Warren Buffett’s Berkshire Hathaway Inc. (BRKA, BRKB) took an accounting charge to reflect the declines of three stocks in its investment portfolio after regulators asked about the company’s policy for writing down investment losses. But Berkshire Chief Financial Officer Marc Hamburg complained that the current stock prices don’t reflect the worth of the shares, and predicted in a letter to the U.S. Securities and Exchange Commission that “each security’s market price will grow to at least the intrinsic value that existed” when Berkshire made the investments. [Dow Jones]
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Research: A Majority of CFOs Face Significant Talent Shortage and Burnout of Existing Staff
It’s not even worth coming up with a smarmy clickbait headline for this press release […]
Renegotiate Everything NOW
Editor’s Note: Chad Cohen is a licensed CPA in California and currently serves as a Senior Director of Finance and Corporate Controller for Zillow.com in Seattle, WA. He has over 13 years of experience in corporate finance, audit and accounting; primarily in the technology and entertainment sectors. He has also functioned in financial planning and Sarbanes Oxley compliance efforts. Previously he also worked as a Big 4 auditor of high technology clients both domestically and abroad. Chad spent the first 12 years of his life in Hong Kong and as such enjoys eating dimsum in Chinatown and practicing Kung Fu in his free time. You can follow him on Twitter @cfolounge.
Unemployment is over 10%, the US dollar is going through the floor as interest rates continue to tank and Congress wants to push through a 2,000 page, $1 trillion health care bill. It might appear that our country is coming apart at the seams but if you are riding out this tidal wave, now is the perfect time to take advantage of the crappy macro conditions and start turning the screws to your vendors.
I don’t care if you’re an accounting manager, a senior buyer, AP clerk or CFO; everyone in the finance department should have a part in looking for ways to save the company some coin and NOW is the perfect time.
Here are a few ideas off the top of my head:
Commercial real estate is in the crapper &mdash Talk to your landlord about extending your lease and locking in or lowering your rents for the next 3 to 5 years. Get concessions, push for free TIs, get a couple more parking spaces, etc.
Strong Arm Your Outside Accountants &mdash Accounting firms have been laying off employees left, right, and center so lock in a long term contract and negotiate a steep discount on standard audit rates and other services like taxes. OR have a bake off with other accounting firms. This will get your auditors attention and encourage them to drop their rates to be competitive with these other firms. BDO, Moss Adams, RSM, etc. also audit public clients (it’s not just the Big 4 firms, folks) and their fee structure is 20 – 30% less than the Big 4. Don’t be afraid to switch firms or give parts of your accounting business (tax compliance, SALT, audit, etc.) to other firms.
Contracts &mdash If you find yourself in the middle to end of a contract term, try to extend your subscription, maintenance or service contract for multiple years in exchange for steeply dropping prices. Mandate that your IT, sales or marketing departments bid out services to multiple businesses when deciding who to give your precious business to. Find a free service that can do what your paid service does &mdash these do exist (they’re usually crappier but you may not need the “Cadillac”).
Price out hardware purchase orders with new vendors &mdash You’ll be surprised what others are willing to do now to get your business. You can usually negotiate better at quarter-ends as sales departments have quotas and targets to meet.
I could go on and on but I think you catch the drift.
I read a book on negotiations a couple years ago that encouraged its readers to negotiate “fearlessly”. I couldn’t agree more.
Thoughts?
REMEC Court Decision Could Expose Companies to More Accounting Fraud Litigation
This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.
As if it wasn’t a big enough risk already, CFOs may have to brace themselves for more private litigation over accounting fraud if a court decision on April 21 involving failed telecom equipment maker REMEC serves as precedent. The good news is that plaintiffs will have to show evidence of the executives’ intent in such cases.
Most cases involving accounting are either dismissed because they involve judgment or are settled before they go to trial, Robert Brownlie, a partner in the law firm of DLA Piper who represented the defendants in the REMEC case, told CFOZone last Thursday. The Del Mar, Calif., company filed for bankruptcy in 2005.
One of the largest such cases involved former Lucent executives, whom shareholders charged had defrauded them through improper accounting for goodwill. In that case, shareholders agreed in 2003 to accept a $600 million settlement.
In contrast to the Lucent case, the one filed by shareholders against REMEC’s former CEO, Ronald Ragland, and former CFO, Winston Hickman, was dismissed, though it also rested on charges that they misled investors because they didn’t write off goodwill that was impaired.
But the dismissal was more difficult to achieve than it would otherwise have been, said Brownlie, because the plaintiffs submitted evidence of internal reports and testimony showing that the company was behind schedule on certain objectives and not meeting its internal forecasts. The court said that those reports created a factual issue that should be determined by a jury; the defendants had to show there was no evidence of intent to deceive on the part of management.
“Normally, with matters of opinion or judgment, you either can’t bring a suit or it’s very difficult to do so,” Brownlie said. But he warned that the decision could mean more cases against corporate executives over accounting fraud.
The court dismissed the charges even though the plaintiffs’ accounting experts testified that they would have reached different conclusions than the former executives did.
Brownlie added that his case was helped by evidence of good faith conduct by the defendants, including evidence of transparency between the company and its auditors, disclosures of disappointing results and write-offs of other accounting items during the period of the alleged fraud and the absence of stock sales.
Describing the outcome for CFOs as “both good and bad news,” Brownlie said the decision showed that the critical issue in such cases will be “a connection between claims and evidence.” And he cautioned that in other accounting cases, it’s likely to be harder to defend executives on the basis of intent, which is why he said “there’s a paradox” in the REMEC decision.