Author: Caleb Newquist

Founding editor, Going Concern.

CFO Seizes Opportunity to Unite Disgust for IFRS, Metric System

If W. Anderson Bishop wanted to sound like a person who is refusing to adopt a different system of measurement because A) it was developed outside the United States B) doing things the easy way is dumb or C) he’s a crusty old fart, he has succeed admirably.

“We didn’t join the metric system when everybody else did,” says W. Anderson Bishop, [Hallador Energy Co.’s] chief financial officer. U.S. accounting rules are “the gold standard, and why would we want to lower our standards just to make the rest of the world happy?”

U.S. Firms Clash Over Accounting Rules [WSJ]

Women Attracted to Accounting Firms for Flexibility Despite ‘Old Boys’ Network’ at the Top

Our friends at Vault are curating the data for this year’s rankings to be released later this summer but they’ve got a little teaser for us that they published last week. They found that the number of women in accounting is roughly double of those in investment banking, the explanation being that “that women, more than men, seek careers with better work-life balance […] due to the fact that they’re more often than not the main caretakers of families,” as well as “offerings that the former industry provides its women in the workplace.”

According to accountants who took Vault’s 2011 Accounting Survey, their firms offer extremely generous maternity leave (and, in some cases, paternity leave); do not look down upon or punish women who take their full maternity leave; offer numerous flex-time and part-time working arrangements; and provide strong mentoring, retention, and promoting programs for women.

The finding that “[firms] do not look down upon or punish women who take their full maternity leave” and “strong mentoring, retention, and promoting programs for women” are contradictory to the recent lawsuit filed by Donna Kassman, a former KPMG Senior Manager, who has sued the firm for $350 million gender-discrimination lawsuit. Her allegations include KPMG’s “[failure] to properly investigate and resolve complaints of discrimination and harassment,” that her salary was cut when she went on maternity leave and that she was subjected to numerous instances of harassment and discrimination. Whether this one example illustrates a systemic problem is debatable as the Vault survey includes a large pool of respondents (Vault doesn’t have the tally yet) who seem to have responded positively to question of gender opportunity but the allegations are severe and are a blow to the KPMG’s (and the Big 4 at large) marketing machine of gender promotion and equality. KPMG has stated that Kassman’s lawsuit is without merit.

Despite the positive findings, the survey respondents didn’t have all good things to say. Turns out, “some” respondents believe that the leadership at accounting firms are the professional services firm equivalent of Augusta National Golf Club:

However, this doesn’t mean that accounting still doesn’t suffer from some of the same things that investment banking does. Some accountants who took our survey report that their firms are still beholden to the “old boys’ network” and, at the very top of the org chart, still consist mostly of white males.

That and “minorities and GLBT individuals are on par with those in the banking industry — that is, not so hot.”

Overall, this take on women’s fondness of the accounting industry is certainly more believable than the Times‘ piece on the culture of work-life balance since it collected responses directly from those who work in the biz rather than going to the firms for the story.

Ladies, what do you think of the results? Do you have all the opportunities of your male counterparts and the flexibility with no strings attached or do you still get the feeling that the deck is stacked in favor of the bros?

What Does the Big 4 Have That the Bulge Bracket Doesn’t? [Vault]

Big 4 Newbie Wants the Scoop on Choosing an Industry

Welcome to the whose-missing-fingers? edition of Accounting Career Emergencies. Today, a fall new hire is asking about industry placement at his Big 4 firm. How to choose, what to avoid, you know, the ushe.

Feeling violated? Is your firm’s macho culture cramping your delicate sensibilities? Need to get something off your chest and want a partner to be the one who hears it? Email us at advice@goingconcern.com and we’ll share some magic words.

Meanwhile, back at school:

Dear Going Concern,

I’m going to be starting as a college [i.e. new] hire in assurance at a Big 4 firm in the fall (I was not previously a summer intern). I still haven’t heard any information about what industry I will be placed in. Which are the most desired industries, and which should be avoided like the plague? Do the firms have any methodology in in placing new hires in industry groups?

