Category: Deloitte

You May Have Noticed People in Deloitte T-Shirts Running Around Your City Today

That’s because it’s Deloitte IMPACT Day which means no one is actually “billing” but instead providing services and time pro bono at 800 events across the country.

Three-quarters of the firm’s people are participating in various events including some in Boston working on fund Dana-Farber Cancer Institute and the Memphis Botanic Garden. Surely some people just called in sick and started drinking at noon but let’s not focus on that. If you’ve got pics or other stories to share from your event, get in touch. [Deloitte]

What Do We Make of the Headcount in Deloitte’s Los Angeles Office?

Our tipster had this to say, “No wonder they are getting rid of PSW [Ed. note: he/she is referring to this], there are more partners than junior staff! Where the hell is the leverage model? This is beyond completely ridiculous.”

Posted on the Green Dot’s internal interwebs:

Did you know?

The Los Angeles office represents 55% of the PSW region in terms of headcount:

Los Angeles Headcount
Partners, Principals, and Directors 195
Sr. Managers and Managers 407
Senior/Senior Consultants 304
Staff Consultants 188
Junior Staff/Analysts 141
Client Service, Admin, and Other Support 271
TOTAL 1506

Technically, the combination of “Staff Consultants” and “Junior Staff” exceeds the PPD number although that but that puts the ratio of 1.69 staff for every PPD. I’m no expert but that could be considered low. It’s safe to say there are a few big engagements in L.A. that demand more than 1.69 staff people which probably leaves the small jobs shorthanded. Anyone in Deloitte L.A. (or anywhere else for that matter) feeling the pain because of this? Let us know in the comments.

You Can Add ‘Hospital Staff’ to the List of Positions That Can Do the Job of a Deloitte Auditor

A hospital in Winnipeg is suing Deloitte after an ATM scam went undiscovered for over ten years. Luckily some vigilant RN, janitor or cafeteria worker (it’s not clear from the article) noticed something amiss and alerted the proper authorities.

Police arrested a long-time hospital employee last year after she allegedly skimmed $1.5 million from automated teller machine (ATM) deposits between 2000 and 2010.

According to a lawsuit filed last week, the fraud was uncovered by hospital staff, not the auditor. The lawsuit accuses Deloitte & Touche of preparing financial statements not in accordance with “generally accepted accounting principles” and “materially misleading” the hospital about its financial position.

“MHC says that D & T owed it a duty in contract and owed it a duty of care not to act negligently or make negligent misrepresentations to MHC and to ensure that cash and liquid assets as reported in the financial statements were not materially misstated.”

According to the lawsuit, a former finance clerk deposited Worker’s Compensation Board cheques into the hospital operated ATM, understated the amount and pocketed the difference.

All this trouble and no one was even taken hostage. Not good, Green Dot.

Misericordia Health Centre files suit against auditor [Winnipeg Sun]

Deloitte Partners Get Some Pointers on What to Say Re: Bonuses, Compensation

As was mentioned on Tuesday, rumors around Deloitte’s compensation are starting to surface. This likely means partners are fielding questions from anxious employees about raise, bonuses and if they’re considering any part PwC’s new compensation structure. Of course, not everyone is comfortable discussing personal financial matters with Gen Y types, so TPTB have floated some talking points to the partners so they might reduce the number of awkward moments.

Question: What can we say to our people about this year’s compensation?

As we are in the process of closing our books for FY11 and completing our financial plan for FY12 over the next several weeks, we have not finalized the overall Deloitte or AERS compensation – both for [bonuses] and FY12 base compensation. Deloitte and all of the major audit, advisory, and consulting firms participate in Mercer and similar compensation surveys and use this information as a key benchmark for determining competitive compensation. We also continue to differentiate performance (and move AERS Advisory to a more incentive based pay mix). We do our best to be above the survey midpoint of the aggregate of our competitors’ with regard to compensation and make adjustments as necessary (as evidenced last year).

We will continue to implement our Rewards and Recognition program which is significant. We are confident that we will be rewarding our professionals in a way that recognizes their contribution and efforts over the past challenging year and the increasing performance expectations we all face looking forward. We also stay very abreast of what our competitors’ actions and claims are and, if appropriate, make adjustments based on factual information.

