The recession has taken a toll on the consulting business. Simply put, companies are being fairly tight with their expenditures -- and yes, consulting is certainly a discretionary item.

So, to deal with this, major consulting operators are consolidating. For example, Aon (AON) recently agreed to shell out $5 billion for Hewitt Associates.

After two years of digging, it looks like former American International Group (AIG) executive Joseph Cassano will emerge unscathed. Well, at least he won't wind up behind bars.

The former head of AIG Financial Products Group is expected to meet with attorneys from the U.S. Justice Department this week to learn that criminal charges will not be filed. The investigators didn't find any evidence that Cassano fibbed to his superiors, shareholders or outside auditors about the problems brewing in AIG FPG.

Venture capital funds aren't being terribly adventurous. In the U.S., they invested less capital in start-ups, a sign that uncertainty persists. Also, they're spreading the wealth: More companies are getting a taste, but in smaller doses. This tendency suggests that VC investors are diversifying as a way to test the waters for promising companies.

The situation is pretty straightforward: A difficult economy means that (a) start-ups will have trouble finding customers and (b) exit strategies for investors will be more difficult to attain and probably less lucrative. So, the risks of failure are higher, and the rewards are lower. As a result, VC investors need to be more cautious as they enter positions. Add to this the general financial market malaise we've experienced for the past year and a half -- longer if you trace the origins of the financial crisis to February 2007, with the agita at New Century Mortgage -- and now doesn't exactly seem like the time to place a handful of big, concentrated bets.

The worldwide insurance industry may be worth more than you think. Industry analysts believe that reporting isn't as consistent as it could be, and that improvements to insurance financial reporting would pump up those stock prices.

PricewaterhouseCoopers interviewed more than 40 investment professionals from the U.S., Asia and Europe, finding that dissatisfaction with insurance financial reporting was widespread. They'd like to see the International Accounting Standards Board and Financial Accounting Standards Board build a better mousetrap for the industry.

Company attitudes toward social media sites vary. Some swing the doors wide open, allowing employees to tend to their Facebook farms and update Twitter statuses throughout the day. Others lock 'em down, keeping non-business site access to a minimum.

A recent study found that, in the United States, 77% of employees with Facebook accounts check in with the community from the office. And, the amount of time they're spending in this part of the online world is growing. In the United Kingdom, another study found that 57% log in regularly from work, costing their employers 40 minutes a day.

Philip Wicks, a consultant at Morse PLC, a technology research firm in London, "It isn't just something you can do for half an hour during a lunch break but all through the day and because of that, it has a huge impact because people aren't necessarily concentrating on what they should be doing during the day." He estimates that this translates to lost productivity of $2.25 billion a year.

It seems like the obvious move would be to block the sites, but William Beers of PricewaterhouseCoopers disagrees. "Instead of trying to shut it down, I think we should try to embrace these technologies, put in a nice policy that governs it and explain to users the risks related to it, provide some training and then see what business benefits we can have from it," he said.

Your e-mail account is a goldmine. Technology companies push hard to keep your data secure, but there are plenty of scumbags out there who always seem to find a new way to gain an edge over the guys in white hats. Phishers, in particular, are eager to find new ways to profit from your identity and information, and they're getting some new tricks.

Phishing scam activity was quiet at the beginning of this year, according to a report in USA Today, but these attacks surged 200% from May through September, says the X-Force team at IBM (NYSE: IBM). Webmail, social media and gaming accounts are their primary targets. E-mail access, in particular, is highly sought after, since they can be use to push out spam ... while bypassing filters.

These "virgin" e-mail accounts command top dollar: a digital criminal can pick up as much as $2 for a clean account from Microsoft (NASDAQ: MSFT) Windows Live, Google (NASDAQ: GOOG) Gmail, Yahoo (NASDAQ: YHOO) YahooMail or AOL (NYSE: TWX). This is more than twice the amount typically paid for a stolen credit card account, according to Fred Rica, principal in the security practice at PricewaterhouseCoopers. Many webmail users actually do half the criminals' job for them, with 33% using just one password online and 48% using only a handful.

Venture capital funds found 612 companies in which to invest $3.67 billion in Q2. Of this, $1.5 billion (41%) was first-time financing, according to a report by PricewaterhouseCoopers and the National Venture Capital Association. This is only slightly ahead of the action in Q1, in which 141 transactions were first-time, and far behind the pace we enjoyed earlier this decade.

The biotech sector was the big winner in a shrinking market, with funding up 54% to $888 million over 85 deals. The software business was flat quarter-over-quarter at 4644 million over 135 transactions. Investments in internet companies fell 15% to $524 million via 124 deals. Clean technology showed considerable growth, up 15% to $274 million, with 42 transactions closed.

According to a report from PricewaterhouseCoopers, last year was horrible for IPOs. The number of deals plunged 80.7%, with the overall amount raised down 54.9%. In all, there were 57 IPOs and total proceeds came to $29.4 billion. Interesting enough, the Visa (NYSE: V) IPO accounted for $17.9 billion (it was the largest IPO in U.S. history).

Basically, the deal activity has been the slowest since the 1970s. In fact, there was only one public offering in Q1 of this year.

Unfortunately, the malaise could continue. After all, there are only a handful of filings in registration. Plus, it can easily take half a year to get an IPO through the SEC process.

Every year, the world's elite converge on Davos, a Swiss mountain village, to discuss the world and what they want to do to it. We're not invited but we end up paying the price for the mistakes that Davos Man makes. This year, Davos Man is feeling weepy. Let's hope that doesn't lead to a year of inaction on the world's pressing problems.

