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PCAOB Sanctions Marcum LLP for Auditor Independence Violations

The PCAOB has settled disciplinary proceedings against New York-based Marcum LLP (FY18 net revenue of $549.7 million), Marcum Bernstein & Pinchuk and Alfonse Giugliano, the senior partner responsible for Marcum’s independence policies and procedures.

Marcum has a 50% ownership interest in Marcum Bernstein & Pinchuk, provider of SEC audit, accounting and consulting services to Chinese companies listed in the U.S. capital markets.

The violations involve the firms’ annual Microcap Conference and China Conference, which is designed to bring together investors and companies looking for investment. According to the PCAOB, “from 2012 through 2015, Marcum and two senior partners made public statements advocating the investment potential of the companies presenting at its annual Microcap Conference, 62 of which were the firm’s issuer audit clients.”

Also, in 2013 and 2014, Marcum Bernstein & Pinchuk advocated the investment potential of the companies participating in its China Conference, seven of which were the firm’s issuer audit clients. Giugliano approved Marcum LLP’s conference “without performing any substantial independence analysis,” PCAOB says.

This is the first time the board has sanctioned a CPA firm and its head of independence for publicly advocating its audit clients as investment opportunities. Another first is the PCAOB’s mandating of an independent consultant to evaluate auditor independence at the two firms.

The PCAOB orders say that success of the two conferences depended on companies perceiving them as good ways to connect with potential investors, and on potential investors perceiving them as a good opportunity to find high-quality investment opportunities. And yet, at the same time, the firms had issued audit reports on the financial statements of some of the presenters.

In the case of the MicroCap conference, the PCAOB says Giugliano approved the conference, and gave “limited advice” that Marcum should not be involved in company presentations or one-on-one meetings with investors. He also advised that Marcum should not make positive statements about individual presenting companies. PCAOB, however, says Giugliano failed to consider how an investor relations firm, brought in to market the conference, would tout the investment potential of the presenting companies as a group.

Marcum’s own public statements and marketing also included laudatory statements about the companies, as “some of the most promising emerging growth companies out there today,” in one example.

PCAOB alerted Marcum to possible independence issues with respect to the conference in 2015. The firm removed some positive language about the companies from promotional materials, added a disclaimer to its conference website and changed quality control policies. Marcum subsequently failed to evaluate the effectiveness of those measures, the PCAOB order says.

“As a result, Marcum failed to identify, evaluate or appropriately address a number of issues concerning the 2016 and 2017 conferences that, at the very least, raised questions about the firm’s independence.” PCAOB reported that Marcum sold one of its audit clients a “sponsoring” presenting company designation in 2016 and another client was sold a “premium” presenting company designation the next year without performing an independence review.

Additionally, Marcum provided press release templates to presenting companies, including the audit clients. “A number of Marcum’s issuer audit clients issued press releases that included Marcum’s suggested language, thereby using the conference’s reputation and association with their auditor to promote themselves to investors,” according to the PCAOB order.

Penalities are $450,000 for Marcum, $50,000 for Marcum Bernstein & Pinchuk and $25,000 for Giugliano. Marcum LLP and Marcum Bernstein & Pinchuk must additionally hire an independent consultant to review its policies, procedures, staffing and training related to auditor independence.

Marcum LLP Admits 16 to Partner

New York-based Marcum LLP (FY18 net revenue of $549.7 million) announced that 16 associates have been admitted to partnership, effective Sept. 1.

Jeffrey Weiner, chairman and CEO, says, “We have an especially robust class of new partners this year, each of whom brings exceptional experience, dedication, and talent to our management team. They will all play an essential role in shaping the future of our firm as we continue to evolve to meet our clients’ changing needs, as well in helping steward the future of the accounting industry. I extend my sincere congratulations to each and every one of our new partners and welcome them to Marcum’s leadership team.”

This year’s class of new Marcum partners includes the following professionals:

  • Nick Antonian, assurance services, Los Angeles
  • Moises Ariza, assurance services, Miami
  • Anthony Basile, assurance services, Melville, N.Y.
  • Michael Buchheit, assurance services, Philadelphia
  • Andrew Clark, tax & business services, Boston
  • Joseph DeCusati, advisory services, New Haven, Conn.
  • Ashlie Forum, tax & business services, Fort Lauderdale, Fla.
  • John Heilmann, tax & business services, Philadelphia
  • Ali Jahangir Hirji, tax & business services, Melville, N.Y.
  • Matthew Huffner, assurance services, Washington, D.C.
  • Janet Levy, assurance services, New York
  • John McCarthy, assurance services, Boston
  • Jason Moi, assurance services, Boston
  • Patrick O’Brien, assurance services, Nashville, Tenn.
  • Jill Scher, accounting services, Melville, N.Y.
  • Karen Schuler, managed services, Washington, D.C.

