Category: Deloitte

Wife of Ex-Deloitte Partner: Porn-extortion Plot Saved Our Marriage

[caption id="attachment_17969" align="alignright" width="260" caption="The happy couple. SOURCE: Jeff Day/NYP"][/caption]

Remember back in May when we told you about Steven Klig, the former Deloitte tax partner-cum-lawyer who attempted to extort his ex-lover with a sex tape? Klig was merely looking for some additional nude pics of his mistress after she broke it off and when she didn’t comply, Klig started with his devious-randy plot.

Klig thought to do some of his blackmailing while on vacation with the wife in kids at Disney World, which is especially creepy considering he would have been drowning in happiness.

Well, Klig is to be sentenced on Friday after pleading guilty in May to illegally accessing a computer network to threaten his mistress. Yesterday he had a whole host of people singing his praises, including his wife, who told the judge that this whole situation has turned things around for them.

In court papers filed yesterday, Steven Klig’s wife, Ellen, said she “thought our life was over” when six FBI agents showed up at their Great Neck, LI, home last year and arrested her hubby for extortion.

“Instead, it was just beginning again. I got my husband back and my children got their father back,” she wrote to Manhattan federal Judge John Koeltl, who will sentence her husband Friday.

Ellen — who said Klig had “withdrawn from our family” due to job-related stress — noted that they’ve been seeing shrinks “individually and as a couple,” and “really work at keeping the lines of communication open.

“As a couple, we have rebounded to the point that after 20 years of marriage, we renewed our wedding vows and our commitment to each other and to our family,” she wrote.

Oh sure lady. Blame Deloitte! It’s bad enough that they have to take shit from the likes of Marin County California. But now you’re saying your marriage troubles were the fault of a firm that is going to (supposedly) create a quarter of a million jobs and the arrest of your husband for plan he concocted in order to get his rocks off are what turned it all around?

Even Klig himself claims that he was somewhere in between mild-mannered tax attorney and something out of a David Lynch film:

Klig — who has never revealed if he actually had the sex tape — blamed his shameful scheme on a sleep disorder, saying, “I really have no explanation other than I strongly believe . . . I was in a world that existed somewhere between insanity and sanity.”

Several former Deloitte co-workers also penned missives in support of Klig, who left the firm in disgrace after his arrest.

Former colleague Monte Jackel wrote that he “heard no mention of any misconduct of any type on Steve’s part . . . until the story broke in the New York Post.

“I was truly shocked at the allegations . . . but view them as out of character with the Steve Klig that I knew then and know today,” Jackel wrote.

The guy in between, well, who’s to say?

Lusty lawyer bust turned marriage around [NYP]

Wherein We Try to Make Sense of Deloitte’s Purported Hiring Spree

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All right people, we’re going to talk about something that’s been bugging us all week – Deloitte’s big hiring spree announcement.

If you’ve already put the story right out of your mind, Deloitte Global CEO Jim Quigley announced earlier this��������������������would be hiring 50,000 lucky men and women a year over the next five years. At least that’s what we initially thought.

The PR machine was in full force as Quigs was mentioned in several publications all over the world touting the hiring plans in addition to big revenue numbers that might – MIGHT! – put them ahead of newly branded PwC for the biggest of the Big 4.


The problem is that the earliest report, from the Financial Times stated the following:

Deloitte Touche Tohmatsu, the global accounting firm, said on Monday that it would hire an average of 50,000 workers a year during the next five years as it revealed strong revenues.

[…]

Deloitte employs 170,000 people worldwide and said on Monday that it expects to add 250,000 new workers during the next five years as it looks to expand its services and geographic reach.

There is no room for misinterpretation there. The FT reported that Deloitte will add 250k new people to its firm. Nowhere in that report did they take into account (or think to ask) how those people would be added or how attrition, layoffs and partner retirement would affect those numbers. It was simply stated, “Deloitte is more or less adding the city of Lexington, Kentucky to its workforce.”

Our friends at FINS did some digging on these numbers and thought to ask a few more questions:

That’s almost 140 new hires a day.

By 2015, the company expects to grow to 225,000 total employees from its current roster of 170,000, accounting for standard industry turnover, retirements and natural attrition.

