Category: Big 4

If it happens at a Big 4 accounting firm, we’re talking about it here.

Schwag Watch ’11: Deloitte May Be Implying That Recruits Have Poor Personal Hygiene

Earlier this month our resident big man on campus, DWB, put out a call for all the schwagtacular gear that recruits were snatching up this fall. We didn’t get much for submissions at first but luckily a friend from the north passed along photos that ranged from “a bunch of junk” to Dr. Seuss to a PwC cookie describe as “soft” and “amazing.”

Things have quieted down since then but thankfully, another enterprising young recruit who is right in the wheelhouse of recruiting passed along a couple more pics that include examples of loot from Deloitte and Grant Thornton.


First our tipster’s thoughts on GT’s offering: “The GT cup is ok but the straw is totally useless.” And for the gazillionth time, purple just sucks.


According to our tipster, the Deloitte sanitizer is really the most perplexing item: “I am not sure what to think of Deloitte’s hand sanitizer.”

So what do we make of this? It’s not a surprise that Deloitte isn’t a “If it’s brown flush it down; if it’s yellow keep it mellow” kinda place but what does this bottle of freshness really communicate? Do they simply think college students are unkempt? Is Deloitte making the assumption that all the recruits are applying there because the Occupy movement rejected their applications? Or, since there is fairly new leadership in place, does this speak more directly to the firm’s position on germs in general? Put simply: Are Joe Echevarria and Barry Salzgerg germophobes? I’m inclined to go with option 3 but would entertain other theories.

Report: Chinese Government Asking Big 4 Firms to Take Another Look at Their Audits

The request, sources said, is seen as a direct response to the move by the U.S. regulators in the case of scandal-hit Longtop Financial Technologies Ltd, and to ensure that firms do not succumb to pressure to hand over documents to regulators outside of China. Last month the U.S. Securities and Exchange Commission (SEC) asked an American court to enforce a subpoena it sent to Deloitte Touche Tohmatsu’s China practice for documents from its audit of Longtop.Two sources from the audit industry told Reuters that the Ministry of Finance and China Securities Regulatory Commission (CSRC) met last week with the so-called ‘Big Four’ audit firms — KPMG, PricewaterhouseCoopers, Ernst & Young and Deloitte — along with two smaller firms. The firms were requested by the government to conduct an urgent review of all audits they had done on U.S.-listed Chinese firms in 2010 along with work on U.S. initial public offerings by Chinese companies. [Reuters]

Hiring Watch ’11/’12: Ernst & Young Chicago Taking Applications

They’re looking to fill 500 JITs with new Black and Yellows by June of next year.

Chicago Mayor Rahm Emanuel announced the jobs on Tuesday, saying the firm will start hiring immediately and hopes to have all the positions filled by June. Ernst and Young currently employs about 2,000 people in Chicago. The hires will be diverse across experience levels and include support workers.

Just remember that E&Y seems to be upgrading the gene pool, so uglies need not apply.

Ernst & Young to add 500 jobs in Chicago [CT]

Former Deloitte Employee Swings to Settlement with SEC Over Insider Trading Charges

Remember Annabel McClellan? She’s the wife of former Deloitte partner Arnold McClellan who sorta got wrapped up into an insider trading mess with her sister and brother-in-law last fall. Annabel is also a former Deloitte employee who gave up the glamorous life of a Salzberg solider to be a stay-at-home mom. Oh! and she was working on swingers app called My Nookie that was on the verge of taking the scene by storm. The whole insider trading thing put those ambitions on hold due to the fact that Annabel may be looking at some jail time and she settled civil charges with the SEC yesterday for $1 million. The good news for Arnie is that if judge gives the settlement the thumbs-up, he’ll be off the hook who, prosecutors say, had no clue that the Mrs. was engaging in extracurricular activities:

McClellan, who pleaded guilty in April to one count of obstructing the SEC’s investigation, said she overhead her husband talking about the deals and passed the information to her brother-in-law, according to a transcript of her change of plea hearing.[…] McClellan told prosecutors that her husband wasn’t aware of or involved in passing information, according to documents filed in the SEC case.

Of course, if Arnie wasn’t aware that Annabel was trading under his nose, it makes you wonder with whom she was researching Amazon Squat and the Foldover.

