PricewaterhouseCoopers LLP appears to be getting into a little bit of Latin American hot sauce, following their Japanese misadventures which landed them into miso soup
Carrefour SA, the French retailer is suing PwC and Argentine Exxel Group for purported fraud when it bought Supermercados Norte SA from Exxel in April 2001. Carrefour says it overpaid
Exxel by nearly $120 million when it bought the 49% of Norte that it did not own earlier for $252 million....indicating the price paid should have been $132 million.
Carrefour claims that Exxel, in cahoots with PwC committed fraud by changing 1,020 account payables bills in an attempt to portray a better financial situation. Carrefour agreed to pay a multiple of Norte's 2000 operating income, so getting a true picture of costs was very critical.
The agreed number was 9 times EBITDA, so we figure that EBITDA was higher by $120/9 or $13.3 million, indicating that each bill was lessened by about $13,000.
So why five years later? Apparently, Carrefour had filed the lawsuit in May 2003 in Argentine federal courts, but was reported only recently by local media.
PwCs' local associate firm, Hartneck, Lopez and Co., Exxel Group's auditor agreed to the supermarket chain's accounts in 2001. This brings in PwC since an accountant for the affiliate, Gabriel Rolando Martini, who signed off on 2001 numbers, later admitted in a 2004 hearing for the initial case that "certain irregularities" occurred in the bookkeeping before the sale went through. Since that time, apparently PwC moved Hartneck Lopez's clients over to itself. Carrefour is alleging that this was a fraudulent with motive to make Harteneck Lopez an insolvent "shell" to protect it from liability, this point being the center of the lawsuit.
PricewaterhouseCoopers press office in Buenos Aires would not commment, nor did Exxel group.
From the Carrefour website, we note that Carrefour and Exxel signed an agreement on April 11, 2001 to transfer ownership and management of Norte in Argentina to Carrefour. The price at that time was not dislcosed, but now we know the number.
PwC's Japanese affiliate ChuoAayama was recently sactioned in Japan. PwC reacted swiftly to create its own parternship under the name PwC Aarata. This lawsuit just shows that the risks of operating internationally (especially through an affiliate) are equal to the risks of operating in the US. Litigiousness has spread globally and companies are not reticent to sue their auditors for real or perceived negative impact on their financials or value.
Further from the 2001 Carrefour press release....
Norte operates 139 supermarkets across the country and achieved net sales of 2.037,2 m$ (2.202 m€) in 2000.Carrefour already held 70% of the capital and 51% of the voting rights of Norte, which had been fully consolidated in Carrefour's accounts in 2000. The initial agreement included a sale option of Exxel to Carrefour - concerning the remainder of shares and voting rights and the management of Norte - to be exercised between January 1st 2001 and September 30th 2002.
With the current agreement replacing the exercise of that option, Norte and Carrefour will benefit this year of the first exchanges of know-how between the two groups and the setting up of a common organization. The Exxel Group will cooperate with Carrefour to assure an optimum integration of Carrefour Argentina and Norte-Tia operations. With their well known reputation for their knowledge of the retail business in Argentina, the teams of Carrefour and Norte should together reinforce their expertise in hypermarkets and supermarkets. However, no synergy has been forecast for this year: this transaction has therefore no new impact on the current profit forecasts of Carrefour in 2001.
The price of the transaction has not been disclosed and provides for a payment by Carrefour to Exxel in the 1st quarter 2002. The merger of Norte and Carrefour Argentina has already been approved by the Argentinean authorities in May 2000 and the current transaction is not suspended to any further approval.
The combination of the Carrefour hypermarkets, Norte supermarkets and Dia hard discount stores gives Carrefour Argentina a clear leadership in the sector. Beyond the current crisis in Argentina, this will allow Carrefour to reinforce its discount strategy and commercial offer in the second biggest retail market in South America.
Wednesday, June 21, 2006
Tuesday, June 20, 2006
Ex Ernst & Young LLP Partner Heads PCAOB
A Big Four Alumni has made it Big.
Mark W. Olson was recently appointed head of the Public Company Accounting Oversight Board by Chris Cox, SEC Commissioner. This ends months of uncertainty about leadership at the PCAOB or Peekabo as it is popularly known. Mr. Olson was a governer at the Federal Reserve Board.
He is 63 years old and becomes the PCAOB's second full-time chairman, a vacant spot after William McDonough, another ex Federal Reserve governor resigned. He takes over from acting PCAOB Chairman Willis Gradison. Mr. Olson will earn $615,000 per year.
The PCAOB is an oversight board set up as part of the Sarbanes Oxley act under the auspices of the SEC with responsibility to oversee accounting practices at firms.
Mark Olson is an ex-partner at Ernst & Young LLP (ERNY.UL). Congratulations to this super achieving alum.
Mark W. Olson was recently appointed head of the Public Company Accounting Oversight Board by Chris Cox, SEC Commissioner. This ends months of uncertainty about leadership at the PCAOB or Peekabo as it is popularly known. Mr. Olson was a governer at the Federal Reserve Board.
He is 63 years old and becomes the PCAOB's second full-time chairman, a vacant spot after William McDonough, another ex Federal Reserve governor resigned. He takes over from acting PCAOB Chairman Willis Gradison. Mr. Olson will earn $615,000 per year.
The PCAOB is an oversight board set up as part of the Sarbanes Oxley act under the auspices of the SEC with responsibility to oversee accounting practices at firms.
Mark Olson is an ex-partner at Ernst & Young LLP (ERNY.UL). Congratulations to this super achieving alum.
Monday, June 19, 2006
New Fresh Start for PricewaterhouseCoopers in Japan
We told you a few weeks ago that the Japanese Financial Authority came down strong and hard upon the PricewaterhouseCoopers LLP affiliate in Japan for condoning some not so clean auditing practices.
There was a rumor that PwC (PricewaterhouseCoopers LLP) would be opening its own subsidiary in Japan.
Last week, we see from PwC's website that it has actually happened. PwC Aarata, is being set up in Japan with the global PwC network, getting ready for business on July 1st. The difference from the previous set up - the new firm will be a member firm of the international PwC network complying with (tougher) international accounting best practices. And its biggest focus - ethics, independence and compliance with the law.
The PwC mothership will continue to support the other firm in Japan PwC ChuoAoyama, though the tone seems rather weak. PwC indicates that it is taking the Financial Services Agency (FSA) of Japan's sanctions very seriously and taking steps to remedy the situation. As readers may recall, the sanction was quite historic and very symbolic of the actions that the Japanese authorities are taking against fraudulent accouting practices.
PwC (PricewaterhouseCoopers LLP) says, "The name “Aarata” which signifies “new and fresh” was chosen to reflect the new perspective that PricewaterhouseCoopers Aarata will bring to the Japanese auditing market".
We found on an internet Japanese to English language translator that Aarata means "new or fresh or novel", so the choice of terms is very appropriate in this context.
We just hope there is no confusion with Errata, which is Latin for "An error in printing or writing."
There was a rumor that PwC (PricewaterhouseCoopers LLP) would be opening its own subsidiary in Japan.
Last week, we see from PwC's website that it has actually happened. PwC Aarata, is being set up in Japan with the global PwC network, getting ready for business on July 1st. The difference from the previous set up - the new firm will be a member firm of the international PwC network complying with (tougher) international accounting best practices. And its biggest focus - ethics, independence and compliance with the law.
The PwC mothership will continue to support the other firm in Japan PwC ChuoAoyama, though the tone seems rather weak. PwC indicates that it is taking the Financial Services Agency (FSA) of Japan's sanctions very seriously and taking steps to remedy the situation. As readers may recall, the sanction was quite historic and very symbolic of the actions that the Japanese authorities are taking against fraudulent accouting practices.
PwC (PricewaterhouseCoopers LLP) says, "The name “Aarata” which signifies “new and fresh” was chosen to reflect the new perspective that PricewaterhouseCoopers Aarata will bring to the Japanese auditing market".
We found on an internet Japanese to English language translator that Aarata means "new or fresh or novel", so the choice of terms is very appropriate in this context.
We just hope there is no confusion with Errata, which is Latin for "An error in printing or writing."
Sunday, June 18, 2006
Accenture (Champion) Beats BearingPoint (Champion) in Nail Biting Finish
The just concluded US Open ended with its fair share of thrills and upsets.
Phil Mickelson (the BearingPoint guy) (NYSE: BE) was the clear favorite and in top form running at plus 3 going into the 17th hole on the last round. He slipped by a bogey on the 17th to be plus 4 going into the 18th. A par on the 18th would have secured him victory and a place in the golf history books. But such is the fickle game of golf that Phil went twice past the hole and ended with a double bogey and a total score at plus 6.
Meanwhile Geoff Ogilvy (the Accenture Match Play champion) (NYSE: ACN) was in the locker room having completed all his round and ending at plus 5 for the tournament. Equally with the crowd, he stood surprised, shocked and jubiliant as the tide turned in his favor and crowned him champion.
This is reminscent of how consulting firms wait with bated breath to see who will be awarded a client contract, and sometimes the turn of events is quite mysterious, the obvious front-runner does not always win.
So a disappointed BearingPoint (NYSE: BE) will hold back its ads for the major newspapers, and Accenture (NYSE:ACN) will not push Tiger Woods, but may take solace in the fact that their champion did make it all the way to another great victory.