According to CEO Jim Quigley, Deloitte is hiring across all areas: consulting, tax, audit and financial advisory services. For FY 2011, Deloitte is looking to hire in all regions, but it expects growth in priority markets like China and India. Both recent graduates and experienced professionals will be targeted in the hiring bonanza.

[…]

In a shaky economy — in any economy, for that matter — it would perhaps seem foolhardy to add so many new hires. But, the firm has had a “successful year despite challenging economic conditions,” Quigley said. “Deloitte’s member firms have experienced growth, even double digit growth in certain markets, so we feel well-positioned to continue this trend in FY11.”

Okay, so whether the FT was credulous or just plain didn’t think to ask any follow up questions is unknown but we are still hella-skeptical about Deloitte’s math here. They’re still claiming that they will add 55,000 global employees in five years. The problem is, you didn’t bother telling anyone exactly how you plan to do that, other than the boilerplate CEO statements offered up.

Just for the sake of argument, say the firm does add the NET 55k warm bodies that it claims. It’s pretty obvious that not many of these jobs are coming to the United States. Plus, this won’t be purely organic growth.

Looking at Deloitte’s press release, it’s pretty obvious that consulting is the only practice growing and BRIC and emerging markets are the only regions where the firm is seeing meaningful growth:

Geographic results (aggregate, in USD):

• Asia Pacific revenues grew 9 percent, making it the fastest-growing region for the sixth consecutive year. Member firms achieving growth in excess of 20 percent included Korea and India. Deloitte China grew 8 percent. Market share of the Fortune Global 500 grew by 2 percentage points in the Asia Pacific region. Deloitte member firms also served some of the largest IPOs in these markets.

• The Americas revenues grew 4 percent. Brazil grew in excess of 20 percent. Deloitte United States grew 3 percent.

• EMEA revenues declined 3 percent. Southern Africa grew 22 percent. The Middle East grew 15 percent.

Business and industry results (aggregate, in USD):
• Audit revenue declined 1 percent while market share of the Fortune Global 500 grew by 1 percentage point.

• Consulting revenue grew 15 percent.

• Financial Advisory revenue declined 2 percent.

• Tax revenue declined 5 percent.

• Industry: Public sector revenues increased 38 percent compared to the prior year. Financial Services and Manufacturing were essentially flat, which represents a significant rebound from last year’s double-digit declines.

As far as the “public sector,” everyone is aware that these were boosted by last year’s acquisition of BearingPoint, so after that plateaus, then what? And speaking of acquisitions – something that Barry Salzberg has gone on record about – this could be part of the headcount boom equation but that’s still makes for funny math.

But increase your people by nearly a third organically? We’re not buying it, Deloitte. Not that you were selling it but you certainly got a lot of panties to drop with some hot rhetoric. Will they make the numbers? Who knows but there are at least three other firms out there that will be fighting you to the death for the business that will finance that growth. Good luck with that.

Deloitte’s New San Francisco Office Will Be Cooler Than Yours

Sayeth San Fran managing partner Mark Edmunds.


He told the SF Business Times, “The cool factor will be very high,” so maybe we’re taking his statement slightly out of context. Presumably, “high cool factor” not only means that there won’t be tight security on bathrooms and they’ll allow pictures in your respective cube but it sounds as though there will be a faux-Starbucks available and a theater so you can listen to Barry Salzberg talk about diversity in surround sound.

The new office — nine floors in San Francisco’s newest office tower — represents not only a change in address, but an evolving philosophical transformation in how Deloitte serves its clients. Instead of private sanctuaries where partners retreat to pore over financial statements, the new environment will be all about collaborative spaces, Starbucks-like cafes and enclaves with the latest video conferencing technology. There will be a theater-style “learning center” that can hold groups of up to 200.

Deloitte recalculates headquarters [SF Business Times (partial subscription required)]

Marin County Scrapping SAP System That Deloitte ‘Neophytes’ Slapped Together

Earlier in the summer, we told you about Marin County California, who was pretty displeased with Deloitte throwing a bunch of ‘neophytes’ at their ERP implementation project or in the County’s words ‘a trial-and-error training ground.’

As a result of Deloitte’s amateur hour, the SAP system – that Deloitte claims was just fine and dandy where they left it – is now being thrown to the scrap heap by the county because fixing it will cost more than replacing the whole system. And God knows Arnie won’t be helping them out with the bill, so they have to save on costs where they can.

