Last we checked on Deloitte’s compensation news, it was news of the wealth being spread around more than last year, although no one was really impressed based on the discussion that followed.
“It was announced at a Tax meeting last Monday that the average raise for NE Tax would be 5% this year.”
Since Dr. Phil recently said that raises weren’t going to return to “pre-recession levels” an average raise of 5% may be in the ballpark. Then again, this is only the tax practice…
Anyhoo, our source told us that reactions boiled down to:
1. After axing or transferring everybody from the Stamford, Wilton and Hartford offices, they better pay the remaining people more!
2. At least it’s more than the average of 0% last year…
If you don’t fall into either camp 1 or 2, make your opinion known. Otherwise, get back to watching your fantasy team suck.
With just a couple weeks until the June 30 deadline for the company to issue its restated financial statements, Satyam is requesting just a little more time to get this mulligan nailed down. Three months to be precise.
Yes, they’re completely aware that it’s been nearly 18 months since the shit hit the fan. And yes, this is the third time they’ve asked India’s Company Law Board (“CLB”) for an extension on the filing but at this point they figure expectations are so low, no one will get too worked up over it.
Except for an “analyst with a leading brokerage house.” who is quoted in the Business Times, “There is no clarity on what is happening within the company. They should have at least provided the current sales figure or the bench strength. How is the shareholder supposed to rate their stock?”
Since more than a few people might be caught up in “sales figures” and whatnot, Satyam went to the trouble to let everyone know that they’re working hard, ordering in, etc. etc. so you can rest your pretty little heads:
A Satyam official said, “The records have been under the custody of investigating agencies and we recently got a court clearance. Also, our auditors (KMPG and Deloitte) told us they need some more time for the restatement. It’s only a matter of a quarter.”
See? It’s just a matter of a quarter. Plus, you can’t really blame them – KPMG and Deloitte are the ones saying they need more time. Satyam has likely been bugging them for months about wrapping up but KPMG and Deloitte are probably complaining, saying things like, “we can’t find any documentation to supports these numbers” and “this doesn’t add up.”
So, TFB if some whiny analysts don’t like it. We’ll just find out just how big of nightmare these financial statements will be in due course.
“Deloitte is providing hundreds of nonprofit leaders from across the country with valuable counsel to help them deal with common business challenges, at no cost.”
That’s right friends, no one is – gasp – billing time! It’s a 100% green dot free-for-all across this great land.
However, we did speak to one source at the firm who told us that they haven’t participated in Impact Day in 3 years, “everyone leaves me alone so I can get something done,” so despite the message at Deloitte HQ that “no one is available to take your call,” and what you’re reading on Twitter, we know some people are working.
Obviously that’s lame but the real question is how many Green Dots called in sick and are currently getting blitzed watching the World Cup? And keeping an eye on their fantasy teams? AND maniacally laughing while watching Barry Salzberg live Tweet the whole day?
KPMG has been kicked to the curb by Enterprise Financial according to an 8-K that was filed on Friday by the company. The ubiquitous claim of “no disagreements with [insert firm]” was there along with a mention of a material weakness that was related to the restatements issued for both 2008 and 2007 but that couldn’t possibly have anything to do with the dismissal of the auditors:
In connection with the identification of the loan participation accounting error described in Item 7, Management Discussion & Analysis and in Item 8, Note 2 of the consolidated financial statements and elsewhere in the Form 10K dated March 16, 2010, the Company also determined that a material weakness in its internal controls over financial reporting existed during the periods affected by the error, including as of December 31, 2008. The Company’s management concluded that the material weakness was the Company’s lack of a formal process to periodically review existing contracts and agreements with continuing accounting significance. To remediate this material weakness, during the fourth quarter of 2009 the Company implemented a formal process to review all contracts and agreements with continuing accounting significance on an annual basis. As a result of the review conducted in the fourth quarter, management did not identify any other errors in its previous accounting for such contracts or agreements. Management believes that this new process has remediated the material weakness in the Company’s internal control over financial reporting.
So in other words, “Yeah, maybe we should have been looking at these contracts but we weren’t and so some material misstatements slid through. We’ve slapped some duct tape on it and it’ll be fine from here on it. End of story.”
The esteemed pleasure of auditing Enterprise now belongs to Deloitte who has now snagged three clients from KPMG this year (by our count) – picking up Jefferies and Select Comfort back in March.
Deloitte is officially the first Big 4 firm to succumb to their World Cup fever. Understanding that a large portion of its 160,000-ish employees will be completely unproductive for the next month, rather than take reactionary measures, D has instead decided to encourage participation the Deloitte World Cup Fantasy League.
