Deloitte Disney World joins PwC’s tax practice which took the dirt nap effective May 3rd. The Orlando Business Journal reports that the office will become “virtual,” a term that still has not been defined to our satisfaction.
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.
Accounting firms rumored to be paring down area operations [Orlando Business Journal (subscription)]
Some straight talk from Barry Salzberg:
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.
A GC reader from Deloitte emailed me the notes from a recent meeting for management on the health of its staff levels. Our source had the following to say:
I’m a senior in D&T (making manager in the fall) and thought the minutes from a recent manager meeting were interesting in terms of HR’s take on attrition. It does match what you’ve said in your column, i.e. they plan for a certain level of attrition, but I don’t think they even want to consider that there could be a cause for concern.
Management Community Feedback
Retention: Previous S. Manager / Manager Practice meeting unity is seeking additional clarity as to where the firm is heading, in the short term and long term (i.e., economics, compensation, etc.).
HR Audit Update: As of the time of the meeting, specific numbers are not known
DWB: Staff complaints, questions, and concerns, are summed up with the phrase “community is seeking additional clarity.” People want to know what the *#&! to expect in these still-somewhat-unclear times. Oh, and HR? They can run their “numbers” in minutes. Why they were not shared is a mystery; a concerning one at that.
Senior Turnover: Managers feel concerned with the leadership leaving at the senior level – potential for additional turnover in the fall
HR Audit Update: Turnover is comparative to 2 – 3 years ago so not considered a concern.
• Recent increase in the number of seniors that are voluntarily leaving the firm when compared to those trends seen in the last 12 – 18 months
• Region is looking at approximately 75 new hires
• Restrictions on inter-office transfers are being lifted
DWB: A lot to take away from this.
1) Managers are vocalizing the fact that people are leaving; this goes beyond the typical public accounting attitude of “good riddance.”
2) Turnover in 2007 was incredible. Do you remember what the market was doing in 2007?! It was a rip-roaring success. To compare it to that time frame and say it is “not considered a concern” is troubling. The difference between then and now is D&T was hiring like gang-busters themselves at that time so the attrition was not “felt” as severely as it’s being felt now. Layoffs and frozen hiring budgets make the recent staff losses more significant.
3) More people quitting now than during the recession? What research expert included that bullet point?
4) Inter-office transfers being reintroduced is a positive point; expect an announcement about this spun in the HR-style of “woo-hoo, now you can work in St. Louis!” And by St. Louis they mean Branson, Missouri.
What to do?
• Create a positive environment for the seniors and staff
• Leverage personal experiences to keep seniors/staff motivated
• Express advantages a “manager” position can add to one’s career path when looking at long-term goals.
• HR Advisory Update: National recruiting expects a good group in the Mid-West. Comparative attrition trends are taking place even though it may feel that the turnover rate is higher than normal.
DWB: Talking about the glory days of D&T audits doesn’t sound exciting, but sometimes it’s enough of a Kool-Aid effort to keep staff motivated. And look! Attrition rates are right where they want them to be. So all of you on under-staffed, over-worked projects? Yeah, this is the type of environment they plan for.
I’ll let our anonymous tipster finish off the commentary:
At least they might try to “create a positive environment” for me. I’d be really concerned if HR actually believes this or if they just don’t want to panic the managers. (Incidentally, I will be leaving after they give me the promotion.)
After a sun-adverse family man tried to blow up the Viacom Building (and was close enough to E&Y to evacuate the area) and a former PwC Senior Manager was charged yesterday for supporting terrorism, now a taxi driver whose company serviced Deloitte in India has been arrested for attempting to set off a bomb in Hyderabad’s HITEC City:
Pakistan-based Lashkar-e-Taiba was planning bomb attacks on the HITEC City, a major IT township here, and the office of a multinational auditing firm.
Mohammad Zia Ul Haq, who was arrested yesterday following a tip off by the National Investigation Agency, was directed by his LeT handlers to bomb the Hyderabad office of Deloitte Touche Tohmatsu, one of the four largest auditors in the world, and was in the process of carrying out the plan, government sources said.
Interestingly, Haq works as a driver for a taxi service hired by Deloitte Touche Tohmatsu.
What kind a-holes do they have working at Deloitte in Hyderabad? Bad enough that this guy concluded that bombing a company that puts food in his mouth was an action that needed to be taken. Thankfully, they caught the guy.
Obviously the question now is, when does KPMG get its little terrorist related news?
LeT planning to attack Hyderabad’s HITEC City [Economic Times]
Let’s stop digging E&Y for five minutes and talk about Deloitte trying to sex itself up as tax advisory coaches to the group hoping to purchase Manchester United.
Deloitte, which has worked hard to build up its sporting credentials with its annual audits of football’s finances and consultancy work for a host of clubs, is understood to have become the latest big financial hitter to become associated with the Red Knights, the would-be buyers of Manchester United, in an advisory capacity.
Alongside Freshfields, which is supplying legal expertise, and Nomura, the Japanese investment bank that has been responsible for contacting all the 40 or so wealthy individuals who expressed concrete interest in the plan, Deloitte is believed to have been supplying advice on tax structures and how to structure any bid most efficiently.
