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I’d like to anonymously report that Grant Thornton is conducting another round of layoffs, affecting approximately 150 employees, primarily within the tax division. This comes amid broader concerns about the firm’s direction and workforce strategy. All impacted have been notified but this comes less than six months since 350 were laid off surrounding PE deal.

A quick Reddit search to see if we could find anyone talking about layoffs at GT gave us this:

Grant Thornton Layoffs
byu/HarryNobz inAccounting

Alright, confirmed. We should have written this up Friday night, alas did not and WSJ scooped us. It happens. Some details WSJ received:

“Grant Thornton has made targeted staffing decisions to best meet the needs of the clients, markets and industries it serves,” the firm said in a statement.

The affected employees will receive their full salary and benefits through the end of the calendar year and a severance package, Mark Margulies, national managing principal for U.S. tax services, said in a memo to tax staff reviewed by The Wall Street Journal.

The cuts are primarily focused on “meeting market demand and reallocating capacity from where growth has slowed to areas where growth is accelerating,” Margulies said in the memo.

*insert jerk-off hand motion here*

The post-PE deal layoffs referenced by our tipster happened in May. Catch up on that here:

TLDR: In May, two months after the majority sale to New Mountain Capital was announced, GT laid off about 3.5% of the workforce across all service lines. This on top of the three percent they laid off the prior spring and about 200 people axed last November. As far as we know, GT US’s headcount is around 9,700.

Here’s a bit WSJ didn’t report, courtesy our tipster:

Less than a month ago, they sent all of the partners and managing directors to the Bahamas for a firm meeting to celebrate our 100th year of the firm.

Nice. Of course they did. They were probably also celebrating the impending merger with Grant Thornton Ireland, a deal that was backed by — you guessed it! — New Mountain Capital. Allegedly GT Ireland’s 45 equity partners were looking at payouts around €6.5 million ($6.9 million USD) in cash for the GT US deal.

Grant Thornton US had supposedly been waving New Mountain Capital’s money around hoping to have a three-way merger between them, Ireland, and GT UK however GT UK appeared to want nothing to do with this unholy threesome and went with a different private equity firm in their own deal.

According to FT’s sources, Grant Thornton UK was able to get bidding up to approximately £1.3 billion ($1.6 billion USD) in an auction organized by Rothschild, only slightly short of the £1.5 billion partners were hoping for. GT UK revenue for 2023 was £654 million with operating profit of £146 million ($183 million USD). These PE firms have lost their minds.

The Bahamas trip is of course unconfirmed but we wouldn’t be at all surprised. We’ll see if we can dig up more, get in touch if you have anything to add.

Chipman69, you know what to do.

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On Friday, we prompted the readership to speculate about which mid-tier accounting firm was going to announce a private equity investment on Monday after a Reddit post teased an imminent announcement. Our money was on Carr, Riggs, & Ingram and a tip that came in shortly after publication confirmed that suspicion.

Imagine our surprise when the first press release of Monday morning wasn’t CRI but PKF O’Connor Davies. PKF announced they were getting cozy with Investcorp and Public Sector Pension Investment Board, one of Canada’s largest pension investment managers.

Was our intel wrong? No! CRI just hadn’t gotten around to announcing their deal first thing Monday morning. More like first thing Monday afternoon.

Like PKF, CRI struck a deal with not one but two outside capital firms:

Centerbridge Partners, L.P. (“Centerbridge”), a global alternative investment manager with approximately $40 billion in assets under management as of September 30, 2024, and a focus in the financial services, technology, industrial and healthcare markets, and Bessemer Venture Partners (“Bessemer”), a venture capital firm with more than $18 billion in assets under management primarily invested in the consumer, financial technology, enterprise, and healthcare markets. This first-time investment of institutional capital for CRI recognizes the firm’s exemplary track record of growth and creating value for its clients and is intended to help accelerate the firm’s innovation initiatives and expansion strategies.

The private equity deals in accounting are coming so fast they’re dropping on the same day now. WHO’S NEXT?

Earlier:

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Put on your tallest wading boots and let’s see the press release:

“We could not be happier to add a firm like Clearview Group to the Citrin Cooperman family. Clearview Group’s ability to expand our service offering and offer up-market solutions to our client base will allow us to continue to help our clients Focus on What Counts,” said Citrin Cooperman Advisors LLC CEO Alan Badey. “Clearview Group’s focus on a strong culture and technical excellence will fit perfectly with Citrin Cooperman.”

“We are thrilled to be joining Citrin Cooperman,” said Brian Davis, CEO of Clearview Group. “With Citrin Cooperman’s expansive geographical presence and impressive suite of world-class professional services and industry insights, this transaction enables us to expand the reach of our industry-leading risk and enterprise solutions to continue to provide clear solutions to the complex problems large corporations are facing in today’s ever-evolving market conditions.”

New Mountain Capital — the same PE firm that is pouring cash into Grant Thornton — has owned a majority stake in Citrin Cooperman since 2022.

Let’s check out Glassdoor to see salaries at Clearview Group shall we?

Because modern day PE-backed deals are extra complicated, Citrin Cooperman Advisors LLC will acquire the non-attest assets of Clearview Group, Inc. while Citrin Cooperman & Company, LLP will acquire the attest assets of BD & Co., Inc., Clearview’s licensed CPA firm.

The press release says the transaction is expected to close November 2024 so…any day now.

Related:

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With all the election noise of the last week or two we almost missed this: RSM sent orders down from on high to get tax people back in the office. We don’t know if other service lines have received similar orders but were told that all functions are trying to get more people in the office.

In an email reviewed by GC, leadership requested — rather, strongly advised — a minimum of three days a week in the office or at a client site. “Being face-to-face with our teams and clients is essential,” said the email sent out by federal specialty tax leader Dave Kautter. “We ask that you ensure you’re spending at least three days in the office with your people and/or visiting clients and prospects in person. I leave it to each of you to determine what days work best for you and your teams to be together.”

In addition, senior managers were reminded of their duty to train up their future replacements. IN PERSON. “With new colleagues, fall and winter interns, and your existing teams, we’ve talked about the importance of being together,” the letter said. “But we must make the most of working side-by-side with our people.” Right. Just being in proximity of

RSMers must be slipping on their tedious paperwork game because the email also reminded recipients that their work “is a balancing act with equal parts client service and operational tasks.”

“I’d like you to work with your teams and TFLs to identify your target client and prospect visits for the coming months and the operational responsibilities (e.g. billing, scheduled billing, off-strategy clients, SOWs/CLEAR, etc.) you must complete,” said Kautter. “We are a team and we must work together to succeed. Ensure all of your people are contributing to the tasks at hand.”

We suspect this bit at the bottom is a big reason why the firm is pushing these people to get into the office elbow-to-elbow with the impressionable associates and senior associates:

Meeting these expectations, I know we will be well-positioned to capitalize on this moment and demonstrate our roles as first-choice advisors. The U.S. election is behind us and we can expect a flurry of middle market activity with clients looking to us for guidance on tax policy. Let’s show up for them together.

As you may recall, RSM laid off 3 percent of its workforce in September. As far as we know these cuts were limited to audit and consulting. On October 11, RSM US announced it would be merging with RSM UK to “establish a partner-owned multinational organization dedicated to delivering quality, globally integrated services for the middle market.”

Get that bag, RSM.

If anyone has info on other service lines being called back to the mothership get in touch.

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Grant Thornton’s 2024 State of Work in America survey was released today and these key findings alone will make you depressed (if you aren’t already).

• 51% of respondents reported to have suffered burnout in the past year
• 63% named mental and emotional stress as the top cause of burnout
• 40% said people shortages are the most stressful part of working at their organization

Fun. It gets worse. The number of respondents suffering from burnout in the past year jumped by 15 percentage points from last year’s survey.

Respondents said the top causes of burnout were mental and emotional stress at 63%, followed by long hours at 54%.

Alongside the rise in burnout, respondents reported a decline in their overall well-being in 2024, noting a decline in key areas, including mental (32%) and financial (30%) health.

Said Joe Ranzau, managing director of Growth Advisory Services at Grant Thornton: “External factors such as increasing global conflicts, post-pandemic inflation and a particularly stressful political environment are all outside stressors that can burden the minds of employees, who in turn bring these worries with them into the workplace.” Tell us, are global conflicts and politics weighing on your mind at work?

Here’s what respondents had to say about why they’re burned out at work:

And here’s what they had to say about which parts of their job are most stressful:

Now let’s talk compensation. Rather, let’s let GT’s press release talk compensation:

When asked what initially drew them to their organizations, respondents cited benefits (48%) and base pay (45%) as the top two factors. These same elements also play a key role in retention, with 53% identifying benefits and 44% highlighting base pay as the main reasons they remain with their current employer.

Now, with rising costs and inflation continuing to impact households, employees are becoming more critical of their wages and the costs associated with their benefits. To address this, leaders must leverage market data to stay competitive, practice transparency regarding their organization’s financial standing and ensure clear pay practices are in place.

Alright, we’re with you so far.

Rob Ginzel, director of Growth Advisory Services at Grant Thornton, notes that, over the past few years, workers have had the advantage in compensation negotiations, resulting in widespread wage increases. However, inflation over the last year has eroded those wage gains, and the hiring dynamic is now shifting back toward an employer-favored marketplace.

“In times of financial constraints, employers need to recognize that compensation isn’t just about salary,” said Ranzau. “Employees value flexibility in areas such as work schedules, job content and how and where work is done. But employers should be mindful that when salaries are lower, trade-offs — such as adjusting workloads or expectations — may not be as effective in retaining talent.”

Accounting firms:

Continuing on:

An interesting finding from the survey is that only 10% of workers expressed concern about potentially being laid off in the next year, despite job security ranking highly as a motivator for staying with an organization. The survey also found that 25% of workers currently hold a second job, and 37% are considering one, which can quickly contribute to declining wellness and increasing burnout.

A lot of them are probably not all too concerned because they want to get laid off.

Respondents also seem to be fairly confident they won’t be replaced by AI in the next 12 months. To the statement “I am concerned that my job will be reduced/replaced by AI in the next 12 months,” 28% fell in the agree pile, 16% neither agreed nor disagreed, and 56% disagreed or completely disagreed. This despite AI being incorporated into many of their workplaces in the past year.

You can find the full survey here.

Grant Thornton survey: Employee burnout continues to surge as mental and emotional stress mount [Business Wire]

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Let’s preface this entire article by saying both the original BDO lawsuit and the counterclaim embedded below are allegations at this point in time.

In March, we reported on BDO USA suing its former healthcare transaction advisory team national practice leader after said former leader Phuoc Vin Phan dipped out to go work for Ankura Consulting and allegedly sniped several of his team members on the way out. BDO’s lawsuit alleged that Ankura “set its sights on stealing the BDO Healthcare TAS practice rather than building a practice of its own from the ground up” and that it would use Phan to accomplish that goal.

Here’s a quick excerpt from BDO’s lawsuit:

As part of this scheme, while still a partner of BDO, Phan solicited at least seven of the 11 full-time employees in the Healthcare TAS practice—all of whom reported directly to him—to leave their employment with BDO and join Ankura. His conduct violated his fiduciary duty to BDO as well as the plain terms of his former partnership and employment agreements with BDO. These were all duties and commitments Ankura knew about.

Phan’s egregious misconduct did not end there. On his way out the door from BDO to Ankura, he stole or attempted to steal voluminous quantities of BDO’s confidential information and trade secrets as well as the confidential information of multiple BDO clients, with the goal of taking all of that information to Ankura and using it in his new job for the benefit of Ankura.

Three of the employees Phan solicited to leave BDO and join Ankura also stole or attempted to steal BDO’s confidential information and trade secrets and that of its clients and to take that information for Ankura. Two of them, Thomas Bradey (“Bradey”) and Mitchell Thomas (“Thomas”), were successful in their theft. They transferred substantial quantities of BDO’s confidential information and trade secrets to Ankura for Ankura’s financial gain.

All remain employed by Ankura today. Ankura, with Phan’s assistance, has stolen BDO’s Healthcare TAS practice. BDO now seeks a verdict that will require Ankura and Phan to pay for what they have stolen and to compensate BDO for the collateral harm their tortious conduct has caused.

That lawsuit filed in the United States District Court for the Eastern District of Virginia is embedded here if you want to give it a read: BDO Lawsuit Alleges a Defector Took the Team With Him When He Jumped Ship to Another Firm

Phan has now had a chance to respond officially and just like a different but similar lawsuit in which BDO sued a former partner who is now leading the National Private Equity & Asset Management Tax Practice at Armanino, he’s dropped some explosive claims against his former firm.

To refresh, these were the accusations levied by the former partner and Armanino defector Caleb Crandell in his counterclaim filed in the same court but different lawsuit in April:

• BDO refused to repay Crandell his capital of $151k but reported the proceeds in his income tax form
• BDO leadership made false and misleading statements to get the ESOP vote to pass
• BDO misled the partnership that there was no private equity transaction
• BDO delayed partner retirements and reactivated retired partners to garner sufficient votes
• BDO didn’t allow partners sufficient time to sign new employment agreements
• BDO forced Crandell to inflate revenue to prop up the firm’s valuation ahead of an ESOP deal that was only announced to the partnership a week ahead of any voting in Orlando
• BDO refused to promote high performing directors, prompting them to look elsewhere

Now let’s see what Phan had to say in his counterclaim. Big thanks to the tipster who slipped us this.

Firstly, Phan denies most of BDO’s allegations other than the basic ones that relate to his employment as Healthcare Transaction Advisory Services National Practice Leader and that members of his former team do in fact work at Ankura. The counterclaim also says that many of BDO’s allegations do not relate or pertain to Phan, therefore no response is required. This goes on for 40 pages, we don’t need to go through it all.

Let’s get to the juicy bits. The preliminary statement of Phan’s counterclaim says:

BDO’s lawsuit against Phan is only the latest in a series of lawsuits brought by BDO against former employees who dared to exercise their right to leave the hostile and distrustful work environment at BDO and seek employment elsewhere. Indeed, many partners have been unexpectedly terminated or left without explanation, contributing to many other partners and employees leaving BDO for more stable and favorable employment. Rather than attempt to retain employees by working to improve its deteriorating and hostile culture – characterized by well-placed distrust over management’s intentions and the direction of the firm – BDO’s only retention strategy appears to be comprised entirely of intimidation and litigation. By filing this lawsuit, BDO now seeks to falsely represent itself as a victim, when it is anything but. By this counterclaim, Phan seeks to hold BDO to account for its false promises and improper conduct.

After enduring years of unfulfilled promises and a culture that was increasingly hostile towards its own employees, Phan decided to explore alternative employment options at other professional services firms – he interviewed with no fewer than three firms, including Ankura. Despite the fact that exploring better employment opportunities is something employees across the country do every day, and something that Phan was permitted to do under the terms of his employment agreement, BDO’s response was to threaten, punish and seek vengeance.

As part of its vendetta against Phan for having the temerity to seek employment elsewhere, BDO also seeks to punish Phan for other employees who likewise exercised their right to leave the BDO TAS practice. In its lawsuit, BDO insinuates that Phan and the other employees that left were outliers, and that but-for some kind of malfeasance they could not possibly have decided to leave BDO. This narrative is completely divorced from reality. The truth is that BDO, through its managing partner and a small circle of confidants, carefully fostered a culture of secrecy, fear, deceit, and retaliation over a period of years. They deliberately created a workplace environment where lawsuits like this one were broadcast to the firm during periodic partner calls as an unsubtle warning to those who might seek to leave – do so at your peril knowing that BDO will come after you. There is no mystery why Phan, and so many of his colleagues, decided to leave.

Indeed, around the time that Phan decided to look for other opportunities, there were several high-level departures among key employees at BDO, including the heads of BDO’s other major practice groups: Stephanie Giammarco (Head of Advisory Practice), Tony Alfonso (Head of Valuation) and Timothy Mohr (Head of Forensics Practice). Other partner departures followed as well.

Relevant article published here on October 28, 2022: Some High Level Folks Have Abruptly Left BDO and No One Seems to Know Why (UPDATE) — this article is referenced in Phan’s counterclaim (“The anxiety surrounding the leadership turmoil at BDO was not contained within its walls – there was rank speculation within the industry about what was happening (or not
happening) at BDO.”)

In early June 2023, the BDO partners received a calendar invite for a partnership call. During this call, Berson presented a plan to convert the legal structure of the firm from a partnership to a professional services corporation. Under this plan, the partnership would convert from BDO USA, LLP to BDO USA, P.A. Berson expressed that this was solely a tax mitigation strategy.

On that same call, several partners asked whether this plan had to do with a private equity or other kind of transaction. BDO leadership said the conversion was purely for purposes of reducing partner income taxes and that there was no private equity or any related transaction on the table, further misleading Phan and the partnership.

As part of the conversion, many partners expressed concern about changing their titles from “Partner” to “Principal.” Leadership informed the partnership that they could keep the “Partner” titles. This later proved to be another falsehood, as once the conversion occurred on or about July 1, 2023, the former partnership was told they were required to refer to themselves as “Principals” only.

BDO’s most recent “partner promotion” press release from October 1 contains 60 people promoted to principal and zero partners.

But here’s the most explosive allegation. Phan claims that in the months leading up to the ESOP transaction, “he was pressured to inflate revenue to increase the firm’s valuation for the transaction by manipulating and/or misattributing client ‘Credits.'”

Credits are either prepayments (e.g., retainer amounts) or amounts paid more than the actual worked performed that either must be refunded to the client or applied against future work. Phan was improperly pressured to recognize Credits as revenue to artificially boost revenue numbers. This is particularly troubling given that BDO serves as the independent auditor of many public and private companies.

On or about August 3, 2023, BDO held a partnership call where leadership presented the ESOP transaction, whereby the partners would sell 42% of firm equity to an ESOP.

On the call, Berson explained that the valuation of the firm for the ESOP deal was based on trailing twelve-months performance and a “very conservative” growth projection. However, given the nature and methods of historical organic growth of the firm, there were legitimate questions about the basis and validity of the projections. Those questions went unanswered.

It’s worth noting here that BDO has not issued a press release announcing revenue this year. The last revenue press release the firm put out was in July 2023. The ESOP was announced in August of that year.

Only Berson and BDO’s Board of Directors, all of whom stood to significantly benefit personally from the ESOP transaction, had input into the projections and assumptions that drove the valuation for the ESOP transaction.

On the same August 3rd partnership call, Berson informed the partnership that there would be a meeting in Orlando, Florida the week of August 9, 2023, to vote on the ESOP transaction, giving the partners only one week to evaluate the personal and professional implications of the transaction.

At the Orlando meeting, despite prior representations that private equity was not involved, representatives from the involved investment bank and private equity lender thanked Berson personally for partnering with them over the last 15 months to complete the transaction.

Upon information and belief, BDO had misrepresented to their partnership the purpose of the ESOP transaction and corporate conversion. Over the span of two years, Berson and BDO leadership covertly hatched a scheme to enrich themselves at the expense of their partners and employees by mortgaging the future of the firm for their sole personal benefit. Upon information and belief, Berson personally collected many tens of millions of dollars from the transaction.

The counterclaim once again cites Going Concern here. A partner we spoke to at length just before the transaction was announced — who insisted on anonymity due to fear of retribution from the firm — told us Wayne Berson stood to make $25-30 million from this deal though as far as we know the official numbers have never been disclosed externally. Financial Times published this story on August 13: “BDO partners in line for windfall after $1.3bn debt deal with Apollo Global Management.”

Like Crandell, Phan claims BDO owes him money. “Following BDO’s conversion from a partnership to a corporation, Phan entered a promissory note with BDO dated July 1, 2023,” says the counterclaim. “To date, BDO owes Phan $39,997 pursuant to the Promissory Note. BDO has refused to pay Phan the $39,997 owed under the Promissory Note.” He also says BDO owes him $8,127.77 in expenses reimbursement, expenses BDO says are improper.

If you have something to add to this or any related stories, you’re welcome to email or text the tipline. Tipsters are always anonymous.

There’s more here but this article is already too long. Enjoy:

The post Another Explosive BDO Lawsuit Counterclaim Accuses the Firm of Inflating Revenue, ESOP Tomfoolery appeared first on Going Concern.

Grant Thornton Ireland and Grant Thornton US are to merge their advisory and tax businesses, in a deal backed by New York private equity firm New Mountain Capital.

New Mountain Capital is the same private equity firm that took a majority state in our GT in March.

The GT Ireland business has about 2,800 staff, which includes 72 partners. As always with these kinds of deals, the audit side will remain its own thing.

Talk had been that GT US wanted to merge with Grant Thorntons UK and Ireland both, no word on what happened with the other half of that potential tie-up.

Grant Thornton Ireland and US firm to merge non-audit businesses [Irish Times]

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Grant Thornton UK has begun sounding out private equity firms over a potential deal that could see them buy into the business, which is jointly owned by more than 200 partners.

Grant Thornton UK, which employs more than 5,000 people, said it was not “actively engaged” in a transaction but that it “continually evaluates” the business landscape.

The firm is said to be working with advisers from Rothschild, which declined to comment.

Shortly after that, out came a story suggesting that Grant Thornton US was in the market to buy their Brit and Irish cousins across the pond. This is from “Grant Thornton explores three-way merger,” published by Financial Times in the latter half of July:

Under the three-way merger plan, the current partners of the UK and Irish firms would become shareholders in an international holding company led by Grant Thornton’s US private equity owners and partners. Relative valuations of the firms had yet to be discussed and the UK and Irish firms could decide to pursue different deals or none, according to people familiar with the matter.

The UK firm has already hired Rothschild to explore options for its business. Bankers have begun seeking expressions of interest from private equity firms that could provide an alternative to a merger with the US firm.

Our take on that: Grant Thornton Wants to Have a Threesome?

In the weeks and months that followed, several more stories came out about this alleged heated battle to buy (literally) Grant Thornton UK’s heart. We don’t need to link them all but here’s a recent one. Sky News put this out on October 15:

A trio of buyout firms have been shortlisted to buy a stake in the UK operations of Grant Thornton, one of Britain’s six biggest accountancy firms.

Sky News has learnt that Cinven, EQT and New Mountain Capital – the backer of Grant Thornton’s US business – have made the cut in a process that could value the UK firm at more than £1.5bn.

Other contenders, including Permira and Carlyle are said to no longer be in contention, although insiders cautioned that the list was subject to change.

Oh my God just sign something already. It sounds to us like someone or someones at Grant Thornton is/are desperately trying to seed rumors of a bidding war among private equity firms vying to be the lucky one to win a piece of Grant Thornton. No other firm has dragged out this song and dance, they do the thing and move on. Please try that, GT.

Related:

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There doesn’t appear to be a press release about this nor is Armanino listed on Further Global’s companies page. Of their “differentiated capital approach,” Further Global says:

Our objective is to be the Capital Partner of Choice to the financial services industry. We seek to be a differentiated form of capital and consider ourselves experts in constructing creative, bespoke solutions within our target universe. In this process we endeavor to take a highly collaborative approach with the management teams behind which we invest, ensuring proper incentive alignment and an open line of communication. We seek to partner with firms in which we can create value by leveraging our extensive network, industry knowledge and operational expertise to assist with business, financial and product strategies on both an organic and inorganic basis.

We target equity investments of $75 to $200 million and have the ability to execute significantly larger transactions through co-investment. While we typically seek to take control positions, we are very comfortable operating in minority positions, given appropriate alignment and governance rights.

Armanino is currently #20 on the INSIDE Public Accounting Top 100 with revenue of $640,448,684.

All we could find about this deal other than the AT article published today is this bare bones September 30th post on MergerLinks: Further Global Capital Management to invest in Armanino. It’s been rumored for a few months now that Armanino was very close to striking a deal with someone for a minority stake so none of this is surprising.

If anyone has more info get in touch.

Armanino takes on minority investment [Accounting Today]

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CohnReznick has $150 million of EBITDA, they said. The firm is currently sitting at #16 on the INSIDE Public Accounting Top 100 with $1,052,365,413 in revenue.

In June, Financial Times ran a teaser story that named three firms very close to inking private equity transactions — PKF O’Connor Davies, Carr, Riggs & Ingram, and Aprio. Aprio’s private equity deal was leaked ahead of an announcement shortly thereafter, CRI hasn’t made a deal yet as far as we know but is exploring options, and who cares about PKF O’Connor Davies.

A CohnReznick deal would mean six of the country’s top 20 accounting firms have taken private equity investment. In descending order by revenue size those firms are BDO (6), Grant Thornton (7), Baker Tilly (10), EisnerAmper (17), and Citrin Cooperman (19).

If anyone in the know feels like talking, get in touch via email or text. Tips are always anonymous.

CohnReznick said to review PE investment interest by early 2025 [PE Hub]

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RSM US and RSM UK announced the two entities “intend to establish a partner-owned multinational organization dedicated to delivering quality, globally integrated services for the middle market.” In other words, they’re merging. And of that they said:

This merger would significantly expand the multinational platform created by the U.S. and Canada with the launch of RSM Canada in 2017 to meet the growing needs of global middle market businesses and continue RSM UK’s expansion following its 2023 merger with RSM Ireland.

