“Zero Hedge kindly requests any and all Big 4 (and all other) accounting firm whistleblowers to please stand up and let us know of any and every case of improper accounting they are aware of (preferably with supporting documentation).”
Category: Big 4
If it happens at a Big 4 accounting firm, we’re talking about it here.
Some Clarification on the Bathroom Situation at E&Y Jericho
Yesterday, we shared a story with you that probably caused you to thank your lucky stars that you don’t work in Norway (especially if you’re a woman). In that post, we called back to our old report from January about the secure lavatories at Ernst & Young’s Long Island location in Jericho.
You may have been under the impression that someone within E&Y was responsible for the lockdown, however, thanks to an enterprising E&Y employee, we now know who the keymasters really are:
I don’t work in the Jericho office, but got shipped out there for random clients for most of this summer. The bathrooms are in the common areas shared by all tenants of the building, so the keyed entry to the bathrooms is mandated by the building management, not EY (not that I’d put it past the partners to come up with something like this, though).
Also, while there are keys for each bathroom, there are also entry codes you can use instead. So you can grab one of the communal keys (kinda gross), or remember the terribly difficult four digit code (0001 if I remember correctly).
As a side note, I remember the admin mentioning that the original set of five keys for the men’s room was down to two. I’m wondering why someone would make off with these nasty over-sized germ farms.
Okay, so the missing keys aren’t news but what’s it going to take to get some extras made? And, again, who’s making off with the keys in the first place?
And while it’s good to know that the E&Y brass in Jericho aren’t actually the ones putting the clamp on the johns, would it kill them to spring for some private restrooms that non-E&Yers don’t have access to? It’s one thing to have to schlep to the front desk to get a key every time; it’s entirely another to be sharing a bathroom with the entire building. What is this, Penn Station?
Seriously, how much time and cost would it take to throw in some pots, sinks, urinals and XLERATORs®? It’s a health issue for crissakes.
Some Ernst & Young Employees Got Paid to Look at a Plethora of Porn
Really not sure why or how E&Y landed this gig but work is work.
Police may be called on to investigate reports [New South Wales] [Members of Parliament] or their staff accessed websites containing sexually explicit images of young people.
The findings were contained in an independent report by Ernst & Young, commissioned in September after an unauthorised audit of computer use in the NSW parliament showed “adult” websites had been visited from the offices of some MPs.
The report, tabled in parliament yesterday, says that of the 72 most-used websites on parliamentary computers over a 10-month period, 35 “appear to be adult-related sites”.
Nine contained sexually explicit images of young people, some of whom may be under 16.
Nearly 50% of the most-used sites over a 10 month period? And some that could involve minors (in NSW)! That’s impressive even by SEC standards.
Ernst & Young Rang the Closing Bell Today
We don’t recognize anyone but you’re invited to point any notables out.
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And you just know that somewhere, Dick Fuld is slobbing around in a old CU sweatshirt, muttering about backroom number-crunching dweebs that are still in business.
[via NYSE]
(UPDATE 2) SEC Charges Deloitte Tax Partner with Insider Trading
~ Update includes clarification of partner’s employment status and statements from accused’s attorneys via MarketWatch.
~ Update at circa 7:20 pm ET includes statement from Deloitte
If you thought all this insider trading fun was just for hedge funds you would be sorely mistaken. Deloitte seems to have another case of a partner who can’t seem to control himself when he gets some insider info. Earlier this year, former Deloitte Vice Chairman Tom Fla > shelled out $1.1 million to settle charges with the SEC.
This time around, it’s still a family affair – husband, wife, wife’s sister and brother-in-law job – and it went overseas:
The Securities and Exchange Commission today charged a former Deloitte Tax LLP partner and his wife with repeatedly leaking confidential merger and acquisition information to family members overseas in a multi-million dollar insider trading scheme.
The SEC alleges that Arnold McClellan and his wife Annabel, who live in San Francisco, provided advance notice of at least seven confidential acquisitions planned by Deloitte’s clients to Annabel’s sister and brother-in-law in London. After receiving the illegal tips, the brother-in-law took financial positions in U.S. companies that were targets of acquisitions by Arnold McClellan’s clients. His subsequent trades were closely timed with telephone calls between Annabel McClellan and her sister, and with in-person visits with the McClellans. Their insider trading reaped illegal profits of approximately $3 million in U.S. dollars, half of which was to be funneled back to Annabel McClellan.
The UK Financial Services Authority (FSA) has announced charges against the two relatives — James and Miranda Sanders of London. The FSA also charged colleagues of James Sanders whom he tipped with the nonpublic information in the course of his work at his London-based derivatives firm. Sanders’s tippees and clients made approximately $20 million in U.S. dollars by trading on the inside information.
