Category: Big 4

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

Let’s Speculate About Why Deloitte and KPMG Aren’t on the America’s Largest Private Companies List

Riddle me this, oh wise Going Concern readers – Forbes’s list du jour is America’s Largest Private Companies and its Top 10 has two familiar names: PwC and Ernst & Young but Deloitte and KPMG are nowhere to be found.

Here’s a rundown of companies, their revenues in billions and # of employees:

1. Cargill – $109.84, 130k
2. Koch – 100.00, 70k
3. Bechtel – $30.8, 49k
4. HCA – 30.05, 190k
5. Mars – 28, 65k
6. Chrysler – 27.90, 41.2k
7. PwC – 26.57, 161k
8. Publix – 24.32, 142k
9. E&Y – 21.26, 141k
10. C&S – 20.4, 16.6k

Just for the sake of not opening a bigger canner of worms we’ll ignore the enormous drop in revenues from #2 to #3.

Both firms have over $20 billion in revenues – Deloitte’s the biggest of the Big 4 for crissakes – so that puts them in the top ten easily, yet they’re completely MIA.

If you look at the methodology, you’ll find that both firms should easily qualify to make the list:

In addition to our $2 billion revenue requirement, the companies on our list have either too few shareholders to be required to file financial statements with the Securities and Exchange Commission, or have shares whose ownership is restricted to some group, such as employees or family members. We exclude foreign companies, companies that don’t pay income tax (like Mohegan Tribal Gaming Authority), mutually owned companies (like State Farm Insurance), cooperatives ( like Central Grocers), companies with fewer than 100 employees, and companies that are more than 50% owned by another public, private or foreign company. We also leave out companies whose primary business is auto dealerships or real estate investment and/or management.

If you take a hard line here, “companies that don’t pay income tax” should probably disqualify all the firms but obviously Forbes made at least two exceptions. As for the rest of requirements, nothing really jumps out so it’s anyone’s guess.

Perhaps Deloitte and KPMG just got their applications in late? Maybe they were “meh” on the whole list? Maybe they don’t support the flat tax so Teve Torbes just said “To hell with them.” ? The editors for the piece don’t have emails included in their bios but we’re pretty curious as to how this whole thing came together, so please get in touch.

Theories (DWB is going with “because they both suck”) on the alleged oversight/snub are welcome.

Ernst & Young Employee Disappointed with Boston Office’s Party Planning, Lack of Boozehounds

From the mailbag:

EY Boston Tax had their end of busy season party last week. On Tuesday, we had beer and wine in the office. Considering everyone had to work through the first football sunday of the year, the least they could do is get us drunk on a Thursday so we can enjoy ourselves. Who’s gonna get drunk in the office on a Tuesday? [Ed. note: show of hands?]

I have to say I’m disappointed with the social/drinking scene at this place compared to other Big 4s in this market. Pretty stiff, but I feel like the firm takes pride in that–I have no idea why.

Without the proper context, it’s difficult to know what kind of a drinker our tipster is. If he/she is merely a two wines/beers and out person then E&Y Boston is really bucking the trend in that fair city. However, if the tipster is Charlie Sheen, then there’s no cause for concern.

Any Bostonians familiar with the situation are invited to elaborate on the Big 4/next tier drinking scene below or share with us directly.

Unhappy KPMG Employees Need to Quit Making Excuses

Like every company out there, KPMG has its share of unhappy people. It’s unavoidable when people are working long hours, have random employees emailing colleagues and your boss’s alma mater can’t field a decent football team.

But it was recently brought to our attention that despite the Kranky Klynveldians out there, KPMG was recently recognized by Forbes as one of America’s Happiest Companies.


Yes, it’s true! The list is alphabetical but it only features ten companies so you know this isn’t one of those catch-all lists that just gets thrown together. Seriously, the firm is on their with Google and Zappos, two of the most notoriously nauseatingly gleeful companies on the planet.

But why is KPMG one of the hap, hap, happiest? Simple. It comes down to education. From Forbes’s list:

[The Company] [i]nvests in happiness training; allows employees to take partially paid leaves for up to 12 weeks; encourages flexible scheduling and formal mentoring programs.

So the bottom line is that if you work at KPMG and you’re unhappy, you’ve got no one to blame but yourself. Money be damned. Get your ass to happiness training, take copious notes and you’ll be whistling to work in no time.

Ernst & Young: Hedge Funds Like Us! They Really Like Us!