The integration of the two largest firms in the RSM International Network would advance RSM’s global 2030 strategy by creating a leading platform for assurance, tax and consulting services worldwide.

Following the infographic is this in big letters:

Client service from 4 countries supported by integrated teams in India and El Salvador

Ohhhh, we get it.

In July, RSM US announced plans to more than double the amount of staff in India from 2,000 to 5,000. Last we checked, RSM US had around 17,000 employees including the offshore ones. “The proposed merger will enable seamless service delivery across the U.S., the UK, Canada and Ireland,” they said.

And now for the quotes. “Our clients have long desired to be served by a financially integrated transatlantic organization. This merger will create a platform to more effectively serve client needs with quality services and more seamless access to our resources,” said Brian Becker, Managing Partner and CEO of RSM US. “We are doubling down on our future as a dynamic, partner-owned platform, at a time when the industry is undergoing transformation. We are well capitalized to continue investing in our growth and the advancement of our 2030 global strategy. We have a deep and long-standing relationship with our UK colleagues, and we look forward to joining forces to drive value for our clients, owners, employees and the entire RSM International network.”

Becker told Financial Times earlier this year that RSM had no plans to court private equity investment, hence the “partner-owned” comment above.

“RSM UK has seen strong growth in revenue and profits as we’ve repositioned the firm over the last four years,” said RSM UK CEO Rob Donaldson in his sanitized and PR-polished comment. “Bringing our UK and Irish firms together with our U.S. and Canadian colleagues is the next logical step on our journey. We already have strong bonds with our transatlantic colleagues and work together with a common aim, to be leading advisors to the middle market.”

“We’ve decided to come together to form a unique partnership that goes further to service the needs of our clients as they expand globally, and to create terrific opportunities for our own talent,” he added. “Now is the time to accelerate our ambitions by drawing on each other’s considerable strengths to become the middle market advisor of choice, globally.”

A tipster says to us Rob Donaldson told partners at a conference earlier this year that the firm had no plans to do a transaction so this news comes as a bit of a shock. We’ll dig more into that, sounds like there’s some good drama at the center of that particular Tootsie Pop.

RSM US and RSM UK pursue transatlantic merger to strengthen client offering [RSM]

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Reports FT:

Democratic senators Elizabeth Warren and Sheldon Whitehouse said deficiency rates that have exceeded 40 per cent for the past two years call into question whether the Public Company Accounting Oversight Board is properly holding the industry to account.

In a letter to the PCAOB seen by the Financial Times, the senators zeroed in on BDO, the sixth-largest accounting firm in the US, where almost all audits examined by inspectors last year were found to have flaws. They asked whether “repeat offenders” are deterred by potential fines that they said are typically “a drop in the bucket” compared with firm revenues.

“The PCAOB must do better,” Warren and Whitehouse wrote. Either the audit standards written by the board were inadequate, they wrote, “or the PCAOB is failing to establish accountability for firms that do not meet them”.

Oh boy. Look, lady, the PCAOB has been very busy fining audit firms halfway across the world for not filing a timely Form 3, ain’t nobody got time to hand down some consequences to sloppy firms.

In their defense, the PCAOB has been handing down record fines in recent years. Obviously this tactic isn’t working because the firms know they can’t/won’t do shit of real consequence at the end of the day. Their largest fine to date was $25 million against KPMG Netherlands because auditors were sharing answers on BS internal training and the firm fibbed when they told the PCAOB they didn’t know it was happening (spoiler: it happens everywhere). “The PCAOB will not tolerate cheating nor any other unethical behavior, period,” said PCAOB Chair Erica Y. Williams when that fine was handed down earlier this year. “Impaired ethics threaten the investor confidence our system relies on, and the PCAOB will take action to hold firms accountable when they fail to enforce a culture of honesty and integrity.” But screwing up 86% of your job is fine, whatever. Just have Chair Williams write another scathing op-ed for the Wall Street Journal and say for the millionth time that firms must do better.

A question that gets asked any time a new PCAOB fine (or verbal tongue-lashing) happens is this: Does it matter? Did financial statements need to be restated or opinions changed as a result of the misbehavior a firm is fined for? No? Then who cares.

We all know the PCAOB is the TSA of capital markets: security theater. Evidently Senators Warren and Whitehouse are just now figuring that out too. I’ve got a free idea for them. Bully the PCAOB into forcing firms to report the exact percentage of work being performed by offshore staff. That should lead you in the right direction.

Elizabeth Warren criticises accounting watchdog over BDO audit failures [Financial Times]

The post Senators Yell at the PCAOB Because BDO’s Auditing Sucks appeared first on Going Concern.

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On October 7, Dohman, Akerlund & Eddy, LLC (or DA&E as we’ll refer to them for the remainder of this article) of Aurora, Nebraska sent out letters to 82,207 people whose data — including name, address, date of birth, Social Security number, medical treatment/diagnosis information, dates of service, health insurance provider name, health insurance claim information, and/or treatment cost — was accessed through a breach of their network in February of this year. As is required by the law, they also filed a breach notification with the attorney general of Maine as 19 of those 82,207 people are residents of the state.

We wrote about a similar breach just a week ago (see: A Firm With 55 People Finds Itself at the Center of a Data Breach Affecting 127,431) and wondered out loud at that time how a tiny little accounting firm with 55 people working there would find itself in possession of the medical/treatment information of 127,000 people. In the case of DA&E, we don’t have to wonder. They spell it out in a press release put out today.

It said:

Dohman, Akerlund & Eddy, LLC (“DA&E”) announces a data incident that impacted some protected health information stored on its network. DA&E provided auditing services to some Aurora area hospitals.

As far as the breach itself, DA&E detected suspicious activity on its network on February 28, 2024. They brought in third-party specialists to conduct an investigation and determined “an unknown party accessed certain files” on the network (duh). The press release says the files were accessed on the 28th but the notification filed with the Maine AG says it was February 11.

Well whatever. Here’s what happened after discovering the breach, bringing the experts in to figure out how bad it was, and concluding the investigation on September 26:

DA&E began a comprehensive review of the files at issue to determine the information the files contained and to whom the information related. DA&E’s review included the assistance of third-party data review specialists and determined the potentially impacted information included the following types of information related to some patients of hospitals in the Aurora area including name, address, date of birth, Social Security number, medical treatment/diagnosis information, dates of service, health insurance provider name, health insurance claim information, and/or treatment cost. [Emphasis ours]

DA&E notified law enforcement of the incident. The firm “has no reason to believe any of the information described above has been misused” but is providing 12 months of credit monitoring and identity protection from IDX including CyberScan dark web monitoring. IDX Complete costs $355.32 a year which means the retail cost to cover 82,207 people for just a year would be more than $29 million. Surely the firm isn’t paying retail.

DA&E is presumably too small to appear at all on the INSIDE Public Accounting Top 500 (the last firm on the list is Shannon & Associates of Kent, Washington with revenue of $6,063,000). According to this their revenue is $3.5 million, Dun & Bradstreet says sales revenue is $0.86 million. Who knows, who cares.

In a separate consumer notification that appears to be related to this breach as it occurred during the same time period, 3,687 people were notified that their name and Social Security number were accessed by whoever was digging around in DA&E’s network back in February.

Anyone else feel wildly uncomfortable about your private medical information just sitting there on some tiny accounting firm’s server ripe for the looting by bad actors?

The post DAE Get Sick of Hearing About Accounting Firms Getting Their Data Breached? appeared first on Going Concern.

FT says in a fresh story that 54-year-old rapper Jay-Z — real name Shawn Carter aka Mr. Bey — severed his relationship with BDO “following accusations that a staff member had been stealing money from customer accounts.” That former staff member is Vanessa Rodriquez, assistant to Andre N. Chammas who is a tax partner at BDO’s Miami office. Rodriquez was fired in July 2022, after which Fat Joe — real name Joseph Cartagena — noticed “some accounting irregularities” with his accounts. Wrote TMZ in 2022:

For starters, Joe says his wife Lorena’s name was used to open AMEX accounts and make huge unauthorized purchases, including $40K in charges for Uber rides and UberEats deliveries, as well as tuition payments for Rodriguez’s daughter.

Joe also claims he discovered one of his entities, Sneaker Addict Touring, was missing large deposits — to the tune of more than $300K. He says there were similar irregularities with other entities.

As for the Ponzi part of the alleged scheme — Joe claims the firm also defrauded Jose Iglesias of Colorado Rockies, Luis Garcia of the Houston Astros and former Chicago White Sox player Dayan Viciedo.

In the suit, he says AMEX accounts were opened under their names as well, and the money flowed between all of their accounts to keep the Ponzi going. The players are not plaintiffs in the suit, and Joe makes it clear he feels they were victims … just like himself.

Although the firm denied the allegations, BDO eventually leaned back and settled with Fat Joe. The terms were not disclosed.

Said FT:

Staff working for Jay-Z, whose real name is Shawn Carter, were angered by how BDO responded to the accusations of theft from Fat Joe, who is a client of Jay-Z’s entertainment company Roc Nation. They felt the accounting firm became overly defensive and failed to quickly provide Fat Joe with full access to his financial affairs, said people familiar with the matter and his 2022 lawsuit.
That anger led to Jay-Z’s departure as a BDO client in 2023, the people said, within months of Fat Joe leaving.

Fellow Roc Nation artist Megan Thee Stallion also dropped BDO. Their sources are a little late on this but it’s the first we’ve seen it reported. All three stars came to be BDO clients after the firm acquired Miami firm Morrison, Brown, Argiz & Farra in early 2021, at the time Florida’s largest accounting firm.

Here’s Fat Joe warning everybody not to trust accountants on a Breakfast Club Power 105.1 FM appearance in 2022:

Fat Joe’s lawsuit against BDO is embedded below for your reading pleasure.

The post Jay-Z Has 99 Problems But BDO Ain’t One appeared first on Going Concern.

Jordan Boston here has a beef with the good folks of WMDD&H:

The only non-Google photo for this place is from Jordan.

These people have a beef with the firm too but it’s not nearly as entertaining as some guy getting chased off by a lady with a Sonic haircut for metal detecting on the property.

Before you ask, yes it is a slow news day. The next time we write about this place it will be far more interesting, I promise.

The post This Might Be the Strangest Review of an Accounting Firm Yet appeared first on Going Concern.

According to The Real Deal, Weaver (#31 IPA 100, $328,276,610 in revenue) is taking 36,500 square feet at the Penn 1 building in Midtown. The move comes after they merged with Buchbinder Tunick & Company who already had 8,000 square feet at the tower. A source tells TRD asking rent for the entire 28th floor was $105 per square foot and the lease duration is 11 years.

Side note: we had no idea Weaver’s website was so pretty. Props to their web developer.

Says Penn 1 owner Vornado Realty Trust of the building:

Punctuating the Manhattan skyline, PENN 1 is a Class-A, 55-story tower of over 2.5 million square feet, providing breathtaking 360-degree views of the entire city and direct access to Penn Station and Moynihan Train Hall.

PENN 1 has undergone a major transformation with a focus on providing a first-class hospitality experience to its tenants. The result of this redevelopment is a sleek, modern building that seamlessly blends state-of-the-art technology with luxurious amenities to create an unparalleled tenant experience.

Weaver MP John Mackel told TRD the proximity to Penn Station was a big draw. “At Weaver, we are dedicated to our people-centric culture that puts our team members in the best position to collaborate, innovate and serve our clients well,” he said in a news release. “The redeveloped PENN 1, which sits atop North America’s most accessible transit hub and features unparalleled in-building and neighborhood amenities, proved to be an ideal spot to consolidate our New York City team.”

And they have on-site pickleball courts!

The post Weaver’s Upgrading to a Whole Floor in NYC appeared first on Going Concern.

There are a large amount of layoffs going on at RSM, specifically in the D365 practices, Risk Cyber Security, and MC (management consulting practices). Meetings were scheduled yesterday via Webex, not MS Teams, which is interesting as the firm uses MS Teams for all communications. Meetings are all day today across these groups.

And followed up later in the day with specifics:

Updates after the meetings today, so far, over 200 staff let go in Audit, 260 let go across consulting, mainly D365 & Dynamics teams, Risk Consulting and Management Consulting.

Webex? Really? What year is this?

Just going to drop this completely unrelated post from July here: Within Three Years, RSM US Will Have Twice as Many People Working for Them in India

Anyone with more info or in need of a virtual shoulder to cry on is welcome to email or text.

The post Layoff Watch ’24: It’s Not TGIF at RSM Today appeared first on Going Concern.

The comment:

Comment
byu/Delicious_Chip_6339 from discussion
inAccounting

And there it is:

In a format one can actually read (As noted above, this is in thousands, except share data):

So there you go. Off to go dig around in EDGAR to find more accounting firm/private equity transaction deets, brb.

The post Let’s Look at Apollo’s 10-Q to Get Specifics on Their Deal with BDO appeared first on Going Concern.

CBIZ is the biggest firm to be data breached in recent months that we’re aware of since PwC and EY found themselves tangled in the MOVEit cybersecurity breach and ransom last year. CBIZ was also hit by the MOVEit vulnerability and informed 35,843 people their Social Security numbers were probably jacked by bad actors last year.

CBIZ Benefits & Insurance Services, Inc. provides actuarial, administration and investment advisory solution services for organizations, as well as providing recordkeeping and administration for retiree health and welfare plans.

According to the notification, it was retiree health and welfare plans that were accessed and the data included names and Social Security numbers.

Says the notification:

On June 24, 2024, CBIZ learned that an unauthorized party may have acquired information from certain databases. CBIZ promptly launched an investigation with the assistance of cybersecurity professionals. CBIZ’s investigation determined that an unauthorized party was able to exploit a vulnerability associated with one of its web pages, and acquired information from certain databases between June 2, 2024 and June 21, 2024. CBIZ conducted a review of the data acquired and determined that individuals associated with multiple CBIZ clients were impacted by the incident.

The retiree plan clients are:

• Central Pennsylvania Teamsters
• Knoll, Inc.
• Liberty Utilities
• Sanofi
• Sanofi Pasteur

Seven Maine residents were affected by this breach. No information was given on how many victims there may be in other states in the AG filing referred to here. CBIZ began notifying victims on August 28, 2024.

The post Hackers Stole Social Security Numbers From CBIZ Again appeared first on Going Concern.

The Best Places to Work for Disability Inclusion list belongs to Disability:IN, a nonprofit “committed to empowering business to achieve disability inclusion and equality.”

The Disability Equality Index covers Culture & Leadership, Enterprise-Wide Access, Employment Practices, Community Engagement, Supplier Diversity and Responsible Procurement (unweighted). They explain it more in the FAQ:

To make it on the list, an employer needs to score 80 or above on the self-submitted assessment that asks about things like diversity policies, accommodations for people with disabilities, and if anyone in leadership has made a public statement in support of people with disabilities in the last year such as a speech or being quoted in an article. Disability:IN corporate partners do not have to pay to submit for the list — all firms listed below are corporate partners, Forvis and Wipfli are too but either didn’t make the list or chose not to submit — and the fee for non-partners is $900 for the US alone or $2,300 if they want to submit for all eight countries in which D:IN has an index.

All accounting firms on the 2024 list scored 100 with the exception of Crowe at 90:

• Crowe (90)
• Deloitte (100)
• EY (100)
• Grant Thornton (100)
• KPMG (100)
• PwC (100)
• RSM (100)
• Withum (100)

The group notes that “a score of 100 on the Disability Equality Index does not indicate or imply perfection.”

God bless whoever had to fill this questionnaire out because boy, it’s a lot. Here’s the Excel sheet if you want to check it out.

The post These Firms Scored High in Disability Friendliness appeared first on Going Concern.

We knew this was coming. In July, BDO put out a damage control press release that used words like “continuous improvement” and promised the firm implemented “multiple strategic initiatives” to strengthen audit quality and build trust and confidence in the capital markets. In other words, “We really bungled this and the one before it wasn’t great either but pinky swear, we’re doing better. Trust us.”

So what’s the total damage? 25 out of 29 audits inspected scored Part I.A. deficiencies.

Oftentimes, and rightfully, we criticize the PCAOB for excessive paper-pushing and nitpicking but in this case, one issuer restated its financial statements to correct misstatements and in another audit, an issuer revised its report on internal controls over financial reporting (ICFR). In both cases, BDO revised its opinion and in the latter case, the firm expressed an adverse opinion. 2022 and 2021 also had some mess to be cleaned up:

In addition, in connection with our 2022 inspection procedures for two other audits, the issuer corrected a misstatement in a disclosure or an omission of a required disclosure in a subsequent filing. Our 2022 inspection procedures also involved one audit for which the issuer, unrelated to our review, revised its report on ICFR and the firm revised its opinion on the effectiveness of the issuer’s ICFR to express an adverse opinion and reissued its report.

Our 2021 inspection procedures involved one audit of an issuer that was formed by a merger between a non-public operating company and a special purpose acquisition company (SPAC) for which the issuer, unrelated to our review, restated its financial statements to correct a misstatement and the firm revised and reissued its report on the financial statements.

The most common Part I.A deficiencies in 2023 related to identifying controls related to a significant account or relevant assertion, performing substantive testing to address a risk of material misstatement, and testing the design or operating effectiveness of controls selected for testing. The Part I.B deficiencies in 2023 related to consideration of fraud, retention of audit documentation, audit committee communications, risk assessment, the firm’s audit report, management communications, critical audit matters, and Form AP.

We propose the PCAOB add a new data point to its inspections and public reports: What percentage of audit work is performed offshore. Hell, throw in what kind of work it is, too.

Revenue and related accounts tripped BDO up the most followed by inventory, business combinations, and finally goodwill and intangible assets. At least they’ve gotten better at goodwill.

We don’t need to cover each deficiency but Issuer A is worth a look, a health care client that went on to restate its financial statements in connection with the PCAOB inspection:

With respect to Revenue:

The issuer recorded revenue at the time its services were provided to its customers. The firm did not perform any substantive procedures to test whether the performance obligation had been fully satisfied before revenue was recognized. (AS 2301.08)
The firm used information produced by the issuer in its testing of transaction prices, but did not perform any procedures to test, or test any controls over, the accuracy and/or completeness of certain of this information. (AS 1105.10)

With respect to Warrants:

During the year, the issuer issued warrants that were recorded as liabilities. The firm did not identify and evaluate misstatements in the fair value measurement of these warrants. (AS 2810.30)

In connection with our review, the issuer reevaluated its accounting for these warrants and concluded that misstatements existed that had not been previously identified. The issuer subsequently corrected these misstatements in a restatement of its financial statements, and the firm revised and reissued its report on the financial statements.

In its response to the PCAOB inspection, BDO linked their 2023 Audit Quality report and said the “numerous investments” they’ve made in improving audit quality can be found there.

Better luck next time.

The full 2023 PCAOB inspection of BDO USA, P.C. can be found here [PDF]

The post BDO Aced Its 2023 PCAOB Inspections! JK, It Was F**ked appeared first on Going Concern.

Completely unsubstantiated rumor of the day: pic.twitter.com/xNiStHwgnB

— Going Concern (@going_concern) July 24, 2024

Didn’t hear much on the wire after that except a small handful of people who said this could be in the works but couldn’t or wouldn’t offer any information beyond that. Gonna be honest with you here fam, I was sure this was a troll.

IT’S NOT. This press release dropped this morning:

CBIZ, Inc. (NYSE: CBZ) (“the Company”), a leading national provider of financial, insurance and advisory services, today announced that it has entered into a definitive agreement to acquire the non-attest business of Marcum, LLP (“Marcum”), which will make CBIZ the seventh-largest accounting services provider in the U.S. with approximately $2.8 billion in annual revenue.

Concurrent with the closing of this transaction, the attest business of Marcum will be acquired by Mayer Hoffman McCann P.C., a national independent CPA firm with which CBIZ has had an Administrative Service Agreement for over 25 years.

The cash-and-stock transaction is valued at approximately $2.3 billion. It is expected that approximately half of the transaction consideration will be paid in cash and the remainder shares of CBIZ common stock.

CBIZ even explained their reasoning for this transaction, in bullet points no less.

Expected Transaction Benefits Post-Close:

• Market Position: Solidify position as a leading provider of professional services to the growing middle market and seventh largest accounting services provider in the U.S.
  
• Growth Strategy: Scale accelerates growth and further positions CBIZ as an acquirer of choice
  
• Our People: Attract and retain the best and brightest in our industries, enhance learning and development aligned to meaningful career paths and expanded growth opportunities
  
• Client Experience: Offer an unmatched breadth of services and depth of expertise including the development of innovative and actionable solutions
  
• Industry Expertise: Combined industry knowledge enables access to new sectors and expands presence in target industries
  
• Innovation and Technology: Enable greater investment in technology to support data-driven insights and solutions while driving innovation, increasing efficiency and enhancing performance
  
• Shareholder Value: Expect to be accretive in 2025, with an estimated contribution to Adjusted earnings per share of approximately 10%

“Today marks the most significant transaction in CBIZ’s history as we announce our agreement to acquire Marcum,” said Jerry Grisko, President and Chief Executive Officer of CBIZ. “At closing, our company will have combined annual revenue of approximately $2.8 billion, more than 10,000 team members and over 135,000 clients. Together, we will provide a breadth of services and depth of expertise that is unmatched in our industry, allowing us to bring a broader array of high-value solutions to our combined client base. This transaction enables CBIZ to strengthen our presence in key markets, continue to attract and retain top talent, and innovate through technology. We are excited about our future together and the opportunities it will provide our people, the solutions we will bring to our clients and the value we expect it will create for shareholders.”

Jeffrey Weiner, Chairman & Chief Executive Officer of Marcum, said, “CBIZ and Marcum share a dedication to providing high-quality innovative professional services to our clients, and personalized, local client relationships supported by national resources. By joining forces, we will capitalize on our strengths and leverage our similar models to bring more diversified services and even greater subject matter expertise to our clients and attract new business. We both have a proven track record of growth through successful acquisitions, and we are excited to bring these two best-in-class organizations together.”

More to come later.

Update 11.1.24: It’s official, the $2.3 billion deal is done.

Related:

The post Turns Out The Tipster Who Said Marcum and CBIZ Are Merging Wasn’t a Troll After All (UPDATE) appeared first on Going Concern.

Grant Thornton and Grant Thornton Lite today announced a partner, principal, and managing director class of 56 people. They’re going to make us do math here to figure out how many partners and principals they have this year so we can compare it to prior years. Sorry, MDs, you’re left out.

Historical number of partners and principals promoted each year at Grant Thornton:

• 2024: 22
• 2023: 43
• 2022: 38
• 2021: 46
• 2020: 30
• 2019: 42
• 2018: 32
• 2017: 39
• 2016: 47
• 2015: 50
• 2014: 32
• 2013: 30
• 2012: 27
• 2011: 26
• 2010: 22

Because this is the first PPMD announcement since Grant Thornton’s huge private equity deal and mixing attest services in with PE-backed entities is a no-no, they made sure to separate the audit and non-audit peeps. Everyone get used to these convoluted announcements, it’s only going to get worse from here.

In total, Grant Thornton Advisors LLC, which provides non-attest services, admitted nine new principals and promoted 22 professionals to managing directors. At the same time, Grant Thornton LLP, which provides attest services, admitted 13 new partners and promoted 12 professionals to managing directors. These appointments and promotions are effective August 1, 2024.

Seth Siegel, CEO of Grant Thornton Advisors LLC, emphasizes that the newly named leaders will serve clients with excellence and propel Grant Thornton forward at a poignant moment for the firm.

Poignant, that’s a new word for them. At least we got one familiar DYNAMIC among all this word salad.

Thanks for internalizing last year’s criticism and giving the people what they want, Seth.

Audit wins the PPMD race by a long shot with 44% of the newly promoted peeps coming from there and the only service line to have any new partners. Coming in second — and reminder, this is a separate entity — is tax with 27% followed by advisory at 20% and internal services at 9%.

New PPMDs at Grant Thornton LLP (the audit business):

New PPMDs at Grant Thornton Advisors (the PE side of the business that they will remind you multiple times is a totally different business from the attest side):

New this year thanks to private equity is the following disclaimer at the bottom of the promotions press release:

“Grant Thornton” is the brand for two professional-services entities: Grant Thornton LLP, a licensed, certified public accounting (CPA) firm that provides audit and assurance services ― and Grant Thornton Advisors LLC (not a licensed CPA firm), which exclusively provides non-attest offerings, including tax and advisory services. With revenues of $2.4 billion for the fiscal year that ended July 31, 2023, and dozens of offices nationwide, Grant Thornton represents a community of almost 10,000 problem solvers, relationship builders, and industry specialists who know that how we serve matters as much as what we do.

Grant Thornton LLP, Grant Thornton Advisors LLC and their respective subsidiaries operate as an alternative practice structure (APS). The APS conforms with applicable laws, regulations and professional standards, including those from the American Institute of Certified Public Accountants.

