Updates to report that individuals were terminated appear throughout. Welp, this looks bad. The Wall Street Journal reports that six KPMG employees, including four partners and the firm’s head of audit, have been fired after a PCAOB employee leaked confidential inspection details to the firm. The departing KPMG employees include four partners and Scott Marcello, […]
Today in consequences of career limiting moves, a former EY auditor settled charges with the SEC that he traded on insider information about a merger of a client that he was staffed on. Now, I know you’re thinking, “Wow, that was dumb.” And yes, that was incredibly bad decision on the part of Nima Hedayati, […]
Here's a weird one: A New Jersey man has been charged with threatening now-former President Obama's life on Facebook. A report in the Philadelphia Inquirer has the details: Federal prosecutors say William Peterman Jr., 33, of Medford Lakes and Beaufort, S.C., posted two death threats on his Facebook page last week, including one addressed to […]
As an accounting professional you have come across people who have attempted to bend the rules or do something illegal. There are penalties. Why do people do it? Smartest person in the room: They feel the pool of potential rule breakers is so huge, the chances of getting caught are minimal. This makes taking the […]
This is from last week, but it's still worthy of a mention since we don't get the deluge of long-winded, self-absorbed farewell emails like we used to. The Daily Mail reports that Oliver Alcock didn't take to life as a professional at PwC too well. He found the work boring and was relieved when he […]
Ed. note: Warning, there's some offensive language contained in this post.
Today in potential career limiting moves, we have a prospective PwC intern being accused of creating a bunch of “sock puppet” Twitter accounts to hurl bigoted tweets at high school football recruits.
The US Supreme Court has agreed to review an insider trading case involving a man who used his brother-in-law's position as a banker at Citigroup to make more than $1.7 million. The Court's decision could redefine insider trading and could possibly make it more difficult for the SEC to prosecute insider traders who pass information […]
A judge in London sentenced a former EY employee to four years in prison for filming more than 3,500 people "in bedrooms and bathrooms in his own home, shower rooms and lavatories at his work place and bathrooms in a large number of coffee shops in central London." George Thomas started his little hobby in […]
Here's one those fraud cases I just can't get my head around. Sean Weaver, 33, a former principal with Ryan, LLC pleaded guilty today to a $20 million tax scheme. He ran the whole thing by himself out of the firm's transaction tax practice group. The FBI press release states that he was in charge […]
If you were a CPA who testified in the trial of two NYPD officers dubbed the "Mafia Cops," no one would doubt you if you said, "I could never ever, I will never ever, be a CPA again." After he was busted for stealing more than $5 million from his clients, New York accountant Stephen […]
Over this long holiday weekend, if you decide to hatch a plan to trade on non-public information here are a few tips to keep the Feds off your tail for a couple of extra weeks1 until your inevitable capture. Your “golf-coded emails” aren’t clever Sean and Robert Stewart are a father-son insider trading duo charged this […]
A young man has just pledged his #loyaltEY to EY in a creative way. We aren't sure how else to explain it, really. I guess you just have to see the tweet. @EYMichael @EYLisaT @EYKates #selfie #selfEY #ihadtodoit #noregrets #yolo #HEADSTART pic.twitter.com/lnNkvnzE9O — T (@TheThomaToshi) July 24, 2014 Well, I guess it could be […]
Have you been entertaining the thought of giving the spreadsheets a rest and offering your support to a known terrorist organization? For those with their hands up, you might like to know that ex-PwC senior manager Sabirhan Hasanoff opted for this route and it has not gone so well. He was found guilty last June of supporting al-Qaida […]
With full-time personnel already on notice, E&Y figured any interns not already familiar with insider trading should be made aware that material, non-public information about a client should not be used to trade securities. Nor should you pass it to your golfing buddy, local jeweler, or connection for hard-to-get concert tickets. A tipster sent us […]