A source informs us that this is hardly surprise as E&Y has some the best known shops as clients including SAC Capital, Third Point, Anchorage Capital Partners, Reservoir Capital Group and Pershing Square. Although the HF honchos still appreciate the recognition:

“Receiving this award is a testament to Ernst & Young’s 25-year commitment to serving hedge funds through every phase of their business – from starting up through investment, global expansion and going public,” said Art Tully, Co-leader, Global Hedge Fund Practice, Ernst & Young LLP. “Since we began serving the alternative investments industry more than two decades ago, our seasoned professionals have worked to help hedge fund clients anticipate and meet new regulatory, transactional, accounting, tax, technology, operations and investor demands.”

“Ernst & Young’s hedge fund practice was founded on start-ups. In 2009, we audited the most significant share of the top 25 fund launches in 2009,” said Mike Serota, Co-leader, Global Hedge Fund Practice, Ernst & Young LLP. “As these organizations continue to evolve and expand, we can support their evolving needs through our extensive portfolio of services.”

E&Y is two for two in Hedge Fund Manager Week’s Best Accounting Firm Category so it’s a little early for any “dynasty” rhetoric but they seem to have a decent hold on things.

Some People Are Wondering When/If KPMG and Ernst & Young Will Ante Up

From the mailbag, courtesy of an E&Y senior associate:

I work for EY. Roommates are Deloitte and PWC. I’m hearing from the PWC employees that in addition to a holiday bonus, as well as a March compensation adjustment similar to Deloitte’s, PWC is also giving their employees the last two weeks of December off without requiring them to use their vacation days.

Thoughts on whether EY or KPMG will ante up? Hot topic at my client site today as you can imagine 🙂


Before we get to E&Y and KPMG, it should be noted that PwC is really playing hardball here. A quick recap:

• Mid-year bonuses that include an option for an iPad. Steve Jobs hater or not – that’s a cool bonus.

• Rumors of poaching seniors in Chicago and New York.

• New Yorkers given the option to shovel Thanksgiving sustenance at a Manhattan location to be named later (btw, we really want to know where, so get in touch with details when known).

• iPhones are now available and Christmaskuh festivities return.

Now there are rumors of a merit increase in March and two free weeks of time off? This is quite the run of employer gratitude. We won’t say “unprecedented” but it is an impressive show of generosity.

Maybe PwC has gone on this offensive because they had a kick-ass first quarter. Or maybe it’s because they lost the number one spot to Deloitte and they still want everyone to know that they’re still capable of equating love with money. OR maybe they’re trying to make people forget about Logogate. Whatever the motivation, the firm is throwing money around with the gusto of Charlie Sheen and they are getting a relative amount of attention for it.

Now, then – Ernst & Young and KPMG. Maybe these two firms are spreading the wealth on the Double-DL but if not, TPTB have to be aware of the what the competition is up to. If not, maybe someone should clue them in. Regardless, there has to be heat to act in some way.

One explanation for the House of Klynveld is that the fiscal year just ended, so it is too early for leadership to communicate “the great first quarter,” thus rationalizing a mid-year bonus. If KPMG comes out to soon with the news, they risk the “Monkey see” effect.

As far as E&Y is concerned, we’re stumped. They have the same fiscal year as PwC and should have a pret-tay good idea how Q1 went. Now that PwC has made the first move, any action by E&Y is going to look reactionary .

So for the E&Y and KPMG crowd – you clearly have some expectations for something but are you hearing anything about mid-year bonuses or will the belly aching continue into the holidays? Discuss below and get in touch with details.

Bonus Watch ’10: PwC Announces Across the Board Mid-year Bonuses

We reported last week about a rumor that PwC would be paying bonuses and making salary adjustments this December and we now confirmation of the bonuses, courtesy of an email from PwC’s Bob Moritz.

BoMot that thanks to a solid first quarter, the firm would like spread a little wealth around in the form of $1,000 bonuses for “client service and IFS” employees who were with the firm prior to June 30, 2010 and $500 bonuses for those hired after June 30.


The firm is letting employees choose their “recognition payment” from one of the four following options:

• Net payment of $1,000/$500 included in the December 15 pay cycle.

• iPad

• Visa gift card

• $1,000/$500 charitable contribution to the PwC Foundation in your name – Aka the PwC Human Fund

In addition, Roberto informed everyone that the spot and bonus pools are being increased across the firm. There was also the standard words of encouragement, repeated “thank yous” and whatnot. The email appears in its entirety below.