The system is the subject of a lawsuit Marin County filed against system integrator Deloitte Consulting earlier this year. Deloitte used the project as “a trial-and-error training ground” for inexperienced employees, and the result was a “costly computer system far worse than the legacy systems it was intended to replace,” according to the county’s complaint.

Deloitte has filed motions against Marin County’s “completely unfounded allegations,” as well as a complaint seeking unpaid fees, a spokesman said via e-mail. The system “was working properly and could perform all the tasks consistently with the standards set forth in the written contract,” according to a Deloitte court filing.

Marin County tells a different story. The SAP implementation dates to 2006, but today only 50 percent of the functionality is in place and working properly, according to a county report.

The county hasn’t decided on who they’re going with for the new system but if you’ve got a one-person shop with no experience and present your RFP using overhead transparencies, you’ll still have an edge on Deloitte.

County will rip and replace ailing SAP system [Reuters]

Deloitte Poll: One-Third of Companies Don’t Have the First Damn Clue About Business Analytics

You can try to blame the Obama Administration’s anti-business policies but you really only have yourself to blame. Get with it people.

Business analytics represents the ability to rapidly harness massive amounts of data for modeling complex situations and predicting potential outcomes and alternatives. This presents enormous potential value for business leaders to make more informed, fact-based and ultimately better business decisions. Yet, in a recent Deloitte webcast poll of more than 1,900 technology executives and business professionals, approximately one-third of the participants either didn’t know if their organization utilized business analytics – or even if they had business analytics capabilities at all.

“Mind-boggling,” said John Lucker, a principal with Deloitte Consulting LLP, leader of its Advanced Analytics and Modeling practice, and one of the webcast presenters. “Organizations have ever more depth and breadth of information readily available within their grasp, and the technology and methods to extract and help synthesize the data are well proven. When you see the low levels of adoption, you have to ask the question, ‘Why aren’t more companies doing it?'”

Deloitte Webcast Poll: One-Third of Organizations Have Limited or No Business Analytics Capabilities [PR Newswire]

Deloitte Highlights Its Non-monetary Commitment to Its Talent Via Hexagon-Filled Report

Deloitte officially rolled out its Talent Annuity Report today and before you start wondering just what the hell a Talent Annuity Report is, Barry Salzberg enlightens everyone:

We published a Talent Annuity Report because we regard our talenhat generates an annuity. We take pride in the contents of the report — it is a tangible manifestation of our passion and commitment to our talent. Our people are vital to the continued growth of our business, and we are focused on fostering a quality culture where everyone has the opportunity to reach their fullest potential.

Everything Dr. Phil says may in fact be true, however when we look at the report, we see a lot of indecipherable hexagons that may or may not be used to communicate this “passion and commitment to [Deloitte’s] talent.”


Fortunately, if you’re not too interested in navigating through the geometric maze, the press release manages to break down why it was such a bang-up year for the talent at Deloitte:

The report chronicles a year of bold talent initiatives and historical milestones including:
• Groundbreaking of Deloitte University, a $300 million state-of-the-art center established to foster personal and professional growth at Deloitte

• Company-wide rollout of Mass Career Customization® , a career development model that enables all Deloitte professionals to dial up and dial down their careers to fit their needs at various life stages

• Launch of a voluntary sabbatical program for employees to take up to six months leave to engage in volunteering and other personal pursuits

• Presentation of Deloitte’s cutting-edge corporate lattice business strategy in a new book titled “The Corporate Lattice: Achieving High Performance in the Changing World of Work“

• Introduction of a customized approach to talent development with Deloitte professionals participating in 2.4 million learning hours

• Achievement of the 1000+ mark for women partners, principals and directors — a reflection of Deloitte’s hallmark Women’s Initiative and commitment to an inclusive environment.

• Recognition from more than a dozen national organizations, including the No.1 ranking on BusinessWeek’s “Best Places to Launch a Career” list

Whether or not spending $300 million to build the Deloitte frat house is worth it, is a matter of opinion.

As for BusinessWeek lists and whathaveyou, most employees understand that this perpetual conclusion is for marketing purposes and would be more than happy to take exception with it. As for the rest of the initiatives and milestones, you can take them for what they are worth.

