Accounting Board Faults Audits of Brokerage Firms

The following is an excerpt from an article in 

The New York Times
Tuesday, August 21, 2012

Accounting Board Faults Audits of Brokerage Firms

By FLOYD NORRIS

The many auditors who inspect the financial statements of brokerage firms appear to be cutting corners and not doing all the work they should do, a worrisome sign after the collapse of the Peregrine Financial Group, a leading commodities brokerage firm, where a fraud had gone undetected for many years.

Having completed the first review of such brokerage firm audits, the Public Company Accounting Oversight Board said on Monday that it had found deficiencies in every audit its inspectors reviewed.

“The auditors,” said Jeanette M. Franzel, a member of the board, “were not properly fulfilling their responsibilities to provide an independent check on brokers’ and dealers’ financial reporting and compliance with S.E.C. rules.”

That does not mean that any of the statements misrepresented the financial conditions of the 23 brokerage firms whose audits were reviewed by inspectors from the board. In most cases, the accounting board concluded that the audit firm had failed to do the necessary work to ensure that the financial statements were accurate or that the firms had sufficient capital.

“In 13 of the 23 audits,” the board reported, auditors “did not perform sufficient procedures to identify, assess and respond to the risks of material misstatement of the financial statements due to fraud.”

Lynn Turner, a former chief accountant of the Securities and Exchange Commission, called the report “mind-boggling” and said it indicated that audit firms had failed to respond to the disclosure of Bernard Madoff’s Ponzi scheme. It was that fraud that led Congress to authorize the oversight board to review audits of brokerage firms.

The Peregrine fraud was uncovered after the National Futures Association, a self-regulator, stopped relying on paper copies of bank records in its own inspections. Peregrine had forged such records for years. Its independent auditor, a one-person firm, did not discover the fraud even though bank accounts are supposed to be confirmed.

For more, visit www.nytimes.com.

BP Selects Accenture as its Global Outsourcing Provider of Finance and Accounting Services

Press release:

August 14, 2012

BP Selects Accenture as its Global Outsourcing Provider of Finance and Accounting Services

 

LONDON; August 14, 2012 – BP has selected Accenture (NYSE: ACN) as its global outsourcing provider of finance and accounting (F&A) services to complement its in-house captive business service centers. Terms of the multi-year agreement were not disclosed.

 

Under the agreement, Accenture will help BP consolidate its global F&A function through standardized reporting and metrics and by using advanced analytics to improve business controls and drive greater insights into the business. Specifically, Accenture will be responsible for providing record to report, order to cash, procure-to-pay and production revenue accounting services.

 

In addition, BP will be able to leverage Accenture’s industry processes, industry knowledge, and business process outsourcing (BPO) technologies across BP’s finance organization to drive end-to-end process standardization and controls.

 

“BP’s decision to select Accenture reflects our continued commitment over the past two decades to helping BP achieve its business objectives,” said Arthur Hanna, managing director of Accenture’s Energy industry group. “We will continue to draw on our industry knowledge, leverage our capabilities worldwide and bring innovation to support BP’s finance function.”

 

Accenture and BP have a long story of working together. The companies signed their first F&A agreement in 1991.

 

“BP sees this partnership with Accenture as an important milestone in driving standardization in our finance and accounting processes by consolidating our F&A service providers,” said Brian Puffer, Group Controller at BP. 

 

About Accenture

Accenture is a global management consulting, technology services and outsourcing company, with more than 249,000 people serving clients in more than 120 countries.  Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world's most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments.  The company generated net revenues of US$25.5 billion for the fiscal year ended Aug. 31, 2011.  Its home page is www.accenture.com.

 

About BP

BP is one of the world's largest oil and gas companies, serving millions of customers every day in more than 90 countries, and employing 83,400 people. BP’s business segments are oil and gas exploration & production, and refining & marketing. In alternative energies, BP has low- and no-carbon wind and biofuels businesses, and a carbon capture technology team. Through these activities, BP provides fuel for transportation; energy for heat and light; services for motorists; and petrochemicals products for plastics, textiles and food packaging. It has strong positions in many of the world's hydrocarbons basins and strong market positions in key economies.

