I’ll be in Washington, DC the next few days to attend, primarily, the SEC and PCAOB Open Meetings on Wednesday and Thursday, respectively.

See you there!

SEC Open Meeting

July 14, 2010

Agenda as of July 13, 2010. Note that Open Meeting agendas are subject to last-minute changes.

Concept Release on the U.S. Proxy System: The Commission will consider whether to issue a concept release to solicit public comment as to whether the Commission should consider revisions to its rules to promote greater efficiency and transparency in the U.S. proxy system and enhance the accuracy and integrity of the shareholder vote.

8:30 am – 9 am Welcome and Update on Current Events

9 am – 10 am Broker-Dealer Audit Considerations

Briefing Paper

10 am – 10:15 am BREAK

10:15 am – 12:15 pm Panel Presentation – FASB/IASB Projects and Potential Impact on Auditors

Briefing Paper

12:15 pm – 1:15 pm LUNCH

1:15 pm – 2 pm Subsequent Events

Briefing Paper

2 pm – 3 pm Auditor’s Reporting Model Project Framework

3 pm – 3:30 pm Communications with Audit Committees – Summary of Comments

3:30 – 3:45 pm Wrap-up

The Big 4 auditors are now in a harsh spotlight as a result of the Lehman bankruptcy examiner’s report, litigation surrounding AIG, New Century and Merrill Lynch, the Madoff scandal, Satyam fraud, and tax shelter and inside trading convictions/sanctions. This site is seeing record traffic and consistent and repeat interaction with readers, academics, media critics and other journalists.

Have you seen my quote in the New York Times regarding Lehman and their SIV Hudson Castle?  It was the most popular story that day and generated enormous traffic to this site.

Or maybe you saw my quote in the print and online edition of Business Week on Anton Valukas, the Lehman bankruptcy examiner or on Senator Ted Kaufman, one of the members of the Senate Permanent Committee on Investigation.  I wrote about the recent Senate hearings on Goldman Sachs and my coverage was mentioned positively in the Columbia Journalism Review. I was recently named a finalist for a Gerald Loeb Award for Distinguished Business and Financial Journalism in the online commentary and blogging category.

Your firm can benefit from the attention these issues and this site are receiving. The audit/accounting industry will be in the news for a long time coming and re: The Auditors will be there to cover it.

Would your firm like to sponsor my appearance at upcoming conferences and events and coverage of upcoming events such as:

• The American Accounting Association Conference in San Francisco in August (I’ve been invited to participate in a panel with accounting professors who blog.)
• The 2010 Governance, RISK, and Compliance Conference August 23-25 in Palm Beach.
• A Crisis of Our Own Design, sponsored by the New York County Lawyers Association, September 15th, panelist with Roger Lowenstein, author of The End of Wall Street and When Genius Failed.

Please call or write for more information and my Media Kit.

fmckenna@mckennapartners.com

312-730-4884

There’s quite a bit on my plate while I’m here in Washington DC this week for the Compliance Week Annual Conference.

I’ve brought my sharp pen and stilettos to the the Mayflower Hotel, where I’m resting comfortably and waiting for the kickoff reception tonight.  This is my fourth year covering the conference for re: The Auditors readers. I’ll list some links at the bottom of this post so you can go back to those interviews, speeches and my commentary on the sights and sounds of DC.

I’ve made my selections for sessions but don’t hold me to them.  What’s really great about this conference are the attendees.  With a C-level selection of global Chief Compliance Officers, Chief Risk Officers, General Counsels and Chief Audit Executives  - and representatives from all of their important regulators – I’m often in a great conversation during a break that’s more important than the next session.

It’s that kind of crowd…

I’m looking forward to seeing fellow bloggers/tweeters Matt Kelly, Bruce Carton, Doug Cornelius, Doug Chia and Tom Fox.  We’ll be tweeting with hashtag #CE2010. Follow us live for up to the minute updates.

I will also be meeting with my sponsor, Approva, to plan some exciting collaboration for the months ahead.

And I’ve got some additional interviews and meetings with legislators and regulators lined up so stay tuned for my reports on those and for my column on Wednesday  at Going Concern.com

