Is Ernst & Young Dishing Out iPhones to New Associates?
A soon-to-be E&Y associate would really like to get their very own version of Alan the Accountant but would prefer it if Ernie chipped in with the whole iPhone part of that equation:
I’m starting with Ernst & Young in the fall, and was wondering whether you know if Ernst & Young allows iphones to be used with their system like Deloitte? I don’t really want to ask a recruiter or anything just in case it looks bad.
For the record, some of the recruiters are easily rankled, so if there’s anything you don’t want to ask a Big 4 recruiter, you can certainly ask us.
Back to the issue at hand – if your memory serves, you’ll recall that Deloitte has been allowing all professionals to opt for the iPhone for awhile but it was just back in January that the firm quit charging you $13 a month for it.
But as far as E&Y goes, we’ve got no idea what the iPhone situation is, so enlighten the future associate.
Experienced Recruiting Amongst The Big 4 Gets Aggressive
As you know the Big 4 are extremely competitive when it comes to picking up talent. Now that the firms have amped up their experienced hiring, things appear to be taking an interesting turn.
Case in point, the following email went out to PwC professionals in the Southeast:
Hello. I work for Ernst & Young’s Assurance Recruiting Team and, through my networking, came across your name. I was wondering if you would be interested in making contact for professional networking purposes.
We are currently seeking managers and senior managers in our Southeastern markets. Your referrals would be greatly appreciated as you know the best people in this industry! We are expanding our Assurance Experienced talent pool and look forward to hiring only the best and brightest talent!
There are twelve more reasons to consider EY as a strong career option!! Ernst & Young was just named to FORTUNE’s “100 Best Companies to Work For” list for the 12th year in a row–and ranked highest among the global professional services organizations. The reason? Our people. Together, we’ve created a culture of learning, flexibility, inclusiveness and community responsibility that truly makes a difference.
I have been a finance/accounting recruiter for six years and assure you that not all Big 4 firms are cut from the same cloth……it never hurts to have a dialogue!!!
Thanks in advance for your time and consideration. Have a wonderful summer!
Say what you want about these particular tactics but if there is a need in a particular office or region, it is Big 4 recruiters’ job to go out and find the talent to fill that demand. Other Big 4 firms seem like a pretty good place to start since they have the “talent” that the firms want. Plus, the email does state that the intent of the message is to “open a dialogue” which, sure, could lead to someone switching firms but let’s be real – this happens.
And don’t forget! This isn’t confined to Dixieland. You may recall that PwC in the UK had been allegedly poaching E&Y partners, as reported by the Times Online.
So if you want to get all defensive about a rival firm going behind enemy lines to do their jobs, so be it, but your firm is likely doing the exact same thing.
Grant Thornton Picks Up Four Tax-Exempt Experts from WTAS
Ernst & Young Striving for Fewer “Cookie Cutter” Engagement Teams
E&Y’s annual intern conference invaded Orlando yesterday and the ‘Berg had Director of Campus Recruiting, Dan Black on to discuss Gen Y and why they are pre-tay, pret-tay, pret-tay important to the future of the firm.
Despite their technology savviness, it appears that Gen Y is still relying on rock-paper-scissors as a key decision-making tool. Apparently, darts and jigsaw puzzles are important too.
Oh, and the time you put in as a line cook at Applebees’s in college really doesn’t translate into anything useful so don’t be too concerned about that.
Comp Watch: Early Returns at Ernst & Young Keeping Pace with PwC
So far there are several reports of low to mid-teens and some as high as 20%, which some simply don’t believe.
We do have some specific details for assurance associates in New York and they don’t sound terrible:
NYC first year associate went from $55k to $64k, associate raises [are] coming in around 11-18%
So if you’re keeping score at home (and we know you are) it appears that the partner at E&Y who prognosticated that raises at his firm would beat PwC’s Raises appears to be right in some cases but perhaps not all.
Sooo, Ernie troops – are you happy? Disappointed? Suicidal? Ready to jump ship? Or calling your friends at PwC to brag how you’re keeping the pace? Discuss.
Are Ernst & Young and PwC Neck and Neck in the Compensation Race?
(UPDATE) Comp Watch ’10: Ernst & Young Numbers Coming Out This Week?
Last time we checked in on E&Y in the comp department, convos on promotions and ratings were to have gone down by last Friday. That appears to have happened right on cue and now we’re told that starting this week, the numbers will be coming down from 5 Times Square:
Latest regarding compensation (exact $ amount) in both FSO/New York and Northeast/New York regions is discussions should start today and run for 2 weeks. Big push right now in all business units to try and appear to care about people; people advisory board members have been reaching out for ways the firm can improve.
Feel free to speculate as to why the “caring” and “reaching out” is happening at this particular time of year (and if the Facebook downloading is at all related). Also, if you’ve had the talk and have great/disappointing news to report, do share or get in touch with us.
UPDATE: Word is that meetings are still being had this week and the numbers are still good. One source (Manager) in the assurance practice reported a 5 rating and a 21% bump. Not too shabby.
Why Would E&Y Download 100 Million Facebook Profiles off BitTorrent?
Good question! In case you didn’t hear, someone – his name is Ron Bowes – created a “crawler” (resident tech expert Nick told us it’s “a bot that has directives and algorithms based on known patterns in a webpage it ‘visits’ a webpage and pull information from selected places in that structure.”) that pulled data on 100 million Facebook profiles.
Since it only pulled the data that was publicly available, you could claim that this is NBD as Nick told us, “[A]ll the crawler did was collect it and put it into a single place, presumably in a format that is searchable and very ordered.”
And Engadget agrees, “There’s nothing illegal about any of this, of course — we put our information out there into the public forum that Facebook is, after all — but there’s still something creepy about the idea of someone torrenting our profile.”
What may be even more creepy is that lots of corporations – including E&Y – are downloading the data.
Nick told us that any corporation could have done this anyway but since someone else did, these companies figured, “why the hell not?” and downloaded the data. But E&Y? Maybe it’s just some back office guy stalking ex-girlfriends, as Gizmodo suggests, or Zitor collecting names for future abductions but it certainly makes you wonder.
So much so, we emailed E&Y spokesman Charlie Perkins to ask him about it (and if nothing else, we may have introduced him to a new website!) but we haven’t heard back and we don’t have our hopes up.
Major Corporations Are Downloading Those 100 Million Facebook Profiles off BitTorrent [Gizmodo]
Is Mary Schapiro Talking About a Certain Lehman Brothers Auditor?
Maybe! After last week’s settlement with Team Jehovah and the financial reform bill allowing for a few more hands on deck, the SEC chair says there are some other smackdowns in the works.
Unfortunately she doesn’t name names but use your imagination:
“We have investigations in the pipeline, across products, across institutions, coming out of the financial crisis,” SEC Chairman Mary Schapiro said after testifying before a House of Representatives subcommittee hearing.
Asked if the bulk of the cases have already been brought to light, she said: “Not necessarily, not necessarily.”
So it’s a grab bag really. Although, as you may recall, Dick Fuld is on the record that E&Y was on board with whatever the dorks in accounting were doing. Or maybe MS is just messing with Congress. The situation remains fluid.
SEC chairman says more post-crisis cases in pipeline [Reuters]
Are Ernst & Young and PwC Neck and Neck in the Compensation Race?
From the mailbag:
I heard some scoop and wanted to share with my fellow indentured servants in the big 4 field. Word on the street is that P-dubs gave 10% raises to staff 2s becoming senior 1s (early promote) and 16% raises to staff 3s becoming senior 1s.
However, P-dubs doesn’t hand out the 5k bonus that Uncle Ernies offers to its staff 2s becoming senior 1s. I’d like to see how EY will top this, per an earlier promise from a partner that EY raises will be higher than P-dubs (maybe can some low performing partners?). In addition, the variance between average performers and high performers at P-dubs is only .6% (not significant at all).
If you forgot what this is referring to, back in April we reported a tip out of the Ernstiverse that a partner had claimed that the raises at E&Y would beat PwC’s. The reports out of PwC have been better than expected, although not for everyone.
So if this partner’s prognostication holds up, how will they pull it off down the stretch? Seems like a good question. Conversations are going on right now and the official news will reportedly be out in a couple weeks.
Since we’ve got half of the Big 4 involved here we’ll just mention that the belly aching at KPMG is in full force on the bonus front but maybe there’s hope for a strong move down the stretch?
As for Deloitte, apparently communication has occurred for promotions but it sounds like word on comp could be more than a month out. If you’ve got the scoop get in touch with the details and discuss this four horse race but as it stands right now, it looks as if PwC has E&Y by a nose.
Forced Rankings Appear to Be in Full Effect at Ernst & Young
Confirming some discussion in the comments from last Friday’s Ernst & Young compensation post, a source got in touch with us with more details on some rankings getting chopped:
I’ll confirm what your sources are saying about reviews being available in fso. Not only that, but forced rankings are in full effect. While [there] was less pushback during roundtables earlier (which was accurrate at the time), the ratings for at least 5 people were lowered by a notch from what was agreed to by the full committee at the end of may. (5 to 4, 4 to 3) While they do say after all people are discussed they’ll assess the levels to ensure the same criteria is being used, I firmly belive its being used as a way to lower ratings (and raises). Why have the formal review committees (roundtables) if the partners are going to have the ability to act unilateraly to ‘right size’ the ratings?
We’ll still have to wait a couple more weeks before we find out if the forced rankings actually translate into disappointing raises, as the official communication won’t come until August but this news surely doesn’t bode well. If you got knocked down a peg, discuss below and as always, keep us updated.
Promotion and Compensation Watch: Ernst & Young Communication to Come Eventually, Someday
Straight out of the Bubba Gump Shrimp location up the street from 5 Times Square:
Ernst & Young, Financial Services Office, NY
Received communication that our annual ratings were finalized and discussions between counselors and counselees to occur by July 30. Promotions are still not final, but promotions and compensation will start to be communicated in August (to be effective October).
So t-minus three weeks (give or take a day here or there) until “you’re not going to be disappointed with raises” which apparently could mean that they will make PwC’s raises look like chump change (for auditors anyway).
BUT! In case you need a refresher on the numbers so far: 3-5% is what we last heard for those in the meaty part of the curve. No word on what top performers are getting but speculation is welcome. Keep us updated.
PCAOB Report States That There Was a Fair Amount of Failing Going on at Ernst & Young
The PCAOB has issued its annual report on Ernst & Young having given the firm the third degree at its national office and 30 of its 80 U.S. offices. It inspected 58 audits performed by the firm but exactly who is, of course, a big secret (unless you tell us).
There were five “Issuers” that were listed in the report and some form of the word “fail” was used 25 times (that includes the footnotes).
[Issuer A] The Firm failed to adequately test the issuer’s loan loss reserves related to certain loans held for investment. Specifically, the Firm failed to reconcile certain values used in the issuer’s models with industry data, failed to test the recovery rates used in the issuer failed to test the qualitative components of the reserves.
Damn those loan loss reserves!
[Issuer C] The Firm failed to perform sufficient procedures to test the issuer’s allowance for loan losses (“ALL”). The issuer determined the general portion of its ALL estimate, which represented a significant portion of the ALL, using certain factors such as loan grades. Data for this calculation were obtained from information technology systems that reside at a third-party service organization. The Firm relied on these systems, but it failed to test the information-technology general controls (“ITGCs”) over certain of these systems, and it failed to test certain of the application controls over these systems. Further, the Firm’s testing of the controls over the assignment and monitoring of loan grades was insufficient, as the Firm failed to assess the competence of the individuals performing the control on which it relied.
This loan thing appears to be a trend…
[Issuer D] The Firm failed to sufficiently test the costing of work-in-process and finished goods inventory. Specifically, the Firm’s tests of controls over the costing of such inventory were limited to verifying that management reviewed and approved the cost allocation factors, without evaluating the review process that provided the basis for management’s approval.
Hopefully that doesn’t blow back on an A1.
Anyway, you get the picture. The whole report is below for your reading pleasure. E&Y’s got its $0.02 in, however it was short and was mostly concerned about the firm’s right to keep its response to Part II (the non-public part)…non-public:
We are enclosing our response letter to the Public Company Accounting Oversight Board regarding Part I of the draft Report on 2009 Inspection of Ernst & Young LLP (the “Report”). We also are enclosing our initial response to Part II of the draft Report.
We note that Section 104(g)(2) of the Sarbanes-Oxley Act requires that “no portions of the inspection report that deal with criticisms of or potential defects in the quality control systems of the firm under inspection shall be made public if those criticisms or defects are addressed by the firm, to the satisfaction of the Board, not later than 12 months after the date of the inspection report.” Based on this statutory provision, we understand that our comments on Part ii will be kept non-public as long as Part ii of the Report itself is non-public.
In addition, we are requesting confidential treatment of this transmittal letter.
So this doesn’t mean much other than E&Y would prefer that no one know how it managed to tell the PCAOB to fuck right off as nicely as it could.
