Rumor Mill: KPMG Debunking ‘Six Year Manager’ Rumors?
While many Klynveldians are getting amped to cobble together some bears for the kids this morning we’ll pass along a little rumor about a rumor.
The rumor that the KPMG bigwigs have been considering a six year timeline to make manager in the audit practice has been kicked around for at least a couple years. Naturally, there were two schools of thought:
• Managers thought it was good idea
• SAs thought it was a terrible idea
According to a tip we received, apparently there is an email floating around that says the rumors about a “six year program are not true and that the firm will continue with existing promotion timing.”
A friend of GC told us that while it’s entirely possible that such an email exists, it’s definitely not coming down from 345 Park and could be some local office trying to calm down those SAs that are considered flight risks.
Regardless of the rumored debunking, the path to partner is certainly becoming longer as we reported earlier this week, and early promotions will still happen based on
need or political maneuvering.
If you’ve been notified that your promotion timing is still on track, by email or otherwise, pass the info along or discuss in the comments.
Are You Ready to Build Some Bears KPMG?
“Tim, you really shouldn’t have. Seriously. I’m a King, for crying out loud.”
In case you’ve forgotten, KPMG’s bear-building extravaganza is tomorrow and word around the campfire is that everyone is psyched.
At least one office is dedicating the better part of the morning to the “Town Hall” portion of festivities which sounds like it could be a real hoot. We’re guessing there might be a little session regarding stationery controls, given the whole Canopy sitch.
Since all the offices are having their get-downs tomorrow keep us updated throughout the day on anything interesting that comes up.
(UPDATE) KPMG’s Letterheadgate May Require the Firm to Revisit Stationery Controls or Get Rid of the Blue Squares
All right Klynveldians, we don’t know which one of you was a little generous with the letterhead but you’ve really done it.
Jeremy Blackburn, COO and President of Canopy Financial was able to raise $75 million for Canopy Financial based on bogus audit reports he provided to investors and pocketed more than $2 million for himself, according to the SEC’s complaint against Blackburn and the Company.
We’ll give the man cred ew the script:
Blackburn sent [Canopy CEO, Vikram] Kashyap an email dated June 30, 2009, attaching the KPMG Audit Report and the audited Canopy financial statements, with an email subject heading of “Audit Finally Complete,” and email text stating “I never wanna [sic] go through this again!!”
Kashyap apparently wasn’t in on the little secret that KPMG was not engaged to audit squat for Canopy. Nice work staying on top of everything, Vik. Meanwhile, Canopy’s investment bank, Financial Technology Partners, didn’t need an email telling them the audit was hell. They just ran to VCs with the notion that everything was on the up and up.
The bank is all bent out of shape because they’re taking heat and claim ‘We clearly had no clue about any such wrongdoing.’ Who wants to bother with the auditors? As Michael Arrington of Tech Crunch notes, “A 10 second phone call could have cleared this up before investors plowed $85 million into the company.”
The whole thing finally went south when Canopy’s new general counsel contacted an acquaintance at KPMG to help him find a new CFO. Canopy’s general counsel then sent over the “audit report.”
KPMG quickly responded to Canopy and advised Canopy in a “Cease-and-Desist Demand” letter dated November 3, 2009, that Canopy used KPMG’s name without KPMG’s authorization and consent. Further, KPMG told Canopy that it: (1) had never been retained nor agreed to audit any of Canopy’s financial statements; and (2) did not issue the audit opinion dated June 29, 2009. KPMG demanded, among other things, that Canopy “immediately CEASE AND DESIST from using the subject report and/or the unauthorized use of the KPMG name….”
It’s seems obvious that KPMG did nothing wrong here but this is still a big bowl of awkward. The firm’s name is all over the complaint and who knows how many other companies are running around with the firm’s letterhead throwing their “audited” financials around.
As we’ve indicated, this may call for a completely new look for KPMG. That means no more blue squares. We realize that’s a horrifying thought but the whole firm may be compromised. If you’ve got suggestions for the look (other than pink) or any thoughts on this snafu, discuss in the comments.