So not a bad haul. The kicker is, Annabel was also employed at Deloitte, working in the London, San Jose and San Francisco offices. The McClellans provided information to the Sanders on several companies including Kronos, Inc., aQuantive, Inc. and Getty Images.
The SEC brass gave their standard scolding. First, Enforcement Chief, Robert Khuzami, “The McClellans might have thought that they could conceal their illegal scheme by having close relatives make illegal trades offshore. They were wrong.”
And San Fran Director Marc Fagel, “Deloitte and its clients entrusted Arnold McClellan with highly confidential information. Along with his wife, he abused that trust and used high-placed access to corporate secrets for the couple’s own benefit and their family’s enrichment.”
But the real story here is the second instance of insider trading charges against a Deloitte partner this year. The firm successfully sued Tom Flanagan back in January but you have to wonder if there isn’t some flaw with the firm’s internal oversight. Not long after the Flanagan suit, we reported on the 475 reprimands for internal noncompliance in 2009. Those reprimands did not mention insider trading specifically but over 200 of them were related to independence violations. Pattern? You can weigh in below.
Anyone with any knowledge on this story is invited to get in touch with us. as it is not clear if there has been any internal repercussions yet. Messages (including voicemail, carrier pigeon and morse code) left with Deloitte have not been returned (see statement below).
UPDATE: McClellan’s attorneys are not amused by the SEC’s little stunt:
Lawyers for Arnold McClellan denied charges Tuesday by the Securities and Exchange Commission that the former Deloitte Tax LLP partner was involved in a big insider trading scheme. “Arnold McClellan denies the SEC’s claims and will vigorously contest them,” Elliot Peters and Christopher Kearney of Keker & Van Nest LLP said in a statement on behalf of McClellan. “He did not trade on insider information, and there will be no evidence that he passed along any confidential information to anyone.” McClellan “had no financial incentive to commit the actions alleged,” the lawyers added. “He is a conscientious, law-abiding professional with a 23-year unblemished track record of client service at Deloitte to prove it. We will see the SEC in court.”
And just to clarify, McClellan is no longer with Deloitte, leaving the firm in June of this year. Deloitte spokesman Jonathan Gandal emailed us the firm statement (see below) still hasn’t returned our call (busy day, right?) but managed to give a statement to and was quoted by Reuters, saying that he was “shocked and saddened” by the allegations and “If the allegations prove to be true, they would represent serious violations of our strict and regularly communicated confidentiality policies.”
UPDATE 2: Here is the full statement from Deloitte:
“We are shocked and saddened by these allegations against our former tax partner and members of his family. If the allegations prove to be true, they would represent serious violations of our strict and regularly communicated confidentiality policies. Deloitte is committed to safeguarding non-public client information and has cooperated with the SEC throughout its investigation. The SEC does not allege any wrongdoing by Deloitte in this unfortunate matter.”
PwC Survey: Working People to Death Might Cause Them to Quit Their Jobs
Shocking survey results out of PwC today as the firm announced that overworking staff increases turnover at law firms. If you can believe that.
There is a “strong correlation” between staff turnover and chargeable hours at law firms, according to PricewaterhouseCoopers.
Numbers released as part of their annual survey of the sector show that the top ten law firms have average turnover rates of 17-18%.
According to the accountancy firm, reducing turnover to less than 10% can reduce costs by £32,000 per equity partner.
In semi-ironic and related news, a bunch of bitter Big 4 employees finally decided over the Thanksgiving holiday that they would be leaving their respective firms because they are sick of the hours.
KPMG Partner-cum-Poet Resists Urge to Create Verse on His Blackberry
Believe it or not, employees of Big 4 firms possess talents that have nothing to do with elaborate spreadsheets, coffee and bagel consumption or fantasy football.
A perfect example of this would be Arun Kumar, a “battle-tested” partner in KPMG’s Silicon Valley office. Mr Kumar is a poet, who recently published a collection of 39 poems entitled “Plain Truths.” And regardless of his almost certain reliance on his BlackBerry, he manages to set it aside for the sake of his art.
Kumar, a partner at accounting and consulting giant KPMG, knows another kind of poetry. A poetry of nature and relationships, of whimsy and wisdom, a poetry of words that can be written on planes or between planes or in the quiet of the evening, but never, ever, on a BlackBerry.
“A poem, for me, is visual,” Kumar says at his Mountain View office. “Seeing it is quite important, so I can’t imagine — on a BlackBerry it’s not the same.”
So not only is Kumar a man of professional integrity, he also is one of artistic integrity, resisting the eyestrain and temptation to double-thumb inspiring words on to a 2.5 inch screen that may or may not be lost after he drops it one too many times.
But even more surprising (and disappointing) than his commitment to his craft, is Kumar’s ability to avoid penning poems related to his job. “Most [poems] are far removed from his work,” the article states, despite the undeniable muse that is life inside the House of Klynveld.
Arun Kumar, of Silicon Valley s KPMG office, finds poetry on the human side of the ledger [Mercury News]
Forward One Email and Your Career at PwC Is Over
Do you see what happens?
Of course we kid (some of you have no sense of humor). We actually haven’t heard what is happening to the Irish lads as the investigation is rumored to be still on-going. But this could explain what PwC did with a large portion of their swag when the new logo rolled out.
If you happen across this guy, get him a seat at the New York Thanksgiving soirée (location still unknown), wouldja?
Bonus Watch: Pre-Turkey Spot Bonuses at PwC?
This just in:
Was communicated a spot bonus yesterday, PwC Tax. $4k as a senior. I have never received a spot bonus anywhere near this size. I think instead of mid-year salary adjustments, they are giving enhanced spot bonuses to the higher performers. This is in addition to the “ipad or cash” extravaganza from earlier this month.
PwC is really buttering some people up, aren’t they? Either it’s going to be a rough 2011 or the good times are really back. If you’ve received similar news this week, do share or get in touch and we’ll keep things rolling here.
Earlier:
Bonus Watch ‘10: PwC Announces Across the Board Mid-year Bonuses
Roland Berger Tells Deloitte to Drop Dead
Last week we mentioned that Deloitte and Munich-based Roland Berger were talking about getting cozy with both firms sounding pret-tay excited about the future. Turns out, no one had asked the Roland Berger partners how they felt about the whole situation.
Plans to merge Roland Berger Strategy Consultants with Deloitte Touche Tohmatsu have fallen through after the Munich-based firm rejected the advances.
The two had been in advanced talks but directors at Berger overwhelmingly voted to remain independent.
Talks between the two firms had progressed so far it is believed they had already decided upon a new chief executive and were examining possible regulatory hurdles.
Over at the Financial Times, Adam Jones reminds us that this is a big wrench in Deloitte’s McKinsey-slaying plans, “[Roland Berger’s] decision to continue to go it alone is a blow to Deloitte’s ambition of eclipsing McKinsey in the market for strategic managerial advice.”
It’s a strange turn of events to be sure after last week’s PR lovefest but the FT reports that the Roland Berger was willing to put up his own cash to keep the green ink out of his firm:
Roland Berger said the vote to remain independent had been carried with a majority of “close to 100 per cent” on Saturday.
It added that partners in the firm – including Roland Berger, its founder – had agreed to put in more money to support the renewed go-it-alone plan.
People close to the deal talks suggested Mr Berger had agreed to invest about €50m ($68.5m) to help fund its expansion as a standalone business.
That’s not so much of a “No.” as it is a “Hell no.”
Exposure of PwC Email Scandal Really Put a Damper on Irish Accountants’ Spirits
We kid, we kid. The lid being blown off PwC Email Hottiegate probably has a few people down in the dumps but it’s more likely that Ireland’s Greece impersonation is what has the country’s accountants wallowing in their sorrows.
Irish accountants are more pessimistic than their international counterparts about the future of the economy, according to a new global survey.
Only about a quarter of Irish accountants, surveyed by the Association of Chartered Certified Accountants (ACCA), believed the global economy was in, or close to, recovery and more than half believed it would remain stagnant for some time yet.
This is much more pessimistic than the global view where less than half believed that conditions were stagnating or deteriorating. With regards to business confidence, Irish respondents continued to report falling confidence, but only marginally so, with 32 per cent reporting a loss of confidence and 27 per cent reporting gains.
Irish accountants more pessimistic than their peers [The Post]
San Jose Mayor Simply ‘Excited’ That PwC Chose to Move into a Building That Was Vacant for Eight Years
Considering this hunk of metal and glass has been empty since before the Iraq War started, San Jose Mayor Chuck Reed could probably muster a little more enthusiasm than this:
San Jose Mayor Chuck Reed said Wednesday that he was “excited” that PwC was staying in San Jose.
Something along the lines of “OMG! OMG! OMG! OMG! PwC, we are so grateful that you saved this building from becoming overrun by cobwebs and rats plus, it won’t be the laughingstock of our skyline anymore!”
No, Mayor Reed kept things fairly tepid:
“It’s a big relief for me,” said Reed. “I was worried about a major tenant moving out of downtown.”
Plus, you know, having this eyesore remain empty for a few more years.