Agenda

Monday, May 24
8:30 a.m.	Welcome and Opening Remarks Featuring: Compliance Week Publisher Scott S. Cohen
8:45 a.m.	MORNING KEYNOTE The SEC’s Agenda: Enforcement and Regulatory Priorities U.S. SEC Commissioner Luis A. Aguilar, dubbed “The Enforcement Commissioner” by Compliance Week in March 2009, will provide an update on SEC’s enforcement developments and priorities, including topics such as penalty guidelines and the SEC’s streamlining of the formal order process. Commissioner Aguilar will also explore broader regulatory priorities and the SEC. Featuring: U.S. Securities and Exchange Commission Commissioner Luis A. Aguilar
9:30 a.m.	Move to Concurrent Sessions, Conversations, and Demonstrations
9:45 a.m.
	White-Collar Investigations 101 Featuring: U.S. Department of Justice Chief Fraud Section Denis J. McInerney U.S. Department of Justice Assistant United States Attorney (Criminal Division), Southern District of Texas (Houston) Ryan D. McConnell
11:15 a.m.
	Directors Speak Out: What We Need and Expect, and Why What do audit committee members really need and expect when it comes to compliance and risk programs? Three seasoned audit committee chairmen from companies such as Host Marriott, Paychex, and Sunrise Senior Living, will discuss their needs, expectations, and preferred level of involvement. Featuring: Host Marriott Audit Committee Chairman; Director, Home Shopping Network, AES Corp. John B. Morse Paychex, Inc. Audit Committee Chairman David J.S. Flaschen Sunrise Senior Living Audit Committee Chairman; Director, ING Direct Bank, Harris Interactive, Medstar Health Stephen D. Harlan Ernst & Young Senior Manager, Fraud Investigations & Dispute Services Andrew E. Reisman (moderator)
1:15 p.m.	AFTERNOON KEYNOTE Former SEC Chairman Harvey Pitt: Goldman Sachs, SEC Enforcement, and Lessons For Our Times Prestigious firms sued by the SEC, subjects of negative reports, forced to endure angry Congressional testimony arising out of their involvement in the financial crisis of 2008, already provide important lessons for corporate executives. Kalorama Partners CEO Harvey Pitt—the former SEC chairman who has penned a Compliance Week column for seven years—makes his fifth appearance at Compliance Week’s annual conference with a look at the lessons executives can learn from current events. Featuring: Kalorama Partners CEO; Former U.S. Securities and Exchange Commission Chairman; Compliance Week Columnist Harvey L. Pitt
2:00 p.m.
	Achieving Success With External Compliance Monitors Boeing and Lockheed joint venture United Launch Alliance has had no fewer than three compliance monitors over the last decade. In this session, ULA’s compliance leader will convene with one of her monitors and the senior government official to whom she reported compliance performance, to discuss the experience in working with the federal government and externally appointed monitors. Featuring: United Launch Alliance VP, Office of Internal Governance Cindy S. Corrigan U.S. Air Force Retired Lieutenant General; ULA Special (External) Compliance Monitor Leslie F. Kenne U.S. Air Force Deputy General Counsel for Contractor Responsibility, Office of the Air Force General Counsel, Washington, D.C., Steven A. Shaw
3:30 p.m.	Social Media & Compliance Compliance, ethics, and legal executives at Johnson & Johnson, Best Buy, and The Travelers Companies will provide details on their social media policies, programs, and experiences, focusing on a variety of cultural, legal, and disclosure-related issues. Featuring: Johnson & Johnson Senior Counsel & Assistant Corporate Secretary Douglas K. Chia Best Buy Chief Ethics Officer Kathleen Edmond The Travelers Companies, Inc. SVP, Chief Compliance Officer & Group General Counsel David Baker Compliance Week Columnist; President, Docket Media LLC; Founder and Editor, Securities Docket, Bruce Carton (moderator)
4:45 p.m.	EVENING KEYNOTE View From the Top: JetBlue, Governance & Compliance JetBlue Airways President and CEO David Barger, and JetBlue Chairman of the Board Joel Peterson, will explore tone-at-the-top, cultures of integrity, and the evolution of JetBlue’s corporate governance and compliance programs. To be explored: How JetBlue built integrity as a core value to be considered in every decision made by every crewmember; why JetBlue separated the CEO and Chairman roles, and more. Featuring: JetBlue Airways Corp. President and CEO David Barger JetBlue Airways Corp. Chairman of the Board of Directors Joel Peterson
5:30 p.m.	Compliance Week’s Annual Blow-Out Reception!
Tuesday, May 25
8:45 a.m.	Opening Remarks Featuring: Compliance Week Editor Matt Kelly
9:00 a.m.	MORNING KEYNOTE U.S. Rep., House Financial Services Committee Chair Barney Frank Barney Frank is the U.S. House Representative for Massachusetts’ 4th congressional district. In 2007, Rep. Frank became the chairman of the powerful House Financial Services Committee, which oversees much of the financial services industry, including securities, insurance, banking, and housing. Rep. Frank will address those four industries in his keynote, and will take questions from attendees. Featuring: U.S. Representative and House Financial Services Committee Chairman Barney Frank
9:45 a.m.	Move to Concurrent Sessions, Conversations and Demonstrations
10:00 a.m.
