Archives for February 2013

Anchin, Block & Anchin Loses Court Battle In The Amount of $51 Million

A Federal Court jury in Boston unanimously found on Tuesday, Feb., 19 that accounting and business management firm, New York-based Anchin, Block & Anchin LLP (FY11 net revenue of $92 million) acted negligently and in breach of its fiduciary duties in managing the financial affairs of best-selling crime writer Patricia Cornwell and her partner, neuroscientist Dr. Staci Gruber.

In October 2009, Cornwell filed a lawsuit with the U.S. District Court of Massachusetts against Anchin and former principal, Evan Snapper. The trial began on Jan. 7, 2013 and the jury began deliberating on Feb. 14.

According to a New York Daily News article, Anchin, Block & Anchin and Snapper, were found negligent in its management of Cornwell and Gruber’s money, the court decided Tuesday. Known as an accounting firm, the New York-based firm operates a wealth management arm, Anchin Wealth Management.

In a statement issued on Feb., 19 by Anchin, Frank Schettino, MP of Anchin said he is “disappointed” with the case’s outcome and will explore the firm’s legal options, including appealing the verdict. “For more than 90 years, the professionals at Anchin have built a reputation for honesty and integrity. The firm will endure despite today’s outcome,” Schettino said. “We are eager to return to our business and continue providing the highest level of professional services our loyal clients have come to expect.”

During the seven-week trial, The Boston Globe reported that, lawyers for Anchin, Block & Anchin and Snapper, said Cornwell’s losses were due to the economic downturn combined with her expensive taste. They also maintained she was a demanding client who relied on the firm for what amounted to concierge services, the newspaper said.

The lawsuit accused Anchin of excessive and unauthorized billing, failing to put the clients’ interests ahead of its own, and gross mismanagement of Cornwell’s and Dr. Gruber’s money over four and a half years, which resulted in the loss of millions of dollars.

In addition, Cornwell charged that the firm engaged in high-risk investment strategies without her approval. Under Massachusetts law, Judge O’Toole may also award Cornwell and Dr. Gruber payment of their legal fees and multiple damages in a subsequent proceeding.

Cherry, Bekaert & Holland Rebrands

Richmond, Va.-based Cherry, Bekaert & Holland (FY12 net revenue of $123.6 million) launched a strategic rebranding initiative under the new name of Cherry Bekaert LLP.

The brand strategy is a result of more than a year of in-depth research and analysis of clients and marketplace influencers to uncover how the firm should represent its partnership with clients. The tagline for the newly rebranded firm is ‘Your Guide Forward’. “Our brand is representative of who we are as an organization. We are a dynamic company, and our identity reflects that image,” says Howard Kies, MP.

“The primary concern of our clients is growth, particularly given the current economy. We provide relevant solutions to companies at all stages of development and the insight necessary to manage growth for our clients and guide them toward their goals.” The firm’s new website was launched on January 16 http://www.cbh.com.

Leading Edge Alliance Named Second Largest International Association of Accounting Firms

Leading Edge Alliance (LEA) has been recognized by the International Accounting Bulletin as the second largest international association of independent accounting firms for 2013.

Established in 1999, LEA has more than 190 member firms worldwide with collective revenues of $2.7 billion. There are approximately 100 countries represented in the association.

“The continued growth of the Alliance is a testament to the independent successes of member firms and their ability to understand and proactively deal with new challenges. The appeal of an accomplished association that consistently meets the needs of its membership is indisputable,” says Gary Shamis, LEA Chair Emeritus.

IPA Most Recommended Consultant, Gary Boomer is Inducted to Hall of Fame

Gary Boomer, president of Manhattan, Kan.-based Boomer Consulting has been inducted into CPA Practice Advisor’s Accounting Hall of Fame. He was presented with the award Feb. 17 during the 2013 CPA Thought Leader Symposium in Dallas.

Boomer Consulting was started in 1996 and was one of the first technology strategy consultants for accounting firms. Members of Boomer Consulting have been selected as the top thought leaders in the profession since CPA Practice Advisor started the annual symposium.

BlumShapiro Founders, Both in Their 90s, Die Within Weeks of Each Other

Two founders of one of the largest accounting firms in New England have died. Longtime friends Julius “Yuddy” Shapiro died in Florida Jan. 21 at 93, and Alfred Rosenthal died at his home in Hartford, Conn., at the age of 92 on Feb. 7.