Grant Thornton LLP and Grant Thornton Advisors LLC serve as the U.S. member firms of the Grant Thornton International Ltd (GTIL) network. GTIL and its member firms are not a worldwide partnership and all member firms are separate legal entities. Member firms deliver all services; GTIL does not provide services to clients.

Congrats to all.

Grant Thornton names 56 new partners, principals and managing directors [Business Wire]

The post Promotion Watch ’24: 56 People Rise to the Top of the Heap at Grant Thornton* appeared first on Going Concern.

What do the initials BDO on Billy Horschel’s golf hat represent?

This is actually funny because they really didn’t know what BDO is. Which is fine because up until today we didn’t know who Billy Horschel is.

Horschel is sponsored by BDO, a professional services company that specializes in tax and business services for companies. The golfer has been seen wearing the logo on his left collar of his shirt or outerwear during tournaments, but the hat he’s wearing today has caught all of our attention.

We first thought it was LBDO, but realized immediately that the “L” isn’t really a letter and is just part of the design. He was playing yesterday with his hat on backwards as the rain was complicating things for everyone on the course.

And here’s another article from the sports corner of the internet that probably confused the hell out of the AI when it was asked to write it:

Do you ardently follow golf fashion? [Ed. note: no] Then you must be eager to find out what Billy Horschel wore on the greens. One of the most fashionable golfers around, Billy never fails to amaze, be it his Ralph Lauren polos, FootJoy shoes, or quirky printed trousers. And we know, despite finishing runner-up in the 2024 British Championships, he did not disappoint you with his fashion choices once again. After all, only a few could have carried that backward hat look on a golf course! While looking at that, we can not miss the BDO logo on it. What does it stand for?

With an instant glance, it might appear like LBDO. But the ‘L’ is not a letter and a part of the design. BDO stands for Binder Dijker Otte. It is the 5th largest global accounting network and has over $12.8 billion in revenue. The company became a sponsor of the 62nd OWGR-ranked golfer in 2022. But do you know why the association was first-of-its-kind?

The 8x PGA tour winner was BDO’s first US golf brand ambassador. During his three-year partnership with the firm, Billy is supposed to wear its logo on his jersey and cap.

And here’s Mr. Horschel rocking that LBDO hat and a sharp Ralph Lauren sweater:

After finishing T2, Billy Horschel had high praise for Xander Schauffele.

Also, he'll be grinding away on the range at the 3M Open on Tuesday. pic.twitter.com/q7QmbP196e

— Golf Digest (@GolfDigest) July 21, 2024

It seems random sports blogs weren’t the only ones that thought Billy’s hat said LBDO…

Always think about your logo in a one color versus multi color format.

BDO, the accounting firm who sponsors Billy Horschel- who led #TheOpen just lost out on a lot of search traffic to…ahem, LBDO pic.twitter.com/PyS1xgZJio

— Jordan Rogers (@JordanRogers26) July 22, 2024

What’s the emoji for? *Googles* Oh.

Losing out on some website hits from random golf fans probably wouldn’t be too bad except for one thing. The real LBDO is an Australian “sexual wellness” company with the tagline “Feel good about feeling good.” In other words, they sell stuff to help get you off.

I did some research, and Billy Horschel is sponsored by BDO, not LBDO, which is NOT a company that distributes boner pills

— Gstaad Blackledge (@loljocks_grimey) July 20, 2024

Oh no. The LBDO blog is packed with helpful articles such as “A five step guide to getting off with your shower head” and the first Instagram post we saw was advice on how to get into piss play. (BTW they’re currently having an Orgasm Day Sale if anyone’s interested. Not an ad.)

Let’s not dive into that world, OK?

At least this isn’t as controversial as the comments that made KPMG cut ties with Phil Mickelson and his hat forever back in 2022, it’s only sex toys. Billy may want to think about asking for a two-color hat though.

The post Golf Fans Everywhere Now Think BDO Sells Dildos and Lube appeared first on Going Concern.

Anyway, RSM US and RSM Canada, along with their one office in El Salvador (wat) and four locations in India brought in a clean $4 billion in fiscal 2024. See it’s right here in this chart:

Revenue by service line is as follows:

• Assurance: 28%
• Tax: 32%
• Consulting: 39%
• Other: 1%

This is nearly identical to last year’s numbers except tax had 32% and consulting had 38%.

Our headline for last year’s revenue announcement was “RSM US Is That Much Closer to $4 Billion in Revenue” and by gosh, they got there. We knew you could do it, RSM. Let’s compare this year to last:

God, we’re going to have to do math aren’t we? In 2024, they added 609 employees and 35 partners and principals, got rid of two locations in the US, and made $300 million more in revenue. Approximately 2,000 of their slightly more than 16,000 employees are in India with plans to double that number within three years.

We haven’t yet discussed RSM’s Global 2030 strategy so let’s throw this in here:

There’s also a section called A compelling talent experience that reads exactly as you’d expect it to read (as in, instead of the light tapping noise of hitting the keys as this was typed out it made only fapping sounds):

This year, we brought together people, process and technology to help deliver a digital enabled talent experience. We implemented new, user-friendly systems and processes to enable our people to find the information they need more effectively with new self-service options.

One example is Talent Compass, our new global human resources (HR) service desk. Talent Compass provides our people with a centralized place to get their personal HR-related questions answered. Through Talent Compass, our people can access on-demand resources and quickly connect live with a member of our talent team, enabling a consistent, streamlined experience.

Additionally, we transitioned to Workday as our integrated human capital management and finance system, replacing various existing systems with one modern application to simplify business processes and enable our teams to be as efficient and effective as possible across the globe.

How’s Workday going anyway? Last we heard it was not good.

Looks like RSM won’t have any problems maintaining its position in the top ten hierarchy.

The post RSM US Had a Good Year appeared first on Going Concern.

• Matthew Bohdan, risk and accounting advisory services, Southfield
• Eric Bowers, Plante Moran Financial Advisors, East Lansing
• Amanda Carrigan, risk and accounting advisory services, Denver Tech Center
• Alicia Cole, wealth management, Detroit
• Ben Cote, tax, Denver Tax Center
• Adam Counts, assurance, Southfield [Ed. note this has to be one of the best accountant names in history]
• Ryan Defer, tax, Chicago
• Stephen Eckert, tax, Chicago
• Ryan Fedricks, Plante Moran Financial Advisors, Auburn Hills
• Alan Gallatin, tax, Southfield
• Dana Hullinger, tax, Southfield
• Curt Hurd, assurance, Southfield
• Rachelle Jeselnik, tax, Chicago
• Matthew Keigher, assurance, Auburn Hills
• Chad McCoy, tax, Chicago
• Amber Mitchell, assurance, Cincinnati
• Sara Montgomery, wealth management, Denver Tech CenterStephen Palmer, tax, Columbus
• Laura Parish, tax, Chicago
• Shawn Riley, Plante Moran Financial Advisors, Southfield
• Mark Sommerfeld, tax, Grand Rapids
• Justin Switzer, tax, Ann Arbor
• Colin Taggart, cybersecurity, Southfield
• Alisha Taranek, tax, Ann Arbor
• Jessica Wiltjer, tax, Grand Rapids

So if we managed to add correctly, tax comes out on top with 12 people followed by assurance with four, Financial Advisors with three, risk and accounting advisory with two, wealth management also with two, and cybersecurity with one.

In addition to these 25, two people were promoted to affiliated entity members:

• Jonathan Grossman, Plante Moran Trust, Chicago
• Zack Otte, Plante Moran Realpoint Investment Advisors, Denver Tech Center

“We’re excited to welcome these incredible professionals to our partner group,” said Jason Drake, Plante Moran managing partner. “This group of leaders has already added so much value to the firm and there is no doubt they’ll continue to contribute to Plante Moran’s overall growth, success and culture.”

Plante Moran promotes 25 new partners and two new affiliated entity members [Plante Moran]

The post Promotion Watch ’24: Plante Moran Welcomes 25 New Partners and Two Other Guys appeared first on Going Concern.

See: Concerns Abound Over PE Impact, But Firm Leaders Believe They Can Compete

For this article, we were initially going to focus on the 19 percent of MPs who think PE is a good thing for the profession, the 35 percent who feel its impact will be negative, and the 40 percent who are, at this point, unsure. That’s interesting, right? But then you scroll down and see this:

Firm leaders without an interest in PE were asked their opinions on the best way to compete. Their responses:

• 0% said raising compensation;
• 3% said using outsourcing and technology to reduce the workload on entry-level staff;
• 21% said promoting culture;
• 67% said “all of the above,” and
• 7% cited “other.” One “other” respondent commented, “I do not believe anyone truly knows at this point. Promoting culture and taking care of your employees will always be a key to success.”

Normally we would chortle loudly — LOUDLY — at these managing partners thinking culture will trump compensation when it comes to competing for talent in this rapidly changing landscape but in this case, they might actually be onto something. Plus 67 percent of them did say “all of the above” so it’s not like 0% of them identified raising compensation as an important factor in securing talent. It’s just that none of them identified raising compensation as the only factor.

I don’t know if you’ve been on Reddit lately but r/accounting has been on fire with discussions about private equity these past few months. The common sentiment in a lot of these posts is fear and uncertainty. Well, excluding the many discussions about boomers selling out and pulling up the ladder behind them. What’s going to happen in the long term? That’s the fun part, no one knows! It’s only been three years since EisnerAmper became the first Top 20 firm to cut a deal with outside capital.

Exhibit A:

Ah yes. I’m sure private equity will magically work out for public accounting when it has brought every other industry it touches to ruin. Good luck with that.
byu/Jumpy_Parsnip3954 inAccounting

You know who this might work out well for? The firms that remain independent. They can pitch stability to both clients and talent, assuming they are well-managed and not outsourcing 70% of the work to offshore randos.

In the Institute of Chartered Accountants in England and Wales (ICAEW) “Evolution of mid-tier accountancy firms” report released in May, the ICAEW explained how managing partners at mid-tier firms across the pond see an opportunity to market themselves as “100% PE-free” to clients who are looking for a more personal touch.

Said the ICAEW in that report:

Conversely, maintaining independence may support firms in upholding their unique identity, values and client approach, which some firms believe could be jeopardised under external ownership. More than one-fifth of respondents (21%) described the culture of their firm as ‘family-like’, and a further 17% as ‘traditional’, which may not be seen as a natural fit for PE investment. One respondent suggested that there were already “disgruntled clients” unhappy with accountancy firms taking on PE investment, and that remaining independent was an opportunity for their firm.

Again, we’ve got to hold back a hearty laugh at “family-like.” OK.

In the IPA survey, 85 percent of the MPs surveyed “frequently” (IPA’s word) have private equity firms sliding into their DMs; 66 percent of them have no interest in these advances. With the ICAEW report we see somewhat similar numbers from their mid-tiers:

When we wrote about that ICAEW report the first time we said “Brace yourselves for a bunch of corny ‘wE’rE a FaMiLy’ marketing from firms that are morally opposed to private equity investment” but maybe unironically this?

We’ll wrap this up with the negative quotes from the IPA survey because negativity feeds our rotten souls over here.

“I have not enjoyed the vulture-esque approach of many of the PE firms – total turnoff – and I’m afraid it is indicative of what they will do to the industry.”

“PE investment has been a financial windfall, and it will likely be on a PE firm’s exit, but at the expense of future firm culture and legacy. All about the money. Just waiting for the cuts in headcount that PE will implement.”

“PE in the profession will ultimately be a net negative, as PE focuses on short-term financial goals rather than long-term success. It will be a financial boon to retiring partners, but I expect that 15 years from now PE will regret their decision.”

Concerns Abound Over PE Impact, But Firm Leaders Believe They Can Compete [INSIDE Public Accounting]

The post Anti-PE Firms Talk About How to Compete When Everyone Else is Selling Out appeared first on Going Concern.

UK-based accounting firm RSM’s U.S. arm is planning to more than double its India workforce to 5,000 over the next three years, a top executive said.

“The expansion is driven by the tremendous talent base in India. Compared to the last 10-15 years, the talent now is very superior in the market,” Prasad Balakrishnan, India Principal of RSM US LLP, told Reuters.

The world’s No. 6 accounting firm’s U.S. arm employs 2,000 of its 17,000 employees in India, and is creating more consulting, audit and tax roles in the country to cater to its North American clients as a part of its global capability centre (GCC) expansion plan. [Ed. note: RSM Global clocks in at 57,000 staff in 860 offices and 120 countries around the world]

India’s evolution from a low-cost back office location to a high-value innovation hub has encouraged many multinational companies to set up local offices and boost hiring, a trend that is expected to gain more traction in the coming years.

Reuters describes the GCCs as supporting “their global parents in daily operations, finance, research and development, and product development functions.” About a year ago, they wrote about Big 4 expansions in India and said Deloitte planned to add 50,000 more people to its India headcount of 100,000 over three years, KPMG wanted to hire 20,000 over the same period, and PwC hired 12,500 people in India in fiscal 2022 with plans to hire the same number of people the following year. Last summer, Deloitte South Asia CEO Romal Shetty said 30 percent of the firm’s total workforce would be based in India by 2027. If it isn’t clear to you yet, firms are going all-in on India (not an EY pun).

There are unfortunately no salaries listed on RSM’s India job openings page but we did find this:

10 lakh = about $13,333 USD. 50 lakh = about $67,500 USD.

And here’s Glassdoor. Note these salaries are listed in rupees, not lakh (150,000 rupees = 1.5 lakh). ₹398K (rupees) = $4,766 USD. Dear reader is welcome — nay, encouraged — to double-check our math because no one around here is a mathlete.

Related:

The post Within Three Years, RSM US Will Have Twice as Many People Working for Them in India appeared first on Going Concern.

Here’s what they said:

BDO’s 2023 Audit Quality Report

BDO’s commitment to quality – and a mindset of continuous improvement – reflects the firm’s core purpose and values as well as its ongoing efforts to engage in important and constructive dialogue with stakeholders, including investors, regulators, audit committees and clients.

In BDO’s 2023 Audit Quality Report, the firm shares how the implementation of multiple strategic initiatives strengthens audit quality and builds trust and confidence in the capital markets. These initiatives, building on the strategic foundation set in 2022, are multifaceted and interdependent. The firm is working to ensure changes are not only embraced by BDO professionals but embedded in processes, decisions and daily work. BDO’s leadership and professionals are engaged in this journey and are committed to audit quality excellence in the pursuit of a sustainable and resilient business that serves the interest of the capital markets.

BDO has made numerous investments to improve the quality of its audits over the past two years, including, among others, the deployment of a reimagined approach to learning, an enhanced approach to audit phasing, the implementation of a new methodology enablement group, the continued nationalization and standardization of its assurance practice, as well as the continued expansion of its digital audit suite. To learn more about these initiatives, see BDO’s 2023 Audit Quality Report.

TLDR: We’re getting better. Promise.

BDO racked up deficiencies for more than half of the audits inspected by the PCAOB for its 2021 inspection report. Here’s what we wrote at that time:

Terrible PCAOB inspection reports are par for the course for BDO lately. For the second straight inspection cycle, the PCAOB found significant mistakes in more BDO audits than ones without (16 out of 30 in 2021 and 13 out of 24 in 2020). As a result, BDO followed its 54.2% failure rate in its 2020 inspection report with a failure rate of 53.3% in 2021.

For 2021 inspections, six audits had problems in both internal control over financial reporting and in the financial statement, nine had deficiencies in the financial statement only, and one ICFR audit wasn’t up to snuff.

The news release also mentioned the firm has added PCAOB alum John Fiebig as the second independent member to BDO’s Audit Quality Advisory Council (AQAC), established in 2022. Fiebig is founder of ADIGEO Consulting, LLC — “a consulting firm focused on advancing audit quality for the benefit of strong capital markets” — and prior to that was senior deputy director and program leader for the Global Network Firm Program at the PCAOB.

Bloomberg Tax wrote about the press release when it came out and has now followed up with this article: BDO Pares Back Clients, Reforms Audit Practice to Boost Quality. Resident accounting firm watcher Amanda Iacone writes:

In the past few years BDO, among the six largest audit firms in the country, has restructured its audit practice, shrunk its book of public company clients, and launched a new learning program meant to train entire audit teams. It’s also aiming to frontload more work for its auditors to ease the burdens of the busy annual report filing season.

“Humans work a lot better when they have time to think and they’re not dealing with battlefield conditions,” Lillian Ceynowa, BDO’s national managing principal of audit quality, said in an interview with Bloomberg Tax.

Oh the poor India team. See: Rise Up! BDO USA Is Gonna Double Its Offshore Workforce, Mostly in India

Ceynowa said the changes are meant to improve regulatory inspection results and to remake the firm’s culture and shift auditor behavior.

“We are moving in the right direction,” she said, though predicting the firm’s progress won’t pay dividends until BDO’s current 2024 inspection results are published.

The next inspection report coming out will be for 2022. And, as mentioned above, it will have to be significantly worse than the last deficiency rate of 53.3% to prompt a press release that reaffirms a commitment to audit quality.

But wait! There’s more!

BDO is also considering updates to its audit methodology and a revamp of the core platform that auditors use every day. Last year, the firm began to shift the calendar for its audits, aiming for the bulk of its work to be completed before a client’s fiscal year ends.

Those changes won’t erase the strains of the busy annual report filing season but are meant to carve out more time for staff to research decisions or dig into red flags. Completing more work earlier in the audit also could help lead to fewer inspection findings, Ceynowa said.

A source of ours postulates there’s some kind of big regulatory settlement coming down the pike, we’ll just have to wait to see if that prediction materializes.

BDO Pares Back Clients, Reforms Audit Practice to Boost Quality [Bloomberg Tax]

The post BDO Is in Damage Control Mode appeared first on Going Concern.

To tide you over until we can do that deep dive, the good folks at TR just published an article on tax firms’ top strategic priorities. Talent continues to influence the obsessive thoughts that bubble over in firm leadership’s brains when they’re trying to fall asleep every night however growth, pricing, and efficiency are of significant importance, too. Depending on what size firm you ask.

Here’s a handy chart:

Says the full report:

• Small firms (1-3 people) tended to lean in the direction of maintaining the status quo, preferring a more balanced approach to prioritization.
• Midsize firms (4-29 people) were much more likely to pursue talent development as a priority and drive efficiencies through streamlined workflows and aggressive use of automation.
• Large firms (30-plus people) had the resources to pursue multiple priorities at once, including talent development and growth through efficiencies found using more sophisticated technology and automation. Large firms were also more likely to explore different pricing strategies for the broad range of business services they offer.

On the topic of pricing, Thomson Reuters says this is the first time ever it has appeared in the top priorities list. Ron Baker and the rest of the Death to the Billable Hour gang will love this part:

…largely because the wisdom of hourly billing is being questioned by both clients and their firms. Many clients don’t like hourly billing because it is unpredictable; hence the rise in flat-fee and project-based pricing, among other alternatives types of pricing. Firms, too, have come to realize that hourly billing doesn’t necessarily capture the true value of their services, particularly in the areas of business consultation, tax strategy, and decision support.

This makes a lot of sense when you think about how popular advisory services are these days. Don’t expect this change to happen as rapidly as automation, they’ve been debating this for like 15 years and the old-timers are really having trouble letting go. Here’s Ron Baker’s value pricing pitch from almost ten years ago:

A big problem with hourly billing is it’s an internally focused metric. It looks at our costs and our inputs. It doesn’t look at our outputs and outcomes. There’s nothing in the hourly billing formula that looks at client value.

The other problem with it is it limits an accounting firm’s income. As more and more firms are moving to the cloud, a lot of labor that CPAs used to do is now being automated. If you’ve got a business model that says, “I sell time,” and the time it takes you to do more work is being driven down because of all these technological changes, unless your hourly rates are increasing faster than productivity, your income is going to suffer, and your profitability is going to suffer. And our hourly rates have not been increasing faster than our productivity. So it’s a very limiting business model.

But back to the report. Comparing 2023 to 2024, we see efficiency still dominates the list, talent is once again a headache (note: retention is now the word of the day when we talk talent which should not be confused with the pipeline problems that get all the headlines), and growth has slipped a bit.

“Growth may have slipped down the priority list; but then again, lack of growth hasn’t been a problem for most firms either,” says the report. “Indeed, a majority of firms reported an average revenue increase of 24% over the past 12 months. So whatever firms are doing, it’s still working.” Mid-size firms interpret growth as expanding their client base while the larger firms see implementation of automation as the best way to grow. In other words, “growth” means different things to different-sized firms.

We’ll do a deeper dive into the report later, hopefully this has whet your appetite.

Survey Methodology:
Surveys for the 2024 State of Tax Professionals Report were conducted in the first quarter of 2024.* The survey involved 500 respondents from tax & accounting firms of all sizes, although a bit more than half (51%) of respondents were from midsize firms (4-29 people), and 38% were from small firms (1-3 people). By region, slightly more than half (51%) of respondents were from firms in the United States; the rest were from firms in the United Kingdom, Canada, Australia, Brazil, and Argentina. Also, 60% of the respondents were male, and the age range of all respondents was represented relatively equally by decade, from under 40 years old to over 60 years old. The vast majority (85%) of respondents reported having leadership roles in their organization, and almost half (48%) were either partners or principals.

The post Let’s Talk About This Year’s Strategic Priorities at Tax Firms appeared first on Going Concern.

So FT ran this yesterday: ‘Private equity groups poised to own one in three top US accounting firms‘ and in it, they paraphrased people familiar with the matter as saying “ten of the 30 largest US accounting firms could soon be in private equity hands.”

The article goes on to say:

The acquisitions by financial buyers of those two top-10 firms by revenue opened the floodgates to other deals, the people said, positioning private equity to increase its influence over the US accounting profession dramatically.

One top-30 firm, Atlanta-based Aprio, was planning a deal to sell a majority stake to the private equity firm Charlesbank Capital, according to people familiar with the situation.

Two more — New York’s PKF O’Connor Davies and Carr, Riggs & Ingram of Alabama — had engaged bankers to run sale processes, they said.

The two top-10 firms they’re talking about are Grant Thornton and Baker Tilly.

FT has some details on each of the firms mentioned, such as Carr, Riggs & Ingram shopping themselves out to three suitors and using “premier global boutique” investment bank William Blair to advise on the deal. And PKF O’Connor Davies working with Capstone Partners. Both firms failed to respond when FT reached out for their piece.

Aprio did respond but hit ’em with a no comment. We’re told by a tipster Aprio is in the middle of a private equity deal that is “all but finalized,” information that was passed along to staff in a town hall yesterday. This Reddit comment co-signs that story:

Comment
byu/Designer-Can-5891 from discussion
inAccounting

There’s also apparently some drama with the IT team getting ousted but we need to dig into that some more.

If you’ve got more info, you know what to do. Anonymous tips can be sent by email or text.

Update: There’s a Reddit thread about this situation worth sharing with you. The fear and uncertainty is not unexpected but unpleasant to read regardless.

Private Equity Buyout at Aprio
byu/Intelligent-End-8973 inAccounting

The post We Think We Know Who’s About to Do a Big PE Deal (UPDATE) appeared first on Going Concern.

• Firm structure and operational model
• Leadership and culture
• Talent
• Technology
• Financial performance and service lines

See: Here’s How Mid-Tier Accounting Firms Are Feeling About Private Equity and M&A for a breakdown on the PE and merger topic.

For this piece, we’re going to check out the talent portion and how hybrid work relates to it. We’ll get to technology in a later piece because once again this is going to run long. Everyone (by everyone I mean leadership) is waiting around for technology to swoop in and save the day but for the moment, adoption of next-gen tech solutions is slow. And that’s not necessarily a bad thing, the accounting profession is reactive and scared of taking big risks for a reason. See: Accounting Firms Will Not Be Leading the AI Revolution

The Talent Problem at Mid-Tier Accounting Firms

The short summary of the ICAEW’s findings is as follows:

Talent is the top challenge currently facing the mid-tier, with attraction and retention of qualified staff being the largest concern, and recruitment of trainees a secondary issue. The importance of future-proofing the skills of chartered accountants was recognized by firms, largely driven by changes in technology and the increasing breadth of work that they are likely to be required to perform. Firms recognize that they must be an attractive place to work. Nearly one-third of firms described their culture as ‘caring’ and while firms indicate a shift to more time working onsite, the majority still see hybrid working as the norm in the future. Investments in technology, offshoring and outsourcing initiatives can potentially help to address talent shortages and enhance operational efficiency.

Good luck with that.

An important distinction is revealed in the survey findings and it’s this:

“Recruitment of qualified staff was a top talent challenge for 67% of respondents, while recruitment of trainees was considered a challenge by 10%”

Meaning much lip service is paid to pipeline challenges but really, mid-tier firms don’t care so much about entry-level staff. Or at least they aren’t panicking about not being able to find them. A steady supply of fresh blood is how you get qualified staff but I suppose that’s a future problem we’re not too pressed about for now. They do sort of acknowledge this:

A top three talent challenge for 43% of those surveyed was ‘future-proofing skills’, which speaks to the need to ensure the quality of staff in the long term. Meanwhile, 45% of respondents confirmed that ‘succession planning’ was a key talent challenge. This seems to acknowledge the importance of retaining sufficient talent to maintain the partnership and its leadership team, which is corroborated by 14% selecting the ‘attractiveness of partnership’ as a challenge.