	Emerging Topics in Financial Reporting Featuring: U.S. Securities and Exchange Commission Professional Accounting Fellow, Office of the Chief Accountant Douglas T. Parker U.S. Securities and Exchange Commission Associate Chief Accountant, Division of Corporation Finance Steven C. Jacobs Compliance Week Columnist; former SEC Acting Chief Accountant; Managing Director, Financial Reporting Advisors LLC Scott A. Taub
11:30 a.m.
	What to Tell the Board What metrics should your company be reporting to the board, and why? How much sharing is “oversharing,” and how do you know? The compliance and legal officers at Time Warner, Allstate Insurance Company, and NRG Energy, respectively, will demonstrate and discuss what they report to the board, when, how, and why. Featuring: Time Warner SVP and Deputy General Counsel, Chief Ethics and Compliance Officer Curtis Lu NRG Energy, Inc. SVP and General Counsel Michael R. Bramnick Allstate Insurance Company VP, Chief Ethics & Compliance Officer and Chief Privacy Officer Richard C. Crist, Jr.
1:30 p.m.	AFTERNOON KEYNOTE SEC Disclosure Update With Shelley E. Parratt Shelley Parratt of the SEC’s Corporation Finance Division will provide an update of the Commission’s disclosure program, including topics such as executive compensation disclosure, climate-change disclosure, and other proxy disclosure issues, as well as updates regarding the Comment Letter process. Featuring: U.S. Securities and Exchange Commission Deputy Director (Disclosure Operations), Division of Corporation Finance, Shelley E. Parratt
2:15 p.m.
	Third-Party Relationships: Opportunities to Control Risk and Pitfalls to Avoid For companies with hundreds to thousands of third-party relationships all over the world, what’s the best way to manage related risks? How do you get started, what approaches have worked, and what mistakes should you avoid? Tyco’s compliance leader Matt Tanzer will discuss how his company has approached the global challenge, first evaluating and then implementing global processes to manage the risks presented by thousands of third parties all over the world. Joining him will be Scott Moritz of Daylight Forensic, which has assisted Tyco with the process. This will be a practical, hands-on session, designed to provide real-world advice, based on one company’s extensive experience. Featuring: Tyco International VP and Chief Compliance Officer Matt Tanzer Daylight Forensic & Advisory Executive Director Scott Moritz
3:45 p.m.	Auditing Compliance, Ethics, and Risk Should ERM programs be audited? How? What about compliance and ethics programs? Three audit executives from Marsh & McLennan Companies, FMC Corporation and The Boeing Company will explore the ways in which they have addressed the issue of auditing compliance, ethics, and risk programs at their companies. Featuring: Marsh & McLennan Companies, Inc. VP, Audit and Risk Management Michelle E. Viotty FMC Corporation Compliance Director Nadia Ciaravino The Boeing Company VP, Corporate Audit Office of Internal Governance Kelvin E. Council PhyServe Physician Services, Inc. SVP Governance and Compliance José Tabuena (moderator)
5:15 p.m.	EVENING KEYNOTE U.S. Dept. of Justice Acting Deputy Attorney General Gary Grindler Gary Grindler, the second-highest ranking official at the U.S. Justice Department, will talk about the department’s policy goals and initiatives to fight corporate fraud, including white-collar crime issues such as securities and commodities fraud, healthcare fraud, and the work of the Financial Fraud Enforcement Task Force. Featuring: U.S. Department of Justice Acting Deputy Attorney General Gary Grindler
Wednesday, May 26
8:30 a.m.	MORNING KEYNOTE U.S. DoJ Asst. Attorney General, Criminal Division, Lanny Breuer Lanny Breuer, selected by President Obama to head the Criminal Division of the Justice Department in January 2009, will discuss practical matters for companies dealing with the Justice Department, including topics such as cooperation, attorney-client privilege, and the importance of pre-existing compliance programs. Breuer will also discuss the Department’s increasing use of proactive law-enforcement strategies and tools, such as wiretaps, to combat financial fraud. Featuring: U.S. Department of Justice Assistant Attorney General, Criminal Division, U.S. Department of Justice
9:30 a.m.
	CONVERSATION SEC Enforcement and Investigations Update Compliance Week Columnist Bruce Carton, a former SEC Enforcement staffer, and U.S. Securities and Exchange Commission Division of Enforcement, Market Abuse Unit Assistant Director Rob Cohen, will provide a recap of current SEC enforcement actions on topics such as the FCPA and insider trading, and will lead a discussion of the Enforcement Division’s new reforms to accelerate corporate investigations. Featuring: Compliance Week Columnist; president, Docket Media LLC; founder and editor, Securities Docket, Bruce Carton U.S. Securities and Exchange Commission Division of Enforcement Market Abuse Unit Assistant Director of Enforcement Rob Cohen
10:30 a.m.	Second City Summary: Compliance Week 2010 Conference Wrap-Up Get ready for a fun, interactive, high-energy conference closer from Second City Communications, the business solutions division of the world-famous comedy theatre. Using observations, ideas, and insights garnered from the entire three-day conference, Second City Communications will play back what they’ve heard, offering a real-time wrap-up of key conference takeaways, and providing a host of ideas you can bring back to your company. This is a closing session you won’t want to miss! Featuring: Second City Communications CEO Tom Yorton

