Category: Big 4

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

PwC, Deloitte Enjoying Their Booming Advisory Businesses, Thankyouverymuch

This morning we linked to a Reuters report about the horse race between Deloitte and PwC for the biggest of the Big 4. It reports virtually nothing new that we haven’t discussed here already including Deloitte jumping P. Dubs last year by a whopping $9 million (thanks mostly to keeping their consulting business in house), the hiring sprees, the acquisitions, and oh! the audit business sucks:

With audit revenues leveling off in developed markets, the firms have been making a push in growing countries such as China and India and plowing ahead with investments in consulting, where business is growing after a recessionary slump.[…] The big four are expected to report their fiscal 2011 revenues in coming weeks and any significant growth will likely once again be in the consulting area, said Jonathan Hamilton, managing editor of Accounting News Report. “The audit business, while certainly the staple of all these firms, is a slow-growth business,” Hamilton added.

In other words, the consulting advisory business is hot and audit is not. And what causes some people to fly off the handle is how the firms have sold everyone on the idea that they can still miraculously be the bastion of good business principles ethics. Well, maybe not everyone:

More worries loom from stepped-up regulatory scrutiny. As consulting revenues grow, complaints are surfacing again that firms will be tempted to go easy on audit clients for the sake of winning or keeping a consulting job — a charge the audit firms deny.

Last week, European Union lawmakers approved a report that calls for barring auditors from providing audit and non-audit services to the same client. The report is nonbinding but could shape a draft law in the works.

PwC and Deloitte both said there was no conflict of interest in the consulting services they provide. Much of their consulting is done for companies they do not audit and they follow regulators’ standards and companies’ own restrictions on the kind of consulting they do for audit clients.

The report doesn’t mention many things that have cropped up (some recent, some not so much) including the nearly 500 reprimands Deloitte had in 2009, the rash of insider trading, or PwC’s incestuous Satyam scandal but talking points are also used to address those issues. These firms didn’t get to where they are without figuring out how to play the media game.

One thing is for sure – the firms are going to depend on their consulting/advisory businesses for growth until someone banishes audit firms from offering any other services at all. And God knows what that will take.

In close race for No 1, Deloitte, PwC grow apace [Reuters]

New KPMG Associate Wants to Know What the “Deal” Is with Working Mothers

Yesterday we discussed the plethora of accounting firms that are pro-mom, according to Working Mothers. It seemed like a pretty simple idea – treat moms good = win; treat moms bad = Christ, what kind of hellhole firm are you running? Despite this elementary idea, there still is some questions out there:

GC,

On the subject of working mothers…what’s the deal with that? I’m a first year at KPMG and there is another first year who is already pregnant and taking maternity leave soon.

My question is, does she really get promoted on the same schedule as the rest of us? I get the importance of allowing some flexibility for working moms but does it make any sense to treat someone the same as the rest of us when it comes to raises and promotions when they’ve missed out on all the work? I’d love to hear what other readers have experience with this.

Thanks,

KPMG First Year

Well, the “deal” with working mothers is that not having policies that allow them to pursue a career and having a family is what I like to call “doing shitty business.” As to your specific question, the details aren’t clear. It’s not as if she will be on maternity leave for 6 months. KPMG offers up to 9 weeks of paid maternity leave, according to the firm’s profile on WM. That means that there are 43 other weeks (that assumes no PTO, obv) that she will be working. That doesn’t really qualify as “miss[ing] out on all the work” as you put it.

Those who are evaluating her performance should have a pretty good idea whether or not she’s capable of being promoted. Besides, it’s a jump from A1 to A2, not exactly a huge change in responsibilities or expectations. Furthermore, your raise from A1 to A2 isn’t going to be anything to write home about so getting worked up about whether or not she’s getting the same 11% bump as you isn’t worth it.

Are the Big 4 Starting to Demand Higher GPAs From New Recruits?

