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Block picks McGladrey's leader; BDO dodges bullet but...; More

News and commentary…
C.E. Andrews, whose 29-year career with Arthur Andersen included key roles near its end as a national accounting firm, is returning to the profession as the chosen successor to Steven Tait as president of RSM McGladrey, the Minneapolis-based firm owned by Kansas City, Mo.-based H&R Block. Andrews will have base operations in both Chicago and Washington.

“His extensive industry background and leadership experience, including nearly three decades with a major global accounting firm, make him a great choice for the company as it pursues the tremendous market opportunities that exist and builds on its recent growth,” Russ Smyth, HRB’s CEO, said in a statement.

Andrews joined AA in 1974 and made partner 10 years later. He became MP-mid-Atlantic region and was promoted to global MP-A&A services in 2002. After news broke in late 2001 that AA was shredding documents related to its work at Enron Corp., Andrews defended AA’s document retention policy in congressional hearings in Jan. 2002. He later served as AA’s spokesman as the jury in Houston reached its verdict in June 2002. An Andersen man until the end...

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Bowman commentary
On the surface, it's easy to understand why Andrews is an attractive choice for H&R Block. Andrews was a partner in an accounting firm where he rose to leadership positions profession, and he’s been at the top of a huge public company. From a corporate owner’s perspective, what’s not to like? We see plenty of caution flags.

Former Arthur Andersen partners don't have good records of accomplishment trying to manage and/or lead smaller accounting firms. It’s like hiring Arthur Sulzberger Jr., publisher of the New York Times, to run the Des Moines, Iowa, Register. The Times and Register are in the same industry and both have fine reputations but there the comparison ends. Andrews, who grew professionally in the Marine Corps-like culture at AA, will experience...

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Belgium-based BDO International dodged a bullet but the gun is still loaded for both BDOI and Chicago-based BDO Seidman. John Schlesinger, Miami-Dade Circuit judge, ruled from the bench Tuesday that BDOI is no longer at risk of paying the punitive damages –$352 million – awarded in a civil negligence case brought by BES Bankest (Banco Espirito Santo). The jury will decide whether BDOI should share with the liability – $170 million – with BDOS in compensatory damages.

Schlesinger’s seems to have based his decision on the plaintiff’s inability to prove that BDOI was negligent in its supervision of BDOS to the extent of the damages. “I don't believe the facts are in the neighborhood of adequacy to support punitive damages against BDOI,” the judge said, according to a transcript. “They're entitled to a judgment as a matter of law on the directed verdict.”

Unless reversed on appeal, BDOS remains responsible for both the $170 million and...

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DAVID G. FRIEHLING - For a third time, federal prosecutors have delayed for a third time the indictment of the CPA who provided audit services to Bernard L. Madoff’s investment advisory business for more than a decade. It's a sign the he may be cooperating with investigators. Prosecutors requested to delay the indictment until July 17 to “conduct additional discussions regarding a possible disposition” of the case, according to court papers. Friehling, 49, was arrested in March and charged in a six-count criminal complaint that...

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