Links to my previous Compliance Week Annual Conference coverage.

2007

Meet The Auditor: Richard Steinberg

Compliance Week 2007 Washington DC

Keynote Mark Olson PCAOB

Top Ten List For Implementing Auditing Standard 5

New Links

2008

Compliance Week 2008 – Choosing My Agenda For Day 1

Compliance Week 2008 Day 1 – Too Many Questions, Too Little Time

More Of The Same And, Yet, Somehow Different I Hope

Day 1 The Rest of The Gang – Scott Taub

Day 1 The Rest of The Gang – Robert Pozen

2009

Compliance Week 2009 Day 1 – What A Difference A Day Makes

Compliance Week Day 2 – More Than Enough To Keep Me Busy

McKenna In Accountancy Magazine

Video i of famous Chicago restaurateur, TV personality and recent State Dinner chef Rick Bayless in my beloved Mexico eating great home-style food. I’ve been reminded lately of my love for the cuisine by a friend who eats his jalapeños whole.  Andalé.

Also, thanks to Terri Thornton, PR for Porter Keadle Moore and Morris Manning & Martin LLP, for her encouragement.

I enjoyed some great speakers here, among them:

Scott Hilsen of Alston & Bird who spoke on Avoiding Legal Pitfalls in Fraud Investigations

Richard Berry on Ponzi Schemes and Feeder Funds

Justin M. Paperny, Etika, LLC, Lessons from Prison

Cindy Durtschi, DePaul University, Tallahassee Bean Counters Case Study

My presentation, The Skeptical Professional, is here.  I had a great audience and lots of good questions.

Here’s a few of the tweets:

I was lured back to New York last week with the promise of a TV appearance to talk about Lehman.   That did not work out as planned.  The news channels were fixated on the Lehman hearings in the Committee on Financial Services, US House of Representatives, DC, Tuesday.

Instead, I  took advantage of the trip to tape some video footage for The Deal magazine, a publication that focuses on the business of mergers and acquisitions.

There’s a lot of footage, so I hope to see a few more clips on other topics soon.

Here’s me on…

Lehman Hearings: Who’s auditing the auditors?

“Why isn’t Ernst & Young testifying at the Lehman hearings today too?,” asks Francine McKenna, an accounting consultant who writes the blog re: The Auditors.

In other news today, Goldman Sachs’ Lloyd Blankfein, Fabrice Tourre, and other executives will testify before the Senate Permanent Subcommittee on Investigations.

Business Week: “Thomas Montag, the former head of sales and trading in the Americas at Goldman Sachs Group Inc., called a set of mortgage-linked investments sold by his firm “one shi**y deal,” according to an excerpt from internal e-mails released by Senate lawmakers.”

This is not good.

I’ve not been a huge fan of Goldman Sachs on this blog.  Mr. Blankfein seems horrbly smug to me, they do things like allow their vendors (who they also own) to squeeze their workers on their premises.  And then there’s the strange saga of their dispute with AIG over CDS insurance while PwC stood by, thumbs in ears.

I’ve spoken to their spokesman, Lucas van Praag, and he seems a lot less stuffy and smug than others have accused him of being.

What can I say?  I like a guy who likes a stiff drink.

My take on what this means for additional litigation:

Goldman SEC charges to spark cases against others

The SEC’s fraud case against Goldman, Sachs will give people ideas about other primary dealers in similar deals, says accounting consultant Francine McKenna.

ATLANTA, GA–(Marketwire – March 30, 2010) – You might think of superheroes in uniforms or capes, but in these tough financial times, many heroes wear business suits. And instead of firearms, their weapons are spreadsheets, paper trails and databases. Dozens of forensic accountants, investigators, attorneys, educators and others who spend their lives stopping conmen and white collar criminals are coming to Atlanta in May to speak at the Fourth Annual Fraud and Forensic Accounting Education Conference. They’ll not only share their secrets of success, they’ll teach others to do what they did — only better.