Respondents ranked their top talent challenges and, uh, yeah, recruiting trainees barely made the board.

Communication

Along with technological prowess, a good number of respondents listed excellent communication skills as most-desired in their staff.

Effective interpersonal skills With firms predicting that future clients will require more tailored support (31%) and demand a more personalized service (14%), effective communication and interpersonal skills will continue to be very important to build strong client relationships and collaborate effectively. Investing in business and professional skills at all levels within the firm would appear to be money well spent.

This is going to be a big problem in a few years as the group of professionals who experienced pandemic disruption four years ago at critical points in their adult lives like college and their first accounting job start reaching the higher rungs on the ladder. See: Big 4 Firms Are Noticing a Sudden Skills Gap in New Hires

On the topic of Gen Z — even though the mid-tiers clearly don’t care about the younguns — the report offers the usual crap about sustainability and purpose. No, Gen Z just doesn’t want to grind away at a spreadsheet for meager salaries. And millennials have been telling you this same thing for twenty years.

Culture
Gen Z have a different outlook on life to previous generations, prioritizing social responsibility, diversity, work-life balance and sustainability.

Let me interrupt them here. Stop it. Previous generations gave just as much a shit about work-life balance as Gen Z. It’s just that the talent pipeline was so robust no one in leadership cared to do anything about. Now that people at the experienced level are drifting away from the profession altogether the problem is getting worse because there are fewer people to share the load. If only they’d jacked up salaries 10-15 years ago when they had the chance.

Just 2% of firms surveyed described the culture of their firm as ‘environmentally conscious’, despite 38% stating that ESG considerations did impact decision-making at board level.

This disconnect may be contributing to the retention challenge within firms, as Gen Z seek employers that resonate with their beliefs and values. Although, when asked which words best described the culture in their firms, ‘caring’ was the third most popular choice, behind ‘collaborative’ and ‘client centric’. A sizeable proportion of respondents (21%-26%) also described their firms as ‘entrepreneurial’, ‘purpose-led’, ‘inclusive’ and ‘family-like’.

Let’s move on before I get annoyed.

Tied to communication, the report covered ways of working. According to this, the mid-tiers are accepting that some remote work is here to stay but clearly really, really want people in the office more.

Said the report:

Survey respondents indicated that client-facing staff are currently working on average two days in the office (or at client sites) each week. Looking to the next three years, respondents predicted this would change to staff spending the majority of their time in the office and at client sites. The portion of firms offering fully remote work is set to be nominal (2%), while at the other extreme 12% of those surveyed indicated that they anticipate a return to staff working fully on-site.

Changes to working patterns must allow firms to compete in recruiting and developing top talent while meeting the firm and client requirements to be on site. Hybrid working must be balanced with and aligned to individual client expectations. Close to one-third of those surveyed (31%) predicted that clients will want more tailored support in the future. Meanwhile, 14% believe clients will require more personalized relationships and their firm’s ways of working will need to deliver on this.

They really love saying they’re “collaborative,” don’t they? Walking up to someone’s desk to interrupt them when they’re in the zone is not collaboration, you guys.

When asked what word best described their firm’s culture, the most popular choice was ‘collaborative’ – which was selected by 45% of respondents. As hybrid working arrangements can create communication gaps and reduce spontaneous interactions among team members, there is a disconnect between that working model and many firms’ collaborative culture, driving a shift back to working in the office.

So that’s it on talent. If succession planning is really as important to them as they say they maybe should be a bit more worried about headcount than they purport to be. But whatever. Not my circus, not my monkeys spreadsheet jockeys.

Access the full ICAEW report here: Evolution of mid-tier accountancy firms

The post Here’s How Mid-Tier Accounting Firms Are Feeling About the Talent Crisis and Remote Work appeared first on Going Concern.

As you may remember, last November we were first out the gate with a rumor that Forvis was set to do a big merger. Apparently us letting the cat out of the bag was not well-received by certain Forvis partners who said “don’t believe everything you read on Going Concern” only for the news to hit the “real” media a day or so later. Still, they have a point.

Well unlike the Elliott Davis/Whitley Penn merger that fell apart in the eleventh hour — news that we also reported first *ahem* — Forvis and Mazars were able to hammer out the details and made their alliance official as of June 1.

Two leading professional services firms, Mazars, an international partnership operating in over 100 countries and territories, and FORVIS, a top ranked firm in the United States, today mark the official launch of their new global network, Forvis Mazars.

Forvis Mazars, a top 10 global network* is the largest new entrant into the global rankings in decades. As a two-firm network, Forvis Mazars is unique in the market and provides the agility, capacity and coverage to support clients wherever in the world they operate. This move brings increased choice in the market, serving the public interest.

It was exactly two years ago that BKD and DHG joined forces to become Forvis (that name is still stupid). Prior to that merger, the two firms were in the 14th and 17th spots, respectively, on the IPA 100 in 2021. Combining their powers pushed the conjoined firm to the 8th spot on the list the following year.

While the deal with Mazars’s global operation isn’t exactly a merger merger, Forvis did absorb Mazars USA. Mazars ‘Murica sat at #31 on last year’s IPA 100 ($258 million in revenue) so combined with Forvis’ $1.7 billion that’s still a ways behind #7 Grant Thornton’s $2.3 billion. Though who knows what’s going to happen at GT in the next few years. The absorption of Mazars USA will add 1,000 more professionals to Forvis’ existing stable of 7,000 and 14 office locations to however many Forvis had before which brings their total locations to more than 80.

The newly formed Forvis Mazars boasts more than 40,000 professionals in 100 countries. Mazars appears to have beat out Forvis for who gets to keep their logo as the new group is wearing Mazars’ old outfit.

The new network will have a global board overseeing operations. That board is:

Hervé Hélias will serve as the first Chair of the Global Network Board. Hélias also will continue to serve his ongoing mandate as Chairman of the Group Executive Board of Forvis Mazars Group, SC (formerly Mazars Group). Matt Snow, Chairman of Forvis Mazars, LLP (formerly FORVIS, LLP) will serve as Vice Chair of the Global Network Board.

In the United States, Tom Watson will continue to serve as CEO of Forvis Mazars, LLP (formerly FORVIS, LLP) and will also sit on the Global Network Board. Rob Pruitt, Fran Randall and Tim York from Forvis Mazars, LLP will sit on the Global Network Board.

David Chaudat, Pascal Jauffret, Véronique Ryckaert and Phil Verity from Forvis Mazars Group will sit on the Global Network Board.

Good thing Hervé Hélias isn’t going anywhere because that guy brings so much European swagger (Lord knows Forvis needs all the cool points they can get).

Alright, brace yourselves for the quotes.

Hélias comments: “This is a momentous and exciting time for our clients, our profession and our people. Mazars and Forvis have worked together for over 20 years and share a commitment to delivering an outstanding client experience. We are well positioned to deliver excellence, everywhere, under a single global brand. Clients will get consistent, high-quality, comprehensive services worldwide, and we remain agile and flexible to their specific needs. I am extremely proud to serve as first Chair of the Global Network Board. Working together, I am confident that our two firms will continue to empower our people to raise the bar for client service standards, while challenging industry opportunities to support future needs in local markets.”

“Forvis Mazars is built on our commitment to listen to our clients, anticipate the challenges they face, and deliver an unmatched client experience in all that we do,” Watson said. “This new network will quickly unlock new opportunities for our clients and our people, and both groups can feel confident that we are making decisions with their long-term success in mind.”

There are a few leadership changes to note as well.

New Managing Partners
Connie Cagle – Boston
Chris Clark – Dallas
Chris Lindner – Nebraska
Karine Philippon – California & Arizona
Danielle Solomon – Chicago
Heather Wallace – Birmingham, Alabama & Jackson, Mississippi
Andy Williams – Arkansas

New Assistant Managing Partners
Paula Ferreira – New Jersey
Craig Fine – Long Island
Marty Garland – Philadelphia
Carlos Martins – New York City
Rob Opitz – Fort Worth
Andy Young – Fort Wayne, Pittsburgh & Charleston

New Industry Leaders
Brad Brotherton – Healthcare National Industry Leader
Ashley Ensley – Financial Services National Industry Leader
Steve LaFrance – Healthcare Consulting Managing Partner

New Firm Leaders
John Roberts – Chief Performance Officer
Jim Blake – Co-Regional Managing Partner, Northeast Region

If anyone has details that didn’t make the press release and would like to ruin a partner’s day, get in touch. Tipsters are anonymous, always.

Congrats to the happy couple.

The post Forvis and Mazars Consummate Their Union with a Postnuptial Jerk Off appeared first on Going Concern.

As mentioned in this week’s news brief, the Institute of Chartered Accountants in England and Wales (ICAEW) put together a snazzy little report on the state of mid-tier firms based on a survey of managing partners. Keeping in mind that these are specifically mid-tier firms across the pond but the Brits are basically us with funny accents, bland food, and an unnecessary vowel littered throughout their words ending in -or. The biggest difference between our firms and theirs is that their advisory practices seem to be struggling even harder to secure work if frequent layoffs at large firms are any indication.

Without further blabbering, let’s get into the report.

Mergers & Acquisitions

As we predicted two years ago, firms of this size and under are merging — and acquiring — like crazy. We tend not to cover these stories because they’re not relevant to our predominantly US and Big 4-focused audience but I definitely see tons of them in my news feeds on a weekly basis. Says the ICAEW report:

While some accountancy firms favour lower-risk organic growth, the mid-tier has been active in using M&A for growth to meet client demand. The majority of respondents (64%) confirmed that their firm had acquired another in the past and 17% had been part of a merger. Of firms that had experienced fee growth in the past year, 21% was attributed to M&A.

And:

Whatever the approach, growth is an important item on firms’ agendas, with 29% of firms describing the culture of their firm as ‘growth led’. Looking ahead, using M&A to achieve rapid growth and build capacity appears set to continue in the mid-tier. More than one-fifth (21%) of respondents stated that their firm would look to merge with another in the next three years, and more than half (55%) are looking to make an acquisition. This propensity towards M&A was reinforced by respondents when asked for the key opportunities for their firm’s future, with 19% listing it among their top three.

Let’s add in here that now is a great time to absorb a practice or five because so many boomers who think succession planning is for bitches or who just assumed they’d get a ton of buyers at inflated prices are desperate to cash out. See also: The Old Guys Want to Cash Out. According to the most recent Rosenberg survey, 25 percent of all partners are over the age of 60, and 60 percent are over 50. It is, without a doubt, a buyer’s market and the mid-tiers are buying.

Private Equity

Move over talent, private equity is the profession’s hottest topic of 2024. Although the ICAEW’s research shows that only 12 percent of respondents had secured private equity investment, and 80 percent of those in the preceding three years, 57 percent of respondents ranked PE investment as a top three macro trend impacting the profession. 19 percent of firms said PE is attractive to them and 12 percent said it’s a top three opportunity (versus 7 percent who ranked it a top three challenge).

When discussing the opportunities around PE investment, respondents cited the ability to invest in technology, particularly artificial intelligence (AI) and automation, and the opportunity for growth. With 93% of firms surveyed looking to make further
investments in technology, capital injections from PE investors could be a great enabler and allow firms to get ahead of the curve.

As we’ve seen on our side of the pond, firms have said outright that private equity opens the door for them to make acquisitions. We saw this just the other week with Baker Tilly buying Seiler to gain a strong foothold in the tech-rich Bay Area within a few months of their private equity deal — that deal is rumored to be 50 percent of the firm and worth a billion dollars. Expect many more acquisitions to come.

So private equity is a hot topic and some mid-tier firms are interested but…

Close to two-thirds of respondents (62%) said that PE was “not [or] not at all attractive” to their firm. Furthermore, 17% of respondents saw remaining independent as an opportunity.

This is a valid concern. While firms appear to be getting around independence requirements by creative restructuring of their firms and quarantining off their audit practices, it’s certainly something to be cognizant of. SEC Chief Accountant Paul Munter directly flagged independence concerns related to PE deals in a recent statement:

Audit firms have also sought investments from third parties, such as private equity firms, that have not been subject to the same independence and ethical responsibilities as auditors. Depending on how those investments are structured, they could lead the firm’s professionals to question the firm’s commitment to both independence and high-quality audits. Firm leaders need to be sensitive to the message such arrangements could send and stand ready to correct any such misimpressions.

Calling it now, at least one of these PE’d-up firms is going to catch a fat independence violation within the next two or three years because they got sloppy about their post-PE restructuring.

Some visuals from the ICAEW because we love pictures:

We predict that chart will look very different two years from now as the “not attractive at all” crowd watches their competitors grow their practices in ways that wouldn’t be possible on billable hours alone. The “Not attractive at all” column will shrink but that won’t necessarily mean large numbers of firms start jumping into PE. They’re comprised of risk-averse accountants after all.

That said, many firms in the ICAEW survey are understandably concerned that PE will do a Red Lobster on their firm. It’s rumored — rather, people with eyes and brains are postulating — that Grant Thornton’s recent layoff of 350 people is due to PE-related housekeeping. No doubt more PE-aligned firms will be trimming fat as their investors seek ways to streamline the business. Firms that are already a hot mess will be gutted and sold off in parts.

And there’s another concern: the personal touch. It’s the family-owned grocer versus Wal-Mart.

Conversely, maintaining independence may support firms in upholding their unique identity, values and client approach, which some firms believe could be jeopardised under external ownership. More than one-fifth of respondents (21%) described the culture of their firm as ‘family-like’, and a further 17% as ‘traditional’, which may not be seen as a natural fit for PE investment. One respondent suggested that there were already “disgruntled clients” unhappy with accountancy firms taking on PE investment, and that remaining independent was an opportunity for their firm.

So this is interesting. When news of EY splitting its audit and consulting practices hit the news, we saw their competitors championing their “multidisciplinary private partnership model” as superior to the chopped up service lines EY was debating. See: Deloitte Global CEO Joe Ucuzoglu Just Mic Dropped EY’s Messy Split Drama and PwC Plans to Poach Unhappy Senior Managers From EY. In both of the linked examples, EY’s direct competition was quick to plant a seed in clients’ minds that their way of doing business was superior to what EY would have going after the split. We should expect to see similar behavior with non-PE firms versus PE-funded ones.

Brace yourselves for a bunch of corny “wE’rE a FaMiLy” marketing from firms that are morally opposed to private equity investment.

OK, but there’s another concern at these firms. While private equity is touted as a band-aid solution to the talent shortage (theoretically, private equity cash can help fund better salaries and efficient technology), some firms think it is more con than pro.

Comments from those looking to remain independent highlighted a sentiment that a PE model did not value people in the same way as traditional partnership structures. One respondent stated that staying away from PE was an “opportunity to recruit good staff that PE-backed firms underappreciate”. Another cited their firm’s desire to: “…retain a ‘traditional’ people-focused practice model which, in the light of increased private equity involvement in other practices, may make us more attractive.”

We have no doubt this will be the case. The public accounting model is shitty enough already without adding another layer of profit bloodletting to it.

A third respondent said: “We remain a privately owned network of businesses. [We see an] opportunity to attract other like-minded firms who wish to avoid PE funding and all that goes with that.”

Again, can totally see that. Aspiring retirees with their practices on the market may prioritize a culture match over a quick sale. Depends on how desperate they are to cash out I suppose.

Choice quote from this section:

Oh fuck off, firms can afford outsourcing without PE. That’s the whole point of doing it, you scrub.

This article is already long enough so we’ll stop here and hit part two on talent and technology tomorrow.

The post Here’s How Mid-Tier Accounting Firms Are Feeling About Private Equity and M&A appeared first on Going Concern.

Based in Massachusetts, Rinke has more than two decades of international tax experience, notably involving cross-border transactional and operational planning for multinational corporations. His diverse industry experience includes pharmaceutical, biotech, manufacturing, chemicals, semiconductors, retail, and finance.

As you can see, he’s thrilled to be opening this next chapter in his esteemed professional career.

The rest of the news release is the usual fluff meant to flaunt their new recruit’s wealth of experience to current and prospective clients. “Rinke is focused on providing strategic guidance that helps clients address changing macroeconomic conditions, reconfigure operational profiles to improve business sustainability, and navigate complex global tax laws and regulations.” We get it, he’s good.

PwC isn’t specifically mentioned in the press release (“a Big 4 firm”) because that would be tacky. They do, however, drop other names:

He earned a JD, cum laude, from Syracuse University School of Law; an LLM in Taxation from Georgetown University School of Law; and a BA in Philosophy, cum laude, from Minnesota State University Moorhead.

Going by Daniel Rinke’s LinkedIn experience, it’s unclear if this was an outright robbery. Usually when someone is unhappy at their current firm and leaves for another, they align their leaving and starting dates to reflect a direct jump which he has not.

Hilarious. Did a year as associate at KPMG and was like nah, I’m outta here. Good for you, Dan.

Best of luck to him in the new gig. That’s not sarcastic.

Rinke joins CohnReznick as International Tax Principal [CohnReznick]

The post CohnReznick Snags a Longtime PwC International Tax Guy and Issues a Press Release appeared first on Going Concern.

The Chicago-based firm is in the process of notifying the workers this week, people familiar with the matter said. The cuts, equating to 3.5% of the U.S. workforce, span advisory, audit and tax up to the level of managing director, the people said.

Grant Thornton has made targeted staffing adjustments to address evolving demand in select business segments, the firm said in a statement. “The firm continues to invest and grow its team, and is on track to deliver another fiscal year of strong performance,” the firm said.

Yeah you better have a fiscal year of strong performance.

GT’s US headcount is around 9,700. They laid off 3 percent of the workforce around this time last year, about 300 people, and shed another 200 in November 2023.

If anyone has more details holla.

The post Layoff Watch ’24: Grant Thornton Does 350 People a Favor appeared first on Going Concern.

As for how it went down:

Meetings were added to people’s calendars late Thursday evening.

Friday rolls around and:

Comment
by from discussion
inAccounting

Classy, Crowe. As far as we know not everyone was on a single call, some laid off staff had one-on-ones.

The firm states it has “more than 5,000 specialists delivering exceptional client service in offices across the US,” three percent of that would be 150 people. Their Fortune Great Place to Work page — they came in #32 on this year’s list — says the exact number is 5,121. 4,921 now.

One commenter here says the OG partners at Crowe aren’t bringing in business leading to too many people twiddling their thumbs at the bottom rungs of the ladder. “There are older partners who are just dead weight, not selling anymore, but they keep getting the big K-1,” they wrote. “Not long ago they were hiring like crazy and appears overhired at this point. But some staff with low hours is driven by the fact the partners aren’t selling work. Plus this firm has created such a soft culture, with too much emphasis on DEI. It’s crazy that there’s no change in leadership at the top. They’re going to pin it all on underperforming staff and the market, which is some of it, but there are real leadership issues at this firm.” As of 2022, the firm had almost 500 partners (source).

As for how the firm is doing, Crowe hit the billion dollar revenue mark for the first time in 2022 and saw $1.3 billion in revenue for the fiscal year ending March 31, 2023.

The post Layoff Watch ’24: Crowe Cut Some People on Friday, Here’s What We Know appeared first on Going Concern.

The press release reveals a clue to Baker Tilly’s big plan: get in on that sweet Bay Area tech money.

This move represents Baker Tilly’s commitment to expanding its footprint in the San Francisco Bay Area, reinforcing its dedication to delivering unparalleled service to family offices and ultra-high-net-worth clients.

With a 65-year legacy, Seiler has established itself as an iconic advisory, tax and accounting services provider with deep roots in the Silicon Valley and the San Francisco Bay Area. Seiler’s reputable work serving ultra-high-net-worth individuals, families, closely held enterprises and non-profit organizations across the country strengthens Baker Tilly’s expertise in this space and its dedication to delivering tailored solutions and fostering enduring client relationships. Seiler’s legacy speaks volumes about its expertise and influence, making it a natural choice for Baker Tilly as it seeks to bolster its Bay Area presence and capabilities.

“The Bay Area market is a major business incubator on the West Coast and an international connection point,” said Baker Tilly Bay Area Managing Partner Lynette Stolarzyk. “Our combination with Seiler will enable us to continue growing and injecting innovation, value creation and an elevated customer experience in this pivotal market.”

The deal will involve some personnel changes. Seiler CEO George Marinos will become Baker Tilly’s Regional Tax Leader – Western U.S., succeeding Gabe Torre who will step into the role of Managing Partner – Western U.S. That means current Western MP Steve Milner (“with an illustrious 35-year career at Baker Tilly and Squar Milner,” the press release adds) will retire. Seiler Partner Ron LaVelle will be Baker Tilly Private Wealth practice leader.

We’ve been hearing rumors of some other personnel changes at Baker Tilly that won’t be making press releases if you catch our drift. If you happen to know anything about that, get in touch by text or email (anonymous, always).

Baker Tilly strengthens Bay Area presence with Seiler acquisition [Baker Tilly]

The post Flush With PE Cash, Baker Tilly Buys the Bay Area’s Seiler appeared first on Going Concern.

BDO has sued yet another defector (see earlier: BDO Lawsuit Alleges a Defector Took the Team With Him When He Jumped Ship to Another Firm) and this time the defector, one Caleb Crandell, is fighting back.

The full counterclaim is embedded at the bottom, let’s start with the basics. Also, here’s a copy of the original complaint on Scribd and a Justia link for BDO USA P.C. v. Crandell, Case Number: 3:2024cv00012. If you want to skip past this backstory and head straight to the explosive allegations against BDO, click here to go to that part of the article.

Tax partner Caleb Crandell left BDO for Armanino in November 2023 where he’s currently leading the National Private Equity & Asset Management Tax Practice. One of his direct reports, Justin Rojas, also left for Armanino that same week (Rojas is getting sued too, we’ll cover that one in a separate article because this one is already a lot). BDO alleges Crandell raided his clients and some BDO employees on his way out, Crandell denies this and says the clients and employees left of their own accord “because of BDO’s failure to ensure that those clients were adequately serviced and its mistreatment of employees.” The firm says Crandell owes BDO thirty percent of the annual earnings of the four employees he allegedly “solicited away from BDO” plus an additional ten percent for each year of service of the employee to cover training costs. That amount totals $343,400.00 for the solicitation of the named ex-BDO employees, Rojas, Timothy Vacchi, Kaylin Koopmans, and Tara Dunphy. They all work at Armanino now.

BDO’s claim is that restrictive covenant obligations state that Crandell may not, directly or indirectly, solicit or perform accounting, auditing, tax, and/or consulting services for BDO clients for whom he directly provided substantive services during his partnership in and later employment with BDO. Crandell “admits that Plaintiff seeks to impose restrictive covenants against him” but “denies the implication that those restrictive covenants are enforceable.”

Along with the exit of the four employees, BDO’s major beef is with clients A, B, and C defecting to Armanino. One of them allegedly said they severed their relationship with BDO and went to Armanino specifically because Crandell and Rojas were there now. BDO’s complaint is in italics, Crandell’s response in bold.

On or about December 12, 2023, three BDO clients to whom Crandell and Rojas had directly provided substantive services informed BDO that they would no longer use BDO’s services.

ANSWER: Defendant is without sufficient information to admit or deny the allegation of what, if anything, three BDO clients stated to BDO on or about December 12, 2023.

One of these clients, Client A, specifically informed BDO on a call that it was following Crandell and his team to Armanino. The other two clients, Client B and Client C, are also following Crandell, Rojas, and the rest of that team to Armanino.

ANSWER: Defendant is without sufficient information to admit or deny the allegation of what Client A stated to BDO. Defendant admits Client A, Client B, and Client C left BDO for Armanino.

Further, Crandell scheduled a happy hour with Client B’s Chief Financial Officer (“CFO”) in the days leading up to his departure from BDO.

ANSWER: Defendant denies the allegations contained in Paragraph 9 of Plaintiff’s Complaint. Defendant admits that he attended a happy hour with the CFO of Client B, as was commonplace practice after certain milestones, but Defendant does not believe he scheduled it nor does he recall when this took place.

This is an email from Client B included in BDO’s suit:

Scott Grimm oversees BDO’s Tax Practice across Colorado and Wyoming, Crandell lives in Colorado.

BDO adds this allegation in their suit:

Client A told BDO that Crandell and Rojas were the reason why Client A was going to Armanino.

LOL.

On December 14, 2023, BDO sent a letter to Crandell demanding that he compensate BDO for the lost clients—Client A, Client B, and Client C—in accordance with the terms of his agreements with BDO. “Defendant admits that BDO sent a letter to Crandell falsely accusing him of violating his agreements with BDO and demanding money,” says his answer in the counterclaim. “He denies the remaining allegations contained in Paragraph 73 of Plaintiff’s Complaint, including the implication that he breached any agreement with BDO and that he was the cause of any damages to BDO.”

