Presumably, in the bad years some high performers may see a paltry raise of around 4% but in the good years, it will push 16%, depending on metrics listed:
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American Apparel Subpoenaed Over Auditor Switcheroo
- Caleb Newquist
- August 17, 2010
American Apparel’s downward spiral continues as Bloomberg reports that the company has been subpoenaed by the U.S. Attorney for the SDNY over the company’s “change in accounting firms.”
If you’re just l started with Deloitte quitting as the auditors of APP late last month. At that time, Deloitte warned that the ’09 financial statements may not (read: definitely are not) reliable and that they were getting the hell out of Dov.
Former APP auditor Marcum – for reasons unbeknownst to us – went back to their old client to try and help them straighten things out. Here’s the latest from the “preliminary results” for the second quarter, while thetardy 10-Q remains elusive. These prelims (i.e. a wild stab?), that were filed today warn that things are likely to get worse before they get better:
Potential Restatement of previously issued financial statements
Effective July 22, 2010, Deloitte resigned as our independent registered public accounting firm. On July 26, 2010, we engaged Marcum as our independent registered public accounting firm. On July 28, 2010, we reported on a Form 8-K that we had been advised by Deloitte that certain information had come to Deloitte’s attention that if further investigated may materially impact the reliability of either Deloitte’s previously issued audit report or the underlying consolidated financial statements as of and for the year ended December 31, 2009 included in our Annual Report on Form 10-K for the year ended December 31, 2009. Deloitte has requested that we provide Deloitte with the additional information Deloitte believes it is necessary to review before any conclusions can be reached as to the reliability of the previously issued consolidated financial statements as of and for the year ended December 31, 2009 and auditors’ report thereon.
Depending on the outcome of this review, a restatement of our financial statements as of and for the year ended December 31, 2009 could be required. Any restatement may subject us to significant costs in the form of accounting, legal fees and similar professional fees, in addition to the substantial diversion of time and attention of our Chief Financial Officer, our other officers and directors and members of our accounting department in preparing and reviewing the restatement. Any such restatement could adversely affect our business, our ability to access the capital markets or the market price of our common stock. We might also face litigation, and there can be no assurance that any such litigation, either against us specifically or as part of a class, would not materially adversely affect our business, financial condition or the market price of our common stock.
But that’s not all! The company discusses a few more issues, “We are subject to regulatory inquiries, investigations, claims and suits. We are currently defending one wage and hour suit, one sexual harassment suit and responding to several allegations of discrimination and/or harassment that have been filed with the Equal Employment Opportunity Commission or state counterpart agencies.”
At that point, the filing finally gets to the problem du jour:
In addition, in connection with our previously disclosed change in auditors, on July 30, 2010, we received a grand jury subpoena from the United States Attorney’s Office for the Southern District of New York for the production of documents relating to the circumstances surrounding the change in our auditors. We have also received inquiries from the Securities and Exchange Commission regarding this matter. We intend to cooperate fully with these requests and any related inquiries.
If consider all that, plus the fact that the company is spending cash like Pacman Jones at a strip club and that they’re likely to be in noncompliance with a major debt covenants at September 30th, it’s no surprise that the stock is off even more than when Deloitte first quit as auditors.
American Apparel Drops After Receiving Subpoena on Change in Accountants [Bloomberg]
10-Q [SEC]
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Compensation Watch: Deloitte Advisory Can Expect ‘Substantial’ Salary Increases
- Caleb Newquist
- July 29, 2010
From the mailbag:
Just got off an “All Hands” call for Deloitte Advisory (not Audit). TPTB said to expect “substantial” base salary bumps for staff and seniors, but that they are moving toward a “base+bonus” structure for managers and up. As such, the bulk of the increase in salary pool will be to staff/seniors.
I dont know what that means – it would sure be nice to see 12-15% percent, but I dont think that is being too realistic. Whatever the case, I doubt there will be bonuses for staff/seniors like you saw at PwC. They bandied about a “$36MM” number a couple times, but that is really irrevelant without a discussion of the distribution.
People are sure giving a lot of credit to PwC. Maybe firing out of the gate was a way to put pressure on everyone else but don’t forget, not everyone at PwC is thrilled with their compensation season.
We aren’t expecting official word out of Deloitte for awhile but in the meantime, feel free to speculate on ‘substantial’ and keep us updated.