UK News
Improving governance
Non-executive directors must understand their companies and should be provided with regular personalised training, the final Walker report has proposed. Executive directors should be trained to understand business areas outside their immediate experience. NEDs of banks and life assurers should also commit more days than has been normal in the past, with chairmen of major banks expected to commit around two-thirds of their time. Boards of major banks and life assurers should establish risk committees, in addition to audit committees, and the companies should appoint Chief Risk Officers. Walker proposes that clearer responsibilities are laid on shareholders, including through a Stewardship Code overseen by the FRC. Sir David Walker also recommended that the largest banks and building societies report senior employees’ pay, in bands, and the elements of salary, cash bonus, deferred shares, performance-related long-term awards and pension contributions. The report was accepted by the Government, which promised to “move quickly” in implementing the proposals.
FAST FACTS
184 – pages of the final Walker Report on Corporate Governance of UK Banking
142 – submissions made to the review
39 – recommendations made and accepted
‘Companies in climate change denial’
Less than half of global companies have carbon emission accounting practices in places, or strategies for emission reduction, according to a joint report from ACCA and the Global Reporting Initiative. The study, “High Impact Sectors: the Challenge of Reporting on Climate Change,” argues that standards of voluntary corporate climate change disclosures can be improved, but that the climate change policy framework needs to be strengthened. ACCA research into the high impact industries, such as energy, found that reporting practices were below that demanded by investors and other users of financial statements. Interviews with opinion formers and environmental academics suggested that companies’ responses to climate change remain inadequate, described as “sleepy” and “timid”. Lord Turner calls for a clear legal framework for carbon reductions in the ACCA publication, ‘Getting it’. The IASB is reportedly now under pressure to produce clear accounting standards for reporting companies’ global emissions, but the IASB declined to confirm or deny this.
IFRIC guidance
IFRIC has revised its draft interpretation and guidance on extinguishing financial liabilities with equity instruments. IFRIC had previously proposed that equity instruments issued to extinguish a financial liability should be measured initially at the fair value of the equity instruments issued or the fair value of the liability extinguished, whichever is more reliably determinable. But representations urged that there should not be an ‘accounting choice’ regarding which measurement should be used. IFRIC has now determined that the preferred measurement should be the fair value of the equity instruments issued.
Financial statements get longer
Company annual reports have grown 57% longer since 2005, according to analysis by Deloitte. The average company report is now 47 pages long – 3 pages more than last year. Deloitte suggests this is not surprising, as there are 3,000 disclosure points associated with IFRS. An Ernst & Young study concludes that the amount of information in financial reports causes confusion, with stakeholders struggling to understand company performance. An ASB review of the top UK 50 companies’ annual reports complains they contain too much “clutter”.
HMRC joins YouTube
HMRC has joined the social networking age by using YouTube to warn tax dodgers that their time is up. “For some people, offshore bank accounts and tax havens typically conjure up images of exotic and far away places, well out of the reach of the taxman at home,” says HMRC permanent secretary for tax Dave Hartnett on the two minute video. “Well, life’s just not like that any more. And here’s a blunt message from HM Revenue & Customs: times have changed. The taxman now has more powers and more information.”
PwC’s Paragon purchase
PwC has acquired the Paragon Consulting Group to expand its consulting arm with an additional 90 staff, including 40 in the UK. The group is now part of PwC Advisory’s consulting business. The consulting practice has expanded to around 1,200 staff. Paragon had teams in Turkey and Singapore and a stake in a joint venture in Dubai. Ashley Unwin, head of consulting at PwC, said: “Paragon is a leader in corporate performance management technology and this acquisition is an excellent strategic fit with our consulting business.”
Insolvency market reviewed
The Office of Fair Trading is to conduct a market study into corporate insolvency services. The study will consider whether there are anti-competitive market practices, including whether there are higher fees or lower recovery rates for certain groups of creditors. Concerns were raised by the Insolvency Service and other parts of government. A recent World Bank report showed it costs more to close a business in the UK than in other countries, including those with better recovery rates.
