Tuesday, December 1, 2009

Risk Management

Great discussion today with a colleague and respected friend.

We can develop a useful risk management site with tools and guidance that people can use, without the cost of a consulting or public accounting firm. There is no mistique in risk management.

We can also provide direction on what companies should be paying for consulting services in risk management, internal audit, IT audit...Yes, there is a wide range of fee structures out there within and between the firms. It doesn't need to be a secret as to what companies are or should be paying.

Monday, October 19, 2009

Accounting's day of reckoning | Crain's Chicago Business

Accounting's day of reckoning | Crain's Chicago Business

Interesting-Chuck Allen at Crowe is up for negotiating on price-clients should definitely negotiate with the partners-not just at Crowe, but the Big 4 and second tier firms. $350,000 plus for a partner in a big firm? What is that for??

Friday, October 16, 2009

JofA article - Auditing at the Speed of Change


Interesting to me that Mr. Keizer speaks to 'opportunity to grow and rise in that organization as their (staff) careers are built' but doesn't address one of the biggest challenges facing public accounting-getting staff who have a desire to be part of it on the long haul to partner.

Gotta be willing to play the games in the firms-sacrifice time with family or find ways to maximize chargeable hours and still party with clients and staff. I was with three firms-KPMG, GT and Crowe and couldn't see myself buying into the partner mentality at any of them.

Auditing at the Speed of Change

Auditing at the Speed of Change

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Monday, October 12, 2009

Public Accounting litigation

As the fiscal year end for many companies nears at 12/31, public accounting auditors are looking at the work papers from last year; but not to plan for a better audit-to see where they can cut the budget this year. The partner just drove up in his Mercedes/BMW and is going to ask how the audit will get done this year without the writeoff like last year.

And the manager on the job only knows how to do what he did last year. When will public accounting wise  up and realize the importance of internal controls in the audit. Yes, SOX pushed the agenda forward a bit, but only because the firms found an opportunity for a new revenue stream. Oh, you thought it was about helping companies comply with strict regulations. COME ON! It was about revenue, stupid!

So, as the auditors ramp up for big hours that they can't charge to the client-they ponder....where is the line of risk management and how they can avoid the next costly lawsuit.

Thursday, October 8, 2009


Attended a not for profit discussion at the IL CPA Society today. Professionals from NFP's looking for their accountants/auditors to be trusted advisors, not just check the box and sign off.

And on ERM-looking for a practical way to understand and implement ERM without pointing to COSO framework. Just another example of the public accounting firms overblowing something in order to drive fees higher from their clients.

ERM doesn't need to be a huge ordeal for companies. It can be implemented with minimal effort from consultants. Companies, including not for profits need a framework, some guidance and it's management's responsibility to implement ERM.

Public accounting firms have developed behemoth models and processes to implement, and it's killing businesses.

Saturday, October 3, 2009

Memo to CPA firm CEO's

Well thought article in Accounting Today based on the convergence of IFRS and GAAP, but discusses drivers of CPA firms. In my opinion, firms are generally focused on their own profitability (after all, they are a business too) and this article discusses what motivates firms to underserve their clients.

Enlightment is truly helping clients to run their businesses better!

Independence for CPA firms

Great article in the current issue of Accounting Today 'Independence Comes Under Fire' http://www.webcpa.com/ato_issues/2009_17/-51773-1.html and discussion of key elements of reliability of information.

Monday, September 28, 2009

Training the auditors

Now that the busy audit season is coming up for most CPA firms, top of mind is likely to be-how do we manage our fieldwork time and balance that with risk for the firm.

One straightforward answer is to have audit teams understand internal controls. It's not enough just to understand the financial statements and auditing standards. Internal controls play a crucial role in business and it's time to train auditors so that they understand the implications of weak or strong internal controls.

Thursday, September 24, 2009

What are internal controls

Internal controls are defined by COSO as a process, effected by an entity’s board of directors (regents), management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: Effectiveness and efficiency of operations; Reliability of financial reporting; and, Compliance with applicable laws and regulations.

But what is internal control in layman's terms-since my wife doesn't understand what I do, I had to think more about this. And using everyday processes, I explain internal controls as the locks on doors, passwords for computer access, and signatures on checks to pay bills.

Wednesday, September 23, 2009

Internal audit fees

Consulting fees continue to be driven down in the Big 4 and second tier firms and the partners need to cut costs to maintain profits.

The result is higher turnover of staff on client projects, and inefficiency in the firms' internal processes.

In the hay days of Sarbanes-Oxley, the firms could charge blended rates of $250 an hour and up. Now, clients are realizing that the blended rate, even from large firms-should be in the neighborhood of $130-$150. If client's are paying above that, they're likely overpaying.