Category: Big 4

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

Would-Be Audit Noob Struggles With Picking a City (After Already Picking a City)

I’m pretty sure this isn’t a troll and this guy actually wants to know if this is OK. I have some location-based advice having lived in that area for over a decade, hoping you guys can fill in the rest. What would be the etiquette on this?

I am starting with a Big 4 firm in a little over a month in their San Jose office. However the more that I think about where I want to be and the housing options available I am more interested in San Francisco. Would I be risking my offer by asking to transfer so late in the game?

If it matters at all, I have heard from a friend in the SF office they are still looking to fill a few entry level audit positions.


Are you kidding me? You’re trying to kick off your career as “that guy” (don’t think recruiters aren’t tweeting amongst themselves all the time; you will get talked about) over the difference of a 45 minute drive. I could understand if you were struggling between New York and Los Angeles (with tail and good salary potential in both relative to cost of living and actually being able to enjoy the apartment you pay too much for) but you’re within the same metro area. San Jose isn’t that bad and you have the advantage of being able to “escape” city life to some extent when you are not actually at work.

Would you be risking your offer? Did you sign it? Did you feel like it was right at the time but now think a handful of miles will be worth considering that bridge burned?

But living in San Jose means you don’t live in the thick of it. San Francisco is fun to visit and great on paper but after a few years, it gets really old. You’re already putting yourself through life in the Big 4, why make that worse by also subjecting yourself to guys peeing on the Muni and those damn grey speckled recycled blankets everywhere? What makes you more interested in San Francisco?

In your copious amounts of free time, you can drive near San Francisco, BART in, enjoy yourself a paper-bagged PBR and BART your ass back to the San Bruno parking lot and retreat back to your San Jose lair. It’s practically like being in San Francisco.

If you haven’t actually signed the offer, you could try to get a lead on “your friend’s” firm; tell them unsubstantiated rumors are one thing but calls from HR are another. I’d advise against rejecting the San Jose firm’s offer without having some sort of reasonable assurance (bleh) that the San Francisco office actually wants you but with less than a month to go, you better have started pursuing that yesterday. I assume you don’t have the luxury of doing this in person; if you were local, you would know San Jose and San Francisco are pretty much the same thing if you are talking about money but there’s also a quality of life issue here that you need to look long and hard at.

If you still like this idea, please go read So You’re Moving to San Francisco by Twitter API lead Alex Payne. I’m not trying to talk you out of it, I’m just asking you to really think this through before you screw yourself in San Jose. If you signed the offer, you should do the grownup thing and suffer through it for two years like everyone else. Then once you are sufficiently jaded, have passed the CPA and have the work experience to get the actual license, you are more than welcome to bail on the firm after the competition in San Francisco poaches you.

The market is not that good to allow you the opportunity to get this picky unless you are an Elijah Watt-Sells winner, 4.0 MAcc superstar or putting out. A lot.

(UPDATE) Fulltime Offer Watch ’11: Interns, Let’s Talk About Offers

A wise suggestion from the mailbag:

I had an idea for an interesting blog topic – most Big 4 interns will be finishing up within the next week or two. It would be interesting to see what the starting salaries and bonuses are turning out to be across the firms and across the different offices for new hires starting Fall 2012. I know you did a similar compensation blog a while back and it had several hundred comments with people sharing their respective numbers.


Thanks, astute future capital market servant! Jesus, is it really August already? We did do this last year around this time and you are correct that we got some great feedback from the kids. Except for the ones who got kicked off the team before the big trip to Disney, awww sucks for them.

Instructions this year are the same as last year, please be sure to include 1) your starting salary 2) your office 3) practice 4) signing bonus (if applicable) 5) Bonus for CPA (if applicable). Remember that anything you post will be seen by everyone you know including your colleagues, lover, dog and grandma so please, if you want to remain anonymous, post as such. Mommy won’t be around to moderate your discussion.

