FB4 firms like "hot topics" which translates into, "potential ways for making boatloads of cash".
Sarbanes Oxley was a hot topic. Now it's part of the routine. The Firms Madoff made off with their boatloads and now that all clients are all SarbOx legit, they're saying, "We'd like to revisit our audit fee" or in the UK, "lower your bloody audit fees you greedy wankers".
The new moneymaker is IFRS conversion. The push to conform to international standards came courtesy of the crack squad of regulators at the SEC under Bush 43. The target date was 2011, which everyone should have known was a joke since it took 12 years to roll out IAS 39.
Before my trip to the gallows at KPMG, trainings on IFRS were getting more and more common. Partners were talking to their clients early and often about getting all over this IFRS convergence like stink on a monkey.
The word on the street is that partners are drooling over the thought of engagement teams billing 40 hour weekends to cope with the complexities of IFRS conversion.
But now there are some problems. The pesky FASB is saying it'll be 10-15 years before convergence will occur. The new gang at the SEC isn't pushing IFRS like its predecessors.
Plus, CFO's in the States aren't too keen on the idea of getting this pulled off in 2 years, they know that the FB4 are going to bleed them out for the convergence, and, oh, there's talk about a financial meltdown or something that's making things complicated.
Not to worry though, FB4 partners are a crafty bunch. There will no doubt be more scheming to be had. They don't really have a choice, as one of my friends put it, "partners will take a free lunch these days".
I'm quite certain that this could not have been an auditor/tax professional as it probably would have required actually leaving work, which we all know, rarely happens at E&Y, KPMG, et al.
If, it turns out, this person who got the Wilbur flu had left the office and accordingly acquired said flu, I'm sure we'll be reading about her dismissal in the next few days.
...Or Jack Bauer will attempt to get a clue from her about who infected her with the virus only to have her die immediately at the point when she's about to confess to her involvement in the development of a swine flu bio-weapon after a little coaxing from Agent Bauer.
You may now return to your regularly scheduled swine flu coverage.
So the FB4 is begging, nay, pleading for protection from the British government because a "blockbuster lawsuit" could put one of them right next to Arthur Andersen in the auditor graveyard.
Ok, so we've all gotten used to large companies asking the government for things but this new low in corporate pan handling is especially pathetic.
"[A lawsuit] could trigger the collapse of the audit market and cause chaos for business". Ok, so now the audit firms think they are too big important to fail?
So the usual suspects provided flimsy pieces of paper that state that they performed procedures (on a test basis) to ensure that the financial statements were in accordance with GAAP. Oh, and that small bit about how there was nothing materially misstated on said financial statements.
Welllllll, it turns out some pretty important stuff wasn't in accordance with GAAP and the financial statements were materially misstated when the super-duper auditors said they were a-ok. Now they want the government to protect them so they can continue to suck at their jobs.
It's hardly a surprise that Deloitte takes exception with the PCAOB's most recent inspection report. Would you expect them to say: "Gosh, PCAOB, you're right. We've made lots of mistakes. Thanks for pointing them out to us."?
Audit partners don't concede to making mistakes or being wrong. They just don't. You can ask any controller or CFO out there. All they have to do is say, "If you don't agree with us, we'll slap a material weakness on your ass."
Best quote from the report is: "Those deficiencies included failures by the firm to identify or appropriately address errors in the issuer's application of GAAP, including, in some cases, errors that appeared likely to be material to the issuer's financial statements" (emphasis mine).
Oh, and this: "The PCAOB inspectors concluded that in some instances, Deloitte had not gathered enough evidence to support its audit opinions." (Emphasis mine again)
Bloomberg is reporting that Nancy Pelosi is going to "push for a comprehensive inquiry" into the causes of the collapse of Bear Stearns, Lehman Brothers, and Merrill Lynch because "three-quarters of Americans " want to know.
So let me get this straight: 225 million people want to know what caused the failure of these firms and that will help them how exactly?
Oh, I know: NASCAR Dads and Stepford Wives will definitely be watching the hours and hours of interrogation by politicians like Maxine Waters and then Goldman Sachs conspiracy will gain some traction.
It will come as no surprise to regular visitors of this blog that I absolutely detest small talk, a common form of dialogue for inhabitants in the corporate world and almost universally spoken among accountants. What I haven't discussed in detail is an advanced dialogue that is spoken by many, understood by some, and baffles all that come into contact with it: reversespeak.
For you scholars out there, yes, this is an Orewellian derivative, however, I'm hardly the first to utilize Orwellian influence. Mr. Orwell has turned out to be right about so many things that it's becoming increasingly cliche to reference the dystopia in the literary classic. But I digress...
The folks at Stuff Accountants Like have addressed this in some form (link below). The purpose of my post is to actually start an increasing body of analysis of this language. The more information that can be spread will no doubt be helpful to those professionals still in practice so they can avoid potential pitfalls as a result of not being familiar with reversespeak.
Reversespeak is incredibly difficult to follow and can it can be turned on and off by the speaker at any time. A hypothetical exchange appears below. See if you can see who is utilizing reversespeak:
Manager:Good morning hard working associate!
Associate:Uh, hello manager.
Manager:Have you had a chance to finish up that project that I assigned to you?
Associate: You mean the one you first told me about last night around 8 pm and is logistically and substantively complex?
Manager: Yes. That sounds right.
Associate: No, I haven't started on it yet
Manager: That's OK. I don't really expect you to work on the weekend or be able to go back in time and complete the project prior to me even asking you about it.
Associate:Uhhhhh....OK?
Manager: Oh, and don't worry. This won't come up in your project assessment either. It's really not that important.
Can you pick out the person using reversespeak? This may come as a surprise to you but it was......The Manager. I know, hard to believe.
Let me just translate for those of you that are not fluent in reversespeak:
Manager Statement #1: Good morning hard working associate!
Translation #1: What time did you get in to work today? Have you done a damn thing?
Manager Statement #2:Have you had a chance to finish up that project that I assigned to you?
Translation #2: Why isn't the project I assigned to you done?
Manager Statement #3:Yes. That sounds right.
Translation #3: Of course that's the project. Do you speak English?
Manager Statement #4:That's OK. I don't really expect you to work on the weekend or be able to go back in time and complete the project prior to me even asking you about it.
Translation #4:This is unacceptable. I expect you to work on the weekend or go back in time and complete the project before I even ask you about it.
Manager Statement #5:Oh, and don't worry. This won't come up in your project assessment either. It's really not that important.
Translation #5:You better be worried because this is sure as hell going into your project assessment. It's really an important project.
Identifying those who use reversespeak can be difficult as users of reversespeak all have their own style. Some use it as a form of sarcasm. Others use it as a way to hide their actual contempt for a particular person or thing. Others still, just because they are compulsive liars and don't really know what the truth is.
Proceed with caution when engaging someone who is a common user of reversespeak. In this day and age, you may end up finding yourself as a statistic if you're not listening closely.
re: The Auditors has a great summation for the methods that the FB4 are using to save money since they're playing the pity poor us card in this "tough economy". Francine also goes into why they're cutting the costs that they are cutting and how and why it's basically the complete wrong course of action
She also eludes to the ubiquitous "Stockholm Syndrome" that exists within the FB4. This is right on the money. I suffered from this myself at various points in my tenure at the Radio Station.
It's such a relief when your personal paranoia is vindicated...
Lots of commentary from all ends of the blogosphere about the end of mark-to-market accounting for the banks. Not exactly the most sexy topic that's out there but it's getting lots of ink because the clowns in Congress are pretty much blaming it for everything but the disappearance of Jimmy Hoffa.
As one commenter put it, "Blaming mark-to-market accounting for the banking sector's woes is like blaming a polar bear stranded on an ice flow for global warming."
Now the best part: God Goldman Sachs is saying that relaxing the rule isn't going to help investors' confidence in the banks anyway. SHEESH.
Throughout this whole dog and pony show, the oracles of double-entry accounting at the FASB really proved themselves to be spineless. Per usual modus operandi, Congress threatens to take a bigger role in overseeing accounting rules and the FASB gets nervous and ultimately bows to the wishes of BFrank, Bingo to the Max, and Ed Perlmutter, who introduced HR 1349 which would form the Financial Accounting Oversight Board, which, if enacted into law, would get to whip the shit out of the FASB whenever it wanted to.
Which I guess would be necessary because when lawmakers forget about the FASB, that allows them to sit up in CT and write rules that actually reflect some transparency. Once those rules become a problem for companies that contribute money to political campaigns, then Congress gets the torches out and beancounter witchhunt is on.
Dartboard valuation seems to be a more fun way for banks to figure out what pieces of paper are worth anyway.
Sphere: Related Content
Reuters and Financial Week are both reporting on New Century's (or what's left of it) lawsuit against KPMG that was filed today in Los Angeles and New York. The plaintiffs are seeking $1 Billion in damages.
One highlight mentioned is an excerpt from an email that the engagement partner sent to a specialist working on the engagement, “As far as I am concerned, we are done. The client thinks we are done. All we are going to do is piss everybody off.”
This was sent the night before the 10-K was to be issued. This is not a surprising statement or situation for anyone that has worked in a FB4 atmosphere. Integrity at its best people.
Not sure what's going to come of this but you'll be sure to get updates.
