CPAs aren’t down with you wasting either their time nor their money. Climbing down from my soapbox now….
From what I can piece together, you have two offers. A FT offer that will commence September 2014 and another offer for a winter internship that pays more and will take place this January to March.
News flash here, kids: Internships, for the most part, are recruiting tools. In fact, the firms won’t make much, if any, money off your services until about the second year of your career. It takes a lot of money and time to train you. Can you see the theme here?
That being said, my recommendation is for you stop wasting resources and commit to only one firm. It is not cool for you to date one Big 4 firm this winter and commit to be in a relationship with another firm starting next fall. Doing so evokes the Facebook relationship status of “It’s complicated”, which is the exact same thing a recruiter told you.
If you heed my advice, what’s next is for you to choose the right firm. It sounds like the firm offering the internship is more appealing to you. I recommend you investigate if their internship will parlay into a FT role or not. Often times they do. The risk, as you noted, is that you may jeopardize a FT offer. So if it is probable you will get a FT offer from the internship and you are confident you can show your stuff from January to March, then I say go for the firm you really want.
Honestly, I tell all candidates to go for the firm they really want. You are going to spend more time at work than with your family and friends. It is important that you enjoy how you spend your time or you are able to see a direct correlation between a short-term sacrifice and a long-term benefit.
ANR: SEC Accounting Fraud Task Force Is on the Non-GAAP Case; Battle Over Leases to Resume; Embezzling for a Man Cave | 12.11.13
SEC Task Force Probes Use of Non-GAAP Metrics [WSJ]
Your made-up financial measures won't stand a chance! " 'We're looking at non-GAAP measures,' said David Woodcock, chairman of the SEC's new Financial Reporting and Audit Task Force, referring to companies' customized measures that don't comply with generally accepted accounting principles, or GAAP. Mr. Woodcock, who was speaking at an American Institute of Certified Public Accountants conference, didn't mention any specific companies that the task force is looking at. While other regulators have touched on some of the same issues in recent months, Mr. Woodcock's comments are the first indication that the SEC is looking at these metrics with an eye toward possible enforcement cases."
Who Has The Last Word On “Network” Audits of US-Listed Companies? [Re:The Auditors]
Francine McKenna's writes that about a small loophole that the PCAOB's proposal on naming audit partners has left wide open for Engagement Quality and Appendix K (i.e. foreign associated firm) reviews.
FASB, IASB to Tackle Lease Issues in January [CW]
Prepare for wailing and gnashing of teeth: "Feedback on the boards' joint proposal to overhaul lease accounting has ranged from broad support to suggestions the boards should scrap the project and instead develop new disclosure requirements. Users of financial statements generally told FASB and IASB they support putting leased asset and the related liabilities on the balance sheet and believe there are economic differences between real estate and property leases that should be reflected. FASB's own Investor Advisory Group, however, suggested FASB should go back to the drawing board and focus on a way to simply draw out new disclosures on lease obligations."
Accountant sentenced to prison for embezzlement [TNG]
Neal Freeman, 59, was sentenced to 37 months in prison for embezzling $860k from his former employer, Champaign Builders Supply Company. Although the article states that Freeman didn't explain why he stole the money, it does suggest that there was an epic man cave involved: "Champaign police detective Pat Kelly learned that Freeman spent the money on such things as a $16,000 Bobcat, a motor home, a pickup truck, a sport utility vehicle and the transformation of a spare garage into a 'man cave' with such amenities as a flat-screen TV, an entertainment center, wet bar, juke box, popcorn machine and pool table. He also traveled to NASCAR racing events."
Capitol Leaders Agree to a Deal on the Budget [NYT]
Huh. Wouldja look at that? "House and Senate budget negotiators reached agreement Tuesday on a budget deal that would raise military and domestic spending over the next two years, shifting the pain of across-the-board cuts to other programs over the coming decade and raising fees on airline tickets to pay for airport security. The deal, while modest in scope, amounts to a cease-fire in the budget wars that have debilitated Washington since 2011 and gives lawmakers breathing room to try to address the real drivers of federal spending — health care and entitlement programs like Medicare and Social Security — and to reshape the tax code."
CFO Likes Having Few Finance Staffers Who “Do Lots” [CFO]
So I guess this means "More with less" is an actual strategy now? "I love capacity constraints on a team. It forces us to eliminate nonessential tasks," says Chris Lynch, CFO of Sprinklr.
Tacos or death, sword-wielding robber demands [SAEN]
A San Antonio man named Adam Kramer was NOT interested in paying for his tacos: "Kramer ordered six tacos at Alondras De Jalisco on South Loop 1604 at about 2:30 p.m. on Dec. 2, according to documents released Friday. When the waitress told Kramer how much he owed, he responded that he was going to take them for free, officials said. When the waitress told Kramer that he had to pay for his food, he allegedly started sliding what is described as a large sword in and out of a black sheath on his waist, the affidavit says. The waitress asked the cook to come talk with Kramer, who left the building when the phone rang, according to the affidavit. Kramer went to his vehicle before walking back to the restaurant, still allegedly carrying the large sword, so the waitress locked the door, documents state. 'Mr. Kramer was yelling that he wanted his free tacos or somebody was going to die,' the affidavit says." Then he drove away but was picked up by sheriff's deputies the next day.
Here are 6 jobs that are dying and don't worry, "accountant" isn't on the list [Careerealism]
Regulators adopt final Volcker rule limits on bank trading [WaPo]
Regulators seek to curb Wall St. trades with Volcker rule At some point someone is going to have to write up a manual for examiners on what to look for and ... how to enforce that stuff. That's going to be a really important document," said Bradley Sabel, a lawyer at Shearman and Sterling in New York. [Reuters]
Poor math, forever alone [NYT]
Manny Pacquiao owes the IRS $18 million [TMZ]
Alan Grayson was outed in court as having lost $18 million to fraud [POLITICO]
GT is planning ahead... on Twitter:
— Grant Thornton LLP (@GrantThorntonUS) December 10, 2013
The Volcker rule broke credit markets? I thought credit markets broke credit markets. [Forbes]
"The sorcerer's apprentice of implants" has been sentenced to 4 years for breast implant fraud. Wouldn't you like to have been that forensic examiner? [The Australian]
TIL: John Koskinen can take credit for the world being exactly the same on January 1, 2000 as it was on December 31, 1999:
Twelve years later, the Year 2000 date change panic that riveted the public and government leaders seems like something out of a disaster movie. But in the late 1990s, there were real fears that the computer systems that supported our modern infrastructure — from banking and air traffic control to defense systems — would fail when their digital clocks flipped over on January 1, 2000.
In the United States, that race against time was led by John Koskinen, an Office of Management and Budget executive selected to lead President Bill Clinton’s Council on Year 2000 Conversion.
Remember Y2K? And the accompanying clip art warnings that we were all going to die and our computers were going to explode? THIS GUY RIGHT HERE was running that show while everyone else was getting drunk and preparing for the worst.
“On New Year’s Eve, we had 100 information desks set up” in the coordination center, Koskinen said. “Madeleine Albright, then secretary of State, came by and said, ‘Geez, you could run the world from here.’ I said, ‘Well, we might have to.’”
Presumably the Senate need know no more, as they asked Koskinen all of two questions before cutting his Finance Committee hearing short today. Guess there were urgent snowballs to be lobbed on the Hill instead.
Let no one say our comment section is pointless, offensive, and about as valuable as the stuff I scoop out of litter boxes every day. Would something so worthless come up with a gem like this?
Who the lead audit partner is on the audit of a publicly traded company is irrelevant - he or she has absolutely no idea of what work was actually done, who did it, or what it revealed. But they could make the audit report be like an office get-well card and let everyone who worked on the audit sign at a random location on the audit report page, perhaps adding a brief sentiment such as "Cash Rocks" or "Don't spend your dividend before you get it."
Can someone please get the PCAOB on the phone right this moment?
- Make audit partners stand in front of the client site wearing a giant "I AM THE AUDIT PARTNER" sandwich board
- Change all audit partners' email signatures to "I am the audit partner on XXX engagement" in large, purple Comic Sans
- Require the client's product to have a label or sticker -- that may not be removed under penalty of law -- clearly naming the lead audit partner
- Tattoos of the client's logo on the partner's ass, sort of like branding cattle
Any other bright ideas?
It *is* innnnnsaaaaaane outside.
Accounting News Roundup: Boston Globe Still Sticking It to Deloitte; Show-Me State Shows Boeing the Money; GM's New CEO | 12.10.13
Consulting giant becomes a State House fixture [BG]
The Boston Globe continues to skewer Deloitte since Massachusetts Department of Revenue fired the firm for the lousy job they did implementing a news system for filing tax returns. Of course, the firing only happened after the Green Dot billed them for $54 milion. The Globe found "[Deloitte] has won at least $330 million in consulting and technology contracts in Massachusetts over the past decade. State officials could not name a firm that has won more business. Deloitte is currently working on at least 12 contracts here, accounting for about $215 million of its business with the state." Reporters Beth Healy and Megan Woolhouse are turning over every rock they come across, even the fact that the heads of Mass' unemployment division and the state’s health insurance marketplace are Deloitte alums.
Volcker vote made private due to weather [The Hill]
Somehow the banks had a hand in this: "The Commodity Futures Trading Commission (CFTC) was scheduled to vote on the sweeping regulation on Tuesday, limiting the way that banks are able to make risky bets for their own profits. The rule is a core provision of the Dodd-Frank Wall Street reform law and a major priority for advocates of financial reform. The CFTC announced early Tuesday morning that its meeting would be canceled due to a snow storm that has swept across the Eastern seaboard and closed federal agencies throughout Washington. The commission is still scheduled to vote on the rule behind closed doors, a spokesman said."
Internal Auditors Take on Third Parties [CFO]
I love the irony of a potential third party suggesting that companies need to be wary of third parties: "With companies outsourcing more responsibilities to third parties, the risks associated with outside firms are also increasing. While chief risk officers are often called upon to manage those risks, however, it is internal auditors who are responsible for setting up processes to identify third-party risk factors. While CROs and internal auditors work together, it’s tricky to tease out who actually owns the risk — that is, who has primary responsibility for managing it. 'Ownership of risk should be diverse,' says Rick Warren, a principal with Crowe Horwath and co-author, along with the Institute of Internal Auditors, of 'Closing the Gaps in Third-Party Risk Management,' a study which surveyed 164 chief-audit executives about their role in third-party risk management."
Missouri makes $1.7 billion tax break bid for Boeing [DMWT]
It's hard to compete with Washington state's $8.7 billion, but this'll do.
G.M. Names First Female Chief Executive [NYT]
Now that GM is finished being a ward of the state, they've decided to get up to speed in other ways: "General Motors said Tuesday it has named Mary T. Barra, the automaker’s head of product development, as its next chief executive, succeeding Dan Akerson, who will step down in January. She would be the first female C.E.O. of a major automaker."
Snooping in SEC examiner's briefcase, Madoff hid fraud -ex-aide [Reuters]
The stories that come out of this fraud never get old: "When a pair of U.S. Securities and Exchange Commission examiners visited Bernard Madoff's offices in 2005, the now-imprisoned financier was not too worried - until he sneaked a look into one of their briefcases. What Madoff found - a news article questioning how he produced positive returns every year - sent him into a rage, according to courtroom testimony on Monday by his decades-long right hand man Frank DiPascali. 'These SOBs are toying with me,' DiPascali quoted Madoff as saying."
TSA agent confiscates sock monkey's pistol [King5]
TSA agents have a thankless job already and this doesn't help matters: "Phyllis May of Redmond, Wash. says she is 'appalled and shocked and embarrassed all at the same time' about the incident that happened on Dec. 3. May has a small business selling unique sock monkey dolls. She says she and her husband were on their way from St. Louis to Sea-Tac and she had a couple of monkeys and sewing supplies with her in a carry-on bag. 'His pistol was in there,' she says of the sock monkey 'Rooster Monkburn,' a take-off on John Wayne character 'Rooster Cogburn' from the film 'True Grit.' "