accounting firms

PCAOB takes PwC to task

Jim Kim — Thu, 03 Jul 2008 09:33:15 -0400

There has been a lot of talk about how the new Sarbanes-Oxley, as rendered in the PCAOB's AS5, will ease the burden and make audit firms less conservative in their approach. But you have to wonder, despite all the talk of a principles-based system, if that is really possible. Consider the scolding that PricewaterhouseCoopers just took from the PCAOB. (It should be said that other accounting firms regularly take similar medicine.) The PCAOB review found various GAAP errors, instances where standard audit procedures were not followed, cases of improperly documented work, and so on. PwC takes issue with a lot of the critique, but the point is that when it comes to audits, audit firms have every reason to be a big pain in the butt.

For more on PwC and the PCAOB:
- here's a cfo.com article

Audit conflicts must go!

Tue, 29 Apr 2008 06:59:59 -0400

We recently suggested it would be a good idea for firms to get rid of all potential conflicts of interest in the audit process regarding directors or executives. We noted the case of Feldman Mall Properties, which hired an accounting firm owned by one of the directors. As it turns out, the Public Company Accounting Oversight Board is moving on this issue, according to cfo.com. It seems to favor a rule that would require accounting firms to inform audit committees about any potentially tricky relationship. Anyone in an important financial role that might be able to influence the auditor would be required to disclose the relationship. Only then would a contract be allowed. In many ways, this seems like a no brainer. Audit committees need all the information they can get about these sorts of relationships before making decisions.

For more:
- here's the cfo.com article

Is the Sarbox hiring boomlet over?

Tue, 25 Mar 2008 07:59:59 -0400

People jokingly refer to Sarbanes-Oxley as the full employment act for accountants. Clearly, a lot of accountants, as well as finance and IT types, owe their jobs to the law. But the San Francisco Business Times notes that the hiring may be waning--even as the top firms hone their hiring practices to a near science. Controls are placed at many companies, and processes have been streamlined. There may actually be some layoffs in the works in some Big Four offices. The economy may have a lot to do with this. Companies are not going to be in expansion mode. While audits will always be necessary, a lot of related projects, especially on the consulting side, may not get funded. On the client side, you can bet a lot of departments are feeling headcount pressure.

For more:
- here's the San Francisco Business Times article
- here's an article on the art of recruitment from cfo.com

Related Article:
Wasn't Sarbox supposed to prevent this? Article

PCAOB finally fines a Big Four firm

Tue, 18 Dec 2007 06:59:59 -0500

It had to happen. I guess later rather than sooner is good enough. For the first time, the PCAOB has fined a big four accounting firm. Deloitte has been fined $1 million for the troubled 2003 audit of Ligand Pharmaceuticals, the Financial Times reports. A partner, James Fazio, was given a two-year ban from the industry after the PCAOB determined he had failed to adequately audit Ligand's reported revenues from products which included a right of return. In addition, he was said to have failed at taking into account the company's ability to accurately estimate likely returns - given past problems. Some might wonder if more such actions are forthcoming. Given the large restatements (the trends are down recently) you would think so. But we'll have to wait and see.

For more:
- here's the Financial Times article

Deloitte says goodbye to Radian

Tue, 09 Oct 2007 06:59:59 -0400

In this era, whenever a top accounting firm decides to drop a client, you can bet the rumor will crank up. Case in point: Deloitte & Touche's decision to no longer serve as Radian Group's independent accountant after third-quarter earnings are filed. The market was awash in uncertainty, despite Radian's assurances that no major dispute led to the move, and the stock was pressured. CFO.com notes that the company filed its June 30, 2007 quarterly report before Deloitte had completed a review of interim financial statements. That may have been an issue. In any case, there will be times when such transitions are necessary, but we all have to acknowledge that they will be seen as red flags that investors and others will seize. It will be interesting to see who the new auditor is.