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

Hi GC,

I am a longtime reader of this website and it has never failed me so here I go once more – some Big Four positions just got posted to our school’s résumé submission website here at University of Illinois at Urbana Champaign. PwC internship and full time positions have a minimum required GPA of 3.4 while EY is 3.2 and KPMG is 3.0. Deloitte’s have not been posted. I know our school isn’t the greatest in accounting [Ed. note: huh?]and the public accounting profession pales in comparison to investment banking and management consulting but a 3.4 MINIMUM GPA to apply??

Last year’s minimum GPA was 3.0 to apply which was understandable but this new recruiting team from PwC increased the GPA by 0.4. Do they feel like someone is throwing out GPA points like Bernanke is throwing out dollars? Would it be kosher to change my 3.37 GPA to 3.4/4.0 on my resume to qualify for on campus interviews?

Best,
Drinking Beer in Champaign

Dear DBinC,

I’m always glad to throw a loyal reader some freebie advice. Thanks for checkin’ in with us.

First of all, forget that last year’s GPA requirement was 0.4 points lower; last year is irrelevant. Put your game face on and rise to the challenge.

Yes, absolutely round your 3.37 up to a 3.4. That’s fair game. In fact, this is a non-issue.

Also, take two minutes of your time to figure out what your major-specific GPA is. Should that be higher than the 3.4 cumulative GPA, add it to your résumé as well. There’s no reason that Intro to Woodcarving should hurt your chances of interning with one of the Big 4.

Why are the GPA requirements rising? To weed out résumés, obviously. Why look through 500 when you can whittle things down to 400 by cutting out the bottom? If you fall into this range, beg, borrow, and NETWORK your way to an interview. Circumstances are individual – if you have a story or reason as to why you’re on the cusp, track down the recruiter (not a audit/tax professional) at the career fair and state your case. Hard work can be rewarded in cases like this.

You Certainly Can’t Complain About a Lack of Accounting Firms Purporting Mom Friendliness

Do you work? Are you a mom? Do you wanna be one? No? Then continue shotgunning 5-hour bombs.

For those of you thinking about juggling tikes and 10-keys, Working Mother hay it’s exactly 100) companies that they think you’re looking for. Hey! and there are even some accounting firms in there, so if you think your current employer will keep you crunching numbersup until your water breaks, you may consider some of these firms.


BDO – “To encourage its employees to use flexible schedules, this accounting and consulting firm has formalized the request process, made sure nearly everyone has laptops that enable remote work and instituted flex training for all.”

Deloitte – “As they pursue their career goals, moms telecommute, ramp up or reduce their workloads, take paid sabbaticals and even go on five-year breaks, all the while maintaining connections to office mentors and freelance work.”

Ernst & Young – “If you’re surrounded by talented people, it makes sense to seek their advice on work life matters, which is what the female employees of this professional services firm often do.”

Grant Thornton – “[Women] earned 32% of all promotions to partner in 2010 (their biggest victory ever) and now fill nearly triple the number of slots they did seven years ago. In the hopes that they will occupy 20% of the partnership by 2015.”

KPMG – “While women earned half of all promotions to manager, senior manager and executive last year, the growth of virtual meetings means they don’t have to stay in the office to be considered top performers.”

McGladrey – “Most every working mom has a vision for her own future—maybe she’d like to get a better degree, rocket up the career ladder, have more kids or just get a little free time. Goals like these are often achieved by women at the accounting, tax and business consulting firm.”

Moss Adams – “Moms-to-be can earn up to $250 through the Beginning Right Maternity Program, which evaluates their health needs, supplies a nurse to counsel them through high-risk pregnancies, and helps them get ready for delivery. When primary caregivers give birth, they may take ten fully paid weeks off; those who adopt earn four fully paid weeks of leave, plus $6,000 in aid.”

PwC – “Working a reduced schedule won’t hurt your career at this audit, tax and advisory services firm: Moms who put in just 20 hours per week still earn full benefits and remain under consideration for top jobs.”

All of the Big 4 snuck into the WM100 top ten which shocks absolutely no one except for maybe Donna Kassman. If BDO, GT, MA, and Mickey G’s get their act together maybe accounting firms will get their very own special Mom list. God, that sounds awful actually.