Speakers will include:

• FBI Special Agent Robert Herndon – a key player in the case that inspired the book and film The Informant
• Former FBI Special Agent Joe Dooley, now with KPMG, who helped bust conman Martin Frankel
• Assistant U.S. Attorney Barbara Nelan, who prosecutes mortgage fraud on a daily basis
• Richard Barry of Sobel & Co., who led several successful investigations while with the New Jersey Bureau of Securities
• Scott Hilsen of Alston & Bird, who helps investigators avoid legal pitfalls in fraud investigations
• Francine McKenna, whose investigative Web site “re: The Auditors” takes a critical look at the role of the audit/accounting industry in global capital markets

The agenda for the three-day conference is filled with experienced knock-out crime-fighters, dedicated professionals, fiscal heroes from private enterprise and educators from academia. Participants can learn from industry leaders about interviewing techniques, data analysis, new technology, e-discovery and transaction monitoring. They’ll also learn how to detect different types of fraud including Ponzi schemes and feeder funds, and how to spot financial cheats in procurement and divorce cases. Topics also include the victims of the Madoff scandal, The Foreign Corrupt Practices Act, potential issues with IFRS and what local officials can expect when the FBI enters investigations.

Accounting firm Porter Keadle Moore and Georgia Southern University, in conjunction with the Center for Forensic Studies in Accounting and Business, are sponsoring the event, which will be held May 13-15 at the J.W. Marriott Hotel in Buckhead. To view the full agenda and to register, go here.

PKM is one of the largest firms in Atlanta with 10 partners, more than 80 total staff and more than $13 million in annual revenues. The nationally-recognized, full-service accounting and consulting firm provides audit, tax and systems services to clients throughout the country. The firm was founded in 1977 and focuses its efforts on serving companies registered with the Securities and Exchange Commission (SEC). It specializes in banking, insurance, real estate and construction, and technology and life sciences. For more information, visit www.pkm.com or call 404-588-4200.

About Fraud and Forensic Accounting at Georgia Southern University

Located in Statesboro, Georgia, The College of Business and the School of Accountancy both have undergraduate and graduate level accreditation through the Association to Advance Collegiate Schools of Business. Only 30% of all U.S. colleges of business have this accreditation, and only 10% also have separate accreditation for their Schools of Accountancy.  This accreditation provides external validation of the high quality educational programs offered.  For more information about degree programs and previous conferences, visit http://coba.georgiasouthern.edu/forensic/ or call (912)478-2228.

I often forget that not everyone who reads my posts also follows me every day on Twitter.  I often Tweet breaking news, my reviews, and intermittent musing on the days (and often the evening’s) events. If you have not tried Twitter, I strongly encourage it, especially if you’re in transition.  It takes a bit at first to get your rhythm, but when you do, it’s worth every minute.  If you decide to give it a Twirl, let me know so I can help you get introduced to others with similar interests.

I was fortunate to be mentioned kindly in two different blogs recently.

The first is the blog of Professor Dave Albrecht.  You may have seen his guest post here or my mentions of his constant stream of interesting  posts on his blog, The Summa.  But today, as part of an ongoing conversation with an accounting student, he mentioned me and this blog as daily required reading.  It means so much to me to have the academics, especially one so smart and world-wise as Professor Dave, include me in his world.  Take a look.  I am sure you will enjoy his discussion.

The second mention was totally unexpected. Arik Hanson, a public relations professional based in Minneapolis, mentioned me as one of the most intriguing women he knows in… Public Relations. I have never met Arik in person.  We know each other from Twitter, have mutual friends here in Chicago and New York, and have spoken on the phone.  I knew he had an appreciation for what I was doing and for the challenge of doing it in the professional services arena.  But to be included in his list was one of the nicest things that has happened to me so far this year, actually for a long time.

If it weren’t for Twitter and this site I would not now have as friends – not just business contacts but friends – at least a dozen people that I met first online.  I count them as mentors, buddies, and trusted confidants in many cases.  They are people I can’t imagine ever having met any other way, since our worlds had never collided before, even though in some cases we have lived and worked in the same city for years.  Allan Schoenberg of the CME Group, a PR and corporate communications professional and professor at both DePaul and Loyola, is probably the best example of people I can’t imagine living without now who, not that long ago, lived in a parallel universe  - until Twitter.  Some contacts  may have occurred eventually, but the social media tools accelerate these meetings and enhance pre-live-meetings with a level of comfort and knowledge that allows professional relationships to develop much faster and deeper, in my opinion, than ever before.

Even if I am not posting on this site, I am always working in the background.  One technique that helps bring new readers to the site is commenting on others’ sites.  This past week, I left a comment on two sites that I consider must reads every day.

I left a comment on the Wall Street Journal’s Law Blog on a post discussing prosecutorial misconduct charges in stock option backdating cases. The right comment, at the right time, on the right subject brings thousands of new visitors to the site.  It’s a tool that should not be abused. But, done well, many of those new visitors stick, some contact me and become sources, and some may even become clients.

