Category: Big 4

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

PwC Snags Another KPMG Partner

Is PwC offering these partners a lifetime supply of Girl Scout Cookies or something?

Ellen Rotenberg will join PwC to head up the Banking, Capital Markets and Insurance group as a tax partner in New York. She was most recently the National Tax Leader for Banking and Finance at KPMG. Prior to that position she did a stint in KPMG’s Washington National Tax Practice.

If you’re keeping score at home, this is the fourth KPMG partner/principal to join PwC since February (that we know about). Kinda makes you wonder if Tim Flynn is really retiring. [PwC]

Let’s Try to Match Big 4 Firms to Their Statements About the OFT Inquiry

As we mentioned this morning, Britain’s Office of Fair Trading has determined that the Big 4 isn’t playing fair in the audit market and that it’s time everyone sat down (at roundtables, preferably) to sort this thing out. You’d expect the Big 4 to be a little rankled by this, accused of being benefactors in a game played with a stacked deck but actually, they’re quite comfortable with the situation. Accountancy Age got statements from various people at all the firms in the UK but just for fun, let’s try and identify which statement belongs to which firm. NO PEAKING.

STATEMENT #1:

A […] spokeswoman said the firm was “happy to co-operate” with the inquiry, outlining its ideas on opening up the marketplace.

She said: “We support increased choice in the audit market to enable audit committees to have a wider range of audit firms to choose among in meeting their audit needs and obtaining a high quality audit.

“To this end, we support a number of measures to increase choice, including reinforcing the audit committee’s role in auditor appointments; publication of independent inspection results for all audit firms that are active in listed company audits; removing Big-Four only restrictive covenants from loan agreements; liberalising audit firm ownership rules; and the creation of a single market for audit services in Europe.”

STATEMENT #2:

“We welcome the opportunity to cooperate with the OFT and participate in relevant discussions.

“We welcome all measures that enhance the quality and value of audits and we are supportive of measures that can increase competition and ensure there is – and is seen to be – a level playing field for market participants.”

STATEMENT #3:

“We welcome the OFT’s announcement today, in particular to engage all stakeholders in a programme of round tables and bilateral talks. [The firm] plans to play a constructive and active part in these discussions.”

STATEMENT #4:

A […] spokesman said the firm “welcomed” the inquiry, but said it believes there was already effective competition and pricing in the UK audit market “and look forward to hearing from the OFT its reasons for believing otherwise”.

“It is important to bring to a head the long-running debate on competition and choice, and we support calls for progressive and practical change within the industry.

“In carrying out its work, it is important that the OFT puts audit quality at the heart of the debate. We support a level playing field for all parties, and market-based – not regulatory – intervention.”

First correct answer in the comments will get GC luggage grips (yes, that’s what they are) and other swag that our publisher will gladly send you along with a recipe for Chicken Kiev.

Big Four welcomes OFT inquiry [Accountancy Age]

Here’s PwC’s New Comp Structure in Its Entirety (And Thoughts on Salary Multiple)

Last Friday we broke the news of the “exciting changes” to PwC’s new compensation structure. We now have obtained the document in its entirety (on Page 2 of this post) for those interested in perusing and any P. Dubbers who are unable to navigate their own email or internal websites.

The news has generated a healthy discussion with mixed reviews so far but one reader wanted to focus on the salary multiple specifically

Caleb – I think something that has been glossed over by everyone is the expectations PwC has set around salaries throughout your career.  While the attached excerpt [after the jump] shows that the firm wants you to think you will make 2X your starting salary as an average manager and 1.5X your salary as an average senior, it just doesn’t add up. 

No one is making that multiple, and most don’t think they will get there when we get raises on July 1.  Even the partners in our office said 1.5X for seniors and 2X for managers is an unreasonable salary expectation; they are also a little pissed that BoMo set such absurd expectations.  From what I heard about the associate and senior webcast yesterday, a lot of the questions were some form of “why are you a lying piece of shit about compensation?”  I haven’t had a chance to listen to the webcast yet, but I assume the answers to the questions were some sort of non-answer.