When speaking with your teams, please consider the following key points:

• We continue to monitor the marketplace and pay at or above market. The compensation scenarios we’re modeling will ensure that we maintain, and likely improve, our position relative to our competitors on a total cash basis this year.

• We are confident our [bonuses] will be at or above last year’s levels, which were the highest in the history of our organization.

• Our merit pool will provide for market based compensation for all of our professionals and appropriate pay differentiation on the basis of individual performance. Our people continue to tell us this is important to them, we owe it to them, and we will deliver on this commitment this year.

• We know that our people have worked extremely hard this year and we will do whatever it takes to ensure that they are rewarded accordingly. We have a number of options on the table but frankly we don’t have the year-end numbers in yet so it’s still too early to make those decisions.

Will Barry Salzberg Join Twitter?

As we’ve mentioned, it’s the first week of the new (fiscal) year at Deloitte which means people are getting antsy and your new leaders are starting to get acclimated to their new titles, repsonsibilities and whatnot. One of the most important decisions that new global CEO Barry Salzberg will have to make is whether or not he jumps into the Twittersphere. His predecessor, Jim Quigley, has quit Twitter without getting all dramatic about it, saying, “My CEO tenure concludes today. Enjoyed trying Twitter. Thanks for following my updates. Stay connected w/ Deloitte @deloitte. Regards, Jim.”

So now that @DeloitteCEO is no longer in use, it seems to be a shame that the ol’ Salz decided to not to use it as a Twitty pulpit but we realize it’s not for everyone. However, being the charismatic mustachioed man that he is, I think he’d probably be able to get the hang of it pretty quickly. And if he needs some pointers, he can always consult Adrienne’s Twitter case studies.

My only advice is, don’t get too sensitive on us.

Comp Watch ’11: Happy New Year’s Eve Deloitte!

It’s the final day of fiscal 2011 in GreenDotville and it seems fitting that we have a little comp discussion:

Word is coming out of the senior manager meeting last week that raises and bonuses are going to be “very good” this year. Of course, those are just rumors, and that’s what the firm said in 2009 when comp increases averaged less than 1% across the board. Other than the mid-year salary bump last fall, there have been no raises, bonuses, or any other incentives to keep slaving away since last summer.

As you may know, Deloitte moved to a decentralized audit planning approach this year, causing hundreds (if not thousands) of additional hours to be added to each engagement. With a shortage of seniors and managers as it is, it’s been close to a breaking point for everyone in the audit function. And, of course, it’s an internal mandate, so unlike the glut of work that came as a result of SOX, Uncle-D is unable to recover any of those costs from clients. Senior management is aware of the problem (Steve VanArsdell said it was the worst busy season he’s ever seen in his 36-year career), but as yet no solutions have been offered other than to say that “year 2” of the new approach should be easier.

Interestingly, the Ivory Tower here at D&T has been suspiciously quiet regarding comp and other issues. Consensus among the employees is that they’re panicked and haven’t yet figured out how to dig out of the hole that they dug for themselves over the past few years. They’ve moved up the timetable on the compensation and rating process by a couple of weeks, which means that we’ll be getting our raise and bonus information in early August instead of mid-August this year (to which, most employees have responded with, “BFD”). To most of us working here, it feels like it’s all going to be too little, too late to win back the loyalty of the current workforce here at Uncle D.

But hey, I hear PwC is hiring!

Our tipster sounds pretty glum for a NYE celebration, so if you can cheer him up with contrary rumors, please do so. Of course, you can always corroborate his suspicions if that’s what you’re hearing as well. And don’t forget to drop all your new leaders a good luck email. Everyone deserves a little thumbs-up on the first day in a new job.

Deloitte Announces New Heads of Tax, Consulting

Rounding out the spring of leadership changes for Deloitte are Jim Moffatt who will be the new Chairman and CEO of Deloitte Consulting and Carl Allegretti who will serve in the same roles for Deloitte Tax.

U.S. CEO Elect Joe Echevarria is already finding his stride with the boilerplate praise, saying of Moffatt, “Jim is an excellent choice to build Deloitte Consulting’s market leadership. During his 23 years with Deloitte, Jim has served clients with distinction, and demonstrated his ability to drive the Deloitte Consulting strategy and seize market advantage.”