PriceWaterhouseCoopers (PWC), which is now famous for not catching a fraud of epic proportions at Satyam Computer Services (NYSE: SAY), has done a survey of Davos attendees which gives a flavor for just how pessimistic they are. It found that only 20% of 1,124 CEOs in 50 nations said they were very confident about prospects for revenue growth in 2009, down from half last year, and 25% said they were pessimistic -- this is the most gloomy result since PWC began tracking the CEO outlook in 2003.

After Enron, Arthur Andersen collapsed. With a new bombshell allegation about Satyam Computer Services (NYSE: SAY), will its former auditor PriceWaterhouseCoopers (PWC) be next? To be fair, I have not seen any evidence implicating PWC in the Satyam scam. But surely PWC can't have been so incompetent that it did not know what its client was doing.

Satyam's CEO, B. Ramalinga Raju, initially claimed that there was a $1.1 billion shortfall between its reported and actual cash. Now an Indian prosecutor alleges that Raju made up 10,000 employees and then used the money those fake employees would have received (net of taxes and insurance) to buy land through almost 400 companies with fake names -- including that of his elderly mother. The prosecutor also alleges that Raju forged documents related to bank deposits.

You can't make this stuff up! And if these allegations are true, it does make me wonder what PWC was doing to earn its fee. There are some basic things that auditors are supposed to do -- like checking a company's bank deposits and comparing those to what management reports or verifying that the employees who are getting paid actually exist. If PWC couldn't pull off these basics, then it was either incredibly incompetent or in with management on the scam.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

PricewaterhouseCoopers LLC and Deloite & Touche LLP had a ring side seat to the collapse of Freddie Mac (NYSE:FRE) and Fannie Mae (NYSE: FNM) which may cost taxpayers hundreds of billions of dollars. The two auditing firms have some serious explaining to do to taxpayers and members of Congress.

According to the New York Times, advisers to the U.S. Treasury Department found that Freddie's accounting methods overstated its financial cushion.

"The company had made decisions that, while not necessarily in violation of accounting rules, had the effect of overstating the firm's capital resources and financial stability," the paper said. "Indeed, one person briefed on the company's finances said Freddie Mac had made accounting decisions that pushed losses into the future and postponed a capital shortfall until the fourth quarter of this yearwhich would not need to be disclosed until early 2009." Fannie Mae used the same methods, though, apparently not as aggressively as Freddie Mac.

A spokesman for Freddie Mac's auditors, Pricewaterhouse, did not immediately return an email seeking comment. In its letter to shareholders filed with the 2007 annual report report, PwC noted that Freddie Mac had changed some accounting policies. It elected to offset the amounts of some derivative contracts as of October 1; elected to measure newly acquired interests in securitized financial assets that contain embedded derivatives at fair value as of January 1, 2007; changed its method for accounting for uncertainty in income taxes as of January 1; changed the method for accounting for defined benefits plans as of December 31, 2006, changed its method for determining gains and losses on sales of certain guaranteed securities as of October 1, 2005

That's quite a bit to keep track of, no? I am sure Congressional investigators will want more detail about why these policies were changed.

Fannie Mae, whose former chief executive Franklin Raines was ousted in 2004 following another accounting scandal, paid Deloitte $49.3 million in fees in 2007. The firm was hired by Fannie Mae in 2005 because its predecessor KPMG missed accounting errors that cost the housing finance company $9 billion in previously reported profit. A Deloitte spokesman declined to comment.

Chief Executive Daniel Mudd told investors following weaker-than-expected first quarter results that this year and next year would beg "tough." Little did he know that those words would foreshadow his ouster along with his counterpart at Freddie Mac Richard Syron. They no doubt will be getting a pretty fat golden parachutte. Both companies have lost a combined $14 billion over the past year.

If the auditors were not as diligent with Freddie and Fannie as they should have been, then members of Congress needs to hold them accountable. The shareholders who have been wiped out by the government's rescue deserve to know if auditors missed signs of the collapse that they should have caught.

International Business Machines Corp. (NYSE:IBM) has weathered the storm about the SEC investigation into its first-quarter earnings disclosure pretty well. Shares of Big Blue have jumped 32 percent over the last six months, keeping pace with other tech heavyweights such as Microsoft Corp. (NASDAQ:MSFT) (up 38 percent) and Hewlett-Packard Co. (NASDAQ:HPQ) (up 38 percent).

Bloomberg News reports The company said last January that it was facing a formal SEC investigation, which makes the stock performance all that more remarkable. Still, you can bet that the earnings call following the release of earnings on January 18 will be lively. I'm sure analysts will be interested to hear the company's thoughts on technology spending and any update on the investigation.

Wall Street is skeptical that IBM shares will go much higher. Their average target price is $99.67,about where the shares are trading today. Analysts are expecting the Armonk, NY-based company to have earnings of $2.19 on revenue of $25.66 billion, according to Thomson Financial.

IBM is a bellwether for both the tech sector and overall confidence in the economy. Since becoming the head of IBM in January 2003, Sam Palmisano wisely decided that IBM should focus on businesses. He got rid of the underperforming notebook computer division and acquired the consulting business of PricewaterhouseCoopers LLC. Some critics of the company have claimed -- wrongly I think -- that IBM makes its hardware and software hard to use so that customers need to hire an IBM consultant to help them out.

Also check out some other earnings reports that we're following, and let us know your thoughts on earnings expectations.