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Marcum LLP Acquires OGH CPAs & Advisors

Jeffrey Weiner

New York-based Marcum LLP (FY18 net revenue of $549.7 million) announced that it has acquired OGH Certified Public Accountants & Advisors of Coral Gables, Fla., adding two partners, 17 associates and a second office in the Miami area.

OGH was a full-service CPA firm offering assurance, tax and accounting, consulting and property management services to clients in 10 industry sectors. The firm focused primarily on real estate developers, construction companies and real estate investors; export and wholesale distributors; and domestic and international tax services.

OMP Hiram D. Ocariz says joining Marcum means the team will be able to access national resources for its clients, “while having the opportunity to deepen the bench of talent in Marcum’s South Florida region.”

Jeffrey Weiner, Marcum CEO and chairman, says, “OGH’s strong position in a gateway city to the global economy, industry specialization, and culture based on integrity, excellence, strong client relationships and measurable results make OGH a perfect fit for Marcum.”

Michael Balter, MP for Marcum’s Southeast region, says, “OGH’s focused expertise is an additional asset in several of Marcum’s core industry groups, while also bringing experience in several new industries to our South Florida region.”

In addition to the two Miami offices, Marcum also has Florida offices in Fort Lauderdale and West Palm Beach.

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Marcum Merges in The Abrix Group

Thomas Frank

New York-based Marcum (FY18 net revenue of $549.7 million) expanded further into the Midwest by merging in The Abrix Group of Northbrook, Ill.

Abrix, a business management and accounting firm focused exclusively on the health care industry, adds four partners and 22 associates to Macum’s Illinois offices.

Abrix specialized in helping medical and dental practices with their organizational, business and financial issues, as well as the business and personal needs of individual practitioners. The firm’s services included tax, accounting, business development, regulatory issues, Medicare fraud and abuse, practice mergers, practice valuations, profit formulas, and retirement planning and administration.

“Abrix’s unique expertise in the nuances of medical and dental practice management will be an additional asset to our health care clients regionally and nationally, as we continue to grow our presence in the Chicago area,” says Cary Buxbaum, Marcum’s regional MP in Illinois.

“It is a tremendous opportunity for our firm to be able to bring the national resources of Marcum to our clients, while bringing a specialized focus on the practice side of the health care industry into their service mix,” says Thomas Frank, Abrix MP.

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Marcum LLP Admits 5 New Partners

New York-based Marcum (FY18 net revenue of $549.7 million) announces the admission of five new partners in two divisions – tax and business, and advisory services.

Marcum’s newest partners are:

  • Dean Drummund – advisory and consulting group, Boston
  • Andre Benayoun – tax and business services, Fort Lauderdale, Fla.
  • Martin Martinez – tax and business services, Houston
  • Amie Gartenberg – tax and business services, New York
  • Patrick O’Reilly – advisory services, Portland, Maine

“All five of these new Marcum partners bring outstanding expertise and additional depth to specific niches within the firm’s service portfolio, which creates more value for our corporate and individual clients,” says Jeffrey M. Weiner, chairman and CEO.

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Marcum LLP, Hofstra Survey Shows CEOs Planning to Invest in Future

New York-based Marcum (FY17 net revenue of $469.5 million) and Hofstra University’s Frank G. Zarb of Business are partnering to survey business leaders on their perspectives on the business environment, short-term plans for growth and investment, and selected business or news developments.

The survey is being conducted as part of the business school’s MBA curriculum. Results will be presented in three installments this year.

Results from the first survey found CEOs to be “strongly bullish,” both in their current and short-term future outlook, Marcum announced.

“CEOs whose companies realized a tax savings in the first year of the new tax law described how they plan to invest the funds back into their companies, citing business expansion, debt reduction, operational improvements and increasing employees’ salaries as their first priorities,” the firm announced. The CEOs surveyed stressed recruitment and availability of talent as top priorities in capital spending and business influences.

