Tag Archives: government

As The Audit World Turns: Interview with Francine McKenna

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Meet one of today’s leaders in the accounting profession, Francine McKenna, CPA. With more than twenty-five years of experience in consulting and professional services including tenure at two Big 4 firms, both in the US and abroad, Francine has a lot say. Through her speaking engagements, articles, her blog re: The Auditors, and more, Francine lays it on the line. Smart, engaging material…spectacular reading, I must say.

Q: Coming from a Big Four background, you’ve carved out a very interesting niche for yourself. Was this by design?
When I look at all my experience I see a straight line through the scatter diagram that’s led to writing and to writing about what I know the best and am most interested in the world of business. I can’t say it was by design but I don’t do anything by default. I just create as many options as possible. I started out at the end of ’06 thinking the blog would be the platform for a book. I haven’t yet written the book. But the blog took off, mostly because of what started happening in 2007 then 2008. The more I wrote about the business of the big four firms in a critical way, the less employable at what I was doing before I was. And the more attention I got for my writing the more I wanted to write. So I committed to write as well as I could and make it a success, at least professionally.

Q: Any insights on where the future of auditing is headed? Or the future of Big Four (or whatever number that’s going to be)?
I would agree with PCAOB Chairman Jim Doty’s latest comments: “The audit industry is flirting with stagnation.” I said on Twitter that the industry is worse. It’s whoring for quarters, selling audit as a commodity again, capitulating to executives to save the engagements and looking for consulting to save the day. We’ve come full circle in ten years since SOx.

Q: If a young professional told you he/she wanted to get into auditing, what would you tell them?
Go into consulting instead.

Q: What would you most like the accounting profession to know about what’s going on in Washington D.C.?
There are good people in Washington DC who want to serve the public. Fortunately for the audit industry they are few and far between. Most from both parties can be bought. Unfortunately, it’s going to cost lobbyists and the audit industry PACs more and more to buy them and politicians are fickle. You have to keep paying to maintain their attention and loyalty.

Q: What’s the most rewarding aspect of what you do on a daily basis?
When journalists I respect say I’ve written something with impact. When my parents say don’t stop because I’m finally using my talents.

Q: What have been some of the key things you’ve learned throughout your career? What might you do differently if you could go back in time?
If I could go back in time I wouldn’t listen to anyone who said I had to wait to earn bigger pay and bonuses, to get my stripes first. I was doing the work well. I deserved to be rewarded for it long before I ever was.

Q: What’s in the future for Francine McKenna?
I just started in the Masters in Liberal Arts program at the University of Chicago. I want to teach. I’ve been visiting a lot of universities lately, talking with students and faculty. Before too much longer I’d like to fully live the life of the mind. And I will write a book, but it may be fiction.

Francine McKenna 1

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On This Sunny Afternoon, The Tax Man’s Wanting to Tax the Dough

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Is the double-edged sword striking down on that lunchtime chicken salad sandwich? I’ve often wondered when Silicon Valley’s culture of providing meals to employees at all hours–and I’m speaking of Google, Facebook and other companies in this free food mix–would be more of a hot Tax vs. Don’t Tax topic. Well, my friends, that day is officially here.

While this debate has certainly come up in the past, the lunch wagon has it on the front burner again, most likely because the IRS is on a mission to scrape up dimes in the gutter with a putty knife.

Looking at both sides of the controversy, on the pro-tax view of those company-provided lasagnas, smoothies and various cookies, crème puffs and gelatins, I venture to say that the average employee at these companies is enjoying at least a couple of thousand dollars a year in free eats and drinks. That’s clearly compensation and should be taxed.

Now, for the anti-tax view, it can all be taken in the same “de minimis” vein as the free donut and coffee of yesteryear. Why? Today’s work culture has changed. These companies that go to great lengths and costs to establish a high level of perks feel that they must do so in order to remain competitive with recruitment and retention in their respective industries. Few would argue that fact, I think. With that being the case, it doesn’t seem right to tax the free salad bar and barbecue hut, does it? If a Yahoo employee has to declare these edible fringe benefits as compensation, does that really seem fair?

What do you think about this issue? This matter isn’t in the same realm as a public accounting firm bringing in evening meals during busy season…this is a whole other kettle of fish. Drop it like a hot potato, IRS.

Cucumbers

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Freedom of Choice: It’s What You Want

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Does excessive executive pay make your blood boil? Should a CEO of a big public company make $30 million a year? In Switzerland, there’s a new law that requires shareholder approval of executive compensation at all publicly traded companies. Good idea?

In the U.S., we regularly read about huge bonuses paid to top executives of large public companies—with the chief criteria for these bonus amounts being tied to stock price performance. With such incentives based on that primary goal, how can a company’s foundation be built soundly and without shortcuts and cracks?

As with most everything else in our free market society, the power lies with the people. Fortunately, we not only can vote at the polls, but we can also vote with our wallets and purses every day. Freedom of choice—it’s a wonderful privilege. If you don’t like what’s going on at a certain company, well, then don’t buy their stock, their products or their services. That’s the most powerful message that anyone can send.

Freedom

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Is the U.S. Headed Up the Mountain or Down the Mountain?

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With all of this “fiscal cliff” talk, the U.S. trade deficit issue with China has been pushed to the side. Growing in October to a record $29.5 billion, this trade deficit cannot be ignored. Or can it? How important is it to the growth, prosperity and future of the United States? Economists can debate this topic all day long.

American companies simply can’t compete with cheap Chinese goods such as clothing and electronics; they must either lower their costs or go out of business. Obviously, many have been forced to do the latter in recent years.

China is now the largest lender to America. The Chinese people are a great society and a valued part of the world, but this indebtedness doesn’t feel right to me. While a “fiscal cliff” is our current mountain to climb, there’s a seemingly insurmountable Mount Everest waiting around the corner.

China

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Today’s Employment Landscape: Your Company, Your Clients

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With all of this talk in the recent election campaigns about jobs and growing the economy, it’s interesting to note that the median job tenure for workers age 25+ is rising, according to the Bureau of Labor Statistics. Conventional wisdom says Americans are changing jobs more frequently, but the data shows otherwise. The median worker age 25 or older has been with his or her current employer for 5.4 years, up from 5.2 years in 2010.

Now, according to a Towers Watson survey of 440 midsize to large companies, employer health care costs will increase 5.3% in 2013. Clearly, everyone in Washington D.C. has their work cut out for them—not to mention today’s employers and their employees.

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Press Release on the 250th Blog Post

The Nation’s Battleground: O-H-I-O

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As an Ohio resident, regardless of who wins the elections on Tuesday, all of us in our house will be thrilled that the relentless marketing efforts in our state will have ceased. It’s been overwhelming, unlike any other election season. I’m not even talking about TV ads and all that of which can be controlled; it’s the telemarketing, huge amounts of direct mail, the people coming to the front door at the house, etc., that’ s mind-numbing and downright irritating as hell.

Given how presidential candidates hopscotch all over the country–inefficiently campaigning, in my opinion–I would never donate to any presidential candidate. Wouldn’t it make more sense to have a strategy of spending two or three days at a time canvassing Ohio, then do the same in Florida, then a couple of days in another state? And we wonder why our government is not a model of efficiency? It makes no sense to be jumping around in multiple states each day; they need to plan a lot better, which would result in tremendous travel expense savings. You don’t have to be a Harvard MBA or CPA to understand that this is wasteful.

Speaking with my 14 year-old son about the election and the accounting profession, I mentioned an article written by thought leader Gary Boomer. My son then remarked, “Gary Boomer? What a sweet name!” Perhaps Gary can use this story in the introduction of his next conference speaking engagement. In the meantime, I might just write in “Gary Boomer” when I vote tomorrow.

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Press Release on the 250th Blog Post

Put On That Jumper, It’s Getting Cold Out There

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There are a lot of poor people in America. That’s a fact, regardless of what politicians preach or what certain news media outlets bark. What’s even more staggering than any statistics on the number of welfare recipients, homeless or unemployed is the latest measurement that the average Canadian household is $43,232 richer than the average America one. That’s a huge spread—far more than I would have estimated.

I don’t hear Obama, Romney or any other candidate running for office this November talking about how we need to catch up to Canada, our seldom talked about friendly neighbor to the north.

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Remember That Day

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The New Jersey Society of Certified Public Accountants issued an excellent article last week titled NJSCPA Will Never Forget 9-11. Without question, we all know where we were on that fateful day. I was wrapping up a breakfast meeting with one of our accounting firm’s construction company clients when an eerie silence fell over the restaurant. As we heard rumblings about planes crashing into the World Trade Center, our waiter came over to confirm what was milling about the room. I quickly paid the tab, and then the client and I stepped outside to make phone calls to find out what the heck was going on; we were not alone in this activity outside the restaurant. In those pre-smart phone days, we didn’t have the ease of instantly tuning in the news via what we held in our hand. How technology has changed in the last decade…

I urge you to read this post on the NJSCPA site. As an editor friend of mine commented to me earlier today, “It was a surreal day…and still is.”

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Taxman Says “No Job for You!”

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Last week, the House of Representatives approved legislation that would allow federal employees with seriously delinquent tax debts to be fired. The legislation would also prohibit the hiring of future federal employees who are already in that hot overdue tax mess. I think this is a smart move–and certainly one that is long overdue–but I’m skeptical as to the implementation of this rule if, indeed, it gets set in the proverbial governmental stone.

For starters, this would allow for the opportunity to shed some dead weight on Uncle Sam’s payrolls. Honestly, how many star performers on the job are also going to be tax deadbeats? The two normally don’t go hand-in-hand. Secondly, the directive would provide a prudent safeguard for bringing on new hires. Smart companies run credit checks on prospective hires in finance and sales departments, allowing them to spot those occasional red flags, giving cause to end the employment process (“dodging bullets”) for finance workers and salespeople who can’t manage their money properly. Isn’t this really a similar attempt to strengthen the workforce? Bottom line, the government needs to borrow more ideas from the private sector and put them to use.

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What Will Be the Economic Consequences of Tax Increases?

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Earlier this week on iShade’s BulletIN–the news section of our accounting community site–I spotlighted the fantastic Ernst & Young report titled “Long-Run Macroeconomic Impact of Increasing Tax Rates on High-Income Taxpayers in 2013.” Regardless of your political beliefs on tax increases, I think you’ll find this a fascinating read. I did, devouring it slowly in the basement a couple of evenings ago. Shockingly, the kids wanted no part of reading it or hearing any findings of the report.

The results of this study indicate long-run economic repercussions should the top two ordinary tax rates and investment tax rates rise as planned in 2013. Quoting the E&Y report: “this policy path can be expected to reduce long-run output, investment and net worth.” Note the word “reduce” in that sentence. This isn’t simply an overt opinion piece from E&Y intellectuals; there’s raw data to back this up. Of course, you can choose not to believe it.

Spout these data lines from the report around your company or public accounting firm if you want to spark some discussion on the matter:

*Changes would translate into a decline in GDP of $200 billion (yes, billion)
*Employment would fall by roughly 710,000 jobs or 0.5% (yes, unemployment would rise)

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