 

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Accenture & Panalpina Collaborate on Optimizing Finance & Accounting Business Processes

Accenture and Panalpina Collaborate on Optimizing Finance and Accounting Business Processes

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March 20, 2012

Accenture and Panalpina Collaborate on Optimizing Finance and Accounting Business Processes

 

Agreement helps freight and logistics company to standardize F&A processes and achieve cost efficiencies

 

BASLE; March 20, 2012 – Panalpina, a leading freight and logistics company, has rolled out the first phase of a finance and accounting (F&A) business process outsourcing (BPO) initiative as part of a seven-year agreement with Accenture (NYSE: ACN) signed in October 2010.

 

Panalpina is working with Accenture to consolidate and standardize finance processes across its global operations, including Purchase to Pay, Order to Cash and Record to Report services. The project aims to deliver consistent processes, uniform technology and a strong control environment for Panalpina’s finance function while achieving significant cost efficiencies.

 

Accenture first designed the new operating model for Panalpina’s finance function and is now delivering F&A services to the company in 14 languages and in 23 European countries[i], as well as the U.S. and Canada. This represents approximately half of the finance and accounting operations at Panalpina.

 

“By implementing a financial shared services model, Panalpina is able to achieve significant efficiency improvements,” said Marco Gadola, Panalpina’s CFO. “We chose to work with Accenture because of their proven track record on delivering robust F&A services using the capabilities and flexibility of their global delivery network.”

 

“Accenture and Panalpina are working to create a world-class finance organization for Panalpina,” said Michael Sturm, a senior executive for Accenture’s Air, Freight & Logistics and Travel Service group. “That means a finance organization that is both efficient and effective – that has consistent processes, uniform technology and a strong control environment to help achieve high performance in a challenging, global marketplace.”

 

This outsourcing work builds on a strong relationship between the two organizations as Accenture has worked with Panalpina on a number of management consulting projects. Panalpina started the project of optimizing its F&A operations in late 2010 with implementation during the course of 2011. The work is being delivered by teams located on-site at Panalpina and in Accenture Global Delivery Centers the Philippines, the Czech Republic and the United States.

 

The Panalpina Group

The Panalpina Group is one of the world's leading providers of supply chain solutions, combining intercontinental Air and Ocean Freight with comprehensive Value-Added Logistics Services and Supply Chain Services. Thanks to its in-depth industry know-how and customized IT systems, Panalpina provides globally integrated end-to-end solutions tailored to its customers' supply chain management needs. The Panalpina Group operates a global network with some 500 branches in more than 80 countries. In a further 80 countries, it cooperates closely with partner companies. Panalpina employs approximately 15,000 people worldwide.

www.panalpina.com

 

About Accenture

Accenture is a global management consulting, technology services and outsourcing company, with more than 244,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$25.5 billion for the fiscal year ended Aug. 31, 2011. Its home page is www.accenture.com.

 

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News Release from IBM - Smarter Buildings

New IBM Smarter Buildings Analytics to Help CFOs Prepare for Major Accounting Shift

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ARMONK, N.Y. - 02 Mar 2012: IBM (NYSE: IBM) today introduced new analytics software to help Chief Financial Officers and real estate executives accelerate preparedness for pending compliance rules for leased assets. More than 92 percent of senior executives surveyed in a new IBM study say they're not yet prepared to address these changes.

Proposed accounting rules from the U.S. Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB), expected to be finalized in 2012, will require a company's leased assets – such as real estate, vehicles and other equipment – to be added to their balance sheet as a capital asset.

This means S&P 500 companies, for example, would have to list the value of their leases on the balance sheet, weighing them down with an estimated average of more than $1 billion in new assets. The pending regulation has the potential to dampen their financial performance as expressed in debt/equity ratios and return on assets. The U.S. Securities and Exchange Commission (SEC) estimates the impact of these changes may approach $1.25 trillion dollars for U.S. publicly traded companies.(1) 

IBM today is issuing new software to help companies manage this major accounting change. IBM TRIRIGA software has new analytics that delivers visibility into balance sheet and income statement impact; financial assumptions and audit controls for both real estate and equipment leases; and automates management review and approval processes, specifically to help companies navigate the proposed regulation.