Thanks,

Procrastinating Exam Studier

Dear Procrastinating,

Why you felt the need to hint at your lack of CPA exam preparedness is curious but that’s AG’s beat, so take it up with her but prepare yourself for a verbal assault.

As for the question at hand, you have to look at this like you’re choosing from a lineup of people with whom you’ve gotten biblical to be your significant other. None of them are perfect but there are definitely pros and cons to each. It’s best to experience a few of your interests before you jump in head first with one particular option. Then, after playing the field a bit, you can determine: 1) Are you pursuing one possibility knowing that it’s a dead end? 2) Is one option hot for you but things aren’t mutual? 3) Is another choice easy but doesn’t have much going in the way of intellectual stimulation? You get the idea.

One other consideration is the city where you live. If you’re interested in the energy business, New York City isn’t going to have much to offer. Likewise, if you would like to explore things in the entertainment industry, you won’t find much in Kansas City. Adjust your expectations accordingly.

Most cities will have the following industries: Financial Services, Consumer and Industrial Products, Information/Communciations/Technology, Healthcare/Public Sector/Governmental. Of course certain places have a higher concentration of these industries (e.g. NYC and Financial Services, DC and Governmental), so that will determine demand for particular areas. Lots of people get roped into F/S in places like New York and Chicago because there is lots of work, thus the need for warm bodies. That’s basically how firms decide who goes where – the need. Managers tell schedulers that they need a body and your name just gets thrown on a job. Unless you speak up, to your career/performance counselor. Be sure they know what you’re interests are, otherwise you’re just a new name that will end up wherever there is demand.

I’ll leave the “good industry v. bad industry” debate to the peanut gallery, as that varies by city but I will tell you that if you are in a market like New York, working in Financial Services is the best route simply because you’ll have many options when you decide to leave your firm. The work is hard and it’s competitive but it’ll be worth it long-term. Choose wisely.

Bill Clinton Wants a Lower Corporate Tax Rate

“We’ve got an uncompetitive rate,” Clinton told a crowd at the Aspen Ideas Festival on Saturday.

“We tax at 35 percent of income, although we only take about 23 percent. So we should cut the rate to 25 percent, or whatever’s competitive, and eliminate a lot of the deductions so that we still get a fair amount, and there’s not so much variance in what the corporations pay.” [HP]

McGladrey Employee Not Happy with Firm’s Attempt to Give Everyone a Three-and-a-Quarter Day Weekend

Good morning capital market servants. I know the first day back from an epic holiday weekend is a tough pill to swallow, as many of you couldn’t bear the thought of returning to work today. And because some people like to prolong the agony by taking today off, I’ll do my best to take you back to last Friday. A McGladrey reader dropped this note after I checked out for the day.

The company leaders have recently rolled out this lean working platform [GC coverage here]. They are trying to say work smarter not harder. What most people think lean means though is “do more with less” which is trademark of this company. CE [Andrews] and Joe [Adams] talked on a webcast the other day and they were trying to rile us up. What for? So in the end, they can tell us “despite our great efforts there isn’t money for salary increases”.

CE and Joe and other leaders are all excited about letting the entire firm off at 3 p.m. Friday., July 1 for the weekend holiday WOW! Don’t get too crazy CE and Joe, not 3 p.m. on a Friday? Holy cow!

When Steve Tait was President [of RSM McGladrey] we would get two days off during the Fourth, but under new leadership we get to get off at 3 p.m. on Friday? What a deal. What work-life balance. No wonder we make Working Mothers top 100 each year. Oh and you know what, the firm took away summer hours too…all because they want us to focus on ongoing flexibility…and working lean, which means no one can take time off because departments are too lean.

It’s 3 p.m. now on Friday, and boy I am lucky to be off. Nevermind most employees checked out – officially or unofficially – a few days ago already. I am sure major accounting and tax deals are going down right now on this holiday weekend, but we were fortunate enough to get off at 3 p.m. What a joke!