Marcum CEO and Hofstra alumnus Jeffrey Weiner says, “It is a very positive signal for the economy and the national mood that the first Marcum-Hofstra survey revealed CEOs’ strong optimism about the business environment, despite the economic and policy flux that has characterized the past year, and the complex new tax code that has changed the dynamics of commerce from the local to the international level.”

Janet Lenaghan, dean of the business school, says, “Partnerships like this one between Marcum and the Zarb School are vital to training the next generation of business leaders. This survey, with its in-depth, real-time insight about the business climate, help us provide a pipeline of talented students who are poised meet the demands of industry and prepared to take their place in C-suite.”

Highlights of the first Marcum-Hofstra survey include: 

  • 49% rated the availability of talent among their top influences for business planning over the next 12 months.
  • 29% said talent recruitment will be one of their top capital investments in the next year.
  • 18% of CEOs gave their outlook on the business environment the highest rating of “10” and 96% rated their outlook at “5” or higher.
  • 64% of CEOs plan to invest more in their companies over the next 12 months. Technology was most frequently selected as a top-three investment priority (47%), and equipment was the No.1 priority overall (20%).
  • The three greatest influences on business planning selected by CEOs were technology (53%), economic concerns (53%) and availability of talent (49%).
  • The top external issues cited by CEOs as impacting their businesses included economic trends (76%), cost of labor (49%), cybersecurity (38%) and inflation (38%).

CEOs were also asked whether their jobs were harder now than in the past. A majority, 57%, answered “no.” Of the 43% who said the CEO job is harder now, the most frequent reason given was the challenge of “attracting and retaining customers/clients” (18%).

CEOs were also asked about the impact of the 2017 Tax Cuts & Jobs Act on their business’ tax liability. More than a quarter (27%) of respondents said their companies’ tax obligations decreased in the first year under the new tax law, while 18% said their companies’ taxes increased. About half (46%) saw no effect on their taxes.

Zarb MBA students designed the questionnaire, analyzed the survey results, and reported on the influence of these factors on executive decision-making. “The students, in addition to honing their research skills, gained a deeper appreciation of the role that external forces play in the evolution CEOs’ strategic priorities,” says Andrew Forman, associate professor of marketing and director of the co-op MBA program.

C-suite executives at 255 companies in more than a dozen industries participated in the Marcum LLP- Hofstra University CEO Survey.

For the complete Marcum LLP-Hofstra University CEO Survey and an archive of prior surveys, visit www.marcumllp.com.

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Marcum LLP Merges in Guyder Hurley

New York-based Marcum (FY17 net revenue of $469.5 million) has merged Guyder Hurley of Braintree, Mass., into its Boston office as of March 1.

The Guyder Hurley team adds 17 associates, including one partner and one managing director, to Marcum’s New England region.

Founded in 2000, Guyder Hurley is a full-service accounting firm specializing in the affordable housing industry. The firm’s clients include public housing authorities, HUD multi-family housing projects, low-income housing tax credit developments, state and local affordable housing developments, health and human service organizations, and community development organizations. The firm’s service portfolio encompasses financial statement and compliance audits, compilations and reviews, bookkeeping, tax and consulting.

“There are clear natural synergies between Guyder Hurley’s housing specialization and our national government services group, as well as with Raffa-Marcum’s nonprofit and social sector group. The complementary nature of our businesses is a blueprint for expanding our portfolio of services to our clients and our mutual opportunities to grow,” says CEO Jeffrey Weiner.

“Marcum’s openness in recognizing the value that we can add to their business and the ability they give us to expand our service profile nationally is a formula for success,” says assurance services partner Michael Guyder.

The firm’s government services group provides auditing, accounting, financial reporting and management advisory/consulting services to a broad spectrum of governmental entities. In addition to public housing authorities and related entities, the group’s clients include counties, school districts, local municipalities, community redevelopment agencies, special districts, quasi-governmental agencies, public employee retirement systems and utilities.

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Marcum LLP Welcomes 5 New Partners

New York-based Marcum (FY17 net revenue of $469.5 million) has admitted five professionals to the partnership group.

Mark Cummings is an assurance services partner in the Boston office. He has more than 20 years of experience in assurance, reimbursement and tax in the health care industry, serving skilled nursing facilities, continuing care retirement communities, assisted living facilities, home health and hospice agencies, and physicians’ practices. He serves clients in the New England market with revenues ranging from $1 million to more than $300 million, in both the for-profit and nonprofit sectors.

