When accounting goes unaccounted for
“I’m guessing that if Mike Tyson walked into a job interview for a financial analyst position at PricewaterhouseCoopers with his half-face tribal tattoo, he probably wouldn’t be asked back for a second interview.”
~ Brie Reynolds, over at Ology, is making the assumption that the baddest man on the planet wouldn’t be able to provide the PwC Experience.
Back in April, the DOJ and SEC passed on filing criminal charges against the man everyone perceived to be the cause of the financial apocalypse, Joe Cassano.
The Journal digs into a few of the details behind the failed pursuit of criminal charges against JC and we first learn that PwC’s audit team wasn’t r ve when they were poking around AIGFP:
Auditors at PricewaterhouseCoopers, AIG’s accounting firm, felt Mr. Cassano was evasive when they asked questions as the housing market weakened that year, according to people familiar with the matter. Tim Ryan, a PwC auditor, was concerned about requests for collateral from Goldman Sachs, which had purchased AIG’s derivatives contracts. He believed the requests were an indication the value of the swaps needed to be lowered and that further collateral calls were likely, people familiar with the matter said.
In interviews in 2008, Mr. Ryan told prosecutors he sometimes couldn’t get straight answers from Mr. Cassano when he asked him to justify how AIG accounted for the swaps, these people said. Through a PwC spokeswoman, Mr. Ryan declined to comment.
Okay, so Cassano was a prickly guy. That’s no surprise, especially since the lion’s share of people that have to deal with auditors, dislike them based purely on spite. Regardless of that factoid, it irks auditors to no end when they have to deal with an uncooperative client.
Cassano’s attitude was noted by prosecutors and this led them to believe that maybe he was withholding information from PwC and the AIG brass about the shitstorm that was growing at AIGFP:
“Why would he do that?” said Jim Walden, one of Mr. Cassano’s attorneys. Mr. Cassano had no reason to hide key facts because he knew the year-end audit was approaching and the unit’s books would be examined.
“He was smart enough many times before” in surviving prior problems, Mr. Pelletier retorted. “He thought he could pull a rabbit out of the hat” and turn things around.
In meetings spanning several weeks in Washington, the defense team rebutted the prosecution’s allegations, presenting a version of events that portrayed Mr. Cassano as repeatedly disclosing bad news to his bosses, investors and PwC.
The defense team didn’t know it at the time, but its efforts helped focus prosecutors’ attention on an obscure set of handwritten notes in their files, found scrawled on the bottom of a printed spreadsheet.
Prosecutors had seen the annotations, which were made by a PwC partner at a meeting with Mr. Cassano and AIG management a week before the key December 2007 investor conference. But the strange hieroglyphs from the world of financial derivatives were hard to decipher and ambiguous enough to support several readings.
Some of the broken phrases that could be made out: “Cash/CDS spread differential,” “need to quantify” and “could be 10 points on $75 billion.”
At this point, prosecutors knew that the jig was up, regardless if started out as a good jig or not. As much as they wanted to pin the near death experience of the financial world on this one shifty (and easily unlikable) guy, they couldn’t. The fact that no one that was at the meeting in Dec. ’07 could remember anything, “According to people familiar with the matter, no one at the meeting—including the author of the handwritten notes—recalled Mr. Cassano disclosing the magnitude of the accounting adjustments he was preparing to make,” certainly didn’t help matters. Especially since, for all we know, the partners’s chicken scratch could have been a recipe for pineapple upside down cake.
And after failing to nail Matthew Tannin and Ralph Cioffi back in November of ’09, the feds could hardly go to trial on such shaky ground. Sigh. OH well! Can’t always catch the (perceived) bad guys!
From the mailbag:
I heard some scoop and wanted to share with my fellow indentured servants in the big 4 field. Word on the street is that P-dubs gave 10% raises to staff 2s becoming senior 1s (early promote) and 16% raises to staff 3s becoming senior 1s.
However, P-dubs doesn’t hand out the 5k bonus that Uncle Ernies offers to its staff 2s becoming senior 1s. I’d like to see how EY will top this, per an earlier promise from a partner that EY raises will be higher than P-dubs (maybe can some low performing partners?). In addition, the variance between average performers and high performers at P-dubs is only .6% (not significant at all).
If you forgot what this is referring to, back in April we reported a tip out of the Ernstiverse that a partner had claimed that the raises at E&Y would beat PwC’s. The reports out of PwC have been better than expected, although not for everyone.
So if this partner’s prognostication holds up, how will they pull it off down the stretch? Seems like a good question. Conversations are going on right now and the official news will reportedly be out in a couple weeks.