I think I might get a small putting green cake to celebrate!

Many firms – we’ve confirmed PwC and KPMG – gave their employees last Friday off, which does make for a nice four day weekend. And our tipster is correct, early July is a pret-tay, pret-tay, pret-tay slow time of year for accounting firms so a 3 pm let-out for a Friday before the grandest, pyrotechnic digit-losing holiday of the year might feel like a slap in the face.

That said, if you’re so bent out of shape about it, why not use some PTO (God forbid!)? You’re completely in control of this situation, friend. You want an extra-long weekend? Make it happen. Expecting accounting firms to just hand you a four-day weekend is a little bitchy and you have no excuse if you have a grip of PTO banked. Don’t make the same mistake come Labor Day.

Accounting News Roundup: Zynga’s Revenue Recognition; States Relax Fireworks Bans for Tax Revenues; What About the Tax Gap? | 07.05.11

Profits Thrive in Weak Recovery [WSJ]
Two years after the official end of the recession, a range of indicators show that the economic recovery has been the worst, or one of the worst, since the government began tracking such data after World War II: Unemployment is too high, bank lending necessary to spur spending is too low, home prices are depressed while household expectations for financial well-being are near record low levels. Many economists predict the sluggish rebound may continue for years.

How Zynga Recognizes Revenue [Dow Jones]
Washington Mutual Inc. (WAMUQ) and other co-defendants agreed to settle a consolidated shareholder class-action lawsuit for $208.5 million, putting behind it one chunk of the failed bank’s litigation issues. The suit in federal court in Seattle was the consolidated version of several other class-action lawsuits filed by shareholders, in multiple courts, that all essentially alleged that Washington Mutual failed to stop them from investing when the now-failed thrift knew, or should have known, how much trouble it was in. Some of the lawsuits were actually filed long before the thrift’s collapse, though the plaintiffs regularly updated the consolidated case to include the latest reports on Washington Mutual.

2 Republicans Open Door to Increases in Revenue [NYT]
One of the senators, John Cornyn of Texas, said he would consider eliminating some tax breaks and corporate subsidies in the context of changes in the tax code, provided there was not an overall increase in taxes. “I think it’s clear that the Republicans are opposed to any tax hikes, particularly during a fragile economic recovery,” Mr. Cornyn said on “Fox News Sunday.” “Now, do we believe tax reform is necessary? I would say absolutely.”

Budget Needs Let Fireworks Fly Lawfully [NYT]
Desperate to find any source of untapped revenue, many cities, counties and states are scrapping decades-old restrictions on firework sales, trying to rescue budgets battered by several years of economic doldrums. A 65-year-old ban on fireworks in Hawkins County, Tenn., was lifted in May after a county commissioner persuaded colleagues that the sales could generate as much as $200,000 in annual permit fees and sales tax revenue. “Every penny helps,” said Shane Bailey, the county commissioner.

Minnesota Lawmakers, Governor to Discuss Ending Shutdown After Holiday [Bloomberg]
Minnesota Republican legislative leaders are returning to the capital in St. Paul today after a long holiday weekend ready to resume talks with Democratic Governor Mark Dayton on ending a government shutdown, said Senator Geoff Michel, the deputy majority leader. “It was probably healthy for the legislature and the governor to get out of St. Paul and get a little perspective,” Michel said in a telephone interview yesterday from Edina.

Unpaid taxes total $400B, but little political will to pursue it [Seattle Times]
In its most recent analysis, from 2001, the Internal Revenue Service estimated about 84 percent of federal taxes were voluntarily paid on time that year, leaving a gross tax gap of $345 billion, or roughly 16 percent, uncollected. Late payments and IRS collection efforts cut the net tax gap to $290 billion in 2001. But similar estimates point to a gross tax gap of $410 billion to $500 billion in 2010, said Benjamin Harris, a research economist at the center-left Brookings Institution. “You could go a long way toward solving our budget mess by closing the tax gap, but the problem is, it’s not easily closed,” Harris said.