Phil Mickelson (the BearingPoint guy) (NYSE: BE) was the clear favorite and in top form running at plus 3 going into the 17th hole on the last round. He slipped by a bogey on the 17th to be plus 4 going into the 18th. A par on the 18th would have secured him victory and a place in the golf history books. But such is the fickle game of golf that Phil went twice past the hole and ended with a double bogey and a total score at plus 6.
Meanwhile Geoff Ogilvy (the Accenture Match Play champion) (NYSE: ACN) was in the locker room having completed all his round and ending at plus 5 for the tournament. Equally with the crowd, he stood surprised, shocked and jubiliant as the tide turned in his favor and crowned him champion.
This is reminscent of how consulting firms wait with bated breath to see who will be awarded a client contract, and sometimes the turn of events is quite mysterious, the obvious front-runner does not always win.
So a disappointed BearingPoint (NYSE: BE) will hold back its ads for the major newspapers, and Accenture (NYSE:ACN) will not push Tiger Woods, but may take solace in the fact that their champion did make it all the way to another great victory.
BearingPoint Versus Accenture at Winged Foot
The US Open is on, with the last round being played out today, the final 18 holes to decide the 2006 Champion.
Phil Mickelson strongly surged into a share of the first position with solid play of 69 in the third round and 70-73 in the first two rounds. With a total of 212 he is square with Kenneth Ferrie for number 1 and plus 2 over par for the first three rounds.
Geoff Ogilvy, the Australian, is just one stroke behind at plus 3 over par for the first three rounds. His score 70-71-72 puts him undisputed 2nd.
Vijay Singh, Colin Montgomerie, Ian Poulter and Steve Stricker are all at plus 5 in third place.
Winged Foot is turning out to be more challenging and fickle than people had imagined. So it is going to be a close call in the end
What does all this have to do with the Big Four.
As our readers know, BearingPoint (NYSE: BE) is a big supporter of Phil Mickelson, and their logo is prominently displayed on his cap. He did well by winning the 2006 Masters in addition to the 2004 Masters, and could make history as a three-major winner if he captures this 2006 US Open title.
On the other hand, Geoff Ogilvy, won the 2006 Accenture (NYSE: ACN) Match Play Championship, and the young Australian could also make history if he wins. Tiger Woods, who is sponsored by Accenture (NYSE: ACN) (Go On - Be a Tiger), did not make the cut in this US Open, the first time in his professional career, by posting a plus 12 in the first two rounds when the cut was plus 9.
So while the players get ready today to play out a thrilling round of golf, there is background action in the Big Four firms to see who will take home the bragging rights.
The PR guys are getting ready with their full page ads in the WSJ, NYT and USA Today...a BearingPoint (NYSE: BE) splash or otherwise. We will keep a watch and let you know the outcome.
Phil Mickelson strongly surged into a share of the first position with solid play of 69 in the third round and 70-73 in the first two rounds. With a total of 212 he is square with Kenneth Ferrie for number 1 and plus 2 over par for the first three rounds.
Geoff Ogilvy, the Australian, is just one stroke behind at plus 3 over par for the first three rounds. His score 70-71-72 puts him undisputed 2nd.
Vijay Singh, Colin Montgomerie, Ian Poulter and Steve Stricker are all at plus 5 in third place.
Winged Foot is turning out to be more challenging and fickle than people had imagined. So it is going to be a close call in the end
What does all this have to do with the Big Four.
As our readers know, BearingPoint (NYSE: BE) is a big supporter of Phil Mickelson, and their logo is prominently displayed on his cap. He did well by winning the 2006 Masters in addition to the 2004 Masters, and could make history as a three-major winner if he captures this 2006 US Open title.
On the other hand, Geoff Ogilvy, won the 2006 Accenture (NYSE: ACN) Match Play Championship, and the young Australian could also make history if he wins. Tiger Woods, who is sponsored by Accenture (NYSE: ACN) (Go On - Be a Tiger), did not make the cut in this US Open, the first time in his professional career, by posting a plus 12 in the first two rounds when the cut was plus 9.
So while the players get ready today to play out a thrilling round of golf, there is background action in the Big Four firms to see who will take home the bragging rights.
The PR guys are getting ready with their full page ads in the WSJ, NYT and USA Today...a BearingPoint (NYSE: BE) splash or otherwise. We will keep a watch and let you know the outcome.
Saturday, June 17, 2006
Diebold Insources Outsourcing, Leaving Deloitte & Touche At Sea
Can't count your chickens before they hatch. In this case, can't even count'em even while hatching.
In an unusual turn of recent events, Diebold, Inc., a $2.6 billion manufacturer of ATM machines, security systems and services and 14,000 employees, pulled out of a 7 year outsourcing contract with DC Outsourcing ITO L.P., an affiliate of Deloitte Consulting LLP, a part of Deloitte & Touche.
Four years ago, Diebold had contracted with DC Outsourcing to receive various IT-related services over a 7-year period, including deployment and implementation of the Oracle ERP system.
Now Diebold has decided to bring the global IT operations in-house. Why? The company claims this provides more control and flexibility over IT ops and ability to accelerate the remaining ERP deployment.
This switch will bring back 80 IT employees, who were mainly Diebold employees prior to the original outsourcing arrangement.
And there is financial pain too, Diebold will incur a termination fee that will result in a restructuring charge of approximately $7 million or $.07 per share in the second quarter 2006.
In February, surely as a precursor to this announcement, Diebold made several leadership appointments and operational changes, including enterprise applications, Oracle implementation, global information management, business intelligence and information security. These changes were intended to provide the structure necessary to achieve maximum value out of the new IT organization.
And the CEO says, "I am pleased to announce that we have taken another important step toward returning our company to a more acceptable level of long-term profitability. Regaining direct control of our IT operations and ERP implementation will allow us to expedite the process of realizing the long-term benefits of an enterprise-wide information system," said Thomas W. Swidarski, Diebold president and chief executive officer. "This strategic decision is critical to achieving the operational improvement targets we have set as well as positioning us to be more flexible and responsive in meeting the needs of our customers. We are very excited to bring these experts back to Diebold, and to add the expertise of the DC Outsourcing associates who have worked for Diebold during these past years."
We don't really know what exactly happened here, but clearly there was a mismatch between expectations and delivery. And the client decided to take action on what must have been a potentially difficult set of circumstances.
Stepping back, this appears to be symptomatic of a potentially larger trend. We take away:
Outsourcing, just like any other consulting project, demands keeping the client happy at all times. And we will also see if this trend is being replicated elsewhere.
In an unusual turn of recent events, Diebold, Inc., a $2.6 billion manufacturer of ATM machines, security systems and services and 14,000 employees, pulled out of a 7 year outsourcing contract with DC Outsourcing ITO L.P., an affiliate of Deloitte Consulting LLP, a part of Deloitte & Touche.
Four years ago, Diebold had contracted with DC Outsourcing to receive various IT-related services over a 7-year period, including deployment and implementation of the Oracle ERP system.
Now Diebold has decided to bring the global IT operations in-house. Why? The company claims this provides more control and flexibility over IT ops and ability to accelerate the remaining ERP deployment.
This switch will bring back 80 IT employees, who were mainly Diebold employees prior to the original outsourcing arrangement.
And there is financial pain too, Diebold will incur a termination fee that will result in a restructuring charge of approximately $7 million or $.07 per share in the second quarter 2006.
In February, surely as a precursor to this announcement, Diebold made several leadership appointments and operational changes, including enterprise applications, Oracle implementation, global information management, business intelligence and information security. These changes were intended to provide the structure necessary to achieve maximum value out of the new IT organization.
And the CEO says, "I am pleased to announce that we have taken another important step toward returning our company to a more acceptable level of long-term profitability. Regaining direct control of our IT operations and ERP implementation will allow us to expedite the process of realizing the long-term benefits of an enterprise-wide information system," said Thomas W. Swidarski, Diebold president and chief executive officer. "This strategic decision is critical to achieving the operational improvement targets we have set as well as positioning us to be more flexible and responsive in meeting the needs of our customers. We are very excited to bring these experts back to Diebold, and to add the expertise of the DC Outsourcing associates who have worked for Diebold during these past years."
We don't really know what exactly happened here, but clearly there was a mismatch between expectations and delivery. And the client decided to take action on what must have been a potentially difficult set of circumstances.
Stepping back, this appears to be symptomatic of a potentially larger trend. We take away:
- Companies are willing to outsource to large offshoring providers if they can see the value proposition
- Companies are keenly monitoring progress and delivery against promises
- Companies can abort contracts mid-way even it means financial and organizational pain
Outsourcing, just like any other consulting project, demands keeping the client happy at all times. And we will also see if this trend is being replicated elsewhere.
Thursday, June 15, 2006
Mitchell & Titus Joins Ernst & Young: Diversity is Good Business
Mitchell & Titus, the largest minority-owned accounting firm in the US will join Ernst & Young Global as a member firm. M & T was formed in 1974 and has 125 employees. Exact revenue was not disclosed, but an an average of say $200,000 per employee, this is a $25 million dollar firm.