Specifically, the letter demanded that Crandell compensate BDO (a) $378,003.20 for the loss of Client A’s business; (b) $1,895,806.46 for the loss of Client B’s business; and (c)$346,591.43 for the loss of Client C’s business

Further into the complaint we get to the language in the BDO Partnership Agreement:

Crandell entered into an Amended and Restated Partnership Agreement (the“Partnership Agreement,” attached here to as Exhibit 1) with BDO’s predecessor, BDO USA, LLP on August 1, 2020, that contains the following client and prospective client non-solicitation covenant:

[I]f, without the specific consent of the Board of Directors, a Partner at, prior to, or within two years after, his/her termination from the Partnership:

(a) Directly or indirectly solicits or obtains for himself/herself, or for a firm with which he/she is or becomes associated, engagements to perform, or if he/she or a firm with which he/she is associated does perform, accounting, auditing, tax and/or consulting services, or related services, or any other services which the Partnership then offers directly or through an affiliate, for a client of the Partnership for whom such Partner directly provided substantive services during his/her employment by or membership with the Partnership (other than personal clients developed by such Partner only as a result of his/her independent recruitment efforts which the Partnership neither subsidized nor otherwise financially supported as parta program of client development) (a “Direct Client”), or a prospective client that such Partner directly recruited or solicited during such Partner’s employment by or membership with the Partnership (a “Direct Prospective Client”), or causes a Direct Client or any person, company, partnership or other entity who provides, has provided or would reasonably be expected to provide referrals of clients or prospective clients to the Partnership to terminate that relationship. . . the said Partner shall compensate the Partnership for any loss, damage and expense suffered by the Partnership (the “Damages”).

The Partnership Agreement also contains the following employee non-solicitation agreement:

[I]f, without the specific consent of the Board of Directors, a Partner at, prior to, or within two years after, his/her termination from the Partnership. . .(b) Lures away or causes an employee or Partner of the Partnership to leave its employ. . . the said Partner shall compensate the Partnership for any loss, damage and expense suffered by the Partnership (the “Damages”)

The damages for a breach of either of the non-solicitation covenants are set forth in the Partnership Agreement as follows:

(i) For any engagements lost by the Partnership under (a) above an amount equal to one hundred fifty percent (150%) of the fees charged by the Partnership either(x) during the last full fiscal year during which the Direct Client was a client of the Partnership or (y) during the twelve (12) month period prior to the last date upon which the Partnership performed services for the Direct Client, whichever is greater;

(ii) For Direct Prospective Clients, one hundred fifty percent (150%) of the proposed fee;

(iii) Under (b) above, an amount equal to thirty percent (30%) of the annual earnings of each employee or Partner who leaves, to cover recruiting replacements, plus an additional ten percent (10%) for each year of service of the employee to cover training costs.

This part is hilarious:

31. In exchange for his consent to the Partnership Agreement, Crandell was made a Partner at BDO USA, LLP and received significant compensation, benefits, and access to confidential and trade secret information. ANSWER: Defendant denies the allegations contained in Paragraph 31 of Plaintiff’s Complaint

OK, now the juicy part. A tipster helpfully summarized the items outlined in Crandell’s counterclaim:

• BDO refused to repay Crandell his capital of $151k but reported the proceeds in his income tax form
• BDO leadership made false and misleading statements to get the ESOP vote to pass
• BDO misled the partnership that there was no private equity transaction
• BDO delayed partner retirements and reactivated retired partners to garner sufficient votes
• BDO didn’t allow partners sufficient time to sign new employment agreements
• BDO forced Crandell to inflate revenue to prop up the firm’s valuation ahead of an ESOP deal that was only announced to the partnership a week ahead of any voting in Orlando [Ed. note: this checks out with information we’ve been given from multiple sources inside BDO]
• BDO refused to promote high performing directors, prompting them to look elsewhere

This is directly quoted from said counterclaim:

In the summer of 2023, the Board of Directors and majority partners of BDO USA LLP convinced the partners to vote to approve the conversion of the partnership to a professional corporation by making false statements and materially misleading omissions, including that the conversion would benefit all partners, including the minority partners and, further, that there was no private equity transaction on the table. In early June 2023, Wayne Berson, CEO, provided false information on an all- partner call stating that the conversion was intended to simplify tax filings and specifically stated that there were no discussions with private equity and there were no private equity transactions in the works

Upon information and belief, BDO reactivated retired partners right before the ESOP transaction and delayed the retirement of several partners to obtain additional votes to obtain enough votes to secure the ESOP transaction. However, a few weeks after the conversion, the majority partners were told that Plaintiff had been in conversations with private equity investors for months. In order to sweeten the deal for the private equity investors and some (but not all) of the partners, Plaintiff began to pressure Defendant to overinflate revenues. Defendant refused. On or about June 10, 2023, Plaintiff presented Defendant with the BDOPartner/Principal Employment Agreement, Exhibit 2 to the Complaint, setting forth the terms and conditions of his employment with BDO USA, LLP. BDO only gave Defendant 10 days to sign the agreement in violation of Colorado law [Ed note: Reminder, Crandell is a resident of Colorado]

In early August 2023, the firm held an all-partner meeting in Orlando, Florida and at this meeting a representative from State Street, investment bank, and Apollo, private equity lender, thanked Mr. Berson for partnering with them over the last 15 months to complete the transaction. Clearly this statement represented that BDO had misrepresented to their partnership the purpose of the ESOP transaction and corporate conversion.

See our earlier coverage: Let’s Speculate Wildly About Why All the BDO USA Partners Are Getting Together for a Secret Meeting in Florida (UPDATE)

Partially as a consequence of the substantial debt Plaintiff incurred in connection with the conversion and adoption of the (ESOP), Plaintiff began to hemorrhage money. It undertook substantial cost-cutting measures, including not providing employees with raises and previously promised bonuses.

On October 23, 2023, Scott Grimm, Tax Market Leader, drafted an email to BDO leadership Matthew Becker, Hoon Lee and Brent Hagerman explaining that both Tim V and Justin Rojas can double their salaries by leaving. He further explained that if BDO cannot get them close to $400K some of BDO’s largest relationships will be at risk. He goes on to state that if BDO cannot secure Rojas he does not think that the PE work will stay at BDO.

Oh look, a picture of that email:

I can transcribe the text of this email later.

As the email reveals, Scott Grimm advises BDO leadership that BDO will lose its key people based on how they had been treated by BDO, in that BDO had failed to support them,recognize their tireless work and compensate them according to market demand. Because Plaintiff misrepresented the corporate conversion, lacked operational transparency, and pressured Defendant to inflate revenues leading up to the ESOP, Defendant decided to resign from BDO.

On the clients, Crandell says it’s BDO’s own fault the firm lost them when he left.

On or about October 23, 2023, Defendant provided advance notice to BDO that he was resigning. He offered to remain with BDO for three months to assist BDO with transitioning his work to other employees and thus ensure a smooth transition that protected not only BDO, but also the clients for whom Defendant was providing services.

A smooth transition was particularly necessary for Clients A, B, and C, as those clients were in the middle of important and complicated transactions.

BDO rejected Defendant’s offer to assist his clients with the transition and, instead,cut off his access to his computer and all BDO related documents and removed him from the premises on or about November 4, 2023.

BDO’s decision to reject Defendant’s offer to assist with client transition negatively affected its clients. For instance, the following email was sent to Scott Grimm by one of the clients referenced herein:

“Hey Scott, please give me a call. We have a transaction closing next week and need the tax analysis that Justin was working on ASAP. I spoke with Tim yesterday and he let me know about Caleb and Justin being let go over the weekend. He said that you guys were getting into their accounts and would not miss a step, but I showed up for our weekly BDO tax call at 9am this morning with nobody on the line. We have $50M dividend recap transaction on our most complicated investment that is closing next week. I’m in shock that we can have a transaction like this going on and its being lost in the shuffle. How can you cut off my team from communication without a plan to transition the immediate work that is due? Let me know when you can speak.”

Defendant had a long-standing relationship with Clients A, B, and C. Upon information and belief, those clients were happy with his services.

Clients A, B, and C were unhappy with BDO’s services after Defendant’s departure and particularly BDO’s failure to provide for a smooth transition because it could have resulted insignificant financial ramifications to the clients. As a result, BDO’s own actions jeopardized its relationship with its clients.

But wait, there’s more! Crandell says BDO owes him money.

Plaintiff has refused to pay the $151,112.52 it admits it owes Defendant in connection with two promissory notes representing his share of the profits and losses of the former BDO USA, LLP (a Cash Capital Promissory Note and an Undistributed Earnings Promissory Note) and his share of the amounts owed him related to the operation and sale of BDO Wealth Advisors, LLC BDO Wealth Advisors to Choreo Advisors following BDO USA, LLP’s conversion to a professional corporation.

Plaintiff owes Defendant $151,112.52 allocated as follows: $49,769.00 for the sale of BDO Wealth Advisors; $56,302.52 for his portion of the BDO Capital Account on the date of the conversion of the partnership to a corporation; and $45,041.00 for his portion of the undistributed earnings account of BDO USA, LLP as of the date of the partnership’s conversion to BDO USA, P.A.

The proceeds from the BDO Wealth Advisors sale were distributed at the end of January 2024. Defendant learned about the distribution because it has been identified as taxable income in his tax documents, however BDO has withheld the distribution from Defendant.

Plaintiff provided defendant with certain tax records and other documents admitting it owed him $151,112.52. Those records contain personal financial information and are not attached to this Answer and Counterclaim.

In an email dated January 28, 2024, Defendant requested the amounts owed him, but Plaintiff refused to pay him.

The counterclaim then says after getting a letter from Crandell’s lawyer, BDO “informed him that it was unilaterally refusing to pay him the money because it claimed he violated the unenforceable restrictive covenants in the BDO USA, LLP Amended and Restated Partnership Agreement and the BDO/Partner/Principal Employment Agreement and that it had the right to ‘withhold or defer payment of proceeds from the sale of BDO Wealth Advisors and the two promissory notes to Mr. Crandell.'”

Whew. So that’s it. Keep you posted.

BDO v. Crandell, Crandell A… by Adrienne Gonzalez

Contact the editor. Text tips to 202-505-8885, tipsters are always anonymous.

The post Lawsuit Counterclaim By an Ex-Partner Accuses BDO of Shady Behavior Around the ESOP, PE Deal, and Corporation Conversion appeared first on Going Concern.

Among the #TaxTwitter trends we’ve witnessed of late — like enforcing proper onboarding and not proceeding with the relationship if the prospective client can’t bother to complete it — a new one is emerging. Faced with staffing shortages, firms are taking the unconventional approach of turning away work that isn’t worth the trouble.

Exhibit A:

Sucks for clients but great for the overworked professionals who serve them. Don’t say you weren’t warned, clients.

The post Confidential to Clients: You Better Act Right, You’re Getting Graded Now appeared first on Going Concern.

PPG says:

In a statement, Deron Curliss, assurance practice leader in BDO’s Pittsburgh office, said the new space will provide “a flexible and collaborative work environment” for employees.

“BDO’s core purpose is helping people thrive every day, and this space exemplifies that mission,” he said.

The firm also was drawn to amenities like a fitness center, on-site retail, and outdoor areas for employees, added Michael Rick, BDO’s tax practice leader in the Pittsburgh office.

“Our team works incredibly hard to serve our clients and this space offers our professionals the tools to continue providing the exceptional service BDO is known for, while also prioritizing their well-being,” he said.

Said PG, BDO will be downsizing significantly when they go from the about 67,000 square feet they’ve got now to 16,500.

Map view of the current office to the new one:

Alright, let’s check out this FNB joint.

The New FNB Financial Center from Buccini / Pollin Group on Vimeo.

The creepy superimposed office drone technology has improved dramatically in the last few years, hasn’t it? Still creepy.

They apparently have a live construction cam, we couldn’t get it to work.

And a walkthrough office floor tour “for evaluation purposes only.”

It adds up for them: Accounting firm moving to FNB Financial Center at former Civic Arena site [Pittsburgh Post-Gazette]

The post BDO to Undergo Major Office Space Shrinkage in Pittsburgh appeared first on Going Concern.

The methodology is as follows:

The Vault Accounting 25 is compiled using a weighted formula that reflects the issues accounting professionals care most about, combining quality of life rankings (such as culture, satisfaction, work/life balance, and compensation) with overall prestige.

While PwC’s placement is no surprise, the rest of the list contains a few. The top ten with their 2024 ranking in parentheses. Look at you, EY! They came so close to falling off of the list last year.

1. PwC (1)
2. KPMG (3)
3. EY (25)
4. BDO (4)
5. Plante Moran (7)
6. CohnReznick (9)
7. Baker Tilly (8)
8. RSM (5)
9. Schellman (22)
10. Moss Adams (6)

Where’s Deloitte? NOWHERE TO BE FOUND. Not on the top ten, not on the Vault Accounting 25 at all. The rest of the list, in order:

11. Marcum
12. PKF O’Connor Davies
13. H&CO, LLP
14. Eide Bailly LLP
15. Frank, Rimerman + Co. LLP
16. Grassi
17. Withum
18. KSM (Katz, Sapper & Miller)
19. BPM LLP
20. Whitley Penn
21. Aprio
22. HCVT
23. Akram
24. Cherry Bekaert Advisory, LLC
25. Armanino LLP

The Most Prestigious Accounting Firms list looks more like what we’d expect from a list of accounting firms with swag. As you’ll see from last year’s firm rankings in parenthesis, PwC and Deloitte swapping spots is the only different from the 2024 list.

1. PwC (2)
2. Deloitte (1)
3. EY (unchanged)
4. KPMG (unchanged)
5. Grant Thornton (unchanged)
6. BDO (unchanged)
7. RSM (unchanged)
8. Baker Tilly (unchanged)
9. Crowe (unchanged)
10. CohnReznick (unchanged)

Check out both lists and details on each firm from Vault here: Most Prestigious Accounting Firms and Vault Accounting 25.

The post PwC Is the Best, Prestige-iest Accounting Firm on the Vault Accounting 25 appeared first on Going Concern.

This year, they only narrowly beat out Deloitte again.

Plante Moran and Deloitte climbed from 16 and 17 (respectively) on last year’s list where they were also close neighbors.

Other accounting firms on the list sorted by descending order with last year’s rank in parentheses are:

• #22: PwC (30)
• #32: Crowe (60)
• #44: RSM (42)
• #54: Ryan (56)
• #64: EY (50)
• #72: KPMG (38)

So Deloitte stayed in the top 20, PwC climbed a few spots up from #30 last year, EY tumbled 14 places to #64 and KPMG…well.

Full list and company profiles here.

The post Mid-Tier Firms Are Kicking Big 4’s Ass on Fortune’s 2024 Best Companies to Work For List appeared first on Going Concern.

According to earlier reporting, the property in Gray, TN (pop. 1,342) could have been turned into a school. Instead it will be filled with the glorious sound of dozens of accounting firm staff with earbuds in hoping no one talks to them once the space is ready for Blackburn Childers & Steagall PLC to move in.

Per a building permit pulled by Channel 11, a local construction company will be doing $265,000 of demo work first.

The current office is in one of those beige professional parks that make you question what you’re doing with your life when you pull into the parking lot every morning so this will be a nice upgrade.

Why is this news? Because sometimes we like to hear about what the little guys are doing. It is also a strong signal that the littler firms are going all in on return-to-office and getting their staff under one roof these days. The MP literally said that. “We feel like being under one roof is going to help us give better client service and be more efficient with our work and gives us plenty of room to grow into the future,” said managing partner Andy Hatfield to WJHL. There’s another 75,000 square feet in their new building, no tenant has signed for now.

BCS is #244 on the esteemed INSIDE Public Accounting Top 500 with $18,594,028 in revenue.

Accounting firm preps for move into Citi building [News Channel 11]

The post The 244th Largest Accounting Firm in the US Is Getting a Big New Office appeared first on Going Concern.

Reuters:

BDO also named as a defendant Phuoc Vin Phan, a former national practice leader of its healthcare transaction advisory team. Phan led the 11-member group from 2019 to January of this year, according to the lawsuit, before jumping to New York-based Ankura. The lawsuit alleged Phan broke his BDO employment agreement in the move.

The language used in this lawsuit is pretty incendiary. It alleges Ankura “set its sights on stealing the BDO Healthcare TAS practice rather than building a practice of its own from the ground up” and that it would use Phan to accomplish that goal.

As part of this scheme, while still a partner of BDO, Phan solicited at least seven of the 11 full-time employees in the Healthcare TAS practice—all of whom reported directly to him—to leave their employment with BDO and join Ankura. His conduct violated his fiduciary duty to BDO as well as the plain terms of his former partnership and employment agreements with BDO. These were all duties and commitments Ankura knew about.

Phan’s egregious misconduct did not end there. On his way out the door from BDO to Ankura, he stole or attempted to steal voluminous quantities of BDO’s confidential information and trade secrets as well as the confidential information of multiple BDO clients, with the goal of taking all of that information to Ankura and using it in his new job for the benefit of Ankura.

Three of the employees Phan solicited to leave BDO and join Ankura also stole or attempted to steal BDO’s confidential information and trade secrets and that of its clients and to take that information for Ankura. Two of them, Thomas Bradey (“Bradey”) and Mitchell Thomas (“Thomas”), were successful in their theft. They transferred substantial quantities of BDO’s confidential information and trade secrets to Ankura for Ankura’s financial gain.

All remain employed by Ankura today. Ankura, with Phan’s assistance, has stolen BDO’s Healthcare TAS practice. BDO now seeks a verdict that will require Ankura and Phan to pay for what they have stolen and to compensate BDO for the collateral harm their tortious conduct has caused.

BDO is seeking $60 million in damages and an injunction that would prevent Ankura from pulling another robbery off this caliber (note: we mean “robbery” in the meme sense, not in the “a crime was committed here” one). The lawsuit embedded below gives quite a bit of insight into BDO employment agreements and states Phan was unhappy with BDO changing from a partnership to a corporation structure last year, might be worth a deeper dive.

Per the lawsuit, Phan resigned from BDO on January 9, 2024 and subsequently told the firm he was taking a new position at Ankura. And then:

Between January 5 and January 12, 2024, seven of the then 11 full-time employees in BDO’s Healthcare TAS practice—all of whom directly reported to Phan—resigned from BDO. They are Johnny Beauplan (“Beauplan”), [Thomas] Bradey, Zachary Gentry (“Gentry”), Aram Gupta (“Gupta”), William Mixon (“Mixon”), Jeffrey O’Brien (“O’Brien”), and [Mitchell] Thomas.

You can read the rest:

Keep ya posted!

To speak with Going Concern editors and/or submit a confidential tip, contact us at editor@goingconcern.com or text 202-505-8885. Tipsters are always anonymous.

The post BDO Lawsuit Alleges a Defector Took the Team With Him When He Jumped Ship to Another Firm appeared first on Going Concern.

Of note, and barely mentioned in the press release, is Edwards’ prior gig:

Edwards joins Crowe from EY, where he began his career and most recently served as Americas, Consumer Industry Supply Chain Leader. In addition to his work with EY, he also served as a senior leader of supply chain improvement with General Mills. Edwards received his BBA from the University of Notre Dame and an MBA from Indiana University.

His LinkedIn is conveniently linked in the announcement:

Wow, that’s a direct yoink from EY. Nice.

“I am thrilled to join Crowe, a firm with an impeccable reputation built on culture and values,” Edwards allegedly said. “Every interaction I’ve had with people in the firm has demonstrated that the reputation they’ve earned is well founded and very real.”

Crowe LLP names Mike Edwards new managing principal of its consulting business [PR Newswire]

The post Crowe Poaches Someone From EY and Issues a Press Release appeared first on Going Concern.

That’s it, that’s the story.

Accounting firm FORVIS moves to top floor of PNC Tower in downtown Louisville [WHAS]

The post FORVIS Shows Off Its New Office In Loo-Ville appeared first on Going Concern.

Drew Andrews, managing partner and CEO of Hartford-based accounting and consulting firm Whittlesey, said the main factor driving mergers is the significant number of smaller firms with aging partners who are looking toward retirement, but don’t have the “backup” on staff to fill their shoes.

Michael Sabol, a founding partner at MahoneySabol, said a recent survey by consulting firm Rosenberg Associates found 25% of all partners are over the age of 60, and 60% are over the age of 50.

Andrews said mergers have always been an industry option, but 10 years ago, it was more of a seller’s market. Today, it’s more of a buyer’s market. “There are probably 10 firms out there for every two people looking to buy,” he said.

The article also notes that the UConn School of Business accounting program has seen its enrollment drop from a peak of 160 in 2017 to 90 last fall, a decrease of 43.75%.

Sounds like a great time to pick up an accounting firm or two at bargain basement prices.

Earlier:

The post The Old Guys Want to Cash Out appeared first on Going Concern.

RSM, the leading provider of assurance, tax and consulting services to middle-market businesses, has today announced worldwide revenues of US$9.4* billion for the 12 months to December 2023, a year-on-year growth of 16%.

It seems they forgot to define the asterisk as there is no corresponding footnote explaining why it’s there. Whoopsie.

Their press release bullet points as follows:

• Double-digit growth in five RSM regions for third successive year
• RSM headcount worldwide increases by 13% to 64,000
• RSM’s global brand re-energised to better support RSM’s strategic direction
• Global tech and digital investment increased four-fold.

Last year, the headcount was up 10% to 57,000 professionals and they were thrilled to report global revenues were up over 41% in three years.

Fee income in USD and increase from last year by service line:

• Audit: $3.6 billion (+13%)
• Tax: $2.6 billion (+17%)
• Consulting: $3.1 billion (+17%)

RSM had single-digit growth in tax and audit in 2022 (8% and 6% respectively) so that’s a healthy jump. 2022 global fees from consulting grew by 37% so the growth has slowed but still strong.

All regions showed impressive growth. Europe grew by 36% compared to 2022 as a result of sustained development across 33 Member Firms and the addition of RSM Ebner Stolz in Germany. North America, RSM’s largest region by revenue, saw an impressive 13% rise in fee income for the latest financial year, powered by significant growth in both tax and consulting services, particularly in relation to IT and ESG consulting. A strategic merger in South Africa in July 2023 coupled with overall progress across the region contributed to a 29% leap in revenue from Africa over the period. Exceptional growth was also recorded for both the MENA region, with a 30% increase on 2022, and Latin America, with an increase of 18%. Representing more than US$1bn in fee income, the Asia Pacific region grew by a strong 8%.

RSM US reported $3.7 billion in 2023 revenue back in August.

The rest of the press release is the usual self-fellating trash. Choice quotes include:

RSM has established the critical building blocks for ongoing growth, transformation and change, focusing on four Strategic Drivers – People, Clients, Technology and Solutions

RSM is dedicated to developing an unrivalled, inclusive culture and talent experience, believing investment in both people and technology to be critical to sustained growth and delivering rich, personalised client experiences.

Jean Stephens, CEO of RSM International, said: “With an emphasis on the generation and sharing of insight, streamlining the efficiencies and effectiveness of service provision and building connectivity through an enhanced global digital infrastructure, RSM is focused on providing innovative and valuable human insights powered by technology.”

Yeah whatever. Congrats to them on a fabulous year.

The post RSM Reports Double-Digit Growth and Record Global Revenue of $9.4 Billion appeared first on Going Concern.

On Saturday, January 20, Plante Moran celebrated 100 years in business, a milestone few organizations reach. Since its founding in 1924, the firm has grown from a sole accounting practitioner in a Detroit office to a billion-dollar audit, tax, consulting and wealth management firm with more than 3,800 professionals serving clients around the globe.

When the firm was founded a hundred years ago, the average income was $2,196, a new car would run you $265, and a house $7,720.

So how does a little one-man operation in Detroit grow to hit the coveted one billion revenue mark and a milestone such as this?

Managing Partner Jim Proppe said:

“Plante Moran’s unique culture is rooted in what Elorion Plante and Frank Moran called their ‘grand experiment,’” Proppe explained. “They envisioned an accounting firm where the best practitioners couldn’t wait to get in the door and clients were lining up to receive unsurpassed service. To achieve this, they built our firm on a solid foundation of principles and values like following the Golden Rule, doing the right thing for the right reasons and putting people and a long-term view before profits. A century later, our firm still operates under these same philosophies. It’s been the key to our success for 100 years, and I have no doubt it’s what will help us succeed for 100-plus more.

“We’re a people firm,” he added.

Look, we love ragging on accounting firms and their ridiculous press releases full of phony culture brags. It’s a hobby of ours really. But it does seem that Plante is doing something right, for a firm their size you’d expect to see way more complaints coming out of their shop and into our complaint box. Over the years, we just haven’t heard much griping. Some. Not a lot.

More quotes:

“When asked about the firm’s success, Frank Moran once said, ‘Elorion Plante and I made a little snowball and got a lot of wonderful people to help roll it. Today, that snowball looks pretty good.’” Proppe shared. “I can’t help but think Elorion and Frank would be excited about what that snowball looks like today and the incredible impact their grand experiment has had on so many people.”

