Well gang, the Sue Sachdeva circus has come to an unspectacular end. S-squared pleaded guilty yesterday to the $30-odd million embezzlement at headphone factory Koss. No trial, no media circus (the type we envisioned anyway) and no spectacular cross-examination that could have resulted in a great Law & Order Brewtown spinoff.
Nope. Just a guilty plea, some regret from Suz and the distinct possibility that something might not be right upstairs. Although the MJS reports, “when asked whether she had any mental health issues. [Her attorney, Michael] Hart answered for her, saying there were no issues of mental health that prevented her from understanding the government’s case or the plea agreement,” her statement alludes to some “issues” that led to the thieving:
So while the Sachdeva portion of this program is more or less over (sentencing is October 22), we still have the Koss v. Grant Thornton blamestorming to look forward to. Which will be a for more nerdy exchange but could result in some fun finger-pointing, nonetheless.
Sachdeva pleads guilty, says she regrets fraud [Milwaukee Journal Sentinel]
Hard to believe that it’s been nearly two weeks since we first wondered out loud about the waning patience at GT. From the Blagojevich Circus grounds:
GT is releasing salary info across the US this week. Can we get a thread going about it?
Preliminary reports are looking bleak, per the last thread’s comments, including
Just had my fears confirmed…comp adjustments will be throughly disappointing. So much so that the partner charged with communicating those adjustments is stressing. That’s a great sign, right?
a 5% raise and i am a 4 overall. grant thornton can watch their firm progress with one less person…
I could wipe my ass with the raise I got. Actually, I better not wipe my ass with it, it may be the only I can afford bread and water
Oh. Dear. So here’s your fresh thread – spread your joy/misery/reactions to your comp news below.
KPMG’s Advisory practice will take over Grant Thornton’s Supply Chain Advisory Services practice, the firm announced today, in a deal that closed on July 16th. The purchase includes “the addition of 23 highly-skilled, experienced professionals to KPMG” and the firm will also take over the existing projects “at select Fortune 500 companies.”
This is certainly appears to be a nice little boost for KPMG’s Advisory practice clear whether this will be a big part of the advisory practice or an area for potential growth in jobs and revenues, TPTB seem pretty excited about it (see boilerplate after the jump).
But we think the more interesting aspect of this particular deal is the strategy of Grant Thornton. Back in January when Stephen Chipman gave his first firmwide call to the troops, he discussed many things including the not so subtle warning that some people would not be “joining us on the next stage of our journey.” That’s a pretty clear message but nowhere in the message to the firm was the slightest indication given that this, dare we say, firesale would be occurring.
This is the fifth major move that we have covered involving Grant Thornton just this year. We have reported on sales of GT’s Albuquerque, Honolulu offices as well as the closure of the Madison and Greensboro offices.
This is the first sale of a practice that we have covered and KPMG is the largest firm to be involved in one of these transactions. Moss Adams purchased GT’s Albuquerque office and partners in the Honolulu office purchased the practice to become an affiliate of PKF.
Perhaps this part of the journey was too sensitive to share with the troops or maybe it was communicated in code that could only be deciphered with a secret book with all the definitions OR maybe the majority of people at GT weren’t paying attention to anything SC said unless it included the words “compensation,” “promotion,” or “bonus.” We can’t really say.
That being said, we are still hearing rumors of other office sales by GT. Nothing we’re permitted to share with you now but if you are aware of any talk about a possible sale in your city, get in touch with us. And if you’ve got thoughts or knowledge on this particular deal – from the perspective of either firm – share below.
NEW YORK, July 19 /PRNewswire/ — KPMG LLP, the U.S. audit, tax and advisory firm, today announced it has expanded its restructuring capabilities through acquisition of the Supply Chain Advisory Services practice of Grant Thornton LLP, U.S. member firm of Grant Thornton International Ltd.
The acquisition strengthens KPMG’s existing restructuring services practice in the automotive, pharmaceuticals, aerospace and defense and other manufacturing industries by expanding current capabilities in financial and operational restructuring, supply chain advisory, supplier services, technology and performance improvement. The transaction also includes Grant Thornton LLP’s Vontik software system.
“As organizations continue to reinvigorate their focus on growth, they are facing unprecedented pressures to transform their finance and operations functions,” said John Veihmeyer, Chairman and Chief Executive Officer, KPMG LLP. “This acquisition will enhance KPMG’s ability to help businesses address the four key drivers of business transformation: people, process, risk and control, and technology.”
The transaction, which closed on July 16, includes the addition of 23 highly-skilled, experienced professionals to KPMG. KPMG will also take over existing Grant Thornton LLP projects at select Fortune 500 companies.
“As the already strong demand for large scale transformation and restructuring assistance continues to grow, this acquisition helps us provide the functional breadth and depth needed by large organizations across several key industry sectors,” said Mark A. Goodburn, Vice Chairman and Head of Advisory, for KPMG LLP. “It’s also consistent with our continuing strategy to build superior large-scale transformation capabilities to serve the world’s top organizations.”
“Adding these tactical, operational restructuring and supply chain skills to KPMG’s strategic market position is a great fit, at the right time,” added Drew Koecher, partner and head of restructuring for KPMG LLP. “With the addition of this group, we broaden and deepen our client base and add to our already extensive advisory capabilities to serve businesses as they transform their business models to be successful in this new economy.”
From a voracious reader of Stephen Chipman’s blog:
GT just announced the admission of 22 new partners/principles notably 5 from NY, 5 from Alexandria and 3 from NC – 9 from audit 3 from tax and 3 from advisory
Yes, we realize the numbers don’t work but we’ve confirmed the details we’ve got. We hear there’s an email floating around out there so if you’ve got it handy, fire it our way.
