July 23, 2018

Accounting News Roundup: Complicated Simplification; McLaren Dumps KPMG for Deloitte | 05.15.17

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Accounting is complicated

Here’s a New York Times column by William Cohan on FASB’s Accounting Standards Update 2016-01, aka “Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.” This rule, besides having an awful name, will change how fluctuations in equity investments valuations will be reported. My favorite sentence is this one:

Like much of what the accounting standards board tries to do, the new rule is intended to provide investors and creditors with better information and more clarity around a company’s financial statements, with the lofty goal of helping them make more informed decisions when providing capital to a company or business.

The subtext here, I think, is that FASB rarely achieves its goal of providing investors with better information or more clarity around financial statements. The new rule would require companies with small equity investments to write them up every quarter or whenever something major happens. In some cases, those write-ups could “[cause] fluctuations to earnings per share from something that is not even a core business.” And there’s a fun non-GAAP twist, too:

It would force corporate executives to remind listeners on every quarterly conference call that the fluctuations in the value of these investments have nothing to do with their core business and should be ignored, and that something like “adjusted net income” without these fluctuations is the way to look at their earnings.

No one uncomplicates things by complicating them further quite like accountants.

Break-ups

Awhile back, McLaren Applied Technologies inked a deal with KPMG to “develop analytics and technology-based projects.” It was supposed to be a 10-year partnership, but Sky News reports that it’s over, and McLaren is partnering with Deloitte instead. KPMG is playing it cool, though:

A KPMG spokeswoman told Sky News: “Our alliance with McLaren has been very successful and achieved its objectives.

“Together we have developed predictive analytics tools unmatched anywhere else in the market, which allow KPMG to offer enhanced audit and advisory services to our clients.

“KPMG will now continue the development of these in-house and will be unveiling an additional audit tool later in the year.

“Now that development of these tools has completed, we have taken the mutual decision with McLaren to end our formal alliance.

“We intend to continue to work with McLaren on a range of client engagements across 2017 and beyond.”

It’s mildly amusing how much that statement sounds like someone who just got dumped: “I got what I wanted out of that relationship. I’m just going to be by myself for awhile. Plus, I want to play the field, you know? I’ve got some too much going on anyway. It was mutual. We’ll still be friends.”

Yeah, sure. Whatever you say.

Accountants behaving badly

In many states, a person who steals something of value of $1,000 or more can be charged with a felony and thus, be sentenced to at least a year in prison if found guilty. That’s something to keep in mind if you’re an accountant, money’s tight, and an old roommate isn’t around to help you make good on back rent:

Ashlee Ryanne Thompson, 24, of Monteview was charged Thursday in Twin Falls County Magistrate Court with a felony count of grand theft.

Prosecutors say Thompson stole $1,090 from Rob Green Auto Group in January that she used to pay back rent to her landlord.

Thompson told police she had prepared a deposit for $1,090 and locked it away in the safe, but then her landlord called asking that she pay November and December rent, court documents said. When Thompson couldn’t contact her ex-roommate to help her pay, she decided to take the cash from the safe.

It’s terrifying that a person a couple months behind on her rent can wind up being charged with a felony because of one stupid decision, but there you have it.  One of these days, I’m going to develop a decision flowchart for accountants who are considering embezzlement.

Brought to you by Accountingfly

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Dallas Mayor: Deloitte Is Definitely Moving All Its Employees Downtown

Thumbnail image for DTa.jpgMaybe! 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

Rumor Mill: KPMG Restructuring Plans

Thumbnail image for PomeranianSP1324.jpgWe’ve finally received some details on a possible restructuring at the House of Klynveld in the U.S.
According to our source, the plans were announced over the past week on a series of calls by Tim Flynn. The firm would be consolidated down to two regions, East and West and each would have a regional managing partner and one service line managing partner per region.
This would result in the elimination of one level of regional leadership and would transfer several partners into client-facing roles.
The restructuring would also include placing some partners on ‘profit improvement plans’ and some layoffs would occur over the next year. Additional staff layoffs would occur across all ranks over the next year as well.
The bad news is obvious. The silver lining, as some of our other sources have indicated, is that the Firm would be eliminating at least one level of bureaucracy that should allow partners to be more active in developing potential client relationships.
Messages left with KPMG were not immediately returned. We’ll update you with any response that the firm gives us.
If you can expand on of the details we mentioned on this restructuring, let us know, otherwise, discuss your thoughts in the comments.
Earlier: KPMG Atlanta Shake-up Makes Us Wonder
UPDATE, 4:45 pm: Regardless of this rumor, we learned a short time ago that KPMG admitted thirty-six new partners last month. Seventeen in Audit, twelve in Tax, and seven in Advisory. Congrats to the new partners! No, seriously. Good job.