Fun story. Plante Moran probably wouldn’t exist today if Elorion Plante’s daughter Jeanne didn’t have a crush on a young Frank Moran. It would at least be sans Moran.

Jeanne Plante was very taken with Frank Moran — a charismatic philosophy student and friend’s older brother. In the early 1940s, Frank tutored high school students for extra money — including Jeanne, who introduced him to her father. Elorion was so impressed with Frank that he offered him a job at his small accounting firm in downtown Detroit. And the rest, as they say, is history.

It doesn’t appear things worked out for Jeanne and Frank but hey, we got an accounting firm out of it.

We leave you with this banger from 1924.

Plante Moran celebrates 100th anniversary [Plante Moran]

The post Happy 100th Birthday to Plante Moran appeared first on Going Concern.

The $3.7bn-in-revenue firm had no need to bring in private capital to fund expansion or to allow partners to cash out early, he said, and he expressed scepticism about the business models being pursued by US rivals.

“We deal with private equity a lot and their goal is to get a return on their investment,” he said. “You have to realise that, when you take that type of capital.”

It was only a little more than two years ago that EisnerAmper became the first top 20 accounting firm to bring private equity into the mix. Since then, “private-equity investors have been buying their way into the world of accounting, planning, and advisory services” or so Journal of Accountancy wrote in February 2023. “The profession has been moving toward consolidation for a lot of years now. The pressure and intensity on mergers have been growing for the last four or five years. This is a continuation of the trend,” said Charly Weinstein, CEO of Eisner Advisory Group LLC, for that JofA piece.

We expect the next five years to be awash with private equity cash (and perhaps some scandals to follow as firm ownership slips out of the hands of CPAs) as more boomers retire en masse and talent-strapped firms combine forces to better compete. Someone mentioned the private equity trend in our open survey on issues affecting the profession in 2024, writing that the future of the profession “actually existing vs it all being PE owned and for tax and consulting” is a conversation that needs to be had.

Anyway, RSM. Becker referenced RSM’s past as a reason he wants to keep RSM in the hands of its owners.

Becker cited RSM’s own history as a reason for not wanting to follow suit. For 12 years until 2011, the firm — then known as RSM McGladrey — was part of the publicly listed tax preparer H&R Block.

“It made us into a national firm, which was great. Not so great is that [owners] look for an exit. We don’t want to be put in the position where we are trying to drive [earnings] after a certain period of time.”

The firm’s history is actually interesting. And a bit messy. In 2011, H&R Block sold RSM McGladrey to McGladrey & Pullen. Oddly, then-managing partner at McGladrey & Pullen Dave Scudder said in 2009 the “operational and financial model” with H&R Block that had been in place since 1999 “wasn’t working and “does not serve us well as we address our future goals of client service, opportunity for our partners, and continued growth.” See? Messy. That happens when you start chopping firms into pieces and passing them around.

Thing is, H&R Block later said it was RSM McGladrey that was a drag. You’re not breaking up with me, I’m breaking up with you!

Wrote Going Concern founding editor Caleb Newquist of the RSM McGladrey trade in August 2011:

This morning we learned that H&R Block would be selling RSM McGladrey to McGladrey & Pullen for $610 million. This reunion of the two firms is interesting because just a couple of years ago they couldn’t stand the sight of one another. These days, you might conclude that since they opted to rebrand under the name “McGladrey” that everyone has kissed and made up but we all know better. In all likelihood, there are partners on both sides who would rather set their CPA certificates on fire than work with the other side. The problem for the partners in these firms is that they probably had little choice in the matter, as H&RB seemed intent on cutting off the weak link:

[T]he top U.S. tax preparer looks to jettison the underperforming division and focus on its core business. H&R Block will finance about $65 million of the deal value as it looks to push through the sale of RSM McGladrey. […] In June, H&R Block’s new Chief Executive William Cobb told analysts that RSM’s falling profit and revenue were a drag on the company’s earnings, and that the unit and its troubles were on his “radar screen.” “(The sale) should improve overall corporate margin, as Tax Services margin in FY11 was 27.1 percent and RSM McGladrey’s was 9.3 percent,” Oppenheimer analyst Scott Schneeberger said in a note to clients.

“H&R Block Was Pretty Eager to Dump RSM McGladrey,” Going Concern August 23, 2011

We’re going to need a heist board to keep all this straight. Or Wikipedia.

No wonder Brian Becker wants to avoid messy dealings with outsiders.

He also said RSM won’t be copying BDO’s ESOP either. “Any strategy that is dependent on saving taxes can be very short lived,” he told FT. “We don’t need capital and we don’t need a method to distribute income any differently.”

We get it, Brian, RSM has money. Even with nearly $4 billion in revenue the firm is quite a bit behind smallest Big 4 firm KPMG but secure in its place as the fifth largest firm for now. We hear FORVIS is gunning for them hard, they might want to keep their options open.

RSM rules out radical changes to accounting partnership model [Financial Times]

The post Sorry, Private Equity, RSM Doesn’t Want Your Money appeared first on Going Concern.

Ready?

And the damage:

• EY: ~130 partners (December)
• Grant Thornton: 200 (November)
• Baker Tilly: 180 (June)
• RSM: ? At least 20 (June)
• KPMG: 700 (June)
• Grant Thornton: 300 (May)
• Deloitte: 1200 (April)
• EY: 3000 (April)
• BDO USA: 85 (March)
• KPMG: ~2000 (February)

Considering what a rough year it was for the economy (though not necessarily firm revenue), it could have been a whole lot worse. Still bad. If attrition starts creeping up to normal levels as it looks like it might be, we don’t anticipate large personnel shake-ups in at least the first part of 2024. Though firms can always surprise us! Calling it now, if anyone does it’s going to be EY.

Stay billable, friends.

The post Here’s How Many People Were Laid Off From the Big Accounting Firms This Year (That We Know Of) appeared first on Going Concern.

That’s what happened last week when a group of academics presented AI-generated case studies on Big 4 malfeasance before Australian parliament. The academic who claimed responsibility for the submission — Macquarie University Professor of Accounting and Corporate Governance James Guthrie — had only started using Google Bard that same week and did not fact check Bard’s work. A+ trolling by Bard there.

Maybe this warning needs to be larger.

The Guardian:

The original submission falsely accused KPMG of being complicit in a “KPMG 7-Eleven wage theft scandal” that led to the resignation of several partners. It also accused KPMG of auditing the Commonwealth Bank during a financial planning scandal. KPMG never audited the Commonwealth Bank.

Deloitte’s general counsel, Tala Bennett, also expressed concern about the submission wrongly accusing her firm of being sued by the liquidators of the collapsed building company Probuild for allegedly failing to properly audit its accounts. Deloitte never audited Probuild.

The submission raised concerns about a “Deloitte NAB financial planning scandal” and wrongly accused the firm of advising the bank on a scheme that defrauded customers of millions of dollars. Deloitte told the Senate there was no such scandal.

It also accused Deloitte of falsifying the accounts of a company called Patisserie Valerie. Deloitte had never audited the company.

Patisserie Valerie was audited by Grant Thornton (incompetently) and Deloitte is well within its rights to be outraged by this mix-up because even the dumbest of AIs shouldn’t have gotten that one wrong. Worse, the accounting professor who received that information from Bard should have known better. If the burnouts here at Going Concern can remember which firm screwed up which audit you’d expect esteemed academics to do at minimum the same if not better.

“Deloitte supports academic freedom and constructive discourse in relation to those matters currently before the committee, however, it considers that it is important to have factually incorrect information corrected,” said Deloitte’s annoyed lawyer. “It is disappointing that this has occurred, and we look forward to understanding the committee’s approach to correcting this information.”

KPMG, too, was pissed and wrote a strongly worded letter to the academics’ employers to complain. There was a 7-Eleven wage theft scandal (“widespread systematic underpayment of workers by franchisees“) though it appears the only connection it has to KPMG is former Partner in Charge of KPMG Australia’s People Advisory Practice Dharmendra Chandran joining the 7-Eleven board post-scandal.

Having taken responsibility for the egregious mistake, Professor Guthrie proceeded to drive the bus over himself in a letter to the Senate. Some quotes from the letter as shared by Guardian and Americanized for our audience (as in we switched the S for a Z in “realize”):

“Given that the use of AI has largely led to these inaccuracies, the entire authorship team sincerely apologizes to the committee and the named Big Four partnerships in those parts of the two submissions that used and referenced the Google Bard Large Language model generator,” Guthrie said in the letter.

“Given we are also accounting academics, we are deeply invested in the public interest and ensuring accountability and transparency in the sector – which is why we unreservedly offer our apologies and deep regret.”

“I now realize that AI can generate authoritative-sounding output that can be incorrect, incomplete or biased,” Guthrie said.

Ahem.

With the apology out of the way, Guthrie stands by the overall sentiment that Big 4 firms are scandalous and might be in need of breaking up. “Our substantive arguments and our recommendations for reform remain important to ensure a sustainable sector built on shared community values,” he said in the letter. For further reading, see this Australian Financial Review opinion piece: “PwC scandal makes a case for breaking up the big four.”

Because the false statements were covered by parliamentary privilege, the firms can’t sue for defamation. So the lesson here is if you’re going to accuse Big 4 firms of things they didn’t actually do and don’t want to get sued for it, do it at a parliamentary inquiry.

The post Academics Let AI Ruthlessly Slander Big 4 Firms, They’re Very Sorry They Didn’t Think to Fact Check appeared first on Going Concern.

Here’s a tip that came in this evening:

Grant Thornton Advisory laid off around 100 people as of 11/3 after the firm adjusted what groups do and do not fall under advisory. Purely utilization based it seems, performance only a factor with a small few.

And here’s Fox Business with what they heard from an insider, confirmed by GT:

Grant Thornton LLP is laying off 200 people, its second round of layoffs in the past six months and an indication that the major players in the professional consulting and advisory business are preparing for an economic slowdown that could squeeze profits across corporate America, Fox Business Network has learned.

In May, the company cut about 300 jobs across its U.S. division; the recent cuts that began late last week haven’t been reported. They will mainly affect so-called advisory positions at the company, sources with direct knowledge of the matter tell Fox Business.

A spokesperson for Grant Thornton confirmed the layoffs. In a statement, he said, “The staffing changes reflect pockets of underutilization in limited business segments, and specialty areas that the firm is exiting due to market trends. We continue to invest in higher-growth areas of the business to even better serve our clients. ”

Earlier this weekend, another tipster sent in the text of an email sent out by leadership at the end of last week. It reads:

“Teammates,

This week, due to softened demand in specific Advisory offerings, we eliminated a limited number of Advisory positions and these actions concluded as of today. Additionally, we are winding down five specialty business offerings within Advisory: Restructuring, Enterprise Risk, Gov Con Risk, Icertis and Coupa. These decisions were not taken lightly and will enable us to shift investments into areas where we foresee sustained demand. This is one way we will keep the firm healthy and strong so we can continue to invest in the solutions our clients need most, and to provide expanding professional opportunities for our broader community of teammates in the future.

We have not reduced roles in Audit, Tax or ICS – these actions are limited to Advisory only. Our impacted teammates have our greatest respect and appreciation for their contributions, and we’ll continue to provide customary P&C support for them as they transition into new professional opportunities. We remain grateful for your compassion for teammates who have seen their roles eliminated, and for your continued support for each other.”

Said our tipster:

This is absolutely ridiculous. We just had a round of layoffs in May. Once that round (in May) was finished, Wade Kruse hosted a call thereafter for the advisory group at GT. In that call he was asked if he anticipated any further layoffs. He responded by saying no and that all the necessary headcount reductions were already made for the foreseeable future. People like him need to be held accountable. His words meant nothing in May and still don’t today. The public needs to be made aware of this.

This story is developing. If you have more info, thoughts, feelings, or rants directed at firm leadership feel free to reach out by email or text the tipline at 202-505-8885.

Earlier: Grant Thornton Layoff Numbers Are In (May 26, 2023)

The post Layoff Watch ’23: 200 People at Grant Thornton Can Now Go Work For a Real Firm appeared first on Going Concern.

Some choice quotes from PKF O’Connor Davies interns:

“I never felt stressed being a part-time worker and a full-time student. The balance was great, and my advisors were always so understanding if I needed a day for school. What I really found extremely helpful is the trainings this office holds, and I have learned a lot from having specific training days on certain topics.”

“As interns, you are only expected to work the hours when you are able to work. Even though it was the busy season, no one ever pressured me to work long hours, I was also told to put school first. If I need to take my scheduled day off for school or any reason, it was always approved immediately.”

“Everyone in the office was very welcoming and helpful. This was the first time that I was doing auditing, and the office was small, so there wasn’t a lot of room to hide if I made an error. However, each person who I worked with never failed to walk me through each process and answer any questions that I might have had. There was never a time when I felt like I couldn’t reach out to someone for help. Each person, all the way up to the partners, was always willing to answer a question or steer me in the right direction.”

“Everyone is extremely approachable and friendly. It feels like a nurturing environment; there is no competitive or cutthroat air. I feel that the culture at PKF OD allows me to learn and become more comfortable and useful.”

Warms your heart, doesn’t it?

Not only did the top firm kill it, accounting firms took half the spots in the top ten. Those firms are:

• 4. Weaver (2023 rank: #14)
• 5. Frazier Deeter  (#25)
• 8. Lumsden & McCormick (#76)
• 9. Elliott Davis (#12)
• 10. Freed Maxick (not ranked in 2023)

Honorable mention: Grant Thornton coming in at #12 (2023 rank: #24). Actually, let’s grab all the firms on the list. Haters of the Big 4 oligopoly will note only one Big 4 firm made the list and it doesn’t appear until the bottom. The remaining best firms for interns, their respective ranks, and their rank on last year’s list are:

• 14. Frank Rimerman & Co. (2023 rank: #2)
• 19. Baker Tilly (not ranked in 2023)
• 22. Aprio (#4)
• 26. CohnReznick (#35)
• 28. BDO USA (#40)
• 32. Moss Adams (#20)
• 41. Cherry Bekaert (#71)
• 43. Wipfli (#56)
• 52. EisnerAmper (#17)
• 57. Marcum (#54)
• 61. Ryan (#84)
• 70. Armanino (#43)
• 72. PwC/Strategy& (#59)
• 94. Eide Bailly (#86)
• 97. Withum (#52)

To calculate scores, Vault surveyed thousands of current and former interns in the summer of 2023. On a scale of 1 to 10, with 10 being the highest and 1 being the lowest, respondents were asked to rate their internship experiences in six core areas:

• Quality of Life (company culture, hours, work-life balance, flexibility)
• Compensation & Benefits (pay structure, subsidized expenses, technology resources, office space, perks)
• Interview Process (application process, requirements, number of interviews)
• Career Development (including four separate ratings for training and mentoring, quality of assignments, real-life experience, networking opportunities)
• Full-time Employment Prospects (opportunity to obtain a full-time job with this organization)
• Diversity (including four separate ratings for diversity with respect to women, racial & ethnic minorities, LGBTQ+ individuals, and other underrepresented groups)

Vault scientists then assigned relative weights based on what interns said they value most in an internship. The overall scores are based on the following weighted formula: 30 percent career development, 20 percent employment prospects, 20 percent quality of life, 20 percent compensation, 5 percent diversity, and 5 percent interview process.

Although accounting had a heck of a performance overall this year, as you can see from the ranking above some firms are really killing it while others appear to be slipping and might disappear off the list altogether come 2025.

Interns of any of the listed firms are welcome to share their experiences in the comments or via editor mail.

The post List of the Day: The Accounting Firms on the 2024 Vault 100 Best Internships List appeared first on Going Concern.

What does it mean to be a best firm for women in the year 2023 anyway? From the list’s press release [PDF]:

In the 2023 Accounting MOVE Project report, released today, a talent-starved profession receives a fresh influx of strategies and inspiration for investing in the women it must attract and retain to achieve short goals and survive long-term. With nearly 75% of accounting firm leaders eligible for retirement, and accounting degree college enrollment continuing to drop, the profession is at a crossroads. It is more important than ever for firms to find ways to attract and retain employees to not only meet increasing client needs, but to simply survive. So, what are firms that are outpacing the industry doing differently?

Didn’t we just ask that?

The Accounting MOVE Project report finds firms embracing the new super skill of career sustainability are rising to the occasion. For women, career sustainability addresses the capacity to maintain motivation and energy at every step, while rebalancing the personal and professional with each engagement. For firms, it engenders a leadership culture, defining new capabilities, qualifications, and measurements for unmapped growth. And for both, this super skill is the ability to “skate to where the puck is” on slanted ice through upended physics. Through it all, mutual respect and collaboration remains paramount, the inescapable legacy of the workplace upheaval brought on by the pandemic.

“This super skill is the ability to ‘skate to where the puck is’ on slanted ice through upended physics” is both unreasonably dramatic yet such a beautiful way to describe a profession suffering under the weight of its self-induced talent shortage and increasing regulatory burden.

To get on the list a firm must have a proportionate number of women in leadership roles and score highly on MOVE’s qualitative scorecard. Those factors are:

M – Money: Pay equity programs, analysis and measurement. MOVE is not a salary survey but does examine how employers hold managers accountable for pay equity, and how employers address equity gaps.
O – Opportunity: Leadership, management and technical training and development, especially operating positions that involve profit and loss responsibility which are key for rising to top leadership.
V – Vital supports for work/life: Flexible work practices are only effective when they drive business results. MOVE examines not just the existence of programs such as telecommuting, wellness and dependent care benefits, but also how they directly support productivity and business results.
E – Entrepreneurship: Hands-on business development and supplier diversity demonstrate a company’s investment in the business-building skills of its women employees and partners.

Firms pay up to $5,800 for a MOVE scorecard which includes interviews with leadership and an independent review by MOVE. More on the methodology here.

And finally, the list in alphabetical order:

• Abbott, Stringham & Lynch
• Armanino [Armanino issued their own press release about this honor]
• BeachFleischman PLLC
• BerryDunn
• Bland & Associates, P.C.
• BPM LLP
• Clark Nuber
• Councilor, Buchanan & Mitchell, PC
• Eide Bailly
• James Moore & Co.
• Johanson & Yau
• Moss Adams
• Rehmann LLC
• RoseRyan, a ZRG Company [oh look, another press release]
• Schellman
• The Bonadio Group

Obligatory comments from the AFWA: “When options abound, women want to work for firms that appreciate their talents and give them opportunities to advance at a pace that fits with the rest of their lives. That’s why programs like the Accounting MOVE Project are so important to identify firms that have a
history of women in leadership and offer flexible career options,” said Cindy Stanley, Executive Director of the Accounting and Financial Women’s Alliance.

“When the 2023 Nobel prize in economics is awarded to a historian for her work unmasking the ingrained imbalance in wages and opportunities between men and women, we are in good company,” said Bonnie Buol Ruszczyk, Accounting MOVE Project president. “We are committed to identifying and sharing best practices so the profession as a whole can become more equitable and attract a more diverse slate of leaders.”

For more, check out the 2023 Accounting MOVE Project report [PDF].

The post List of the Day: These Are the Firms on the 2023 MOVE Project Best CPA Firms for Women List appeared first on Going Concern.

Yavinka Mendis, a University of Manchester economics graduate, joined KPMG’s Manchester office as an audit associate in 2019. He worked there for just over a year, auditing investment banks among other things, before leaving and spending four months working for Domino’s Pizza while looking for other roles. Mendis eventually found one at Grant Thornton, where he spent nine months as an audit associate in the public sector assurance at the Manchester office before leaving to work in Spain.

Mendis says he left Grant Thornton because he was burnt out. A letter he received from the firm nearly 12 months after he left, published to his LinkedIn account, helps explain why: after looking back through its timesheet data and considering his Mendi’s ‘flexible benefit choices,’ Grant Thornton said it had realised that he’d earned less than the minimum wage for the time he’d spent there. It sent him £100 [$121.12] for the inconvenience and promised to make up the difference.

Mendis says he wasn’t aggrieved at his underpayment, and instead complimented Grant Thornton for its honesty. He didn’t respond to a request to comment for this article.

Although Mendis didn’t want to speak to eFinancialCareers, GT did and said they discovered that “a small number of our people were inadvertently paid under the National Minimum Wage threshold, owing to them having made significant salary sacrifice deductions via our flexible benefit choices and/or having worked longer hours during specific periods of the year” after an internal review. However:

[The firm] added that no one there actually receives a salary below the minimum wage threshold.

Indeed says the average salary for a Grant Thornton audit associate in the UK is £32,059, Payscale puts it in a range of £17k – £30k or an average of £23,031. While the National Minimum Wage is currently £10.42 ($12.64) an hour, assuming he spent a year at KPMG he would have started at GT in 2020 or 2021 at the latest, at which time minimum wage in the UK was up to £8.91 ($10.79).

Accounting firm apologises for paying trainee below minimum wage [eFinancialCareers]

The post Grant Thornton Apologizes to Ex-Audit Associate For Paying Him Less Than Minimum Wage appeared first on Going Concern.

PCAOB:

These failures occurred despite BDO, Olvera, and Musick encountering several red flags that called into question the reasonableness of the estimates. For example, BDO, Olvera, and Musick were aware that PCAOB inspectors had found deficiencies in the procedures performed to test one of the same estimates during BDO’s audit of AAC for 2015, yet the procedures performed during BDO’s 2017 audit of AAC failed to adequately address those deficiencies.

The involved parties did not admit or deny the PCAOB’s findings but graciously consented to the PCAOB’s order. Said order censured the firm (side note: why does the PCAOB insist on capitalizing “Firm” in news releases) and imposed a $2,000,000 civil money penalty. That’s a biggun, almost 20% as much as ALL PCAOB monetary penalties combined in 2022.

Olvera scored himself a $35,000 civil penalty and will be limited on the kind of audit work he can do for the next year while Musick received a penalty of $25,000. Both are required to complete 20 hours of CPE in addition to the hours required to maintain any professional licenses.

“PCAOB standards call for auditors to evaluate and respond appropriately to the significant risks they encounter during an audit,” said Robert E. Rice, Director of the PCAOB’s Division of Enforcement and Investigations. “The Respondents here repeatedly failed to meet these and other obligations, to the detriment of the investing public.”

Full PCAOB order here (PDF)

PCAOB Sanctions BDO USA, P.C. and Two of Its Partners for Violations of PCAOB Rules and Audit Standards [PCAOB].

The post BDO USA and Two of Its Audit Partners Got in Trouble and It’s Gonna Cost Them $2 Million and Change appeared first on Going Concern.

• More than 50% of firms reported double-digit organic growth rates.
• Average non-compliance revenue as a percentage of total net revenue was 43.0% for firms above $50 million.
• Average net income growth was 14.4% for firms above $75 million.
• Outsourcing initiatives were reported by 47% of firms.
• Professional staff turnover averaged 14.4%.

In May, outgoing EY Global CEO Carmine Di Sibio shared with CNBC’s Squawk on the Street that EY went from more than 20 percent attrition to 12 “pretty suddenly.” And in July, the data nerds at Revelio Labs said that for the first time since 2019, the number of exits at Big 4 firms decreased rather than increased. Their data showed about 56,600 people left Big 4 firms in 2022, an increase of 8.3% from the year before. For 2023, around 21,400 people left Big 4 firms for the year through June, a 11.6% decrease from the same period last year. All that to say, the IPA figure checks out.

As for outsourcing, duh. Last year we wondered out loud if firms were really sending 30% of their work offshore, that figure’s feeling a little small knowing almost half of firms surveyed are outsourcing.  And the big firms are now working on expanding their footprint in India, investing in operational centers outside of the major metropolitan areas where they’ve been cranking out work for years.

Reported by Reuters in July:

Deloitte, with a workforce of over 100,000 in India, says it will hire 50,000 more staff over three years, and expand its footprint in new towns while KPMG plans to hire over 20,000 over the next three years.

PwC hired close to 12,500 in the fiscal year ended March and expects to hire the same number this year, said Padmaja Alaganandan, the firm’s India chief people officer.

Accounting Today said a few days ago that according to the Rosenberg Survey — yet another state of the profession benchmarking survey or as AT flatteringly calls it: “the industry’s barometer for CPA firm practice management” — the outsourcing number is even higher. “[A]mong firms with over $10 million in revenue, more than 50% are engaging in outsourcing activity, and close to 70% plan to do more outsourcing next year. Of those CPA firms not currently outsourcing, 50% intend to do so next year.”

So yeah. Confirmed.

And as far as revenue and growth are concerned, duh². Statista says estimated revenue generated by accounting services in the US reached almost $145 billion in 2023, up from roughly $144.2 billion U.S. dollars in 2022. But that’s “accounting services” and not accounting firms’ revenue.” In their 2023 revenue announcements, Deloitte said global revenue was up 14.9% from the year before and EY came in at 9.3%. PwC and KPMG revenue numbers have not yet been released.