2011 Working Mother 100 Best Companies [Working Mother]

Comp Watch ’11: PwC Partners Making Deloitte Counterparts Look Like Peasants

The FT reports that the average partner in the UK took home £763,000, up 1% from last year. Ian Powell, the Chairman of the UK firm, took home £3.7 million. The average take home at P. Dubs puts Deloitte partners to shame who only managed to scrape together an average of £758,000, down from £873,000. What does the mean for the partners in the States? Probably nothing but it could indicate that Deloitte’s reign as the biggest of the Big 4 could be a one year wonder. [FT]

Comp Watch ’11: Performance Ranking Distribution and More Bonus Details for PwC

Earlier this month, PwC announced that they were throwing new labels on their performance review buckets for FY ’12. Those of you that can walk on water will be called “Top Performers,” better-than-average mortals will be “Outstanding Performer,” the meaty part of the curve is “High Performer,” rubes will land in “Needs Improvement” while the you Sling Blade mofos will be “Unsatisfactory.” While your mothers and I both believe that you’re all worthy of “Top Performer” status, P. Dubs doesn’t share our viewpoint. This morning, Assurance Leader Tim Ryan sent an email to all opiners regarding the distribution of the “Relative Perhe email was sent to us by a tipster and it includes this table:


As you can see, more than half of the new associates will be coddled with a “High Performer” ranking their first year in order to keep them on the hook. In year 2, we see a 20% drop distributed over “Top Performer” and “Outstanding Performer.” The table shows that, over time, if you aren’t consistently falling into the TP or OP categories, you won’t be wearing autumnal hues for long. This seems fair, although we all know that understanding how performance evaluations are determined is like trying to understand why Michelle Bachmann attempted to speak Yiddish.

The email also goes on to describe the three bonuses that will be available to assurance professionals: Credential (that’s your CPA), Contribution, and Annual Performance. Here are the details of each:

Credential Bonus
Associates are eligible to receive a Credential Bonus if they pass their primary credential exam, consistent with prior years.

Contribution Award
To provide a consistent approach to timely recognition of exceptional contributions, associates and senior associates are eligible to receive a semi-annual Contribution Award, in December and the spring. This award will recognize contributions that exceed the expectations at each level (e.g., unique client contributions to the team, extraordinary effort, enhanced quality, significant assistance to another practice). Individual awards will be determined through a formalized and consistent semi-annual process. This award is not contingent upon RPR or credential status.

Annual Performance Bonus
• Senior associates through directors/senior managers will be eligible to participate in the Annual Performance Bonus. The allocation of these bonus awards will be based on staff level and relative performance rating.

• The total Annual Performance Bonus pool is based on achieving our quality and financial performance goals. Successful achievement of our goals will result in award ranges as noted in the chart. These ranges will increase if we exceed our goals (as was the case in FY11 when we increased the overall performance pool by 10%) and decrease if we do not achieve our goals.

• An individual’s bonus within the target award range will depend on the total bonus dollars allocated to her/his market or business unit based on quality and financial performance, as well as the individual’s contributions in relation to peers within their performance category.

• It is expected that all staff at the senior associate level and above rated High Performer or above will participate in the Annual Performance Bonus. Please note, staff who have not worked the full year may receive a prorated bonus award based on the bonus ranges.

And the representative tables:

Just a few thoughts:

1. Don’t fuck around when it comes to the CPA Exam.

2. Even though Contribution Awards “will be determined through a formalized and consistent semi-annual process,” I can’t help but interpret this as “a political and opaque determination that we’ll throw together at the last minute.”

3. You’re probably wondering about “quality and financial performance goals” mentioned with the APB. Here’s the scoop on those:

Quality performance goals
• Inspections: Reduce the number and severity of non-compliant audits identified through inspections
• Training: Complete participation in all required training, including passing applicable assessments
• Planning: Improve the timing of planning and phasing of our audit work, including the appropriate use and leverage of our delivery model.