So, P. Dubbers – doesn’t look like a mid-year salary adjustment but it beats a sharp stick in the eye. Discuss your contentment or your undying resentment in the comments.

Recognizing your contributions
Thanks to your efforts in providing quality service to our clients, our first quarter results are showing a strong revenue increase year over year. We all should be proud of these results. We’ve supported one another, served existing clients and stakeholders at the highest levels of quality in an extremely competitive environment, and won new work–all achieved through delivering the PwC experience and the new brand promise!

Rewarding your efforts
Because your efforts helped us drive our results, we want you to share in the rewards. Last month I told you that we have taken the results of our top-line growth and have begun reinvesting in you through our holiday time off and celebrations, in-person training events, and more. To further acknowledge the role you have played in our success to date, every staff member–both client service and IFS–will receive an after-tax “recognition award.” Those hired prior to June 30, 2010, will receive $1,000. Those hired on or after June 30, 2010, will receive $500. We debated whether the recognition payment should be in the form of cash or a gift, and concluded that you should decide. So, every staff member can choose from one of the following:

An additional net payment of $1,000/$500 to be included in your December 15 pay period.

Order from several versions of the iPad (total value of iPad and gift card will depend on whether you’re eligible for the $1,000 or $500 gift award).

A Visa gift card valued at $1,000/$500 to use for the holiday season, vacationing , technology gadgets or anything you’d like to purchase for yourself or others.

We will make a $1,000/$500 charitable contribution to the PwC Foundation in your name.

More details to come shortly on each of the options above, as well as how to choose your recognition via a special website.

Increased bonus pools
In addition to the benefits we announced previously and the recognition award mentioned above, we have also decided to increase our spot and bonus pools across the firm, enabling us to better recognize and reward those individuals who are truly delivering for our clients and driving our results. As our top and bottom line continue to improve, we are committed to sharing those results with you. Shortly, you will be hearing from your LOS on how these increased bonus pools will be earned and rewarded over the remainder of FY11.

Increased hiring to help your workload
You’ve been working hard, and we recognize that monetary rewards and compensation are only part of the value you look for from your PwC experience. You have told us that personal and professional development, career advancement potential, peer and team relationships, and even having a little bit of fun along the way, are also important to you. We want you to know that we are also working hard to relieve some of your workload through our increased hiring efforts. In fact, to help lighten your load, we’ve hired more than 1,400 new experienced people in the first quarter alone (for comparison, we hired a total of 1,725 in all of FY10), increased our campus recruiting from last year and are bringing resources to our practice from around the world. Many of you played a key role in bringing in that new talent, whether referring people, interviewing potential candidates, or on-boarding new people. Again, we thank you for those efforts and encourage you to keep them up. We will continue hiring resources to support our current and future needs as we look ahead towards achieving our long term goals, while also providing appropriate work-life flexibility for you.

Thanks for all you do
Again, on behalf of the partners, I want to recognize you for all you do for your teams, our clients and other stakeholders. To me, this demonstrates the power of 30,000 people coming together to build relationships and add value for our clients and one another–delivering on that new PwC brand promise! The fact is, you are making a difference, and our collective efforts are paying off.

Join me on Wednesday!
I look forward to speaking with you on Wednesday at 3pm ET during our third firmwide Town Hall webcast. If you haven’t already, check out the blog and help your colleagues get ready to put me and the LOS leaders on the hotseat with your questions.

In the meantime, I look forward to continuing this journey of success together!

Regards,

Bob

Former KPMG Chairman Walter Hanson Passes Away

Walt was elected chairman of Peat Marwick at 39 and served in that role until he retired in 1980.

We weren’t aware of this but the firm actually has a “Walter E. Hanson Award” that recognizes “a KPMG partner for delivering exemplary client service, providing visionary leadership and displaying the highest standards of integrity.”

So while Walt’s name isn’t in the lobby (and thus, no Warhol treatment) this award sounds pretty good. The firm’s press release is after the jump.

WALTER E. HANSON, FORMER KPMG CHAIRMAN, DIES AT 84
First Chairman of Peat Marwick International

NEW YORK, Oct. 28 – Walter Edward Hanson, former Chairman of KPMG, died after a long illness at his home in Newport Beach, Calif., his family has disclosed. He was 84.

During a career at KPMG that spanned more than 23 years, Mr. Hanson, who died Sept. 24, was widely regarded and admired for his business insight and determination by both his colleagues and clients. He became the first Chairman of Peat Marwick International in 1978.