The firm has had a hard time keeping seniors around, so my best guess is they were trying to get senior expectations up to get them to stick around.  I guess they didn’t count on accountants to check those figures and do the math to make sure everything was accurate.

Well, P. Dubs new managers and SAs – do the numbers add up? Tell us in the comments.

PwCTotalRewards2011

Ernst & Young Toronto Invites Employees to Don Their ‘Best’ Denim This Summer

It’s not everyday we get news from north of the border, so it’s nice to see our Canadian friends reaching out to us. If you’re from the True North and have some gossip or other newsworthy items to share, send them our way. As for today’s news, we’ve been informed that Ernst & Young’s Toronto office has given the green light to their employees to rock half of the Canadian Tuxedo starting this Friday through Labor Day. Our tipster was quite excited about this since, “This is unheard of in Big 4 accounting firms in Toronto.”

Hi everyone,
If you watched my “[Toronto OMP] Korner” video from last week, you’ll know that the topic of Jeans Day was discussed.

I know many of you have been waiting for a few Jeans Days in the [Greater Toronto Area], so I’m pleased to share that there will be many opportunities for you to wear your best jeans to work over the summer months.

Starting this Friday, 20 May until 2 September, every Friday will be Jeans Day.

From time to time we’ll add a charity-challenge component to Jeans Day. However, for the most part, feel free to wear your best jeans to work on Friday just because.

Retaining a professional appearance is important to us — even when wearing jeans. Please — no rips or tears in your jeans, no t-shirts or running shoes either. If you’re seeing a client on a Friday, please wear your usual office attire.

Best regards,

[Toronto OMP]
Managing Partner, [Greater Toronto Area]

All the emphasis is the original, so you know when “best” is best, the Toronto brass means business. Per usual in these situations when you give an inch of denim, some people take a mile of looking like a complete slob, so please pass the warning on to the Toronto leadership.

Big 4 firms have a staunch pro-denim track record here in the States, as E&Y’s FSO was given a similar reprieve from the drabness of the business casual uniform last busy season and KPMG’s Summer Blast last year. It’s likely that you’ll be seeing more denim around the office the summer again this year but we’d be very interested in seeing pictures of some egregious vilolations. So if you fancy yourself a member of the fashion police and see a perpetrator, take a pic and send it our way.

KPMG Lands More Audit Work From Bridgewater Associates

Big win for the KPMG audit practice in New York as we’ve confirmed that the Asset Management group has won more audit work from the Westport, Connecticut hedge fund.

This week Institutional Investor compiled the largest 25 Hedge Funds and Bridgewater was at the top with $58.9 billion in hedge fund assets. Our source, someone familiar with matter, was impressed, “Huge win for them considering they’re typically fighting for 3rd in those major bids.” It’s our understanding that KPMG had some work from BW but adding more engagements will make for a prestigious addition to their client roster. Congrats to KPMG and the team that made it happen.

PwC Unveils Changes to Compensation Structure

~ Note updates after the jump.

In the last week or so there has been lots of compensation news coming out of PwC, starting with the news from last Friday that “exciting changes” to the compensation structure were happening. There was a lot of speculation and up through yesterday’s Steve Beguhn capping Town Hall webcast about what those changes would be and now we’re happy to report that we’ve got the details for you.

Late yesterday we spoke to a person within PwC who helped develop the new compensati�������������������� employees and it sounds like their are plenty of exciting changes that are being unveiled today. These changes to the comp structure are part of a large shift in culture and values that all started last fall with the unveiling of the new logo (and here you thought it was all about colors and shapes). But enough with the pleasantries, you’re probably anxious to the know the details.