Perplexed by corporate fashion dos and don'ts? Need remedies for comp/bonus anxiety? Are you an auditor that needs a go-to quip for those relatives who want help with their taxes? Email us your questions and we will answer them in order of stupidity. I have an upcoming interview at a large firm, but in one of […]
Like when you've been telling people that you also have a computer science degree, when in fact, you don't have a computer science degree (at least in the traditional sense) and then someone – in this case, Third Point founder Dan Loeb – sorta notices: May 3, 2012 Board of Directors Yahoo! Inc. 701 First Avenue Sunnyvale, […]
It's so sad to read these stories but I am convinced this is a real person and not some made up front for the conspiracy against for-profit schools: I attended DeVry University for over two years. However, in 2010, I had to drop out because I was told that I was going to go over […]
Last week, we tried to get the ball rolling on Ernst & Young compensation rumors and while some may chalk up the lack of chatter to “PwC sticker shock,” others claim this is simply standard operating procedure. If you remember last year, eventually Ernst & Young reported some impressive raises that kept pace with P. Dubs but one of Turley’s troops is expecting the worst this year and would like to give a partner a piece of his mind. Unfortunately, he isn’t sure how to do it:
By way of introduction, I am a loyal reader of going concern as well as a big four slave in the audit practice. Slavery had begun four years ago at EY and with all the compensation talk going on at other big four firms, I can’t help but to think –
What is a tactful way of telling a partner during the comp talk, “well thank you for that oh so very generous double digit percentage raise (assuming if it’s even double digit), but I am still unhappy because even after this supposed raise, you are still not paying me jack for the amount of contribution and commitment that you demand from me.”
As noted above, I’m a second year senior from an east coast office and my base is still not breaking mid-60s. Seriously, what the f___?
I will be forever grateful if you post my question up for discussion. Thanks so much!!!
Angry EY audit senior
There are various directions we can take here so I’ll try to cover a few options before turning it over to you all.
A. Start off with a variation of, “Look, I’m an ungrateful, bitchy auditor. I also have unrealistic expectations and an inflated notion of my self-worth. I’d really appreciate an explanation as to how you can reconcile these traits to this paltry 10-15% raise.”
B. Continue with the slavery narrative.
D. Simply ask if E&Y’s raises will beat PwC’s.
Now you may not think these are “tactful” ways to have this conversation but he did sign, “Angry EY Audit Senior.” If I tried to reason with this person, I’d be doing him a disservice. And when is honesty ever not tactful? If you sugarcoat your frustration, the partner will assume you’re a pushover like everyone else. My guess is most partners want you to give it to them straight. If you’re a performer (and something tells me you think you are) than this partner doesn’t want to lose your talent.
Having said all that, not everyone can muster up the courage to ditch the filter in these meetings. If you’ve got better more practical ideas than what I’ve listed, feel free to bestow your sage advice below.
~ Update includes statement from Ernst & Young.
~Update 2 includes statement from Claudius Modesti, PCAOB Director of Enforcement and Investigations
Today in obscure accounting oversight board enforcement actions, an Ernst & Young Manager in the Boston office was censured by the PCAOB for repeated violations o y to Cooperate with Inspectors, and Auditing Standard No. 3 (“AS3”), Audit Documentation.
The violations occurred when 27 year-old Jacqueline Higgins “(1) added documents to the working papers without indicating the dates that documents were added to the working papers, the names of the persons preparing the additional documentation, and the reason for adding the documentation months after the documentation completion date; and (2) removed a document from the working
papers after the documentation completion date.”
The timeline goes like this: E&Y was given notice by the PCAOB that an inspection of the unknown company’s audit was being performed on March 30, 2010 and the partner, senior manager and manager on the engagement were given notice on March 31, 2010. The inspection fieldwork was set to begin on April 19, 2010.