Wife of former Deloitte partner to pay $1 million [Bloomberg]

PCAOB Publishes Part II of Deloitte’s 2008 Inspection Report, First Ever for a Big 4 Firm

They really, really, really don’t appreciate it when you blow off their recommendations. Here’s the statement from the Board:

The Public Company Accounting Oversight Board, in anticipation of questions about the publication of previously nonpublic portions of its May 19, 2008 inspection report on Deloitte & Touche LLP, issued the following statement today:

“The quality control remediation process is central to the Board’s efforts to cause firms to improve the quality of their audits and thereby better protect investors. The Board therefore takes very seriously the importance of firms making sufficient progress on quality control isn inspection report in the 12 months following the report. Particularly with the largest firms, which are inspected annually, the Board devotes considerable time and resources to critically evaluating whether the firm did in fact make sufficient progress in that period. The Board can and does make the relevant criticisms public when a firm has failed to do so.”

So to clarify, Deloitte had until May 19, 2009 to get their methods up to par but failed to do so. To put this into a little bit of context, Jim Doty was not yet the Chair of the PCAOB and Barry Salzberg was still the CEO of Deloitte’s U.S. firm. Does this mean that the PCAOB has been stepping up its game and this is the first instance of many to come? Hard to say but the audits that this inspection report cover are nearly five years old, so it’s debatable as to the value of Part II being made public now.

For Deloitte’s part, here’s current CEO Joe Echevarria’s statement:

“Deloitte is committed to the highest standards of audit quality and as newly elected CEO, it is my foremost priority. Our commitment extends from the top and cascades throughout our entire organization. We place great value on the PCAOB’s input and continue to work with the Board in support of our shared objectives. We recognize that audit quality is fundamental to protecting investors and ensuring the effective functioning of the capital markets.

“We have complete confidence in our professionals and the quality of our audits, and agree that there were and always will be areas where we can improve. In our drive for continuous improvement, we have been making a series of investments focused on strengthening and improving our practice, and will continue to do so to make Deloitte the standard for audit quality.”

In other words, a non-response response. However, it’s much more measured than Deloitte’s response to the initial release of the report. Their response letter spelled out their feelings quite clearly:

Professional judgments of reasonable and highly competent people may differ as to the nature and extent of necessary auditing procedures,conclusions reached and required documentation. We believe that reasonable judgments should not be second guessed and therefore disagree with a number of comments as indicated[.]

Deloitte’s letter is located Appendix C. You can read the full report, including all the details from Part II that were previously unpublished, on page 2.

PCAOB_2008_Deloitte

First-Generation Americans’ Parents Need Convincing That Accounting Is a Better Career Choice Than Law

As we all know, the Big 4 are more than happy to market themselves as the melting pots of the professional services world. First in your family to go to college? Great! Not an Ivy League graduate? No problem! Completely devoid of WASPyness? Even better! With the relative success of the firms to market this inclusive culture, however, Reuters reports that the biggest challenge is convincing the parents of first-generation recruits that accounting is just as worthy of a career path as medicine or law:

Accounting has long provided a path for first-generation Americans into the professional classes. Good pay and a focus on numbers makes it an attractive career choice. Still, recruiting the children of immigrants is complex, say some Certified Public Accountants (CPAs). Parents’ opinions are influential and they often don’t know the field, a problem that alternatives like medicine or the law don’t face. Once on the job, first-generation CPAs can face new challenges like decoding the relationship-driven, sometimes self-promotional American business culture.

Makes sense to me. Medicine is easy because doctors are in the life-saving business. Law is attractive because parents hope that they might become Jack McCoy or the protagonist in a John Grisham novel. But accounting? Jesus, numbers are boring, it’s not even a real profession:

When Maria Castanon Moats, PwC’s chief diversity officer, told her family that she planned to be a CPA, she remembers her parents asked “Why not be a lawyer?”

“They did not understand this accounting thing … To them, a professional was an attorney or a doctor,” said Moats, 43. Moats, who emigrated from Mexico at the age of one with her father, a migrant farmworker, said the profession appealed to her because it brought stability. High ethical standards and integrity, strong values in her family, were also important. Now, as part of the firm’s 14-member leadership team, she welcomes young recruits with a similar background. “The first generation really wants to be successful to make their parents proud. They are committed and loyal,” she said.