Because not everyone fits into the Big 4 cookie cutter, all interns looking forward to full-time offers are welcome to join the conversation, compare packages (erm) and brag about how much better their firm is than others. There’s no crying in baseball but this is public accounting, which means whining is also welcome.

Get on that, future leaders of the industry!

UPDATE:
The latest:

I believe PwC and DT offers come out this Friday. I’d really appreciate the input from other readers. It could affect my own FT offer.

PCAOB Bans Former Auditors From Faking the Audit Trail For the Near Future

The PCAOB has banned former Ernst & Young partner Peter O’Toole from associating with a PCAOB-registered firm for the next three years and fined him $50,000 for his part of a 2009 scheme to fake audit paperwork. E&Y removed O’Toole from the audit engagement team in June of 2010 and canned him several months later in September. The three year ban from audits is the longest bar that the PCAOB has imposed on a partner of a Big 4 accounting firm to date.

“These actions threatened to undermine the integrity of PCAOB inspection processes, and the ability of the Board to discharge its mandate to inspect the auditors of public companies,” said James R. Doty, PCAOB Chairman in a statement. “The Board moved swiftly to address this conduct, having commenced litigation against these respondents within seven months of learning of their conduct. I commend the Board’s Division of Enforcement and Investigations for its timely and effective work,” he added.

The PCAOB has also banned Darrin Estella from working with a PCAOB-registered firm for two years in connection with the improper creation, addition, and backdating of audit documentation in this case. Estella was a senior manager with E&Y’s Boston office and also let go in September of 2010.

The Board found that, shortly before a PCAOB inspection of an E&Y audit, O’Toole and Estella — acting with O’Toole’s knowledge and authorization — created, backdated, and added a document to the audit working papers that related to the most significant issue in that audit. The Board also found that O’Toole authorized other members of the audit engagement team, including Estella, to alter, add, and backdate other working papers in advance of the PCAOB inspection.

Additionally, the Board found that O’Toole and Estella provided a written document to PCAOB inspectors in which E&Y represented to the Board that no changes had been made to the audit working papers following the documentation completion date for the audit. Neither O’Toole nor Estella ever disclosed to the PCAOB inspectors that, in fact, the working papers were altered after the documentation completion date and shortly before the inspection.

The Board found that O’Toole and Estella’s actions violated PCAOB Rule 4006, which requires cooperation with Board inspections, as well as PCAOB Auditing Standard No. 3, which governs audit documentation.

The PCAOB has not released the name of the company involved, who hired E&Y as  independent auditor in 2002. E&Y expressed an unqualified opinion on the company’s September 30, 2009 financial statements, which led to notice by the PCAOB that an inspection of the unknown company’s audit was being performed on March 30, 2010. The partner, senior manager and manager on the engagement were given notice on March 31, 2010. The inspection fieldwork was set to begin on April 19, 2010.

This comes on the heels of an earlier PCAOB decision which censured 27-year-old Jacqueline Higgins for her part in the scheme. Word is she has since taken a job with McGladrey’s Boston office (unconfirmed rumor), who could probably use the help.

Can Any Big 4 Folk in Nashville Help This Young Lady?

A call for action, Nashville market, we know you’ve been dying to have your moment in the spotlight.

I currently work for a Big 4 firm but I’m looking to move to Nashville. I know firms vary from each city and would like to get information on Nashville before deciding to try and transfer or see if there were openings in other firms. I would like to know the sizes of the different office and the clients for each firm. Is there any where that shows this information? I’ve tried searching online and can’t find anything and was hoping I could get input from anyone who has worked in that market.

Nashville, huh? We’re guessing there must be a man involved here but without knowing the specifics, you’re doing the right thing by sniffing the market out first. You probably already know that you’re not going to be making San Francisco or New York money but hopefully we can get some info for you.

If no one is going to speak up, there’s always Glassdoor. It lists Deloitte manager salaries in the $60 – $105k range. You didn’t say what firm you’re looking at (or if you care) but that’s a start.