But what’s especially interesting is the timing of this release. These non-monetary reasons are presumably supposed to serve as reminder of Deloitte’s commitment to employees. But since the report was issued in wake of the merit increases we saw last week, it’s almost if it’s meant to console employees after the relatively disappointing news. And if that is the case, it will fail miserably.

Deloitte Releases Talent Annuity Report [PR Newswire]

Deloitte Donates $500k to Seminar Where Professors Nerd Out on Complex Accounting Issues

Joking, joking, joking. Actually it’s the American Accounting Association Robert M. Trueblood Seminars for Professors and it sounds as though it’s a pretty important little get-together.

Launched in 1966 and sponsored by the AAA, the Trueblood Seminars is a two and one-half day session where attendees share and examine complex accounting and auditing case studies. The program’s objective is to offer professors some perspective on present day accounting issues from the viewpoint of the auditors and preparers of financial statements. Each seminar features multiple case discussions led by Deloitte & Touche LLP partners, an open forum discussion on professional issues and developments in practice, as well as an update on the standard-setting activities of the Financial Accounting Standards Board (FASB). More than 2,000 professors have attended the Seminars since the program’s inception.

As long as Barry Salzberg isn’t having a free-wheeling discussion about diversity, then we’re all for it.

Deloitte Foundation Renews $500,000 Commitment to Continuing Education for Accounting Professors [CSR Newswire]

Comp Watch: Deloitte Advisory Breaks Double Digits

The news from the House of Salzberg continues to roll in; following the news from the audit practice yesterday:

The Deloitte advisory P/P/D group had a call today discussing the raises for this year. The raises will run between 5%-15% for anyone rated 1-3. 4s will get no raise. The breakdown will be based on level, promote status, rating and some potential variable factors to determine percentages. Most likely staff and seniors will get the best raises, as they are most likely to bolt once bonuses (AIP) are paid.

No word on what bonuses are, as this can vary much more on a person to person basis.

Tax practice was supposed to have their call this morning; was there a mass hari kari or a riot?

American Apparel Subpoenaed Over Auditor Switcheroo

American Apparel’s downward spiral continues as Bloomberg reports that the company has been subpoenaed by the U.S. Attorney for the SDNY over the company’s “change in accounting firms.”

If you’re justl started with Deloitte quitting as the auditors of APP late last month. At that time, Deloitte warned that the ’09 financial statements may not (read: definitely are not) reliable and that they were getting the hell out of Dov.

Former APP auditor Marcum – for reasons unbeknownst to us – went back to their old client to try and help them straighten things out. Here’s the latest from the “preliminary results” for the second quarter, while thetardy 10-Q remains elusive. These prelims (i.e. a wild stab?), that were filed today warn that things are likely to get worse before they get better:

Potential Restatement of previously issued financial statements

Effective July 22, 2010, Deloitte resigned as our independent registered public accounting firm. On July 26, 2010, we engaged Marcum as our independent registered public accounting firm. On July 28, 2010, we reported on a Form 8-K that we had been advised by Deloitte that certain information had come to Deloitte’s attention that if further investigated may materially impact the reliability of either Deloitte’s previously issued audit report or the underlying consolidated financial statements as of and for the year ended December 31, 2009 included in our Annual Report on Form 10-K for the year ended December 31, 2009. Deloitte has requested that we provide Deloitte with the additional information Deloitte believes it is necessary to review before any conclusions can be reached as to the reliability of the previously issued consolidated financial statements as of and for the year ended December 31, 2009 and auditors’ report thereon.

Depending on the outcome of this review, a restatement of our financial statements as of and for the year ended December 31, 2009 could be required. Any restatement may subject us to significant costs in the form of accounting, legal fees and similar professional fees, in addition to the substantial diversion of time and attention of our Chief Financial Officer, our other officers and directors and members of our accounting department in preparing and reviewing the restatement. Any such restatement could adversely affect our business, our ability to access the capital markets or the market price of our common stock. We might also face litigation, and there can be no assurance that any such litigation, either against us specifically or as part of a class, would not materially adversely affect our business, financial condition or the market price of our common stock.

But that’s not all! The company discusses a few more issues, “We are subject to regulatory inquiries, investigations, claims and suits. We are currently defending one wage and hour suit, one sexual harassment suit and responding to several allegations of discrimination and/or harassment that have been filed with the Equal Employment Opportunity Commission or state counterpart agencies.”