Financial performance goals
• Revenue: Achieve our annual revenue budget, which includes a 4.9% revenue growth target
• Contribution Margin: Achieve our contribution margin budget
• Cash Collections: Achieve our monthly cash collection plan

Achieving our quality and financial performance goals will require both an individual and team effort. Reaching our quality goals will require staff to continue to focus on our compliance with auditing standards, concentration on continuous improvement and enhanced management of all engagements. Meeting our financial performance goals will be dependent upon each staff charging all their time and billing timely for all client services.

Assurance quality and financial performance results will be shared with you on a quarterly basis.

So while the increased transparency is nice, the quality and financial performance will be one of those things where you’ll be told the numbers; you’ll hear the story behind the numbers; the end. You could audit your ass off, ace every diversity, independence, and ethics training but if business is down or flat (looking probable) you’ll simply have to accept it.

Anyway P. Dubbersteins, try to digest this and discuss your ecstasy over the latest details.

KPMG Remembers 9/11

Yesterday was the tenth anniversary of 9/11 and memorials were held all over the country. Thousands of KPMG employees volunteered at over 200 non-profits to mark that tragic day including over 100 at PS 161 in New York and 70 at the wreath-laying ceremony at the Pentagon in Washington, D.C. Nothing more really needs to be said other than kudos to KPMG for their “Service of Remembrance.” Drop your own remembrances in the comments and if your firm marked the 10th anniversary in some way (aside from t-minus 4 days until the corporate tax filing deadline), let us know below or email us. [KPMG]

SEC Not Amused By Deloitte’s Failure to Produce Documents Related to Company That Held Their Audit Workpapers Hostage

Remember Longtop Financial Technologies? Deloitte resigned as auditors of the Chinese company back in May after LFT took some actions that were, shall we say, unusual for an audit client. Among them, “interference by certain members of Longtop management in DTT’s audit process; and […] the unlawful detention of DTT’s audit files.” And there may be some financial statement fraud going on, to boot. What’s even slightly weirder is Deloitte’s resignt to Longtop’s Audit Committee that laid out the specifics:

[A]s a result of intervention by the Company’s officials including the Chief Operating Officer, the confirmation process was stopped amid serious and troubling new developments including: calls to banks by the Company asserting that Deloitte was not their auditor; seizure by the Company’s staff of second round bank confirmation documentation on bank premises; threats to stop our staff leaving the Company premises unless they allowed the Company to retain our audit files then on the premises; and then seizure by the Company of certain of our working papers.

Right. The auditors-almost-taken-hostage situation. Quite a doozy, this one. Based on the history between Deloitte and Longtop, one would think that Green Dot would jump at any chance to exact a little revenge on these shady bastards. NOPE!


From the crack squad at the SEC:

The Securities and Exchange Commission today filed a subpoena enforcement action against Deloitte Touche Tohmatsu CPA Ltd. for failing to produce documents related to the SEC’s investigation into possible fraud by the Shanghai-based public accounting firm’s longtime client Longtop Financial Technologies Limited.

According to the SEC’s application and supporting papers filed in U.S. District Court for the District of Columbia, the SEC issued a subpoena on May 27, 2011, and D&T Shanghai was required to produce documents by July 8, 2011. Although D&T Shanghai is in possession of vast amounts of documents responsive to the subpoena, it has not produced any documents to the SEC to date. As a result, the Commission is unable to gain access to information that is critical to an investigation that has been authorized for the protection of public investors.

“Compliance with an SEC subpoena is not an option, it is a legal obligation,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “The ability of the SEC to conduct swift and thorough investigations requires that subpoena recipients promptly comply with that legal obligation. Subpoena recipients who refuse to comply should expect serious legal consequences.”

Maybe the email/hand-written letter sent by carrier pigeon (whatever method of communication the Commission is using these days) got lost OR maybe no one at Deloitte Shanghai was in the translating mood that day but it seems slightly strange that Deloitte would just blow this off especially since Longtop screwed them 70 ways to Sunday. Of course these documents could show that Deloitte was really a bunch of pansies and we’re letting LFT run the show until the gross negligence got to the point that they simply couldn’t ignore it anymore. It’s anybody’s guess, really.