Typically, a large Big Four firm like Ernst & Young would annex the clients, employees and relationships of the firm it buys and absorb into its infrastructure. But Mitchell & Titus will continue as its own entity and maintain its own clients and billing structure. It will become the second US member firm in the global E&Y network, typically there is only one firm in each country in the global partnership.
We can only conjecture the cause for this unusual arrangement....did E&Y want to promote diversity in its ranks, or is there economic value in maintaining M&T as a separate entity, or the prevailing conditions are such that an amalgamation between a minority-owned busines and a large global firm is not entire possible. Or is it setting a trend in the industry where newly acquired firms (with clout of their own) will continue to operate under their own umbrellas.
M&T is apparently going to focus on its own client base, which is likely also minority owned businesses. Letting this situation continue is probably to Ernst & Young's advantage. Minority owned businesses are growing strong and plentiful and serving them with a minority-owned firm but with global resources is probably good business sense. Diversity is no longer a buzzword but an impactful business phenomenon. Diversity hiring is growing and is 36% of experienced hires, according to E&Y.
We will keep monitoring such acqusitions to see if the other Big Four are taking the same route.
Here is the Press Release
Source: Ernst & Young Global Limited
Mitchell & Titus to Join Ernst & Young Global as a Member FirmThursday June 15, 7:00 am ET
NEW YORK, June 15 /PRNewswire/ -- Ernst & Young Global Limited announced today that Mitchell & Titus, LLP, the nation's largest minority-owned accounting firm, is expected to join as a member firm. The announcement was made at the National Association of Black Accountants annual convention, taking place this week in Hollywood, Fla.
The global Ernst & Young organization consists of separate member firms in 140 countries, including Ernst & Young LLP in the United States. Mitchell & Titus will maintain its brand name and continue to operate under its current ownership through its offices in New York, Philadelphia, Baltimore, Rutherford, New Jersey and Washington, DC. Mitchell & Titus's membership in the global Ernst & Young organization is expected to commence by October 2006, pending the resolution of professional independence related and other outstanding matters.
Founded in 1974, Mitchell & Titus is currently ranked among the 100 largest accounting firms in the United States. With a staff of more than 125 people, the firm provides auditing, tax and advisory services for Fortune 1000 companies, entrepreneurial enterprises, not-for-profit organizations, government entities, and high net worth individuals. Mitchell & Titus intends to remain a minority-owned business.
"From where we started, more than 30 years ago, it would have been hard to expect that we would be where we are as a firm today," said Bert N. Mitchell, Chairman and CEO of Mitchell & Titus. "Despite some obstacles, we built a firm of quality that has been in a continuum of growth. By joining as a member firm of Ernst & Young Global Limited, we believe we are better positioned to continue this growth and to provide clients a unique option of a minority-owned firm that can draw upon the vast resources of a world class professional services organization. In addition, Ernst & Young shares our passion for quality and integrity in client engagements, as well as a desire to enhance opportunities for minorities seeking a career in our profession. We are excited for the opportunities that lie ahead for us in the future."
"Bert Mitchell is among the true legends of the accounting profession, and he and his team have established one of the most respected firms in the country," said James S. Turley, Chairman and CEO of Ernst & Young Global Limited. "It will be a privilege to have Mitchell & Titus as part of the global Ernst & Young organization, and we hope this arrangement demonstrates in a very real way our mutual commitment to promote diversity in the accounting profession, while maintaining a laser-like focus on quality in the delivery of client services," Turley added.
As the two client-serving members of the global Ernst & Young organization operating in the United States, Mitchell & Titus and Ernst & Young LLP expect to work on some client engagements jointly, in addition to providing business referrals, where appropriate. The arrangement enables Mitchell & Titus and Ernst & Young LLP to focus on their respective preferred client segments, with the result that together the firms will provide broad-based, consistent, seamless quality service throughout the market. As a member firm of the global Ernst & Young organization, Mitchell & Titus will follow the organization's quality and risk management and independence procedures, as well as have access to leading technological resources and the collective knowledge base of the other member firms around the world. However, as a separate firm within the global Ernst & Young organization, Mitchell & Titus will maintain its own billing and fee structure.
A chronicler of the lack of diversity in the accounting profession throughout his 40 year career, Mitchell notes that 30 years ago fewer than two out of every thousand CPAs in the United States were African American. Ten years ago only one percent of CPAs were African American. And while progress has been made in minority hiring, according to a 2004 study by the American Institute of Certified Public Accountants 23 percent of accountants hired were minorities (up from 18 percent in 2003); the total number of African-American accountants hired in 2004 was only 3 percent (down from 5 percent in 2003).
For the past 8 years, Ernst & Young LLP, the U.S. client-serving member firm of Ernst & Young Global Limited, has been named by Fortune magazine as one of the "100 Best Companies to Work For." Minorities currently represent more than 24 percent of all client-serving Ernst & Young LLP staff. Minority hiring on campuses is at an all time high, accounting for 28 percent of all off-campus hires at Ernst & Young LLP, while minorities currently account for 36 percent of experienced hires. African Americans currently comprise 6 percent of all staff at Ernst & Young LLP, with 48 percent in client serving roles.
In addition to significant investments in mentoring, networking and career development opportunities for minority professionals at the firm, over the past 10 years Ernst & Young LLP, along with the Ernst & Young Foundation, has contributed more than $6 million to minority business students and their organizations to help increase the pool of minority applicants and new hires for the profession. Recognizing the firm's commitment to promoting diversity, Black Collegian magazine named Ernst & Young LLP one of the top 100 Diversity Companies for the fifth consecutive year. Ernst & Young LLP also was named one of the top 100 companies for Hispanic professionals by Hispanic Magazine for the second year in a row.
Mitchell has served as president of the New York State Society of Certified Public Accountants, as well as chairman of the New York State Board of Accountancy. In addition, he has served as a member of the board and the Governing Council of the American Institute of Certified Public Accountants (AICPA) and as president of the Accountants Club of America. A co-founder and chairman of the National Association of Minority CPA Firms, Mitchell has also served on the Commissioner's Advisory Group of the Internal Revenue Service. He has received numerous honors and awards, including four honorary doctorate degrees and the AICPA's Gold Medal.
About Mitchell & Titus
Mitchell & Titus, LLP is a preeminent provider of auditing, accounting, tax, and business advisory services. Since the firm's founding in 1974 Mitchell & Titus has become the nation's largest minority-owned accounting firm, ranking among the top 100 of more than 50,000 accounting firms in the United States.
The growth and success of Mitchell & Titus is directly linked to its commitment to excellence and quality of services. With an ever growing number of professionals in its New York City, Rutherford, NJ; Philadelphia; Baltimore; and Washington, DC offices. Mitchell & Titus assists clients throughout the United States including Fortune 1000 companies, entrepreneurial enterprises, not-for-profit organizations, government entities, and high net worth individuals who choose Mitchell & Titus for its knowledgeable, experienced and responsive team.
About Ernst & Young Global Limited
Ernst & Young, a global leader in professional services, is committed to restoring the public's trust in professional services firms and in the quality of financial reporting. Its member firms' 107,000 people in 140 countries pursue the highest levels of integrity, quality, and professionalism in providing a range of sophisticated services centered on our core competencies of auditing, accounting, tax, and transactions. Further information about Ernst & Young and its approach to a variety of business issues can be found at www.ey.com/perspectives. As used in this paragraph, Ernst & Young refers to the organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited does not provide services to clients. Ernst & Young LLP, a Delaware limited liability partnership, is the U.S. client-serving member firm of Ernst & Young Global Limited.
Typically, a large Big Four firm like Ernst & Young would annex the clients, employees and relationships of the firm it buys and absorb into its infrastructure. But Mitchell & Titus will continue as its own entity and maintain its own clients and billing structure. It will become the second US member firm in the global E&Y network, typically there is only one firm in each country in the global partnership.
We can only conjecture the cause for this unusual arrangement....did E&Y want to promote diversity in its ranks, or is there economic value in maintaining M&T as a separate entity, or the prevailing conditions are such that an amalgamation between a minority-owned busines and a large global firm is not entire possible. Or is it setting a trend in the industry where newly acquired firms (with clout of their own) will continue to operate under their own umbrellas.
M&T is apparently going to focus on its own client base, which is likely also minority owned businesses. Letting this situation continue is probably to Ernst & Young's advantage. Minority owned businesses are growing strong and plentiful and serving them with a minority-owned firm but with global resources is probably good business sense. Diversity is no longer a buzzword but an impactful business phenomenon. Diversity hiring is growing and is 36% of experienced hires, according to E&Y.
We will keep monitoring such acqusitions to see if the other Big Four are taking the same route.
Here is the Press Release
Source: Ernst & Young Global Limited
Mitchell & Titus to Join Ernst & Young Global as a Member FirmThursday June 15, 7:00 am ET
NEW YORK, June 15 /PRNewswire/ -- Ernst & Young Global Limited announced today that Mitchell & Titus, LLP, the nation's largest minority-owned accounting firm, is expected to join as a member firm. The announcement was made at the National Association of Black Accountants annual convention, taking place this week in Hollywood, Fla.