I also left a comment, the first one, on a post at the Naked Capitalism.com site about AIG’s secret stash of bonds that were used to collateralize part of their bailout.  It’s an interesting post for accounting/audit professionals because it asks the question of how in the world this could be true and I ask how in the world PwC could have allowed it.  Take a look and stay tuned for a long post I’m working on to update you on several different sources’ opinions about this unholy trinity – AIG/PwC/Goldman Sachs.

I added a big quote to Going Concern.com’s Satyam Anniversary post.

What do we know about the scandal one year later – its causes and how to prevent similar frauds in the future? Not much. The experts we should look to for answers, Satyam’s auditors Price Waterhouse India, are accused of being complicit and are still in jail. Who’s guarding the guardians? We’ll have to wait for the shareholders’ lawsuits and the SEC here in the US to hear what really happened, who all benefitted, and who is ultimately responsible.

Finally, attorney Francis Pileggi who specializes in cases before the Delaware Chancery Court, updated his post about the Deloitte inside trader case with a link to mine. He called my analysis “insightful.”

I am actively seeking more sponsors like my oldest and dearest, Roger CPA Review.  (Email me if you are interested and I can send a media kit with all my stats.) Thanks to Roger and his gang for all of their support.  Even if you are already a CPA, their blog and site are worth checking out.  Heck, why not take the exam all over again just for kicks!

Perhaps the lack of success with some types of ads (The Google Adsense ones at bottom of post are fairly successful..) is due to the email phenomenon I discussed with Professor Dave Albrecht on New Year’s Day. Professor Albrecht was passing through from visiting family and heading back to Concordia College where he teaches accounting.  (Take a look at his Top 10 posts for 2009, when you get a moment…)  We spent about four hours in the Starbucks near my new digs – I also moved house over the holidays – talking about all sorts of things, including some things we may collaborate on.  We also talked about how email still rules in our world.

Many people click on this site from their office networks, while at work.  The folks that read what I write are still fairly traditional and most separate worklife and homelife.  Although I know lots of accounting and legal professionals who are online 24/7, I have to keep remembering that they are not typical in the grand scheme of things, just yet.  Many, many of you receive new posts via email and only visit the site if the post interests you.

I’ve been encouraged to compile a summary of weekly or bi-weekly highlights in an email newsletter with some bonus tracks to capitalize on this still predominant email tradition. What do you think of that? It’s still the fastest, easiest form of content delivery for many.

I also corresponded over the holiday with Edith Orenstein over at the FEI Blog.  She is my rock and often my technical salvation.   She complied a pretty extensive Top 10 list, reminding me of Roger Ebert’s list of his favorite films of the decade and the ten best films of the decade.  Two different things, I agree.

And I had the good fortune last week to talk with the former Fortune writer, now Vanity Fair staffer, who is most famous for her role as the journalist who broke the Enron story. Bethany McLean is as smart and savvy in real life as you can imagine.

Jim Peterson compiled the top responses to our posts about the future of the audit firms, given their minimal role in preventing, warning, mitigating, or supporting the development of solutions to the financial crisis.

To greet the new year, instead of a backwards look at a dreary 2009, this will revisit last month’s lively exchange, initiated by Francine McKenna’s provocative post of December 7, “They Weren’t There: Auditors and the Financial Crisis.” My response of December 13 is here, and hers of the 14^th is here.

Highly compressed, the gist of our mutual concern is, as Francine put it, “the auditors’ failure to be a force either before, during, or after the financial crisis.” The depressing explanation, said I, is that “their core product has long since been judged irrelevant. The standard auditor’s report is an anachronism – having lost any value it may once have had, except for legally-required compliance.”

It’s a great read and saves me from repeating myself in the comments here.

Finally, I was inspired to create an entry for the Davos Debates competition.  YouTube and the World Economic Forum are opening the doors to Davos to provide unique access for an individual to elevate a worthy and important cause. The Davos Debates’ are an opportunity to engage and debate with the world’s leaders, and join them on stage for a special panel to help pitch your cause to the world. I took my first real shot at creating a video, of only three minutes no less, to make my case for being selected.

At this point it’s up on You Tube and hopefully will get submitted before the deadline Monday.  I apologize in advance for the poor sound quality.  And I’m not as lively or animated as I am in real life.  It was a one-girl porduction using only my MacBook and tools available there.  I promise I will get better.  I’ve put the video here for you and reprinted the text of my pitch below to aid in your comprehension.

Many great posts in the hopper, including a Satyam update, more on the AIG/PwC/GS ménage à trois, and some new info on a very bad trend in internal audit co-sourcing. Stay tuned to this channel!

My name is Francine McKenna and I am the Managing Editor of a specialized news site, re: The Auditors, the only place you’ll find original reporting and analysis on the business of the Big 4 audit firms and the public accounting industry.