UPDATE: A tiny clarification/correction here: The original post over at Tech Crunch states, “Multiple sources have told us that Canopy was absolutely making up their financial statements, even forging audited statements with fake KMPG [sic] letterhead.” One could get the impression from our post here that genuine KPMG letterhead was used. That does not seem to be the case. The SEC’s complaint states that the audit report was “falsified” or “forged” without mentioning the authenticity of letterhead.
Nevertheless, we still stand by our conclusion that the Firm has no choice to either revisit stationery controls (since it’s obvious you can’t just get the shit anywhere) or change the entire logo as a precautionary measure. Similarly, we will continue to address this particular scandal as “Letterheadgate” to best follow the tradition of any scandal happening in the post-Nixon era to be suffixed with “gate”. We’re done here.
Canopy Financial Turns Into Sad, Comical Game Of Hot Potato [Tech Crunch]
Earlier: KPMG Will be Stingy with the Letterhead From Now On
(UPDATE) KPMG Will be Stingy with the Letterhead From Now On
Have you been craving a tech startup accounting scandal? Thought so. Enter Canopy Financial, Inc. who “provides technology-enabled electronic payment, account management, and investment technology platforms for health savings accounts, flexible spending accounts, and health reimbursement arrangements.”
The company was ranked #12 in the 2009 Inc. 500 List of fastest growing companies in America:
In 2008 CEO Vikram Kashyap said his company had 2007 revenues of $9 million. More recently, we’ve heard, the company was saying they’d hit $60 million in revenue and $9 million or so in EBITDA.
All of this may have been lies.
Until recently all the venture capitalists involved proudly placed Canopy Financial on their portfolio pages. Now all trace of the company have been erased from the portfolio pages of investors GGV Capital, Spectrum Equity and Foundation Capital. And their investment bank has erased them from their trophy page as well.
So what happened? Multiple sources have told us that Canopy was absolutely making up their financial statements, even forging audited statements with fake KMPG [sic] letterhead. And somehow the investment bank and all the investors never figured it out.
Jesus, this doesn’t even qualify as cooking the books. This is more along the lines of:
CFO: No, we cannot say $100 kajillion.
CFO: Because no one will believe it.
CFO: Do you know what a kajillion looks like?
CEO: Um, no.
CFO: It has to look like a real number. I’m saying $59,984,387.
CEO: What about…
CFO: Shut up, that’s the number.
Then all you have to do is get your hands on some KPMG letterhead and BAM your company is listed in a magazine.
We tried contacting KPMG about this but our emails have gone unreturned. We’ll let you know if we hear back from them. In the meantime, if you know anything more about this particular story, enlighten us in the comments.
UPDATE: See the clarification about the authenticity of the letterhead on our post from December 3rd.
Canopy Financial Accused Of Serious Financial Fraud, Investors Burned [Tech Crunch via FINS]
The KPMG Dress Code Now Accommodates Ugly Christmas Sweaters
At least for one day, anyway.
You’re all acutely aware that many firms are opting to forgo holiday parties this season in favor of charitable activities.
Regardless of your desire — and our sincerest hopes for you — to get cop-slugging drunk on your firm’s dime, the commitment of time to charity is admirable. KPMG is spending an entire day building bears and wrapping them with books. We’re not sure how that will work but whatever.
As an added bonus, we heard that at least one office is attempting to make things more festive:
If some of you aren’t able to get behind the celebration of hideous Clark Griswold-esque sweaters for the sake of sport, shame on you. In fact, since the charitable activities are mandatory (as we understand), we’d go so far to suggest that the donning of ugly sweaters should also be mandatory. Judging by many or your fashion proclivities, this will be as easy as opening your closet.
Rumor Mill: KPMG L.A. Layoffs, Maybe Dallas?
We’ve received multiple reports of layoffs that occurred last week in the audit practice of the Los Angeles office.
The numbers have been described as “a few” and the news has been “hush hush” making us wonder if these cuts were some unfinished business from either the August and September rounds.
There also have been rumors about additional layoffs in Dallas tax but we don’t have any more details than that.
If you’ve got any details for these layoffs or details for other cities, get in touch and discuss in the comments.
More KPMG Leadership Changes
Just a brief update on KPMG leadership moves that we’ve been following.
Late Friday we learned that the office managing partner (“OMP”) of the New York office has been promoted to serve as the Vice Chair of Market Development. Our understanding is that all the OMPs across the country will report to this position and it will focus on 21 key markets in the U.S.
The former head of the New York Financial Services will move up as the new New York OMP. No word on who will fill the leadership role in NYFS.
This appears to be the first instance where the OMP was promoted to a national position as opposed to a “client-facing role”.
Continue to keep us updated with the latest on the comings and goings of the grand poobahs and discuss your thoughts on the progress of the restructuring in the comments.
Earlier GC coverage of KPMG Leadership Changes and Restructuring:
Another KPMG Shake-Up
KPMG Shake-up Continues
Rumor Mill: KPMG Restructuring Plans
(UPDATE 2) KPMG Atlanta Shake-up Makes Us Wonder
Another KPMG Shake-Up
Following up on our earlier reports of leadership changes in several cities, — as well as the Southeast region — the Charlotte Business Journal is reporting that John Switzer now sits in the big chair of KPMG’s Charlotte office.
Swizter ascended to the new gig after serving as the managing partner of the Cleveland, Louisville, and Lexington offices.
This appears to be another restructuring switcheroo as Switzer’s predecessor, Paul Chapman, will be “[taking] a new role, serving some of the firm’s largest audit clients.”
As prestigious as that sounds, we’re inclined to believe that the bigwigs decided some fresh blood was needed in Ken Lewis land.
If you’ve got any news on freshly minted grand poobahs in your office, kindly pass along the details and feel free to speculate on the progress of the restructuring in the comments.
KPMG names managing partner [Charlotte Business Journal]
KPMG Has Its Reasons for Banning Google Talk
Klynveldians have been warned about certain software that should not, under any circumstances, be downloaded by any of you:
In the firm’s defense — and since they didn’t mention it — many of these programs are used by you to waste precious billable hours complaining to each other about a myriad of things including why the Phil Mickelson hats only come in black and white and where Tim Flynn and John Veihmeyer buy their suits (we hear Marshall’s but that could be total bupkis).
Furthermore, we’re not going to sit here and say that none of these programs present a legitimate risk. That would be foolhardy and insensitive.
What we do wonder about is what “disciplinary action” involves. Feel free to wildly speculate on this in the comments.
Caption Contest Friday: KPMG Scary Stories
Pictured below is R.L. Stine, often known as the “Stephen King of children’s literature”. Mr. Stine did some pre-Halloween scary story-telling yesterday while visiting students. The occasion celebrated KPMG’s Family for Literacy distributing its one-millionth book. “I think it would be a very scary world without books,” said Stine.
Rules: Submit possible captions in the comments. We’ll choose our favorites — with preference given to those with a Big 4/KPMG/accounting bent — and then let you vote for the best one.
Whatever You Do, Don’t Bring Up Tax Shelters
Well you can if you want but somebody will probably flash a piece on the lanes and you’ll end up entering a world of pain.
If you’re in Beta Alpha Psi at the University of Illinois, KPMG is hosting a charity bowling event tonight at 6 pm. Hell, even if you’re not a member you should do a jay and head on over and get your roll on. What’s the worst they can do, throw you out?
KPMG Partner Named in $240 Million Tax Fraud
This is getting awkward, KPMG. Tax shelters continue to be a problem for some of your partners.
Three local businessmen have been indicted on a charge of conspiracy to defraud the Internal Revenue Service of more than $240 million.
According to the indictment filed in federal court on Oct. 22, two of the men allegedly attempted to defraud the IRS by making several “false and misleading statements” concerning a corporate tax shelter that was implemented by them.
Daryl J. Haynor, a partner in KPMG’s federal tax practice for the mid-Atlantic Area, based in Tysons Corner; and Jon Flask, a Vienna-based attorney, are both named in the suit.
“Mr. Haynor has been placed on administrative leave pending a review of the situation,” said George Ledwith, a spokesman for KPMG, on Monday.
Obviously our little warning concerning tax shelters was way too late.
According to the federal indictment, Flask, Haynor and Parker implemented and marketed a tax shelter named “Sale Leaseback of Tenant Improvements Strategy (SLOTS),” from 1998 through 2006.
The shelter enabled various U.S. corporations to claim tax deductions totaling more than $240 million on corporate income tax returns.
The indictment alleges that Flask, along with Haynor and Parker, misled and deceived the IRS by misrepresenting facts concerning the SLOTS tax shelter during IRS audits of companies claiming tax losses generated by the shelter in the years 2002 through 2004.
Mr. Haynor has been with KPMG for over 25 years. He and Mr. Flask face up to eight years in prison and $500,000 in fines. If you know any details, shoot us an email or discuss in the comments.
Someone Is Letting KPMG Employees Handle Firearms
Judging by everything that has gone on in the past few months, we can’t emphasize enough how dangerous this could have been. Video after the jump.
Some Atlantans Get to be a Cop for a Day [Fox 5 Atlanta]
Rumor Mill: KPMG Wants You To Stop Smothering Your Kids
Klynveldians, what are you doing today at 2 pm? Nothing? Here you go:
As we continue to observe National Work & Family Month during October,
KPMG will host a national MSO from Lifeworks entitled Being an Involved
Parent: How Much Is Too Much? on Thursday, October 22, from 2:00 p.m. –
3:00 p.m. ET.
This special session is designed to help parents:
§ Understand the traits of overly involved parents
§ Learn the long-term consequences of over-involvement
§ Identify strategies for raising self-reliant, resilient children
§ Find a balance of involvement that will help children ultimately become
If you’d like to join us for this session, be sure to sign up today!
Don’t have kids? No worries. This will load up your queue of excuses for why you’re working late after you enter parenthood.
The Moment You’ve All Been Waiting For
If you work at KPMG anyway. We heard that the annual employee survey was sent out today so that’s exciting. The most thrilling news is that FIVE of you will win $200 AMEX gift cards for participating. If there are questions missing on the survey that are not addressed, feel free to bring those up in the comments.
The only other firm that we’ve heard about having their survey is E&Y so if yours is rolling out be sure to let us know.
(UPDATE) Madoff Investors Sue KPMG, JP Morgan, Bank of New York Mellon
By our last count KPMG had been named in ten lawsuits related to Madoff feeder funds. What’s one more?
KPMG, JP Morgan, Bank of New York Mellon, Oppenheimer Acquisition Corp. and Mass Mutual Life Insurance, along with the Tremont founders were all named in an amended lawsuit that was filed yesterday.
Cotchettt, Pitre, & McCarthy, the attorneys for the Plaintiffs, are not mincing words on KPMG’s part in the whole mess. From the firm’s website:
The sheer size and scope of the fraud make it impossible for Madoff to have acted alone. The complaint alleges JP Morgan and the Bank of New York as well as powerhouse accounting firm KPMG LLP and their international counterparts, KPMG UK and KPMG International were primary players responsible for the fraud.
The amended complaint further alleges that the phantom trades “should have been discovered by KPMG UK, the auditor for Madoff’s London based operation, Madoff Securities International Ltd. Instead, KMPG UK never raised any red flags that investors’ money was used by Madoff as his personal piggy bank.”
KPMG declined to comment for the Reuters article
but we’ll assume that they don’t take kindly to the complaint.
Madoff investors sue KPMG and major banks [Reuters]
UPDATE: The UK Firm issued the following, per Accountancy Age:
KPMG considers the allegations in the complaint to be wholly without merit and will defend them vigorously. The complaint cites KPMG in its capacity as statutory auditor of Madoff Securities International Limited (MSIL), a London based company directly owned by the Madoff family. KPMG acted in this capacity for several years and issued unqualified audit opinions on MSIL’s financial statements. We are not aware of any suggestion that the financial statements of MSIL contain errors.