Mr. Hanson joined KPMG in 1957 as a partner in charge of its transportation practice, later as partner in charge of the New York office, and was elected Chairman of the U.S. firm at the age of 39, serving in that role from 1965 until his retirement in 1980.

He was born on Oct. 17, 1925, in Adelphia, N.J. After serving with the U.S. Naval Air Corps, he graduated from Lafayette College in 1949. He became a certified public accountant and joined the Minneapolis & St. Louis Railway Co., where he rose to the position of Vice President and Comptroller.

Numerous academic and civic honors were conferred upon Mr. Hanson. He served as a member of the Board of Trustees at Lafayette College for 18 years, nine of those as Chairman. In 1984, the firm established the Walter E. Hanson/KPMG Peat Marwick Professorship of Business and Finance endowed chair at Lafayette. In June 1977, he received an honorary Doctor of Laws degree from Lafayette. In 1979, the Citizens Union of New York City presented him their Distinguished Service Award.

Mr. Hanson served for 15 years as a member of the Board of Governors of the United Nations Association of the USA. He was a member of the Advisory Council of both the Harvard Business School and the Stanford University Graduate School of Business. He also served as a member of the Board of Visitors of the Graduate School of Management-UCLA and Duke University Business School.

Following his retirement in 1980 from KPMG, he served as a member of the Boards of Directors of many companies, including CIGNA Corp, Fidelity Investments, Chesebrough-Ponds, and Insurance Company of North America. Mr. Hanson was founding Chairman of the Maritime Center in Norwalk, Conn. In 1983, Mr. Hanson was awarded the Gold Medal of the American Institute of Certified Public Accountants, the profession’s highest honor.

Commemorating Walter Hanson’s contributions, KPMG created the Walter E. Hanson Award in 2003 to recognize and honor a KPMG partner for delivering exemplary client service, providing visionary leadership and displaying the highest standards of integrity.

Mr. Hanson was one of America’s top sailboat racers. He raced for many years on Long Island Sound and along the East Coast. He twice won the Marblehead-Halifax Race and was the Northern Ocean Racing Circuit winner. In addition, he was a member of the New York Yacht Club and served for many years on its Board of Trustees.

Mr. Hanson is survived by his wife, Elizabeth, children Katharine (Greg Hurray), Elizabeth (Edward) Lawlor, and Barbara (Samuel) Maropis; grandchildren Jeffrey Hurray and Matthew, Abigail, and Casey Lawlor; a sister, Emma Freeman and brother, Irwin.

In lieu of flowers, donations can be made to the Alzheimer’s Association and/or Lafayette College.

About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.us.kpmg.com), is the U.S. member firm of KPMG International Cooperative (“KPMG International.”) KPMG International’s member firms have 140,000 professionals, including more than 7,900 partners, in 146 countries.

Will the Solution to the Big 4 “Too Few to Fail” Problem Come Out of China?

Adam Jones at the Financial Times takes a look at the Big 4’s too few to fail problem, noting that the recent green paper from the European Commission is a combination of A) lame ideas:

Its flakier suggestions included getting a regulator or another third party to appoint auditors to ease fears about their independence – a move that would disenfranchise shareholders to an unacceptable extent. A European quality certificate for auditing was also mooted as a way of helping second-tier firms show they could handle the biggest jobs. Such a badge would have limited credibility.


And B) points of discussion that need to be explored further, “[A] call for international talks on a contingency plan for the possible failure of one of the Big Four,” “enforced work-sharing also merits further discussion,” and “Brussels says it may also loosen rules requiring auditors to own the majority of an audit firm.”

All this talking gives us a headache and Jones admits that by allowing all ideas on the table it allows those happy with the status quo to distract from any real solutions:

The surfeit of ideas makes the debate comprehensive. But it also creates easy targets for those who want to preserve an inadequate market structure, detracting from more sensible suggestions made by Michel Barnier, EU internal market commissioner, and his team.

Despite the haters out there, the most interesting solution mentioned by Jones is the possibility of China – albeit a longshot – coming to the rescue:

Some think the danger might be eased by a Chinese accountant teaming up with a second-tier firm to create a new rival to the Big Four. Such an entity would face suspicion in the west, though, and it may be too soon to look to Beijing for answers.

For the market enthusiasts out there, this has to be the best idea you’ve heard even though it comes at the exception of the Chinese.