At that point, the filing finally gets to the problem du jour:

In addition, in connection with our previously disclosed change in auditors, on July 30, 2010, we received a grand jury subpoena from the United States Attorney’s Office for the Southern District of New York for the production of documents relating to the circumstances surrounding the change in our auditors. We have also received inquiries from the Securities and Exchange Commission regarding this matter. We intend to cooperate fully with these requests and any related inquiries.

If consider all that, plus the fact that the company is spending cash like Pacman Jones at a strip club and that they’re likely to be in noncompliance with a major debt covenants at September 30th, it’s no surprise that the stock is off even more than when Deloitte first quit as auditors.

American Apparel Drops After Receiving Subpoena on Change in Accountants [Bloomberg]
10-Q [SEC]

(UPDATE) Compensation Watch ’10: More Deloitte Results Lag E&Y, PwC

From the mailbag:

Managers in the Northeast for Deloitte had their compensation call today, raises for [audit] senior promotes (2nd year to 3rd year) are confirmed at 5 to 9 percent, depending upon rating. 1st year to 2nd year are 2 to 5 percent, depending upon rating. Experienced seniors are 4.5 to 6.5 percent with bonuses from $3k to $7k depending upon rating.

This is materially flat year over year for Deloitte. Although they are giving bonuses and raises to experienced seniors which did not happen last year.


So this is similar to the news from the Midwest we reported on Friday which doesn’t bode well for the rest of the country who may have been hanging on to a sliver of hope for PwC/E&Y-esque numbers.

Discuss and keep us updated.

UPDATE, August 18th: This just in:

Confirmed on audit senior compensation webcast this morning:

Base salary increase for New Managers by Rating:

1 – 24%
2 – 23%
3 -18%

Base salary increase for Experienced Seniors by Rating:

1 – 9%
2 – 6.5%
3 -4.5%
4 – 0%

Bonus for Experienced Seniors by Rating:

1 – 7k
2 – 5k
3 – 3k

Base salary increase for 1st to 2nd year staff:

1 – 5%
2 – 3.5%
3 – 2%
4 – 0%

Base salary for new hires will not change from prior year.

Annnnd discuss.

Compensation Watch ’10: Early Returns from Deloitte Are In

The first reports of Deloitte raises for audit professionals have come in from the Mid-America Region:

I’m surprised to see absolutely nothing posted about Deloitte raises. We have had the raise discussions in my office for staff and seniors, no double digit raises in sight. AIP (bonus) for Seniors and above. Managers- TBA.

Mid America Region- it’s looking like 2-9% for staff/seniors. AIP is supposed to be in the range of 2-12%, but that is the range for both seniors and managers. I spoke with a friend in another office in my region and their raises are looking pretty consistent, if not lower. Starting salaries are frozen- start classes from fall 09, 10, 11 will all at the same rate.

This is the earliest word we’ve received and comments have suggested that more news would come early next week. The tax practice still has their town halls next Tuesday but that could be to explain the numbers if in fact they are similar to audit’s.

So this could be a John Kerry-esque exit polls effect or maybe this is a sign of things to come. Either way, if you’ve gotten word, discuss below and keep us updated with any developments.

All This Talk of Deloitte’s “Double Digit Growth” Has People Wondering

On Monday we learned that Deloitte Tax had a STD and now there’s more chatter about the firm’s performance that could maybe, possibly affect comp for this year:

A new set of video blogs came out from the northeast regional managing partner. He announced double digit growth in perdiods [sic] 9-13 of FY10 and a plan for “continued double digit growth through FY11”. I know everyone is getting antsy over compensation (discussions are supposed to take place beginning next week, with raises hitting on the 9/3/10 payroll), and they keep dropping comments about “substantial raises” and “double digit growth.”


So while some people remain skeptical, it appears that Deloitte is warming you up the troops for a nice surprise next week. Deride if you must but can Dr. Phil & Co. really afford to come in with lower raises than PwC and E&Y?

For a firm that talks like they’ll be numero uno in a few short years, it would be pretty embarrassing to bring in some paltry raises while the firm they’re chasing managed to make it up to at least a few of their people. Discuss the latest and keep us informed.