We’ve had the accounting vs. law debate before and we don’t to call Elie Mystal in here to explain why pursuing a career in a law is a risky proposition. The Reuters article doesn’t come out and say it but it really amounts to candidates educating their parents about the advantages to pursuing a career in accounting. Recruiters at the Big 4 can’t really say, “Clue your parents in,” so they put on aggressive marketing campaigns to tout diversity and inclusion. The students take this message back to mom and dad (along with salary ranges) and they start warming up to the idea. This way, everyone is happy. The kids get a decent job; the parents can beam about the CPA in the family. Sure, accounting isn’t justice but it beats being unemployed and doing this:

Accounting can be door to U.S. professional class [Reuters]

The Fall Busy Season Has One Ernst & Young Team in Danger of Going into Diabetic Shock

By way of the Ernst & Young Staff Twitter account, we learn that the young associates are quite fond of the snack drawer:

While I’m not one to condone such unhealthy life choices, I am not lost on the fact that these drawers of death are not uncommon. That said, if all of you out there in E&Y land insist on this type of sustenance, I suggest you get a pair and put down the whole drawer in a prescribed amount of time. The bankers and hedgies have been doing this for years and since many of you think yourselves worthy of their ilk, you should be able to hold your own in the mass consumption of factory produced crap. Anyone up for the challenge should provide a full inventory of the items to be consumed as well as the time limit and the prize to the winner should they emerge victorious. Additionally, I would need to be given a play by play in order to appropriately report the progress and results to the world at large.

We’re waiting. The gauntlet has been thrown.

Muddy Waters CEO: There Are Some Big 4 Partners in China Conspiring to Defraud Investors

As you probably heard, the PCAOB officially put out a proposal earlier this week for audit partners to be named in the annual reports of public companies. It would also require “registered firms to disclose the name of the engagement partner for each audit report already requirethe form” and “disclosure in the audit report of other accounting firms and certain other participants that took part in the audit.”

While most Big 4 audit partners are probably feeling a little chapped by this whole proposal, there is at least one person going on record (by way of PCAOB comment letter) that feels that it doesn’t go far enough. That would be Carson Block, the CEO and founder of research firm Muddy Waters. In Block’s letter (in full on page 2) to the Board he writes that not only should the engagement partner be identified but that he or she should be putting their name on the audit opinion because “[it] will decrease investors’ future losses to fraud and gimmicky accounting by billions of dollars.”

That on it’s own is enough to get more than a few people riled up. But as we indicated, there are some conspiracy and fraud accusations as well:

Even the most reputable auditors in China seem to be in a race to the bottom. We believe that there are particularly egregious situations in which some Big Four partners in China offices have actually conspired with their clients to defraud investors. Further, it is a reasonable proposition that the conflict of interest inherent in the Chinese auditors’ business model also affects the quality of US company audits.

Now before your knickers in a twist, don’t forget that this is the guy who called Sino-Forest a “Ponzi Scheme for the 23rd Century” which more or less looks to be accurate. Further, if you consider all the trouble Big 4 firms have had with Chinese companies listed in the U.S. and elsewhere, it doesn’t seem to be that much of a stretch that some partners would just say fuck it and work with their clients to keep a lid on the shenanigans than go through the pain of actually doing their jobs.

Regardless, with these accusations the PCAOB may try to make another run at getting the Chinese to play ball.


Carson Block 102011

Thankfully, Dillard’s Disputes with Audit Firms Haven’t Resulted in Anyone Disappearing into Thin Air

Your mother’s third favorite department store, Dillard’s, has fired PwC as their auditor over a dispute related to the timing of a “tax benefit related to its new real estate investment trust.” The Little Rock-based company replaced P. Dubs with KPMG (who will take every chance they can get to stick it to Team Autumn). Basically the two didn’t see eye on this matter (here’s the 8-K that explains it), Dillard’s asked the IRS for their opinion, who said the treatment was kosher and next thing you know, the audit committee was on the hunt for a replacement.

Anyway, this isn’t really news until you consider the fact that PwC had only become Dillard’s auditor in 2009. Deloitte had been the auditor of the company for 20 years and in many auditor-client relationships, that’s just the honeymoon phase. So that seems a little odd. And couple that with the most recent firing of PwC and you’ve got to wonder what’s the scoop is over at DDS. But all that pales in comparison to this:

In 2008, [Dillard’s] had a dispute with CDI Contractors LLC’s chief financial officer [Ed. note: Link is broken], John Glasgow.

At the time, Dillard’s owned half of CDI. It has since bought the half that it didn’t own.

Glasgow objected the way Dillard’s CFO James Freeman was conducting an audit of CDI. Glasgow disappeared during the dispute and was declared dead [Ed. note: Ditto] more than three years later, although no trace of him has been found.

After Glasgow’s disappearance, Dillard’s restated earnings for several previous years, blaming an accounting error by CDI.