When each of the notorious “financial crisis” institutions collapsed, were bailed out, nationalized, or rescued by so-called “healthier” institutions, they carried in their wallets non-qualified, clean audit opinions. If only the Big 4 global audit firms – Deloitte, Ernst and Young, KPMG and PricewaterhouseCoopers – had told us these banks were technically insolvent or essentially illiquid.

The auditors have been riding sidesaddle, cantering obediently a few strides behind the investment banks, mortgage originators, commercial banks, ratings agencies and monoline insurers who made the real estate bubble into a full blown systemic financial crisis. But the auditors never stepped up to perform their oversight role.

The auditors should have been where the buck stopped. We know now that regulators were often underfunded, understaffed and potentially biased against protecting the average shareholder. But the audit firms are appointed as shareholders’ first line of defense. They benefit from a government-sponsored franchise, but their role is to be gatekeepers, watchdogs, and shareholder advocates. This is their public duty.

The Big 4 auditors have combined global revenues of more than $100 billion dollars and employ hundreds of thousands of people. They’re probably not totally corrupt, but they are demonstrably self-interested and no longer singularly focused on their public duty. When accused of negligence, malpractice or complicity, they claim to have been “duped” and that global networks have no control over member firms.

Arthur Andersen failed because the firm was a repeat offender, an incorrigible, profit seeking, “corporate” type that finally, with Enron, strained the last nerve of the US Department of Justice. A primary goal of Sarbanes-Oxley was to restore confidence in the audit profession. But we gained an insidious byproduct – the “too few to fail” policy that prohibits any other large accounting firm from failing.

My first job was as an internal auditor at Continental Illinois National Bank And Trust Company, the original “too big to fail” bank. The “too few to fail” policy for audit firms has been no more successful in protecting shareholders and restoring confidence than the “too big to fail” policy for the financial institutions. Every one of the audit firms is defending against a bucketful of lawsuits for audits of financial institutions that failed, were taken over, or bailed out, in addition to the various malpractice, fraud and Madoff-related lawsuits. Any one of these matters may threaten the viability of any one of the audit firms. Regulators, and the worldwide business community, are woefully unprepared to address this threat.

I hope that by participating in Davos, I can bring the role and responsibility of the public accounting firms – that is, their public duty to shareholders – back into the discussion on improving transparency and accountability of capital markets and financial institutions.

Main page photo source

Conversations Rule: Employees Drive Your Company’s
Brand And Add Risk, jointly with Jason Moriber, Director of Strategy & Planning, Wise Elephant

and

Lessons  From The Financial Crisis For Internal Auditors (Inexplicably scratched a few days ago.  If you’d like to hear this presentation please reach out to the IIA Chicago Chapter Conference team.)

Please check my Speaking page for more information about prior speaking engagements and inviting me to speak at your next conference or seminar.

Izam is currently the Head of Corporate Services at BAG Networks Sdn Bhd (Brunei Accenture Group) a market leading IT consulting and outsourcing services provider in Brunei. Pengiran worked and qualified with PricewaterhouseCoopers UK (PwC). He is the first Brunei-Malay to be admitted as an Associate member of the Institute of Chartered Accountants in England and Wales (ICAEW). He is also an Associate member of the Brunei Darussalam Institute of Certified Public Accountants (BICPA).  Pengiran graduated with Honours in Accounting from the University of Manchester.

He has been described by some as a “technocrat”. An Open Source Software (OSS) hobbyist, he enjoys the process of understanding, installing and deploying OSS as a way to enhance his understanding of technology trends.

he is an advocate for best practices in corporate governance and business management. He regularly blogs about technology and business trends on his personal weblog “Relevance Found”.

Here’s his post:

Global economic downturn – why CFOs are in the hot seat

Image credits: tylerdurden

Licensed under Creative Commons license

16^th ASEAN Federation of Accountants Conference (AFA16)

In 1977, the national accounting associations in Indonesia, Malaysia, Philippines, Singapore and Thailand (commonly abbreviated as the IMPST members of the Association of South East Asian Nations (ASEAN) grouping) banded together under the AFA umbrella. Since the `70s, the ASEAN grouping has expanded to include Brunei, Vietnam, Laos, Myanmar and Cambodia. Currently, all 10 ASEAN member countries are represented in AFA.

Once every two years, the Federation hosts the AFA Conference. This year was the first year we hosted the AFA Conference in Brunei. This blog post is a report of the first Plenary session.