And he’s equally stoked for Allegretti, “In each of his leadership roles, Carl has made and maintained strong connections with both clients and people. This is a formula for success that has served him well.”

That should do it for announcing new Deloitte overlords since the new fiscal year starts next Wednesday but if someone else gets squeezed in between now and then, we’ll let you know. And since the new fiscal year means compensation speculation, drop us any rumors you’re hearing around merit increases and bonuses.

[via Deloitte and er…Deloitte]

Deloitte Consolidating Pacific, Central Regions

Deloitte CEO elect Joe Echevarria has informed the partners that a little bit of restructuring will be going down when he takes the big chair next week. The Pacific Southwest and Northern Pacific regions will create a new West region while the Midwest and North Central regions will form a new Central region. The three remaining – Northeast, Mid-America, and Southeast – will remain as is.

Optimizing our regional structure

To: The partners, principals, and directors of Deloitte

When I shared my overall organizational structure with you in February, I noted that I would make the development of the right management model for the regions a priority. Just last week, the Board ratified the decision to move from seven regions to five for FY12 onwards.

We will combine Pacific Southwest with Northern Pacific to create a new West region. By combining Midwest and North Central region we will create a new Central Region. Northeast, Mid-America, and Southeast regions are unchanged.

This decision is the outcome of a comprehensive, strategic review led by Chet Wood, leader of Markets and Offerings. The review was inclusive, with input from many perspectives, including LCSPs, line partners from each FSS, OMPs and RMPs, FSS CEOs and other members of the U.S. Executive. We looked at the regions through the strategic lens of our Lead from the Front framework, to determine how, at this time, we can best align our organization model to the external marketplace.

We carefully considered the different roles regions and offices play for each of our businesses; while many of our non-regulated services are increasingly delivered nationally, regions are critical to the service delivery of our Audit, Tax and DGES practices. Our review also considered factors such as the impact on spans of control, leadership and development opportunities, community-building and sense of partnership, infrastructure costs and speed of implementation. We defined the regional model that will best drive client and business growth, improve our strategic positioning, and strengthen our performance.

The new structure is effective from the start of FY12, although some tactical aspects of implementation may take longer to complete. I have asked Anne Taylor and Gary Tabach to lead the succession process for the West RMP, and Mark Edmunds to lead the process for the Central RMP.

With this improvement comes new opportunity. It’s up to us to realize it and turn our new regional structure to a business advantage. In every region and in every market where we operate, we must continue to widen the gap between us and our competitors, strengthen our position, and ensure that we stay out ahead of change. That is how we will continue to lead from the front.

Joe Echevarria
U.S. Chief Executive Officer Elect
Deloitte LLP

Since we’re not intimately familiar with the hierarchy at Deloitte (e.g. “Regional Partner Leader of M&A Advisory Services” or “Area OMP Chief Leader of Regional Assurance”) these changes will probably mean some jockeying for spots amongst partners effected by the consolidation. And since some regional leaders within the firm (i.e. Talyor, Tabach and Edmunds) will be watching over this process, maybe there will be potential for some interesting developments.

Based on This Letter, You May Get the Impression That Deloitte Staff Were Lucky They Weren’t Taken Hostage Along with Their Workpapers

On Monday, we reported on Longtop Financial Technologies was the latest Chinese company to have their CFO quit, auditor resign and be accused of being a massive fraud. This particular story was interesting as one of the reasons cited by Deloitte for dumping LFT included “the unlawful detention of DTT’s audit files.” These accusations were described in much more detail in Deloitte’s letter to the company’s audit committee that was filed with the SEC and you may even conclude that the staff were thisclose to being hos

We italicized and bolded the best part.

The Audit Committee
Longtop Financial Technologies Limited
No. 61 Wanghai Road, Xiamen Software Park
Xiamen, Fujian Province
People’s Republic of China
Attention: Mr. Thomas Gurnee, Chairman of the Audit Committee

Dear Sirs,

Longtop Financial Technologies Limited (the “Company”) and together with its subsidiaries (the “Group”)
Audit for the Year Ended 31 March 2011

We hereby give you formal notice of our resignation as auditor of the Company.

Background and significant issues encountered by Deloitte Touche Tohmatsu CPA Ltd. (China) (“Deloitte”)

As part of the process for auditing the Company’s financial statements for the year ended 31 March 2011, we determined that, in regard to bank confirmations, it was appropriate to perform follow up visits to certain banks. These audit steps were recently performed and identified a number of very serious defects including: statements by bank staff that their bank had no record of certain transactions; confirmation replies previously received were said to be false; significant differences in deposit balances reported by the bank staff compared with the amounts identified in previously received confirmations (and in the books and records of the Group); and significant bank borrowings reported by bank staff not identified in previously received confirmations (and not recorded in the books and records of the Group).

In the light of this, a formal second round of bank confirmation was initiated on 17 May. Within hours however, as a result of intervention by the Company’s officials including the Chief Operating Officer, the confirmation process was stopped amid serious and troubling new developments including: calls to banks by the Company asserting that Deloitte was not their auditor; seizure by the Company’s staff of second round bank confirmation documentation on bank premises; threats to stop our staff leaving the Company premises unless they allowed the Company to retain our audit files then on the premises; and then seizure by the Company of certain of our working papers.

In that connection, we must insist that you promptly return our documents.

Then on 20 May the Chairman of the Company, Mr. Jia Xiao Gong called our Eastern Region Managing Partner, Mr. Paul Sin, and informed him in the course of their conversation that “there were fake revenue in the past so there were fake cash recorded on the books”. Mr. Jia did not answer when questioned as to the extent and duration of the discrepancies. When asked who was involved, Mr. Jia answered: “senior management”.

We bring these significant issues to your attention in the context of our responsibilities under Statement on Auditing Standards No. 99 “Consideration of Fraud in a Financial Statement Audit” issued by the American Institute of Certified Public Accountants.

Reasons for our resignation

The reasons for our resignation include: 1) the recently identified falsity of the Group’s financial records in relation to cash at bank and loan balances (and also now seemingly in the sales revenue); 2) the deliberate interference by the management in our audit process; and 3) the unlawful detention of our audit files. These recent developments undermine our ability to rely on the representations of the management which is an essential element of the audit process; hence our resignation.

Prior periods’ financial reports and our reports thereon

We have reached the conclusion that we are no longer able to place reliance on management representations in relation to prior period financial reports. Accordingly, we request that the Company take immediate steps to make the necessary 8-K filing to state that continuing reliance should no longer be placed on our audit reports on the previous financial statements and moreover that we decline to be associated with any of the Company’s financial communications during 2010 and 2011.

Our consent

We hereby consent to a copy of this letter being supplied to the SEC and the succeeding auditor to be appointed.

Section 10A of the Securities Exchange Act of 1934 (U.S.)

In our view, without providing any legal conclusion, the circumstances mentioned above could constitute illegal acts for purposes of Section 10A of the Securities Exchange Act of 1934. Accordingly, we remind the Board of its obligations under Section 10A of the Securities Exchange Act, including the notice requirements to the U.S. Securities and Exchange Commission. You may consider taking legal advice on this.

Yours faithfully,
/s/ Deloitte Touche Tohmatsu CPA Ltd.
c.c.: The Board of Directors

Auditor Resignation Du Jour: Deloitte Didn’t Appreciate Their Audit Files Being Held Hostage

And yes the perpetrator, Longtop Financial Technologies, is a Chinese company.

As we mentioned, Deloitte had some decent reasons for kicking LFT to curb, among them:

(1) the recently identified falsity of the Company’s financial records in relation to cash at bank and loan balances (and possibly in sales revenue); (2) the deliberate interference by certain members of Longtop management in DTT’s audit process; and (3) the unlawful detention of DTT’s audit files. DTT further stated that DTT was no longer able to rely on management’s representations in relation to prior period financial reports, that continued reliance should no longer be placed on DTT’s audit reports on the previous financial statements, and DTT declined to be associated with any of the Company’s financial communications in 2010 and 2011.

And because it seems to be the standard narrative in stories such as these, Longtop’s CFO has resigned and “The Audit Committee has also initiated a search for a new auditor.” Although were not sure if there’s a firm out there that will pick up a client who has engaged in hostage taking.