Don’t worry if you happen to work at a less cool firm that would never encourage such egregious behavior, anyone can play in Deloitte’s World Cup Fantasy League, so some KPMG folk can enjoy a little international competition and sport denim twice a week.
And if that’s not worth your time then maybe you aren’t capable of being pleased by anything. Except for perhaps more images of football stars with their shirts off.
Deloitte is being sued by Marin County in California, who is alleging fraud by misrepresenting its “skills and experience.” In other words, the County says that D used their ERP project as more or less a training ground for its newbie consultants. And no client likes it when you bring the blades of grass on site. They can’t even turn on their laptops without causing some sort of scene, amiright?
The County in April 2005 hired Deloitte to implement its SAP ERP system. However, the County alleged in the court document, “rather than providing the County with SAP and public sector exp d the County’s SAP project as a trial-and-error training ground to teach its consultants — many of them neophytes — about SAP for Public Sector software, all at the county’s expense.”
Plus! The County claims Deloitte promised their very best people. From the complaint: “Deloitte further represented that for the County’s SAP implementation, Deloitte had assembled a team of its ‘best resources’ who had ‘deep SAP and public sector knowledge.’ “
A Big 4 firm promising their best and brightest on the job in an RFP? There’s a shocker. “Best” being relative, as we all know but Marin County (obviously not familiar with a Big 4 sales pitch) must have been expecting a team to fly in from hyperspace that could slap this thing in lickity.
1. The court filing describes sales practices that are common through the consulting and systems integration industry.
For example, the complaint alleges that Deloitte committed to “dedicate our best resources and bring tailored implementation strategies to meet [Marin’s] long-term needs.” Many IT customers complain their system integrators do not follow through on such commitments and use inexperienced labor in attempts to reduce their own costs and increase profits.
We’d be so bold to say that this true of many Big 4 engagements, whatever the service line. Newbies have to get their teeth cut somewhere – why not on a public service job where money obviously grows on trees?
Deloitte isn’t impressed with this gnat of a lawsuit, claiming that they did exactly what they were supposed to do (not to mention to put up with the amateurs at MC that have zilch ERP experience) and the system was working just fine when they left:
As stated previously, we fulfilled each and every one of our obligations under the contract, as evidenced three years ago when all of our work was approved by the County officials responsible for the project. To be clear, the SAP (NYSE:SAP) software was working properly when we completed our work in November 2007. Not only is the complaint without merit, but we are filing our own claim against the County for breach of agreement and unpaid invoices. Although we are confident that we will prevail in court, it remains our belief that this dispute can and should be resolved in a more logical fashion that benefits the County and its taxpayers.
So Deloitte gets a little huffy basically saying, “Suck it, Marin County. MBAs love Deloitte. OH, and btw, you owe us some money,” but ultimately wants to keep things civilized for the sake of the taxpayers. Let’s hope it stays childish just for the sake of entertainment purposes. Taxpayers in California are f—ed anyway.
This story goes back before GC’s time so we’ll give you some background: Steven Klig was a hotshot tax partner at Deloitte until he was arrested for extorting an ex-lover back in January 2009.
Since most tax partners we know have to beat off the ladies with a stick in each hand, this seems unbelievable but apparently, Klig didn’t have the typical IRC wonky charm and was a little miffed that a lover wasn’t interested in him any more.
His frustration reached critical levels which resulted in emails to the lover, who he tracked down on the web and claimed that he had a DVD of them getting down. Lucky for us, the Post just so happened to get its hands on a copy of the email back in January ’09:
“Just to give you a head’s up. I’ve been doing a little editing on our video. Mostly some blurring of myself so that I won’t be recognized,” he wrote in one e-mail, according to the criminal complaint. You, on the other hand, can be seen very clearly having the time of your life being f—ed by me.”
Despite the good times, the woman went to the FBI after Klig emailed her husband trying to get a hold of her email address. An agent posing as the woman responded to Klig:
[A]sking what he wanted and pleading, “I want to keep my family out of this.”
He allegedly responded, “I don’t need money. What I really want is something new to look at.”
Klig then allegedly detailed his preferences for the “first installment” as: “(1) fully clothed; (2) without your shirt; (3) without your shirt and pants (in just a bra and panties); (4) without the bra and (5) fully nude.”
And the best part? He sent some of these emails while he was on vacation. At Disney World. With his wife and kids. Can’t you see it? You’re walking around Epcot, surrounded by shrieking children, grown adults dressed as princesses, talking animals, and overgrown dwarves; what a perfect opportunity to extort some porn out of an uncooperative ex-lover!
