FEI CFRI – Unexpected Pleasures Part 2

I mentioned in a previous post that press briefings were set up to allow the media attending the FEI CFRI Conference to question certain speakers in a small, private setting.  The press conference with Sir David Tweedie on Monday was fun.  I actually asked him if I could have a transcript of only his jokes and stories.  But I know better.  A Scotsman never writes them down.  

After that briefing on Monday, the reporters introduced themselves and some of us talked about the differences between being a blogger and a journalist for a traditional media publication. As a blogger,

1) I have only self-imposed deadlines.  

2) If it’s not interesting to me, I don’t write about it.

3) I can express my opinion, strongly if I feel like it, and have no obligation to balance the story or present other points of view.

4) I do my own research.  And I don’t reprint anything in post form that hasn’t been personally source verified. 

5) If I make a mistake, no one backs me up, explains for me, or defends me. I take the consequences and have to correct an error myself, if needed.

6) I pay my own expenses. I consult to write, not write to gain more consulting work.

7) Sometimes I am invited to blog an event, sometimes I have to request a press pass.  I didn’t routinely get an answer to requests until the last six months or so.  Now I get invites.

8) I don’t have a journalism degree.  Content is king for me. The form and the quality of the writing and arguments are important, too. But my primary goal is to get new, interesting information to a wider audience.

9) Every post is important to me personally.  Nothing is a throwaway just because it is “coverage” or an “assignment”.  

10) I write all the posts (with only a few exceptions in the past two years) and I am my own editor.  I have lately sought out some trusted advisors on specific posts to provide air cover and to make sure my facts are correct on more technical subjects.  It’s the reason I rarely take criticism personally or change anything after it’s posted.

Some of the journalists I met at the FEI Conference and their posts:

Michael Rapoport, columnist, from Dow Jones – Michael overheard me mention Jonathan Weil to Ian Katz, the Bloomberg reporter, and was coincidentally emailing Jonathan at that same moment.

One of Mike’s articles from the conference is here.

Ian Katz is a Bloomberg reporter, but his work shows up primarily on the Bloomberg terminals.  I learned from these reporters that so much specialized business content nowadays is subscription only, that is, totally restricted to limited corporate subscribers.  Sometimes these journalists are not as well known outside of these circles.  Googling them, unless they’ve written for free access publications, won’t get you many citations compared to a traditional reporter.  Ian, fortunately, gets around.

U.S. publicly traded companies could be required to switch from domestic accounting standards to international rules by 2014 under an SEC “road map” issued Nov. 14. Some companies could make the move as soon as 2010. The agency said it will determine by 2011 whether to impose the switch… 

Emily Pickrell is a reporter for Thomson Reuters but writes exclusively for their Accounting and Compliance Alert.
She covers FASB. She quoted me in her article, but I do not have a link for it yet and it is subscription only.

Emily Chasen is a reporter for Reuters.  She is only 25! She asked some great questions at the SEC  press briefing about IFRS costs.  Here’s an excerpt:

Some excerpts from their articles. (Full article available via subscription only.)

IASB, FASB Heads Stress Need for Boards To Cooperate During Current Global Crisis 

NEW YORK–The chairmen of the International Accounting Standards Board and the Financial Accounting Standards Board vowed continued close cooperation Nov. 17 in further rulemaking, to respond to the current global financial crisis, and to prevent situations such as the in October that led IASB’s chief to seriously weigh resigning.

“The idea is that we’ll actually move together — if we move,” IASB Chairman David Tweedie said of such joint rulemaking at a news conference at a financial reporting conference of Financial Executives International.

“But it’s going to be done together and it’s going to be done with due process,” added Tweedie, after he and FASB Chairman Robert Herz spoke together in tag-team fashion at the FEI event. Tweedie also gave a separate speech.

Tweedie and Herz described a significant alignment of the boards’ workplans intended not only to achieve a long-sought-after convergence on a single set of global accounting standards. That goal also is favored by the Securities and Exchange Commission, as shown in the formal proposal Nov. 14 for the regulators’ potential acceptance of US public companies’ filings cued to IASB standards (see related report in this issue).

Tweedie, especially, also suggested the need for the boards to work closely together to help reduce the effectiveness of outside pressure. Such pressure could drive a wedge between the boards on rulemaking, potentially resulting in retreats or in more shifts from accounting standards and calls for short-cutting of due process sparked by politics.