The global Ernst & Young organization consists of separate member firms in 140 countries, including Ernst & Young LLP in the United States. Mitchell & Titus will maintain its brand name and continue to operate under its current ownership through its offices in New York, Philadelphia, Baltimore, Rutherford, New Jersey and Washington, DC. Mitchell & Titus's membership in the global Ernst & Young organization is expected to commence by October 2006, pending the resolution of professional independence related and other outstanding matters.
Founded in 1974, Mitchell & Titus is currently ranked among the 100 largest accounting firms in the United States. With a staff of more than 125 people, the firm provides auditing, tax and advisory services for Fortune 1000 companies, entrepreneurial enterprises, not-for-profit organizations, government entities, and high net worth individuals. Mitchell & Titus intends to remain a minority-owned business.
"From where we started, more than 30 years ago, it would have been hard to expect that we would be where we are as a firm today," said Bert N. Mitchell, Chairman and CEO of Mitchell & Titus. "Despite some obstacles, we built a firm of quality that has been in a continuum of growth. By joining as a member firm of Ernst & Young Global Limited, we believe we are better positioned to continue this growth and to provide clients a unique option of a minority-owned firm that can draw upon the vast resources of a world class professional services organization. In addition, Ernst & Young shares our passion for quality and integrity in client engagements, as well as a desire to enhance opportunities for minorities seeking a career in our profession. We are excited for the opportunities that lie ahead for us in the future."
"Bert Mitchell is among the true legends of the accounting profession, and he and his team have established one of the most respected firms in the country," said James S. Turley, Chairman and CEO of Ernst & Young Global Limited. "It will be a privilege to have Mitchell & Titus as part of the global Ernst & Young organization, and we hope this arrangement demonstrates in a very real way our mutual commitment to promote diversity in the accounting profession, while maintaining a laser-like focus on quality in the delivery of client services," Turley added.
As the two client-serving members of the global Ernst & Young organization operating in the United States, Mitchell & Titus and Ernst & Young LLP expect to work on some client engagements jointly, in addition to providing business referrals, where appropriate. The arrangement enables Mitchell & Titus and Ernst & Young LLP to focus on their respective preferred client segments, with the result that together the firms will provide broad-based, consistent, seamless quality service throughout the market. As a member firm of the global Ernst & Young organization, Mitchell & Titus will follow the organization's quality and risk management and independence procedures, as well as have access to leading technological resources and the collective knowledge base of the other member firms around the world. However, as a separate firm within the global Ernst & Young organization, Mitchell & Titus will maintain its own billing and fee structure.
A chronicler of the lack of diversity in the accounting profession throughout his 40 year career, Mitchell notes that 30 years ago fewer than two out of every thousand CPAs in the United States were African American. Ten years ago only one percent of CPAs were African American. And while progress has been made in minority hiring, according to a 2004 study by the American Institute of Certified Public Accountants 23 percent of accountants hired were minorities (up from 18 percent in 2003); the total number of African-American accountants hired in 2004 was only 3 percent (down from 5 percent in 2003).
For the past 8 years, Ernst & Young LLP, the U.S. client-serving member firm of Ernst & Young Global Limited, has been named by Fortune magazine as one of the "100 Best Companies to Work For." Minorities currently represent more than 24 percent of all client-serving Ernst & Young LLP staff. Minority hiring on campuses is at an all time high, accounting for 28 percent of all off-campus hires at Ernst & Young LLP, while minorities currently account for 36 percent of experienced hires. African Americans currently comprise 6 percent of all staff at Ernst & Young LLP, with 48 percent in client serving roles.
In addition to significant investments in mentoring, networking and career development opportunities for minority professionals at the firm, over the past 10 years Ernst & Young LLP, along with the Ernst & Young Foundation, has contributed more than $6 million to minority business students and their organizations to help increase the pool of minority applicants and new hires for the profession. Recognizing the firm's commitment to promoting diversity, Black Collegian magazine named Ernst & Young LLP one of the top 100 Diversity Companies for the fifth consecutive year. Ernst & Young LLP also was named one of the top 100 companies for Hispanic professionals by Hispanic Magazine for the second year in a row.
Mitchell has served as president of the New York State Society of Certified Public Accountants, as well as chairman of the New York State Board of Accountancy. In addition, he has served as a member of the board and the Governing Council of the American Institute of Certified Public Accountants (AICPA) and as president of the Accountants Club of America. A co-founder and chairman of the National Association of Minority CPA Firms, Mitchell has also served on the Commissioner's Advisory Group of the Internal Revenue Service. He has received numerous honors and awards, including four honorary doctorate degrees and the AICPA's Gold Medal.
About Mitchell & Titus
Mitchell & Titus, LLP is a preeminent provider of auditing, accounting, tax, and business advisory services. Since the firm's founding in 1974 Mitchell & Titus has become the nation's largest minority-owned accounting firm, ranking among the top 100 of more than 50,000 accounting firms in the United States.
The growth and success of Mitchell & Titus is directly linked to its commitment to excellence and quality of services. With an ever growing number of professionals in its New York City, Rutherford, NJ; Philadelphia; Baltimore; and Washington, DC offices. Mitchell & Titus assists clients throughout the United States including Fortune 1000 companies, entrepreneurial enterprises, not-for-profit organizations, government entities, and high net worth individuals who choose Mitchell & Titus for its knowledgeable, experienced and responsive team.
About Ernst & Young Global Limited
Ernst & Young, a global leader in professional services, is committed to restoring the public's trust in professional services firms and in the quality of financial reporting. Its member firms' 107,000 people in 140 countries pursue the highest levels of integrity, quality, and professionalism in providing a range of sophisticated services centered on our core competencies of auditing, accounting, tax, and transactions. Further information about Ernst & Young and its approach to a variety of business issues can be found at www.ey.com/perspectives. As used in this paragraph, Ernst & Young refers to the organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited does not provide services to clients. Ernst & Young LLP, a Delaware limited liability partnership, is the U.S. client-serving member firm of Ernst & Young Global Limited.
Wednesday, June 14, 2006
Big Four Alumni Go Places! Focus on Ernst & Young Alumni
We have recently started compiling key movements on Big Four alumni, here is a sample of Ernst & Young alumni.
Even from this small sample, we can see that Big4 alumni:
Take on senior positions in a variety of industries
Represent multiple roles and backgrounds
Go beyond traditional accounting and financial roles
Represent their Big Four background with pride
Great going! For other alumni news, check out www.Big4.com
Thomas Fineis has been appointed Senior Vice President, health valuation actuary of Conseco, Inc. He will be responsible for managing Conseco's health valuation function on an enterprise-wide basis, overseeing activities at Conseco Insurance Group, Bankers Life and Casualty Company, and Colonial Penn Life Insurance Company. Fineis previously worked at Ernst & Young. Reported by Trading Markets on June 2, 2006.
David Metcalf has been appointed as General Manager Finance by Aviva, a leading provider of life and pensions products to Europe and has substantial businesses elsewhere around the world. Metcalf had an extensive career with Ernst & Young. Reported by Aviva on June 5, 2006.
Ben Au has been appointed as Chief Financial Officer and VP Finance and Administration at St Andrew’s Corporate Office in Oakville, Ontario. He will be responsible for all the financial and administration activities including financial reporting, budgeting, internal reporting and control functions for the Company. Ben started his career working for Ernst & Young in Auditing and Public Accounting for 12 years. Reported by Market Wire on June 1, 2006.
Andrew G. Papandreadis has been appointed as Director of Product Strategy and Management by Axioma Inc., a leading global provider of risk analysis and portfolio rebalancing tools for the financial services industry. Earlier in his career, Papandreadis was with Ernst & Young LLP as a Senior Manager in the firm’s IT Practice. Reported by Business Wire on June 1, 2006.
Chad Pack has been named the new Vice President and Chief Financial Officer with Fifth Third Bank (Ohio Valley). He is responsible for analyzing the $1.5 billion bank’s financial performance and growth opportunities along with providing assistance to profit center managers. Pack was an Audit Senior with Ernst & Young. Reported by The Huntington Herald-Dispatch on May 28, 2006.
Andrew R. Crescenzo has been appointed as Senior Vice President of Finance by Enzo Biochem, engaged in the research, development and manufacture of innovative health care products based on molecular biology and genetic engineering techniques, and in providing diagnostic services to the medical community. For nine years he served as Senior Manager with the accounting firm of Ernst and Young LLP. Reported by Business Wire on June 6, 2006.
Michael Strianese, the Chief Financial Officer of L-3 Communications, has been appointed as its interim Chief Executive Officer. Strianese will however continue to serve as the Chief Financial Officer of the company. He used to work with Ernst & Young. Reported by Trading Markets on June 9, 2006.
Mr. Harvey McKenzie has been appointed as Chairman of the Audit Committee and to the Board of Directors of Outlook Resources Inc. From 1983 to 1987 Mr. McKenzie was a Director of Information Services for Ernst & Young, Chartered Accountants, in Toronto. Reported by CCNMatthews on June 9, 2006.
Paul Jaggard has joined the Board of Directors of RAND Worldwide (R), a global leader in providing technology solutions to organizations with engineering design and information technology requirements. Mr. Jaggard was a Senior Partner with Ernst & Young, LLP, Chartered accountants, and had been with that firm and its predecessors for 27 years. Reported by CNW Telbec on June 13, 2006.