UPDATE: The Journal reports that Deloitte claims to be “caught in the middle of conflicting demands by two government regulators,” which could be seen as extremely convenient.

SEC Files Subpoena Enforcement Action Against Deloitte & Touche in Shanghai [SEC]
Court Filing [SEC]
Also see: S.E.C. Asks Court to Force a Release of Papers From China [NYT]

KPMG Can’t Get Rid of the Countrywide Rash

As you probably remember, Countrywide Financial once owned a lot of shitty mortgages. This wasn’t clear to many of the company’s investors so when the things turned sour, lots of those investors lost boatloads of money and then Bank of America came in to pick up the scraps. KPMG was the auditor of Countrywide and the shareholders sued both companies because, gosh, that’s basically what happens when a bunch of money is lost for no good reason and you had a front row seat for the action. Accordingly, the two firms settled with CTW shareholders last year for $624 million. KPMG, for its part, chipped in $24 million. That’s rumored to be in the ballpark of what John Veihmeyer spends every year on Notre Dame gear, so the firm was probably thinking it got off pretty easy. Unfortunately, things are just getting started since other countries hadn’t had a chance to jump into the mix.


From Zero Hedge:

Norway’s Government Pension Fund, which is another name for its Sovereign Wealth Fund, has just announced it is suing Bank of America for mortgage fraud. Not only that but it is also going after Countrywide, obviously, but far more importantly, is also suing KPGM [sic], the auditor on the Countrywide transaction, and, drumroll, ole’ Agent Orange himself [That’s former Countrywide CEO Angelo Mozilo for those of you not up to speed].

So what, you say? Norway is just some Scandinavian wasteland with a lot of blondes and the occasional psychopath? Not the point!

[J]ust like the US lawsuit spigot opened ever so slowly at first, it is now gushing, and is absolutely certain that every company (ahem insolvent German banks) that ever bought a mortgage from Countrywide, Merrill and Bank of America will serve the local branch of the bank with a summons over the next month.

In other words, this little breakout may turn into a full-fledged epidemic.

Bank Of America’s Legal Woes Go Global After Norway’s Sovereign Wealth Fund Sues For Mortgage Fraud [ZH]
Also see:
The Fund suing large bank in the U.S. for fraud [DN.NO (Beware, the translation is brutal)]

Confirmed: New PwC Senior Associates Can Look Forward to Fireside Chats with Partners and a Pacific Ocean Backdrop

Last month we reported some details about the Milestone Award for PwC’s new class of Senior Associates. At the time we weren’t able to definitively confirm the details but we’re happy to report now that yes, your four day adventure will be happening at Terranea Resort and YES, there will be fireside chats and other social activities to keep you occupied.

“Fitness activities” may not appeal to everyone but with any luck the “signature adventure” won’t involve any physical exertion. ANYWAY, enjoy your getaway, new PwC SAs! Be sure to take lots of pictures and share them with us.

Big 4 Hiring Watch: PwC Going on the Offensive in China

You may remember that the Big 4 have BIG plans to go on a hiring binge here in the States and around the globe over the next few years. Just last year, Deloitte announced that they were adding 250,000 new employees over the next five years (although we were a bit skeptical as to what the final numbers would actually shake out). The latest in job creation PR, comes from PwC who has announced that they will be adding 15,000 new professionals in Hong Kong and China:

Accounting firm PricewaterhouseCoopers plans to hire 15,000 graduates and experienced professionals over the next five years in China and Hong Kong, it said Tuesday, as it capitalizes on growing business opportunities in the region, particularly mainland China.

The Big-Four firm said the new hires will be “across all lines of service,” adding it hopes to recruit more than 2,000 university graduates in the coming months in Hong Kong and China. The company is conducting campus recruitment in Hong Kong and three mainland Chinese cities this month.

Adding to this glowing news was Fitch Rating’s vote of confidence in the Big 4 who “should inspire confidence in terms of corporate governance” in Chinese companies. Right. Because it’s been clockwork so far.

PricewaterhouseCoopers: To Hire 15,000 In HK, Mainland Over Next 5 Years [Dow Jones]