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Expats say they're concerned about safety; little info coming from employers. Plus: Making Cheney account for Halliburton, Andersen's woes are E&Y's gains, more billion-dollar borrowings, and Verizon dials 142.
Stephen Taub, CFO.com | US
May 23, 2002
Getting transferred to Hong Kong or Budapest or Caracas may sound like a plum job—but it can turn out to be a royal pain.
Or at least that seems to be the take-away from a recent survey of expatriate executives conducted by CIGNA International Expatriate Benefits, the National Foreign Trade Council, and employment specialist WorldatWork.
According to the survey, 55 percent of executives serving cross-border assignments said the lack of information about health and safety issues was detrimental to their peace of mind and performance on the job.
What's more, nearly 40 percent of expatriates felt their employers did not do a good job preparing them for international assignments. Indeed, well over half of the respondents rated the coordination between local-country and home-office human resources departments negatively. About a third of the survey participants said they expected to leave their current employer within five years.
Worrisome news for global businesses, considering multinational corporations invest an average of $1.3 million per employee for a typical cross-border assignment.
The majority of expatriates in the survey felt they needed more assistance "to keep them informed about current, changing, or potentially adverse health and safety conditions, and how to cope" with them, says Virginia Hollis, vice president of global markets for CIGNA International Expatriate Benefits. "Expatriates are looking for more peace of mind, and right now they're not getting it."
In fact, only 20 percent praised their companies for maintaining a "best-practice communications process that keeps expatriates up-to-date and fully informed" with security bulletins, contingency plans, and emergency guidelines, notes Hollis.
"With growing tensions around the globe, employees on overseas assignment feel increasingly overwhelmed by health and safety concerns, and think they aren't being provided with the preparation and support they need," says Hollis.
So, what should companies do to make it easier for employees who work overseas?
The survey asked respondents to suggest best practices for companies to adopt in order to better handle expatriate family welfare, community, and on-the-job challenges. Suggestions for best practices to be adopted by companies with workers on international assignment included:
The study also found that only one in five expat execs rated the preparation by their company for the assignment as good. For example, 58 percent of expatriate families (and 40 percent of expatriates themselves) were never given language training.
A bad move by employers. Expatriates who rated preparation favorably were three times as likely to have had cross-cultural training. At the top of that list of preparation: language training. Of those expatriates and their families who received language training, 75 percent found it very valuable.
Ironically, while surveyed executives didn't feel overly warm and fuzzy about their overseas postings, 74 percent saw no change in their willingness to accept a future expatriate position.
A contradiction? Hardly. As noted in a story in the November issue of CFO, many finance executives believe international assignments are crucial to moving up the corporate ladder. Indeed, gaining international experience, says John Wilson, co-head of Korn Ferry's CFO practice, has become increasingly vital to CFO advancement. In fact, he says, it is "probably number four or five on the [CEO wish] list at large-to-midcap companies."
To read the full article about the importance of cross-border assignments for finance managers, As CFO.com cllick here.
Cheney's Revenue-Recognition Problems
While Vice President Dick Cheney has been furiously defending his meetings with Enron officials, the veep may have some explaining to do about the accounting practices at his previous gig.
It seems that while he was chief executive of Halliburton Corp., the energy company's accounting policies became much more aggressive, enabling it to boost reported revenues by more than $100 million, according to Wednesday's New York Times.
The change was reportedly approved by—you guessed it—Arthur Andersen, Halliburton's auditor at the time.
According to the Times, Halliburton, under pressure for losses it was racking up from some of its long-term contracts, sped up how it booked revenues for long-term construction projects. Those projects—such as the construction of natural gas—processing plants—sometimes ran over budget.
So, Halliburton reportedly booked some revenue assuming its customers would pay a portion of the cost overruns. Before Cheney joined the company, Halliburton management waited to see whether it could actually negotiate compensation for these overruns before it booked the revenue.
Halliburton's chief financial officer, Doug Foshee, told the paper earlier this week that he doesn't believe Cheney had specifically approved the change, which he called a routine decision.
Rather, Foshee said he was certain that the accounting change was approved by David Lesar, a former Andersen accountant who was Cheney's number two executive—and eventual successor.
"If they changed their accounting from recording claims when they were settled and collected to recording claims at an earlier point in time, then that would raise a red flag and would raise a question as to whether it's a permissible change," Lynn Turner, a professor of accounting at Colorado State University and former chief accountant of the Securities and Exchange Commission, told the Times.
Andersen's Woes Are E&Y's Gains
It was another bad day for Andersen. It was a pretty good day for Ernst & Young, however.
E&Y picked up a number of Andersen practices in Chicago, staff in four western states, and four offices in Florida.
The Big Five auditor announced it acquired two Andersen practices in the Windy City. It also said it is hiring select Andersen staff in Los Angeles, Denver, Phoenix, and San Diego. Altogether, E&Y picked up about 165 Andersen employees, including 21 partners, from these transactions alone.
Industry watchers say E&Y's poaching of AA's western-practice employees will enable the firm to break into the media, entertainment, and hospitality sectors in the Pacific Northwest.
E&Y also reported it has signed an agreement to hire 78 professionals and staff at Andersen's offices in Miami, Fort Lauderdale, and West Palm Beach, Florida. The transaction involves 66 Andersen audit professionals, including six partners and 12 practice support and administrative personnel.
Meanwhile, Andersen Middle East, a member company of Andersen Worldwide, will join E&Y on July 1. Altogether, around 45 Andersen partners and 900 staff in the Middle East will work for E&Y.
The day before, E&Y hired 46 employees from Andersen's practice in Atlanta, including five partners.
It's been a mixed bag for E&Y this week. While the firm did pick up valuable parts of Andersen's practice, it was also slapped with a suit by the SEC on Monday. That suit alleges that E&Y violated auditor independence rules in its audits of PeopleSoft from 1994 to 2000. The SEC claims that, while E&Y was serving as PeopleSoft's auditor, it and the ERP vendor jointly developed and marketed a product called EY/GEMS for PeopleSoft. That application incorporated certain components of PeopleSoft's proprietary source code into software previously developed and marketed by E&Y's tax department.
The SEC is asking E&Y to give back its fees for the audits in question. That could turn out to be a considerable sum.
(To read more about the SEC's suit against E&Y, click here.)
>> It looks like this is the week of the billion-dollar funding. In at least the fourth issue of that size in the past three days, J.P. Morgan Chase & Co. said it issued $2 billion in five-year notes. They were priced to yield 5.353 percent, or 92 basis points over comparable Treasuries. The notes were rated Aa3 by Moody's and AA- by Standard & Poor's.
>> Verizon said it will have a $1.1 billion "impact" from adopting FAS 142 as a result of the discontinuance of goodwill amortization. Noted the telecom company's management: "Assembled workforce, included in other intangible assets, will no longer be recognized separately from deferred cellular licenses and goodwill. In addition, deferred cellular licenses, an indefinite life asset, and goodwill will no longer be amortized."
>> The Phoenix Cos., an investment-management firm, said it took a $130 million charge to comply with FAS 142.
>> ServiceMaster Co. said it hired Deloitte & Touche to provide audit-related and tax-compliance services, replacing Andersen. Quintiles Transnational Corp. said it is switching from Andersen to PricewaterhouseCoopers.