Firms in the News: March 19

CBIZ and Mayer Hoffman McCann May Be Opening a New Office

CBIZ and Mayer Hoffman McCann (FY12 net revenue of $615 million) says that it is searching for a new home, and according to several sources in the real estate industry, it is leaning toward Kansas City, Mo., the Kansas City Star reported.

Rick Mills, COO of CBIZ Financial Services, says the firm is seeking 100,000 to 130,000 square feet and anticipates a decision within two months.

“We’re still looking, and we have lots of opportunities at a lot of places,” says Mills. “It’s a little premature to draw any conclusions.”

But sources in the real estate and development agency worlds, who spoke to the Star on condition of anonymity, say Missouri has offered a substantial incentive package to lure CBIZ across the state line.

Mayer Hoffman McCann is currently based in Leawood, Kan. and CBIZ is headquartered in Cleveland.

 

PCAOB Reports On Second-Tier Firms, Improvements Made, But Still High Failure Rate

The PCAOB says Chicago-based Crowe Horwath (FY13 net revenue of $599 million) failed to properly audit half of the audits that inspectors studied in their 2012 inspections.

The board’s recently published 2012 inspection report on Crowe says inspectors selected 12 audits for the annual review and found deficiencies that are significant enough to call failures in six of them. That’s an improvement over the firm’s earlier failure rates – 62% in both 2011 and 2010.

It also improves Crowe’s standing among the major firms that are inspected annually by the PCAOB. Since 2009, Crowe has had the highest failure rate of the Big 4 and second-tier firms, which audit the vast majority of U.S. public companies. For the 2012 inspection cycle, Chicago-based Grant Thornton (FY12 net revenue of $1.2 billion) and Chicago-based BDO USA (FY13 net revenue of $683 million) turned in higher failure rates, at 65% and 55% respectively. McGladrey’s 2012 report is the only report for the major firms that is not yet published.

The PCAOB says Crowe failed in four of the six deficient audits to adequately check internal controls over financial reporting, a common theme throughout inspection reports among the major firms. In two cases, Crowe failed to properly respond to risks of material misstatement, inspectors said, while the firm recorded one failure each in auditing estimates, sampling, and identifying and assessing risks of material misstatement.

In a letter attached to the inspection findings, Crowe offered no objection to the findings and says it has taken appropriate follow-up measures related to each of the criticisms. “While we are pleased that we improved from the previous two years, we are still not satisfied with the results and are using this constructive criticism to make improvements in processes and procedures,” says Rick Ueltschy, MP of Crowe Horwath, in a prepared statement. “We continue to revise and expand our audit procedures and training, and are always taking steps to improve our audit quality. We welcome the input from the PCAOB.”

 

Gumbiner Savett Continues its “Jeans Day” Fundraisers

What started as a fundraiser three years ago following the Japan earthquake and tsunami in 2011 has grown into a monthly activity for Santa Monica, Calif.-based Gumbiner Savett (FY12 net revenue of $16.3 million).

Each month, GS employees and shareholders enjoy a day of relaxed dress, and in exchange, they donate funds to charities selected by staff. Recently, the firm’s management announced that they would be matching the funds raised from the monthly Jeans Day events. “We felt it was important to start a matching program to let our staff know that we were supportive of their charitable efforts,” says Michael Savoy, MP of Gumbiner Savett.

In the past year, the firm has collected nearly $300 per monthly charity — not including the non-monetary donations of books, clothes, toys, school supplies and food. The firm has also given about 120 hours of volunteer time throughout the year.

 

Ex-Grant Thornton Partner Gets Four and a Half Years For $4 Million Theft

A former partner at Chicago-based Grant Thornton (FY12 net revenue $1.25 billion) has been sentenced to 4-1/2 years in prison for stealing nearly $4 million from the firm, Reuters reported.

Craig Haber pleaded guilty in August, 2013 to a charge of mail fraud stemming from what prosecutors say was a scheme to funnel payments from clients to a personal bank account over eight years. Haber was fired in July 2012 and arrested in February 2013.

Haber’s lawyer asked for a sentence that did not involve prison, saying Habor had no prior criminal history and needed to care for his son, who has autism.

“I just want to tell the court I’m extremely remorseful for my actions,” Haber said at the March 12 sentencing.

The judge, however, disagreed with a light sentence and said the case was characterized by Haber’s greed. U.S. District Judge Kevin Castel ordered Haber to forfeit $3.97 million, but said he would wait for further information before ordering restitution, which could go as high as $4.31 million.

U.S. Attorney Preet Bharara in a statement said Haber “abused his position as partner of an accounting firm, stealing millions of dollars in client payments to fund his own personal expenses, including the mortgage on his Manhattan apartment.”

At his plea hearing in August, Haber said he told clients to send checks directly to his office and then deposited the checks into an account he controlled.

Grant Thornton “appreciates the authorities’ swift actions in this matter,” spokeswoman Michele Mazur said in a statement.