The men were both graduates of Bentley College who joined together to form Shapiro Rosenthal in the 1950s. West Hartford, Conn.-based BlumShapiro (FY11 net revenue of $47.3 million), was founded in 1980 after Shapiro Rosenthal merged with Blum, Gavens & Kaplan with a total of 30 partners and associates. Now the firm has 340 associates in Connecticut, Rhode Island and Massachusetts.

Shapiro, who was known as “Yuddy,” lived most of his life in Hartford until retiring to Florida. MP Carl Johnson said of Shapiro, “Our firm has lost a kind and talented accounting professional and leader who served as an inspiration to his partners, colleagues, clients, family and friends. We are deeply saddened by his passing.” The firm said described Shapiro as having an adventurous spirit both professionally and personally, a zest for life, a devilish smile, and incredible business instincts.

Rosenthal was described as a man with a warm personality, infectious smile and unwavering sense of humor.” Johnson said, “When we remember Al, we will not forget the strong culture he helped to create here at BlumShapiro. His character, integrity, honesty and tenacity served as the foundation of our firm’s many achievements.”

People in the News – Feb. 18

Dan Maffey has been admitted as a partner at Washington, D.C.-based Raffa (FY11 net revenue of $33 million). Maffey has more than 28 years of accounting, management and consulting experience for nonprofit organizations, trade associations and professional service firms. Prior to joining Raffa in 2008, Maffey held high-level positions at a technology services firm, and various regional and national accounting firms.

Jarrett Bluth and Swami Venkat have been admitted as partners at CohnReznick, based in Roseland, N.J., and Bethesda, Md. Bluth joined CohnReznick in 2005 after four years at a Big Four accounting firm. His specialty is in accounting for income taxes and strategic tax planning for businesses with international tax operations. Venkat is a partner within CohnReznick Advisory Group. He is an accounting and internal control specialist with over 10 years of professional experience in audit, internal controls review and assessment and SEC/US GAAP reporting. Both work in the Roseland, N.J., office.

Rob Drover has joined Smart Devine of Philadelphia (FY11 net revenue of $9.84 million) as a managing director in their Business Advisory Practice. He specializes in enterprise-level application and infrastructure support, high-volume data management and business process outsourcing for a range of clients, including Fortune 200 organizations. Prior to joining Smart Devine, he led an international accounting firm’s support services practice.

Gary Boomer, president of Manhattan, Kan.-based Boomer Consulting has been inducted into CPA Practice Advisor’s Accounting Hall of Fame. He was presented with the award Feb. 17 during the 2013 CPA Thought Leader Symposium in Dallas. Boomer Consulting was started in 1996 and was one of the first technology strategy consultants for accounting firms. Members of Boomer Consulting have been selected as the top thought leaders in the profession since CPA Practice Advisor started the annual symposium.

Hans Gustafsson and Morris Zlotowitz have been admitted as partners at Los Angeles-based Holthouse Carlin & Van Trigt (FY11 net revenue of $67.1 million). Gustafsson, located in the Pasadena office, specializes in providing tax consulting and compliance services for professional services firms, privately held entities and high-net-worth individuals. Gustafsson joined HCVT in August 2010 after spending 12 years with Arthur Andersen, Deloitte & Touche and Grant Thornton. Zlotowitz, located in West Los Angeles, has extensive experience in the real estate industry, serving commercial real estate developers and operators, homebuilders, and the affordable housing industry (profit and non-profit developers). He joined HCVT in September 2004 after 15 years of experience with a national accounting firm, a Beverly Hills-area accounting firm and Deloitte & Touche.

IRS Wins Tax Shelter Case Involving Bank of New York Mellon Corp.

The IRS has prevailed in a tax shelter case in which Bank of New York Mellon Corp. failed in its efforts to keep $900 million in tax benefits.

The tax shelter, called Structured Trust Advantaged Repackaged Securities, or STARS, was marketed to banks more than 10 years ago. The IRS has been trying to disallow the tax benefits for some of the financial institutions that used it, the Wall Street Journal reported, with the BNY Mellon lawsuit serving as a test case.

The IRS denied BNY’s use of foreign tax credits, expense deductions and trust income to lower its tax bill. The company filed a lawsuit against the agency.

On Feb. 11, the U.S. Tax Court denied BNY’s claim that the strategy was legitimate. “U.S. tax laws and treaties do not recognize sham transactions or transactions that have no economic substance as valid for tax purposes,” the court said in its opinion, Reuters reported. Court papers say that the IRS had determined tax deficiencies totaling about $215 million for 2001 and 2002. BNY plans to appeal.