The speakers

In the order they presented their points were:

• Puan[1] Haslina Taib, CEO of BAG Networks Sdn Bhd (Brunei Accenture Group).
• Dr Ernest Kan, President of the Institute of Certified Public Accountants of Singapore and Chief of Operations (Clients & Markets) Deloitte & Touche LLP, Singapore.
• Ms Christina Constance Foo, Vice President of the Malaysian Institute of Accountants and co-founder of Priority One Consultancy Services Snd Bhd, a strategic business building consulting firm in Malaysia.

The session was moderated by Mr Daniel Ng, Partner in Charge Deloitte & Touche Brunei.

Puan Haslina Taib

Puan Haslina’s presentation was from the point of view of a CEO who rose through the ranks, from a newly qualified accountant through to a CFO before being promoted to CEO. She discussed points about how the CFO’s seat is getting very hot during non-crisis times anyway: with demanding shareholders, ever-changing regulatory requirements and pressure to produce results.  She also compared and contrasted how the role of the CFO has developed from being a financial watchdog, a functional or reactive member of the executive team to a more strategic analyst deeply involved in executive decisions.

Puan Haslina then made the observation that all Executives (from CFO, to CTO, to COO and CEO) were all in the “hot” seat these days. She finished off her presentation with a general exhortation for accountants to not wait for crisis to happen before taking remedial actions. Accountants should strive to better ourselves, to improve weak or flawed business models and processes on a daily basis. To not wait before it’s too late and a crisis is upon us again.

Dr Ernest Kan

Dr Ernest structured his presentation through a series of mini case studies, and talked about the role of the CFO throughout the financial crisis. Dr Ernest introduced the shakeup at Lehman Brothers, the Bernie Madoff ponzi scheme, the Satyam scandal, the Enron collapse and AIG’s bailout as case studies.

These case studies revealed various failures of CFO’s from the failure to perform fiduciary duties when irregularities were detected (Satyam), failure to identify the impact of over investment in subprime loans and the subsequent over exposure to catastrophic systemic risk (Lehman Brothers), a failure to remain independent from the CEO (Bernie Madoff) and the failure to account for the risk of write-downs or collateral payments for exposure in credit default swaps (AIG).

Dr Ernest then touched on the expectations gap that was widening between public expectations of the CFO’s and their actual roles in industry. Dr Ernest echoed a point mentioned by Puan Haslina, where the increasing regulatory and compliance requirements were the single most important factor that has contributed to the changing role of the CFO.

And how the CFO’s role has evolved: from being a financial steward, to an ethical leader, to a strategic business partner and to an agent of change. In these turbulent times, the public has high expectations of CFO’s to lead corporate governance and be an independent voice on the executive committee. Yet therein lies the rub – for this may be a conflicting role between the CFO and the CEO seats, where the CFO must balance being a strategic business partner to the CEO versus being the independent voice.

A great challenge for CFO’s will be to reconcile their own actions and priorities in a role where remuneration is typically based on financial performance and not necessarily adherence to best practices in corporate governance.

And that at the end of the day, as accountants we are above all, professionals.

Ms Christina Foo

Ms Christina Foo brought a “soft” angle to the CFO debate, focusing on the CFO as a human being. Where in the past CFOs were expected to “just produce numbers to please stakeholders”, they are now also expected to ensure that values are upheld. So CFOS should focus not just on “Corporate Governance” but also on “Human Governance”.

Ms Christina also highlighted how CFOs have the opportunity to revolutionise their roles through championing the sustainability debate. CFOs should capitalise on their position as strategist to ensure companies invest for the long term and in sustainability. Because each of us can in small ways influence business decisions to use scarce resources responsibly for the greater good of society, for our stakeholders and eventually for our shareholders through better cost management.

Question: Any advice for a budding CFO?

During the Q&A I asked this:

I would just like to draw out some of the topics discussed by the panel, before I pose my question.

On the ripple effect that Dr Ernest talks about, where a butterfly flaps its wings in South America and causes a thunderstorm in Central Asia … or where a company loses its Triple-A rating status and investors in Singapore lose 80% of their market value.

And where Dr Ernest quoted a study where CFOs are thought to “not fully understand the wider business issues”.

Where Ms Christina Foo then talked about an opportunity to reposition the CFO role, and where she talked about sustainability reporting.

My question is this: Are the existing accountant training and qualifications sufficient to prepare a young accountant for the hot seat? So what would be the one suggestion you would give to a budding CFO? I am at a bit of a quandary, because in my qualifying years, we never covered topics such as sustainability reporting, or management of exposure to catastrophic systemic risk.

Mr Daniel Ng directed the question to Puan Haslina and the panel, who urged the audience to remember that qualifications and certifications were only a starting point, and that the progression to mastery is not a single event but rather a journey through life.

About

Guest post by izamryan of http://relevancefound.com

Disclaimer: I am currently an employee of BAG Networks but the opinions discussed above are my own and are not necessarily those of my employer.