The new software also delivers strategic facility scenario modeling to increase return on leased real property assets. With a global view, the software can:

• Provide operational controls such as critical date alerts, payment processing and financial assumptions for leased real estate and equipment assets in a single technology platform.
• Provide balance sheet and income statement analysis of complex real estate lease decisions, such as 10 years with two renewal options versus 20 years, for instance.
• Help predict future demand for space and display gaps between demand and availability of real estate space.

These types of analytics are critical as an IBM study issued today shows 92 percent of those surveyed believe they are not prepared to implement the pending rules. The IBM survey, conducted by CFO Research Services, a research group sponsored by CFO Publishing, polled 179 senior executives from global companies with revenue in excess of US$1 billion.

Survey Highlights Lease Accounting ChallengesThe IBM survey indicates the proposed rules will require considerable changes to companies' operating and finance strategies. Seventy-nine percent anticipate moderate or substantial changes to accounting policies, processes and practices, while a majority also expects related operational strategies for real estate (53 percent). Sixty-three percent of companies expect changes in information management systems to comply with the pending rules.

Specifically, the new survey, "Beyond the Balance Sheet: Opening the Book on the New Lease Accounting Standards" also found that:

• About half exhibit the most concern over worsening in debt/equity ratios and return on assets.
• Sixty percent say that they will need to make some level of change in planning, budgeting and forecasting systems, while half (49 percent) expect new or upgraded business intelligence systems.
• Sixty percent anticipate the need for changes or new software to enterprise asset management systems, while 56 percent expect to address real estate and facilities management systems.
• Seventy-four percent agree that their companies will need to conduct additional training to adapt to the new lease accounting standard.
• More than half feel they will need significant time to prepare for the proposed standards with 58 percent predicting six months to two years.

"As companies are hit with the new financial regulations, we see that most firms are concerned about their readiness to abide by the lease accounting changes," said George Ahn, vice president of Enterprise Asset Management, IBM. "We predict that the pending IASB/FASB regulations will spark companies to manage their leased buildings, vehicles and equipment as meticulously as they have traditionally managed their overall financial investment portfolio, with an increased focus on asset efficiency. At IBM, we have worked closely with progressive companies to understand the impacts, and are prepared and excited to help companies meet this new need."

Beyond compliance with the proposed regulation, IBM is broadening its reach by making its software available in global languages to increase productivity and ease of use for companies with worldwide operations. This globalization is the next step in accelerating IBM's growth in the smarter buildings market since the company's acquisition of TRIRIGA.

For more information on the lease accounting survey and IBM TRIRIGA software go to:

• http://www.ibm.com/software/products/us/en/subcategory/SW22A
• ibm.com/software/tivoli/lease-accounting

About the Proposed Lease Accounting StandardThe proposed rules are being released by the International Accounting Standards Board and Financial Accounting Standards Board, who are regulators for the U.S., Europe and many other countries.

Companies realize that compliance will take significant effort as it increases the complexity of lease accounting with new requirements for the management and tracking of financial assumptions of leased assets and real estate.

About IBM Smarter BuildingsSince launching its Smarter Buildings initiative in February 2010, IBM has created a portfolio of smarter buildings solutions that integrate with building automation software from across the industry.  IBM's real-time monitoring and analysis, facilities and space management capabilities, and advanced dynamic dashboards helps property owners and managers reduce facilities operations and energy expense, and improve asset management and reliability. Through IBM's acquisition of TRIRIGA, IBM accelerated efforts to bring intelligence in the smarter buildings market. IBM's smarter building solutions help clients listen to data generated by facilities. By collecting, managing, and analyzing data IBM helps clients gain intelligence and insight to energy, space and facilities management. TRIRIGA strengthens IBM's smarter buildings solutions by adding key functions such as real estate, facility and energy management software solutions. 

(1) U.S. Securities and Exchange Commission, "Report and Recommendations Pursuant to Section 401(c) of the Sarbanes-Oxley Act of 2002 On Arrangements with Off-Balance Sheet Implications, Special Purpose Entities, and Transparency of Filings by Issuers", page 64,http://www.sec.gov/news/studies/soxoffbalancerpt.pdf, 2005