(UPDATE) Layoff Watch ’09: Update on Ernst & Young

Posted on by Caleb Newquist

In addition to the layoffs we reported on yesterday in Chicago and Dallas, we now have reports of cuts in Los Angeles, San Francisco, and Irvine. Our source on the left coast speculates that the current round can’t be too large in scope since everyone is already stretched thin.
So far it’s been in assurance only and we’re scant on details for severance so get in touch if you find yourself with some extra time on your hands or you have details on the numbers in your office.
UPDATE, Wednesday Nov 11th: Our sources are now reporting layoffs in the tax practice including the tax managing partner for the Phoenix office, and an executive director in Denver. We also have reports on tax layoffs in the Southern California offices. Per our source:

• Los Angeles: 4 that I know of. At least 1 Senior, 1 Staff
• Irvine: 4 that I know of. At least 1 staff
• San Diego: 4 that I know of. 3 Senior managers, 1 Senior.

Senior managers are reportedly receiving three months pay and A2’s are receiving one month for severance. Continue to keep us updated.
UPDATE 2, Thursday, November 12th: Twelve advisory professionals in the Pacific-Northwest region.
UPDATE 3, Friday, November 13th: Charlotte office dismissed three audit SA1’s. In the North Central region: Pittsburgh, Cincinnati, and Cleveland offices all laid off three SAs. Twenty total layoffs reported between Pittsburgh (at least three), Cincinnati (at least three), Cleveland (3), and Detroit.
UPDATE 4: Saturday, November 14th: ~5-6 audit professionals in Minneapolis and ~1-2 audit in Milwaukee.
Chicago: In addition to the ~20 layoffs we originally reported there were ~2-3 in support roles were let go.

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Ex-Ernst & Young Partner Trades Tech Companies for Cuddlesome Creatures

The Oakland Tribune shares this charming story of an accountant who discovered her talents would be more appreciated in helping animals:

Like many people who love animals, Sue James dreamed of becoming a veterinarian when she was a child.

“I looked into going to vet school but my parents, they wanted me to pursue a more traditional career,” said James, a Danville resident who grew up in a house in New York state where the family pets included dogs, rabbits — even a monkey.

After a long stint in the corporate world, James found an outlet for her lifelong love of animals at Tri-Valley Animal Rescue, an all-volunteer group founded in 1992 with a mission to prevent the unnecessary euthanasia of shelter animals.

Uncle Ernie gets a badass plug in the next bit:

She started volunteering in 2005 as she was winding down a long and successful career at Ernst & Young. There, she was a partner who oversaw audit work for some of Silicon Valley’s leading high-tech companies. Today, she serves on the boards of Yahoo, Applied Materials and Coherent.

Working at Ernst & Young, she learned the importance of teamwork to meet the needs of clients. That focus also carries over to her volunteer work. “It’s about the cats and dogs,” she said. “But also, for me, it’s how can we work effectively as a team.”

It makes sense that she’d end up at the shelter; from what I hear, actual auditing isn’t much different.

By the way, she’s 65. She holds a bachelor’s in math from Hunter College, New York (1967) and bachelor’s in accounting from San Jose State (1975). She taught math and science in junior high and high school in New York state from 1967-69, worked in San Jose office of Ernst & Young starting in 1975, was named partner in 1987, retired in 2006, then consulted for the company through 2009.

Inside Ernst & Young: Talking Points on Lehman Brothers

If you’ve ever worked at a Big 4 firm, you’re aware that when big news hits the MSM, A) it’s never good and B) there is typically some sort of communication from management reiterating the firm’s position on the matter, everything is cool, thanks for your hard work, etc. etc.

With last week’s revelation of the bankruptcy examiner’s report on Lehman Brothers, E&Y seems to be following this protocol as it relates to the troops on the ground. As you would expect, leadership is keeping their heads about this while in the background in-house counsel is likely engaged in all-night smoky room strategy sessions.

We checked in with a few of our Ernst & Young sources to get an idea of what people were thinking and so far, there doesn’t sound like there are any signs of panic (yet!).


From one source:

Overall reaction from what I gathered is pretty muted. We did get a call from some of the higher-ups saying that we reviewed our work and that we feel that our audit was completely adequate and that Lehman’s failure was nothing more than the same systemic failure of two of the other major banks and that we plan to defend ourselves vigorously. Presumably, the examiner’s report really didn’t give any ah-ha moments….

[I]s there a possibility of a payout at some point? It’s possible. Are we worried that we’re the next Arthur Andersen? I don’t think so.

So at least on the surface, E&Y leadership is communicating that what came out in the report wasn’t surprising and that the defense of the firm’s position will be, as usual, vigorous.

That doesn’t of course stop the speculation:

I heard from a technical guy there was some concern because they didn’t issue a going concern opinion [for the previous audit].

And as you might expect, “I heard that [the firm] helped cook the books and is deep shit,” with the book cooking being arguable but pretty hard to prove and the “deep shit” aspect being a given.

Some Ernst & Young partners are probably losing sleep just thinking about the potential liability involved here but eventually they’ll get over it (until something else comes up).

No partner worth their salt got admitted to the partnership focusing on the downside. The problem is that when people use consistently use words like “deceptive” and “misleading” to describe Lehman’s accounting this reflects poorly on the firm since they were comfortable with the treatment.

And because it’s still busy season for a lot of people, they are focused on the shitstorm that currently surrounds them, not one that will likely drag on for years after they’ve left the firm (voluntarily or otherwise).

Anyone with more insight or thoughts on the matter, get in touch with us and we’ll keep you updated on the chatter inside E&Y.