It’s been a very hot few weeks here in Chicago. After last weekend’s thunderstorms, we’ve had temperatures between 85-90 F or so all week. (That’s 30-32 C for you metric folks.)
Needless to say, Rosie Rott and I have been drinking a lot of liquids. I feel like a broken record telling everyone at an event last night, “It’s about time we had hot weather. Wasn’t that a lousy winter we had, worst ever? I blew five tires from potholes. Oh, how I wished I was in Mexico. Better sunshine than snow. I just turned off my heat on Memorial Day weekend…”
Such is the nature of chit-chat.
It’s been a busy week for me, in spite of the fact some of you may complain about the lack of a new blockbuster post. First there’s the comments about layoffs and the general management malaise in Big 4 firms. I made the unthinkable mistake of stopping comments on the latest post for pundits and poseurs before we reached 500. Was just trying to give you a clean slate. Mea culpa, Mea culpa.
“Deloitte – The Worst May Be Yet To Come” is back open. I’m trying not to get in the way of this spontaneous outpouring of content and commentary. Please post comments wherever you feel it makes sense. I will keep 500 as cutoff so you all know when that is approaching. Follow comments on the front page of blog to see the latest in each thread.
I did post a few interesting things based on my travels last week.
My speech on careers at the Maryland Association of CPAS Business Expo:
And info about my participation in a panel at this same conference on Accountants and Social Media.
I also interviewed Steven Thomas, attorney for Banco Espirito Santo, on the status of the litigation and judgment against BDO Seidman and BDO International and what it portends for future litigation against the Big 4 global networks. Mr. Thomas, you may recall, is also the attorney for the plaintiffs in a case against KPMG International and KPMG LLP on behalf of the New Century Trustee. That post should be up early next week. I am currently re-reviewing all trial footage and getting some new clips. In the meantime, take a look here at the clips provided early on by Courtroom View Network for a flavor of the trial and the issues discussed.
Next up in my live auditor trial coverage (this access will be real-time to me) is the Schein v Ernst and Young trial. CVN is streaming the trial live, and making it available for on demand viewing. Superior Bank is the one that caused so much trouble for Cabinet hopeful Penny Pritzker during and directly after the Obama candidacy.
A three-week accounting fraud jury trial in Broward County Circuit Court’s complex litigation division. Plaintiffs Alan Schein and Result Technologies, Inc. brought the claim, alleging they were damaged by Ernst & Young’s failure to conduct proper audits of Illinois-based Superior Bank F.S.B. The FDIC took control of Superior Bank in 2001 after declaring it insolvent.
The case calls into question consulting fees given by the banks to Ernst & Young.
From BNET News: “Feb. 8–Ernst & Young LLP, the auditing firm accused of inadequately overseeing the books of now-failed Superior Bank FSB, also received consulting fees from the bank which totaled at least twice as much as the fees it received for its accounting services, a federal regulator said. “It was a direct conflict,” said Gaston Gianni, inspector general for the Federal Deposit insurance Corp., in testimony to the Senate banking committee Thursday. “
There’s been some hubbub in India over my post, “How Satyam Supported PwC’s Schizophrenic Strategy To Reenter The Systems Integration Business.”
Not here. Not with me. In India. It seems that both Gartner and PwC have contacted the journalist at The Financial Chronicle of India complaining about their article, which was based entirely on mine and on the Gartner report which I linked to. The Financial Chronicle did their own due diligence, contacting PwC India and International, and ran the story after getting no response.
I also had contacted both Gartner (prior) and PwC (day of publishing) about my story and got no response regarding its content. But now PwC seems to want to rewrite the history of their leadership’s arrogant sales pitch and unwise choice of two projects that involved audit clients to showcase their big push to get back into systems integration/implementation consulting.
Price Waterhouse’s Indian PR representative writes the Financial Chronicle:
“…We have read the Gartner report in detail and find no justification for the comment that “the Gartner report indicates that PwC was in a strategic partnership with Satyam”.
We also find no reference to Satyam as PwC’s “system integration partner” in the report.
In our response to our letter dated June 2, you admitted that “The part of ‘strategic partnership’ was our interpretation” (your interpretation). This is precisely the point that we are making — you had drawn a wrong and unsustainable inference.
No PwC firm has ever sought or created a joint business relationship with Satyam Computer Services. The only relationship PwC had with Satyam was as an audit client of Price Waterhouse. In the specific case that your report cited, the company seeking the services contracted with Satyam separately and directly, and not as a result of a joint business relationship between a PwC firm and Satyam….”
The journalist, Ritwik Mukherjee, confidently replies:
“The Gartner report that we quoted said the opposite of what Price Waterhouse now contends — that “No PwC firm has ever sought or created a joint business relationship with Satyam Computer Services.” The report, which was extensively quoted in our story of May 28, quoted PwC’s US advisory strategy leader Joe Duffy at the PwC’s analyst day, as stating: “We are full scale in the implementation and integration business.” According to Gartner, “PwC clarified that its implementation stops short of coding for large-scale customisation of business applications. The firm offered an example wherein its India-based operations performed the coding for a client’s financial data warehouse, but a system integration partner coded the business application customisation.”
To demonstrate the range of its capabilities, PwC offered two case studies with clients and engagement teams: One was Idearc, a $3 billion Verizon spin-off and the other Microsoft. “With Idearc, PwC was engaged through the full project life cycle leading to the one-day flash cutover to Idearc’s new systems. Much of this engagement occurred while PwC was still under the IBM non-compete agreement, and Satyam Computer Services did much of the system integration work,” the Gartner report said.
In our report, we called into question the propriety of PwC having any business relationship with Satyam while its arm was auditing Satyam. The Gartner report pointed to a business relationship between PwC and Satyam, whatever name one may give it….”
Go Ritwik! I support you. Especially since it was my story to begin with. PwC obviously is more worried about its reputation in India than about anyone in the United States reading my blog or forming any opinion on this issue. Maybe it’s because some major media here are saps, still giving PwC the benefit of the doubt and ignoring all other aspects of the story that are negative to PwC. They gave the imprisoned PW partners, whose remand was extended once again, a forum to cry crocodile tears about their treatment and the injustice of it all.
How wrong PwC is in thinking they can control everyone! I have not only been contacted by journalists in the US and the UK who are working on in-depth stories on this issue but I know that regulators on both sides of the pond have read my stories.
Oblivious? In denial? Or just plain stupid, as they were to let Joe Duffy choose the Idearc case study for the Gartner dog-and-pony show last July when PwC International leadership must have already known of the problem-child nature of Satyam and the India practice by then. After all, the PCAOB had been to India in early 2008. Satyam had been, as reported by the Financial Times, included as one of the Price Waterhouse India clients to inspect, and had already formed an opinion that everything was not right with the world there. Did the PCAOB team not start telling PwC what they had seen and found while there as soon as they got back home?
By the way, the PCAOB report on this Spring 2008 India inspection is still not final. Because it shows there was a problem? Because it says there was not? Because PwC is still trying to negotiate out any reference to these issues from the public report, if not from the private report too, given almost certain future litigation?
Inquiring minds want to know.
I hope Dennis Nally has his super diplomat hat on as he repeatedly goes to visit the Indian politicians during these next few months. It’s reported that PwC wants to grow India by leaps and bounds. It’s strategic for them. Are there Foreign Corrupt Practices Act provisions against private professional services partnerships paying off government officials to make it all go away? Maybe someone like our FBI should keep a close eye on PwC International. They are in deep here and scrambling to do damage control.
And they seem capable of anything.
Photo Source (Aansu Lake, Tears of Shiv Devta)