Think WeiserMazars but on a much, much larger scale. Maybe BDO’s U.S. firm is a target because of their legal troubles. Maybe Stephen Chipman will use his connections in China to parlay into some mega-international merger. We realize it’s hard to use your imagination when you’re staring at spreadsheets all day but ideas are needed people.

Solutions provided by the market will be a far better than something mandated by governments. China’s economy is still growing at a ridiculous clip and some say that’s good for the us here in the States.

Bottom line – we’re happy to entertain the possibility of China getting in the mix because as Jones says, “[W]hile this risk is broadly acknowledged, I have so far seen little evidence of a plan to deal with it.” And as it stands now, the bureaucrats are leading the discussion.

The Latest Results from the Deloitte Mid-year Salary Adjustment

Deloitte Raises 2.0 rolls along with the latest news from New York and Cleveland. Continue to keep us updated.


New York:

I am a senior at Deloitte based in New York.
Our engagement partner and I had a brief meeting- a 8k raise for seniors.
The second year was told a $5k raise for his level.
My manager also spoke to a partner and was told a $6k raise.
Nothing for new hires and senior managers.

There will not be a retrospective adjustment to pay us more for the past two months as if the increase happened in end of August.
The increase is effective starting 11/1/2010, meaning the first paycheck to reflect the increased pay will be 11/12/2010.

Cleveland:

1st years – $0
2nd years: $2,500
All seniors: $4,000
All Managers (excluding sr. managers): $3,000
Sr. Managers and up: $0

UPDATE – Friday circa 12:50 pm:

The latest from Houston:

2nd year: $3,500
Seniors: $5,000
Manager:$6,000

KPMG Founders Get the Warhol Treatment

No doubt many a KPMG employees have thought to themselves, “If Warhol painted the KPMG namesakes, what would they look like?”

As you can see, you no longer have to wonder.


It just so happens that the Pittsburgh office’s alumni get-together will be at the Warhol Museum and our tipster wondered if this money could have been better spent on the Steel City employees:

I have a feeling the local partners spent the extra money they didn’t give out in bonuses (note bonuses were given, I’m just saying they could have been bigger) on hiring someone to “Warhol” out the KPMG founders below. Great artistry though.

Frankly, we’re of the opinion that this might be some of the best money the Steel City office has ever spent. However, it’s entirely possible that KPMG does some work for the museum and they’re swapping services, which again, seems like a pretty good deal.

Here’s the full invite:

We’re not Warhol experts so we’ll let you debate the artwork but we do have a few takeaways:

1. KPMG has a knight!

2. Three out of four rocking ‘staches.

3. Is it “Uncle Piet”? Or “Uncle Peat”?

4. What’s with three sour faces, KPM? At least Goerdeler looks like someone you would want to work for.

Any other questions? Leave them below.

Ernst & Young Employee Shared Sue Sachdeva’s Taste in Loot, Lacked Her Fraudulent Self-control

If you work for a partner who likes shamelessly showing off their money, it’s likely that you will think to yourself one of two things: 1) “What a flashy douchebag.” OR 2) “How do I get to be that flashy douchebag?”

For Lily Aspillera, her thinking was more along the lines of the latter, as she made off with $1.7 million from 2002 to 2008 by writing checks to herself that drew on an account of an E&Y client. She used the cash to buy your run-of-the-mill embezzler items: German cars, jewels, vacations, a nice home, etc.

An executive assistant at the giant accounting firm Ernst & Young has been sentenced to more than two years in federal prison for a $1.7 million embezzlement scheme that helped finance a posh San Francisco home, two BMWs, jewelry and stays at luxury resorts, authorities said Wednesday.

Lily Aspillera, 65, of San Francisco was ordered Tuesday by U.S. District Judge Susan Illston to serve 30 months behind bars for mail fraud and tax evasion.

Impressive. Not necessarily by Sue Sachdeva’s standards but impressive nonetheless. However, Lil’s little scam only last a measly 6 years compared to Sachdeva’s twelve year scam because yes, her own greed got the best of her:

“Like so many who commit fraud, over time she increased the amount of money she embezzled, apparently emboldened by not getting caught,” Assistant U.S. Attorney Doug Sprague wrote in a sentencing memorandum.

Defense attorney Donald Bergerson wrote in court papers that his client “has been punished by her own conscience as much as she can be punished by any term of imprisonment.”

The personal guilt over getting caught – after managing to steal money for only six years – would be pretty overwhelming.

Ernst & Young employee gets prison in embezzlement [SFC]