For more:
- here's the CFO.com article

Paulson will take a look at audit industry

Tue, 09 Oct 2007 06:59:59 -0400

Blue ribbon-type committees are usually formed in the wake of some perceived crisis, like the nation's financial competitiveness. Sarbanes Oxley has been one reason for the spate of committees that we've seen recently. And now there is one more. This one will take a look at the accounting industry. Henry Paulson, Treasury Secretary, has been concerned that the system places perhaps too-heavy a burden on accounting firms to sniff out problems. That has led to the cover-your-butt approach that AS5 is trying to undo. In light of AS5, it will be interesting to see what more specific steps the Treasury committee can come up with. For what it's worth, Arthur Levitt and Paul Volcker are on the committee.

For more:
- here's an article from the AP

Related articles:
- More AS5 tips for small companies
- Will AS5 finally ease the tense standoff?
- Will AS5 really make compliance easier?

Career watch: Accounting firms the place to be?

Tue, 25 Sep 2007 06:59:59 -0400

Business Week has ranked the 95 best places to launch a career and guess what? The top three are Deloitte & Touche, Pricewaterhouse Coopers, and Ernst & Young. They beat out even IBM, Google and Microsoft. So what gives? Well, there is a shortage of talent in both accounting and technology. So if you are good at either, the job market for you looks good. Interestingly enough, Sarbanes Oxley is fueling the need for talent in both camps. If you are proficient at both, your options will be enhanced even more. This seems to be one of those lasting trends, but you never know. For those joining accounting firms, you might eventually have to choose between the tax or consulting side. The client side may be another option.

For more:
- here's the Business Week list

Related articles:
- Consulting work thrives all over again
- Shortage of financial talent at home-- and abroad

Audit firms "forget" to register

Tue, 18 Sep 2007 06:59:59 -0400

This news seems almost fit for The Onion: Nearly 70 accounting firms and partners, which are charged with carrying out Sarbanes Oxley ethics reforms, have "forgotten" to register with the board that supervises the industry. "Oh yeah. That was, uh, a top priority," says one partner who was censured. "But let's face it, some summer interns just seem less diligent than others. Overall, we still see ourselves as detail oriented and a stickler for rules." The SEC is not laughing. But it settled the cases without fining any of the offenders. These firms aren't exactly moonshine outfits or unregulated betting parlors. Still, while unregistered, they conducted 53 audits for public companies. Some of them had previously agreed to return fees to clients. None of the big four firms forgot to register.

For more:
- here's an AP article via the New York Times

Related article:
- Accountants and firms charged with Sarbanes Oxley violations
- Sarbanes Oxley Act of 2002
-What's going on at the SEC?

Novel way to attract recruits

Tue, 18 Sep 2007 06:59:59 -0400

Given the looming shortage of talent at top audit firms, Ernst & Young has come up with a novel idea. It will host a competition among students to create the best videos around the theme "Why Professional Services?" Some will roll their eyes, but hopefully enough students will see it as an opportunity. It vaguely recalls the widely (on the Net) distributed video from Aleksey Vayner, the Yale student aiming to land an investment banking job. But then again, the video landed him on the Today Show and in the New York Times. The top entrants in the E&Y competition will hopefully be more creative and less self-aggrandizing. The winning team will accompany Ernst & Young CEO, Jim Turley, on a business trip. What about jobs? You cannot fault E&Y for trying this. They still face an uphill battle. Perhaps the expected hiring slowdown by Wall Street banks will aid their cause.

For more:
- here's the release

Sarbox brain drain in the making

Tue, 18 Sep 2007 06:59:59 -0400

You've heard a lot about what a great time it is to be in finance and compliance, especially if you combine your knowledge with IT skills. You've also heard a lot about a seeker's market and great salaries. But for all the growth in the profession, people are talking about lack of talent still, according to Financial Week. The fact is that compliance still ranks fairly low when stacked against other financial fields, notably investment banking and consulting. The need seems most critical at audit firms, where burnout is a serious issue. Then again, the grass has always seemed greener on the client side of the fence.

For more:
- here's the Financial Week article

Related articles:
- Audit committees evolve, more focus on IT
- Accountants aim to repair Sarbox-related image