There are three major pieces to the change in the compensation structure starting with:

Transparency – PwC hopes to communicate to its employees just how they come up with the numbers that go into your numbers. For example, all those “surveys” and “benchmarks” that get thrown around? The firm plans to tell you exactly what surveys and benchmarks they are using, who participates in them, how many they use, etc. Once all that data is accumulated, the firm will present employees with graphs and other visuals to illustrate ranges of compensation for all the service lines and non-partner levels. They will also show the market midpoint and average vs. the PwC midpoint and average. This will allow employees to know where they are relative to their peers in terms of compensation and through an “open dialogue” in the performance review process, why they are making what they are.

Earning Potential – The next piece is your earning potential. In other words, how well you can expect to do while you’re working at PwC. From brand new associate to a new partner, you’ll be able to see what kind of scratch you’ll be pulling down at each level and in each line of service. Along with this, a new bonus structure will be announced in July for fiscal year 2012. Under this new structure, the firm will state exactly what will come out in the bonus pool; there will be no cap on the pool and it will be based on the following metrics:

Firm performance – The better PwC does, the better you can do.

Line of service performance – Yes, this means that if advisory had a kick ass year, their bonuses will be larger than the audit group’s. Likewise, the next time advisory goes through tough times and the tax group keeps on truckin’, they’ll enjoy a better bonus. Assurance, you’re just screwed (I kid, I kid).

Individual performance – The rating system relative to your peers will remain in place.

Each line of service will receive quarterly updates on the bonus pool. This is something that is already done in the advisory practice and will now be practiced in assurance and tax. All non-client facing support employees will also be eligible. The firm is launching a microsite and will provide flip books that will lay out all the details in case you ever forget all this.

Recognition and Milestone Awards – Spot bonuses have been around for some time but there was concern that it wasn’t always clear how they were earned and what they are. This will also become a more transparent process (sensing a trend yet?). Along with the spot bonuses, the firm is introducing milestone awards that will occur at the senior associate, manager and senior manager/director levels. Here are some of the details for each:

Senior Associate – In addition to compensation awards, new seniors will receive highly specialized individualized offsite training that will help the new seniors make decisions about their careers. This will last for 12-18 months as they adjust to their new roles. UPDATE: And by “offsite,” this means “an offsite marquis location.”

Manager – New managers will receive a bonus that is equal to 25% of pay. This will be phased in over a couple of years, starting with this year’s bonus of 15%, next year 20% and finally reaching 25% in 2013. Since the promotion to manager is such a major achievement, the firm felt recognition of that achievement is appropriate. UPDATE: The reason for the phase-in is so that recently promoted managers will not be jumped in total compensation by their less-experienced counterparts. The firm looks at compensation from a total cash perspective as opposed to comparing salary to salary or bonus to bonus.

Senior Manager/Director – New SMs and Directors will receive four-week sabbaticals to use however they like. They can work to further their professional credentials, spend time with family, take a vacation, whatever they choose.

So there you have it. Some people probably won’t be pleased by the changes because well, some people simply can’t be pleased. But from the sound of it, the firm is trying to give employees what they asked for and that is more information about the process, what “staying competitive with the market” really means and probably all kinds of stuff you didn’t even think you might want to know. Again, some people will be skeptical but those people also probably think OBL is still getting dialysis treatments.

So, let’s have it P. Dubbers. Discuss the new and exciting changes and throw the questions out there that you’re too afraid to ask – TPTB are definitely reading (and it sounds like they are fans of live-blogging).

Former American Idol Contestant Steve Beguhn Sang at PwC’s Town Hall Meeting

Hopefully this isn’t what Bob Moritz meant when he was talking about “exciting changes” to the comp structure. This is according to a tip we’ve just received over the Twitter wire. In case you need a refresher on Steve:

Here’s a confirmation email we received a short time ago:

I have a friend who sent me a stream of consciousness via text while he listened to the webcast. Basically, it was no bonuses for the year (apparently everyone on his team started flipping out when they heard that), you’ll get to know how your salary compares to the rest of your group (er, who really wants to know that?), a extra day off for 7/4, and they got Steve to end the webcast by singing and dancing.

Wow.

SEE UPDATE BELOW: “[N]o bonuses for the year” apparently means “partners haven’t discussed handing out FYE bonuses and it doesn’t appear that they will.” On the bright side we heard that Steve sang Adele’s “Rolling in the Deep” and “some John Mayer song.”

UPDATE:
Based on the conversation below and other chatter we’ve heard, it appears the timing of the payout will not be accelerated rather than “no bonuses.”

Barry Salzberg Recalls That His First Boss Was a Jerk, Being From Brooklyn Had Its Disadvantages

Dr. Phil doppelgänger and incoming Deloitte Global CEO Barry Salzberg spoke at Wharton recently about leadership and how it has changed quite a bit since he started at Haskin & Sells in 1977. He riffed about the old days in his speech including how jackets were all but mandatory (especially if you were from Brooklyn) and the aforementioned boss from Hell:

“In those days, [Deloitte] was a fancy, formal place,” Salzberg recalled, “so formal that you would get bawled out — and I did — if you were caught in the hallway without your jacket, especially if you arrived speaking a foreign language like Brooklynese.” His first leadership lesson came on his third day. “Bosszilla,” as he calls his first boss, asked him for a photocopy of a tax ruling. Eager to please and show off his legal savvy, Salzberg included his own two-page interpretation. “Mr. Salzberg,” Bosszilla hissed, “I asked you for a copy of the ruling, not your interpretation. One copy, stapled.”

Of course, the Big Salz knew that this wasn’t how he wanted to lead so you can bet your signed copy of As One that he spends plenty of time at the Xerox machine. Another leadership trait that has gone the way of the Dodo is that CEOs don’t mingle with the commoners. Bar is out there mixing it up on the regular:

“What I do is get out and talk to people to give them the opportunity to share. And then what you have to do is act on it, so people understand that you can change your mind.” As head of Deloitte’s U.S. operations, Salzberg visits as many as 25 to 35 offices every year, sitting down with partners to hear their concerns. When he becomes global CEO, he plans to travel more, he said. “There’s nothing that can replace face-to-face interaction. Getting the rubber on the shoes worn out is how to do it.”

And of course, in this day in and age, you simply can’t ignore animal metaphors:

“No burying your head in the sand if there’s a problem, and no ignoring the elephant in the room. Much better to name and tame an issue, no matter how difficult it is,” than to ignore it or pretend it isn’t there, he said. “Making sure the truth is told and discussed with all is the foundation of leadership. Without that, you can’t build trust.”

Got it? Ignoring problems – even the really tough ones – is a thing of the past:

Deloitte CEO Barry Salzberg on Leadership as ‘the Norm, Not the Exception [K@W]

Comp Watch ’11: Deloitte Auditor Has PwC Bonus Envy

From the mailbag:

Caleb,

I am reading about PWC getting some spring love in the form of a bonus, and other firms already openly discussing compensation with their employees. Apparently Big D missed that memo.

Everybody at Deloitte had a terrible busy season, that is no secret. We changed our audit methodology, and then in December the powers that be decided to do some last minute tweaking, aka destroy any hope of a bearable busy season. I am a senior working out of Boston and have been pretty busy since October. To reward my hard work Deloitte has given me absolutely nothing. There was no post audit dinner, no monetary reward, not even a free cup of coffee. I did however (and so did everyone else in Boston) receive emails from every executive partner in the NE thanking us for all our hard work, reminding us how much money we made the firm, and telling us to reward ourselves by taking some time off. Apparently being rewarded now means using our own PTO to take a day off. I have had to work both firm holidays up to now (one in January and one in April for the Boston Marathon), so I am not sure when they think we can reward ourselves by using the PTO we already earned. Usually engagement teams hand out “Applause Awards” to their people for hard work, and maybe I am just on a few teams with Ebenezer Scrooge Partners, but I think it is crazy that either Deloitte, or the Boston Office, or one of my engagement partners couldn’t scratch together a few dollars as a thank you for the long hours.

Partners and HR continue to wonder why people leave, but we are continually asked to do more and more and never rewarded for it. With the other firms opening up the piggy banks already, what are the chances that Deloitte follows suit? They missed the mark last year on the compensation, and everyone suffered as a result with the crush of seniors headed for the door. As a result they ended up giving a mid-year raise just to stem the bleeding. Are partners too busy looking to next year or playing golf at their fancy country clubs to remember the little people?

Of course our writer is referring to the PwC bonuses we wrote about on Monday. Don’t know if this is a Deloitte problem or a Boston Deloitte problem but it sounds like Green Dots in Beantown are wicked pissed. How’s your office faring? Tell us below or email us.

Jim Quigley Reflecting on His Time as Deloitte CEO via Twitter

Davos regular and out-going Deloitte Global CEO Jim Quigley is reflecting on his time in the big chair on Twitter and so far he’s said that “Experience has taught me in a world that seems increasingly focused on sprints, great professional relationships are the work of marathoners,” and “I’ve learned we often allow the urgent to crowd out the important; getting in front is the way we will stay in front.” These are nice thoughts and we’re big on reflection but what do you think Jimbo is really thinking that the Deloitte Twitter filters aren’t letting through?

Luckily, we’ve obtained JQ’s copious Tweet notes, all of which were ultimately denied by Deloitte’s Ministry of Propoganda. Here are some of the denied tweets:

• Really kicking myself after turning down Queen Rania’s offer to buy me a drink at Davos last year. #IDIOT

• Disappointed that I only get 5 months to Tweet under @deloitteceo. Not sure what my new handle will be. Is @deloittekicksass taken?

• @JustinBieber how do you get ready for a big show?

• I’m just going to say it: Sharon Allen has awful taste in music.

• Good luck Barry! I guess I don’t have to warn you that this job will make you lose your hair.

Of course, many of you know Jim better than us, so feel free to speak/Tweet on his behalf below.

What Was Discussed on Ernst & Young’s ‘All Hands Broadcast’?

We’ve heard from a couple people that Ernst & Young had an “all hands webcast” of some kind today but so far, no one has given us any details as to what was discussed.


Of course there were probably kind words about all your hard work this busy season, your commitment to the firm and so on and so forth but we want to get to the crux; this calls for speculation on our part, until we get something more solid. Possible topics include:

1. Hazing methods for the folks from LECG Corp.

2. The announcement of special screenings of In a JIT.

3. Two minutes’ hate for a certain Governor.

4. Mysterious references to “exciting changes” to the compensation structure that won’t be revealed until “details” are sorted out (i.e. management knows what PwC is doing).

5. Your input.

First Marblehead Taking a Mulligan on Financial Statements

More importantly, how are the KPMG auditors celebrating (because we want to know)?

From the 8-K, filed this morning:

On May 10, 2011, The First Marblehead Corporation (the “Corporation”) announced that its board of directors (the “Board of Directors”), in consultation with management, the audit committee of the Board of Directors (the “Audit Committee”) and KPMG LLP, the Corporation’s independent registered public accounting firm, concluded that certain unaudited financial statements previously issued by the Corporation should no longer be relied upon.

In order to correct errors in the recording of certain non-cash items, as described below, the Corporation will restate the unaudited financial statements contained in the Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2010 (the “Q1 Form 10-Q”) and the Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2010 (the “Q2 Form 10-Q”). The Corporation expects to file the restated Q1 Form 10-Q and the restated Q2 Form 10-Q, as well as the Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2011 (the “Q3 Form 10-Q”), no later than May 16, 2011.

If you really want to get into the gory details, First Marblehead is bringing 14 securitization trusts onto the balance sheet that were previously accounted for off-balance sheet and its deferred tax assets in Q1 and Q2 are jumping over to the liability side (and the corresponding benefits are becoming expenses). The company says this is NBD as CFO Ken Klipper said, “These restatements … do not affect our cash position and are expected to have no impact on our ongoing business operations.” But the next six days may be a little uncomfortable for the accounting department and the KPMG audit team.