VAT threat to charities
Charities risk losing their ability to obtain VAT refunds after the European Commission commenced refraction proceedings against the UK, Baker Tilly and PKF have warned. Eight EU member states have been told they are breaching EU law in allowing non-taxable persons to be members of a VAT group. Charities, further education colleges, dormant companies and holding companies that do not conduct trading businesses could be affected. VAT groups enable members to make supplies of goods and services to each other without the need to charge VAT.
ASB reviews pensions accounting
The ASB has submitted a report to the IASB arguing that the discount rate used for the measurement of liabilities should reflect the time value of money and be a risk-free rate. It is not possible to make a reliable estimate of the risk arising from the size and variability of the liability, it suggested. Users of financial statements are better served by disclosures regarding the risk, rather than through adjustment of the underlying liability, it concluded.
Profits fall at Deloitte….
Deloitte’s global revenues in the year to May 2009 fell by 4.9%, to US$26.1bn, but rose by 1% on local revenues. The firm made investments of over US$1bn in the year. The fastest growing region was Asia Pacific, which saw a revenue increase of 7.6%. Member firms in India, Australia and Japan experienced local currency growth of 29.9%, 11.5% and 11.3%. There was a 2% growth in the Europe, Middle East, and Africa region and a decline of 1.3% in the Americas. Consulting worldwide grew by 7.3%.
…. and Grant Thornton
Corporate finance revenues at Grant Thornton UK fell by a third last year, contributing to an overall 4.1% fall in income to £378m in the year ended June. Income in the audit practice grew by 3.4% and in recovery and reorganisation by 11.0%. Partner numbers fell by 51 to 235 in the year, with 200 staff also leaving the firm. Average profit per partner rose by 2% to £253,000.
EU gets tough with deficits
The European Commission has given 14 member states new deadlines to get their public finances under control. Greece was criticised for not taking ‘effective action’ in responding to earlier Commission concerns: its fiscal deficit is now 13%, compared to previous projections of less than 4%. Italy and Belgium were told to correct budget deficits by 2012; France, Spain, Germany and six other countries by 2013; Ireland by 2014; and the UK by 2014/15.
IASB moves on with IFRS 9
The IASB has published an exposure draft on reporting standards for the impairment of financial assets, to comprise part of IFRS 9. This is the second part of the project to replace IAS 39 and the third part, dealing with reporting on hedge funds, is underway. IFRS 9 requires a single impairment model to be used. Final requirements are scheduled to be issued this year. The day after the exposure draft was published, the European Union decided not to implement it for the time being.
Tax havens ‘need help’
The three Crown Dependencies – Jersey, Guernsey and the Isle of Man – and the six Overseas Territories – Anguilla, Bermuda, British Virgin Islands, Cayman Islands, Gibraltar and the Turks and Caicos Islands – should ensure they prudently manage public finances, including by having a diversified tax base that maximises sources of revenue, with measures to control public spending and that build reserves in periods of growth, concludes a review of tax havens conducted for the Treasury by Michael Foot. The UK Government should provide support to the territories in fighting financial crime, he adds.
RoW News
Dubai takes action
Omar bin Sulaiman has been replaced as the governor of the Dubai International Financial Center. The announcement was made days before it became clear the extent of the crisis relating to Dubai World and other Dubai government investments. The new governor is Ahmed Humaid Al Tayer, the UAE’s finance and industry minister from 1993 to 1997. He is also chairman of both the Emirates National Bank of Dubai and the Commercial Bank of Dubai. As governor, bin Sulaiman argued for Dubai to become a global centre for Islamic finance. Dubai’s government made several other changes in senior state personnel, including on the board of the Investment Corporation of Dubai – the government’s investment arm. The changes mean that Dubai’s ruler, Sheikh Mohammed bin Rashid al-Maktoum, and his son, Sheikh Hamdan bin Mohammed, the Crown Prince of Dubai, take a more involved and controlling role in the running of state investments.
