MERGER SEASON
As the beginning of the end of the year kicked off, the announcement of the official consummation of the union between Top 20 Firms J.H. Cohn and Reznick Group, as well as news of BDO USA's merging in both Virginia T100 Firm Argy, Wiltse & Robinson and leading Philadelphia firm Asher & Co., made it clear that merger season has begun.
The majority of CPA firms experienced an increase in revenue growth, according to a new survey by the American Institute of CPAs and the Texas Society of CPAs. Two thirds of respondents reported at least some growth in client fees over the past year, compared to 55 percent in 2010, the last time the joint National Management of an Accounting Practice Survey was conducted. Forty-two percent of CPA firms reported modest fee increases of 1 to 9 percent, while a little more than a third saw a decrease or no change. Small firms with less than $200,000 in revenues were more than twice as likely as others to see an increase in fees of 30 percent or more. Average partner compensation jumped to $188,500 in 2012, an increase of 10 percent over two years ago, and now stands at virtually the same level as 2008, when it was $188,572.
The Public Company Accounting Oversight Board held another public meeting, this time in Houston, to hear feedback on its proposals for mandatory audit firm rotation and auditor independence. Panelists included several academics who presented research challenging assertions that audit firm rotation would do little to aid with auditor independence. PCAOB Chairman James Doty concluded the hearing by noting that the number of comments they had received one way or another on the concept release should not alone determine the issue.
The recently created Private Company Council announced plans to host its initial public meeting on December 6, at the offices of its parent, the Financial Accounting Foundation, in Norwalk, Conn. The agenda items for the inaugural PCC meeting include an official transition from the Private Company Financial Reporting Committee, as well as discussing the Financial Accounting Standards Board's private company decision-making framework, and the feedback received from stakeholders who responded to FASB's invitation to comment on the framework. Members of the PCC will be briefed by FASB staff on private company issues and projects. The inaugural meeting will be webcast live
A number of high-profile leadership transitions were announced at various regulators. At the FAF, Jeffrey Diermeier, the former president and chief executive officer of the CFA Institute, was elected chairman of the Board of Trustees, succeeding John Brennan, who will continue to serve for the balance of his five-year term, through December 2013.
At the Governmental Accounting Standards Board, meanwhile, it was announced that Chairman Robert Attmore would retire in June of next year. He has served as chair since 2004.
And finally, the Internal Revenue Service announced that Commissioner Doug Shulman would step down on November 9 -- the last day of his term -- with current Deputy Commissioner for Services and Enforcement Steven Miller stepping in as acting commissioner for the time being.
The Treasury Inspector General for Tax Administration dominated the tax news, with a number of reports: One claimed that the IRS was giving out millions of dollars in erroneous refundable tax credits, prompting the IRS to make plans to clamp down on them. Another said that the IRS had not told qualifying taxpayers that they were eligible for relief from tax penalties, and a third said that it was paying millions in unnecessary interest payments due to delays in processing net operating loss cases within the required 45 days. Yet another said that the IRS is not efficiently or effectively processing information referrals, including identity theft claims, while a fifth found that IRS revenue officers did not always involve taxpayers' representatives appropriately in taxpayer interactions during the collection process.
The Government Accountability Office provided a report to the Senate Finance Committee on the factors for considering a congressional proposal to have the IRS report tax debts to credit bureaus. The IRS is not allowed to directly report tax debt information to credit bureaus because long-standing federal law protects the privacy of any personally identifiable information reported to or developed by the IRS.
IN OTHER NEWS
Global Big Four firm Ernst & Young reported its strongest year since 2008, with revenues up 6.7 percent in U.S. dollars, to $24.4 billion, from $22.9 billion in 2011. Advisory services showed the strongest growth for the year ended June 30, 2012, at 16.2 percent, with transaction services following at 9.4 percent, tax at 7 percent, and assurance revenues rising 4.1 percent. Regional growth was strongest in Asia-Pacific, at 11.1 percent (in U.S. dollar terms), and the Americas, at 9.3 percent.
Meanwhile, Top 6 Firm Grant Thornton said it generated a record $1.212 billion in revenue for the fiscal year ended July 31, a 9.3 percent increase from the prior fiscal year. The firm claimed strong growth across each of its service lines, with audit growing 5.4 percent, tax at 12.5 percent, and advisory at 14.5 percent. Looking ahead, the firm plans to open its first shared services center in Bangalore, India.
In a blast from the past, former Big Five firm Arthur Andersen reached a proposed settlement for an additional $38 million with plaintiffs in a decade-long class-action lawsuit over the firm's audits of telecoms company WorldCom. Andersen voluntarily surrendered its CPA license in 2002 in the wake of scandals at its clients WorldCom and Enron. It still operates to settle the remaining litigation against the firm, and runs a conference center near its old Chicago headquarters.
The Institute of Internal Auditors has released the syllabus for qualifying for its new Certification in Risk Management Assurance credential, the exam for which will be offered in English next year via computer-based testing at more than 400 locations worldwide.
CORRECTIONS
In "The MP Elite" list in our October issue (page 10), we misspelled the name of the chairman and chief executive of ParenteBeard; his name, correctly spelled, is Robert Ciaruffoli. We also misstated the year he joined the firm; it was 1979, not 1969. Our apologies for the errors.
