Published on: 29 Aug 2013
The Public Company Accounting Oversight Board (PCAOB) is the main “watchdog” of the US auditing profession. As part of their quality review procedures they look at samples of audits undertaken.
They have just released their findings for their inspections on the work of KPMG and pwc in the US.
The results of their inspections may surprise some of you as they identified a pretty high number of deficiencies in the work undertaken.
The deficiencies identified were more than the occasional one or two.
In the report on audits performed by pwc for example, the PCAOB found significant deficiencies in 21 of the 52 pwc audits it inspected. That’s just over 40% of the audits sampled.
They inspected 48 audits undertaken by KPMG and found deficiencies in 17 of them (35%).
The PCAOB says that in many of the situations the firms had failed to obtain appropriate audit evidence to support their audit opinions.
For example, during one audit review they found that pwc hadn’t tested the valuation of some financial instruments sufficiently. These financial instruments represented a significant proportion of the company’s portfolio.
If you’re interested in reading the full reports they can be found here:
The PCAOB did point out that that their inspections took place throughout 2012, so the fact that a deficiency was included in the reports didn’t necessarily mean that it remained unaddressed by KPMG or pwc.
Published on: 24 Aug 2013
Maybe the more important question I should have asked is “if you disagree with your boss would you tell him or her?”
My personal view is that whilst you’ll need to show a bit of “emotional intelligence” when it comes to disagreeing with your boss, in today’s business world there should be a certain amount of discussion and debate between all levels of the business.
Importantly though please don’t head straight to your boss’s office and start disagreeing with everything that he or she is saying as you may well not have a job for very long!
One such individual though that has taken the opposite approach when it comes to disagreeing with your boss is Australian politician, Mr Bill Shorten.
Mr Shorten was so extreme in his agreement with his boss, the then Australian Prime Minister Julia Gillard, that he agreed with what she said even though he didn’t know what she had said. I’ll repeat that in case you missed it but he said he agreed with her even though he didn’t know what she had said.
The video footage below shows Mr Shorten being interviewed on Sky News Australia. He was being asked for his (yes, his!) views over whether the Australian Speaker of the Parliament should return to his role whilst allegations of harassment and misuse of funds were being investigated.
Mr Shorten came up with the classic line that only somebody who wanted to stay in the “good books” of his boss could think of saying.
Namely, he said “I haven’t seen what she said, but let me say I support what it is that she said.”
The interviewer replied “Hang on, you haven’t seen what she said?”
Bizarrely, the politician then replied “but I support what my Prime Minister said”
The interviewer seemed a bit confused by all of this and asked “Well, what’s your view?”
Mr Shorten’s reply was “My view is what the prime minister’s view is.”
So, is this a case of an employee being 100% loyal to his boss or is it a case of an employee being afraid to say what he really thinks in case it upsets his boss and he gets into trouble.
Well my view is.
In fact, should I really say that my view is… the view of my boss?
Published on: 18 Aug 2013
When I was in my teenage years, pubs in England were a very distinctive place; dark, smoky, slightly smelly, overwhelmingly male and mostly shut.
A legacy of previous societal norms meant that women rarely went into pubs unless they were with men.
A legacy of World War One legislation meant that drinks could not be served after 10.30pm or 11pm. This generally meant a few hours of seriously intensive binging from about 8pm to 11pm, mostly on two nights per week.
This state of affairs was not great for earning a commercial return. Pubs often occupy prime sites at expensive rental. Trying to recover the operating costs of a business when the assets are only utilised for 10% of the time is a challenge and a half.
The first marketing innovation was to make pubs far more female friendly.
Curtains over windows were abolished in favour of plate glass windows. Pubs started to sell a choice of wines. The smoking ban came in.
Women were far now more likely to go to a bar with friends because the environment seemed less intimidating. Unsurprisingly, where groups of young women went, groups of young men followed.
Doctors worried about the effects of all this on the nation’s health, but the tills kept ringing.
Laws governing opening hours were relaxed a few years ago, with some predictable, but probably transitional, issues of overindulgence, as a nation used to nanny closing the bar at 11pm now continued to serve, as people continued to drink at the, erm, efficient rate the previous law had dictated.
JD Wetherspoon runs a chain of bars in the UK, mostly in sites that previously were not bars. Car showrooms are a particular favourite choice of location because of the big windows that attract passing impulse customers.
They have started to open their city centre bars early in the morning, in an attempt to attract an extra crowd.
Some chains have slightly different staff uniforms in daytime and the evening; pseudo-Parisian coffee bar by day; unfussy drinking den by night.
The result is that JD Wetherspoon claims to sell 400,000 breakfasts per week (only McDonalds are bigger, with 600,000).
A recessionary environment means that customers have become open to the idea of hanging out in Wetherspoons with a cheap latte instead of a more expensive option in Starbucks. It has achieved this growth remarkably quickly, as it only started to open for breakfast last year.
It’s a wonderful example of innovative business change, asset utilisation and absorption costing.
Published on: 15 Aug 2013
The major stock markets around the world have been bear markets for the last couple of years but with the end of the recession looking like it’s here we should soon see a switch to a bull market.
Analysts around the world will be arguing one way or another on the timing of the recovery but where do the terms “bear market” and “bull market” come from?
There are two main views on the origin of these terms.
The first view is based on the methods with which the two animals attack. A bear for example will swipe downwards on its target whilst a bull will thrust upwards with its horns. A bear market therefore is a downwards market with declining prices whilst a bull market is the opposite with rising prices.
The second view on the origin is based around the “short selling” of bearskins several hundred years ago by traders. Traders would sell bearskins before they actually owned them in the hope that the prices would fall by the time they bought them from the hunters and then transferred them to their customers. These traders became known as bears and the term stuck for a downwards market. Due to the once-popular blood sport of bull and bear fights, a bull was considered to be the opposite of a bear so the term bull market was born.
Whatever the actual origin of the terms though I’m sure most people will be relieved when we return to a bull market.
Published on: 13 Aug 2013
John W Henry is the principal shareholder of the Fenway Sports Group. The company owns the American baseball club the Boston Red Sox as well as the English football club Liverpool FC.
In addition to his interest in sports teams, Mr Henry has recently purchased another business. This business though is a far cry from the hallowed turf of Liverpool’s famous Anfield ground.
Mr Henry has just purchased the American newspaper, The Boston Globe for $70 million.
The Boston Globe is one of America’s best-known newspapers and Mr Henry purchased it from the New York Times Co.
Was selling it for $70 million a good deal for the New York Times Co?
It won’t come as too much of a surprise to most of you but the newspaper business has been hit hard by the rise of the Internet. Newspaper readers are now going online to get their news and in a lot of situations the news websites are free. Why should people pay for a newspaper when they can get their news free of charge on the Internet?
The end result for newspapers is that their readership has fallen dramatically over recent years and importantly their advertising revenue has also fallen. Advertisers are now moving their advertising spend elsewhere – for example, spending money on Google adverts rather than newspaper adverts.
Just how much has all of this impacted on the value of a newspaper?
To put it into perspective, last week the New York Times sold the Boston Globe to Mr Henry for $70 million.
20 years ago the New York Times acquired the Boston Globe for $1.1 billion.
In other words, the value of the newspaper has fallen from $1,100,000,000 to $70,000,000.
That’s a big drop in value and for those of you that like to visualise things, if you had a briefcase with $1 million in it, the value of the Boston Globe has fallen by an amount equal to over 1,000 briefcases full of a million dollars.
So, did Mr Henry get a bargain when he bought the newspaper?
Only time will tell but for any Liverpool supporter out there you’re maybe thinking that Mr Henry should have bought the Tottenham player Gareth Bale who is currently on the verge of moving to Real Madrid.
Then again, Mr Henry bought the Boston Globe for $70 million and Gareth Bale is reportedly valued at $135 million – nearly twice the value of the Boston Globe.
Published on: 08 Aug 2013
An accounting undergraduate in Australia called Meri Amber has done something pretty unusual when it comes to trying to get a job.
As well as her skills as an accounting undergraduate she’s very talented when it comes to songwriting. In an attempt to get a job with KPMG she’s written her own song called “KPMG Audit Team – Love Accy” urging KPMG to “give her a call”.
She’s also produced the video below showing her love for KPMG.
It seems to have worked as KPMG’s national manager of graduate recruitment in Australia, Rebecca Jones, is reportedly in preliminary discussions with Meri.
Rebecca is quoted as saying “we think it’s a good song. It’s nice to see the industry portrayed in a quirky, unusual way that helps break the stereotypes. [The big four are] all looking for people who are well-rounded and we could definitely work with someone like Meri to show that KPMG is more than just an accounting firm.”
Here’s Meri’s video:
Good luck to Meri in her new career as an accountant or if it doesn’t work out good luck in her career as a singer songwriter.
Published on: 04 Aug 2013
According to our IT guys, over the last 3 months 24% of you that visited our website used the Mozilla Firefox web browser.
The other main browsers used were Internet Explorer, Google Chrome and Apple Safari.
Personally I use the Firefox browser and am very happy with it (well, to be honest as happy with an internet browser as any normal person should be…)
However, things may be changing and there probably are some very worried people at Firefox.
Whilst nothing public has been said I’m sure the senior guys at Firefox are scratching their heads trying to find a solution to a potentially massive problem.
The problem isn’t because their browser is weak. In fact, far from it as apparently a lot of IT specialists love the Firefox browser due to its various add-ons.
No, the problem lies in the fact that it’s a single product company and there’s currently a move away from computers to Smartphones. In terms of the product lifecycle the Firefox product is arguably at the maturity stage and heading towards the decline.
In the UK the number of Smartphones now being sold is greater than the number of computers. Today’s average Smartphone is now more powerful than the typical computer found on your desk only a few years ago.
So, why is this switch to using Smartphones to access the internet a problem for Firefox?
Well, last week’s announcement by Nokia of their new Lumia 800 and the Lumia 710 Smartphones showed that they have dropped their own operating systems and will be using Microsoft’s new Windows Phone 7.5 system.
This system will use the mobile version of Internet Explorer to access web pages on the move.
The other browser big boys already have their Smartphone relationships. Google’s Android system is on HTC and Samsung phones whilst Apple iPhones use the safari browser.
So, in terms of Smartphone romances there are:
HTC/Samsung + Android (Google Chrome)
Apple iPhone + Safari
Nokia + Microsoft (internet explorer)
Unfortunately for Firefox that leaves them desperately looking for the Smartphone love of their life and there aren’t too many potential partners out there looking for a date…