FAST FACTS
$40bn – debts owed by Dubai World
$26bn – size of the debt restructuring
$3bn – size of the largest single bank exposure, the Emirates National Bank of Dubai
Islamic banking grows
Islamic banking grew in 2009, despite the stagnation in the global banking sector, according to a review by The Banker magazine. Assets held by fully Sharia-compliant banks and banking divisions rose by 28.6% in 2009 to $822bn. There was growth of a mere 6.8% in assets held by mainstream banks in the year to July. The compound annual growth rate in Islamic finance rose to 27.86%. The Gulf states hold 42.9% of total Islamic banking assets, with Iran accounting for 35.6% of assets and Malaysia 10.5%. The UK now accounts for nearly 2.5% of global Sharia-complaint assets. The fastest growth was in Syria, where the Islamic finance market expanded by 500% in one year. Banker editor Brian Caplan said that a close link between Islamic finance and physical assets had protected the sector from the worst of the credit crisis, but added that transparency and financial reporting practices are a challenge for Islamic financial institutions. The study predated the Dubai crisis.
Revised IFRS 9 published…..
The IASB has published an exposure draft on reporting standards for the impairment of financial assets, comprising part of IFRS 9. This is the second part of the project to replace IAS 39 and the third part, dealing with reporting on hedge funds, is underway. IFRS 9 requires a single impairment model to be used. IASB argues that IFRS 9 will improve comparability and make it easier for investors and other stakeholders to understand financial statements. Final requirements are scheduled to be issued this year.
…. which Brussels rejects
The European Union will not implement the revised IFRS 9 – for now at least – fearing the impact on banks and life assurers of the use of fair value of assets. EFRAG – the European Financial Reporting Advisory Group – said: “It has been decided that more time should be taken to consider the output from the IASB project to improve accounting for financial instruments. Therefore, at this stage, EFRAG will not finalise its endorsement advice on IFRS 9. EFRAG is currently considering how it will proceed in its work to address the package of standards that are expected to replace IAS 39.”
‘Companies in climate change denial’
Less than half of global companies have carbon emission accounting practices in place, or strategies for emission reduction, according to a joint report from ACCA and the Global Reporting Initiative. The study, “High Impact Sectors: the Challenge of Reporting on Climate Change,” argues that standards of voluntary corporate climate change disclosures can be improved, but that the climate change policy framework needs to be strengthened. The IASB is reportedly under pressure to produce clear accounting standards for reporting companies’ global emissions, but the IASB declined to confirm or deny this.
Congress backs SEC
The US Congress has rejected moves to weaken the Securities and Exchange Commission’s oversight of the Financial Accounting Standards Board (FASB). Under amendments to the Financial Stability Improvement Bill, a new body monitoring the FASB will review standards, but not alter them. The SEC has just one seat at the table of the new Financial Services Oversight Council – alongside the Treasury, the Federal Reserve and the Federal Deposit Insurance Corp – compared to its sole oversight responsibility for the FASB at present.
IFRIC guidance
IFRIC has revised its draft interpretation and guidance on extinguishing financial liabilities with equity instruments IFRIC had previously proposed that equity instruments issued to extinguish a financial liability should be measured initially at the fair value of the equity instruments issued or the fair value of the liability extinguished, whichever is more reliably determinable. But representations urged that there should not be an ‘accounting choice’ regarding which measurement should be used. IFRIC has now determined that the preferred measurement should be the fair value of the equity instruments issued.
Profits fall at Deloitte
Deloitte’s global revenues in the year to May 2009 fell by 4.9%, to US$26.1bn, but up by 1% on local revenues. The firm made investments of over US$1bn in the year. The fastest growing region was Asia Pacific, which saw a revenue increase of 7.6%. Member firms in India, Australia and Japan experienced local currency growth of 29.9%, 11.5% and 11.3%. There was a 2% growth in the Europe, Middle East, and Africa region and a decline of 1.3% in the Americas. Consulting worldwide grew by 7.3%.
Governments act on tax
Governments are committed to tax reform despite the economic crisis, according to a report from PwC and the World Bank Group. Their report, Paying Taxes, found that 45 economies made it easier last year to pay taxes, 25% up on the previous year. Ten Eastern Europe and Central Asia states agreed tax reforms, the largest in any region. One country – Timor-Leste – reduced compliance time by over 50% by rationalizing tax regulations, simplifying computation rules, and reducing payments, found the study.
SA’s reporting problems
A big increase in irregularities in company reports has been advised by South Africa’s Independent Regulatory Board for Auditors (IRBA). Auditors notified IRBA of 857 ‘reportable irregularities’ in the first eight months of the current financial year – almost equivalent to that for the whole of the last year. Bernard Agulhas, CEO of IRBA said that auditors had become more aware of the consequences of not reporting, but it may also reflect a rise in white collar crime. “This is good news as far as reporting is concerned,” he added.
Spain to end tax break
Spain must end a corporate tax provision that gave Spanish firms an advantage in acquiring companies in other jurisdictions. Spanish companies have been able to amortise goodwill when they purchased non-Spanish companies. The European Commission has decided this breaches state aid rules as it conferred an unjustified advantage to Spanish companies, especially with competitive takeover bids. Telefonica benefited from the provision in its takeover of O2 and Iberdrola in its acquisition of Scottish Power. Spain has been instructed to recover any unlawful aid granted under the provision since December 2007.
EU gets tough with deficits
The European Commission has given 14 member states new deadlines to get their public finances under control. Greece was criticised for not taking ‘effective action’ in responding to earlier Commission concerns: its fiscal deficit is now 13%, compared to previous projections of less than 4%. Italy and Belgium were told to correct budget deficits by 2012; France, Spain, Germany and six other countries by 2013; Ireland by 2014; and the UK by 2014/15.
BDO hit
BDO International’s turnover fell by 2.3% in the year ending September 2009 when measured in dollars, but increased by 1.7% when calculated in euros. The figures for 2009 were US$5.026bn, or €3.710bn. Income fell worst in the Europe and North America regions, while rising in the Asia Pacific, Middle East and Sub-Saharan Africa regions. Revenues grew by 4.5% in audit and accounting, but fell by 10% in advisory and 3.9% in tax services.
Canada’s public sector to use IFRS
Public bodies in Canada with ‘self-sustaining, commercial-type operations’ – called ‘government business enterprises’, or GBEs – are to adopt IFRS from the beginning of 2011. Other trading public bodies – at present called ‘government business-type organizations’, or GBTOs – will chose whether to use IFRS or public sector standards, based on assessment of which set of standards is most appropriate for the users of their financial statements. The move to IFRS particularly affects publicly-owned utilities.
States ‘could collapse’
Ten American states face administrative collapse because of the massive loss of tax revenues, claims a report from the Pew Center on the States. While California is by far the worst affected, Arizona, Rhode Island, Michigan, Oregon, Nevada, Florida, New Jersey, Illinois and Wisconsin all also face ruin. Western states have been hit by the implosion of the housing bubble, while those in the Mid-West and North East have suffered from local factors that destroyed their tax base.
Madoff charges
Bernard Madoff’s auditor, David Friehling, has pleaded guilty to being involved in fraud. Two former computer programmers employed by disgraced fraudster Bernard Madoff have been charged with complicity in his embezzlement. Jerome O’Hara and George Perez are accused of being the technical brains behind the so-called Ponzi scheme. The prosecution alleges the two men attempted to delete the programs they wrote for Madoff. The lawyer for O’Hara indicated his client would plead not guilty, while there was no indication of the plea to be entered for Perez.
Grant Thornton settles Parmalat
Grant Thornton International has agreed to pay investors in collapsed dairy company Parmalat US$6.5m to settle claims against it arising from the collapse of its former audit client. “This includes a number of protections against any potential future claims by third parties,” explained a spokeswoman for the firm. “Grant Thornton continues to deny all culpability.” Deloitte is also reported to have settled, but the firm did not respond to requests for information.
Politics
Brussels stops IFRS
The European Union has decided not to implement the revised IFRS 9, fearing the impact on banks and life assurers of the use of fair value of assets. In a statement, EFRAG – the European Financial Reporting Advisory Group – said: “It has been decided that more time should be taken to consider the output from the IASB project to improve accounting for financial instruments. Therefore, at this stage, EFRAG will not finalise its endorsement advice on IFRS 9. EFRAG is currently considering how it will proceed in its work to address the package of standards that are expected to replace IAS 39.”
Governments act on tax
Governments are committed to tax reform despite the economic crisis, according to a report from PwC and the World Bank Group. Their report, Paying Taxes, found that 45 economies made it easier last year to pay taxes, almost 25% more than in the previous year. Some 10 Eastern Europe and Central Asia states agreed tax reforms, the largest in any region. In the past five years, the report has recorded 171 reforms affecting taxes in 104 economies worldwide. On average, a company pays 9.5 different taxes and corporate income tax accounts for only 12% of payments. “This year’s top reformer [Timor-Leste ] reduced compliance time by over 50% by rationalizing tax regulations, simplifying computation rules, and reducing payments,” said Penelope Brook, World Bank Group Director of the Global Indicators and Analysis department.
Bribery Bill steps up the ante
The Bribery Bill – announced in the Queen’s Speech – will make it illegal to bribe a foreign official to obtain or retain contracts. The Bill will also make it an offence if businesses fail to prevent a bribe being paid by their employees or agents. Unlimited fines can be imposed on firms found guilty, while individuals convicted of making illegal payments to secure business may be fined and could also be imprisoned for up to 10 years. John Burbidge-King of anti-fraud advisory firm Interchange Solutions suggests the new legislation can assist companies to gain value by ensuring they are transparent in their international trade arrangements. “By taking a more proactive approach, and reviewing and re-engineering their businesses, companies can reduce the likelihood of share price volatility, deliver business confidence in managing risk in new supply channels and markets, and reduce the risk of disruption and unbudgeted resources and expenses by mitigating any exposure to an allegation of corruption,” he said.
Are public and private the same?
ACCA is asking whether there should there be a common approach to corporate governance in the private and public sectors. A discussion document, ‘Taken on Trust’, points out that the global financial crisis has coincided with revelations of MPs’ misuse of expenses claims. ACCA’s paper asserts that there is an undeniable link between good governance and public trust and this is why setting new ethical standards should be the new priority. The focus needs to shift from having the right systems and processes in place to standards of behaviour and organisational culture. Gillian Fawcett, head of public sector at ACCA said: “Given the changing landscape of the public sector, there is a strong case for having greater cohesion on corporate governance. The public ownership of the banks and the growth of Public Private Partnerships (PPP) and Public Finance Initiatives (PFI) delivering public services mean that both sectors need to be subject to the same regulations.”
Public sector
ACCA and CIPFA act for climate
ACCA and CIPFA have begun working together to reduce carbon emissions in the public sector. A joint event was held in London by the two bodies, where the impact on the public sector of the Carbon Reduction Commitment (CRC) from April was considered. Gillian Fawcett, head of public sector at ACCA, said: “Government departments, local authorities, the health sector and schools are all potentially affected by the incoming CRC. These sectors will now be legally required to measure, report and reduce their carbon emissions from 2010 and be named in an annual league table, constructed by the Environment Agency. The aim of this joint event was to encourage discussion about any possible difficulties and worries that the public sector might have in the run up to actual implementation of the CRC.” John Maddocks, manager for sustainability and the third sector at CIPFA, said: “The CRC scheme is a key part of measures aimed at reducing greenhouse gas emissions to just 20% of 1990 levels by 2050. This is a considerable challenge for both public and private sectors.”
Bundred steps down
Audit Commission chief executive Steve Bundred is to step down before the summer. Bundred is 56 and has been in post since 2003. He has previously been chief executive of the London Borough of Camden and the Improvement and Development Agency. He has been a member of the Higher Education Funding Council and chair of the Higher Regulation Review Group. Bundred has also been a Labour member of the Greater London Council and was an advisor to a Labour energy secretary.
Practice
Silver Levene expands
The largest ACCA practice in the UK, Silver Levene, is to merge with West End accountants Rosenthal Hass. Silver Levene specialises in entertainment and media, while Rosenthal Hass also works extensively in the creative industries. ACCA Deputy President Mark Gold is a partner at Silver Levene, which will gain a further two partners – Catherine Rosenthal and Musadiq Jaffer – as a result of the merger. Robert Isaacson will join from Rosenthal Hass as a consultant, adding to the practice’s staff of over a hundred based at Warren Street in central London. Howard Levene said: “This merger will help strengthen our position as a niche practice in media and entertainment whilst delivering considerable added value to our mutual clients. Rosenthal Hass are very well respected in the market and the combination of our scale with their additional expertise will create a distinct and exciting proposition for clients.” Silver Levene is a former winner of the medium sized firm of the year award.
Fairness charter
HMRC has published its long awaited customer ‘Charter’, promising to treat individual and business clients with respect, honesty, even-handedly, professionally and with integrity, while tackling people who deliberately break the rules and challenging those who bend them. HMRC also promises to protect client information and privacy, accept that others can represent them and that it will keep the costs of dealing with it as low as possible. But, says HMRC, taxpayers have responsibilities as well as rights.
Enterprise
Bad debts rise
Nine out of ten UK firms are reporting a rise in bad debts, according to research from Creditsafe. Some three quarters of companies are worried about their exposure to bad debts, it found, with 16% worrying that it will affect their continued trading. A small minority of firms – 4% – await payment of over £100,000 from debtors. Despite signs of the recovery easing, the report found that levels of bad debts have risen by 20% in the last year. The gloom was reinforced by the latest Baker Tilly Finance Director Survey which reported that the number of companies suffering late payment from customers more than doubled in six months. Some 41% of finance directors questioned reported a problem with late payment, compared to 19% in early 2009. Most FDs – 54% – do not expect any improvement in trading conditions this year, while 28% expect them to get worse.
Business investment at 40 year low
Business investment has fallen to the lowest level since they were first measured 40 years ago, according to the Office for National Statistics. It fell by 21.4% in the first six quarters from the onset of the recession and by 10.2% in the second quarter of last year. This is twice the rate of slowdown as recorded in recessions in the 1980s and 1990s. But the decline in fall in investment is now slowing down. Similar trends have been noticed in other countries: Australia also recorded a record investment low.
Corporate
Audit committees challenged
Audit committees must expect companies to face severe challenges, even after the recession technically ends, as they run out of working capital, the FRC has warned. Companies may resort to changing business models to cope with the recession and its after-effects: these include modifying terms of trade and payments to pension funds. Such changes may mean that accounting policies need to be reviewed and audit committees should also consider whether internal control systems capture all relevant data reliably and if accounting and actuarial assumptions remain appropriate. Louise Pryor, director for actuarial standards at the FRC said: “The last year has demonstrated how critical it is to understand risk and uncertainty when making significant and complex financial decisions. Trustees, directors and others who base their decisions on actuarial information need to be sure that they and their actuaries have a shared understanding of the relevant risks.”
Debt buyback
Rules on the tax treatment of debt buy-backs have been changed by the Treasury, with effect from 14 October 2009. A debt may now only be bought in at a discount and free of tax in genuine corporate rescue situations. Where debts previously bought in are cancelled, the borrower will be taxed on any previously untaxed discount. The changes will not afect companies where the offer to repurchase the debt was made before 14 October 2009. The Treasury strengthened proposed legal changes initially announced in October after it became clear that there was a loophole that potentially allowed a new creditor to accept ordinary shares in the debtor to release the debtor from its liability.