Dominique Strauss-Kahn Accuser Said to Have Lied on Tax Return [AT]
Prosecutors found a number of inconsistencies in the accuser’s story about the incident as well as her finances, according to The New York Times. They found that she had lied on her application for asylum from Guinea about a gang rape, and misrepresented her income in order to qualify for public housing. She also claimed a friend’s child as her own on her tax return as a dependent, in addition to her own daughter.

China listings in U.S. could slow on accounting scandals -PwC partner [Reuters]
The negative sentiment towards some North America-listed Chinese companies triggered by recent accounting scandals will probably slow the momentum of Chinese firms’ IPOs in the United States, a partner at accounting firm PricewaterhouseCoopers China operations said on Monday. “The current negative public opinion on Chinese companies in overseas markets, especially in the United States, will definitely affect Chinese companies seeking a listing in those markets,” Jean Sun, assurance partner with PwC in Beijing, told reporters. “Investors are now less willing to dip into their pockets (for Chinese companies), so it’s understandable that the listing momentum will slow,” said Sun.

The Company That Brought You Farmville Is Going Public

In addition to the Nets’ financials, you’ve got plenty of reading to do over this long weekend.

Some highlights from Zynga’s S-1 courtesy of Zero Hedge:

• Q1 2011 revenue: $235.4MM, up from $100.9MM YoY, LTM revenue $731.9 MM
• Q1 Net Income: $11.8MM up from $6.4MM YoY, LTM Net Income: $96.2MM
• Q1 Adjusted EBITDA: $112.2MM, up from $93.5MM, LTM EBITDA: $411.4MM
• Adjusted EBITDA definition also excludes stock based comp and change in deferred revenue
• Cash: $995.6MM, almost the same size as the entire proposed IPO
• Working Capital: $603.4MM

Some other fun things of note:

&bull Jeffrey Katzenberg, CEO of DreamWorks is on the Board of Directors and serves on the compensation committee.

• CFO David Wehner is formerly of Allen & Company, an investment bank that specializes in media and technology. He has an M.S. in Applied Physics from Stanford and a B.S. in Chemistry from Georgetown. His total compensation for 2010 was $17,996,057, $16,087,500 of which was stock awards.

• The audit committee consists of Brad Feld, Reid Hoffman and Stanley Meresman. Feld is a MD at the VC firm Foundry Group, Hoffman is the former CEO of LinkedIn and Meresman, the chair of the committee, selected for “his background as chair of the audit committee of other public companies and his financial and accounting expertise from his prior extensive experience as chief financial officer of two publicly traded corporations.”

• Mark Vranesh is the Chief Accounting Officer and had total compensation for 2010 of $1,544,940, $1,287,000 was stock awards.

There’s plenty more to pour through, so have it. And yes, Ernst & Young says everything is kosher, so who wants a piece of this?

Zynga S-1 [SEC]

PwC Report Finds That Wildly Optimistic Projections for Visitors to the NASCAR Hall of Fame Basically Came Out of Thin Air

For some people, NASCAR is a big deal. So big that it, like other “sports,” deserves a hall of fame. The location of which is carefully chosen after a competition amongst cities who feel they are best suited to give the legends of the sport an appropriate and worthy grounds which to immortalize their seemingly noteworthy accomplishments. For NASCAR, this city was Charlotte, North Carolina. The Charlotte Regional Visitors Authority, who operates the Hall of Fame, predicted that the facility would be a monstrous success with 800,00 visitors coming to this shrine of southern boys behind steering wheels in its first year.

Things didn’t really turn out as planned with disappointing attendance and operating losses. Of course this ruffled a few feathers and they invited PwC to perform an “80-hour, monthlong audit” to see what’s what.

Among its findings: Projections for 800,000 visitors in the $200 million NASCAR museum’s first year of operation were based on bluster as much as anything. “Our limited analyses have not identified due diligence or studies supporting these projections,” the PwC report states. “Rather, we understand from our discussions with CRVA representatives that earlier, more modest attendance projections were revised as the competition between Charlotte, Atlanta, and Daytona intensified for the Hall of Fame. It is not clear what, if any, due diligence was conducted in support of these upward revisions.”

PwC report questions NASCAR Hall of Fame numbers [CBJ]

Accounting News Roundup: The Big 4 and Mortgage Fraud; Minnesota Shutdown; New PwC OMP in KC | 07.01.11

Strauss-Kahn Case Seen as Near Collapse [NYT]
The sexual assault case against Dominique Strauss-Kahn is on the verge of collapse as investigators have uncovered major holes in the credibility of the housekeeper who charged that he attacked her in his Manhattan hotel suite in May, according to two well-placed law enforcement officials. Although forensic tests found unambiguous evidence of a sexual encounter between Mr. Strauss-Kahn, a French politician, and the woman, prosecutors now do not believe much of what the accuser has told them about the circumstances or about herself. Since her initial allegation on May 14, the accuser has repeatedlaw enforcement officials said.

They’re Everywhere! Big Four Auditors Mixed Up In Mortgage Fraud [Forbes]
Francince McKenna sees “complicit auditors.”

Geithner Exit Would Force Obama to Rebuild [Bloomberg]
Treasury Secretary Timothy F. Geithner’s potential departure from the administration would force President Barack Obama to assemble a new economic team as he enters a re-election campaign that’s likely to be dominated by voter concern over jobs. Geithner has told Obama that he’s considering leaving the administration after the president reaches an agreement with Congress to raise the national debt limit, according to a person familiar with the matter.

Bill Clinton Backs Tax Holiday on Foreign Profits, With Caveats [Bloomberg]
Former U.S. President Bill Clinton endorsed a tax holiday on repatriating offshore profits with conditions, taking a position contrary to the Obama administration. “I favor it under certain circumstances,” Clinton said in an interview with Bloomberg Television’s Al Hunt yesterday in Chicago. He suggested an approach that would give companies a 20 percent tax rate on repatriated profits, which could be reduced to 10 percent if they “reinvest it in increasing employment in America.”

H-P Girds for iPad Battle [WSJ]
H-P’s device, the TouchPad, comes more than a year after Apple started selling its iPad. In that time, Apple has sold more than 25 million tablets and added nearly $100 billion in market capitalization. H-P, meanwhile, has lost $50 billion. H-P is planning a marketing blitz for the TouchPad. But it faces an uphill battle in the fast-growing tablet market, which is dominated by the iPad and crowded with devices from Samsung Electronics Co., Motorola Mobility Holdings Inc. to BlackBerry maker Research In Motion Ltd. “We know we’re the fifth man in a four-man race,” said Richard Kerris, the H-P executive in charge of developer relations.

Minnesota government shuts down [CNN]
A budget stalemate forced a virtual full shut down of the Minnesota government on Friday and left only a limited array of state services in operation over the busy holiday weekend. Visitors won’t be able to go to the state parks or the zoo, and travelers will find the highway rest stops shuttered. Road construction projects will cease, as will licensing for teachers and businesses.

Accounting woes threaten Chinese listings in Singapore [Reuters]
The string of blow-ups at overseas-listed Chinese companies could derail Singapore Exchange’s efforts to revive investor confidence and dent its status as a major trading hub for mainland issues. The bourse’s long-running charm offensive in China means Chinese stocks, known in the city-state as S-chips, now make up around 20 percent of its 779 listed companies, up sharply from April 2004 when there were just 41 mainland firms listed on the exchange. But a rash of accounting problems that broke this year, reminiscent of a previous wave in 2008 in Singapore, threatens to undermine SGX’s strategy as investor interest fades.

PricewaterhouseCoopers names new managing partner in Kansas City [KCBJ]
It’s New Year’s Day at PwC (E&Y too) and John Martin takes over in Kansas City from James Gegg. Well, sort of. The entire firm has the day off.

