When accounting goes unaccounted for
If it happens at a Big 4 accounting firm, we’re talking about it here.
From the mailbag:
There are rumors that pwc is planning on doing something similar [to Deloitte]. In one of the meetings with an audit team, Tim Ryan [one of your Thanksgiving Day hosts] mentioned that there would be bonuses and salary adjustments sometime in December.
What in the name of superficial corporate gratitude is going on here? First, iPhones and holiday ho-downs but now rumors of MID-YEAR RAISES? Is the new logo making that big of a difference already?
Yesterday, the Accountancy and Actuarial Discipline Board (AADB) in the UK announced that they would be reviewing a decade’s worth of audits performed by KPMG for BAE Systems, the British Defense Contractor.
You see, the defense industry revels in some dark corners of the business world and BAE is no exception. The company plead guilty back in February that involved some “commissions” (some may call them “bribes”) paid to “third party agents” (some may call them “arms dealers”) to secure some business in various countries. Even though this was all settled recently the company was probably hopin forgotten about the whole thing:
The accounting probe threatens to reopen a damaging chapter in BAE’s history, eight months after the company paid almost $450m to settle a high-profile, transatlantic bribery investigation by the US Department of Justice and the UK’s Serious Fraud Office.
Right. So now, presumably because they thought it would be fun, the AADB is curious about what KPMG knew about these “commissions” and “third parties”:
AADB said it would investigate KPMG’s advice to BAE on the operations of three of its offshore companies, Red Diamond Trading, Poseidon Trading Investments and Novelmight.
“The regulator is looking specifically at the audit of commissions paid by BAE to outside agents, any tax advice given by KPMG on commission payments and the status of three offshore companies linked to BAE … penalties could include an unlimited fine for KPMG,” said Credit Agricole analyst Thomas Mesmin.
Well! The prospect for unlimited fine is interesting, to say the least. For their part, KPMG is cooperating with the investigation because, well, what else are they going to do? A spokesman told Reuters, “[T]he firm does not believe there has been any act of misconduct [and that] it will be cooperating fully with the AADB to ensure that the matter is brought to a swift conclusion,” which, as we all know, runs on an audio loop on the firm’s automated press inquiries line.
Meanwhile, some people are just tickled pink with these developments:
Campaign Against the Arms Trade spokeswoman Kaye Stearman told the Star: “We are delighted to see that the AADB is investigating KPMG audits of BAE, even so belatedly. These subsidiary companies were crucial in channelling so-called commission payments. It is vital that this investigation is done thoroughly and well and that any fraud and collusion uncovered is severely punished.”
The thing is, KPMG’s (or any accounting firm) involvement with BAE (or any defense contractor) has to be one of mixed feelings.
On the one hand, you’ve got extremely profitable international businesses that build all these cool toys that fly, blow things up and go into space.
On the other, a lot of their customers are the shifty type, they probably keep lots of secrets and – OH YEAH – their products are designed to kill people.
But once you get passed all that, you realize it’s simply a business needing professional services and who better to provide it than a Big 4 firm, amiright?
KPMG in UK probe over BAE accounts [FT]
KPMG to be investigated over BAE Systems audits [Reuters]
Warm response for KPMG investigation [Morning Star]
As you’re no doubt aware, last Friday Deloitte made the announcement that the market for audit salaries had been misunderestimated and a second adjustment was going to be communicated to opiners this week.
Checking with a source inside Deloitte, we’ve heard some of the preliminary returns:
I have heard rumors of 5k in Hartford and 4k in Chicago for Seniors. But nothing to prove them out. The general range I have heard though is 2kish for 2nd years and 5k for seniors.
No word at at this point on what managers are receiving, so if you’ve gotten the news, let us know below.
The question now is – was all this hoopla worth it? Granted it’s early but if the range is in the ballpark, there’s likely a few people that are simply, “meh.” On the other hand, maybe if you got called in for another meeting to be told that you’re getting an extra $2k – $5k you might be really flippin’ stoked. However, many people will likely remind you to get some perspective.
Either way, the tax practice is feeling short-changed and advisory is too busy rolling around in their cash-filled bathtubs to care.
Discuss the situation at present and keep us updated with the adjustment news just as soon as your sit-down is over.
UPDATE – 12:45 ET: This just in:
Deloitte experienced assistant from South Florida – $2k for audit assistants, $5k for seniors.
total raise for the year with comp adjustment – 8%. Could be better but could be the original 4% I got in August…
UPDATE – crica 2 pm ET: The latest:
Miami: 2nd years: $2k, Seniors: $5k
Parsippany: 2nd years: $5K Seniors: $8K Managers: $6K
All the other Big 4 firms have gotten some digital ink hyping their hiring plans for the next fiscal year and beyond. Before today, PwC had only mustered some rumored poaching which isn’t ideal PR.