[via Longtop Financial Technologies]

Barry Salzberg Recalls That His First Boss Was a Jerk, Being From Brooklyn Had Its Disadvantages

Dr. Phil doppelgänger and incoming Deloitte Global CEO Barry Salzberg spoke at Wharton recently about leadership and how it has changed quite a bit since he started at Haskin & Sells in 1977. He riffed about the old days in his speech including how jackets were all but mandatory (especially if you were from Brooklyn) and the aforementioned boss from Hell:

“In those days, [Deloitte] was a fancy, formal place,” Salzberg recalled, “so formal that you would get bawled out — and I did — if you were caught in the hallway without your jacket, especially if you arrived speaking a foreign language like Brooklynese.” His first leadership lesson came on his third day. “Bosszilla,” as he calls his first boss, asked him for a photocopy of a tax ruling. Eager to please and show off his legal savvy, Salzberg included his own two-page interpretation. “Mr. Salzberg,” Bosszilla hissed, “I asked you for a copy of the ruling, not your interpretation. One copy, stapled.”

Of course, the Big Salz knew that this wasn’t how he wanted to lead so you can bet your signed copy of As One that he spends plenty of time at the Xerox machine. Another leadership trait that has gone the way of the Dodo is that CEOs don’t mingle with the commoners. Bar is out there mixing it up on the regular:

“What I do is get out and talk to people to give them the opportunity to share. And then what you have to do is act on it, so people understand that you can change your mind.” As head of Deloitte’s U.S. operations, Salzberg visits as many as 25 to 35 offices every year, sitting down with partners to hear their concerns. When he becomes global CEO, he plans to travel more, he said. “There’s nothing that can replace face-to-face interaction. Getting the rubber on the shoes worn out is how to do it.”

And of course, in this day in and age, you simply can’t ignore animal metaphors:

“No burying your head in the sand if there’s a problem, and no ignoring the elephant in the room. Much better to name and tame an issue, no matter how difficult it is,” than to ignore it or pretend it isn’t there, he said. “Making sure the truth is told and discussed with all is the foundation of leadership. Without that, you can’t build trust.”

Got it? Ignoring problems – even the really tough ones – is a thing of the past:

Deloitte CEO Barry Salzberg on Leadership as ‘the Norm, Not the Exception [K@W]

Comp Watch ’11: Deloitte Auditor Has PwC Bonus Envy

From the mailbag:

Caleb,

I am reading about PWC getting some spring love in the form of a bonus, and other firms already openly discussing compensation with their employees. Apparently Big D missed that memo.

Everybody at Deloitte had a terrible busy season, that is no secret. We changed our audit methodology, and then in December the powers that be decided to do some last minute tweaking, aka destroy any hope of a bearable busy season. I am a senior working out of Boston and have been pretty busy since October. To reward my hard work Deloitte has given me absolutely nothing. There was no post audit dinner, no monetary reward, not even a free cup of coffee. I did however (and so did everyone else in Boston) receive emails from every executive partner in the NE thanking us for all our hard work, reminding us how much money we made the firm, and telling us to reward ourselves by taking some time off. Apparently being rewarded now means using our own PTO to take a day off. I have had to work both firm holidays up to now (one in January and one in April for the Boston Marathon), so I am not sure when they think we can reward ourselves by using the PTO we already earned. Usually engagement teams hand out “Applause Awards” to their people for hard work, and maybe I am just on a few teams with Ebenezer Scrooge Partners, but I think it is crazy that either Deloitte, or the Boston Office, or one of my engagement partners couldn’t scratch together a few dollars as a thank you for the long hours.

Partners and HR continue to wonder why people leave, but we are continually asked to do more and more and never rewarded for it. With the other firms opening up the piggy banks already, what are the chances that Deloitte follows suit? They missed the mark last year on the compensation, and everyone suffered as a result with the crush of seniors headed for the door. As a result they ended up giving a mid-year raise just to stem the bleeding. Are partners too busy looking to next year or playing golf at their fancy country clubs to remember the little people?

Of course our writer is referring to the PwC bonuses we wrote about on Monday. Don’t know if this is a Deloitte problem or a Boston Deloitte problem but it sounds like Green Dots in Beantown are wicked pissed. How’s your office faring? Tell us below or email us.