If you had the pleasure of being on one of these 58 engagements, we’d love to hear about your experience.
Today in Auditor Musical Chairs: KPMG and Deloitte Both Get the Boot
Evergreen Energy of Denver dismissed Deloitte effective June 23rd according to the company’s 8-K filing. Hein & Associates, a local Denver firm, will take it from here.
It stands to reason that Evergreen didn’t appreciate the going concern opinions that Deloitte gave the company for its December 31, 2009 and December 31, 2008 financial statements but in cordial SEC filing fashion, there are no parting shots from the company.
Evergreen’s press release indicates that this was simply an opportunity to throw some action to another firm (most likely with lower fees), “With the sale of certain Buckeye assets and our exit from the coal mining industry, Evergreen Energy has transitioned into a green technology company. This is an ideal time to switch to a Denver-based regional accounting firm with substantial public company expertise in the clean technology and software industries that can more cost effectively meet our needs.”
Deloitte’s letter to the SEC is abruptly admits that everything is cool rather than flat out saying, “you’ll be sorry you ever ditched us, you losers.”
Similarly, Measurement Specialties, Inc. showed KPMG the door for Ernst & Young. The company says everything was hunky-dory between the two although there was a small matter of the internal controls around a significant joint venture of which the company had no control. Oh, and the effectiveness of internal controls of some recent acquisitions also couldn’t be determined. But it was cool and the company said, “it was in the best interests of the Company to change its independent registered public accounting firm.”
KPMG has NFI what that means saying in their letter, “we are not in a position to agree or disagree with Measurement Specialties, Inc.’s statements relating to the reason for changing principal accountants.”
We wish everyone nothing but happiness.
Promotion Watch ’10: Ernst & Young Names 126 New Partners in the Americas
To please you hair-splitters, that number includes principals. E&Y also named 62 new executive directors and 19 new directors.
It’s been a couple weeks since the announcement but we finally were able to run down a few details on the new partners at E&Y:
We’re not sure why Howe had to slip in the diversity soundbite there but he did. Thoughts?
In terms of the breakdown, right now we only have a few specifics so far out of the Northeast:
Of the offices in NY, MA, CT, RI, and NJ, we had a total of 16 new execs: nine tax, four advisory, and a whopping three assurance.
If you’ve got more details, let us know. Congrats to the new PPEDDs at E&Y!
(UPDATE) Compensation Watch ’10: Are Raises Looking Bleak at E&Y?
It’s been awhile since we’ve heard any news on the E&Y comp front but we finally received a preliminary report from one source late last week:
[Roundtables] went the same way they always go. Surprisingly, less pushback on proposed ratings for the portion I was involved in. I really think they may be scared to lose more people. Indications are raises will be low (3-5% range for most, more for 4/5 rated people) Bonuses are probably non-existent for the masses. Annoucements of promotions for other levels will be made in August (staff to senior, senior to manager, manager to senior manager) they will also do comp increase discussions then. Effective 10/1…
So despite Ernst & Young re-reassuring merit increases the 3-5% for the meaty part of the curve and no bonuses isn’t exactly what “the masses” were expecting.
That being said, this office may be catching some bad luck since we that at least one E&Y partner was confident that the raises would beat PwC’s.
Although, some lucky E&Y soldiers have seen some “spot bonuses” for their hard work but it’s not clear how widespread that generosity is.
On a marginally-related note, we’ve received word that the partner promotions were announced but we’re still trying to run down some details. Get in touch with us if you’ve got the scoop on the new partners, what you’re hearing about comp in your office and discuss below.
UPDATE, Wednesday June 16th: A couple more accountants familiar with E&Y have their own take on the comp situation:
I heard that we “we’re not going to be disappointed with raises” here at EY. I don’t know what that means. And I tend to believe, that as you posted today, 3-5%, is a more realistic view of what’s going to happen (though that’s just my own pessimism).
and that is coupled with another source, “Haven’t heard anything further on comp other than ‘moderate.’
Continue attempting to decipher the latest. As you were.
Is Ernst & Young Quadruple-Checking Your Expense Reports?
A curious mind out of Casa de Turley:
EY just moved to a “new” (basically the same, but it does look more flashy) expense reimbursement system in the US. Along with that move though, my expense pay back times have increased from usually about a 2-3 day turn around for approval to a 5-7 day approval. While it’s not unheard of that it would take that long, I was wondering if other EY people were experiencing the same payment delays and what this could be signaling? Just slow/less staff processing expense reports or is this some sort of cash flow management? I’m not sure that that even makes sense since we bill the client for the expenses, so it puts off the billing process as well as the reimbursement process.
As to why and how this happening, we’re guessing that those of you that got into the habit of going to Bobby Vans twice a month, playing Omaha, Hold ‘Em et al. on the web and lap dances and somehow convinced yourself it was business related have finally broke the proverbial camelback. It’s either that or Jim Turley is pulling up his boot straps and checking every single expense report himself.
Other theories or wild-ass guesses? Fire away.
Allegedly, a Few Ernst & Young Partners Just So Happened to Join PwC
Never having the pleasure of attending a partner-only soiree, we don’t have much knowledge about the haps at these events but we do imagine catering slightly better than what you would find at an in-house training but served by oompa loompas. And an open bar, natch.
Likewise, we’ve never heard about Big 4 partner mixers where, for example, an PwC partner might chat up a E&Y partner talking IFRS, where they fall on the staff’s hottie list and “oh by the way, waddaya say you join our firm?” To save face, we imagine said E&Yer responding with a “No, I will not make out with you” retort followed by open-faced slaps and ripped Jos. A. Bank until the beefy security pulled the two apart (at which point the P. Dubs partner gives his target the “call me” sign).
We bring all this up because the Times Online reports that there has been a fair amount of defection from Ernst & Young to PricewaterhouseCoopers in the Middle East (no sissies allowed). PwC’s Middle East practice was purchased by the UK firm last year and now the Times reports that 20 E&Y partners have been poached by P. Dubs:
According to people familiar with the situation, the defections — amounting to almost a fifth of Ernst & Young’s partners in the Middle East — were in several locations across the region. Most were from Ernst & Young’s consulting business, The moves began last summer but were kept secret because of a settlement between the two firms. PwC agreed that it would not approach any more Ernst & Young staff in return for Ernst & Young agreeing not to take legal action to block the departures.
Neither firm would comment for the Times article except to boast about their numbers in the region, “PwC confirmed that it had recruited 25 new partners and 400 staff in its Middle East offices in the past 12 months,” and “A spokesman for Ernst & Young said that it remained ‘easily the largest’ of the Big Four in the Middle East,” so both firms’ communication departments seem to be operating as normal.
Whether such (alleged) deliberate defections have happened in the States, we don’t know but we hear it is quite the spectacle (marched out by the OMP the second the news got dropped) when one partner notifies his/her intent to leave for a competitor, so all out war could reasonably be expected.
PwC raids rival before Middle East step [Times Online]
Bonus Watch ’10: Ernst & Young Is Rewarding The Hard Workers
From the mailbag:
EY Mclean Office- partners are reaching out to people giving $400 spot bonuses for hard work during busy season.
This particular lucky duck was in the tax practice. Cash? Gift certificates at the Cracker Barrel? Just McLean? If you’re getting greased, phone them in.
Apparently Ernst & Young Doesn’t Buy the “C’s Get Degrees” Mantra
We know that lots of you out there are perfectionists, so this could never happen to you but for you mere mortals, you can sympathize a little bit.
Courthouse News Service reports that a class action suit in California has been filed against E&Y claiming that the contracts signed by graduating seniors “compel” them to work for the firm but allow the company “to legally renege or cancel the offer of employment” if the senior does not maintain “continued strong academic standing.” Apparently this means if you slack off your senior year and slip a couple of C’s in there, you could be out on the street.
Yunjung Gribben, 43, is the named plaintiff in the suit and she is seeking damanges for wrongful termination, age discrimination, breach of employment, specific performance and violations of the Labor Code.
Ms. Gribben claims that she graduated from Cal State Fullerton with a 3.6 grade point average but, “After working for Ernst & Young for a month, Gribben says, she got a call from human resources, questioning her about the C’s she got in her senior year. She says she was fired the next days [sic].”
She claims that “continued strong academic standing” was not defined in her contract, although she admits that there is a “hazy reference” to the term on the firm’s website.
Dale Fiola is representing Ms. Gribben and he us, “No student should be under the impression that they have an employment agreement once they graduate. Most of the time when people sign offers of employment they think they’ve got something.”
The suit alleges that other students have cited the “continued strong academic standing” language and in Ms. Gribben case, “younger employees were allowed to stay at the company.”
Ernst & Young spokesman Charlie Perkins had no comment at the time our post was published.
Class Sues Ernst & Young Over Contract [Courthouse News Service]
Any Attempts by Accounting Firms to Boost Morale May Be Too Late
From an accountant familiar with E&Y:
We got two voicemails today, one from head of Banking and one from the Vice-Chair of people, both talking about compensation. I think the underlying fear is that we don’t have enough people anymore in our practice because they keep stressing all the things that the partners are going to do besides compensation to boost morale (like have a lunch with staff sometime around cinco de Mayo).
The last month and a half has been a bit, shall we say, tough on the E&Y and the troops. That being said, the news that Ernie would beat P. Dubs raises may or may not have got some people to relax but it appears that the firm’s leadership is still on the offensive to keep spirits high.
After discussing it with our resident HR expert, the problem with these little wine & dine events is that at this point they are too little, too late. People don’t want they faces fed. They want answers. They are crawling the walls with anxiety about three things:
1. What raises will be.
2. If there will be a bonus pool.
3. Who is getting promoted.
And they want to know the answers ASAP. Raises have been triple-reassured at all the firms and people want to know that number; they want to know if there’s a bonus pool.
Everyone at the point of promotion has made up their minds about what they will do if they get promoted or not. Plus everyone who is not up for promotion is talking about who will get promoted, who won’t and the reactions that will result (e.g. storming out of the office or a nervous breakdown).
The reality is that these things take time. The fact that PwC put a number out there was impressive (and some have said, desperate) shows that partners are aware of the anxiety and they’re trying to get people to relax.
Deloitte is up first, as their fiscal ends 5/31 and we’ve heard that there has been generosity passed around there but it will ultimately depend on the the merit increases. We hear their all hands webcast is coming up soon and that discussions are occurring this month so it won’t be long.
No amount of margaritas, $100 bonuses or NHL playoff hockey tickets will change the fact that people have worked it out in their heads about what they will do when they get the news. And once that news is known, people will act fast. We would encourage everyone to be patient, try and be rational etc. etc. but we also know that’s an futile request.
Ernst & Young’s Raises Will Be Better Than PricewaterhouseCoopers’
I said it on Tuesday and I’ll say it again. HERE. WE. GO.
Caleb ran a post yesterday about Ernst & Young raises that as of deadline time had no comments. Zilch. Nadda. I was surprised by this because if anything guarantees comments on GC posts it’s talk about layoffs, Overstock.com shenanigans, and money (not in that order). Needless to say, I think this update will change things.
GC received a tidbit from an EY reader about the recent phone call:
“I did receive a voicemail from Steve reassuring compensations but, it appears that the firm will concentrate giving raises to its “high performers”. So, this potentially could mean that only EYers rated a 5 (need to catch a fraud to get this or have really sore knees) or 4s (need to be well liked all the way up the pipeline on an audit) will have a respectable raise.”
So – if you burned through busy season working yourself to the bone for Uncle Steve but stopped short of needing knee pads (it should also be noted that the parts in parentheses above are part of the original email…) you might be shit out of luck for a respectable raise.
“In addition, I checked with a partner and the August 1st early pay increase is a rumor. The rumor appeared believable since EY is a monkey see monkey do type of firm but, our partner said that EY’s raises although be start on October 1st, will be higher than what PwC will offer to its auditors.”
Boom. To quote my man and crime fighting detective Marcus Burnett, “Shit just got real.”
Shit. Just. Got. Real.
Is there any credibility to this? Sure there is. To think that the upper leadership from every firm does not talk to one another about compensation targets is ridiculous. Merely for the sake of the partners’ bottom line, it’s necessary to know what ones
competitors peers are paying in compensation. Why some loose-lipped partner is sharing this information is beyond me, but hey, it’s dedicated readers fed up with their own compensation that forward these tips on. Now, let’s talk it out.
Which would you prefer – every 10 key cruncher receiving a mediocre payout or just the stars receiving something slightly-better-than-insulting? Comment below, regardless of which firm you work for. Be sure to shed some light on the timing of EY’s payouts if you know any details.
Compensation Watch ’10: Ernst & Young Re-reassures Merit Increases
About a month ago, we heard about an E&Y town hall in Chicago that was meant to rally the troops after the last two weeks of March saw ubiquitous Lehman Brothers/Repo 105/bankruptcy examiner’s report coverage.
Plus, it was the end of busy season so people were likely at their wits end. At said town hall, the raises promised by Americas Managing Partner Steve Howe back in January were reassured.
Despite this message, Steve Howe sent out a triple-reassuring message yesterday to everyone that wasn’t listening and/or didn’t get the communiqué:
Stevie Howe just sent out another long VM confirming raises this year. On a related note, FSO sent out a note about accelerating the annual review process to account for the expedited compensation review process.
Another source told us that more details are to come on an upcoming webcast, and because of the “expedited comp review” process, it has been suggested that the merit adjustments may occur earlier than usual. Right now, our source speculates that it will go down in August but no hard date has been thrown out there. Keep us updated.
Some Behind the Scenes Details on the Ernst & Young “We Are Las Vegas” Video
On Tuesday we briefly shared a video that was put together by the E&Y Las Vegas office that involved a large pair of headphones (Koss perhaps?) an Elvis impersonator, plenty of off-key singing and out-of-sync choreography.
Unfortunately, the video didn’t last and AG piped in only to replace the singalong with another video that had – ugh – subtitles but at least it was a little better rehearsed.
Anyway, we did some poking around and we found out a little back story on this whole “We are Las Vegas” production.
Apparently, the video had its non-GC debut at a townhall meeting in LV last night that was relatively uneventful, according to an accountant close to the sitch:
It was basically a loyalty pep rally. They told us that we would be getting raises, but of course said we would “follow the market.” That’s ironic from a firm that strives to be the “market leader.”
Sounds like the typical yarn but it sounds like it was followed by mucho boozing so that made up for it… Anyway, what about that video?!?
What’s with the ginormous headphones?
Headphones guy was just asked to wear them as a prop. Stevie Wonder did, why not somebody else???
Was the whole office in on this thing? Were accountants forced to participate against their will?
There were people from all service lines. I would say tax and audit were both represented equally. Amazingly, there WERE people who were excited about singing the song.
How was the video received?
I was amazed how the upper level management at the town hall (from various west coast cities) was impressed with the song. The overwhelming response at town hall was “that was a good video.” I think a training at our Times Square office might be in place.
Why on Earth did someone decide to put this on YouTube?
The world may never know.
Ernst & Young Pulls Its “We Are Las Vegas” Sing-a-Long (cry)
Editor’s note: Caleb is at some Si Se Puede rally with other pissed off Big 4 expatriates or something so I’m forced to bring you this news. Surely he’ll return shortly to continue keeping E&Y’s “Internet Reputation Team” in a job.
Earlier today, Caleb posted a pretty awful Ernst & Young sing-a-long that I unfortunately did not get to watch before it was pulled by – well duh – E&Y. Hope you saw it while it was up, I’m sure it was fabulously lame.
It appears they have a bit of a public relations nightmare on their hands but who can say?
Here’s another excellent Uncle Ernie flick, wonder how long it takes for them to pull this one?
Damn. That makes me want to be an auditor.
Elvis Fails to Make Ernst & Young Singalong Less Awkward
Any thoughts on this? The swaying needs work, that’s for sure.
Ernst & Young Needs You to Beg Your Friends to Work at Ernst & Young
Maybe beg is a stretch but the Banking & Capital Markets (they had non-Lehman Brothers clients, you know) practice needs more people ASAP.
The following email is from a partner in the FSO practice requesting recipients to get three to five of their friends to drop whatever they’re doing and join Uncle Ernie’s Army:
Please review the following notice regarding Employee Referrals. The success of our Banking & Capital Markets practice is dependent upon the quality of our people and our ability to grow. In order to reach the goals we have put forth this year, we will need to significantly grow the size of our Practice. A key driver to that growth is Employee Referrals. I would like each person in the practice, from Staff through Partner/Principal, to come up with 3 to 5 qualified referrals who you believe would be strong additions to our practice and help contribute to our growth and success. In addition to submitting them through the Employee Referral Program website, please send the candidate’s name, contact information, resume (if you have available) to our Recruiter, [redacted].
Thank you very much for all of your help and hard work!
Does anyone that just finished up busy season even have 3 to 5 friends/acquaintances outside the firm? Anyone that was your friend prior to the beginning of the year probably assumed that you’re dead.
Anyway, here’s the original plea for Ernsters to play recruiter that includes a nice little bonus if your friend/acquaintance/frenemy makes the cut:
Your help wanted to fill critical job openings within the FSO Assurance Practice
Employee Referral Program
The Employee Referral Program encourages and generously rewards you for recommending great people to Ernst & Young. Over and above the monetary awards, we believe the ultimate satisfaction of making a referral comes from the very real difference you can make for your friends, as well as for Ernst & Young. Here’s a great opportunity for you to help a friend or acquaintance, Ernst & Young and yourself — all at the same time!
The Assurance – Banking & Capital Markets practice is looking to immediately fill positions (Experienced Staff and Seniors) in the areas listed below. You could receive a generous referral bonus (up to $7,500!) by suggesting someone you know who you think would be a good candidate and a great EY team member. All referral bonus award information is listed on the EY Employee Referral Program website below.
Banking & Capital Markets (New York, Boston, Stamford)
Asset Management (New York, Boston, Stamford)
Insurance (New York, Boston)
On-Call Advisory/FAAS (New York) *openings at Senior and Manager levels
To make a referral for one of these positions, please visit the EY Employee Referral Program website at http://chs.ey.net/Referral.
Through the referral program, you make can make a real difference for someone you know, for Ernst & Young and for you. We know for a fact that our very best hires are referred to us by our current people. So, please think about who you know that might make a great addition to our team.
Whether this means that the markets mentioned will avoid layoffs this summer remains to be seen. Happy hunting.
Fuld: Ernst & Young “Supported” Lehman’s Repo 105 Treatment
Dick Fuld has a big date with the House Financial Services Committee tomorrow and he’s going to say that he knew absolutely nada about Repo 105 until that nasty little report came out last month.
Fuld will also state that Repo 105 complied with GAAP and that Ernst & Young “reviewed that policy and supported the firm’s approa f the relevant rule, FAS 140.” Further, E&Y was “auditing our financial statements and reviewing our quarterly and annual SEC filings. Each year, E&Y issued formal opinions that Lehman’s audited financial statements were fairly presented in accordance with GAAP, and they were.”
Presumably E&Y will be okay with this since they’re standing by their audits of LEH so we’re sure no one at 5 Times Square will be interested in tomorrow’s testimony.
Full testimony, via Deal Journal:
Mr. Chairman, Ranking Member Bachus, and Members of the House Committee on Financial Services, you have invited me here today to address a number of public policy issues raised by the Lehman Brothers bankruptcy report filed by the Examiner.
Since September of 2008, I have given much thought to the financial crisis and the perfect storm of events that forced Lehman into bankruptcy. Everyone’s focus is now on how to prevent another crisis. The key is how regulation and governance should be deployed going forward to better protect the financial markets and the entire system.
The idea of a “super regulator” that monitors the financial markets for systemic risk, I believe, is a good one. To be successful in today’s challenging environment, this new regulator should have actual experience and a true understanding of the business of financial institutions, the capital markets and risk management and must be given the resources sufficient to accomplish its important mission.
My view is that the new regulator also should have access, on a real-time basis, to all information and data regarding transactions, assets and liabilities, as well as current and future commitments. In addition, we should put in place established and effective methods of communication between the regulator and the firms being regulated, all of whom should be guided by clear standards for capital requirements, liquidity and other risk management metrics. The job of the new regulator can only be done, in my opinion, with the creation and utilization of a master mark-to-market capability that determines valuations and capital haircuts on all assets, commitments, loans and structures. In short, to have a fair and orderly market, I believe we need a single set of transparent rules for all of the participants.
You have asked specifically about the role of the SEC and the Federal Reserve Bank of New York. Beginning in March of 2008, the SEC and the Fed conducted regular, at times daily, oversight of Lehman. SEC and Fed officials were physically present in our offices monitoring our daily activities. The SEC and the Fed saw what we saw, in real time, as they reviewed our liquidity, funding, capital, risk management and mark-to-market processes. The SEC and the Fed were privy to everything as it was happening. I am not aware that any data was ever withheld from them, or that either of them ever asked for any information that
was not promptly provided. After an extended investigation into Lehman’s bankruptcy, the Examiner recently published a lengthy report stating his views.
Despite popular and press misconceptions about Lehman’s valuations of mortgage and real estate assets, liquidity, and risk management, the Examiner found no breach of duty by anyone at Lehman with respect to any of these.
Speaking of asset valuations, the world still is being told that Lehman had a huge capital hole. It did not. The Examiner concluded that Lehman’s valuations were reasonable, with a net immaterial variation of between $500 million and $2.0 billion. Using the Examiner’s analysis, as of August 31, 2008 Lehman therefore had a remaining equity base of at least $26 billion. That conclusion is totally inconsistent with the capital hole arguments that were used by many to undermine Lehman’s bid for support on that fateful weekend of September 12, 2008.
The Examiner did take issue, though, with Lehman’s “Repo 105” sale transactions. As to that, I believe that the Examiner’s report distorted the relevant facts, and the press, in turn, distorted the Examiner’s report. The result is that Lehman and its people have been unfairly vilified.
Let me start by saying that I have absolutely no recollection whatsoever of hearing anything about Repo 105 transactions while I was CEO of Lehman. Nor do I have any recollection of seeing documents that related to Repo 105 transactions. The first time I recall ever hearing the term “Repo 105” was a year after the bankruptcy filing, in connection with questions raised by the Examiner.
My knowledge, therefore, about Lehman’s Repo 105 transactions, and what I will say about them today, is based upon my understanding of what I have recently learned.
As CEO, I oversaw a global organization of more than 28,000 people with hundreds of business lines and products and with operations in more than forty countries spread over five continents. My responsibility as the CEO was to create an infrastructure of people, systems and processes, all designed to ensure that the firm’s business was properly conducted in compliance with the applicable standards, rules and regulations.
There has been a lot of misinformation about Repo 105. Among the worst were the completely erroneous reports on the front pages of major newspapers claiming that Lehman used Repo 105 transactions to remove toxic assets from its balance sheet. That simply was not true. According to the Examiner, virtually all of the Repo 105 transactions involved highly liquid investment grade securities, most of them government securities. Some of the newspapers that got it wrong were fair-minded enough to print a correction.
Another piece of misinformation was that Repo 105 transactions were used to hide Lehman’s assets. That also was not true. Repo 105 transactions were sales, as mandated by the accounting rule, FAS 140.
Another misperception was that the Repo 105 transactions contributed to Lehman’s bankruptcy. That was not true either. Lehman was forced into bankruptcy amid one of the most turbulent periods in our economic history, which culminated in a catastrophic crisis of confidence and a run on the bank. That crisis almost brought down a large number of other financial institutions, but those institutions were saved because of government support in the form of additional capital and fundamental changes to the rules and regulations governing banks and investment banks.
The Examiner himself acknowledged that the Repo 105 transactions were not inherently improper and that Lehman vetted those transactions with its outside auditor. He also does not dispute that Lehman appropriately accounted for those transactions as required by Generally Accepted Accounting Principles.
I have recently learned that, in 2000, the Financial Accounting Standards Board published detailed accounting rules for transactions of this very type, described them and dictated how they should be accounted for. In 2001, Lehman adopted a written accounting policy for Repo 105 transactions that incorporated those accounting rules. E&Y, the firm’s independent outside auditor, reviewed that policy and supported the firm’s approach and application of the relevant rule, FAS 140.
As I now understand it, because Lehman’s Repo 105 transactions met the FAS 140 requirements, that accounting rule mandated that those transactions be accounted for as a sale. That was exactly what I believe Lehman did. Lehman should not be criticized for complying with the applicable accounting standards.
In other words, those transactions were modeled on FAS 140. The accounting authorities wrote the rule that expressly provided for those transactions and how they should be accounted for. To the best of my knowledge, Lehman followed those rules and requirements.
My job as the CEO was also to put in place a robust process to ensure that Lehman complied with all of its obligations to make accurate public disclosures. I had hundreds of people in the internal audit, finance, risk management and legal functions to ensure that we did, in fact, comply with all of our obligations.
Part of that process was E&Y’s role in auditing our financial statements and reviewing our quarterly and annual SEC filings. Each year, E&Y issued formal opinions that Lehman’s audited financial statements were fairly presented in accordance with GAAP, and they were.
We also had in place a rigorous certification process that was carried out in advance of every annual and quarterly SEC filing. That bottom-up process involved hundreds of people who had first-hand knowledge of the firm’s day-to-day business and the responsibility to review for accuracy and compliance the firm’s SEC disclosures before they were filed.
Before we made any annual or quarterly filing, the key people who were involved in this process signed certifications confirming that, to their knowledge, the filing did not contain any untrue statement of a material fact or any material omission and that it fairly presented Lehman’s financial position.
Our certification process culminated, every quarter, with a mandatory, allhands, in-person meeting, which was chaired by Lehman’s Chief Legal Officer. In addition to me, that meeting was attended by the firm’s President, Chief Financial Officer, Financial Controller, Executive Committee members, business heads, the principal internal audit, finance and risk managers, legal counsel and our outside auditors.
After we had reviewed the draft annual or quarterly filing in detail, the Chief Legal Officer and I would each ask everyone present to speak up if there was anything in the document that caused them concern, or if anything had been omitted that they thought should be included. Attendees were also told that they should speak separately with the Chief Legal Officer if they had an issue that they did not want to raise at the meeting. To my knowledge, no one ever, at any of those meetings, raised any issue about Repo 105 transactions.
I relied on this certification process because it showed that those with granular knowledge believed the SEC filings were complete and accurate. I never signed an SEC filing unless it was first approved by the Chief Legal Officer. Mr. Chairman, I thank you for allowing me to speak on these issues and I will be pleased to answer any questions this Committee may have.
The PCAOB Is the Latest Headache for Ernst & Young
Charlie Gasparino is on E&Y like stink on a monkey this week. After reporting yesterday that the SEC may eventually get around to charging Dick Fuld and/or Ernst & Young for the accounting hijinks at Lehman Brothers, CG is now reporting that the PCAOB is asking all kinds of questions that E&Y would rather not answer.
Not exactly great news from CG so we emailed E&Y spokesman Charlie Perkins to see what’s what. He declined to comment and said the firm would not be releasing a statement related to this report.
We also called up the PCAOB to get their take and spoke with Colleen Brennan, Deputy of Director of Public Affairs, who said that the Board is prohibited from discussing these matters and provided us with the details:
The PCAOB cannot comment on whether it is investigating a particular registered accounting firm or a particular public company audit by a firm. The Board, however, takes all allegations of improper professional conduct by a registered public accounting firm seriously and considers all information relating to such allegations.
PCAOB investigations and contested contested disciplinary proceedings are confidential under the Sarbanes-Oxley Act. The PCAOB’s inventory of enforcement matters includes audits of all sizes and varying complexity, including matters related to audits by large firms for issuer audit clients involved in the financial crisis.
So no one is talking. Fine, we’ll just have to take Charlie at his word. What we do know is that if the Board does decide to lay the smackdown on E&Y, they’re going to tell the entire universe about it via its “Disciplinary Orders,” and as CG notes in his report, if the PCAOB does bring an action against E&Y it will be the highest profile enforcement action in its short history. Not exactly a BusinessWeek list.
SEC Might Bring Civil Charges Against Ernst & Young Soon, Maybe
Charlie Gasparino is reporting that the SEC probe in the Lehman Brothers bankruptcy is “ramping up” and that the Commission is under hella-pressure to bring civil charges against Dick Fuld, Ernst & Young and whoever else is on the list.
It’s unclear if the SEC can muster the necessary proof to show that top executives like former CEO Richard Fuld or the firm’s outside auditor Ernst & Young intentionally misled investors about the health of Lehman’s balance sheet in the months before it filed for bankruptcy in mid-September 2008, according to people close to the probe…It’s unclear when any charges might be filed by the SEC, but people close to the inquiry say the SEC believes it does bring one, it must do so “very soon,” possibly within a few months given a combination of the outrage over the report’s findings and that Lehman’s bankruptcy is going on two years old.
Okay, so things are urgent but not that urgent. It’ll be Father’s Day maybe the 4th of July by the time we get a Mary Schapiro smackdown.
But that’s not all! Things are really serious at Ernst & Young now because Charlie reports that E&Y “has hired high-profile white-collar attorney William McLucas as its outside counsel in the matter, people close to the firm say. McLucas had been the SEC’s enforcement chief before entering private practice.” We checked with our friends over at ATL and it turns out that Mr McLucas is a partner at high-powered WilmerHale and was lead counsel to the special committee of the Enron Board that reported “hard-hitting findings” (sayeth he).
Since Mr McLucas doesn’t take shit from the likes of short-seller Jim Chanos, we’ll take Charlie’s word that things are pretty serious over at 5 Times Square.
E&Y spokesman Charlie Perkins declined to comment.
SEC Probe of Lehman Picking Up Steam [FBN]
Gasparino: SEC May Be Forced To Do Something About This Whole Lehman Thing [DB]
Compensation Watch ’10: Ernst & Young Still Planning on Merit Increases
A little more from inside E&Y to round out the week. We got a tip earlier in the week that there was an oddly-timed town hall going on in Chicago this week. Our tipster indicated that the meetings usually occur after the June 30 year-end or in September.
We asked around and from the sounds of it, the meeting amounted to an extremely sober pep rally. The need for a little HR cheerleading is completely understandable, considering the month E&Y has had.
“[T]hey just talked about how they know morale is down, yet no plans for how to fix it. Additionally, they said there would be raises this year, but no mention of how large or small…[and] your basic HR ‘Thank’s for your help’ stuff.”
We haven’t heard the details for the cause “low morale” but it’s quite possible that it could be due, at least in part, to the ehmanlay rothersbay uckshowfay. Plus, busy season is in the home stretch and most people are just over it at this point. As far as fix for morale, our suggestions of Canadidan Tuxes, Timberlands and Hitler videos are obviously being ignored with extreme prejudice. We’re all out of suggestions. Maybe they aren’t the best ideas but at least we’re trying.
The silver lining here is that comp increases are still on the agenda after the initial announcement made by Steve Howe back in January. If they go back on this promise — we’re confident they won’t — you can just blame it on Dick Fuld.
Quote of the Day: If Felix Salmon Was on an Audit Committee | 03.25.10
“If I was on the audit committee which received this letter, I would certainly be shopping my account right now.”
~ Felix Salmon, on Ernst & Young’s “hilariously disingenuous” letter to various audit committee members.
Can the Month of March Get Worse for Ernst & Young?
Today in non-Lehman Brothers Ernst & Young news, the firm has been sued by a liquidator in Luxembourg just a few weeks after a Lux court ruled that individual investors couldn’t bring suits against UBS and E&Y. The suit seeks over $400 million in damages against the two firms. The Iriving Picard de Lux is Alain Rukavina, who filed the suit today.
BBW reports that “Rukavina is one of two liquidators who in December sued UBS and Ernst & Young over Access International Advisors LLC’s LuxAlpha Sicav-American Selection Fund, which once had $1.4 billion in net assets.”
A UBS spokesperson stated that this development was not unexpected and we’re sure that E&Y isn’t yawning at this news, chalking it up to fairly typical Monday.
So in case you’ve been in a coma for the last week or so, you’re probably aware that JT and Co. haven’t had such a great March. Anyone got ideas for how they turn all these frowns upside downs? Do Canadian Tuxedos become standard dress code M – F? Does Jimbo send everyone a complimentary pair of Timberlands? An E&Y Hitler video to lighten the mood? Suggestions are welcome.
UBS, Ernst & Young Sued by Madoff-Fund Liquidators [Bloomberg BusinessWeek]
Quote of the Day: Mary Schapiro Is Being Coy | 03.18.10
“It is safe to assume that we are looking at the conduct of a number of firms.”
~ Mary Schapiro, to a House appropriations subcommittee, not specifically naming Lehman Brothers or Ernst & Young.
(UPDATE) Ernst & Young Doesn’t Care if You Missed Murray State Upsetting Vanderbilt
From an upset Ernster on the Left Coast:
EY Blocks all Websites with “sports” because of March Madness. People in my SoCal office are all ticked off. This sucks. First it was pandora and now it is sports websites. What is next? Lunch breaks? Bathroom breaks?
Music, sports, food, bodily functions. That seems like the right order, doesn’t it?
Since our source sounds pretty upset, this must not be an annual ritual for E&Y. It’s also not clear if this some kind of punishment for everyone showing up hungover today or if it is somehow Lehman Brothers related. Let us know if you’re blacked out at we’ll send you updates.
UPDATE, 6:43 pm: Turns out this was just temporary, THANK GOD:
It turns out there was an internal webcast about Lehman Bros so they shut down all sports websites during the webcast because it was interferring with the webcast. Sports websites are back up but there were a lot of people who were ticked off and went home to work.
Damn you Lehman Brothers! We knew it! So now the question is, what was said on the webcast? Anyone take copious notes?
Former SEC Chairman Pitt: Criminal Prosecutions Are Possible for Ernst & Young, Lehman Execs
Okay then! Not exactly what you’d want to hear from a former SEC Chairman on Monday but what’s a former SEC honcho to do? Paint a rosy picture for everyone? Hell no! The man is gong to get real about this latest bank/accounting firm disaster. Barron’s ran down Harv to get his $0.02 on the whole Lehman/E&Y sitch and he he laid it out for Dick Fuld, E&Y, et al. as how to best handle this dicey situation.
Regarding the timing of a response to the report, you best explain yourselves ASAP and while you’re at it, none of that fancy-schmancy language. Everyone needs to be able to understand this:
If they want to avoid the logical consequences of the ReportÃ¢Â€Â™s conclusions-and none of those consequences are at all good for either Fuld or E&Y-they will need to come forward quickly with a very plain, easily understandable explanation of the errors or their defenses. The longer it takes them to do that, the less likelihood they will have of mitigating the publicity the ReportÃ¢Â€Â™s allegations have already received.
Consequences, you ask? How about indictments? How about no more SEC clients for E&Y? Next Andersen? Maybe! Shockingly, the SEC seems to be dragging its feet, per the usual standard operating procedure (emphasis original):
Many are wondering why there hasnÃ¢Â€Â™t been any action taken, and why the government hasnÃ¢Â€Â™t reported on the same events itself. Criminal prosecutions are possible, as are SEC civil actions. For Fuld, an SEC action could mean that he would forfeit his right to participate in the securities industry and possible disgorgement of monies he received over the years from Lehman. For E&Y, the SEC has the power to suspend their right to practice accounting, limit their ability to take on new clients, and impose remedial sanctions.
Yeah, that last part is kind of the crux. As you may recall, Andersen did not bite the dust because of the money it had to pay to Enron investors but because it’s reputation took such a bad hit that states began revoking their license even before the firm voluntarily surrendered its license to practice before the SEC. This occurred after Andersen clients started running away from the firm like a band of lepers. There’s no indication that’s what will happen to E&Y but there’s a 2,200 page report with E&Y’s name all over that says nothing flattering about the firm.
And say what you want about Harvey Pitt: bearded Bush yes-man, lawyer, whatever. As far as we can tell, he has nothing to gain by throwing out wild-ass speculation about what the possible outcomes could be.
Inside Ernst & Young: Talking Points on Lehman Brothers
If you’ve ever worked at a Big 4 firm, you’re aware that when big news hits the MSM, A) it’s never good and B) there is typically some sort of communication from management reiterating the firm’s position on the matter, everything is cool, thanks for your hard work, etc. etc.
With last week’s revelation of the bankruptcy examiner’s report on Lehman Brothers, E&Y seems to be following this protocol as it relates to the troops on the ground. As you would expect, leadership is keeping their heads about this while in the background in-house counsel is likely engaged in all-night smoky room strategy sessions.
We checked in with a few of our Ernst & Young sources to get an idea of what people were thinking and so far, there doesn’t sound like there are any signs of panic (yet!).
From one source:
Overall reaction from what I gathered is pretty muted. We did get a call from some of the higher-ups saying that we reviewed our work and that we feel that our audit was completely adequate and that Lehman’s failure was nothing more than the same systemic failure of two of the other major banks and that we plan to defend ourselves vigorously. Presumably, the examiner’s report really didn’t give any ah-ha moments….
[I]s there a possibility of a payout at some point? It’s possible. Are we worried that we’re the next Arthur Andersen? I don’t think so.
So at least on the surface, E&Y leadership is communicating that what came out in the report wasn’t surprising and that the defense of the firm’s position will be, as usual, vigorous.
That doesn’t of course stop the speculation:
I heard from a technical guy there was some concern because they didn’t issue a going concern opinion [for the previous audit].
And as you might expect, “I heard that [the firm] helped cook the books and is deep shit,” with the book cooking being arguable but pretty hard to prove and the “deep shit” aspect being a given.
Some Ernst & Young partners are probably losing sleep just thinking about the potential liability involved here but eventually they’ll get over it (until something else comes up).
No partner worth their salt got admitted to the partnership focusing on the downside. The problem is that when people use consistently use words like “deceptive” and “misleading” to describe Lehman’s accounting this reflects poorly on the firm since they were comfortable with the treatment.
And because it’s still busy season for a lot of people, they are focused on the shitstorm that currently surrounds them, not one that will likely drag on for years after they’ve left the firm (voluntarily or otherwise).
Anyone with more insight or thoughts on the matter, get in touch with us and we’ll keep you updated on the chatter inside E&Y.
Quote of the Day: Ernst & Young Partners Losing Sleep? | 03.12.10
“A successful lawsuit against E&Y could result in a court finding that the failure to properly advise the audit committee prevented Lehman from taking genuine steps to substantially reduce its leverage, which may have saved the firm from bankruptcy. Which is to say, E&Y could find itself blamed for all the losses to Lehman shareholders. That would be a stretch – such a claim would be speculative – but it still should be scaring the heck out of the partners.”
Ernst & Young Was ‘Comfortable’ with Lehman’s Shady Accounting
Late yesterday, U.S. Bankruptcy Examiner Anton Valukus released a 2,200 page report that details the collapse of Lehman Brothers. It points the finger at Lehman execs for engaging in shady accounting that Ernst & Young knew about and was comfortable with. Lehman’s Board of Directors were not informed of the questionable accounting treatment.
To put it in more technical terms: Ernst & Young is in deep shit. The lead partner on the Lehman audwed more times than Dick Fuld for crissakes.
The accounting in question was known inside Lehman as “Repo 105.” These transactions moved billions of dollars off of Lehman’s balance sheet that were described by emails in the report as “basically window dressing” and their global financial describing them as having “no substance.” The Times reports that the treatment was so crucial to LEH that one executive, Herbert McCade, was known internally as the “balance sheet czar” and that he described in an email that the treatment was “another drug we r on.”
The really bad part for Ernst & Young is that they were okay with the “drug.” From the report, the lead partner stated that E&Y “had been aware of Lehman’s Repo 105 policy and transactions for many years.” For you wonky types, Lehman was accounting for these “Repo 105” transactions based on guidance from Statement on Financial Reporting Standard 140, Accounting for Transfers of Financial Assets and Repurchase Financing Transactions.
E&Y’s “team had a number of additional conversations with Lehman about Repo 105 over the years,” although they were not involved with drafting the policy nor did the firm provide any advisory services related to the transactions. According to the lead partner on the engagement, the firm simply “bec[a]me comfortable with the Policy for purposes of auditing financial statements.”
The problem, according to the Examiner’s report is that E&Y was okay with the treatment based on the theory:
Ernst & Young’s view, however, was not based upon an analysis of whether actual Repo 105 transactions complied with SFAS 140. Rather, Ernst & Young’s review of Lehman’s Repo 105 Accounting Policy was purely “theoretical.” In other words, Ernst & Young solely assessed Lehman’s understanding of the requirements of SFAS 140 in the abstract and as reflected in its Accounting Policy; Ernst & Young did not opine on the propriety of the transactions as a balance sheet management tool.
According to Lehman’s Global Financial Controller Martin Kelly, “Ernst & Young ‘was comfortable with the treatment under GAAP for the same reasons that Lehman was comfortable.'” Don’t you love it when things work out like that?
Ernst & Young has issued a statement that simply addresses the final audit that the firm performed: “Our last audit of the company was for the fiscal year ending Nov. 30, 2007. Our opinion indicated that Lehman’s financial statements for that year were fairly presented in accordance with Generally Accepted Accounting Principles (GAAP), and we remain of that view.”
SO! E&Y is in a bit of a pickle. Civil suits have already been filed against both firms and more investigations will certainly be coming. If you’ve got some time over the weekend, take a flip through this beauty. We know there is accounting porn in there for some of you.
Report Details How Lehman Hid Its Woes as It Collapsed [NYT]
Examiner: Lehman Torpedoed Lehman [WSJ]
Lehman Brothers Holdings Inc. Chapter 11 Proceedings Examiner’s Report [Jenner & Block]
Luxembourg Court Ruling Nullifies Madoff Investors’ Claims Against Ernst & Young, UBS
Of course the investors are appealing but one win at at time, amiright?
The suits were filed in the fall by investors who lost millions in the LuxAlpha Sicav-American Selection fund which had 95% of its fund invested with Bernie Madoff. The fund claims that it had $1.4 billion in net assets a month prior to Madoff’s arrest.
UBS acted as the custodian while E&Y was the auditor and were sued for “seriously neglecting” their supervisory duties for the fund. Investors in the fund filed more than 100 lawsuits against the two companies.
Luxembourg’s commercial court said in a ruling today concerning 10 test cases that investors can’t bring individual lawsuits for damages. The court said it’s up to the liquidators of the funds that invested with Madoff to seek the “recovery of the capital assets.”
In other words, UBS and E&Y, you’re going to get sued by Irving Picard de Luxembourg rather than 100+ pissed off individuals whose life savings went *poof*. Setting legal precedent aside, taking emotion of the equation works wonders for making an argument.
UBS, Ernst & Young Win Bid to Block Madoff Lawsuits [Bloomberg BusinessWeek]
Ernst & Young Is Thankful for Lawyers, Possibly Toblerones
Ernst & Young Auditors Accused of Missing ‘Tax Loan’ for Investment Adviser’s Stripper Girlfriend
Today in unaudited stripper expense news, two Ernst & Young auditors have been accused in an SEC enforcement action for not investigating a “tax loan” that was misappropriated by a Chicago investment adviser.
John Orrechio founded AA Capital, Inc. in 2002 and he immediately started wining and dining potential clients (primarily unions) in Detroit and Las Vegas. In August of ’03, Orrechio started dating a Detroit stripper (as these stories often go) and he started spending truckloads of money on her and her family. Shortly thereafter, in 2004, Orrechio started taking money directly from client’s tax accounts to fund said his lifestyle and the lifestyle of said stripper.
Orrechio’s stripper fund must have ran dry at some point and he decided to pursue other methods of financing his
family fun time. Since he probably wasn’t too keen on letting everyone in on his little problem, Orrechio told his CFO, Mary Beth Stevens, that he owed a grip to the IRS because of his ownership in one of the affiliate private equity fund and that E&Y screwed up filing one of his tax returns:
Orecchio told Stevens that he needed to borrow money to pay his taxes. At Orecchio’s direction, Stevens withdrew $602,150 from AA Capital’s client trust accounts and then wired the money to Orecchio’s personal bank account.
Between May and December 2004, Stevens made three additional disbursements to Orecchio to pay his purported tax liability. During 2004, Orecchio received a total of four separate disbursements under the guise of the “tax loan” totaling approximately $1.92 million.
Ms Stevens, probably not wanting upset the boss (i.e. get in the way of a man and his stripper girlfriend), played ball. When the two auditors in question, Gerard Oprins and Wendy McNeely, learned of this tax loan, they are accused of doing, well, not much:
20. After learning about Orecchio’s purported “tax loan,” Oprins and McNeeley failed properly to evaluate the transaction or require other audit team members to do so. The audit team did not obtain any documentation reflecting Orecchio’s tax liability or the terms of the “tax loan.” They did not discuss the “tax loan” with Orecchio. They did not take steps to confirm Stevens’ statements that Orecchio “made a payment to the IRS for $1,921,050” or that the “tax loan” would be repaid by Orecchio or the IRS during 2005. They did not take steps to assess the collectability of the “tax loan.” They also failed to discuss Orecchio’s tax liability with their colleagues in Ernst & Young’s tax department who prepared the tax filings for AA Capital and its affiliated private equity funds.
21. Oprins and McNeeley also failed to scrutinize Orecchio’s “tax loan,” or require other audit team members to do so, in light of several red flags that the audit team encountered related to Orecchio’s spending habits.
This all led to an unqualified opinion issued by Ernst & Young on AA Capital’s and AA Capital Equity Fund’s (the affiliated private equity fund) 2004 financial statements. Because of the undisclosed stripper piggy bank, the actions of the auditors amounted to financial statements that weren’t in accordance with GAAP and an audit that wasn’t performed in accordance with GAAS.
An Ernst & Young spokesperson declined to comment.
The two auditors are accused of “improper professional conduct” which could result in the two not being allowed to appear or practice before the SEC, which, if you were to ask Harry Markopolos, will save you the trouble of working with idiots.
ACCOUNTING AND AUDITING ENFORCEMENT [SEC]
Ernst & Young Auditors Accused in Investment Case [Web CPA]
(UPDATE) Jim Turley Breaks Out the Fancy Footwear for His Interview on Bloomberg
~ Update includes quote from Britt Aboutaleb of Fashionista
We meant to get to this on Friday but there was a social engagement occurring that couldn’t be avoided; you know how it is. Anyhoo, the Ernst & Young CEO sat down with Bloomberg last Friday to talk tax policy and we found a few things rather interesting. Watch and we’ll chat about some things after the jump:
First things first: How about the two hotties that Bloomberg threw at JT?
Second: why does the MSM always refer to the “Big 4” as the “so-called Big 4”? Does Big 4 carry some negative connotation in some corners of society or is it meant to be a not-so-subtle dig, like when you call the token short guy on your team “big guy”?
Third and of utmost importance: what’s with JT’s footwear? Are those Timberlands? Does he just put on whatever the wife lays out for him or did she happen to take all of his wingtips to the cobbler this week? OR did he just get back from hiking the Appalachian Trail à la Mark Sanford?
Whatever the situation is, they look like they’ve gotten some good use. We’re not sure what Jimbo likes to do for recreation but it must involve some rugged backdrops that may involve him wearing a flannel shirt and chopping wood.
Britt Aboutaleb, one of the editors of our sister site, Fashionsita, had these thoughts, “I can’t even see the shoes — they look like they’ve emerged from a swamp! Maybe he forgot the shoes he was supposed to change into after trekking through the snow? Or maybe he didn’t realize his feet would be caught on camera…”
God, we hope JT could have arranged for some car service rather than schlepping through the snow. On the other hand, maybe walking to interviews is part of a green initiative? Either way, he could have brought the shoes along and changed into them. Just a thought.
On the other, to say that this is a fashion faux-pas would be an understatement akin to saying “E&Y had a few layoffs last year.”
Ernst & Young Announces Canadian Tuxedo Fridays for the Remainder of Busy Season
Officially, it appears that it’s just half of the Canadian Tux. You can show up in the jacket if you want but we’d advise you lose it while at the office.
Oh right, showing up at your client from head to toe in denim is not advisable so that eliminates a fair share of you. As for the rest of you, kindly schlep that extra outfit with you just in case. You never know when you’ll need the biz-pro or biz-casual uniform handy. On a somewhat related note, it’s not entirely clear is if the Texas Tuxedo is allowed.
Allowing denim on Fridays during busy season is probably not unprecedented but it may be enough to get some of you through the next 30-ish days. Enjoy.
Ex-Ernst & Young Partner Sentenced to One Year and a Day for Securities Fraud
James Gansman, a former E&Y partner in transaction services, was sentenced to one year and one day in jail on Monday after being convicted on six counts of securities fraud last year.
Gansman had provided his mistress, Donna Murdoch, with tips on mergers that Ernst & Young were advising which she subsequently traded on. Despite the help, Murdoch needed more money and she began an affair with another man who used the tips to make trades.
To add insult to injury, Murdoch ultimately cooperated with investigators and testified against Gansman. She is still awaiting sentencing after pleading guilty to fifteen charges of securities fraud, obstruction of justice, and making false statements.
Beside making bad relationship choices, Gansman’s hot tips were in violation of E&Y’s “written policies and the duty of trust owed to the firm’s clients.” That extra day in prison should give him just enough time to study better decision making.
Ex-Ernst & Young Partner Gansman Sentenced To 1 Year, Day In Prison [WSJ]
Ernst & Young Shares the Glory of Its Fortune 100 Victory
Shockingly, many of you don’t get too excited where your firm falls on the F100BCTWF list. Well, in case you’ve forgotten, your firm cares. They care a lot and they want you to care too because dammit, this is important. Somebody over at E&Y got to thinking and decided that bribing you with pastries was the solution to get you Scrooges to appreciate the firm’s 12th year on the list aaannnd being the highest ranking accounting firm on this year’s list:
We’re guessing Jim Turley might be phoning someone in order to save him all the bearclaws, so you best get there early.
Ernst & Young “Believes” It Will Have Pay Raises This Year
Great news Ernstiverse! If you didn’t have the pleasure of hearing it yesterday, Steve Howe, your Americas Area Managing Partner, announced that he “believes” that you’ll be back to pay increases this year, but he’ll let you know for sure as you get closer to the “salary adjustment date”. Sounds like a guarantee to us!
Plus! Being a general believer in resolutions (and noticing you haven’t don’t anything about that paunch), we heard that the firm will now reimburse “reasonable fitness fees incurred while traveling.”
No doubt Steve-o was in a good mood yesterday after seeing that E&Y was the highest ranking Big 4 firm on the F100BCTWF list and he felt like spreading more good news. In his mind, the title was never in doubt but it’s still nice to see the confirmation.
SH makes three accounting firm big shots to announce that happy times are here again in 2010. Along with soon-to-be blogger Stephen Chipman and the original shot-caller, Bob Moritz, the thawing of salaries might be gaining momentum.
The question does remain: will T Fly and Dr. Phil make similar announcements? Have they already? Are they saving it for a better time, say, mid-February when many of you will be close to losing your shit and are about to storm out once and for all? If they’ve made guarantees, kindly let us know, we’d like a superfecta if possible.
(UPDATE) Ernst & Young Partner Sentenced to Prison for Role in Tax Shelter Scheme
In accountants going to jail news, E&Y partner Robert Coplan was sentenced to three years in prison for his role in creating tax shelters for wealthy clients from 1998 to 2006.
In addition to the jumpsuit (denim?), Mr. Coplan was ordered to pay a $75,000 fine and peform 120 hours of community service, half of which must be counseling of tax professionals about his time as a scofflaw.
Judge Sidney Stein said that while Mr. Coplan was an otherwise all right guy, the sentence was for ‘general deterrence’ and that he understood that ‘there was pressure coming from higher-ups at Ernst & Young’.
Judge Stein is scheduled to hand out more prison time to former E&Y partner Martin Nissenbaum today, while former partners Richard Shapiro and Brian Vaughn tomorrow.
Presumably all the men have access to a toilet without too much hassle.
UPDATE, Friday 8 am: Martin Nissenbaum was sentenced to two-and-a-half years. Not sure why he got 6 months less than Coplan but we’re sure he’s thrilled with the outcome.
E&Y partner gets prison over tax shelter scheme [Reuters]
The Fortune 100 Best Companies to Work For: Ernst & Young #44
The always über-hyped Fortune 100 Best Companies to Work For is out and a handful of accounting firms make an appearance, thus, extending the number of years that firms will continue to boast about their inclusion. We’ll present each in the order they are ranked for your enjoyment/debate/debunking, starting with E&Y.
Ernst & Young #44 – Previously ranked #51. According to Fortune E&Y is great because, “E&Y is the only one of the Big Four to offer a traditional pension in addition to a 401(k). The firm is courting alumni via a new magazine, Connect.”
Other interesting stats per the snapshot:
• New Jobs (1 year): -1,111;
• % Job Growth (1 year): -4%;
• % Voluntary Turnover: 10%
• No. of Job Openings at 1/13/2010: 622
• Most common salaried job: Manager with average salary of $105,544
This is the first we’ve heard of Connect but we’re guessing Zitor makes a regular appearance. If no Zitor, we wouldn’t bother.
On a more biological note, it’s not clear is where E&Y would rank if Fortune had gotten word of someone hoarding the keys to the mens john in Jericho. We figure if they knew a sicko like that worked at E&Y it would knock them out of the top 50 at least.
Layoff Watch ’10: More Details on Ernst & Young
We have some additional details to share with you to supplement last Friday’s post on E&Y’s New Year layoffs.
While we were surprised at the timing, a source has indicated to us that IT Risk and Assurance layoffs have occurred at the firm each January since 2008. This is due to a serious drop off in utilization in the new year after high utilization in the fall months
with the exception of especially in the audit heavy ITRA practices.
In regards to the audit practice, we spoke to another source over the weekend that told us that layoffs would not occur until after busy season but assured us that they are being planned.
Finally, in response to one comment asking about severance details, we were informed that the severance for those let go is a week’s pay for each year of service with a minimum of 4 weeks pay. This seems to be fairly standard (with a few variations) amongst the Big 4.
We’ve received word on some positions cut but we’re still awaiting further details so if you have any information or can provide more insight discuss below or get in touch and we’ll update them here.
UPDATE: A source has indicated that three IT Advisory managers in FSO in New York were included in the cuts.
Layoff Watch ’10: Ernst & Young January Edition
Confused doesn’t even begin to describe what were feeling. We are hearing tons of rumors about layoffs in the Ernstiverse this week.
We’ve heard rumors from Denver to the East-Central (fka North-Central) and New York FSO. This includes both client serving professionals and support staff. We have already confirmed that two admins were let go earlier this week in New York.
The timing is especially strange since, you know, it’s January and in some offices the mandatory hours have already rolled out. Even if it were only support staff being let go, the timing is still unheard of. Why wait until January to let people go when having cuts in November? Maybe it’s just us but if we had survived that November cut, we would have thought that our job would be safe until at least the spring.
And since the roundtables seem to be SOP you wouldn’t think they would be anything to worry about but they definitely have people talking and wondering what will go down.
So far, Ernst & Young has not responded to our request for comment.
If you hear anything about your office get in touch in with us and discuss in the comments.
Rumor Mill: New Ernst & Young Office Requires Sterile Cubes, Secure Lavatories
As you’re all aware, your working environment is crucial to your productivity (or lack thereof). The slightest change can throw off your mojo for days or weeks at time. Maybe indefinitely.
So when we heard that the E&Y Long Island office had moved from Melville to Jericho we were concerned for the professionals in that office.
Brand new office in EY spirit, bright white, yellow partner and senior manager offices, orange walls in the enormous staff through manager room. We have super tiny cubes with really short walls where you just sit up an inch and you can see the person across from you. No space heaters or mini fridges allowed and you aren’t allowed to put up anything on you [sic] “cube” / “workstation” walls. They have to remain white. Oh and the bathroom requires a key in which you must walk from the far back of the office (where are seats are) to the front desk to get the key. There are 5 keys for men and 5 for women but the mens keys have dwindled down to 2 so you have to wait for someone to come back from the bathroom to go.
The team colors are a nice touch but the cube dwellers aren’t allowed to decorate? No pictures of spouses, kids, friends, dogs, cats, co-worker crush, favorite metal band allowed? What about the certificate you got from the latest in-house CPE? Can that go up? It sounds as though TPTB are insisting on the most sterile environment possible. No distractions. What about looking that person across from you dead in the eye while they’re eating with their mouth open? How’s that for a distraction?
Speaking of sterile environments, what’s with the bathroom keys? Are homeless people sneaking in and stanking up the joint? And they’re down to two keys for the men? Where did the other three keys go? What sadist is hoarding keys at the expense of other people’s excretory and digestive systems? Any ideas people? Maybe the keys just got flushed. Let’s get to the bottom of this mystery. Discuss.
Ernst & Young Extends Busy Season Two Weeks
While Deloitte rings in the new year with generosity, E&Y has apparently taken a different approach.
One of our sources in the Ernstiverse has told us that busy season is being extended by two weeks this year. The first “official” week is this week (moved up one week from its usual spot) and there will be an additional week on the back end (first week in April as we understand it). This means mandatory 55 hours weeks are in full effect, so find some work people.
Oh! And it’s also our understanding that this week, “roundtables” are going on in the audit practice. We don’t know what those are exactly but it sounds sorta serious and it’s definitely not billable, so enjoy making up the time. If you’ve had the pleasure of attending one of these sit-downs, let us know how it went and keep us updated with other details.
Rumor Mill: More Ernst & Young Offices to Become “Virtual”?
Last month we told you about the E&Y Greensboro office shutting its doors to become a “virtual office”. All the client-serving professionals (around 60) are now reporting and being serviced out of the Raleigh office.
This followed the closure of the Manchester office that we reported on in October and that became official in November. In this particular case, there was no merging of sites and client service professionals (non-partners) were let go.
The latest speculation is that there are several small offices that are at risk of going virtual as opposed to out-right closing post busy season, using the Greensboro office as the model. Offices that are being serviced by nearby larger offices are of greatest risk as well as small offices that have a dwindling client base.
Although the virtual office seems to be the most warm and fuzzy of the two options, there would certainly be layoffs of support staff and service professionals that weren’t interested in working from an office that was a considerable distance from where they lived.
Whether or not this strategy will be utilized by other Big 4 firms is not clear but this story will continue to develop as busy season progresses. If you hear rumors about your office get in touch with us. We’ll keep you updated as we learn more.
How Does Seeing 5 Times Square on New Year’s Eve Make You Feel?
We’ve noticed a lot of chatter in the Twitterverse from soldiers in Uncle Ernie’s army regarding the E&Y sign in Times Square. As you might imagine, the reaction is mixed.
Wanting some reader input we asked around to some of our E&Y sources for their thoughts on seeing the sign on the tube while ringing in the New Year or their reaction if they saw it. So far, we’ve only heard back from one source (are people working too hard already?):
Hmmmm EY on a TV…..I’d flip the eff out!!!!!! No raises this year. I’d probably drag the TV out by its power cord. Then I would taunt it, kick it, give it cigarette burn marks and finally bury the tv alive by strapping it to a gas generator and dumping it in to a smelly landfill. I would then go home, feel bad for the tv for about 5 seconds and eat some apple pie.
For the non-E&Yers the sign may not provoke such shockingly violent images. However, if you did have any thoughts, any thoughts at all, when you saw the sign on NYE, feel free to share them here. We don’t want you to scare your therapist.
Rumor Mill: More Ernst & Young Restructuring Details
We’ve got a follow up to our post yesterday about E&Y’s restructuring plans for the North Central and Pacific regions.
A source has informed us that the Financial Services Office (“FSO”) began nationalizing non-audit banking and asset management clients earlier this year. Insurance clients are also going to be under FSO, which will centralize all non-audit financial services clients. Our source has further indicated that the next step is to nationalize the audit clients. The ulitmate goal is to slim the firm down to five total regions (West, Central, Southeast, Northeast, and FSO).
We asked a couple of sources about this particular rumor to get some opinions:
I do hope this is not true, as [FSO] can’t audit their way out of a paper bag. I’m not sure why they would make an interim step as they’re making now if there’s an ultimate goal of five sub-areas
Running FSO out of NYC seems like a good call from an overhead…cost standpoint but that’s about it. I have heard horror stories about the kind of hours FSO staff typically pull year round. I don’t see this making the “people in the trenches” any happier. Having all the work routed to one place makes it easier…to make sure that work is getting done…Of course I think this is just going to turn FSO into more of a meat grinder than it already is since they are going to do everything they can to get as much work in the pipeline as possible to keep that group busy.
As we mentioned yesterday, E&Y would not comment on internal firm matters.
If you’re in the FSO practice and can attest or refute any of the above details (horror stories, meat grinders, auditing out of paper bags) or even if you’re not and have an opinion share your thoughts below.
In Better Late Than Never News…
Hey gang, we’ll just take a moment of your time to point out the bang-up job that’s being done at the The Business Journal of the greater Triad Area. They’re not in the class of the CNNs of the world but we figure some recognition is appropriate.
They ran a story dated Friday the 18th entitled, “Ernst & Young merging sites, making Triad virtual office” which is kinda, sorta similar to a post we did on December 10th.
Maybe we’re hung up on little stuff like choice of words and timing but we’ll be damned if we see “first reported by Going Concern” anywhere.
…roughly 60 client-serving professionals based in the Greensboro office at 202 Centreport Drive will remain with the firm, with most staying in the Triad to work remotely. They will report to and receive support services from the Raleigh office…
The statement did not specify the impact of the move on Triad support and administrative staff, including whether there are any transfers or layoffs occurring.
If the TBJ is curious, we know the impact on the support staff. You can email us here if you’re still wondering.
We also don’t see any mention of the Manchester closing either but that’s in a whole other state, so it’s probably not relevant.
Ernst & Young Restructuring Plans Affect North Central, Pacific Regions
We received several reports over the weekend and today about regional restructuring at Ernst & Young that will go into effect on January 1.
The majority of the North Central region will combine with the Mid-Atlantic region to form the new “East-Central” region, while the Toledo and Detroit offices will join the Midwest region. One source has told GC that this move is “an effort to reduce infrastructure and we should not be distracted from our client serving duties.”
We have also confirmed that the Pacific Northwest and Pacific Southwest regions will combine into a single “West” region. Again, sources indicating this move is an attempt to reduce overhead costs, saying “Lots a current senior leadership will be moved around,” as a result of this consolidation.
Both regions have seen significant layoffs just in the past month, and reports as recently as December 9th for the North Central. Some may go so far to say that the layoffs were a precursor to these plans but that’s speculative sport on our part.
We reached out to an E&Y Spokesperson who said that the firm prefers not to comment on internal matters.
E&Y’s restructuring follows a major restructuring at KPMG that we reported on earlier this year which saw several leadership changes and rumors of the firm consolidating down to two regions in the U.S.
One of our sources indicated that more news is expected this week so if you have any further details on these changes, get in touch with us, and discuss your thoughts in the comments.
The Day After: KPMG and E&Y Holiday Party Report
We were reminded that not only was E&Y FSO raging at a tourist trap last night, KPMG’s Financial Services practice was also tying one on at Jim Brady’s in the FiDi. This particular fiesta is the first major get-down we’ve heard of KPMG hosting so it’s good to know that there’s a little bit holiday cheer at every firm.
The Jim Brady’s party has been a popular event in the past and it’s a partner-free party so it’s a perfect opportunity for Klynveldians to blow off some steam, pants optional.
One source told us that it was well attended again this year despite being beer and wine only. We’re confident that was supplemented by flasks and other treats as another told us that the party was a “blast”. Safe to say that there was plenty of ass-grabbing as well as being an all-around bitch-about-KPMG fest.
Considering we haven’t heard a peep about E&Y’s get-down at TOTG, we can only assume that it was also epic.
Hopefully your cocktail flues have subsided to the point that you can tell us about the great night. If you remember anything, share the highlights or get in touch.
Ernst & Young Pays $8.5 Million to Settle Charges with SEC Over Bally Fraud
Six current and former partners at Ernst & Young were charged, along with the firm, by the SEC late yesterday in relation to the audits the firm performed of Bally Total Fitness’ financial statements from 2001 to 2003.
Bally settled accounting fraud charges with the SEC in 2008 that were related to its financial statements from 1997 to 2003.
Because everyone and their dog was freaking out over Enron in screws to their clients to follow GAAP, E&Y had identified Bally as “one of E&Y’s riskiest 18 accounts and as the riskiest account in the Lake Michigan Area.”
The firm forced Bally to stop recording revenue in an improper manner that allowed it to claim earnings earlier than was allowed by accounting rules.
But in doing that, the firm allowed Bally to not admit to having violated the rules in the past, an action that would have forced it to restate its accounts and admit that losses in previous years had been much larger.
Mr. Norris also reported that a source of his at the SEC has stated that “he knew of no previous enforcement cases in which a partner of a major firm was cited for his actions as head of a national office.”
The partner in this case is Randy G. Fletchall, the partner in charge of E&Y’s National Office. He along with Mark V. Sever, E&Y’s National Director of Area Professional Practice, and Kenneth W. Peterson, the Professional Practice Director for the Lake Michigan Area office are the current E&Y partners who settled the charges with the SEC.
The former partners include: Thomas D. Vogelsinger, the Area Managing Partner for E&Y’s Lake Michigan Area through October 2003, William J. Carpenter, the E&Y engagement partner for the 2003 audit, and John M. Kiss, the E&Y engagement partner for the 2001 and 2002 audits.
While the news of a current partner of such lofty heights is notable, an extra twist that isn’t being reported in the MSM comes from GC contributor, Francine McKenna, who tells us that Mr. Fletchall served as the former AICPA Chairman from 2007-2008 and Mr. Sever, a former chairman of the Accounting Standards Executive Committee:
What none of the stories that just hit tell you, though, is that at least two of the EY partners charged, Fletchall and Sever, held leadership positions with the AICPA in the past.
Did Mr. Fletchall get off with a slap on the wrist given his AICPA leadership position, AICPA PAC contributions and significant campaign contributions to Senator Christopher Dodd? Mr. Fletchall is used to telling the SEC what it should do. Quite used to it.
These are interesting questions that the SEC probably doesn’t want to address. The connection, in appearance, is shady and we can only speculate as to what happened during the negotiations of the settlement.
The Commission, remaining stoic, gave a standard issue boilerplate statement, saying:
“It is deeply disconcerting that partners, even at the highest levels of E&Y, failed to fulfill their basic obligations to the investing public by not conducting proper audits. This case is a sharp reminder to outside auditors that they must carry out their duties with due diligence. The $8.5 million settlement, one of the highest ever paid by an accounting firm, reflects the seriousness of their misconduct,” said Robert Khuzami, Director of the SEC’s Division of Enforcement.
So it appears E&Y is getting sent to their room here, despite the $8.5 million fine being “one of the highest ever paid by an accounting firm.”
The firm also agreed “to undertake measures to correct policies and practices relating to its violations, and agreed to cease and desist from violations of the securities laws.”
Were the AICPA connections enough to keep them out of really hot water? At the very least, it didn’t hurt anything. If you have any information regarding this story, get in touch with us, and we will update you with any developments.
SEC Charges Ernst & Young and Six Partners for Roles in Accounting Violations at Bally Total Fitness [SEC Press Release]
EY Settles SEC Charges Re: Bally’s Fraud-Lives To Audit Another Day [Re: The Auditors]
Ernst to Pay the S.E.C. $8.5 Million [Floyd Norris/NYT]
Don’t Forget about the Ernst & Young Holiday Rager Tonight!
In case you’ve been so distracted by the Tiger Woods story that everything else has been pushed to the back corners of your mind, we’ll remind you that New York FSO Holiday Party is tonight from 6 to 10 pm over at Tavern on the Green.
For the less fortunate of you, this may be your last chance to get some shameless ass-grabbing done. So if you’ve got nothing better to do, we suggest you check it out.
On the booze front, we’re keeping our fingers crossed that you’ll have open bar, but judging by the actions of other E&Y offices, you might want to stop by the ATM just in case.
Our invite appears to have gotten lost so if someone wouldn’t mind sending ours over that would be great. We’ll accept especially festive pics in lieu of an invite (read: JIM. TURLEY. DANCING.) Have a great time, and don’t forget who you’re representing (?).
Ernst & Young Updates
We’ve updated the E&Y Greensboro post to include the approximate number of professionals affected plus we’ve added an additional ball of useless to the tchotchke collection. Continue to keep us updated on both.
At One Point, Ernst & Young Was Handing This Stuff Out
Today in money well spent news, we bring you items from a care package that was sent to GC from a friend:
Can anyone explain the purpose of this particular item? More pics after the jump.
This item also has no discernible use.
Anyone want to venture a guess on how much money is spent on this stuff? It’s got to be enough to foot an open bar. If you have more useless stuff that makes you question your firm’s spending habits, kindly pass them along and we’ll throw up the most useful items.
UPDATE: The most recently submitted ball of useless:
Rumor Mill: Ernst & Young Closing Greensboro, NC Office
From a source:
Greensboro, NC office is being shut down. Admin staff are being let go. Most client serving have been given the option to transfer to Raleigh or work remotely.
We tried calling the Greensboro office but couldn’t get through to anyone and E&Y’s national PR team hasn’t returned our emails yet. This closing would follow the Manchester office closure that we initially reported on in October. We’re trying to get more details on the closure date, numbers, etc.
In the meantime, if you have more information on this rumored office closing or others get in touch with us and discuss in the comments.
UPDATE, 12/11: Another source has confirmed the closure. We’ve also learned that the Greensboro has in the nabe of 70 – 80 client service professionals. E&Y is still mum. Keep us updated.
Are Other Small Big 4 Offices at Risk of Closure?
Rumor Mill: Ernst & Young Layoffs Move on to the Advisory Practice
We’re hearing more about layoffs in E&Y’s North Central offices today. The chatter is that cuts are now hitting advisory professionals in Detroit, Toledo, and Cincinnati. Our source indicated that it was 2 – 3 professionals in each office which puts the total number of layoffs in the region over 30 since this latest round started last month.
Rumor also has it that the Columbus office — home of dollar beer night — could also get into the axe swinging but we’re scant on details at this point.
These cuts in the advisory practice would be the first we have heard of since the dozen layoffs (that we confirmed) in the Pacific-Northwest.
Continue to keep us updated with the specifics.
Earlier: (UPDATE) Layoff Watch ’09: Update on Ernst & Young
Rumor Mill: The Latest E&Y Columbus Details Include $1 Beers
We continue to receive details about the layoffs at E&Y’s Columbus office. The first bit of information is that one of the unlucky few — a recently promoted SA — was given one day to consider taking a transfer to another office. According to our source, the client the SA was serving caught wind of the dismissal and the client’s reaction convinced TPTB to let the SA stay on an additional week to finish his/her work.
Our source also indicated that new manager training was going on at the time and “those [managers] with potentially the best chance to speak on the behalf of those to be axed were all in sunny Florida oblivious to the proceedings.”
Oh and the dollar beers thing. As you may remember, the layoffs occurred the day before the office’s holiday get-down. The rumor is that the festivities had a tab in the nabe of $1,200, which included $1 beers.
This causes us to wonder a few things: A) No open bar? B) Beast or Natty Light? and C) we realize Columbus is a college town but $1 beers? Were there penny pitchers and $3 Jager shots too?
For reasons that escape us, we’re completely enamored with details that continue to emerge from this. Continue to keep us updated.
E&Y Columbus Layoffs Update
Layoff Watch ’09: Update on Ernst & Young’s November Round
E&Y Columbus Layoffs Update
Just a little more context on the latest E&Y layoffs that we reported on this morning.
A new source has indicated to us the cuts were absolutely based on utilization:
The staff confirmed that no counselor was addressed.
The staff confirmed that no personnel with whom the individual worked within the past 6-8 months was consulted, including manager and above.
The staff confirmed that no performance reviews since April 2009 were referenced.
You better have a strong anchor client that keeps you going year round, and good luck if you lose them. So much for people.
We don’t feel further comment is necessary but if you have any thoughts, please share them in the comments.
Layoff Watch ’09: Update on Ernst & Young’s November Round
It’s been a couple of weeks since we last heard any details from last month’s layoffs at E&Y, so we just assumed this particular story had run its course.
Well now, we have received word of (and confirmed) layoffs in the Columbus, Ohio office. One source indicates it was 2 – 3 staff and possibly one manager in the assurance practice. This would put the number of layoffs in the North Central region in the nabe of 25. Our source indicated that it seemed that Columbus had been spared for the round last month, so this may be their attempt to catch up.
Annnnnnd it’s our understanding that the cuts happened the day before the holiday party in Columbus. So there’s that.
If you have additional details, continue to pass them along and continue to keep us updated on any layoffs you hear for your office.
Here’s a Good Example of How Not to Sue a Big 4 Firm
Were you at all concerned that you would never hear another story about a lawsuit related to the AOL/Time Warner merger from 2001? A merger described by BusinessWeek as possibly being the “worst of the worst.”
AOL’s revenue recognition practices for booking online ad revenue led to restatements of their financial results from 2000 to 2002. This led to hundreds of shareholder lawsuits, most of which were consolidated into a class action suit. All of the suits have been settled or dismissed.
E&Y, who audited the AOL portion of this little gem, has now had the final lawsuit against the them dismissed. Back in 2003, AOL shareholder Dominic Amarosa decided that he was going to file suit on his own rather join the class action. Problem was, he didn’t file suit on time and failed to connect his losses to statements that were made by E&Y. Those both sound kind of important.
On top of that, Judge Colleen McMahon didn’t really care for the plaintiff or his attorney Christopher Gray, calling Amarosa a ‘vexatious litigant pursuing clearly frivolous claims’ and Gray’s tactics, ‘shenanigans.’ Judge McMahon also indicated that she was considering sanctions against Gray for said shenanigans.
So if you’re looking for a blueprint on how to completely screw the pooch on a lawsuit against a Big 4 firm, this is probably a good place to start.
Lawsuit over Time Warner-AOL merger dismissed [Reuters]
Ernst & Young Is Thankful for Lawyers, Possibly Toblerones
Just when we think the Madoff beat has quieted down, we’re reminded that the tentacles of the Ponzi scheme of our lifetime reach far and wide and for that we are thankful.
Not because we enjoy the carnage that has come about from this particular scheme. No, that would be in bad taste. We’re mostly thankful because we’re certain that today, 90% of you will spend the entire day gabbing about turkey-lurkey-do instead of sending us details on your firm’s cost saving initiative du jour, thus making it a slow news day.
So, thank you Berns, for providing us a story on this most non-productive day of the year:
Private and institutional investors who lost money through Access International Advisors LLC’s LuxAlpha Sicav-American Selection are suing UBS and Ernst & Young for “seriously neglecting” their supervisory duties of the fund. A Luxembourg court will decide in hearings that started today whether investors have the right to bring direct claims against the fund’s custodian and auditor.
“These cases are very important,” Pierre Reuter, who represents clients in six of the lawsuits being reviewed over four days of hearings, said by telephone before the hearing. “They could set the course for some 100 pending cases and many more to come.”
Since these are simply “test cases” the plaintiffs will be anxious to see the results, especially since the Swiss are involved. A pallet of Toblerones will certainly find their way to the offering table at some point. Whether UBS allows E&Y to squeeze in on this valuable bargaining chip remains to be seen.
UBS, Ernst & Young Face Test Cases Over Madoff Funds [Bloomberg]
Ernst & Young Wins Hedge Fund Award, Partners Give Boring Acceptance Speech
The accounting firm awards bonanza has begun stateside. After last week’s Accountancy Age awards, Ernst & Young has now been named “Best Accounting Firm to Hedge Fund Industry” at the inaugural Hedge Fund Manager Week US Service Provider Awards.
While this is certainly a less comprehensive ceremony than the Accountancy Age Awards, it should not be taken any less seriously. This is a sincere effort on the part of the hedge fund industry to recognize who has bent over backwards the farthest for them. Nice work, E&Y.
As for the speeches:
Arthur F. Tully, Partner, Financial Services and Global Hedge Fund Practice Co-leader, Ernst & Young LLP said, “It is an honor to receive this recognition. It reflects our ongoing efforts to provide relevant insights into our client’s most pressing issues, particularly in today’s challenging business market.”
“This award is a testament to our efforts to provide consistent, high-quality service to our asset management clients as we strive to anticipate, understand and offer insight into the biggest issues facing our clients,” added Michael J. Serota, Partner, Financial Services and Global Hedge Fund Practice Co-leader, Ernst & Young LLP.
We understand that there’s a an expectation for tactfulness but c’mon guys. This was your opportunity to get on a stage, drunk as Ken Lewis on a Tuesday morning and say something like:
“It feels damn good to win. You other firms, I wish I could say it’s an honor to be nominated with you but I can’t. In other words, suck it. I accept this award on behalf of all those staff and managers that continue to suffer from sleep deprivation, obesity, and overall misery because I know they’re working at this very second. And if I find out that you’re not, you’re uninvited to the party. Oh, and I just want to say, Jim Turley, you complete me. You really, really, really do. I love you.”
Or something to that effect.
Ernst & Young LLP Named Best Accounting Firm to Hedge Fund Industry [PR Newswire]
The Holiday Spirit Is Alive and Well at Ernst & Young
After a rough week of layoffs at E&Y we’re glad we can bring you some good news out of the Ernstiverse. After our reports back in September that the New York office that there was going to be no Christmaskah festivities, the FSO practice has had a change of heart:
Not only are the partners in FSO encouraging you to have a cup of cheer, they’re helping out a financially troubled New York institution.
We reached out to one source in FSO who had these thoughts:
I think for the most part people are very surprised we are having a party, and there is definitely a mixed feeling. Most would rather have gotten a raise, but apparently we got a great deal from Tavern so if there are no raises we might as well have a party!!
Since we don’t have many details at this point, important questions remain: A) Are you going? B) Open bar or GASP beer and wine only? C) Will there be dancing? D) If so, will Jim Turley be there getting his (rumored) $6 million man groove on?
Photos please, especially when he’s doing the sprinkler dance. Keep us updated with the details.
Reports of Ernst & Young Layoffs Still Trickling In
We thought E&Y layoffs had finally quieted down but unfortunately late yesterday we learned of an additional ten cuts in the tax practice of the North Central region including Cincinnati, Detroit, and Pittsburgh.
These cuts in Cincy and the ‘Burgh are on top of the initial cuts we reported but this is the first tip we’ve received about layoffs in Detroit. Jump back to the main thread for the latest discussion and continue to keep us informed with details.
Ernst & Young Severance Negotiable?
Everything is negotiable, amiright? We heard that staff in one North Central office were given one month of severance but at least one person made a big enough stink that they ended up with three months. Personally, we thought the Big 4 was pretty inflexible on this point but hey, if it’s true, nice work.
Jump over to the main thread to check the latest discussion and if there are still details to be reported, get in touch.
GC Weekend: Update on Ernst & Young Layoffs
We received more details late yesterday on the E&Y layoffs. The latest cities reporting layoffs are now Minneapolis and Milwaukee.
We also learned that there were approximately ten layoffs in the tax practice last month in the Chicago office. These were all at the associate and senior associate level.
Check back to the original thread for the latest and continue to keep us updated.
Ernst & Young Layoffs Update, Friday Edition
We’ve updated the E&Y layoff thread to include the latest reports. Check the latest and send details to our tips line if your office is missing or have details to add.
Good luck to everyone that got laid off this week.
Ernst & Young Layoffs: The Latest
From a reliable source on the west coast we have learned that the advisory practice of E&Y was feeling left out and has decided to get into the act.
Twelve advisory professionals — we’re speculating that it was all staff at this point — were laid off today in the Pacific-Northwest Region. The only confirmed city that we have so far is San Jose. Emails were sent out last night and meetings with partners were held this morning. For an added personal touch, our understanding is that the staff met with partners that they were not previously acquainted.
Our calls to E&Y have gone unreturned. An E&Y spokesperson declined to comment.
Jump back to this post for all the details on this round of E&Y layoffs and get in touch with details for your city, practice, and severance.
E&Y Layoff Update
Jump back to our post from yesterday to read the latest on this week’s cuts at E&Y.
(UPDATE) Layoff Watch ’09: Update on Ernst & Young
In addition to the layoffs we reported on yesterday in Chicago and Dallas, we now have reports of cuts in Los Angeles, San Francisco, and Irvine. Our source on the left coast speculates that the current round can’t be too large in scope since everyone is already stretched thin.
So far it’s been in assurance only and we’re scant on details for severance so get in touch if you find yourself with some extra time on your hands or you have details on the numbers in your office.
UPDATE, Wednesday Nov 11th: Our sources are now reporting layoffs in the tax practice including the tax managing partner for the Phoenix office, and an executive director in Denver. We also have reports on tax layoffs in the Southern California offices. Per our source:
• Los Angeles: 4 that I know of. At least 1 Senior, 1 Staff
• Irvine: 4 that I know of. At least 1 staff
• San Diego: 4 that I know of. 3 Senior managers, 1 Senior.
Senior managers are reportedly receiving three months pay and A2’s are receiving one month for severance. Continue to keep us updated.
UPDATE 2, Thursday, November 12th: Twelve advisory professionals in the Pacific-Northwest region.
UPDATE 3, Friday, November 13th: Charlotte office dismissed three audit SA1’s. In the North Central region:
Pittsburgh, Cincinnati, and Cleveland offices all laid off three SAs. Twenty total layoffs reported between Pittsburgh (at least three), Cincinnati (at least three), Cleveland (3), and Detroit.
UPDATE 4: Saturday, November 14th: ~5-6 audit professionals in Minneapolis and ~1-2 audit in Milwaukee.
Chicago: In addition to the ~20 layoffs we originally reported there were ~2-3 in support roles were let go.
Layoff Watch ’09: Ernst & Young
We’ve received tips that layoffs have recently occurred in both the Chicago and Dallas offices of E&Y. The reports out of Chicago were that layoffs occurred on Friday
and over the weekend.
Our source told us that the Friday layoffs were seniors in the Retail and Consumer Products industry group
and weekend layoffs were across as well as other industry groups. Altogether approximately 20 professionals.
We have fewer details on the Dallas layoffs except that they were a couple of managers from the asset management group in the audit practice. The small number leads us to speculate that these were performance related, similar to the cuts we reported in August.
There have been several rumors circulating about layoffs occurring this week at E&Y and other firms as well so if you have more details on the Chicago or Dallas layoffs or know of cuts in your office, send us the details to our tips line.
Rumor Mill: Ernst & Young’s Latest Attempt to Boost the Morale
Not feeling hot about your career lately? Needing some love from TPTB? Apparently one E&Y office is taking a stab at a solution. Not a Starbucks card. Not a year’s subscription to the jelly-of-the-month club. And sorry, Christmaskah is still cancelled. No, this is a completely arbitrary way to win your love.
According to a tip we received, in the Dallas office, all positions that are manager and above are now known as “executives”. As if you didn’t need another reason to stick around until making manager.
Despite the much needed kick-start this may give to the psyche of managers, won’t this cause confusion among the staff?
Manager, director, partner. Simple. If everyone is considered an “executive” the whole hierarchy might become meaningless. And if there’s no hierarchy, we very well may have chaos.
The other problem is that some people take their title very SERIOUSLY. Ever called a “senior manager” a “manager” by mistake? You haven’t known the wrath of an unmerciful, passive-aggressive God if you haven’t. Now if you accidently forget that someone is also an “executive”…Watch out.
It’s not entirely clear if this is a firmwide thing so run it by Steve-o tonight or discuss your feelings on this latest attempt to rally the troops (some of you anyway) in the comments.
Memo to E&Y’s Steve Howe: Choose Your Ice Breaker Carefully
If you’ve got nothing going on tonight and you’re in the Chapel Hill, NC neck of the woods, Steve Howe, E&Y’s Americas Area Managing Partner will be speaking at UNC tonight starting at 5:30. Don’t worry, it’s scheduled to end at 7:00 sharp so you’ll have plenty of time to get home in time for baseball or whatever else is on TV these days.
We’re mostly curious how Steve-o will break the ice with the audience, considering it’s been an awkward moment for some of his fellow partners in the past. We’re confident he’ll be fine though, especially since he’s not phoning in the speech and leaving a voicemail for everyone.
It’s not clear if there will be a Q&A, so if you have questions that you’d like to ask Steve-o, kindly leave them in the comments and we’ll pass them along.
Dean’s Speaker Series – Steve Howe, Americas Area Managing Partner of Ernst & Young [UNC Kenan-Flagler Business School]
Ernst & Young Pranks Involve Heavy Lifting, Possibly Spending $200-$300
In these tough times, office pranks are the perfect remedy for all the bad attitudes out there. Except for you no-fun-under-any-circumstances types.
From an E&Y office in (we’re assuming) the Northeast:
our latest prank was to get the nascar fan in the office a thrill by putting a race car bed over his cube when he returned from his trip to dover for the weekend with some co-workers for the Dover 400 race.
Photos, after the jump
Wonder Bread getting a little exposure.
It’s one thing if one of perpetrators boosted this thing from their nephew. It’s a whole new level of prank-commitment if they put it on the expense report.
Rumor Mill: Ernst & Young Closing Manchester, NH Office
Courtesy of our contributor, Francine McKenna who got the scoop from a Twitter source:
If you’ve got information on this office closure, including layoff numbers, let us know or discuss in the comments.
Rumor Mill: Ernst & Young Bermuda Needs a Few More Hours Out of You
According to a tip we received, beginning this week E&Y is requiring its professionals in Bermuda to charge 50 hours a week through mid-December. This is up from from the normal 40, according to our source.
Our source also indicated that the mandatory 50 hours is considerably more than what the other firms require, citing Deloitte who “has minimum 37.5 hours year round.”
For our friends working offshore, give us the scoop on your hours approaching year end. We also expect a few of you have worked in Bermuda and even more of you have worked with professionals in the Bermuda or other offshore offices, discuss your thoughts in the comments.
Rumor Mill: More E&Y Partner Slip-Ups
Does anyone want a job helping socially awkward partners at E&Y? After last week’s inappropriate ice-breaker rumor, we received another tip about a partner leaving a sensitive voicemail with all employees in the region:
The voice mail says this is for partners only and then discusses the new model EY will be using to determine the # of admin staff in an office and gives the date when admin cuts will happen. Also talks about how all partners will be required to do a mid year review in Jan 2009 (by the way, we all heard the partners saying later how this had never been done in the past so clearly it was papering the files for upcoming partner cuts).
According to the tip we received, the partner decided that leaving another voicemail, asking all non-partners to delete the first message, was the next logical course of action. On the one hand, assuming that all E&Y employees would abide by the honor system and delete the first message represents the strong faith this partner had in their employees.
On the other, it may have been just as effective to say “Don’t worry about that last message, I was just fucking with you.”
Rumor Mill: E&Y CEO Jim Turley Is Appropriately Compensated
Maybe! Depends on who you ask. We’re looking for opinions since we received a tip on what Jim Turley is pulling down:
Saw some info yesterday in a partner’s office. JDawg is pulling down $6 million…every year in October timeframe the partners at EY get a partner report on the “partner news network”. In this report EY shows partner information – the 5 highest paid US partners that are not in client service. So this includes generally JDawg, the AABS managing partner, tax managing partner, the Americas Vice Chair and a few other vice chairs. They started giving out this information about 4-5 years ago.
Our tip also stated that the non-J Dawg execs were pulling down in the nabe of $2.5 million.
Considering that J Dawg’s CEO duties include appearances on CNBC, being an IFRS cheerleader and eating f*(king chicken with Rahm, among other glad-handing and back-slapping duties, $6 mil makes for a nice round number.
Is $6 million fair for J Dawg? Discuss in the comments and pass along any further details you’ve got JT or other CEO salaries.
Mavericks Need Not Apply at Ernst & Young
FINS has a short chat with E&Y’s Director of Experienced Recruiting, Maureen Kelleher, discussing, well, jobs at E&Y.
Highlights that you might
enjoy find interesting:
Getting ahead: “It’s about being a team player — to take leadership responsibility but to not be a maverick.”
Salaries: “We’re staying the course, as it were. We have extremely competitive salaries. We reward for performance. Granted, our firm is not immune to the economy, so the proportion of all that is probably not as great as it has been in the past.”
Layoffs: “We’ve been watching our costs, and that’s about as much as I’ll say about that.”
“Staying the course” may simply be another way of saying, “It’s fair“. Also, the “watching costs” response? We feel Ms. Kelleher could have answered better here but maybe Big 4 rhetoric isn’t our strong suit.
Check out the whole interview over at FINS, and feel free to discuss your non-mavericky firm in the comments.
Maureen Kelleher: Ernst & Young [FINS]
E&Y’s Entrepreneur of the Year Award Just Got a Little More Prestigious
From what we can tell, the Ernst & Young Entrepreneur of the Year award is a BFD. If the other Big 4 have their own versions of this award, we sure haven’t heard of them.
And even if Deloitte were to start handing out the Uncle Dangle Vigilante of the Year award, it would pale in comparison to the EYEY because, now, a past winner is going to be on The Real Housewives of New York City.
Jennifer Gilbert won her EYEY in 1998 for her business, Save the Date, “A dedicated force of event planners who are in tune with the constantly evolving world of corporate events.” She’s even in the EYEY Hall of Fame. Jesus, this thing has a HoF?
J Dawg has to be bursting over this. Shamelessly up on his desk fist pumping, Tiger Woods style. A soon-to-be reality TV star that, God willing, will name drop E&Y every chance she gets on cable would be the best thing that ever happened to the firm. Sorry, NASCAR HoF.
The Real Housewives of New York Adds a Second New Non-Housewife [Gawker]