KPMG Halloween Party: Don’t Expect Treats in the Form of Bonuses
With the cancellation of Christmaskah by most of the Big 4, one would think that a small Halloween fiesta would at least be possible (you know, for the kids).
Good news! At least one KPMG office is contemplating the idea, with the local staff’s help (italics are from the original email):
For $5 you may wear jeans. All donations will be used for the Family Halloween Party. If you would like to participate, please see [redacted] at the reception desk on the 27th floor.
Please note that if you are at a client site that does not subscribe to jeans day, you still need to dress to the client’s dress code.
Please remember you are still in a professional environment and wear professional clothing with your jeans. Additionally, please wear jeans that are in good condition to obtain a clean, professional appearance.
Got it? You want bite-sized 3 Musketeers, Snickers, and the like, you can pay for it. And btw, if you come in with frayed hems, your ass will be sent home.
KPMG Detroit MIA from Free Press’s ‘Top Workplaces’ List
When we learned that KPMG had been left off the Detroit Free Press’s list of Top Workplaces 2009, we thought that it had to be a mistake.
We’re so used to accounting firms being found on “Top Place to/for [enter anything about yourself here]” lists that we almost called up the DFP to demand a recount. Then we got to wondering what HR/Marketing did with the boilerplate email to be sent to employees? Just save the draft and said, “We’ll get ’em next year”?
Well, this is all very awk. Especially since PwC (dropped from the top spot last year, btw), Deloitte, and E&Y find themselves in #2, #3, and #4 on the list for large employers.
So far we haven’t been able to determine if KPMG Detroit has been on the list in years past (which at least makes them consistent) so maybe Motown has decided to pack it in. The firm makes every national “Best of” list but is omitted from your own city’s list? How do the local bigwigs spin that one?
“We realize that we didn’t make the Best Workplaces list here in Detroit but we have made many national lists. You can all take comfort in knowing that KPMG is a great place to work in every city but ours.”
Regardless of how seriously the firms take the “local” lists, for the other three firms to be listed and the Radio Station to be MIA makes for a big bowl of “how the hell do we explain this one?”. Especially when you consider the methodology: “The rankings are solely based on employee feedback.”
Look, we could sit here and speculate on the reasons why KPMG was left off the list but we’re better off leaving that to you. Discuss the Radio Station’s omission in the comments.
Alphabetical listing of Top Workplaces 2009 [DFP]
Large employers survive by encouraging inclusion [DFP]
Earlier: Rumor of the Day: Deloitte Snagging Chrysler Audit from KPMG?
Earlier: Chrysler Auditor Switcheroo Follow-up
KPMG Shake-up Continues
pool boy shake-up news out of the Radio Station as both the Chicago and the DC offices are welcoming new office managing partners, according to our sources.
So by our count that makes four new OMPs along with two area managing partners being moved into the client-facing roles.
Discuss details on any of these moves in the comments and if you have restructuring details, pass them along.
Rumor Mill: KPMG Restructuring Plans
We’ve finally received some details on a possible restructuring at the House of Klynveld in the U.S.
According to our source, the plans were announced over the past week on a series of calls by Tim Flynn. The firm would be consolidated down to two regions, East and West and each would have a regional managing partner and one service line managing partner per region.
This would result in the elimination of one level of regional leadership and would transfer several partners into client-facing roles.
The restructuring would also include placing some partners on ‘profit improvement plans’ and some layoffs would occur over the next year. Additional staff layoffs would occur across all ranks over the next year as well.
The bad news is obvious. The silver lining, as some of our other sources have indicated, is that the Firm would be eliminating at least one level of bureaucracy that should allow partners to be more active in developing potential client relationships.
Messages left with KPMG were not immediately returned. We’ll update you with any response that the firm gives us.
If you can expand on of the details we mentioned on this restructuring, let us know, otherwise, discuss your thoughts in the comments.
Earlier: KPMG Atlanta Shake-up Makes Us Wonder
UPDATE, 4:45 pm: Regardless of this rumor, we learned a short time ago that KPMG admitted thirty-six new partners last month. Seventeen in Audit, twelve in Tax, and seven in Advisory. Congrats to the new partners! No, seriously. Good job.