Yeeeeeeeeeeah I can see it now, “casual football Friday” memos circulated around Deloitte’s UK offices about appropriate garb for the field and some hokey “We Are the World” sing-a-long at the end when Manchester United kicks whomever’s ass (I don’t watch the stuff). Excellent.
In the spirit of not discriminating when ripping on the Big 4, this Deloitte flick nearly brought me to tears. Maybe it was the faux hawk or the overgrown baby beard. Perhaps it was the fucking cape. You decide.
The Green Dot FTW!
Here we are, it’s April, and most of you are happy to be bored (relatively) at work for the first time in months. Now that your brain isn’t saturated with numbers and/or what you’ll eating at your desk, you may be weighing your options. As we’ve mentioned, Big 4 partners are expecting this and naturally they want to keep their top performers. How best can they do this? Bribery of course!
And at Deloitte, this method seems to be gaining steam. An accountant close to the situation gave us the rundown on the recognition programs at the firm:
• Applause Awards (whenever)
• Outstanding Performance Awards (whenever)
• Merit Bonuses (annual)
For the most part AAs ($100 to $500 – tax adjusted) and OPAs ($500 to $5,000 – non-tax adjusted) were frozen for the last 2 years; with MBs only being processed for 1s and sometimes 2s (we’re rated on a scale of 1 to 5 – 1 being the best, 5 the worst – with typically 5% 1s, 10% 2s, 80% 3s, 5% 4s and 5s).
Now that you have the background, there’s this:
Based upon what I’ve been hearing very recently, strong performers have been getting [Applause Awards] for $100 in the NE [Advisory] practice. In some limited instances, partners have also hinted at more money coming their way (seemingly in the [Outstanding Performance] realm). Seems like the partners are noticing that people, especially performers, are getting antsy; and are trying to keep the peace until compensations are adjusted in September…
Well! Good to see that Deloitte partners are taking their firm’s advice (combo of #2 and #5). This could work out well for those of you that are rockstars at Deloitte (and are easily swayed by monetary reward) but for the other 80% that fall into the unexceptional categories, you may just have the longer ladder to look forward to.
Continuing with Wednesday’s attempt to provide insight on some KPMG H.R. banter, I will try to do the same with a recent Deloitte press release.
What seems to be their attempt to provide the private sector advice on how to prevent an exodus of talent actually sounds like a fluffy internal HR memo. Perhaps the Big 4 should review Deloitte’s top ten list of ways to not get slaughtered by the ever-improving job market:
1. Take advantage of the continuing globalization of talent and leadership markets.
DWB – Raid your competitors of their best talent, downplayed earlier this week.
2. Know your critical leaders and most critical talent. Keep your talent pipeline robust enough to deliver those critical skills.
DWB – Pay your top performers in order to keep them happy. If they receive an offer elsewhere, counter-offer their asses. Because the only inevitable outcome is the loss of some talent, see #1.
3. Prepare for a workforce that is more mobile and quicker to pursue new career opportunities.
DWB – Keep tabs on your people. Job loyalty has gone the way of the
dinosaurs Baby Boomers. The “what’s in it for me” mentality is keeping job markets saturated with talented individuals looking for a better deal.
4. Tailor your strategies to address the generational and geographic diversity of your workforce.
DWB – Old people and young people don’t get along. They’ve never gotten along. They never will get along. Accept it and move on.
5. Show your employees both the money and the love. Communicate your employer brand as clearly to employees as you communicate your product brand to customers.
DWB – One part water plus two parts HR spin, stirred. Pour over ice. Serve.
6. Know what it takes to stay ahead of your competitors in retaining critical talent, developing new leaders, implementing workforce planning and driving innovation.
DWB – I don’t have a clue what you’re supposed to learn from this. Money is the main driving force. Money makes people dance for joy or jump ship. If your retained talent is net positive, suhhhweeet.
7. Create clear career paths for employees at all levels.
DWB – I like this one if implemented correctly. The traditional career trajectories are well known; communicate practice-to-practice and geographic rotations. Change – even short term – can refresh one’s career and create a greater sense of loyalty to the firm.
8. Align your leadership development programs with your long-term business goals.
DWB – Every firm has ‘the chosen ones” and invests in additional training, retreats, and leader cultivation courses. This should come as no surprise.
9. Know the real impact of talent retention and voluntary turnover on your bottom line.
DWB – Newsflash: it is not cheap to replace talent. Considering most hires begin their careers as interns, we’re talking years of financial investment in every staff member. From pen giveaways to amusement park tickets, there’s a steep price for every staff member lost!
10. Be a beneficiary — not a victim — of the resume tsunami.
DWB – Perhaps you should revisit point #1.
You don’t need to tell Jim Quigley that it’s only a matter of time before Deloitte is the largest accounting firm ON EARTH.
In a Q&A with India’s Business Standard, Quigs was asked about the shrinking gap and you better believe the man is all over it like a hard-hitting interview at Davos: