Category: Big 4

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

KPMG Employee with Combination of Short-timer’s, Spring Fever Pushes the Dress Code Envelope

Last week’s unseasonably warm weather in New York had one KPMG employee – who had recently put in her notice – taking advantage of the pleasant temps to show off the gams. According to a conversation we overheard on Twitter:


To which someone responded:

This infraction, it’s our understanding, occurred at the friendly confines of 345 Park Ave. Now, anyone familiar with the House of Klynveld knows that shorts are definitely frowned upon, especially at 345 Park where backpacks are rumored to get the crook-eye. Showing this amount of flesh in the middle of February, in a staunchly business casual environment, is about as an awesome disregard for the dress code we’ve ever heard.

The most important question, however, remains unanswered: what kind of shorts? Are we talking boxers? Boy shorts? Daisy Dukes? We need a witness (or two or three) and pictures obviously get bonus points.

What Did Ernst & Young Call Lehman’s ‘Goat Poo’ Assets?

Considering E&Y was, ya know, the auditors and all, they should have been aware that these assets were a grade or two (or three) below human excrement and probably had some name for them.

Lehman Brothers Holdings Inc (LEHMQ.PK) filed for bankruptcy on Sept. 15, 2008 and then quickly sold its prize investment banking assets to Barclays Bank (BARC.L). JPMorgan had been Lehman’s banker. The court papers, filed in U.S. Bankruptcy Court in Manhattan on Thursday, said that Barclays and Lehman called certain Lehman assets “toxic waste” and “goat poo” and knowingly excluded them from their sale agreement.

Jim Turley has been a willing participant in this whole thing so far but were far more interested in what you guys think.

JPMorgan says Lehman called assets “goat poo” [Reuters]

In Case You Were Wondering, KPMG Is Still Wells Fargo’s Auditor

As we’ve discussed, the sudden departure of Wells Fargo’s now-former CFO, Howard Atkins, has been a bit of a mystery. The bank stated that Howie quit for “personal reasons” but Chris Whalen, for one, wasn’t buying that story and stated that it was an “internal dispute” at the Stagecoach Shop and “public behavior suggests significant problems in the bank’s internal systems and controls as defined by the Sarbanes-Oxley law.”

Then John Carney got all heresay yesterday, reporting:

Others say that the departure stems from a heated argument between Atkins and the CEO of Wells Fargo, John Stumpf. Still others say that there could be even more personal reasons for Atkins leaving.

This is pretty fun because this “heated argument” could have been over something awesome like Atkins’s using Stumpf’s private commode without permission or a spurious challenge in their weekly Scrabble® match. Whatever the reasons for Atkins’s departure, all this speculation got the gang over at The Street wondering that maybe – just maybe – KPMG’s risk management team had soiled themselves over the whole situation and asked the audit team to start drawing up their resignation papers.

KPMG said Friday that it remains Wells Fargo’s […] external auditor, though the firm wouldn’t comment on recent criticism that Wells’ financial disclosures aren’t up to snuff. KPMG spokesman George Ledwith confirmed that the Big Four accounting firm is still working with Wells Fargo, which plans to file its 10-K annual report by the end of the month. Howard Atkins, who had been CFO of Wells Fargo for nearly a decade, resigned unexpectedly last week and won’t be signing off on that report. His replacement, Tim Sloan, will do so instead. “Yes, KPMG LLP is the external auditor for Wells Fargo & Company,” said Ledwith.

So what prompted this brief line of questioning is, in itself, a mystery. KPMG resigning as the auditor of Wells Fargo is about as likely as John Veihmeyer throwing all his copies of Rudy into an incinerator. But then again, maybe The Street knows something we don’t. Was/is/will there be any doubt that KPMG will remain the auditor of Wells Fargo? Rampant speculation and nightmare scenarios are welcome. And if you’re in the know, email us.

Auditor Stands By Wells Fargo [TS]

External Recruiter Posing as PwC Staff Is ‘Very Convincing,’ Well Versed in Firm Jargon

This is a new one.

We found out about an external recruiter impersonating PwC late yesterday and apparently it’s gotten on the nerves of the brass that they sent an email to let everyone know that you shouldn’t talk to strangers, even if they say they’re from PwC and know a bunch of internal acronyms.

External Recruiters Impersonating PwC Staff

There have been recent reports of an unethical recruiter attempting to collect PwC staffing information by presenting themselves as a PwC employee. This individual has proven to be very convincing and knows some of the PwC terminology to support their deceptive practices. One of PwC’s best defenses to this type of activity is to protect our information and to not readily disclose it without verifying the requestor and their need for the information.

What to do if you receive a request for staffing information

If you should receive a call from an individual requesting staffing information, e.g., names, staff levels, phone numbers, etc. , do not provide this information by phone and do not send it to an external e-mail address. Politely obtain the caller’s information and inform them you will look into the their request. Do not be fooled by the information displayed on your phone. The caller typically blocks their caller id and the firm has also experienced instances of phone spoofing where the phone displays a false PwC extension from a call originating from outside of the firm. You can verify if it is a legitimate caller by contacting the individual through their PwC office phone number or e-mailing their PwC account. If you determine the call did not originate from the PwC individual, please report the situation to your HR representative or e-mail the call information to security@us.pwc.com and a US Security representative will respond to you.

We’ve contacted the firm about this sly impostor and are waiting to hear back. In the meantime, if you’ve heard from this crafty character, send us the email or voicemail.

PwC Picks Up Thomas Henry from KPMG; Will Lead Global Incentives Practice

This could be what PwC’s Talent Leader was talking about she said that poaching, “[Has] always been a place we like to stay competitive.”

Mr. Henry, a tax partner who has spent more than 25 years in public accounting, most recently at KPMG, has extensive experience in all areas of state and local taxation. He is best known for his work in the credits and incentives space, both domestically and worldwide. His experience in maximizing global incentives for large multinational corporations in the United States, Europe, Asia and Africa will enable both US-based and non-US-based multinational companies to benefit from his counsel when entering into economic incentives negotiations.

Thomas Henry Joins PwC US To Lead Global Incentives Practice [PR Newswire]

How Long Does It Take to Climb the Ladder at Ernst & Young?

Welcome to the where-the-hell-is-Bahrain? edition of Accounting Career Emergencies. In today’s edition, a future E&Y tax associate wants the lowdown on the black and yellow ladder. How high are these rungs, anyway?

Caught in a career conundrum? Have a co-worker that keeps swiping your red Swingline? Want to put the moves on a fellow auditor in the copy room? Email us at advice@goingconcern.com and we’ll help you avoid anything that involves in a knuckle.

Back to our girl on the partner track:

Hi,

I will be starting in the tax dept of a Big Four soon.

How long would it take to move up the tax ladder? (Yes, yes I know your response will be to start first before I start thinking about promotions… But I am thinking ahead…)

What is the minimum number of years typically required at each level? Are exceptions ever made? What goes into promotion decisions? How long would it take to get to the partner/director level? Is the promotion criteria generally standard across all Big Four or is there some variation?

Thanks,
Ms. Thinking Ahead

Dear Ms TA,

You’re quite the eager….errr, go-getter aren’t you? That’s good, I like my accountants ambitious. We’re not intimately familiar with the ladder at E&Y but we’ll give it a go and let the bean gallery fill in the gaps.

Typically, you can expect to be an associate two to three years before being promoted to senior. Depending on the needs of your practice group and your performance, this could be shorter or longer. In order to get the bump to manager, you can expect another three years at a minimum, again, subject to the needs of your group and whether or not you’re impressing the pants off the brass. From there, you can expect at least two years at manager, another two to three as a senior manager and then, if you’re lucky and you have a good business case, TPTB might start looking at your for admittance to the partnership. Altogether, you’re looking at a bare minimum of nine years before you can even get a whiff of partner and twelve to fifteen is probably a more realistic time frame. There are exceptions of course but that’s more or less the timeline.

Because tax doesn’t have the same fee pressure as their audit counterparts the wait might not be as long but don’t forget, not just anyone gets into the partnership. You need to be a performer and be able to win new clients. The benefit of tax is that it has more diverse career paths available, so if you find discover that you’re a wizard at transfer pricing or M&A, you might see a quicker ascension.

This presupposes the fact that you obtain your CPA in a timely fashion as most tax practices will not promote you to manager without a CPA, a JD or EA. How about it black and yellow tax troops? Dispel with the gory details as necessary.

Some Companies Willing to Drop a Big 4 Auditor Like a Bad Habit…For Another Big 4 Auditor

Auditor musical chairs isn’t something that happens too often but Reuters reports that more and more U.S. companies are looking to save a little extra scratch on their audit fees:

Bucking a long-standing preference by most companies to stick with the same auditor for years, some companies are putting their audit work out for competitive bids to win better deals on fees, or to get fresh teams looking at their books. “It’s a change in the competitive landscape among the audit firms where they have the ability and desire to take on more clients,” said Mark Grothe, an analyst at consulting firm Glass Lewis. Public companies also seem to be more willing to switch auditors, as long as one of the “Big Four” firms will be doing the work, he said.

The article cites Apple (dropped KPMG for E&Y) and Tysons (kicked E&Y to the curb in favor of PwC) as two prominent examples. We’re also aware that Credit Suisse is slowly transitioning a good portion of the audits performed by KPMG to PwC, according to sources familiar with the situation. Companies of this size willing to change their auditors demonstrates that some companies aren’t too concerned with the learning curve that may face their new auditors. In fact, some CFOs are more than okay with it, including Linster Fox of Shuffle Master who claims, “There’s no degradation in service — the service is actually higher.”

PwC’s Tim Ryan, however, doesn’t buy the idea that fees are the driving force behind the auditor switcheroo, “When a company does go through a change, it is almost always driven by something other than fees,” he told Reuters. Instead, a change is more likely to happen when, for example, a major fraud gets missed or there’s a difference of opinion on a crucial issue OR the CEO is a finicky character OR some other mysterious reason unbeknownst to all of us.

Regardless, the real concern is that all this auditor swapping puts a lot of pressure on fees:

Fee pressure has been intense worldwide, but especially in the United States, according to the International Accounting Bulletin, which tracks global audit fees. “The U.S. is a very competitive market, easily the largest audit market in the world, and the Big Four have competition from a much larger pool of firms,” said IAB editor Arvind Hickman. “Last year we received reports of fees being cut between 5 and 15 percent on average on audit work, and there were extreme cases where fees were being cut up to 40 percent,” he said. Fee pressure appears to be easing somewhat, “but there will still be fee pressure this year and we don’t predict it will go away any time soon,” he said.

This has Big 4 firms undercutting regional competitors and is no doubt, partly responsible for the parking lot at the Senior Manager level in some markets. With this level of competition and, as a result, a slowly decreasing portion of the Big 4 revenue stream, it doesn’t necessarily mean a career as an auditor is a dead end but it sure doesn’t help.

Auditor shopping helps U.S. companies cut fees [Reuters]

PwC Report Shocker: Consumers Who Pirate Video Are ‘Enticed by Free Content’

If you can believe that.

[A]ccording to a report by PriceWaterhouseCoopers (PwC), those lessons don’t relate well to a generation of broadband mobile users who still prefer to go searching for free content rather than pay even the smallest price.

“Many consumers who say they commit online piracy are enticed by free content” despite having access to “an astonishing variety of movies videos and television shows–on multiple platforms–faster than ever before,” the report concludes.

The report’s key findings are topped by the fact that 81 percent of surveyed consumers say they will continue pirating video despite concerns about computer viruses, the legality of their actions and inferior quality/fidelity of the content. It also reported a crossover effect in that “40 percent of those who report pirating content via traditional methods said they will probably also pirate on mobile devices within the next six months.”

PwC: Video pirates “enticed by free content” [FierceCable]
The speed of life [PwC]

Oral Arguments Heard in Campbell v. PricewaterhouseCoopers

~ Update below with link to audio of the proceedings

Last month we caught you up on Campbell v. PricewaterhouseCoopers, the wage and hour lawsuit filed by employees of the firm, claiming to be non-exempt and thus available for overtime. Oral arguments were heard today at the 9th Circuit Court of Appeals in San Francisco and it marks the most recent step in a case that could have wide repercussions in California. Francine McKenna has a good rundown over at Forbes, including sta��������������������rshaw, the plaintiffs’ attorney. PwC and their lead counsel, Dan Thomasch of Orrick, have declined to comment at this time.

In today’s proceedings, both sides were allowed to make their arguments and answered questions from a three-judge panel. We’ve obtained the briefs for both sides and we’ll give you a taste of each. First, from the plaintiffs:

PwC argues that Attest Associates satisfy the Professional Exemption because—notwithstanding the routine and nondiscretionary nature of their work—PwC claims that they are functionally indistinguishable from fully licensed accountants, doctors, lawyers, and engineers. As a matter of law, however, the text, structure, and drafting history of the Professional Exemption limit its application to licensed accountants, and Associates are not licensed. Second, PwC argues that Attest Associates satisfy the Wage Order’s Administrative Exemption because they work “under only general supervision” despite up to six layers of managers who are responsible for Associates’ work. That argument fails, however, because PwC has not pointed to sufficient evidence to create a triable issue of fact that Associates “work along specialized or technical lines”—much less that they do so “under only general supervision”—as required by the Administrative Exemption.