According to the Post, Klig pleaded guilty to lesser charge in order to avoid serious time although the judge indicated he could face up to a year in prison where he may or may not have the time of his life.
Last month we told you about some Deloitte partners in the Northeast that were dropping some “Applause Awards” on “strong performers,” possibly to help calm some nerves.
At that time, our sources indicated that “partners have also hinted at more money coming their way.” It now sounds like those hints are resulting in some greased palms:
[S]ome $1,000 [Outstanding Performance Awards] have been circulating in NE AERS for “performers”. Similar to the $100 applause awards for the larger segment of consultants, I think partners are trying to head off a mass exodus; not sure if the 1k will make a difference; but it does seem to be keeping people from quitting prior to hearing about their year-end comp adjustments
So regardless of what some Deloitte HR types might think, there are partners out there that are worried about people leaving and they seem to understand that throwing a little cash around does wonders for cooling some anxious heads.
We called Deloitte Orlando for more information but the employee we spoke to “was not authorized to comment.” We were forwarded to a voicemail box of someone else and we haven’t heard back. According to the report in the OBJ, Deloitte is the third largest firm in the area; according to Deloitte’s website the location has 60 employees.
One source familiar with Deloitte told us that this could possibly be a move by D (and possibly other firms) to “centralize their operations in an effort to cuts costs,” while still maintaing a minimum “physical presence” in a city. Whatever the reasoning the most likely scenario is that no one wants to be within a stone’s throw of a certain resident.
Barry had a [recent] session in LA at which time he said essentially the following about comp:
1. Raises and bonuses will be distributed this year
2. Raises and bonuses will be larger than last year, but are unlikely to return to “pre-recession” levels any time soon
3. More people will be receiving raises and bonuses this year
Unfortch, Deloitte doesn’t seem to be getting involved in the pissing match with E&Y and PwC by putting a number out there but “more people” and “larger” are both somewhat encouraging, no? Well, not really, according to our source:
To my knowledge, we’re not getting any more info. On the people side; the video didn’t say anything new and everybody knows that the economy’s getting better and that Deloitte’s doing better; so we all assumed it was going to be like he said. Without a number benchmark, words are pretty much useless.
The PCAOB has released its 2009 Inspection Report for Deloitte and out of 73 audits inspected, 15 deficiencies were cited in this year’s review.
The Board writes that deficiencies are “failures by the Firm to identify or appropriately address errors in the issuer’s application of GAAP, including, in some cases, er ikely to be material to the issuer’s financial statements. In addition, the deficiencies included failures by the Firm to perform, or to perform sufficiently, certain necessary audit procedures.”
Issues cited by the PCAOB in the report included goodwill impairment, deferred tax assets, inventory valuation, a failure to identify a “departure from GAAP,” among others. The Big 4 Blog rightly notes that this is the first time that the PCAOB has provided the sample size of the inspections which allows for some surprising error rates:
The error rate in this situation is quite high, almost one of every five audits has errors. Obviously, Deloitte performs thousands of audit each year and extrapolating from a small sample is quite dangerous, nonetheless, even at half of 20%, the natural conclusion is that one in ten audits has an error, and would have gone unnoticed had not the PCAOB done a good post-audit on the audit.
You could really make a fuss about what auditors did and did not do but the fact remains, audits are never perfect. Some are just more unperfect than others. What’s especially interesting is how Deloitte’s attitude has changed with regards to the PCAOB’s findings as compared to last year.
In last year’s inspection report, the Board cited seven audit deficiencies which resulted in a three page letter from Deloitte that, in no uncertain terms, told the PCAOB to get bent and keep their Monday Morning QBing to themselves. This was about as an aggressive of a response from an accounting firm as we had seen so it was definitely a surprise to see a firm lose their cool.
This year, despite the fact that Deloitte was cited for over twice as many deficiencies, the firm is considerably less defensive (read: boring) and put together a concise one page response to the Board’s findings that included the following:
“We have evaluated the matters identified by the Board’s inspection team for each of the Issuer audits described in Part I of the Draft Report and have taken actions as appropriate in accordance with D&T’s policies and PCAOB standards.”
It’s nice to see the firm playing nice with their regulator this year but we’re curious as to how the change in attitude came about. We hope that at least one of the remaining Big 4 will include a little more color in their response.
With just a couple weeks until the June 30 deadline for the company to issue its restated financial statements, 
As you may or may not be aware, it’s 
The PCAOB has released its