The City of Toronto Pays KPMG $350,000 to Do a Study on the Obvious

To the Klynveldians, it was a pretty decent pay day just to state the obvious: that the city of Toronto could save a few bucks (make that a few loonies) by not putting fluoride in its water supply and a few other cost-saving measures. We find KPMG’s tagline of “cutting through complexity” to be extra appropriately hilarious in this particular context and there is no mention in the report of potential cost savings that could be realized were Toronto never to pay for Big 4 consulting services ever again.

Krupo has the entire story over at A Counting School but here’s the short version for those of you with legitimate ADHD problems: eliminating or reducing some non-core services provided by the Public Works and Infrastructure department could save the city $10 – 15 million (CAD).

KPMG states that ending the forced medication of Toronto’s public water supply by cutting the fluoride could have detrimental effects on the dental well-being of Torontonians, though obviously they haven’t been reading up on their tin foil hat, anti-fluoride research, which clearly shows a higher incidence of tooth decay in areas which use the fertilizer-production byproduct (which is considered toxic waste as long as it isn’t dumped in the water supply). Cut it! (If you think I’m insane, check out this “chemical spill” that burned through the concrete in Illinois. Those guys in Hazmat suits? Cleaning up Hydrofluorosilicic acid, the toxic industry slurry that becomes fluoride)

Anyway, back to the subject at hand. KPMG also advises Toronto that holding itself to a lower level standard could help save some cash. “Over half of the services that report through the Public Works Committee are provided ‘at standard’, which is generally the level required by provincial legislation or the level generally provided by other municipalities,” says the report. “30% of services are provided at slightly above standard offering some opportunities for cost reduction by lowering the service level provided. 17% of services are delivered slightly below or below standard.”

One such “higher standard” service to which KPMG refers in this report is the Toxic Taxi (no, that’s not what you call a bar crawl through Denver with Caleb after yoga and two red bean burritos), a free service that picks up your hazardous household waste like expired medications and batteries if you cannot drop them off at an authorized location yourself. We wonder how much went in to make the high quality “advertisement” of bootleg Canadian Mexicans Chuck and Vince trying to get you to turn in your used paint and batteries.

As Torontoist so astutely pointed out, the report didn’t actually look at how the horribly mismanaged Toronto city government could run more efficiently but instead simply analyzed which services could be cut. “KPMG did not assess the effectiveness or efficiency of City services,” the report states. “Assessment of how services are delivered is envisioned to be conducted through separate efficiency reviews. KPMG did not conduct financial analyses of programs and services to identify potential savings.”

I guess efficiency suggestions are extra.

Comp Watch ’11: Ernst & Young Comp Discussions Start Today

We’ve received several short, anxious emails (presumably all from Uncle Ernie’s nervous camp) tipping us off to the fact that E&Y comp discussions are going down this week, so it must be true. Of course, this post is useless without actual comp numbers, which we’re sure you’ll give us as soon as you have your sit-downs.

Hi Going Concern –

To give you heads up, E&Y comp and promotions dicussions [sic] are happening this week (they’re happening today in my office). Perhaps it’s a good time to open the new thread on the topic.

Cheers,
E&Yer

Great, so does this mean the Ohio and Michigan crews have already packed up and are ready to bail if they get anything less than whatever it was they are holding out for?

Rumors so far are that raises will be in line with last year’s, which were not at all disappointing considering that we are still (not technically) in a recession, not to mention all that Lehman drama the E&Y lawyers are still hashing out. Too soon? Anyway, as usual, you’re welcome to entertain each other with disparaging comments about the size of your, er, comp packages until we hear news on actual numbers.

Update: Looks like some pretty good numbers are rolling in but please, for the sake of your fellow EY brethren, if you want to share your comp info, be sure to at a minimum include where you are (general metro or region is fine), what service line you are in, your rating (hint: this is a number) and, of course, the actual new pay and bonus number (if any).