Another observation, or rather running commentary, that came out of my discussions with the journalists has to do with coverage of the Big 4 audit firms by the traditional media. 

There is very little.

This conference was well attended by major media because SEC Chairman Cox, several of his senior staff, the head of FASB and the head of IASB were speaking.  Chairman Cox did not stick around for the press briefing and read a very prepared speech that the journalists said they would  routinely get in advance.  The press briefings were a chance to get something original and fresh.  But the focus was the SEC, the accounting standards as they relate to the crisis, not the Big 4 firms.  As a matter a fact, the SEC staff cringed when I asked a question about the Big 4.  (That’s a future post.)

I’ve noticed the lack of coverage of the audit firms as a business and commented on it on this blog. It’s one of the reasons why I have a larger base of readers than some might expect from a “niche” topic. Look how slow the traditional media have been at picking up stories like the EY merger outside the US, the Deloitte inside trading scandal, the Deloitte layoffs, and others. None of the major US based news outlets has a reporter assigned to covering the accounting firms as an industry, as a dedicated beat, except for the Financial Times and The Economist, and their coverage is more UK-centric, Euro-centric. 

Jonathan Weil does a great job covering specific stories and has done a fantastic job skewering a particular accounting firm on occasion. Joe Nocera or Floyd Norris at the New York Times?  Interesting stories, some good and some mention the auditors occasionally, but they’re dilettantes when it comes to covering the Big 4. And occasionally someone gets a story right and points the finger squarely at a firm, such as in the case of EY and WalMart’s tax scams. However, Reuters, Bloomberg, Dow Jones/WSJ, Chicago Tribune, Newsweek, and US News and World Report? None have a reporter covering the Big 4 as an industry on a regular basis.

In my opinion, many stories that mention the audit firms are simply a regurgitation of facts with very little investigative or critical reporting. Or they are a direct feed from the firms’ public relations/communications professionals. 

Why is that? 

I asked the question quite a few times as journalists wandered in and out of the press room on Monday and Tuesday and again at dinner with Edith, Susan and Steve on Monday night.  In no particular order, I came up with these possible reasons, not to be attributed to anyone in particular:

1) General cutbacks over the years since Enron at most US newspapers means that “less sexy” beats get eliminated and coverage is therefore reactive.

2) Although I can imagine it’s no party to “cover FASB”, it seems that the audit firms are unfairly deemed boring by the media. Most stories are a reaction, a slow one, when something unavoidable hits.

3) Most media covers law firms and the legal profession as an industry, devoting blogs and specialized coverage to their ins and out. The WSJ has a blog for everything, including a Law Blog. Everything is “blog-worthy” except the audit firms. This is even though the reach and government sanctioned oligopoly in the capitalist market structure of the audit firms makes the Big 4 an ubiquitous, albeit an opaque, presence in every public and most private companies’ activities and transactions. Maybe it’s because lawyers are more apt to disclose their clients and cases to reporters and to give open interviews.

4) There’s a growing perception that auditor certified financial statements are worthless.  Maybe the financial crisis has proved this to be true, since regardless of auditors’ non-qualified opinions on recent financial statements, large companies are “suddenly,” catastrophically, and dramatically imploding and failing.

5) Not long after the intrigue of Enron and the non-stop coverage of the role Arthur Andersen played in its demise, curiosity about the firms, their structure, their inner workings, their business model substantially diminished. 

6)The PR and communications professionals from the audit firms, as well as industry lobbyists such as Center for Audit Quality, do an excellent job spoon feeding often time pressed, stretched, and sometimes non-intellectually curious journalists one side of the story, which the journalists are happy to reprint verbatim, with no critical analysis.

7) Big 4 Audit firms are not appreciated by the average journalist or editor as a standalone industry. They are much larger than any global law firm, with a unique business model and government sanctioned franchise that earns them more than a hundred billion dollars of revenue worldwide each year.

8) Leaders of the Big 4 in Europe seem to grab the spotlight and are quoted much more often than their US counterparts, talking about business, the economy, politics, and strategy.  Some are puff pieces, to be sure. But it seems you never hear from the Big 4 US Chairmen unless it’s a prepared public relations oriented press release or coverage of a prepared speech.  There are exceptions, but those are PR exercises too, with very few critical, challenging, or knowledgeable questions asked. 

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