John Nackel has been named the President and Chief Operating Officer of Salick Cardiovascular Centers. Nackel served 25 years at Ernst & Young in numerous leadership roles, including Global Managing Director of the Health Care Consulting Business, Managing Director of New Ventures, and Chief Executive Officer of Sogeti North America. Reported by PR Newswire on June 12, 2006.
Even from this small sample, we can see that Big4 alumni:
Take on senior positions in a variety of industries
Represent multiple roles and backgrounds
Go beyond traditional accounting and financial roles
Represent their Big Four background with pride
Great going! For other alumni news, check out www.Big4.com
Thomas Fineis has been appointed Senior Vice President, health valuation actuary of Conseco, Inc. He will be responsible for managing Conseco's health valuation function on an enterprise-wide basis, overseeing activities at Conseco Insurance Group, Bankers Life and Casualty Company, and Colonial Penn Life Insurance Company. Fineis previously worked at Ernst & Young. Reported by Trading Markets on June 2, 2006.
David Metcalf has been appointed as General Manager Finance by Aviva, a leading provider of life and pensions products to Europe and has substantial businesses elsewhere around the world. Metcalf had an extensive career with Ernst & Young. Reported by Aviva on June 5, 2006.
Ben Au has been appointed as Chief Financial Officer and VP Finance and Administration at St Andrew’s Corporate Office in Oakville, Ontario. He will be responsible for all the financial and administration activities including financial reporting, budgeting, internal reporting and control functions for the Company. Ben started his career working for Ernst & Young in Auditing and Public Accounting for 12 years. Reported by Market Wire on June 1, 2006.
Andrew G. Papandreadis has been appointed as Director of Product Strategy and Management by Axioma Inc., a leading global provider of risk analysis and portfolio rebalancing tools for the financial services industry. Earlier in his career, Papandreadis was with Ernst & Young LLP as a Senior Manager in the firm’s IT Practice. Reported by Business Wire on June 1, 2006.
Chad Pack has been named the new Vice President and Chief Financial Officer with Fifth Third Bank (Ohio Valley). He is responsible for analyzing the $1.5 billion bank’s financial performance and growth opportunities along with providing assistance to profit center managers. Pack was an Audit Senior with Ernst & Young. Reported by The Huntington Herald-Dispatch on May 28, 2006.
Andrew R. Crescenzo has been appointed as Senior Vice President of Finance by Enzo Biochem, engaged in the research, development and manufacture of innovative health care products based on molecular biology and genetic engineering techniques, and in providing diagnostic services to the medical community. For nine years he served as Senior Manager with the accounting firm of Ernst and Young LLP. Reported by Business Wire on June 6, 2006.
Michael Strianese, the Chief Financial Officer of L-3 Communications, has been appointed as its interim Chief Executive Officer. Strianese will however continue to serve as the Chief Financial Officer of the company. He used to work with Ernst & Young. Reported by Trading Markets on June 9, 2006.
Mr. Harvey McKenzie has been appointed as Chairman of the Audit Committee and to the Board of Directors of Outlook Resources Inc. From 1983 to 1987 Mr. McKenzie was a Director of Information Services for Ernst & Young, Chartered Accountants, in Toronto. Reported by CCNMatthews on June 9, 2006.
Paul Jaggard has joined the Board of Directors of RAND Worldwide (R), a global leader in providing technology solutions to organizations with engineering design and information technology requirements. Mr. Jaggard was a Senior Partner with Ernst & Young, LLP, Chartered accountants, and had been with that firm and its predecessors for 27 years. Reported by CNW Telbec on June 13, 2006.
John Nackel has been named the President and Chief Operating Officer of Salick Cardiovascular Centers. Nackel served 25 years at Ernst & Young in numerous leadership roles, including Global Managing Director of the Health Care Consulting Business, Managing Director of New Ventures, and Chief Executive Officer of Sogeti North America. Reported by PR Newswire on June 12, 2006.
Accenture is Unilever's HR Department: Well, Almost!
Human Resources Outsourcing (HRO) scales new heights!
Accenture (NYSE: ACN) is now going to provide full HR services to Unilever. First the numbers: services to nearly 200,000 employees in more than 20 languages in 100 countries, affecting 3,300 HR professionals over 7 years. Exact deal numbers were not disclosed but estimates exceed $1 billion!!
Then, look at what is covered...in short, the whole enchilada, everything you can think a typical HR function does at a large company:
Recruitment
Payroll administration
Reward administration
Performance management
Workforce reporting
Core HR administration
Third party provider management services
Deploy and manage critical HR software applications
Content sourcing and development
Program planning and delivery
Learning system hosting
Management and administrative services
Accenture will provide services to from delivery centers in Bangalore, Manila, Dalian, Bucharest, Prague and Curitiba.
When put in context, this brings HRO to a completely new level... now a third-party is involved in recruiting your employees, managing their payroll, giving out bonuses, monitoring performance, training, and pension management.
Traditionally, these were considered core competencies - are not people the key component of a company's operation? But that seems to have fallen by the wayside. Unilever's strategic competence is making and selling soap, detergents, consumer goods, consumables, not HR, or so the purists would say.
But who makes the whole thing run, it's the Unilever people, and now who makes them run - Accenture. It makes us shudder.
So next time a Unilever employee wants a raise, he better run it past the Accenture partner on the account before he/she gets to the boss!
Tuesday, June 13, 2006
China Inc. Takes on Big Four Audit Firms
It appears that China, Inc. the growing economic juggernaut is turning its focus on the Big Four Accounting firms. The Big Four - Deloitte & Touche, Ernst & Young, KPMG and PricewaterhouseCoopers have each around 4,500 staff and looking to add an additional 20% .
But the country, which has one of the largest GDP growth rates in the world and fast becoming an economic superpower with a formidable industrial base wants to promote its own local accounting firms to enter an industry hitherto the domain of the Big Four. Chinese companies are now wholly dependent on non-Chinese firms to get audits done so that they can get capital and list abroad.
These so called "national champions" are "encouraged" to gain business from other local businesses but these are not pressured to give business to local firms. The intent is to reduce dependence on foreign accouting firms.
According to a Chinese official, "As Chinese companies list abroad, we also hope the audit firms can go global too." "After all, the entry of foreign companies into China happened alongside the introduction of foreign audit firms here."
But this appears to be a long shot, accounting firms and tradition and integrity and investor confidence are built up over decades. Consider that the second-tier firms like Grant Thornton and McGladrey Pullen in the US even have a hard time becoming a Big Four firm. Chinese accounting firms generally have low experience of global accounting rules and audit procedures or disclosure requirements.
But the Chinese government is not to be underestimated. In industry after industry, toys, shoemaking, steel, chemicals, automotive, electronics, software they have determinedly penetrated and gained global prominence. Accounting is a regulated industry and the local business situation has a large impact on Big Four fortunes. With the might of the government and support of local officialdom, Chinese accounting firms can quickly arm up and start getting larger sized accounts. The 5,600 or so accounting firms, which include around 70 that are authorised to audit listed companies, could consolidate to produce some large, deep firms with decent depth to challenge the Big Four.
Recently Bank of China, which was audited by PricewaterhouseCoopers, went public and the IPO was well received globally. Some of the investor confidence is certainly due to a clean audit opinion by the largest accounting firm in the world. Could investors have felt so comfortable with an audit by a not-so-well-known auditing firm. History shows that this is not the case. Brand does add value and comfort.
The Big Four firms are of course highly sensitive to Chinese government needs, consider that
Ernst & Young held back a report on the level of bad debt at China's top banks, which we covered in a recent blog.
The Big Four need to keep watch in their rear view mirrors for local competitors. Now they all seem far away, but one could sneak into a blind spot close behind and then zoom ahead.
But the country, which has one of the largest GDP growth rates in the world and fast becoming an economic superpower with a formidable industrial base wants to promote its own local accounting firms to enter an industry hitherto the domain of the Big Four. Chinese companies are now wholly dependent on non-Chinese firms to get audits done so that they can get capital and list abroad.
These so called "national champions" are "encouraged" to gain business from other local businesses but these are not pressured to give business to local firms. The intent is to reduce dependence on foreign accouting firms.
According to a Chinese official, "As Chinese companies list abroad, we also hope the audit firms can go global too." "After all, the entry of foreign companies into China happened alongside the introduction of foreign audit firms here."
But this appears to be a long shot, accounting firms and tradition and integrity and investor confidence are built up over decades. Consider that the second-tier firms like Grant Thornton and McGladrey Pullen in the US even have a hard time becoming a Big Four firm. Chinese accounting firms generally have low experience of global accounting rules and audit procedures or disclosure requirements.
But the Chinese government is not to be underestimated. In industry after industry, toys, shoemaking, steel, chemicals, automotive, electronics, software they have determinedly penetrated and gained global prominence. Accounting is a regulated industry and the local business situation has a large impact on Big Four fortunes. With the might of the government and support of local officialdom, Chinese accounting firms can quickly arm up and start getting larger sized accounts. The 5,600 or so accounting firms, which include around 70 that are authorised to audit listed companies, could consolidate to produce some large, deep firms with decent depth to challenge the Big Four.