Deloitte Goes Partner Crazy

Fresh from the mailbag… well, not fresh, actually, it’s kind of been sitting in there gathering dust all weekend so it’s kind of the moldy gym sock of mail. But I digress.

Prior year they [Deloitte] promoted 101 partners and 136 directors; for this year (actual firm year starts June 1, but partners get promoted in September) there will be 146 partners and 180 directors.
This is for the United States only…

Great news for the new partners and directors, not so great for those of you who are still staring at the Green Dot’s multiplier slides wondering when that 8x bump is going to kick in.

Feel free to commence to discussing how big your yacht will be when you make partner in the comments.

Comp Watch ’11: Deloitte Auditors To Get Enlightened About Results in a “High-Performance Culture”

This just in:

To All U.S. Audit staff,

Please join me on Friday, August 5 from 2:00pm – 3:15pm ET for a webcast for you, our staff, where we will discuss our Audit compensation strategy to reward for results in a high-performance culture. During the call, we will also share what you can expect for this year’s process and overall timeline. (Webcasts are being held for all Audit professionals by level to allow sufficient time for Q&A.)

I look forward to speaking with you.

Thank you.

Rick Rayson
Chief Talent Officer
Deloitte & Touche LLP

Get excited, people.

Ernst & Young Is Really Wishing They Hadn’t Blown Off That Lehman Brothers Whistleblower

FT Alphaville found this notable quote from District Judge Lewis Kaplan’s opinion (whole thing after the jump):

The TAC alleges that Lee told E&Y in June 2008 “that Lehman moved $50 billion of inventory off its balance sheet at quarter-end through Repo 105 transactions and that these assets returned to the balance sheet about a week later.” Assuming that is so, E&Y arguably was on 308 notice by June 2008 that Lehman had used Repo 105s to portray its net leverage more favorably than its financial position warranted, a circumstance that could well have resulted in the published balance sheet for that quarter being inconsistent with GAAP’s overall requirement of fair presentation. Accordingly, the TAC adequately alleges that E&Y misrepresented in the 2Q08 that it was “not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles” notwithstanding Lee’s disclosure to it.


“Lee” you may remember is Matthew Lee Lee, the Senior VP for Global Balance Sheet and Legal Entity Accounting who also said this about E&Y’s reaction to his warning on Repo 105:

They certainly didn’t support it. On the Repo 105 issue, they knew about it; they did not appear to know that the number was so large.

Ouch.

lehmanruling

There Appears to Be Some Fuss About PwC Tapping $2 million in Subsidies Once They Spend $78 million and Hire 200 People

Remember when PwC laid off 500-ish 470 people in the Tampa area last year? The townies weren’t impressed and the local press, including the St. Petersburg Times, was all over the firm about it. At the time, PwC insisted that they would create more jobs in the area to make up for things. Frankly, no one took them seriously and probably chalked it up to “something PR has to say.” So it was a nice surprise to learn that the firm is not only hiring 200 new people but they’re spending $78 million on a “build-to-suit building.”

Typically when these kinds of things happen, the local and state governments like to subsidize a bit of the project and this situation is no different. The firm is reportedly receiving $2 million but a source at PwC, who wants to keep their identity secret because DUH, told me that it’s actually closer to $1.2 million. It consists of approximately $800k and some change from the state of Florida and $1.1 million (yes, I know the math doesn’t work you twerps, so save it, they didn’t have exact numbers) from the city and county, the latter being part of the Premier Business Bonus Program.

Rather than simply say “Thank you, PwC for bestowing your autumnal hues on our otherwise hot, sticky, green and tan town…oh, and the jobs are okay too,” the Tampa Bay Businees Journal is poking around the “$2 million” in subsidies. The focus of the story caused our source to be a little perplexed since, you know, the firm is spending nearly $80 million and hiring 200 people. Not to mention the people that will build the $78 million whathaveyou. Did they think the current PwC employees were going to bring their tool belts and slap together some framing and drywall? Plus, the firm doesn’t get the $2 million $1.2 million unless they spend the $78 million and they hire the 200 people. 197 simply won’t do (I asked).

Does it make up for the 500 layoffs? Maybe not. But a story about subsidies that probably wouldn’t pay for Dennis Nally’s annual travel? There’s far more interesting things going on in Florida. I assure you.

What If 20 Percent of Audit Work Was Performed Offshore?

You may have heard that accounting firms – primarily Big 4 firms – have been slowly transitioning work to countries like India and Sri Lanka. This particular topic of discussion typically results in a heated/subtly racist conversations about “foreigners taking American jobs” which eventually evolves into a more overtly racist conversation, not unlike what happens on some Deloitte forums.

ANYWAY, just how much work is being sent offshore? The FT reported some recent projections that the UK’s Financial Reporting Council (“FRC”) found for PwC in the UK:

In an annual inspection report, the FRC said the UK arm of PwC might move as much as 20 per cent of its core audit work to Calcutta by 2014. Less than 2 per cent of its work was offshored in its last financial year.

“On the face of it, 20 per cent of an audit being done without any face-to-face contact with the client seems high,” [FRC Director of Audit Paul] George said. He added that all the large UK audit firms were considering offshoring to cut costs but had so far only shifted a tiny fraction of work overseas.

That “20 percent” has a few people concerned and the FRC is looking into it. Granted, this is just an isolated example to audits at PwC, so obviously your offwhoring experience would vary from audit to audit and also for tax and advisory services. And lest you think this is all about money, the article quotes a flak from P. Dubs as saying, “The driver for us was not a reduction in costs. It is an improvement in quality.” O RLY?

Since many of you have worked directly with this process, you may have a difference opinion with this statement and one tipster – who is interested in hearing other people’s offshoring tales – details his:

My experience with this process has been horrendous. Don’t let comments in the article fool you, we are required to send a set amount of hours overseas to be performed by our shared service center. A process that would originally take 1 hour to start and complete (think bank reconciliations) now takes 6 hours. Nothing like writing instructions on how to perform a simple process and receiving a phone call from someone who barely speaks English to ask you how to perform the test. Or receiving a bunch of garbage and re-doing the work yourself.

Teaching someone how to do something, who has presumably never done it before, is difficult. Teaching someone how to do something, who has presumably never done it before, over the phone is worse. Teaching someone how to do something, who has presumably never done it before, over the phone, whose first language is something other than English is maddening.

Arguably, offshoring has benefits but if this trading 1 hour for 6 hours is fairly standard, then quality certainly isn’t one of them. Of course for a firm flak to say otherwise is grounds for a severe beating from his/her superior. The mere idea of trading 1 hour of work for 6 hours is enough to make a manager lose their shit unless the 6 hours are significantly cheaper. Then there’s the whole “client service” thing which is tricky from the get-go. How do you best explain the increased hours and/or the fact that you’re waiting on something from “the offshore team” that’s ordinarily slapped together in a few minutes?

Clearly, this “20 percent” is a shot in the dark but it’s definitely enough to make someone say, “OH HELL NO. NOT ON MY ENGAGEMENT.” But it’s not impossible that some of you have a grand time with the offshoring, so either way, you should let us know.

Watchdogs probe ‘offshoring’ of audit work [FT]

Comp Watch ’11: Rumors of Imminent Exodus at Ernst & Young Has Some Perplexed

This just in:

I have been talking to a variety of people at E&Y from several offices in Ohio and Michigan. The word from them is that there is going to be a significant movement of people once compensation info is passed out. It’s kinda conflicting since the rumor is that raises should be around what they were last year. Not sure what to make about it.

As you recall, last year’s raises and bonuses at Ernst & Young were competitive with PwC, which came as a pleasant surprise to everyone at Black and Yellow but understandably this rumor has our tipster in a flummox. Of course, this could be limited to the Ohio/Michigan area but it’s worth seeing what the Turley’s Troops in other areas are hearing. Share below.