CBIZ Expands Private Client Services Practice

The New York office of Cleveland, Ohio-based CBIZ MHM, LLC (FY11 net revenue of $598 million) has expanded its Private Client Services Practice by hiring Rosanne Migliorino as a director and Wienerson Previl as senior manager to offer specialty services for high-net-worth individuals. Migliorino has extensive experience working closely with hedge fund managers, business owners, corporate executives, and successful entrepreneurs and personalities.

Previl has more than 20 years of experience serving family groups and high-net-worth individuals including shareholders of closely held corporations, investors, artists and law firm partners.

Leadership And The “Wolf Philosophy”

By Rick Johnson, Ph.D.www.ceostrategist.com

After studying the wolf and deciding to use the wolf as our company [CEO Strategist] logo I believe the wolf and the pack demonstrates a distinctive relationship to successful leadership in the world of business. The wolf pack has many enviable leadership traits.

The wolf [pack] is a social species. Just as management hierarchies vary in size, wolf packs vary in size but average six to seven members. Does that sound like an executive team?

Let’s look at the leadership traits of the wolf pack and what can be learned from them.

Wolves understand that survival depends on a successful hunt, as well as ratio of “pack to prey.” As a result, wolves do not practice panic response management. Wolves develop a plan, working together to ensure that they capture and kill their prey. They are patient and understand that success is not guaranteed and that a success rate of 100% is never realistic. Every wolf within a pack has a role and they are expected to live up to [and be held accountable for] their responsibility within the pack.

There is evidence that wolves have knowledge [strategy] of proper prey management. Wolves are patient of themselves and of one another. They’re focused on their objectives. They respect each other’s role and depend that each individual in the pack will live up to their defined responsibilities. This in itself promotes group unity. Wolves are careful not to duplicate efforts.

Wolves understand that if they fail to succeed on the first attempt they must keep trying. It is understood within the pack that you never quit and it isn’t over until the “alpha” says it is over. That doesn’t mean that the wolves are successful 100% of the time but it does mean they never quit trying. If they [pack] are headed somewhere and you [obstacle] try to stop them, they’ll look for another way. They’ll climb over. They’ll climb under. They’ll go around. They keep looking for another way to succeed. The wolf and pack looks ahead, and does everything possible to enable success.

One of the common characteristics of successful leaders is a sense of curiosity. Wolves share insatiable curiosity. They investigate everything, taking nothing for granted. They seek out opportunity. They have established priorities.

Wolves work together during the hunt in order to ensure success. Each wolf has a role to play and all members respect their positions and follow their leadership. The [pack] members have positions in the hierarchy, inferior to those of the alphas [the leadership team]. The [non-leadership team] wolves have their own unique roles under the leadership of the alphas.

Wolves have a unique sense of urgency. They depend on one another. They’re focused, hard workers when it comes to feeding [survival]. Wolves do not live to hunt; they hunt to survive. They live by an unwritten code that says the good of the pack comes first.

Financial Reporting for Small Companies Still Hotly Debated

The National Association of State Boards of Accountancy and PricewaterhouseCoopers is opposing the AICPA’s plan to create a new reporting framework for small and middle-sized businesses that is not part of GAAP.

NASBA’s board of directors unanimously voted to urge the AICPA to either table or withdraw its proposal for setting up a Financial Reporting Framework for Small- and Medium-Sized Entities. NABSA believes the AICPA should instead allow the Financial Accounting Foundation’s Private Company Council to develop standards for private companies that could be authoritative and part of U.S. GAAP.

The proposal stems from a long debate over setting accounting standards for private companies. The Financial Accounting Foundation, the parent organization to the Financial Accounting Standards Board (FASB), decided to create a Private Company Council. The AICPA wanted that board to be independent of FASB, but it was agreed to the new council would work closely with FASB.

In turn, the AIPCA was given the opportunity to develop a financial reporting framework for small- and medium-sized enterprises, which was supposed to be less complicated and expensive than conforming with GAAP. At the same time, though, the AICPA contends the framework would still present an accurate financial picture.

“The NASBA board has significant concerns that AICPA’s initiative to develop a non-authoritative financial framework will confuse practitioners, preparers, users and the public at large for many reasons and at many levels,” Gaylen Hansen and NASBA president and CEO Ken Bishop wrote in a letter to the AICPA. PwC also asked AICPA to reconsider.

The AICPA is now considering the input it has received. “As is our normal policy, we will not be commenting on individual letters that have been received.” Robert Durak, AICPA’s director of Private Company Financial Reporting, said in an e-mail statement.