On April 5th, the three Ernsters began preparing for the inspection and that’s when problems started cropping up which led to more trouble. The order has the details:
First, Respondent reported to the Engagement Partner and the Senior Manager that a “Review Procedures Memorandum” was missing from the external working papers. The Engagement Partner and the Senior Manager directed Respondent to create and print out the missing document, and to backdate the document to November 30, 2009. The Engagement Partner and the Senior Manager directed Respondent to backdate her sign-off on this working paper to November 30, 2009, and to add this document to the external working papers.
17. Second, Respondent reported to the Engagement Partner that the tie-out of the financial statements contained in the external working papers was performed upon a pre-final set of financial statements. The Engagement Partner directed Respondent to remove this document from the external working papers, and to replace it with a newly created document which tied-out the final financial statements, and which the Engagement Partner directed Respondent to backdate to November 2009.
18. Third, Respondent reported to the Engagement Partner that the Average Forward Foreign Currency Contracts Calculation (“A3a Working Paper”) was missing from the external working papers. The Engagement Partner directed Respondent to gather the missing document, backdate it to November 2009, and add it to the external working papers.
19. Finally, Respondent reported to the Senior Manager that three checklists were missing from the external working papers. The Senior Manager directed Respondent to assemble the missing checklists as a single document (“HH6.8 Working Paper”) and to backdate her sign-off on this working paper to November 2009. The Senior Manager directed Respondent to add the document to the external working papers. The Senior Manager and Respondent reported to the Engagement Partner the facts and circumstances related to the creation of the HH6.8 Working Paper, and the Engagement Partner took no steps to cause the document to be properly dated, or to have it removed from the external working papers.
So those are the wonky details. Where this particular story is most interesting (in our opinion) is that Ms Higgins was, prior to this little mishap, on the fast track. According to the order, she graduated in May of 2005 and started with E&Y in September. She was promoted to senior associate in October of 2007 and then promoted to manager in October of 2009. Now, perhaps she was an audit-savant or perhaps not but in just over four years, she was a manager, which is a much quicker pace than usual.
Granted, she was still under the supervision of the senior manager and partner on the engagement but a young manager nevertheless. Now, you might be asking yourself, “what about the senior manager and partner? Are they getting their wrists slapped?” Conventional wisdom tell us, “absofuckinglutely” but the PCAOB isn’t saying. We were told by a spokesperson that the Board cannot comment on any other action related to this case.
As far as what a censure by the PCAOB actually entails, we were told that “It is an official reprimand from the PCAOB.” Some might call it a wrist slap but we’re damn sure you don’t want that in your file when you’re 27 years old. The action also states that Ms. Higgins was removed from the engagement in July 2010 and “at that time Higgins ceased participating in issuer audit engagements.”
Messages with E&Y spokesperson Charles Perkins and A message left with an attorney for Ms. Higgins were not immediately returned.
Ernst & Young has issued the following statement:
Our firm policy clearly prohibits persons from supplementing audit workpapers in circumstances like those described in the disciplinary order. When we determined that firm policy had been violated, we put the three individuals involved on administrative leave and subsequently separated the partner and senior manager. We have advised the PCAOB of these facts and have cooperated fully with the PCAOB throughout its investigation of this matter.
Based on the above, you might conclude that more disciplinary action will be coming from the PCAOB but like we said, they’re not talking.
UPDATE 2 – circa 3:30 pm: Claudius Modesti, PCAOB Director of Enforcement and Investigations, explained the seemingly light punishment in an email to Going Concern:
As to the censure, under the facts and circumstances, the censure is appropriate given Higgins’ relatively junior position on the audit team and her overall role in the conduct. We also considered the fact that she settled the matter without requiring the Board to commence litigation, which would have been nonpublic as required by the Sarbanes-Oxley Act.”
It was then explained to us that the PCAOB has never explained a disciplinary action in this way: “We also considered the fact that she settled the matter without requiring the Board to commence litigation, which would have been nonpublic as required by the Sarbanes-Oxley Act.”