Court Finds That PwC Might Have a ‘Macho Culture’ But It Didn’t Discriminate Against a Former Partner Who Was Basically Having a Nervous Breakdown

Last year we told you about Colin Tenner who was suing PwC on the grounds of disability discrimination. If you remember, back in 2009 Tenner was told his services were no longer needed after he took some sick time due to depression and severe stress that was a result of a client he was serving and his bosses inside P. Dubs. Tenner’s fellow partners allegedly weren’t impressed by this pansyness, as one partner said “real partners don’t get sick.”

While the judge in the tribunal said that some of these partners “were clearly at the end of the queue when tact and sensitivity were being handed out,” it wasn’t enough to constitute discrimination and Tenner’s suit was thrown out.

An industrial tribunal found that while there may have been a “macho culture within the firm”, it did not accept Mr Tenner had been discriminated against. […] [T]he tribunal said there was no evidence that any of the witnesses for PWC “showed any animosity, prejudice, or intolerance to disabled persons”.

In other words, they weren’t saying “that skitzo retard shouldn’t be calling in sick.” Apparently that’s what was needed here.

PWC partner’s discrimination case is dismissed [BBC]

(UPDATE) Who Wants to Comb Over the New Jersey Nets’ Financial Statements?

Deadspin has gotten its hands on more sports team financial statements, this time those of the NBA’s New Jersey Nets for fiscal years 2004-2006. The NBA owners are set to officially lock out the players tonight at midnight and the strangest piece of information – and some say the cause of the owner/player beef – is highlighted in Tommy Craggs’ post which is known as “roster depreciation allowance.”

UPDATE: Deadspin has updated their post to state that the initial analysis of the RDA was incorrect. That is, the $25.1 million was not RDA but rather the loss the team took on a player contract in that fiscal year (Craggs speculates that it was Dikembe Mutombo). Craggs then writes:

The example is bad, and I apologize for that. I’m leaving the text here for a couple reasons: 1.) The roster depreciation allowance is real, even if we’ve misidentified it here, and it provides owners with a significant tax shelter based on a baroque logic. 2.) The Nets, like all franchises, do use large paper losses to pad their expenses.

I’ve updated the blockquote after the jump to show Deadspin’s note of the correction. They’ve also included some analysis from ESPN and a statement from the NBA’s CFO.

In 2004, the Nets had a $25 million “Loss on players’ contracts” which you can see here on the team’s income statement:

Craggs explains:

The first thing to do is toss out that $25 million loss, says Rodney Fort, a sports economist at the University of Michigan [See correction above.]. That’s not a real loss. That’s house money. The Nets didn’t have to write any checks for $25 million. What that $25 million represents is the amount by which Nets owners reduced their tax obligation under something called a roster depreciation allowance, or RDA.

Bear with me now. The RDA dates back to 1959, and was maybe [sports franchise owner] Bill Veeck’s biggest hustle in a long lifetime of hustles. Veeck argued to the IRS that professional athletes, once they’ve been paid for, “waste away” like livestock. Therefore a sports team’s roster, like a farmer’s cattle or an office copy machine or a new Volvo, is a depreciable asset.

The underlying logic is specious at best. As Fort points out, a team’s roster at any given moment isn’t actually depreciating. While some players are fading with age, others are developing and improving. But the Nets don’t have to pay more taxes when a player becomes more valuable. And in any case, the cost of depreciation is borne by the athletes themselves, when they pass their primes and lose their personal earning power.

As Craggs notes, if that loss, which also saved the team about $9 million in taxes, doesn’t exist, you’ve got a $7 million profit (see update above). But since we’re talking about rich owners with the hands in honeypots all over the place, a profit really doesn’t do them any good on an investment like a sports franchise. Particularly one in New Jersey that was in the process of being sold back in 2004.

Craggs’ whole post is excellent, so check it out. In the meantime, I’ll note some other interesting things from 2004 (financials, in full on page 2) include:

• An enormous working capital deficit of $124 million. This was mostly due to a $95 million term loan the team was guaranteed by a partnership called “YankeeNets” which was created when the then-owners, Lewis Katz and Ray Chambers, bought 37.5% of the New York Yankees Partnership. YankeeNets was 99% owned by Katz and Chambers. It’s all pretty convoluted but I don’t know of any business that wants a huge working capital deficit like that. Even if the term loan was omitted, the negative working capital would be over $29 million, with accrued salaries being nearly double of current assets.