UPDATE – July 14, 2010: We received a copy of Stephen Chipman’s email which we’ve presented here for your reading pleasure.
Internal distribution only
One of the highest and most visible forms of demonstrations of stewardship within a partnership come thorough admitting new partners and principals. This represents a critical underpinning for our continued vitality and success. It is within this context that we are pleased to announce the following individuals will be admitted to the Firm as partners or principals, effective August 1, 2010.
Having outstanding partners and principals is an important differentiator for our Firm in our ability to serve our clients with distinction. Each of these professionals has demonstrated their dedication to making a difference – to our clients, to our profession, to our communities in which we live and work, and to our Firm. Their commitment is reflective of personal responsibility, sacrifice, and accountability which we now pause to recognize.
Please join us in congratulating them on this significant recognition of their contribution and in wishing them continued success as partners and principals of Grant Thornton.
And here’s a further breakdown of the promotions by service line:
Global Public Sector – 5
Transaction Advisory Services – 2
Corporate Tax – 2
Audit – 9
Corporate Advisory and Restructuring – 2
Corp. Strategic Federal Tax Services
(can some demystify this acronym?) – 1
State and Local Tax – 1
And by city:
Alexandria – 5
NYC – 4
McLean – 1
Kansas City – 1
Cleveland – 1
NY – Melville – 1
Charlotte – 2
L.A. – 1
Raleigh – 1
San Diego – 1
Denver – 1
Atlanta – 1
Wisconsin (Milwaukee?) – 1
Chicago – 1
Congrats to all the new partners and principals at Grant Thornton!
Because “early July” becomes “mid-July” in about two days and some people would like to get this over with:
“Just as an update to GT’s “early july” announcement about raises. It hasn’t come yet, but some have been told that they’ll be getting promoted (I’m guessing seniors and managers) and were told that National is still trying to figure out what they’ll be.”
So you can take that as “Chipman and Co. are stuck in an epic game of Risk and can’t be bothered at the moment” or something else entirely if you like. If your anxiety level is at double-Lexapro levels or if you’ve heard something other than the earlier rumors, discuss below.
From the depths of 666 Third Ave:
In New York:
Associates look to come in at almost $10k less than they did in 2007
Senior 3’s are looking to make almost $10k less than Senior 3’s in 2007
New Managers are looking to make almost $15k less than New Managers in 2007
Senior Managers are looking to make almost $15-20k less than Senior Managers in 2007
Raises (without promotion) are looking to be:
3% for employees rated under a 4
6% for employees rated a 4 or 5
Our source indicates that these are all rumors at this point but based on the last Communique de Chipman, the official numbers should be known soon (“early July”).
In the previous thread lots of numbers were getting thrown so who knows; maybe GT is pulling a PwC and promising low, delivering high? Discuss.
Yesterday we briefly picked up the Overstock beat as Sam Antar pointed out that everyone’s favorite Salt Lake City resident got a little confused about when they knew about their gain contingency existed that resulted in some contradictory disclosures.
As you may misremember, this arose from the company for recoveries from underbilled fulfillment partners by improperly claiming that a ‘gain contingency’ existed under accounting rules.”
Now Sam has pointed us to some correspondence between the SEC and Overstock that indicates that PwC wasn’t concerned about the issue until the Commission pointed it out and succeeding auditor Grant Thornton was unmoved until Overstock brought it up:
Please tell us if, and the extent of, your auditors’ national accounting office involvement in these issues during audit of your 2008 financial statements or the reviews of your fiscal 2009 quarterly filings.
PwC served as our auditor during the audit of our 2008 financial statements. PwC has informed us that it did not consult with its national accounting office regarding the above issues when they were identified in Q4 2008 or Q1 2009. However, in connection with this response to your letter dated November 3, 2009, PwC has consulted with its national office in regard to both the fulfillment partner under billing and partner overpayment issues and based on context of this being an area that is a highly facts and circumstances based issue that requires significant judgment where reasonable parties have different views, PwC continues to concur with our accounting and disclosure consistent with its reflection of the underlying economics and our past practices of not billing or collecting for our billing errors, rather negotiating for future price concessions that were contingent on future sales.
Grant Thornton (“GT”) reviewed our Q1 and Q2 2009 quarterly filings. To our knowledge the GT local engagement team did not review these issues with its national accounting office at the time of our Q1 and Q2 2009 quarterly filings. In early October, as we prepared our response to your October 1 letter, we asked GT for its national office’s opinion. It was our understanding at the time that GT’s national office concurred that we had used an appropriate (if not preferred) accounting treatment. Only after we received your November 3 letter, did we become aware that GT’s previous “national office” opinion had in fact been an “informal request” only, and not a “formal request.”
In the case of PwC, it’s entirely possible that they just trusted that OSTK knew what they were doing and went along with it. Obviously a huge mistake. When the SEC came calling however, they moseyed through it again and rang up the accounting wonks at 300 Mad.
But the Grant Thornton engagement team, who came in after all this went down was seemingly on board with it without consulting with its own national accounting gurus even though the SEC was already on this like stink on a monkey. GT making an “informal request” of its national office on an SEC inquiry seems a little tepid.
HOWEVER! You have to remember that this is all in the words of Overstock which hasn’t always been forthcoming/reliable/truthful in its filings. Then again, maybe there’s something to this whole auditor “Yes men” thing.
Well! You might have thought that Koss would just handle this Sue Sachdeva situation like gentlemen headphonesmiths but you would have thought wrong!
Koss is suing S-squared and Grant Thornton for their respective roles in the alleged embezzlement of $31 million from the Brew Town company.