If that’s not quite clear, consider this: It is significant because, had Ms Higgins acted in the alternative (i.e. not settled), litigation would have been necessary and no one outside of the PCAOB, Higgins, her lawyers and E&Y would have known about the proceedings. Granted, it’s fairly common for lighter disciplinary action to result from a settlement but it also makes sense from a PR perspective (not to mention, transparency and investor protection) if the PCAOB can actually announce that they are taking action against people who break the rules. Part of the challenge the Board has faced is convincing anyone that they have teeth.
It will be interesting now to see if the senior manager and partner follow the same track as Ms. Higgins and how the PCAOB will respond to their cooperation (or lack thereof).
In case you hadn’t heard, Miami has been in the news this week. It is the new home of some rich dude who may or may not be the biggest egomaniac in sports.
HOWEVER! What’s more important is that we read that the decimated real estate situation in downtown Miami – you know, all those luxury condos on one bought – might be turning around and it’s due to, in no small part, to a plethora of Deloitte employees infesting the towers:
Brandon Klein has done what few Floridians can: go weeks without driving his car.
The 26-year-old tax accountant walks three blocks from his condominium tower on Biscayne Bay in Miami to his office at Deloitte LLP. On weekends, he and his friends hang out on the pool deck or share a cab to a local Irish pub.
He lives in Downtown, a neighborhood where young people are renting condos built during the 2004 to 2008 boom to attract second-home buyers. Thanks to the housing crash, Klein and two roommates pay about $900 a month each for an obstructed waterfront view, a wraparound balcony and access to a gym, spa and steam room.
“Five years ago you wouldn’t have kids fresh out of college living in luxury like this,” said Klein, sitting in front of the 24-hour concierge in the three-story lobby of his building at 50 Biscayne Boulevard, coordinating happy-hour plans by text message. His friends are concentrated in nearby Met I, which has 447 luxury units and a steakhouse on the first floor. They refer to the building as “Deloitte Dorm” because it’s home to so many employees of the accounting and consulting firm.
We understand that ‘BergBW has certain journalistic standards that prevent it from explaining the ‘Dorm’ aspect of ‘Deloitte Dorm’ so we’ll be glad to elaborate.
Chances are most of Green Bloods living in the Deloitte Dorm are around Brandon Klein’s age so it’s likely that there is activity going on that you would normally find at a national training. This means people passed out in the lobby, lots of awkward accountant sexual advances and the occasional drop-in by Barry Salzberg or some other “adult” to remind everyone that they are representing Deloitte.
In any case, if there’s a ‘Deloitte Dorm,’ then there are certainly other Big 4 buildings in the area which is a pretty sickening thought.
Miami’s Downtown Comes Alive as Condos Fill With Young Renters [Bloomberg BusinessWeek]
Many of you probably consider yourself to be ambitious. You have aspirations of riches and success in the field of accounting that the likes of Arthur Andersen dared not dream of. You’re a game changer. The profession won’t be the same after you’re done with it.
But Yasith Chhun of Long Beach, CA could not be satisfied with simple pleasures like titles such as Partner or CFO and fabulous wealth simply would not be enough. His life goals were far more lofty than a simple title, salary or home with a three-car garage on a golf course. This was about a revolution!
A California accountant was sentenced to life in prison Tuesday in Los Angeles for orchestrating a failed attempt to overthrow the Cambodian government in 2000.
Yasith Chhun, of Long Beach, was found guilty in 2008 of three counts of conspiracy and one count of engaging in a military expedition against a nation with which the United States is at peace.
Chhun is a U.S. citizen of Cambodian descent who helped lead a handful of rebel fighters in an attack of government buildings in the country’s capital of Phnom Penh. Three of the fighters were killed, and several police and military officers were injured.
Prosecutors said Chhun planned the coup over two years, traveled to the region to assemble a rebel force and held fundraisers for the operation.
So unless you’re willing to engage in guerrilla tactics in order to topple an entire nation that’s friendly with the U.S., we don’t ever want to hear about your career path.