Big golf clap all around for firms.

The post Firms Aren’t Doing So Bad According to Them, Almost Half Are Outsourcing Work appeared first on Going Concern.

The tip:

Effective 8/1/23, RSM’s scheduling, time management, billing and CRM system all merged to one system called Workday. Before the implementation all those modules were handled by a different software. We were happy with the old system. However, this Workday implementation is not going well at all. Now it takes more than double to enter our time, Billing people can’t send out invoice as they used to (used to take them 10 minutes to invoice now 3 hrs), no one knows how and where we can retrieve WIP reports.

Here’s how it was supposed to go according to a 2021 press release from Workday:

With Workday, RSM will:

• Leverage one system for its global finance, people, and project data to efficiently monitor business performance, engage with its growing workforce, and change at the speed demanded by clients
• Create an end-to-end project billing process in the cloud, improving efficiency and gaining greater visibility into financial performance
• Eliminate silos to streamline time tracking for greater operational visibility and performance across the company’s 13,000 employees

“We have ambitious growth and revenue goals and recognized we needed to accelerate our digital transformation initiative to support those goals. With Workday, we can break down data silos, streamline processes, and eliminate inefficiencies in order to better manage our performance as we scale. As important, we expect to elevate our customer service as we continue to focus on being the RSM First Choice Advisor among middle market companies and showing our customers the power of being understood,” said Brian Vickers, controller, RSM US LLP.

How it’s actually going according to our tipster:

We can’t even generate a report to compare budget hours and actual hours. From managers to partners, no one knows the answer as to when and how. Some people call “Workday” “Worst-day.”

Good one. They added:

Many processes now work together (in theory) such as time entry, billing & invoice system, our payroll system etc. As of today, not all functionality of Workday is available to us. RSM has not informed us when the functionality would be available.

Thoughts and prayers to everyone at RSM during this difficult time.

The post We’re Told the Switch to Workday Isn’t Going So Great at RSM appeared first on Going Concern.

BDO USA Stewards Transformative Next Chapter With ESOP

Purpose-driven strategy gives participating U.S. employees shared stake in firm’s success.

CHICAGO, AUGUST 2023 − BDO USA, one of the nation’s leading accounting and advisory firms, today announced its intention to establish an Employee Stock Ownership Plan (ESOP), providing a broad base of our employees the benefit of ownership and a new model for the firm’s continued investment, growth, and long-term sustainability. When effective, BDO would be the first large public accounting firm to implement an ESOP. With more than 10,000 participating employees, BDO would be among the largest ESOPs in the country.

“An ESOP is the realization of our purpose of helping people thrive, every day. It is a game-changer for our people, clients and communities, designed to improve lives for generations to come,” said Wayne Berson, CEO of BDO USA. “Amid the changing landscape of our profession, the ESOP unlocks the value of our firm today and embodies our strategy to sustain a strong, caring and resilient business for tomorrow. We are proud to establish this ESOP to invest in each other so everyone who contributes to our success has the opportunity to benefit from it.”

“Today’s talented professionals have many options in choosing where to start and build their careers,” shared BDO USA Chief People Officer Cathy Moy. “BDO has long been distinguished by a culture which puts people first with a commitment to thriving together. The ESOP will be unique and innovative in our profession and supports our goal to be an employer of choice.”

An ESOP is a qualified retirement plan established as a trust, where current and future employees receive beneficial ownership in the company over time. Through the allocation of company stock, participating BDO USA professionals will be able to access a retirement plan that requires no out-of-pocket contribution, helping them plan for their future financial well-being.

“The ESOP also has material benefit to the firm,” notes Steve Ferrara, Chief Operating Officer of BDO USA. “It allows for continued investment in quality, as well as operations and growth strategies, while maintaining continuity in leadership and commitment to a longstanding vision and purpose.”

Establishing BDO’s ESOP involved some of the leading ESOP advisors in the country. Stout, a global investment bank and advisory firm, acted as exclusive financial advisor and debt placement agent on the transaction. Global law firm, McDermott Will & Emery provided legal counsel. In addition, BDO has engaged an experienced, independent Trustee to represent the interests of ESOP participants. The debt financing to support the transaction was arranged by Apollo Capital Solutions and will be anchored by certain funds managed by affiliates of Apollo (NYSE: APO). The ESOP and related transactions are expected to become effective August 31, 2023. In conjunction with the effective date, BDO USA’s fiscal year end will change to December 31. Terms of the transaction are undisclosed.

Earlier:

Let’s Speculate Wildly About Why All the BDO USA Partners Are Getting Together for a Secret Meeting in Florida (UPDATE)

And:

BDO partners in line for windfall after $1.3bn debt deal with Apollo Global Management [Financial Times]

The post BDO Put Out a Press Release on ESOP appeared first on Going Concern.

Let’s ignore that and focus on something good for RSM: fiscal 2023 revenue. The firm ended the year at $3.7 billion according to its recently released impact report, a whole 400 million dollar  — or a numerically satisfying 12.1212% — increase from RSM’s 2022 revenue of $3.3 billion.

Revenue by service line:

• Assurance 28%
• Tax 33%
• Consulting 38%
• Other 1%

Some more numbers for you:

Said Managing Partner and CEO Brian Becker in his very first impact report letter since taking over the helm after Joe Adams left last year:

Here at RSM, we provide both leading insights and compelling solutions to help our clients and our teams rise to meet these challenges. A few examples from this year include our work around economic headwinds and our support of clients during the banking crisis. We have also continued to advance our managed services offerings to help clients who are challenged with the labor shortage, are looking to operate more efficiently or are refocusing on the core of their business. And we continue to advance service offerings in new areas, such as environmental, social and governance (ESG), where our clients are looking for our support.

Simultaneously, we have been positioning our firm to meet the future. In January 2023, we launched a new global strategy for 2030, uniting all 57,000 people at RSM around the world. Domestically, we realigned our business to enable even more compelling experiences for our talent and our clients. Our lines of business are configured around common service lines, capabilities and solution sets to enable our people to build expertise aligned with their passion, assemble strong teams of experts to serve clients, and deploy digital tools and resources more quickly. Our industry teams are focused on going to market with the most compelling insights and services, and our markets are structured to harness the full power of RSM to meet the needs of our clients. We have also scaled our offices in India and El Salvador to bring on outstanding new talent to work with our domestic teams in the delivery of services to our clients.

We are deploying digital solutions more rapidly than ever as we evolve to become a digital firm providing assurance, tax and consulting services. This creates value for our clients through seamless digital engagement that complements the services our people deliver, and it creates value for our people by making their jobs more efficient—enabling them to focus on more strategic work and providing opportunities to learn new skills. Being digital is a journey, and we are well on our way.

Finally, we remain steadfast in sustaining our unrivaled, inclusive culture that compels talent to join us and grow their careers with us. We were named to the Fortune Best Companies to Work For list for the third year in a row, and once again recognized as one of People’s Companies that Care. Additionally, we doubled down on our ESG commitment by joining the United Nations Global Compact, continuing to enhance our environmental sustainability activities, signing the UN Women’s Empowerment Principles, and advancing our culture, diversity and inclusion strategy.

While you’re here, r/accounting’s RSM compensation thread is worth a look. It’s been our observation that RSM is an employee favorite, backed up by Glassdoor reviews and the firm’s listing on Great Place to Work. The money may not be the best but we hear the people are alright. Feel free to say otherwise in the comments.

RSM US Fiscal Year 2023 Impact Report [RSM]

The post RSM US Is That Much Closer to $4 Billion in Revenue appeared first on Going Concern.

The BDO bowl at Fishbowl is abuzz over a discovery that partners — apparently all of them — have suddenly booked travel to Orlando next week and no one there seems to know what for. Thanks to a tipster for providing screenshots as plebs like us are not authorized to view the bowl.

Text:

An in person all partner meeting with < a week of notice to book flights … let the wild speculation begin! But hold up, let me pop my popcorn first.

As predicted by BDO 1, there was in fact a bit of bellyaching. The firm has been closely clutching the purse strings since June when all non-billable travel was suspended.

If it guides your wild speculation any, apparently whatever it is is good news according to at least two people. It’s sounding a lot like a sale what with the freeze on non-essential travel and now this. BDO switching from a partnership to a corporation on July 1 might also bear some relevance to whatever’s going on here. Private equity taking a stake, perhaps? We know of one PE firm in particular that might be looking for a deal with an accounting firm after their last deal fell apart in the 11th hour (allegedly).

Let the speculation commence. We’ll let you know if we hear more.

Update: Here’s what we were told by a tipster. I want to share a few choice quotes I got from them related to the meeting and recent actions by the firm, they told us things have been on a downward slide ever since well-respected advisory leadership was kicked to the curb in October. When our tipster uses “they,” they are referring to top leadership. Remember we’re just relaying what we were told here, some of which aligns closely with info we’ve gotten from other sources.

• “This is nothing but greed at the top”
• “They’re going to burn us, cash out, leave everyone with a massive amount of debt”
• “This is just gonna destroy BDO”

We’re told the super secretive partner meeting is centered around a plan to offer employee stock options, there will be a vote and it’s expected to pass though many partners are not thrilled about the direction the firm is going. You’ll recall BDO switched from a partnership to a corporation effective this past July 1. If all works out as planned, BDO senior leadership stands to make a good chunk of money. We have the figures, still digging in further.

We were also told something very interesting, our tipster informs us that private equity is involved. Past tense, as in they’ve been in the picture. If true, it’s curious this somehow remained under wraps all this time. There’s a whole bunch of debt involved here, don’t want to drop names or numbers yet but they’re both big. Allegedly. (Edit: someone name dropped this PE firm in the comments, same firm we were told)

There’s more but that’s the gist of it. TL;DR: ESOP. Those who guessed this is good news for partners you’re right, but our tipster says only about 100 of them really stand to benefit the most.

Again, you have something to add to this coverage don’t be afraid to get in touch. I mean that more literally that I’d like to. We’re on Signal if you prefer to use that.

Update #2: A comment below says RSM leadership will be in attendance and there’s a merger in the works (!). We may have to resume wild speculation until Wednesday.

Update #3: Now that FT has reported the PE deal, we can add some more information from our tipster. As far as payouts go, we’re told Wayne Berson will receive $25-30 million. Variable share partners will see $1-2 million and fixed share partners will get $30-50,000 each. As we understand it, Apollo will get 48% of the firm, 42% will be made available in the ESOP, Wayne Berson holds 1% and the remaining bits are scattered among leadership. Our tipster told us the Apollo deal “was not done in good faith.” More on that later.

The post Let’s Speculate Wildly About Why All the BDO USA Partners Are Getting Together for a Secret Meeting in Florida (UPDATE) appeared first on Going Concern.

• 2023: 43
• 2022: 38
• 2021: 46
• 2020: 30
• 2019: 42
• 2018: 32
• 2017: 39
• 2016: 47
• 2015: 50
• 2014: 32
• 2013: 30
• 2012: 27
• 2011: 26
• 2010: 22

Unfortunately, GT CEO Seth Siegel did not use the word DYNAMIC a single time in the press release. Booooo.

Audit took the biggest piece of the pie for this year’s promotion class at 40% followed by 28% in Tax, 28% in Advisory, and 4% in Internal Services. The lucky winners are:

*Promoted earlier in 2023 with approval from Grant Thornton leadership.

Congrats to all. Just pretend Sasha Velour’s RPDR finale lip sync featured purple roses and that’ll be celebration enough.

Grant Thornton names 75 new partners, principals and managing directors [GT]

The post Promotion Watch ’23: Grant Thornton Elevates 75 New PPMDs appeared first on Going Concern.

• 2012: $618 million
• 2013: $683 million
• 2014: $833 million
• 2015: $1.05 billion
• 2016: $1.29 billion
• 2017: $1.41 billion
• 2018: $1.47 billion
• 2019: $1.64 billion
• 2020: $1.8 billion
• 2021: $2 billion
• 2022: $2.5 billion

Every practice increased revenue, according to the press release. By service line that growth is:

• Advisory 12.1%
• Assurance 13.4%
• Tax 14.4%

“Despite economic volatility and changing market conditions, BDO maintained its focus on supporting our people, clients and communities,” said Wayne Berson, CEO. “This year’s sustained success was the result of leading with a thoughtful growth strategy and embedding resilience into our operations. The ways we’ve become more adaptable range from building new and innovative client facing solutions to the launch of our inaugural Sustainability Report.”

Doubling down on offshoring in India doesn’t hurt either.

BDO USA Continues on Sustainable Growth Path; Reports Revenue Increase of Over 13% [Business Wire]

The post BDO USA Reports $2.8 Billion in Revenue appeared first on Going Concern.

For those who have been paying attention and noticed us teasing a big story coming out of BDO for months now I’m sorry to say this is not it. I’d also like to say that while I totally understand the accusations of “clickbait” and “bullshit” (I see you, Fishbowl), that’s not why we can’t report on it yet. Just getting those ducks in a row, thank you for understanding.

Anyway here’s some buzz I can report: multiple sources have told us BDO is switching from a partnership structure to a corporate one on July 1. From what we’re told by two sources, this was announced on a partner call a week or two ago. A Fishbowl post that was reported and removed shortly after it was posted also mentions this announcement and the avenue through which it was communicated. Screenshots or it didn’t happen. Oh wait.

Said one of our tipsters:

The junior partners are likely getting screwed and looking to jump.

Let you know if we hear more. /notclickbait For now, BDO USA, LLP is a Delaware limited liability partnership.

The post BDO USA Is Switching From a Partnership to a Corporation on July 1 (UPDATED) appeared first on Going Concern.

Text:

Hearing rumors from multiple sources that RSM is conducting layoffs today and for the rest of the month.

Areas impacted today: Transaction Advisory Services.

If you are a client of RSM, ask for a new firm. Partners sending all the work to india and keeping the profits.

Here’s what we were told via the tip box:

Heard from an insider source that RSM’s technical accounting consulting laid off about 20 today, focused heavily on Directors and Senior Director group. Some of the names I was pretty shocked (highly technical folks) so this is not a performance based issue related but instead seems like higher paid individuals as the group struggles with revenue.

It appears only consulting is affected. Someone on Reddit asked if audit should be worried, a senior assured them that “audit people are quitting faster than they can lay them off.” Whew.

The post Layoff Watch ’23: RSM Is Getting Rid of Some ‘Highly Technical’ Consulting Folks appeared first on Going Concern.

The other day Grant Thornton sent out a firmwide email packed with words like “difficult but necessary decisions,” “values and culture,” and “continued investment in growth” to inform everyone that heads were soon to roll. While pointing out that “unlike peers,” GT’s revenue growth had been strong through March versus the prior fiscal year “thanks to the superb client service our team delivers,” the email said senior leadership would have to make personnel changes “as targeted and limited in scope as possible.” TL;DR the economy sucks, clients are pulling back on consulting work, and some people gotta go.

Grant Thornton’s revenue for the fiscal year ended July 31, 2022 was $2.3 billion, up by nearly 17% compared to the year prior ($1.97 billion). 2022 was a spectacular year for them but, you know, things happen. Consulting is slowing down and the sky high attrition of last year and the year before has now cooled down, leaving firms across the board with more people than they expected to have. Accountant shortage where?

Revisiting what GT CEO Seth Siegel said when the 2022 revenue numbers came out in October: “Our FY 2022 revenues demonstrate how effectively we’re delivering against our firm’s purpose: to make business more personal and build trust into every result. Not only are we providing clients with high-quality solutions and a peerless experience across our audit, tax and advisory service lines, but we’re doing it by supporting and caring for our people—enabling record-setting business performance in the process.”

So yeah, anyway, LAYOFFS.

In Risk Advisory, leadership held a “survivors” call with remaining team members on Tuesday and mentioned that low attrition necessitated these cuts. Added a tipster:

They said it won’t affect bonuses and salary increases at year end discussions [in two weeks].

It seems for that team anyway the damage was spread around all levels with around three each of associate, senior associate, manager, and senior manager let go.

That’s what we heard on our end. Wall Street Journal has better little birds than we do and had this to say:

Grant Thornton is laying off about 300 U.S. employees, or roughly 3% of its workforce in the country, people familiar with the matter said, as the professional-services firm navigates declining demand for its advisory and tax services.

The Chicago-based firm will have laid off the workers, mostly in the advisory and tax divisions, by the end of Thursday, the people said. Grant Thornton employs about 9,000 people in the U.S. and more than 68,000 globally.

In the email that first went out informing employees layoffs were coming, all service line leaders were mentioned — Janet Malzone, Renato Zanichelli, and Wade Kruse — so it was assumed cuts would be somewhat evenly spread around, though we did expect Advisory to have a slightly bigger portion. The firm said “pockets of underutilization” drove many of the cuts.

If anyone has more numbers or just would like to vent, reach out.

Update: A tipster tells us layoffs affected about 120 people in tax, mostly A1s but all levels had some losses. They add:

The worst part was that local partners had no input. All cuts were solely based on utilization and the assumption if you weren’t utilized enough you should be gone. Total ego move by upper management. People are way more upset than past layoffs because of how it was executed (solely based on number on a paper). Trust in all leadership is very low at all levels.

The post Grant Thornton Layoff Numbers Are In (UPDATE) appeared first on Going Concern.

Grant Thornton to perform layoffs across the firm. Numbers unknown. Areas impacted unknown.

Well then, that’s not very helpful is it. A quick search uncovered this Reddit thread from a few hours ago which along with many comments about how these hoes ain’t loyal contains what appears to be the text of an email that went out earlier today. To everyone? Just leadership? Unclear. Someone let us know. (Thank you tipsters who let us know the email went to everyone)

We’re writing today to inform you about difficult but necessary decisions that the Senior Leadership Team has made in response to changing market conditions. Over the next several days, we will reduce the number of roles in certain areas of the business. We will also re-allocate budget and capacity from parts of the business where growth has slowed to areas where growth is accelerating. These changes will be targeted and limited in scope.

As you are all aware, the economy has slowed in recent months. Macro-economic conditions have had varying degrees of impact across all parts of our business, reducing demand for some of our services – particularly in some of our consulting-focused businesses that may represent discretionary spend for clients.

Grant Thornton is not alone in facing this reality. Yet, unlike peers, our revenue growth had been strong through March versus the prior fiscal year thanks to the superb client service our team delivers. We also took proactive steps over the past several months to mitigate the effects of the slowing economy by tightening expense controls and aggressively pursuing new business. While we were cautiously optimistic that these actions would be enough to support continued investment in growth areas through this downturn, it is now clear that we need to do more.

The reductions we’ll make this week will be across our firm at varying levels. They were carefully considered and analyzed by our Senior Leadership Team, ensuring personnel changes are as targeted and limited in scope as possible. We are also taking every opportunity to minimize the number of impacted colleagues by redirecting teammates to apply for open roles in growing areas of the firm.

Here’s what you can expect over the coming days: Conversations to notify affected teammates will begin tomorrow morning. Our goal is to complete these conversations by Thursday morning. Our service line leaders – Janet Malzone, Renato Zanichelli and Wade Kruse – will hold all-hands calls for their teams on Thursday. ICS team leaders may call similar meetings late in the week. The four-day weekend in honor of Memorial Day will take place as scheduled.

To conclude, we’d like to focus on two key points.

First, we will lean into our values and our culture as we go through a difficult process with some of our teammates this week. While this will be a challenging week for the entire firm, we should never forget that it will be most difficult for the teammates who will be directly impacted.

These professionals have given their best to our firm, and they have added value to our team. They deserve, and will receive, our full respect and utmost care as we help them transition to their next professional opportunity. We will be providing severance benefits including salary continuation and professional outplacement services to help each individual identify their next career opportunity as soon as possible.

Second, these steps we are taking will enable us to advance our strategy and achieve the same goals we’ve talked about: namely, continued investment in growth, serving clients with value and quality, and providing teammates professional development opportunities.

To our colleagues who will learn this week you are impacted by these reductions, thank you for all you have done for Grant Thornton and the firm’s clients. We hold each of you in the highest regard and we will support you through this process.

With our deepest gratitude.

Mentioned in the above email, Wade Kruse is National Managing Partner for Advisory and appears in this YouTube video posted just four days ago on Grant Thornton’s YouTube channel. Probably not the best idea to take any of this advice given the situation.

Janet Malzone leads Audit and Renato Zanichelli rules over Tax so we can assume from the email that layoffs will hit from all sides.

Note to GT leadership: layoffs are not an INSTINCT FOR GROWTH.

Good luck on the chopping block this week, all. Let’s be honest, you’ll probably be better off.

The post Layoff Watch ’23: If You Work at Grant Thornton, You Might Not By the End of the Week appeared first on Going Concern.

Financial Times has written about BDO USA’s plan to double its offshore workforce and couched the move as a direct result of the accountant shortage here in the US. “Shortage of young accountants leads BDO USA to double offshore workforce,” reads their headline. Some details from that article:

• BDO USA will add thousands of overseas jobs, largely in India
• The firm is aiming to have 5,000 people at BDO RISE within five years
• The firm currently employs about 12,000 people, has 2,000 people in India, and recently added about 100 jobs in South Africa

“We are seeing a tremendous talent shortage in the profession,” said BDO USA CEO Wayne Berson to FT. “While it would be nice to just hire domestically, you have got to be open to the notion that maybe someone else has something that you don’t have, that you can buy.” For cheap. He forgot for cheap.

People who regularly point out that there isn’t an accountant shortage but rather a shortage of salary offered to domestic accountants (looking at you, Reddit) will be pleased to hear that the FT article goes on to acknowledge that “US starting salaries for accountants often fail to match up to those available in finance or technology.”

As we already know, audit and tax in particular are starved for talent for reasons that I shouldn’t have to explain to anyone in audit or tax. Just in case though, FT includes this:

Berson said young people appear more interested in becoming consultants than joining the more stable, but less immediately lucrative, tax and audit professions.

“The next generation are wanting to move quickly, wanting to be excited by their job. A lot of them are looking at things like advisory services,” he said.

You know what’s exciting? Money.

Anyway, the FT article made me remember a tip we got way back in March when BDO laid off 85 advisory people. Actually it was more like 125 people including 40 back office folks but who’s counting. Just days after advisory head Eskander Yavar wished the newly-severed “the very best,” Wayne Berson and his entourage traveled to India to party with the RISE folks (RISE stands for “round-the-clock international services for excellence” which is just a fancy way of saying “cheaper offshore talent”). There was much celebrating the visit on LinkedIn at the time:

While we’re here, let’s look at some chatter from BDO’s bowl on Fishbowl around that time:

All of this might compel a reasonable person to ask if the so-called “shortage” is really the problem.

The post Rise Up! BDO USA Is Gonna Double Its Offshore Workforce, Mostly in India appeared first on Going Concern.

Today was a difficult day for our practice — we reduced our workforce by 85 professionals. Saying goodbye to colleagues is never easy, and we appreciate each individual’s contributions to our business and our firm. We wish them the very best.

These cuts are now the second consulting cuts at a large U.S. accounting firm in as many weeks. KPMG let about 700 people go on February 15.

It was only a few months ago that well-respected advisory leaders at BDO USA abruptly left the firm and left staff wondering what happened and why these partners seemed to hastily vanish almost overnight. We still don’t know what happened there though we do have some ideas.

We are digging around for more info, if you have some feel free to give me a shout.

The post Layoff Watch ’23: BDO USA Cuts 85 People in Advisory, Wishes Them the Very Best on the Way Out the Door appeared first on Going Concern.

Armanino is ending its crypto audit practice and dropping clients, two sources familiar with the matter say.

The unit may be folding under pressure from Armanino’s non-crypto clients, concerned that reputational risk to the firm will throw their audits into question, according to a source with knowledge of the firm’s crypto offerings. Last month, Armanino was named in a class-action lawsuit for failing to catch irregularities at FTX.US after performing the exchange’s audit last year. The suit was filed by Stephen Pierce, an FTX customer who allegedly lost $20,000.

CoinDesk is now reporting that Armanino’s crypto team — including its leader — have struck out on their own and plan to offer a suite of services to crypto clients who haven’t been able to get these services from their former employer.

Members of the accounting firm Armanino’s digital-asset practice have departed and formed a new startup – The Network Firm – to carry on the business of providing audits, attestations and related work for crypto clients.

The move, confirmed to CoinDesk this week by people with knowledge of the matter, came after Armanino late last year decided to stop performing crypto audits, amid heightened scrutiny of its past work for a U.S. affiliate of Sam Bankman-Fried’s FTX exchange. Armanino has said it stands by its 2020 and 2021 audits of FTX US.

The official separation of the digital-asset team, led by Noah Buxton, took effect on Wednesday, the people said. According to the company’s LinkedIn page, The Network Firm was founded this year and is based in Miami.

The Network Firm website lists the following folks as the team (“CBP” = “Certified Bitcoin Professional,” a certificate issued by the CryptoCurrency Certification Consortium):

Noah Buxton
JD
Co-Founder & CEO

Jeremy Nau
CPA, CMA, CBP
Co-Founder & COO

Clayton Lowery
Co-Founder &
Chief Strategy Officer

Nick Ward
CPA, CBP
Co-Founder & Assurance Director

Ilya Okhotnikov
Lead Engineer

Wesley Barton
CBP
Manager, Digital Asset
Business Services

Thomas Ma
CBP
Supervising Senior Associate, Assurance

Jesse Fink
CPA, CBP, CEP
Manager, Assurance

Noah Buxton is (was?) partner and leader of Armanino’s Blockchain & Digital Assets practice and contributing writer and member of the AICPA Blockchain for SOC Working Group. He is still listed on Armanino’s site and there he is asked “What was it that drew you to Armanino?” His answer:

I was drawn to Armanino because it values the entrepreneurial spirit that I was searching for. When I came here in 2016, it was to build a risk assurance and advisory function, and it really resonated with me that you could build a business within a business here. We started with one staff member and a couple gifted clients, and it grew into the large department that it is today. Armanino’s platform for innovation and growth allowed my career to flourish in ways I never could have imagined.

It makes sense then that he would forge a different path now that Armanino has pulled back on all that innovation.

Former Accounting Team of FTX US Auditor Armanino Sets Up Shop as The Network Firm [CoinDesk]

The post Armanino’s Former Crypto Team Has Left and Formed Their Own Shop, Allegedly appeared first on Going Concern.

Earlier this month, short seller Hindenburg Research dropped a report called Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History (report here) full of bullet points outlining the findings of Hindenburg’s two-year investigation into the Indian conglomerate. Among the various accusations: shoddy controls, nepotism, questionable shell company relations, and poor transparency (we’re being mild here).

A limited number of bullets from the report (yes this is “limited”):

• Many of the Vinod Adani-associated entities have no obvious signs of operations, including no reported employees, no independent addresses or phone numbers and no meaningful online presence. Despite this, they have collectively moved billions of dollars into Indian Adani publicly listed and private entities, often without required disclosure of the related party nature of the deals.
• We have also uncovered rudimentary efforts seemingly designed to mask the nature of some of the shell entities. For example, 13 websites were created for Vinod Adani-associated entities; many were suspiciously formed on the same days, featuring only stock photos, naming no actual employees and listing the same set of nonsensical services, such as “consumption abroad” and “commercial presence”.
• Our research indicates that offshore shells and funds tied to the Adani Group comprise many of the largest “public” (i.e., non-promoter) holders of Adani stock, an issue that would subject the Adani companies to delisting, were Indian securities regulator SEBI’s rules enforced.
• Adani Group’s obvious accounting irregularities and sketchy dealings seem to be enabled by virtually non-existent financial controls. Listed Adani companies have seen sustained turnover in the Chief Financial Officer role. For example, Adani Enterprises has had 5 chief financial officers over the course of 8 years, a key red flag indicating potential accounting issues.
• The independent auditor for Adani Enterprises and Adani Total Gas is a tiny firm called Shah Dhandharia. Shah Dhandharia seems to have no current website. Historical archives of its website show that it had only 4 partners and 11 employees. Records show it pays INR 32,000 (U.S. $435 in 2021) in monthly office rent. The only other listed entity we found that it audits has a market capitalization of about INR 640 million (U.S. $7.8 million).
• Shah Dhandharia hardly seems capable of complex audit work. Adani Enterprises alone has 156 subsidiaries and many more joint ventures and affiliates, for example. Further, Adani’s 7 key listed entities collectively have 578 subsidiaries and have engaged in a total of 6,025 separate related-party transactions in fiscal year 2022 alone, per BSE disclosures.
• The audit partners at Shah Dhandharia who respectively signed off on Adani Enterprises and Adani Total Gas’ annual audits were as young as 24 and 23 years old when they began approving the audits. They were essentially fresh out of school, hardly in a position to scrutinize and hold to account the financials of some of the largest companies in the country, run by one of its most powerful individuals.

The last auditors to touch Adani were the prodigy partners mentioned above. At the time that story dropped, there was mention of getting a Big 4 firm to give Adani a look and an Adani investor with $3 billion in exposure said it “welcomes the announcement by Adani to mandate one of the ‘big four’ accounting firms to carry out a general audit,” though no such arrangement was announced. We here at GC wondered out loud if Big 4 firms would even touch this mess, a report in Reuters yesterday answers in the negative that no, no they won’t.

India’s Adani Group has appointed accountancy firm Grant Thornton for independent audits of some of its companies in a bid to discredit claims by short-seller Hindenburg Research that have battered its stocks and bonds, two people familiar with the matter said on Monday.

The appointment marks the first major effort by Adani Group to defend itself in the wake of a Jan. 24 report by Hindenburg that accused it of improper use of offshore tax havens and stock manipulation.

The conglomerate, led by billionaire Gautam Adani, has strongly denied the allegations but investors remain concerned. Shares in the group’s seven listed subsidiaries have cumulatively lost about $120 billion in market value in the last three weeks.

The source told Reuters Grant Thornton has been hired to conduct independent audits of some Adani Group companies, and that GT would look at whether related-party transactions at Adani Group complied with corporate governance standards. We are eager to hear what Grant Thornton finds.

Update: Adani Group denies the Reuters report.

The post Grant Thornton Scores Coveted ‘Hot Garbage’ Audit (UPDATE) appeared first on Going Concern.

The Wall Street Journal has written a pretty detailed account of comments EY Global Chairman and CEO Carmine Di Sibio made to WSJ’s CFO Network Summit earlier this week, scroll down to skip past a bunch of words and watch the clip.

Of note, the split vote is now expected to happen in April. “I do see potential [further] delays because the deal is complicated,” Di Sibio said. Up until now we have heard “by the end of the first quarter.” As has always been the case, a worsening of market conditions could delay the vote but besides that, Di Sibio sees “no tremendous hurdles” standing in the way of the split. Nor have we heard of any.

We also found out that EY has chosen BDO to audit the liberated consulting arm and a bit about potential future branding. WSJ:

EY is hiring rival accounting firm BDO to check the books of the planned public consulting company, Mr. Di Sibio said. The new company—advising clients on tax issues, deals and more—needs a new brand, as the audit-focused partnership will keep the EY name.

Choosing a brand for the consulting arm is proving tricky, because most regular words have already been taken by brands, Mr. Di Sibio said. So the new EY consulting company name will have to be a made-up word, or a combination of two or three words, he added.

“I’ve lowered my expectations,” he said. “The way the name thing works is you’re going to hear the name. And you’re going to be like, ‘What?’ And then little by little it will grow on you, and eventually it will be a household name.”

Anyone else thinking about this?

When I close my eyes, I see this thing, a sign, I see this name in bright blue neon lights with a purple outline. And this name is so bright and so sharp that the sign – it just blows up because the name is so powerful… It says, “Dirk Diggler.”

Anyway, that’s your Project Everest update for the week. Video:

EY’s Split Faces ‘No Tremendous Hurdles,’ CEO Says [Wall Street Journal]

The post BDO Will Audit EY Consulting, or Whatever That Business is Gonna Be Called appeared first on Going Concern.

The grief is understandable, although we’re not sure how “good” it is. The FASB—along with its younger-but-still-well-adjusted sister, the Government Accounting Standards Board, or GASB—has been rolling out major changes to lease accounting standards since 2016. Many of these new rules are already in place, with others scheduled to go into effect soon.

Specifically, accounting and finance professionals are expressing grief over the impact of these new standards on their balance sheets. Once a relatively simple endeavor, determining whether a lease qualifies as an asset or liability has mutated into a kafkaesque odyssey across labyrinthine regulations, and efforts to implement the resulting changes have been marred by traps and pitfalls.

Navigating your grief over lease accounting changes

According to a random episode of 30 Rock, there are five stages of grief². And—despite the near-total lack of empirical evidence that the five-stages (aka Kübler-Ross) model of grief is real or helpful in any way³—we’re not going to risk arguing with Alec Baldwin at this particular time.

Instead, because it’s fun and should make for a good article, we’ll plow ahead with the unfounded assumption that grief over the new lease accounting standards unfolds in a Kübler-Ross kind of way. Let’s explore the five stages of lease accounting grief—and, more importantly, examine expert advice on how you can navigate and overcome them.

Stage 1 of lease accounting grief:

Denial (of how much work you’ll need to do)

Underestimating (or outright denying) the amount of work required to implement the new lease accounting standards is an understandable temptation—but it’s also a dangerous one.

According to Deloitte, organizations must “radically transform how they account for leases,” with the changes causing a “ripple effect on business processes, from contracts to internal controls to debt agreements with banks.”⁴ And an EY report revealed that nearly half of surveyed companies anticipate spending $1-5 million to implement the new lease accounting standards.⁵

To move past denial, you first need to understand the various regulations, their impact, and their deadlines:

ASC 842, aka Topic 842

• Summary: Requires most operating leases to be recorded on the balance sheet.
• Deadline: Public companies had to comply in 2019. For private companies, see the table below.

GASB 87, aka Statement No. 87

• Summary: Requires state and local government organizations to capitalize most leases on the balance sheet.
• Deadline: Applies to fiscal years beginning after June 15, 2021.

GASB 96, Subscription-Based Information Technology Arrangements (SBITAs)

• Summary: Requires government entities to recognize a right-to-use subscription asset and corresponding subscription liability for such contracts with a specified term.
• Deadline: Applies to fiscal years beginning after June 15, 2022.

And here are some more actions you can take to overcome lease accounting denial and procrastination, courtesy of the experts at EZLease:

• Build time into your project to identify and load leases.
• Consider choosing technology that has a short implementation timeline.
• For ongoing compliance, keep the auditor’s “provided by client” list in mind throughout each financial period to avoid the last-minute rush.

Stage 2 of lease accounting grief:

Anger (over discovering you don’t know everything you lease)

Simply identifying everything your company leases can be challenging. In most cases, the real estate team knows what buildings are being leased. But what about all the other leases, for things like photocopiers, office furniture, laptops, servers, forklifts, trucks, cars, or even aircraft?

A study by EZLease found that private companies had the most difficulty finding and analyzing their equipment leases, followed by real estate leases, embedded leases, and international leases.⁶

When we can’t find what we need to start a project, it definitely makes us angry—like the time we really needed a Phillips-head screwdriver, but all we could find was the court citation from repeatedly breaking into the hardware store across the street.

So, while anger is a reasonable response to being unable to find your leases, you can do plenty of things to restore calm. This handy Quick Start Guide, for instance, provides some concrete steps you can take to locate all your lease data and load it into a centralized database.

Stage 3 of lease accounting grief:

Bargaining (with makeshift solutions that only make things worse)

With actual grief, the bargaining stage involves pledging to reform one’s life in exchange for avoidance or reversal of the initial grief-inducing circumstances. The lease accounting equivalent to this would be something akin to an attitude of, “If I can just survive the first audit under the new standards, I swear I’ll get my lease data organized for real next time.”

But this approach will only cause further problems down the road (which we’ll examine more in the next section.) Instead, the first audit should lay the groundwork for future success. By taking the time upfront to establish complete and accurate lease data, document policy requirements, and implement the right technologies and solutions, you can create a scalable, workable strategy that will make subsequent audits far less painful.

Accounting and finance professionals who spend too long in Stage One (denial) may have particular trouble with this stage, wherein panic over rapidly approaching deadlines leads to short-term fixes or patchwork solutions made from legacy processes and outdated or improper tools.

Spreadsheets, for example, may seem “good enough” to allow you to survive your first audit. Unfortunately, spreadsheets are missing essential functions needed to achieve and maintain compliance, especially when lease counts go above 10.

Here are some other actions you can take to move beyond the bargaining stage (again courtesy of EZLease):

• Work with your auditors ahead of time to understand what they require for the new standards.
• Use technology to ensure your work is repeatable from period to period to make ongoing audits easier.

Stage 4 of lease accounting grief:

Depression (over realizing the long-term impact of quick fixes)

You may be able to avoid this stage if you follow our advice re: bargaining and put the proper lease accounting solutions in place from the start. For many of you, however, that advice is like the $1-off VHS rental Blockbuster coupons we gave our employees as “holiday bonuses” on January 16th—too little, too late.

If you took a triage, duct-tape-style approach to achieve compliance with new lease accounting standards for your first audit, you might already be feeling the sting of the resulting complications. These could include challenges with scalability, version control, collaboration, data integrity, and audit trails. It all adds up to untold amounts of redundant or unnecessary work that—while maybe not “depressing”—is more than enough to give your average accounting or finance exec the lease accounting blues.

As the lawyers in our numerous libel, slander, and felony jaywalking court cases keep reminding us, however, it’s never too late to do things the right way. Which brings us to…

Stage 5 of lease accounting grief:

Acceptance (that your approach needs to change)

At long last, there’s acceptance—the calm, stable relief that makes the fight through denial, anger, bargaining, and depression all worth it. (Or it would be, if the Kübler-Ross model was, you know, real. But you’ve humored this labored metaphor all the way to the end, so we think you deserve some degree of resolution.)

Ultimately, overcoming your grief over the new FASB and GASB standards means accepting that you’ll need to rethink how you handle lease accounting. It means acknowledging that change is required—and that the right way forward may include forgoing legacy processes and solutions in favor of new technology and/or services.

The good news is, the right lease accounting software can help you implement the new standards with minimal cost, risk, and negative impact. But if you decide to go this route, be sure to do your homework.

Qualities to look for when researching lease accounting software include:

• • Fast setup
  • Quick, easy, bulk loading of lease data
  • Automated data validation for all related standards
  • Easy lease modification and validation of changes
  • “Push-button” accounting and disclosure reporting features
  • Proven experience with firms of your size
  • Training and onboarding support

Alternatively, you can outsource some or all of your lease accounting needs through managed services. This is a good option for if you are:

• Not staffed to set up or manage lease accounting and/or software
• Just starting to manage leases and have a large, complex portfolio
• Running out of time
• Looking for lease abstraction, attestation, policy decisions, and memos

Get (and stay) ahead of lease accounting compliance

By implementing the right business processes, controls, technology, and services, you can stay on top of lease accounting compliance—and achieve sustainable results that allow you to shift focus back to your core mission and customers.

Hundreds of companies of all sizes, with hundreds of thousands of real estate and equipment leases, trust EZLease for their lease accounting needs. Backed by decades of expertise, EZLease helps entities from solo CPAs to Fortune 500 enterprises—carrying anywhere from just a few to over 50,000 leases—achieve and maintain compliance.

You can try EZLease for free for 15 days and return it risk-free after 30 days if you aren’t satisfied. Even better: If you have fewer than 10 leases, EZLease offers a free tier via its Essentials Plan.

Sign up for a free trial now to discover how EZLease can get you compliant with ASC 842, GASB 87, GASB 96, and/or IFRS 16 in just hours—and learn why EZLease is the simplest, highest-rated lease accounting software.

Try EZLease for free >

¹Lugo, Denise, “FASB Proposes to Clarify Lease Accounting Rules for Subsidiaries Controlled by the Same Parent Company,” Thomson Reuters, December 2, 2022.
² https://www.youtube.com/watch?v=NIKx9mk5VMU
³ Stroebe M, Schut H, Boerner K, “Cautioning Health-Care Professionals,” Omega (Westport), March 2017.
⁴“Flashpoint: Changes to Lease Accounting Standards,” Deloitte, 2016.
⁵Cohn, Michael, “Lease Accounting Changes Expected to Cost Millions,” Accounting Today, December 4, 2018.
⁶“6 Steps to Finding and Loading Lease Data: EZ Lease Quick Start Guide,” EZLease, 2021.

The post Overcoming the Five Stages of Lease Accounting Grief appeared first on Going Concern.

Our 2021 inspection report on RSM US LLP provides information on our inspection to assess the firm’s compliance with Public Company Accounting Oversight Board (PCAOB) standards and rules and other applicable regulatory and professional requirements. This executive summary offers a high-level overview of:

Part I.A of the report, which discusses deficiencies (“Part I.A deficiencies”) in certain issuer audits that were of such significance that we believe the firm, at the time it issued its audit report(s), had not obtained sufficient appropriate audit evidence to support its opinion(s) on the issuer’s financial statements and/or internal control over financial reporting (ICFR); and

Part I.B of the report, which discusses deficiencies that do not relate directly to the sufficiency or appropriateness of evidence the firm obtained to support its opinion(s) but nevertheless relate to instances of non-compliance with PCAOB standards or rules.

[…]

Four of the 17 audits we reviewed in 2021 are included in Part I.A of this report due to the significance of the deficiencies identified. The identified deficiencies primarily related to the firm’s testing of controls over and substantive testing of revenue and related accounts and the allowance for credit losses/allowance for loan losses.

That comes out to a deficiency rate of 23.5%—a much better showing for a firm that not too long ago had an error rate of 73%.Of the four botched audits in 2021, all of them had problems in both ICFR and in the financial statement, with the most common deficiencies related to testing the design or operating effectiveness of controls selected for testing, testing controls over the accuracy and completeness of data or reports used in the operation of controls, testing the accuracy and completeness of information used to make selections for testing controls, and in some cases the resulting overreliance on controls when performing substantive testing, according to the PCAOB.

The three areas of the audit that were the biggest pains in the ass for RSM auditors were:

• Revenue and related accounts: The deficiencies in 2021 related to testing controls over revenue and related accounts and the resulting overreliance on controls when performing substantive testing.
• Allowance for credit losses/allowance for loan losses: The deficiencies in 2021 and 2020 primarily related to substantive testing of, and testing controls over, the valuation of the allowance for credit losses/allowance for loan losses.
• Inventory: The deficiencies in 2021 related to testing controls over inventory and the resulting overreliance on controls when performing substantive testing.

Of the four audits that weren’t up to snuff, two were for issuers in the financials sector, and the other two were for issuers in the industrials sector. RSM auditors got gold stars for their audits of issuers in the communication services, consumer discretionary, consumer staples, energy, IT, and materials sectors.

You can read the report in its full glory below. Let us know if anything else stands out to you.

The post RSM US Finally Might Be Taking Audit Quality a Little More Seriously, According to 2021 PCAOB Inspection Report appeared first on Going Concern.

• Global revenues increase by over 41% in three years
• Double-digit growth across all RSM regions for a second consecutive year
• 10% rise in headcount to 57,000 RSM professionals
• Network targets 100% growth in revenue by 2030

This $8 billion puts them just $26.6 billion behind smallest Big 4 firm KPMG, and a mere $4.8 billion off from nearest rival BDO.

Anyway, Stephens told FT that RSM is open to merger talks, if it’s a good fit.

“If there’s some deal or some big conversation to be had, absolutely we’ll look at that to see what does that mean, what does that look like for us,” she said in an interview with FT. “I think where there are willing parties then that’s what you start with [and then it’s a matter of] what [are] the goals and objectives and what’s the business deliverable that’s going to come from [it]?”

A big mid-tier merger would obviously put RSM and the future Mrs. RSM much closer to competing with Big 4, though she says that’s not the goal. “It’s such a big jump to . . . even the smallest of the Big Four that that’s not our ambition,” she said.

FT called her comments “the clearest public indication from a mid-tier accounting group that it would consider a large tie-up or other significant transaction” so keep an eye out, RSM may be working on something big. There are likely many conversations being had among the mid-tiers with the EY split in the works, whether any of these talks materialize into something tangible remains to be seen. Should something come of it, hopefully the marketers can come up with something better than FORVIS.

The post RSM Does Not Aspire to Be KPMG appeared first on Going Concern.

From 2016 until its 2020 inspection report, Grant Thornton had an average audit failure rate of about 21%. Not bad for a firm that had an average audit failure rate of 44% from 2010 to 2015. For 2021, GT’s audit failure rate is right around its most recent five-year average:

Our 2021 inspection report on Grant Thornton LLP provides information on our inspection to assess the firm’s compliance with Public Company Accounting Oversight Board (PCAOB) standards and rules and other applicable regulatory and professional requirements. This executive summary offers a high-level overview of:

Part I.A of the report, which discusses deficiencies (“Part I.A deficiencies”) in certain issuer audits that were of such significance that we believe the firm, at the time it issued its audit report(s), had not obtained sufficient appropriate audit evidence to support its opinion(s) on the issuer’s financial statements and/or internal control over financial reporting (ICFR); and

Part I.B of the report, which discusses deficiencies that do not relate directly to the sufficiency or appropriateness of evidence the firm obtained to support its opinion(s) but nevertheless relate to instances of non-compliance with PCAOB standards or rules.

[…]

Seven of the 31 audits we reviewed in 2021 are included in Part I.A of this report due to the significance of the deficiencies identified. The identified deficiencies primarily related to the firm’s testing of controls over and/or substantive testing of revenue and related accounts and inventory.

Seven botched audits out of 31 inspected comes out to a failure rate of 22.6%, the same rate as its 2019 inspection report but not as good as its 17.2% rate in 2020, which was an all-time best for Grant Thornton.

For 2021, five audits had problems in both internal control over financial reporting and in the financial statement, one had deficiencies in the financial statement only, and one had deficiencies in ICFR only. The most common Part I.A deficiencies in 2021 related to identifying controls related to a significant account or relevant assertion, testing controls over the accuracy and completeness of data or reports used in the operation of controls, evaluating the appropriateness of the issuer’s accounting method or disclosure, and performing substantive testing to address a risk of material misstatement, according to the PCAOB.

Three areas of the audit that Grant Thornton auditors found problematic were:

• Revenue and related accounts: The deficiencies in 2021 (as well as in 2020 and 2019) related to substantive testing of, and testing controls over, revenue.
• Inventory: The deficiencies in 2021 related to substantive testing of, and testing controls over, the valuation of inventory.
• Business combinations: The deficiencies in 2021 (as well as in 2020 and 2019) primarily related to substantive testing of, and testing controls over, the reasonableness of assumptions used by the issuer to determine the fair values of acquired intangible assets.

Grant Thornton auditors nailed all of their audits for issuers in the energy, financials, and real estate sectors, but they flubbed three out of 11 audits reviewed for issuers in the industrials sector, half of the audits inspected for issuers in the IT and communication services sectors, one out of three for issuers in health care, and one out of five for issuers in the consumer discretionary sector.

Ever read a Grant Thornton inspection report from the PCAOB? If not, now’s your chance.

The post Grant Thornton’s 2021 PCAOB Inspection Report Wasn’t Too Bad appeared first on Going Concern.

Back in August when it was announced that Guidehouse would be buying Grant Thornton’s public sector advisory practice, we wondered out loud if layoffs might be expected as they so often are in situations such as these. First, let’s do a quick refresher on the acquisition as reported in August:

A tipster reached out to us this morning to let us know the rumor mill is churning over Guidehouse potentially picking up GTPS. “This took some people by surprise when they read about it on Fishbowl,” our tipster said. This appears to be the post in question:

An unexpected 2 p.m. all-hands call was announced by noon and per our tipster, the deal is going through pending approval from antitrust regulators.

Things are moving quick: the deal is expected to close in 60 days, everyone will be sticking around (for now), and they anticipate the transition will be about a month and a half.

We were told that on that all-hands call in August, one person leading the call told staff no layoffs, the other said “no large layoffs.”

According to information we were provided today, approximately half of the old Grant Thornton partners who came to Guidehouse via the acquisition have been laid off. 12 specifically. And three MDs. So yes layoffs.

Grant Thornton’s media department did not entertain us when we asked about potential layoffs back in August, we imagine Guidehouse will take the same approach but we’ve reached out to them anyway.

Anyone with more info is welcome to use the contact information below. We’ll update if we hear more. Friendly reminder, this is as yet just a rumor.

Update:

A tipster has provided more information on the layoffs:

Seven were laid off this past Monday including the former head of all GTPS. In total your numbers are correct. There has been no communication from GH to employees about the layoffs which began in November.

Of course also on Monday was the kick off for 2023 meeting where it was announced the largest partner class had just been promoted.

Guidehouse did not respond to our request to comment.

The post Guidehouse Laid Off a Bunch of Old Grant Thornton Partners After the Public Advisory Practice Merger (UPDATE) appeared first on Going Concern.

The class of 2023 has the most members by far in recent years, topping the 88 new partners and principals in the class of 2022, followed by classes of 84, 80, and 68.

The person who will be ordering these 79 men and 30 women around said this about the class of 2023: “I am pleased to congratulate our new partners and principals on this exciting next step in their careers,” said Brian Becker, managing partner and CEO of RSM US. “They have already distinguished themselves as first-choice advisors to our clients and teams, and I am confident they will help lead us into the future as we become a digital firm providing assurance, tax and consulting services. I am so proud of all they have already achieved and look forward to supporting their future growth and development.”

Here’s a closer look at the RSM class of 2023 by the numbers:

• 44: The number of new partners and principals in consulting, the most of any service line, followed by 33 in audit and 32 in tax.
• 30: The number of new partners and principals who are women, or 27.5% of the class.
• 27: The number of new partners and principals who work in the Northeast region, the most of any region, followed by 24 in the Great Lakes region, 20 in the Central region, and 19 in the Southeast region.

Here are the 79 men and 30 women whose dreams came true last week: