Hedge funds looking for accountants

According to this recent post on JobsintheMoney’s CareerWire blog, hedge funds are looking for accountants and paying top dollar for them:

The Rothstein Kass report, The Compensation Conundrum, makes clear that even for non-investment professionals, hedge funds pay better than both Wall Street and corporate America.

For instance, senior accountants at surveyed firms earned $71,000 median salary for 2007 and were expected to receive bonuses centering around 50 percent – adding up to total pay of $106,000. Total compensation ranged from $96,000 to $124,000, varying little with firm size.

Those are pretty impressive numbers. This is no doubt going to continue to create pressure on public accounting firms and companies trying to hang on to their professionals.

I don’t personally know anyone who has left public accounting to go to a hedge fund, but with salaries like those above, it won’t be too long before I do. Salary shouldn’t be the only reason one leaves public accounting, and indeed I don’t think it often is. There are certainly some for whom the almighty dollar is the sole reason to leave, but most go somewhere they believe offers a better long-term career opportunity, and possibly work-life balance improvement.

Work-life balance is one area where I don’t think hedge funds have an advantage, even over public accounting, which is notorious for the long hours and demoralizing “busy season”. At a hedge fund you still work for clients, as in public accounting, which is the main reason why things get as hectic as they do. My peers would be wise to keep that in mind when they consider the seemingly greener pastures of hedge funds.

Grant Thornton UK swallows Robson Rhodes whole

Grant Thornton in the UK merged earlier in the year with RSM Robson Rhodes, making it “a leading player in the mid-market and the provider of non-audit services to one in four of the FTSE 100,” according to GT’s chief Michael Cleary.

The board of the merged entity makes the transaction look more like an acquisition:

Michael Cleary heads up the board as chief executive, but, of the former Robson Rhodes partners, only David Maxwell has a berth on the panel, which has seven members in total.

So basically Grant Thornton is maintaining control over the new entity through its board. Is this good or bad? Shouldn’t there be more than one former RSM partner on the board, since there are 7 members? Seems strange to me is all. Makes me think the merger was just to acquire RSM’s clients rather than really synergize and reap the benefits of shaking things up for both groups management-wise.

Michael Cleary was so effusive in press releases after the merger that this was heralding in a new age for the merged firm, in terms of providing the Big Four with some real competition.

Jeremy Newman of BDO at the time commented that his firm was going in a different direction in taking the fight to the Big Four’s dominance, and that merging to compete was sending the wrong message about what it really takes to provide a Big Four level of service to clients. Basically, the message was that size matters. Jeremy has been adamant that it is investment in people that really matters at the mid-tier level.

Time will tell which strategy works better.

SEC delays Sarbanes-Oxley requirements for small businesses

The Securities and Exchange Commission (SEC) has provided small businesses another 1-year delay to comply with Sarbanes-Oxley Section 404 requirements. Section 404 is the part of Sarbox that requires management to attest to the effectiveness of internal controls over financial reporting.

“This will help ease the burden on small firms and help encourage more small businesses to become public companies – while still ensuring transparency and honest accounting,” said Senator John Kerry (D-MA), chairman of the Senate Committee on Small Business and Entrepreneurship.

I see how this eases the regulatory burden on small entities, thereby indirectly encouraging small businesses to go public where they might otherwise not, but it remains to be seen how this “still ensures transparency and honest accounting”. How does not requiring companies to fully examine their systems of internal control and have management sign off on their effectiveness ensure anything?

It has been nearly five and a half years since Sarbanes-Oxley was implemented in the wake of the Enron meltdown and the delay applies to companies worth $75-million or less. When will smaller public companies be held to the same standard as larger ones?

Since the law was passed in 2002, the SEC has delayed compliance four times for small businesses. Currently, small companies … are expected to comply with the management guidance part of the law this year and the auditing section by 2009.

Legislators worked quickly to draft and pass Sarbanes-Oxley to protect investors in the aftermath of accounting scandals. Is it reasonable that it will be 7 years before it is in place for the smaller public companies in the US?

Ten principles of sound tax policy

The Tax Foundation’s Ten principles of sound tax policy are a must-read for those influencing tax policy. I think the list can be further refined down to about half that, but maybe they wanted to get an even ten.

For instance, maintaining the neutrality of the system (#2) will result in broad bases (#3). It’s when the system gets less neutral (i.e. favours certain groups or behaviours) that the base is narrowed. Various special interest deductions put in place to encourage desirable behaviour or punish undesirable behaviour have narrowed the base and caused rates to be kept high unnecessarily.

Harmonization of federal, state/province and local/municipal taxes (#10) is part and parcel with creating a simple tax system (#4). The provincial government has been criticized recently about its reluctance to harmonize Ontario’s sales tax with the Federal GST. The premier’s misguided reasoning for the reluctance? It would place a tax on certain exempt items, thus eliminating some of the complexity and non-neutrality in the tax.

Tax stability (#5) is important because it makes them predictable, which is also aided when there is no retroactivity (#6). When politicians can make changes to taxes retroactive, tax is not predictable. The Canadian government announced recently the retroactive increase in the Basic Personal tax credit. You’re unlikely to hear anyone complain about this, but nonetheless it isn’t ideal tax policy.

Transparency (#1) is important no matter what government initiative we’re talking about, and an open process (#9) is one manifestation of this requirement. All the workings of a democratic government must be open to its citizens and open to criticism and debate. Tax is no different from anything else in this respect.

So I humbly put forward my own principles of sound tax policy: simplicity, neutrality, transparency, and predictability. I think that basically covers it at a more abstract level than the Tax Foundation’s ten.

BDO chooses blogging partner to head up international network

Jeremy Newman of BDO Stoy Hayward in the UK is a trailblazer as a managing partner who blogs regularly, primarily about the audit market in the UK. He’s recently won the job to be BDO International’s new CEO starting in October 2008.

Jeremy has been emphatic about getting the message out about audit choice and pushing BDO further into the market for large public company work.

A post he made about trusting people not to waste time on Facebook while at work, and being against the trend to ban it in workplaces, was quoted by yours truly in a post I made a short while ago that caused partners in my office sit up and take notice.

I wonder when others high up in accounting firms will join Jeremy and make blogging part of their regular routine. Communication skills are going to be key to his success in the new role, but judging by his blog, BDO will be in good hands.