• The enormous members deficit of $81 million, again exacerbated by the phony loss of $27 million.

• Negative net cash flow from operations of $20 million.

• Under Note 5, “Intangible Assets” you can see that players’ contracts were completely amortized for a net value of $0.

Of course when you look at the 2005 and 2006 financial statements (page 3), things look very different.

• For starters the term loan has jumped into long-term liabilities but the team still has a pathetic working capital of negative $16.8 million in ’06 and negative $25.3 million in ’05.

• Note that depreciation and amortization is now itemized on the income statement for $41 million and $42 million in ’06 and ’05 respectively. These make a huge portion of their losses from operations. D&A did not have its own line item in the ’04 financials.

• In the two years presented there were member distributions of over $15 million and large negative balances for cash flows used in operating activities.

As we’ve seen with the New Orleans Hornets, you can own a NBA franchise but that doesn’t mean you have to run it like anything that closely resembles successful business (at least i the traditional sense). For starters, you don’t have to answer to anyone except your co-owners with whom you worked out this strategy. I guess you could consider loyal fans to be stakeholders in your organization but my guess is most owners don’t.

I gave these a real quick and dirty look, so if you’ve got the time (and need to distract yourself until the holiday weekend starts) pour over these and call anything else weird you see. Enjoy.

Nets 04

Nets 0506

Ernst & Young Auditor Wants to Give a Partner an Earful About Comp Even If He Receives a ‘Very Generous’ Raise

Last week, we tried to get the ball rolling on Ernst & Young compensation rumors and while some may chalk up the lack of chatter to “PwC sticker shock,” others claim this is simply standard operating procedure. If you remember last year, eventually Ernst & Young reported some impressive raises that kept pace with P. Dubs but one of Turley’s troops is expecting the worst this year and would like to give a partner a piece of his mind. Unfortunately, he isn’t sure how to do it:

Hello,

By way of introduction, I am a loyal reader of going concern as well as a big four slave in the audit practice. Slavery had begun four years ago at EY and with all the compensation talk going on at other big four firms, I can’t help but to think –

What is a tactful way of telling a partner during the comp talk, “well thank you for that oh so very generous double digit percentage raise (assuming if it’s even double digit), but I am still unhappy because even after this supposed raise, you are still not paying me jack for the amount of contribution and commitment that you demand from me.”

As noted above, I’m a second year senior from an east coast office and my base is still not breaking mid-60s. Seriously, what the f___?

I will be forever grateful if you post my question up for discussion. Thanks so much!!!

Yours,

Angry EY audit senior

There are various directions we can take here so I’ll try to cover a few options before turning it over to you all.

A. Start off with a variation of, “Look, I’m an ungrateful, bitchy auditor. I also have unrealistic expectations and an inflated notion of my self-worth. I’d really appreciate an explanation as to how you can reconcile these traits to this paltry 10-15% raise.”

B. Continue with the slavery narrative.

C. Start questioning leadership at every turn, from challenging Andrew Cuomo to rumored twisting of Senators’ arms. “If this is the type of firm your running, yada yada yada.”

D. Simply ask if E&Y’s raises will beat PwC’s.

Now you may not think these are “tactful” ways to have this conversation but he did sign, “Angry EY Audit Senior.” If I tried to reason with this person, I’d be doing him a disservice. And when is honesty ever not tactful? If you sugarcoat your frustration, the partner will assume you’re a pushover like everyone else. My guess is most partners want you to give it to them straight. If you’re a performer (and something tells me you think you are) than this partner doesn’t want to lose your talent.

Having said all that, not everyone can muster up the courage to ditch the filter in these meetings. If you’ve got better more practical ideas than what I’ve listed, feel free to bestow your sage advice below.