Lindsay N. Timcke is part of the advisory and consulting practice in Boston and a member of the firm’s cybersecurity and IT risk and assurance services groups. He specializes in the development and implementation of cybersecurity programs and Enterprise Risk Management (ERM) assessments for preventive and detective risk-based programs. Timcke has 25 years of experience assisting nonprofits, educational institutions, and public and quasi-government agencies, including several Fortune 2000 companies.

Richard Izzi is a partner in the New York advisory group, where he leads transaction services for the New York, New Jersey and Connecticut area. He specializes in transaction advisory services to buy- and sell-side clients including private equity funds, strategic investors and lenders. His expertise includes refinance and recapitalizations, financial modeling, working capital analysis, carve-out analysis, purchase agreement consultation and dispute resolution. He is a certified Six Sigma Green Belt.

Douglas McKay is a tax partner in the firm’s alternative investment industry group, based in New York. He has more than 20 years of experience and specializes in partnership and private equity taxation. He advises private equity funds, real estate funds and their general partnerships and management companies on complex tax matters. His knowledge of partnership taxation, international tax compliance, and state and local tax compliance has been applied to private equity, real estate funds and their portfolio companies.

Andrew Finkle is a partner and tax leader in the transaction advisory services group in the Philadelphia office. He is also a Mid-Atlantic regional leader in Marcum’s private equity practice group. He has more than 30 years of experience advising middle-market businesses on transactional, day-to-day advisory, compliance, and accounting-related tax matters. He is also a tax attorney. Finkle leads a team of transaction tax advisory professionals providing counsel to U.S. and multinational strategic buyers and sellers, private equity groups, and other financial buyers on the tax implications of complex business transactions, including mergers and acquisitions, restructurings, joint ventures, spin-offs, bankruptcies, work-outs and dispositions.

Marcum Merges in Maine Firm

Kirk Purvis

New York-based Marcum (FY17 net revenue of $469.5 million) announced that Dawson Smith Purvis & Bassett of Portland, Maine, merged into Marcum’s New England region on Jan. 1.

The team of seven partners and 20 professional and administrative associates will remain at the firm’s current location at 15 Casco St. It will be Marcum’s second Portland office. Kirk Purvis will serve as OMP.

Founded in 1990, Dawson Smith Purvis & Bassett offers a full range of accounting services, including tax and financial planning for closely held businesses and high-net-worth individuals, litigation support and business valuation, marital dissolution and personal financial planning, among many other services.

“Dawson Smith Purvis & Bassett’s loyal client base, developed over nearly 30 years, is a testament to their commitment to excellence and technical proficiency. They will be a strong addition to Marcum’s New England region,” says Jeffrey M. Weiner, Marcum’s chairman and CEO.

In addition to Portland, Marcum’s New England region includes Boston, Providence, R.I., and four offices in Connecticut – Greenwich, Hartford, New Haven and West Hartford.

“Marcum’s extensive resources and industry specializations will significantly diversify our service offering to our clients while providing a rich opportunity for our professionals to collaborate as part of a national team,” Purvis says.

Marcum also merged in Silverman Kendall of Horsham, Pa., on Jan. 1.

Marcum to Merge In Silverman Kendall

New York-based Marcum (FY17 net revenue of $469.5 million) will merge in Silverman Kendall of Horsham, Pa., on Jan. 1.

The Silverman Kendall team will join Marcum’s Philadelphia office in Center City. Samuel A. Silverman and Jordan M. Kendall will both become Marcum partners.

Founded in 2001, Silverman Kendall is a firm specializing in manufacturing companies and professional service organizations, with a niche in the commercial printing industry. It provides a full range of accounting and consulting services to family-owned businesses, owners, executives and other high-net-worth individuals.

“Sam Silverman and Jordan Kendall built a very highly regarded firm with a focus on serving an industry that is instrumental in business-to-business and consumer commerce. Their niche expertise and their history as advisors and confidantes to their clients make them a perfect fit for Marcum,” says Jeffrey M. Weiner, chairman and CEO.

Silverman says, “We clicked with Marcum from the outset. The mutual chemistry and the business logic of joining a national firm of Marcum’s depth and stature will bring immediate benefits for our clients across the country as well as for our service team.”