Recently Bank of China, which was audited by PricewaterhouseCoopers, went public and the IPO was well received globally. Some of the investor confidence is certainly due to a clean audit opinion by the largest accounting firm in the world. Could investors have felt so comfortable with an audit by a not-so-well-known auditing firm. History shows that this is not the case. Brand does add value and comfort.
The Big Four firms are of course highly sensitive to Chinese government needs, consider that
Ernst & Young held back a report on the level of bad debt at China's top banks, which we covered in a recent blog.
The Big Four need to keep watch in their rear view mirrors for local competitors. Now they all seem far away, but one could sneak into a blind spot close behind and then zoom ahead.
Saturday, June 10, 2006
South African Lynch Turns Hard Work into Imperial Riches
Ernst & Young just announced their 2006 World Entreprenuer of the Year as Bill Lynch, CEO of Imperial Holdings of South Africa. Imperial is a logistics and car dealership company with annual sales of 42 million Rand, and uninterrupted growth for 18 years since inception. Market capitalization is US$3.7 billion. All in all a very impressive growth trajectory, and Bill Lynch's rags to riches story is even more amazing. Bill Lynch started Imperial from humble beginnings and has taken risk and turned opportunity to his advantage to create a leading company not only in South Africa, but also in other parts of Africa, Europe and Australia. Entrepreneurship, passion, vision and hard work in face of adversity does produce tremendous results, showing that individuals can make a strong difference despite starting small in developing countries
Kudos to Bill Lynch for this award, as also to Ernst & Young for such effort and vision to actively promote this global contest, culminating in Monte Carlo.
South Africa’s Bill Lynch Named Ernst & Young 2006 World Entrepreneur Of The Year
MONTE CARLO, 11 JUNE 2006 — Bill Lynch, CEO of South Africa’s Imperial Holdings, was last night named the 2006 Ernst & Young World Entrepreneur Of The Year at a glittering awards ceremony held in Monte Carlo’s Grimaldi Forum. The ceremony marked the culmination of the Entrepreneur Of The Year World Summit, which brought together hundreds of the world’s most respected entrepreneurs for three days of dialogue, learning and networking.
Lynch, who built Imperial into South Africa’s largest transport and mobility conglomerate after arriving there in 1971 with just £2,000 and no job, was picked from a strong field of 32 national winners in this, the sixth annual World Entrepreneur Of The Year competition. Today Imperial Holdings has annual revenues of €6.5 billion across seven synergistic divisions (integrated logistics solutions; fleet management; vehicle and forklift leasing; aviation operations, sales and leasing; car rental and tourism; motor vehicle importation, sales and after-sales services; and related financial services) and employs 36,000 people on three continents.
Chairman of the nine-member independent judging panel, Sunil Bharti Mittal, founder of Bharti Enterprises and 2004 India Entrepreneur Of The Year, said, “Bill is the epitome of an entrepreneur – he started with nothing, but he grew an amazing business over thirty years, and today makes a huge positive impact in South Africa. He does that not only through the jobs he creates but also through the training, education and other community support Imperial provides.”
“This year there was a particularly strong field of country winners to choose from, so the judges had a very difficult decision to make,” said Greg Ericksen, Ernst & Young’s Global Vice-Chair for Strategic Growth Markets. “Bill has seen it all and done it all and is a great role model for entrepreneurs everywhere with his love of business and hard work,” he continued.
“What has been the special feature of the 20 years of the Entrepreneur Of The Year program has been the amazing story that each entrepreneur has to tell,” said Ernst & Young Chairman and CEO James S. Turley. “Bill’s story is a classic one: he started from humble origins and through hard work and smart diversification built a multi-billion dollar international business.”
About Bill Lynch and Imperial Holdings
With only a village school education and a love of business from the day he began work in a garage in rural Ireland, Bill Lynch today is chief executive of South Africa’s largest transport and mobility group, Imperial Holdings.
In 1971, at age 27, Lynch came to South Africa with his wife Ann, £2,000, no job and few prospects during a worsening recession. He joined Imperial Motors, a car dealership losing €12,345 a year. Lynch led a turn-around, applying disciplines that were second nature to a manager raised in poverty.
In 1973 he acquired 10% of Imperial—preferring to take a risk and buy 10% rather than accept a 5% stake for free. He led a growth strategy, with diversification into truck hire, logistics, car rental and leasing.
Imperial listed in 1987 at 9 cents a share versus €21 today. In 1990, Lynch became Imperial’s executive chairman and showed his faith in SA’s future by driving further expansion, transforming the core Toyota dealership into a multibrand network, among other initiatives.
At the time, many predicted SA’s descent into political and economic collapse. In 1998-99, Imperial expanded offshore, buying Thyssen-Krupp’s European logistics business and moving into aviation leasing.
Turnover since South Africa’s democratic transition is up 28-fold.
Kudos to Bill Lynch for this award, as also to Ernst & Young for such effort and vision to actively promote this global contest, culminating in Monte Carlo.
South Africa’s Bill Lynch Named Ernst & Young 2006 World Entrepreneur Of The Year
MONTE CARLO, 11 JUNE 2006 — Bill Lynch, CEO of South Africa’s Imperial Holdings, was last night named the 2006 Ernst & Young World Entrepreneur Of The Year at a glittering awards ceremony held in Monte Carlo’s Grimaldi Forum. The ceremony marked the culmination of the Entrepreneur Of The Year World Summit, which brought together hundreds of the world’s most respected entrepreneurs for three days of dialogue, learning and networking.
Lynch, who built Imperial into South Africa’s largest transport and mobility conglomerate after arriving there in 1971 with just £2,000 and no job, was picked from a strong field of 32 national winners in this, the sixth annual World Entrepreneur Of The Year competition. Today Imperial Holdings has annual revenues of €6.5 billion across seven synergistic divisions (integrated logistics solutions; fleet management; vehicle and forklift leasing; aviation operations, sales and leasing; car rental and tourism; motor vehicle importation, sales and after-sales services; and related financial services) and employs 36,000 people on three continents.
Chairman of the nine-member independent judging panel, Sunil Bharti Mittal, founder of Bharti Enterprises and 2004 India Entrepreneur Of The Year, said, “Bill is the epitome of an entrepreneur – he started with nothing, but he grew an amazing business over thirty years, and today makes a huge positive impact in South Africa. He does that not only through the jobs he creates but also through the training, education and other community support Imperial provides.”
“This year there was a particularly strong field of country winners to choose from, so the judges had a very difficult decision to make,” said Greg Ericksen, Ernst & Young’s Global Vice-Chair for Strategic Growth Markets. “Bill has seen it all and done it all and is a great role model for entrepreneurs everywhere with his love of business and hard work,” he continued.
“What has been the special feature of the 20 years of the Entrepreneur Of The Year program has been the amazing story that each entrepreneur has to tell,” said Ernst & Young Chairman and CEO James S. Turley. “Bill’s story is a classic one: he started from humble origins and through hard work and smart diversification built a multi-billion dollar international business.”
About Bill Lynch and Imperial Holdings
With only a village school education and a love of business from the day he began work in a garage in rural Ireland, Bill Lynch today is chief executive of South Africa’s largest transport and mobility group, Imperial Holdings.
In 1971, at age 27, Lynch came to South Africa with his wife Ann, £2,000, no job and few prospects during a worsening recession. He joined Imperial Motors, a car dealership losing €12,345 a year. Lynch led a turn-around, applying disciplines that were second nature to a manager raised in poverty.
In 1973 he acquired 10% of Imperial—preferring to take a risk and buy 10% rather than accept a 5% stake for free. He led a growth strategy, with diversification into truck hire, logistics, car rental and leasing.
Imperial listed in 1987 at 9 cents a share versus €21 today. In 1990, Lynch became Imperial’s executive chairman and showed his faith in SA’s future by driving further expansion, transforming the core Toyota dealership into a multibrand network, among other initiatives.
At the time, many predicted SA’s descent into political and economic collapse. In 1998-99, Imperial expanded offshore, buying Thyssen-Krupp’s European logistics business and moving into aviation leasing.
Turnover since South Africa’s democratic transition is up 28-fold.
Thursday, June 08, 2006
Who's Blogging at the Big Four? Let's Connect!
We set out to see who is blogging at the Big Four....simply by typing in the word blog in the search at each site. And this is what we found:
At Accenture (NYSE:ACN), it looks like two technologists are blogging with Accenture's blessing. The Accenture blog focuses on emerging technologies and how technology innovation is likely to impact business in the future. Ed Gottsman (BlogGottsman), from Accenture (NYSE:ACN)Technology Labs, tends to focus on unanticipated (and sometimes alarming) uses and applications of new technologies. Martin Illsley (BlogIllsley) is the director of research at Accenture (NYSE:ACN) Technology Labs in Sophia Antipolis. In his blogs, he captures new technologies in action and comments on them. This to us appears to be just a very small representation from the 129,000 employees at Accenture who have expertise on just a huge variety of subjects. Perhaps ACN is just dipping its toes into the water to see how it goes.
In the same vein, CapGemini recently unveiled its CTO blog with some key technologists --Global CTO Andy Mulholland, Ron Tolido, CTO for Northern Europe and Asia, and Juhana Juppo, CTO Finland --- blogging on relationship between business and IT, the impact of service-oriented methodologies, business intelligence, RFID … whatever they feel like basically. Again a technology oriented authorship, but a much higher level. Much like Accenture, CapGemini appears to be testing the waters, but seems to put the right amount of publicity and coverage for this blog.
KPMG takes a different tack however. Its Chairman Mike Rake had a very interesting, entertaining and personal blog about his experiences at Davos 2006. However, this was open only for 3 days and then mysteriously stopped. Mike Rake writes, " Tomorrow we’ll start dealing with the world’s problems - or at least that’s the plan. The theme of this year’s World Economic Forum is ‘The Creative Imperative’. I’m not entirely sure what it is but I hope to find out over the next few days - and how it will benefit mankind. I go to Davos every year in order to gauge the mood of the key players whose decisions shape the lives of every person on the planet. Hopefully I’ll find time to network, to make new friends and to renew some old Davos acquaintances. That includes meeting some of the many journalists here, invariably in a bar somewhere....with such a hectic schedule in store it remains to be seen whether I’ll get the chance to test the ski slopes!." It is evident that he writes from his heart with humor and incisiveness.
And then Deloitte has a very different way to address blogging. Deloitte's Women's Initiative (WIN) connects through the WIN blog, posted weekly on the intranet site. The blog is hosted by Cathy Benko, National Managing Director of WIN and leader of the high technology industry sector for Deloitte Consulting LLP. It also features guest bloggers. Topics include work/life balance, gender bias, the power of networking, creating a personal brand, breast cancer and more. This blog gets very personal, very warm hearted and addresses tough issues in a pragmatic way. Only selected posts are available to the public, one has to be an insider to see all the material. But what we see draws us into the challenges and opportunities faced by career Deloitte women.
BearingPoint, Ernst & Young and Pricewaterhouse came up dry. No blog, no luck on searches. If there are blogs here, they are quite well hidden and not available to the public.
Despite the size of the Big Four firms, there is little known about how they operate, how they recruit, select and pay. The partnership holds much close to the chests, and blogs are one way of
letting show the human and global face of the firms.
In being the only blog (that we know of) which focuses exclusively on this space, we will try to discuss, debate, highlight and push all the key news and issues which the Big Four firms deal with. We would love to see blogging company, and welcome a partnership with all the blogs noted above.
At Accenture (NYSE:ACN), it looks like two technologists are blogging with Accenture's blessing. The Accenture blog focuses on emerging technologies and how technology innovation is likely to impact business in the future. Ed Gottsman (BlogGottsman), from Accenture (NYSE:ACN)Technology Labs, tends to focus on unanticipated (and sometimes alarming) uses and applications of new technologies. Martin Illsley (BlogIllsley) is the director of research at Accenture (NYSE:ACN) Technology Labs in Sophia Antipolis. In his blogs, he captures new technologies in action and comments on them. This to us appears to be just a very small representation from the 129,000 employees at Accenture who have expertise on just a huge variety of subjects. Perhaps ACN is just dipping its toes into the water to see how it goes.
In the same vein, CapGemini recently unveiled its CTO blog with some key technologists --Global CTO Andy Mulholland, Ron Tolido, CTO for Northern Europe and Asia, and Juhana Juppo, CTO Finland --- blogging on relationship between business and IT, the impact of service-oriented methodologies, business intelligence, RFID … whatever they feel like basically. Again a technology oriented authorship, but a much higher level. Much like Accenture, CapGemini appears to be testing the waters, but seems to put the right amount of publicity and coverage for this blog.
KPMG takes a different tack however. Its Chairman Mike Rake had a very interesting, entertaining and personal blog about his experiences at Davos 2006. However, this was open only for 3 days and then mysteriously stopped. Mike Rake writes, " Tomorrow we’ll start dealing with the world’s problems - or at least that’s the plan. The theme of this year’s World Economic Forum is ‘The Creative Imperative’. I’m not entirely sure what it is but I hope to find out over the next few days - and how it will benefit mankind. I go to Davos every year in order to gauge the mood of the key players whose decisions shape the lives of every person on the planet. Hopefully I’ll find time to network, to make new friends and to renew some old Davos acquaintances. That includes meeting some of the many journalists here, invariably in a bar somewhere....with such a hectic schedule in store it remains to be seen whether I’ll get the chance to test the ski slopes!." It is evident that he writes from his heart with humor and incisiveness.
And then Deloitte has a very different way to address blogging. Deloitte's Women's Initiative (WIN) connects through the WIN blog, posted weekly on the intranet site. The blog is hosted by Cathy Benko, National Managing Director of WIN and leader of the high technology industry sector for Deloitte Consulting LLP. It also features guest bloggers. Topics include work/life balance, gender bias, the power of networking, creating a personal brand, breast cancer and more. This blog gets very personal, very warm hearted and addresses tough issues in a pragmatic way. Only selected posts are available to the public, one has to be an insider to see all the material. But what we see draws us into the challenges and opportunities faced by career Deloitte women.
BearingPoint, Ernst & Young and Pricewaterhouse came up dry. No blog, no luck on searches. If there are blogs here, they are quite well hidden and not available to the public.
Despite the size of the Big Four firms, there is little known about how they operate, how they recruit, select and pay. The partnership holds much close to the chests, and blogs are one way of
letting show the human and global face of the firms.
In being the only blog (that we know of) which focuses exclusively on this space, we will try to discuss, debate, highlight and push all the key news and issues which the Big Four firms deal with. We would love to see blogging company, and welcome a partnership with all the blogs noted above.
Tuesday, June 06, 2006
Ernst & Young Books a Hotel Room and Ends up on Wrong Floor
Bad room, poor service, noisy elevator, rubber chicken…and now identity theft…all in the game when you book a hotel room on line.
And how does this connect with the Big Four?
It appears that about a quarter-million Hotels.com customers’ names and credit card numbers were lost when a laptop from an Ernst & Young employee was stolen from his car.
This appears to be a wave of lost personal information…first the Veteran Affairs, then Wells Fargo. Big Four employees and alumni know that all their work is done on personal computers and these laptops are lugged around all over the country in cars, hotel rooms, airports, taxis. It would be impossible to have total security for all the thousands of employee laptops for a very mobile population.
But what makes this a big problem is that Big 4 firms are trusted with very sensitive information which they have to safeguard and protect to the best of their abilities. Mainframes and networks are easier to secure but small, handy laptops are a security nightmare waiting to happen.
Today it is credit card numbers and names, tomorrow it could be vital security or personal information involving millions of customers and thousands of companies.
Ernst & Young is putting one more layer of security on their laptops, and this will help protect info from unscrupulous criminals. The solution is not very clear, software has to reside on hardware, and hardware is open to theft and damage.
Security entrepreneurs, take notice! Great opportunity exists for someone who can figure out how to self-destruct hardware when handled by the wrong person.
Here’s what Ernst & Young said on their website, interestingly enough, there was no mention of this on hotels.com website….
Note to Hotels.com Customers
Hotels.com and Ernst & Young recently mailed letters to some Hotels.com customers regarding the theft of an Ernst & Young laptop that contained Hotels.com customer records.
The transactions recorded on the laptop were mostly from 2004, although some were from 2003 or 2002. The personal information may have included names, addresses and credit card information.
The security and confidentiality of our client information is of critical importance to Ernst & Young, and we regret any inconvenience or concern this incident may have caused Hotels.com and its customers. The crime appears to be a random theft, and we have no indication that the thief was specifically targeting the laptop or any information contained on it. The computer was password-protected, and the theft was immediately reported to law enforcement officials. At this time, we have no indication the information has been accessed or misused in any way. We are working closely with Hotels.com to reach out to its customers whose information was on the computer.
Hotels.com customers whose names were on the stolen computer can enroll in a free credit monitoring service; specific information about this service is contained in the letters. Ernst & Young is also taking additional steps to protect the confidentiality of its data, including encrypting sensitive information we provide to clients as part of the audit process.
Should you have further questions, please call our toll-free number at (866) 387-2242, or (201) 872-0169.
And how does this connect with the Big Four?
It appears that about a quarter-million Hotels.com customers’ names and credit card numbers were lost when a laptop from an Ernst & Young employee was stolen from his car.
This appears to be a wave of lost personal information…first the Veteran Affairs, then Wells Fargo. Big Four employees and alumni know that all their work is done on personal computers and these laptops are lugged around all over the country in cars, hotel rooms, airports, taxis. It would be impossible to have total security for all the thousands of employee laptops for a very mobile population.
But what makes this a big problem is that Big 4 firms are trusted with very sensitive information which they have to safeguard and protect to the best of their abilities. Mainframes and networks are easier to secure but small, handy laptops are a security nightmare waiting to happen.
Today it is credit card numbers and names, tomorrow it could be vital security or personal information involving millions of customers and thousands of companies.
Ernst & Young is putting one more layer of security on their laptops, and this will help protect info from unscrupulous criminals. The solution is not very clear, software has to reside on hardware, and hardware is open to theft and damage.
Security entrepreneurs, take notice! Great opportunity exists for someone who can figure out how to self-destruct hardware when handled by the wrong person.
Here’s what Ernst & Young said on their website, interestingly enough, there was no mention of this on hotels.com website….