The last thing we want to see are pictures of auditors on milk cartons.

Dillard’s Fires PWC After Accounting Dispute, Hires KPMG As Auditor [AB]

Anxious Accounting Student Needs Advice for a PwC “Superday”

Ed. note: Have a question for the career advice brain trust? Email us at advice@goingconcern.com.

Caleb,

I’m an avid reader of Going Concern and I was wondering if you could help ease my anxiety on my Superday coming up fairly soon. I’m currently a senior in a master’s program and I am looking for an internship this Winter. I’ve interviewed with all Big 4 and only managed to score a second round with PwC for a Northeast location. I do have a couple back up offers but really want PwC. Do you have any tips or other insights on these superdays? I often read that the majority of people attending superdays get an offer but I don’t wident. Any insights you can provide would be greatly appreciated.

Thanks,
Anxious Student

Dear Anxious,

I’ll do my best to give you some honest insight on Superdays, although I don’t know if it will quiet your fears.


Your biggest competition at the Superday will be yourself and your choice to pursue a winter internship (presumably tax?). Everyone knows that the summer internship programs are the bees’ knees: barely 40 hours a week; summer outings; awesome schwag. Winter internships, on the other hand, have been traditionally limited in numbers but extensive in experience. This is changing a bit this year, as firms are looking for a small uptick in winter interns to help offset the turnover in staff. The firms’ practices have higher standards for the students they hire for this time of year because they’ll be doing actual work (relative to the summer class). But should you land one of the spots on the winter intern bench, you’ll be poised to rake in a lot of overtime $$$. So, what do you need to do at the Superday to best position yourself for one of the internship spots? Keep your cool. Keep your confidence.

Be flexible. Winter interns are oftentimes from local universities, since many students balance a light credit schedule while putting in long hours at 300 Madison Avenue (or 345 Park, or…okay you get it). If you’re in this position, oversell your availability to work. Think you’re taking 15 credits? Say your’e taking 12. Available on weekends? You bet! They’re looking to hire workhorses, not show ponies. If you’re taking the semester off, that’s great; make sure the recruiter knows this. Talk about your willingness to work long hours and do “what’s best for the team” even if that means working weekends. The goal is to land an offer, not sound like someone with a grasp on reality. “Work the entire month of February and sleep under my desk?!?! Sign me up!!!”

Now, then. General advice for Superdays:

You’re always being watched. Think that the teambuilding event is trivial? Think again. The recruiters will be watching how you interact with the team members. One comment of “this is the dumbest thing I’ve ever done” will get you dinged. Sit down, shut up, and BE REALLY EXCITED TO PLAY WITH MARKERS.

Careful with the booze. Every firm’s 2nd round interview program is different, but be sure to take it easy if there is booze involved. Take a page out of my BFF Patti Stanger’s book: keep it to two drinks. You’ll loosen up, it’ll taste GREAT after the long day, but you won’t get too loose lipped. Just because the evening’s atmosphere is casual, doesn’t mean the office managing partner should know what you’re getting your boyfriend for Christmas.

Shoot for the middle of the fairway. Every in-office interview program has the same cast of characters. The Funny Guy. The Guy Who Thinks He’s Funny But Isn’t. The Girl Who’s Skirt is Questionably Short. The Guy Who is Wearing His Father’s Suit. The Sit in the Corner Special. The Candidate with Too Much School Pride. The Leader Who Doesn’t Know How to Be a Team Player.

Umm, yeah. Don’t be any of those.

Easy on the cellphones. Silence it, turn it off, and only look at it on breaks. Nothing pisses off an over-the-hill recruiter more than watching a room full of Millennials texting and tweeting over their morning fruit salads.

Good luck.

Chinese Gold Company ‘Respects’ Deloitte’s Decision to Kick Them to the Curb

Your auditor-of-a-Chinese-company-resignation news du jour:

Deloitte Touche Tohmatsu Ltd , the world’s largest accounting and consulting firm, has resigned as auditors of Hong Kong-listed Real Gold Mining , more than four months after the Inner Mongolian miner was reported to have filed conflicting accouting [sic] reports.

Real Gold, which halted trading in its shares on May 27. is under investigation by the Securities and Futures Commission for corporate governance breaches. The miner’s announcement to the Hong Kong stock exchange late on Thursday said it was looking for a replacement for Deloitte, which resigned on October 12.

“The company is disappointed that Deloitte has decided to resign at this time but respects its decision,” the firm said.

Deloitte resigns as auditors of China gold firm [Reuters]