The argument goes into detail from there addressing three key arguments: 1) The Professional Exemption Does Not Apply to Attest Associates; 2) The Administrative Exemption Does Not Apply to Attest Associates; 3) The Rules Governing Professions Other Than Accounting Do Not Help PwC. You can see the brief in its entirety on the next pages.

PwC addresses all three arguments in their brief; this is a portion from the brief’s introduction:

Put simply, nothing in the Wage Order precludes unlicensed accountants from being shown to be exempt under subsection (b) of the Professional Exemption. Plaintiffs’ argument that the “drafting history” of the wage order at issue shows an intention on the part of the [Industrial Welfare Commission] to prohibit unlicensed accountants from being professionally exempt should be rejected, because the language and structure of the Professional Exemption are not ambiguous, and contain no such prohibition. Even the District Court did not accept Plaintiffs’ tortured reading of the text of the Professional Exemption, or claim to find unambiguous intent on the part of the [Industrial Welfare Commission] to exclude from eligibility for the Professional Exemption all unlicensed members of the accounting profession — and inevitably by extension, all unlicensed lawyers, doctors, dentists, optometrists, architects, engineers, and teachers. Doing so is flatly contrary to the overriding principle governing application of exemptions from overtime provisions, which is to consider individual employees’ work duties.

And their brief outlines a direct counter to the plaintiffs’ brief: 1) Plaintiffs’ Argument That Accountants Can Only Qualify for a Professional Exemption Under Subsection (a) Is Unsupportable 2) PwC Is Entitled to Show That Its Attest Associates Satisfy the “General Supervision” Requirement of the Administrative Exemption; 3) The Impact of the District Court’s Order Is Not Limited to the Profession of Accounting.

So what we’ve got here is…failure to agree on how the ambiguous (or not) California law is and how it applies specifically to unlicensed audit associates. Are they really just cogs in the wheel, bowing to their superiors as the plaintiffs argue? Or are they responsible professionals who are engaged in a challenging occupation that warrants exemption? The 9th Circuit will have transcripts and audio from the proceedings available on its website at some point tomorrow and we’ll update this post with them when they’re available. As for a resolution, it will be several months before we find out what the 9th Circuit rules and then, there’s still a trial to be had. Stay tuned.

UPDATE: Audio is now available for those interested. You can listen to the proceedings here.

2010 01 29 Br of Appellees

Efiled Reply Brief

PwC Talent Leader Talks 2011 Hiring Spree, ‘Competitive’ Poaching, Autumnal Hues

As we’ve discussed, Big 4 firms are doing their part to marginally improve the frightening national unemployment number by embarking on epic hiring bonanzas in the coming years. FINS reporter Kyle Stock ran down Paula Loop, PwC’s Global and U.S. Talent Leader to find out the details on the firm’s plans and here are a few highlights:


Starting off – if unemployment doesn’t improve by 2012, Obama won’t be able to blame PwC:

KS: It seems like the firm is always hiring, how does that 45,000 compare with 2008 and 2009?

PL: It’s certainly higher than it has been in recent years. For the US, we’re hoping to hire around 10,000 this year. Those numbers are about 60% higher than they were for 2009 or 2010. About 6,000 of those are campus hires and 4,000 are on the experienced side.

Rumors of our acclimating to social media at a snail’s pace have been greatly accurate but only because we were waiting for The One:

KS: When PwC announced the LinkedIn [partnership], some articles said PwC has been slow to embrace social networking — is that accurate?

PL: Well, we were waiting for the right place at the right time. LinkedIn was a really good match for us.

Poaching, on the other hand, we’re all over that:

KS: I always try to ask about poaching. Is PwC hiring from competitors much these days?

PL: Because I think we are hiring more people, there’s more activity there. That’s always been a place we like to stay competitive.

Once you land those people, how do you keep them? Well, it helps if you come to grips with the fact that the last week of the year is pointless and you tell everyone to stay home. Secondly, you replace the old swag:

KS: Is PwC doing anything new to increase retention?

PL: We’ve had some great stuff on the retention front. We had an annual shutdown between Christmas and New Year’s where we closed our firm. That’s a terrific thing for us. I can tell you, you really get a chance to disconnect. Not only are you on vacation, but no one else is working. It gets people rejuvenated.

And we’re always doing stuff. Our new brand was a really great and exciting thing. We all have new bags for our computers that have our new colors for the new brand.

Right, the new brand! That was exciting. Sure, there might have been some kvetching at first but now that everyone has calmed down it’s really what makes us different from other firms:

KS: So how does the culture differ from a company like Deloitte?

PL: It’s hard for me to say on that, because I haven’t been a part of their culture, but I would say our new brand launch this fall really defines our culture. The colors are really vibrant and warm. We took that really long name and shortened it up. Our new logo can be really animated. I think that’s really what we’re trying to bring out in our culture.

PwC’s Paula Loop on Hiring 45,000 and the Firm’s Big Change [FINS]

China MediaExpress CEO Responds to Fraud Allegations by Falling Back on ‘Reputable and Well-Known Auditors’

For anyone out there concerned about Chinese companies who have less-than solid accounting practices, you can rest easy, as Gary Weiss reported in his TheStreet.com column yesterday:

All you have to do is believe in the infallibility of Big Four auditors!


Case in point, China MediaExpress Holdings is the latest company who hasn’t convinced everyone that their numbers are kosher, so their CEO, Zheng Cheng, went on the offensive:

Responding to allegations that the company is a “fraud and reported revenue is exaggerated by tens of millions of dollars,” China Media’s CEO Zheng Cheng said in a letter to shareholders: “The company is strong and doing well. Its revenues and cash position have been audited by reputable and well-known auditors who have confirmed both.” [Emphasis is GW’s.]

Those ‘reputable and well-known auditors’ just happen to be Deloitte, thankyouverymuch. Don’t think for a minute that we were dealing with Frazer Frost or some other firm that has had problems.

With China Small-Caps, It’s Shorts vs. Auditors [The Street]

PwC’s Humor, Laughter and Sanity Preservation Group to Keep Employees in Stitches During Busy Season

Not sure if this is the beginning of something great or not but with lyrics like, “Gonna sit and eat time ta-cos,” we’re hopeful for more and P. Dubs employees are lucky to have so much talent in their midst. And now that Steve’s American Idol run is over, he can record this for the HLSP Group’s future presentations.


Btw, this should be sung to the tune of Ke$ha’s “Tik Tok.”

The real lyrics:
Wake up in the morning feeling like Tim Ryan,
Read my FASs, I’m out the door, I’m gonna vouch this Citi.
Before I leave, grab my keys with my secure ID
‘Cause when I leave for the day, I ain’t coming back.

I’m talking 10-keys and our phones, phones
Freshly laundered clothes, clothes
Ready to confirm loan, loans
Fast-talking, requestin’ our PBCs,
Staff barely in their twenties,
Bookin’ forty – workin’ sixtyy+

Don’t stop, Aura locked
GADM please just hurry up,
Fortnight, it seems like
Since I’ve seen the sunlight,
Tick tock, on the clock,
But the audit don’t stop, no

(Repeat)

Ain’t got a friend in the world,
But the ones that are here.
Ain’t got no money in my pocket
Cuz I’m not non-exempt.
Now the work is piling up,
But now we know better,
And we’ll keep it till the end
Until we get that Rep Letter.

I’m talking about errbody workin’ through lunch, lunch.
Fluxes due to credit crunch, crunch.
Gonna sit and eat time ta-co’s

Now, now we work until they kick us out, out.
But my XP won’t shut down, down,
XP won’t shut down, down,
XP won’t shut down.

Don’t stop, Aura locked
GADM please just hurry up,
Fortnight, it seems like
Since I’ve seen the sunlight,
Tick tock, on the clock,
But the audit don’t stop, no

DJ, you build me up,
You break me down,
My heart, it pounds,
Yeah you’ve got me.
P-Dub’s Help Sucks
Book Vaycay now,
If you’ve got free time,
Yeah, book Vaycay.

Look my ARMS up,
Look your ARMS up,
Look your ARMS up.

(And the Senior says, “Nobody can leave ‘till I say so…”)

Don’t stop, Aura locked
GADM please just hurry up,
Fortnight, it seems like
Since I’ve seen the sunlight,
Tick tock, on the clock,
But the audit don’t stop, no