Since we’ve got half of the Big 4 involved here we’ll just mention that the belly aching at KPMG is in full force on the bonus front but maybe there’s hope for a strong move down the stretch?
As for Deloitte, apparently communication has occurred for promotions but it sounds like word on comp could be more than a month out. If you’ve got the scoop get in touch with the details and discuss this four horse race but as it stands right now, it looks as if PwC has E&Y by a nose.
It’s been a couple of weeks since we reported on the alleged incident at a PwC happy hour that involved a drunk (or roofied, depending on who you ask) partner who made his fondness for an associate known only to follow it up with a knuckle sandwich (we’re picturing a right cross).
Well, we decided to check in with a source down in H-town to see if there was any blowback from this whole situation.
I heard that PwC wasn’t going to do anything because of his client relationship and only offered the guy the chance to get off the job.
Well! Not exactly what we expected hear and we decided to check things out. Through a friend of capable means, we were able to verify the partner’s employment with the firm.
So then we emailed PwC spokesman Jon Stoner again about the incident but we have yet to hear back. Then we called the partner-in-question and left him a voicemail, asking very nicely to call us back. So far, he hasn’t returned our call but there isn’t any evidence by his greeting that he has left the firm.
So…you can see the conundrum here. What are Houston assurance associates going to do if they can’t drink beer on company dime without fearing a punch in the mouth (and possible getting an unwanted tongue down their throat)? Spend their own money? God forbid. If you know more about this, get in touch.
UDPATE: Just a few more details to share with you – we’ve heard from multiple sources that there were multiple kissing incidents at the happy hour. So while it sounds like more love (albeit unwelcome) was being spread than violence, that doesn’t mean you should be risking the invasion of your personal space for a few cocktails.
“How can any self-respecting attorney still argue – and any lucid judge still believe – that PwC’s global firm is not just a sham legal construct, an artificial vehicle for the strongest member firms to control and potentially exploit their weaker ones, all under the guise of ‘improving quality and seamless delivery to multinational clients…’ ?”
~ Francine McKenna still isn’t buying it.
Christ, guys! PricewaterhouseCoopers thinks it’s nice that you’re trying to turn the entire accounting world upside down since you decided the BSDs at the G-20 were serious about this June 2011 deadline.
But then you admitted that it can’t be done and it turns out they (or the SEC) don’t give a rat’s ass. For some reason, you’re still committed to getting the job done by the end of 2011 and PwC would like you take it easy.
For starters, everyone knows that the world is ending in 2012, so this is really a futile exercise. Secondly, you’re really not being rational about the whole thing. Your gusto is admirable but you’re looking like the kid that reminds the teacher to assign homework. KNOCK IT OFF:
PricewaterhouseCoopers Calls for Slowing Down Pace of Accounting Standard Setting
NEW YORK, July 8 /PRNewswire/ — PricewaterhouseCoopers, responding to the Financial Accounting Standards Board’s (FASB) and the International Accounting Standards Board’s (IASB) ambitious agenda to complete about a dozen new accounting standards (about half of which are major projects) by the end of 2011, said the current timeline is not sufficient to produce standards that meet the boards’ high thresholds for quality.
Mike Gallagher, PwC’s U.S. National Office Leader, said, “it is of utmost importance that adequate time be given to complete an effective, thorough analysis of the accounting, business and operational impacts of the proposals.” Gallagher added, “given the boards’ missions of issuing high quality standards, we believe the proposed timeline will need to be further extended to allow for appropriate due process.”
In a Point of View article released today, PwC said it fully supports an aggressive timeline and the goal of attaining a single set of high quality global standards. Yet, the firm also expressed significant concern that the current pace of standard setting does not provide enough time for companies to fully analyze the proposals and respond comprehensively. In the article, the firm’s leadership called upon standard setters to “reevaluate the current timeline and set more reasonable expectations.”
Explaining the firm’s concern about the ambitious timelines, Gallagher pointed out that “even the largest of companies won’t have the resource bandwidth to properly evaluate and respond to so many complex standards in such a limited period of time.”
The projects underway by the FASB and IASB to improve both U.S. generally accepted accounting principles and international financial reporting standards are part of a wider goal to converge U.S. and international standards in key areas.
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.
We received a tip early last week that will could make you think twice about attending the next PricewaterhouseCoopers happy hour, or at the very least, keep your eyes open for the attendees that have clearly drank themselves blind.
Our original tipster told us the following, “You should look into a PwC male partner punching a male associate at a going away happy hour in Houston, TX. Allegedly, the story is the partner got drunk, walked up to the male associate and said “I know you want to kiss me” proceeded to kiss him on the lips and then pushed and punched him.”
Well! That sounds like a helluva party. We’ve heard of partners bullying other partners before but this is a new one.
Before we go any further, we should note that while we did learn the name of the partner in question, we’re withholding the name of the person at this time since we have yet to confirm the incident first-hand with an eyewitness to the events. If you were there and can confirm these events, including whether it was a left jab or round-house uppercut and whether it was a peck or a sloppy make out attempt, email us and tell us what you saw.
Okay. So, our source proceeded to tell us that the partner had been placed on the probation and didn’t acknowledge the event for several days saying, “he didn’t remember anything that happened because the engagement team brought drugs to the happy hour.” Fairly standard black-out excuse.
Anyway, we checked on this rumor with a source in PwC’s Houston office who told us the following:
A fellow associate of mine was at an audit happy hour last Friday and he said something along the lines of “things got really, really crazy.” And he wouldn’t tell me what he meant by “really really crazy.” I guessed table dancing / hooking up, but he said no, it wasn’t like that.
Luckily for all us, our source did end up talking to the witness and told us:
I talked to my friend — he could neither “confirm or deny the events” ; however, from talking to him, it sounds like the rumor is true. Per my friend, the “issues are still under investigation by the Firm.” So its all very hush hush evidently. The client is a high profile one, so I’m sure people are being very, very careful to not let the gossip spread if it all possible.
With all this, we thought we’d better call this partner up to see what’s what. We called the Houston office, requesting the partner in question (“PIQ”) and after a pause by the receptionist, we were connected. Expecting the typical partner buffer of an admin to answer, we were surprised when the he answered. We politely introduced ourselves and asked about “an incident that happened at a recent happy hour where your name came up.”
The PIQ immediately interrupted, “I’m not allowed to discuss anything about that. Thank you very much.” and promptly hung up the phone.
We tried getting in touch with PwC spokesman Jon Stoner to see what he knew about this alleged make out/fisticuffs situation but he has yet to return our phone calls or emails. If you’ve got more details on this story, get in touch with us and we’ll update the post if we hear anything more.
It’s raining bonuses and raises over at PricewaterhouseCoopers these days. Unfortunately, all I’m seeing are news tips (monetary tips or buybacks at the bar are always appreciated). All of my sources are from the NYC office, so if you’re elsewhere in the country, please share your numbers in the comments below. Here’s what we know so far:
• Advisory/Consulting senior associate received a raise north of 18.5%. No, that is not a typo. So in the advisory practice it’s safe to assume the spread is 0% to 19% for raises this year, with the average being about 6% as reported by Caleb earlier.
• A recently promoted associate to senior associate in advisory received a 10.5% raise and a $3,000 bonus.
• Tax bonuses are being handed out now as well. Size matters in this instance, people. Cough up the details below.
This indicates that resources are being spent on what is being determined to be the right people in the right practices. Average performers should expect to receive 4-6% and take it to the bank.
Audit people, what are your numbers looking like? Email us or post your comments below. Practice/office/level are always appreciated
Thanks to everyone that is sharing information. Enjoy the weekend.
As if PricewaterhouseCoopers hasn’t been popular enough around the GC community, I received the following letter from an Advisory practice leader out of their New York City office yesterday:
You know what it takes to succeed here. Smarts. Flexibility. Teamwork. Excellence. Leadership.
Sounds more like a description of the US Soccer team, no? My emphasis and notes below.
That’s why we’re turning to you to help us find our next new hire, that future teammate, a qualified colleague. And, beyond the reward of perhaps having a friend work here and enhancing our level of talent, we’re making it more worthwhile to recommend a friend by temporarily increasing the referral bonus for client service p sue our growth goals and win more work, our staffing needs are growing too.
In Advisory, our business continues to grow and we need the right talent to fill the dynamic and challenging positions we have open to support our continued growth for the remainder of the year and beyond. As we communicated to you, we recognize the need for additional resources in many areas of our practice. Referring qualified candidates has always been one of the best sources of candidates for us, and an important way you can help.
Refer someone you know for a client service position, and you can earn up to a $6,000 referral bonus if they accept the position, depending on the level of the position, from June 14 through September 30. Asking you to help is just part of our push to find new ways to bring talent in faster and through different channels.