Financial services
FSA gets extra powers
The FSA is to get tougher powers under the Financial Services Bill to regulate firms, including oversight of bank pay and bonuses. It will also gain information gathering powers on non-regulated firms, such as hedge funds, and controls on short selling. Major banks will be required to provide ‘living wills’ to assist them to close trading in the event of insolvency. The FSA is to be given other strengthened powers to take action where firms and individuals are guilty of misconduct. Paul Sharma, FSA director for prudential policy, said: “In the Turner Review we set out our view that the financial crisis had raised questions as to the adequacy of financial disclosure by banks throughout all major economies and the level of confidence that investors could place in their financial reports.” New FSA disclosure rules for banks in their 2009 year end accounts would raise the quality of disclosures, said Sharma.
Nomura fined £1.75m
Nomura has been fined £1.75m for widespread systems and controls failings based on the book markings in its International Equity Derivatives business. Nomura breached two FSA principles as the firm failed to conduct its business with due skill, care and diligence and failed to take reasonable care to organise and control its affairs responsibly. The failings were regarded as particularly serious as they were fundamental, systemic and persisted over a long period of time. Nomura cooperated fully with the FSA and because of this obtained a discount under the FSA’s settlement discount scheme. Without the discount, the fine would have been £2.5m.
Plus RoW
Practice
Baker Tilly grows US practice
The US firm of Baker Tilly Virchow Krause has merged with Beers & Cutler, to create the country’s 13th largest accountancy firm. The combined practice will generate over $250m in revenue annually and employ more than 1,400 partners and staff. Baker Tilly Virchow Krause is based in Chicago and the merger will enable it to expand its operations to Washington DC and the East Coast. It is now looking for a New York firm with which to merge. The previously Madison, Wisconsin-based Virchow, Krause & Co. LLP changed its name to Baker Tilly last year, becoming the exclusive US firm in the international network. Beers & Cutler was already an independent member of the Baker Tilly network and the 10th largest accountancy firm in Washington DC. The international network is based in the UK. In October, Canada’s Collins Barrow National Cooperative joined Baker Tilly International, following the merger of the Collins Barrow and and Smith Nixon firms: Collins Barrow had previously been members of the Praxity network.
Grant Thornton announces new COO
Lou Grabowsky has been appointed chief operating officer for Grant Thornton in the US. He joins Stephen Chipman, who was appointed chief executive in the middle of last year. Grabowsky oversees a firm that employs 6,000 people and generates $1.2bn in revenues. “His personal and professional strengths complement my own, and we have already been working on transition issues and other matters of high priority for the U.S. firm,” said Chipman. Grabowsky was previously managing partner of Grant Thronton Central Region in the US. He joined Grant Thornton in 2002 from Arthur Andersen, where he had been a senior partner.
Corporate
New York Fed blamed
The New York Fed mishandled its rescue of the American International Group, AIG, according to a US government audit report. At the time, the New York Fed was led by Timothy Geithner, who is now Treasury secretary. The report from Neil M. Barofsky, special inspector general for the Troubled Asset Relief Program, said that the Fed yielded too much power and influence in negotiations and allowed creditors to walk away undamaged. One bank offered to take a modest loss on its position, but was not taken up on the proposal. The report claims that Goldman Sachs and the French banking regulator persuaded the New York Fed that it would be improper and possibly criminal to force creditors to take any losses. The Fed “refused to use its considerable leverage” in negotiations, with the effect that banks that were counter-parties to AIG transactions were given a funding boost by the federal government. Geithner told the inspector general that this had not been a specific policy objective.
Microsoft CFO leaves
Chris Liddell has stepped-down as Microsoft CFO and has been replaced by Peter Klein. Liddell had been in post for four and a half years and overseen a cost reduction program in the last year that cut expenditure by $3bn more than planned, enabling $14bn to be returned to shareholders. Klein was previously CFO for Microsoft’s business division, having joined the corporation in 2002. He had previously worked for McCaw Cellular and a private equity firm.