Note to Hotels.com Customers
Hotels.com and Ernst & Young recently mailed letters to some Hotels.com customers regarding the theft of an Ernst & Young laptop that contained Hotels.com customer records.
The transactions recorded on the laptop were mostly from 2004, although some were from 2003 or 2002. The personal information may have included names, addresses and credit card information.
The security and confidentiality of our client information is of critical importance to Ernst & Young, and we regret any inconvenience or concern this incident may have caused Hotels.com and its customers. The crime appears to be a random theft, and we have no indication that the thief was specifically targeting the laptop or any information contained on it. The computer was password-protected, and the theft was immediately reported to law enforcement officials. At this time, we have no indication the information has been accessed or misused in any way. We are working closely with Hotels.com to reach out to its customers whose information was on the computer.
Hotels.com customers whose names were on the stolen computer can enroll in a free credit monitoring service; specific information about this service is contained in the letters. Ernst & Young is also taking additional steps to protect the confidentiality of its data, including encrypting sensitive information we provide to clients as part of the audit process.
Should you have further questions, please call our toll-free number at (866) 387-2242, or (201) 872-0169.
Accenture BPO in Emerging Markets: Boom Time
Within just a few days, Accenture announces two new BPO centers in developing countries, aimed at increasing headcount, enhancing capabilities and reducing service delivery costs.
The new center in Pune, India is the fifth one in India’s major cities and will focus on SAP and Siebel; Net-centric technologies like Java and Microsoft; business intelligence and testing. The center is expected to ramp up to 1,600 professional rather shortly. Accenture has been on a growth spurt in India, zooming from 4,000 in 2003 to 17,500 in early 2006, an increase of 400%. At this rate, it won’t be long if the Pune center fills up and Accenture starts to look beyond its current set of nine centers and the larger cities of Bangalore, Chennai, Hyderabad and Mumbai; and into Kolkata, Jaipur, Ahemdabad, Mysore or Coimbatore, the upcoming list of second cities.
On the other side of the world, Accenture just opened a BPO center in Warsaw, Poland with capacity for 1,000 seats. Poland is very attractive because of its large population of educated professionals, strong infrastructure, and economic and political stability. Warsaw delivery center will provide business process outsourcing (BPO) services in finance and accounting, supply chain management and human resources. An added attraction: professionals will speak more than a dozen European languages, to easily cater to all European clients. Warsaw joins other Accenture centers in Eastern Europe, like Prague, Bratislava and Riga.
Accenture has 129,000 people, and more than 40 delivery centers in over 20 countries throughout Asia, Europe and the Americas. And a large and growing chunk of employees are in BPO-favored countries.
The total spending on BPO is about US$425 billion in 2005 and expected to grow 11% each year through 2009, a big industry with strong steady growth. Success in the BPO marketplace requires that firms have large presence in lower-cost markets, and that is exactly what smart-and-aggressive Accenture is doing so rapidly.
Consider that a typical programmer in the US earns $65,000 per year but in Poland or India, earns only $15,000 a year. A terrific savings for employers such as Accenture, and explains their rapid push in these countries.
The new center in Pune, India is the fifth one in India’s major cities and will focus on SAP and Siebel; Net-centric technologies like Java and Microsoft; business intelligence and testing. The center is expected to ramp up to 1,600 professional rather shortly. Accenture has been on a growth spurt in India, zooming from 4,000 in 2003 to 17,500 in early 2006, an increase of 400%. At this rate, it won’t be long if the Pune center fills up and Accenture starts to look beyond its current set of nine centers and the larger cities of Bangalore, Chennai, Hyderabad and Mumbai; and into Kolkata, Jaipur, Ahemdabad, Mysore or Coimbatore, the upcoming list of second cities.
On the other side of the world, Accenture just opened a BPO center in Warsaw, Poland with capacity for 1,000 seats. Poland is very attractive because of its large population of educated professionals, strong infrastructure, and economic and political stability. Warsaw delivery center will provide business process outsourcing (BPO) services in finance and accounting, supply chain management and human resources. An added attraction: professionals will speak more than a dozen European languages, to easily cater to all European clients. Warsaw joins other Accenture centers in Eastern Europe, like Prague, Bratislava and Riga.
Accenture has 129,000 people, and more than 40 delivery centers in over 20 countries throughout Asia, Europe and the Americas. And a large and growing chunk of employees are in BPO-favored countries.
The total spending on BPO is about US$425 billion in 2005 and expected to grow 11% each year through 2009, a big industry with strong steady growth. Success in the BPO marketplace requires that firms have large presence in lower-cost markets, and that is exactly what smart-and-aggressive Accenture is doing so rapidly.
Consider that a typical programmer in the US earns $65,000 per year but in Poland or India, earns only $15,000 a year. A terrific savings for employers such as Accenture, and explains their rapid push in these countries.
Saturday, June 03, 2006
PwC in a bit of Miso Soup in Japan
PricewaterhouseCoopers had landed in a bit of miso soup in Japan, as authorities there begin to keep a closer watch on auditor independence.
Japan's Financial Services Authority took a historic step in suspending a local audit firm associated with PwC for 2 months.
This is supposed to send a strong message to the auditing community that independence and fairness is very important as Japan transitions to a stronger economic player in the integrated global community.
ChuoAoyama PwC was held up by authorities after findings that the firm had OKed manipulated numbers at cosmetics maker Kanebo Ltd. for 5 years. This seems to be another effort to create additional transparency to Japanese markets and send a bow shot over the closeted auditing industry.
Reminiscent of how quickly US companies moved very quickly away from Andersen as it was criminally indicted by the DoJ, it appears that many Japanese companies, including Daikyo and Shiseido have dropped PwC as their auditor.
The FSA will come out with its report on the Big Four in June, similar to the PCAOB.
In a country where disagreements between companies and service firms are rare, and accounting firms generally go along with company lines, similar to the pre-Enron era in the United States, change will be hard and transparency hard to realize over the short term.
But clearly the tide is turning, and auditing firms are to get back to their original charter of protecting investor interests against potentially unscrupulous management in order to survive and thrive in a tough demanding open environment. And how the Big Four react and manage these kind of regulatory oversight in the short term will set the stage for the longer term landscape of the industry.
Japan's Financial Services Authority took a historic step in suspending a local audit firm associated with PwC for 2 months.
This is supposed to send a strong message to the auditing community that independence and fairness is very important as Japan transitions to a stronger economic player in the integrated global community.
ChuoAoyama PwC was held up by authorities after findings that the firm had OKed manipulated numbers at cosmetics maker Kanebo Ltd. for 5 years. This seems to be another effort to create additional transparency to Japanese markets and send a bow shot over the closeted auditing industry.
Reminiscent of how quickly US companies moved very quickly away from Andersen as it was criminally indicted by the DoJ, it appears that many Japanese companies, including Daikyo and Shiseido have dropped PwC as their auditor.
The FSA will come out with its report on the Big Four in June, similar to the PCAOB.
In a country where disagreements between companies and service firms are rare, and accounting firms generally go along with company lines, similar to the pre-Enron era in the United States, change will be hard and transparency hard to realize over the short term.
But clearly the tide is turning, and auditing firms are to get back to their original charter of protecting investor interests against potentially unscrupulous management in order to survive and thrive in a tough demanding open environment. And how the Big Four react and manage these kind of regulatory oversight in the short term will set the stage for the longer term landscape of the industry.
Thursday, June 01, 2006
Deloitte & Touche LLP Gets Pulled into Stock Option Accounting Mess
There is a raging scandal going on in how companies have issued options to senior executives. Apparently several companies have manipulated the date of granting options to a day when the stock price was the lowest for a certain period. So when the stock even goes up modestly from this level, the options become "in the money" and have a good chance of staying in the money due to their artificially low exercise price.
Dr. McGuire of UnitedHealthCare has been one of the best known examples of this, and UNH has instituted severe measures to restrict such behavior. The stock has taken a beating on Wall Street.
Now we hear that Big Four firms have been pulled into this mess. Micrel (MCRL.O), a technology firm, alleges in a lawsuit that Deloitte & Touche LLP, its former auditor, agreed to stock option accounting such that the option's strike price was set at the stock's lowest price during the 30 days after the grant was approved. The lawsuit says that Deloitte & Touche LLP was negligent and it has spent incurred more than $50 million in expenses since it had to restate results for 3 years
Deloitte & Touche LLP will be defending its position.
We have to see where this goes and whether other Big Four firms get sued or indicted. The snowball is just gathering mass now, and the jury is out on how big this can get
Dr. McGuire of UnitedHealthCare has been one of the best known examples of this, and UNH has instituted severe measures to restrict such behavior. The stock has taken a beating on Wall Street.
Now we hear that Big Four firms have been pulled into this mess. Micrel (MCRL.O), a technology firm, alleges in a lawsuit that Deloitte & Touche LLP, its former auditor, agreed to stock option accounting such that the option's strike price was set at the stock's lowest price during the 30 days after the grant was approved. The lawsuit says that Deloitte & Touche LLP was negligent and it has spent incurred more than $50 million in expenses since it had to restate results for 3 years
Deloitte & Touche LLP will be defending its position.
We have to see where this goes and whether other Big Four firms get sued or indicted. The snowball is just gathering mass now, and the jury is out on how big this can get
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