So, take a minute and think about people you know from your professional and personal networks. Use LinkedIn or Facebook to connect with a former colleague, a friend, or someone you volunteer with who has the skill sets we need. We all know people who could achieve personally and contribute to the success of the firm, whether in our line of service, or in another. (And, we could all use a little spending money.)
Not sure you want to comb through all your contacts? You may want to think again. As additional incentive, for client service referrals, you’ll:
§ Receive a $100 American Express gift card for any client service referral who is submitted between June 14 and September 30 and interviewed for a position other than partner or principal in any line of service other than IFS [Internal Firm Services] by October 31, 2010. These will be awarded on a monthly basis after the interview takes place.
DWB: Tell your buddies at other firms to apply, interview, and take you for $100 worth of drinks.
§ Be entered automatically into announced prize drawings for each new client service referral who accepts a job offer (other than as partner or principal) for the position which you referred them in any line of service other than IFS. And these aren’t just any prizes: the first drawings will be for $15,000 or one of four iPads, per line of service of the referrer. There’s no limit on how many acceptances gain you entry, either — so if you refer three new people who accept the client service job offer for which you submit them, you’re entered into the drawing for your line of service three times (though you can only win one prize per drawing).
DWB: Uhhhh. So you can win either $15,000 or an iPad? Fifteen THOUSAND dollars or a personal computer? What pains me is to see the money they are throwing at this process – surely one would assume PwC has an internal recruiting team to fill these needs. Right?
Wrong. My source was kind enough to check their internal job directory, and there are multiple experienced recruiter positions for the Advisory line up for grabs. This makes sense, as these glorified internal “head hunters” are cut early on when times get tough (no sense having recruiters when there is no need for new personnel). These roles were probably canned in 2008 or ’09 when the Advisory sector was bleeding resources.
So get on the horn, PDubbers – call up your friends at the other public accounting shops and cash in on this opportunity.
PricewaterhouseCoopers understands that their employees have big dreams. But if those dreams come crashing down into a heap of flaming shit on the doorstep of your life that they’ll be there for you when you have nowhere else to turn.
Case-in-point, Danny Brannagan is a football player. A Canadian football player. And he has a dream to play in the CFL for the Toronto Argonauts. He also has an opportunity to realize his dream to become an auditor for a Big 4 firm but PwC is accommodating his desire to be a tackling dummy until his knees need replaced:
[PricewaterhouseCoopers] is willing to wait while the young quarterback sees how far his skills can take him in the Canadian Football League.
“They (PricewaterhouseCoopers) understand I have a limited window to participate at a high level in sports and they told me to take advantage of that,” the Queen’s graduate said on Wednesday.
Brannagan will get to experience the life of a CFL quarterback while on the practice roster, but more importantly continue to develop the skills that helped him take Queen’s all the way to a CIS title in 2009.
“It will give me an opportunity to learn and develop as a quarterback, get used to the system and get used to the professional aspect of the game,” he said.
Brannagan will be paid the handsome sum of $500 a week while on the practice roster, which is undoubtedly less than he would be making at PricewaterhouseCoopers, even at an entry-level position.
“I don’t know if it’s a sacrifice, necessarily,” Brannagan said.
“PricewaterhouseCoopers has been very accommodating. They have allowed to me to have a flexible start date there. I don’t necessarily look at it as giving something up as much as I’m postponing a career after football.”
Argonauts head coach Jim Barker was thrilled to be able to accommodate Brannagan on the practice roster.
“It’s a lot better than working for an accounting firm,” he said half-jokingly.
$500 a week to get crushed by the defensive starters? Picking up the starting QB’s leftovers (if you catch my drift)? Get snapped on the ass by a linebacker’s towel who may want to get to know him a little better in the shower? These are the things dreams are made of.
Fortunately for Dan-o, PwC has elevators in its offices because he probably isn’t going to be able to walk up stairs after his “football career” is over.
Plus, the nerve of this coach. There was no half-joking there. He was dead serious. Would the Argonauts be there for Danny if he was part of the next round of PwC layoffs? Not likley.
PricewaterhouseCoopers is opening a field office in Rwanda, thus bringing the glorious PwC Experience to the African nation that has likely never known it. This means one more opportunity for anyone interested in an international rotation to country that barely qualifies as such.
Although this isn’t quite as adventurous as working the Somali engagement that the firm won last year (no pirates in Rwanda after all) but it’s nice to know that you have one more option on the continent.
The daily comings and goings still seem to be dicey enough to keep things interesting although authorities seem to be giving Americans fair warning. S’pose that’s the most you can ask for except the second you explain what an accountant does, they’ll assume you have money and you’ll get shaken down.