The rest of the firms have already made it known that they are doing their part to create jobs here and abroad – Deloitte’s numbers are dumbfounding, KPMG’s spree includes Europe and asking its alumni come crawling back, while E&Y is picking up 6,000 recruits off campus.
P. Dubs finally gets puts some hiring news out there announcing that they will double their headcount in China over the next 5 years to over 20,000 employees.
PricewaterhouseCoopers LLP plans to double its headcount in China to more than 20,000 people within the next five years to meet rising demand for professional services as the nation’s companies become more international.
“We expect more Chinese companies to expand their presence overseas, and we’d like to be part of that growth,” Silas Yang, the firm’s chairman for China and Hong Kong, said today in a statement.
PwC to Double China Headcount to More Than 20,000 Over 5 Years [Bloomberg BusinessWeek]
JT spoke to NYU students earlier this week and of course during the Q&A, Diane Brady, a senior editor at Bloomberg threw him a softie, asking if the firm was hiring, to which Diego responded, “we’re always hiring.” This, of course brought the house down (laughs, raucous applause).
Anyway, Brady decided to throw Jim a curve and asked why a young recruit would pick E&Y over Zuckerland.
“Should students ever consider starting at a big firm of yours?” Brady said. “Why not just go out there and make the billions with Facebook? What is the attraction at Ernst & Young?”
Turley responded by saying that most entrepreneurs, despite common misconceptions, are not just out to make money.
“[Entrepreneurs] go out there to find a need,” he said. “At Ernst & Young, you have opportunities to be extraordinarily mobile and move around the world.”
His advice? “First, find something that you love doing,” Turley said. “Second, align with an organization that actually thinks about where the world is going. And lastly, find an organization that wants you to change them as opposed to them to change you.”
See, if you can’t find a need then you need care about being “extraordinarly mobile.” Seems like a fair trade-off, especially since billionaires don’t travel much.
And just curious, how would the members of Ernie’s army like the firm to change? We’re assuming JT goes with the “whatever is good for the goose” mantra. Leave your suggestions below.
Or the Kylnvelds, Ernsts, Coopers (aka “c”). Take your pick.
From the mailbag:
All staff just received a voicemail from the firm stating that they will be performing a salary adjustment for all staff 2nd year through manager as they have realized the marketplace is providing different salaries than expected and would like to stay competitive. No word on amounts, one on one meetings with partners are occurring in the next week.
This little Friday Surprise was brought to you by Carlos Sabater (listen to the full message below) and the salary adjustment will be for audit professionals only. We’ll definitely be interested to hear what comes out of the meetings next week so keep us updated.
Reactions welcome.
Last week John Veihmeyer asked everyone at KPMG to share their thoughts on what the firm does well but also what the firm can do to improve its awesomeness.
Well, apparently some of you in the Silicon Valley office didn’t get the hint. Your pathetic response rate of 23% (as of this writing) has some people worried that you’re not taking this shit serious. In order to get you to spring into action, the office honchos have dangled two carrots in the form of five lucky ducks winning a $200 AMEX gift card but the big opportunity here is the possibility (albeit a longshot) for wearing denim EVERY SINGLE DAY in the month of November.
2010 Employee Work Environment Survey & Jeans Month!
INTERNAL USE ONLY
As you know, the 2010 Employee Work Environment Survey is underway and will run through Monday, October 25.
The Silicon Valley Office currently has a 23% response rate.
If you have not already responded, I encourage you to do so as your feedback helps us to identify our strengths and our weaknesses and provides us with ideas on how we can become an even better place to work and a higher performing organization.
On October 11, you received an e-mail from John Veihmeyer and Henry Keizer with personal login information to access the electronic survey. If you haven’t done so, please review that e-mail and access and complete the survey before October 25.
Please note that all participants’ responses will remain confidential, and will go directly to our external survey provider, Kenexa, for tabulation. Kenexa will not report aggregate scores for departments with less than 10 responses.
Remember that all employees who complete the survey have the opportunity to enter a drawing in which five randomly selected respondents will receive a $200 American Express gift card. The survey site will provide instructions to enter. The winner will be announced after October 25.
Last year, the Silicon Valley office’s survey response rate was 70%. In order to establish a wider range of views and suggestions, I’d like to set a goal of 80% this year. So we are giving you an added incentive to respond to the survey. If the Silicon Valley office receives an 80% response rate, then the month of November will be “Jeans Month” and you can wear jeans to the Silicon Valley Office every day next month.
Thank you for participating, and we will share results with you later this year.
So for those of you that are ruining it for everyone else, do you not recognize what is at stake here? Are you not interested in providing exquisite client service in the cool, comfort of denim for 30 straight days? Do you really want to be standing around the water cooler in khakis explaining to someone that you didn’t complete the survey? If so, we hope you can sleep well.
Today in “I need advice from strange accountants and Going Concern trolls,” a Big 4 recruit needs some insight into the office visit and how to behave when breaking bread with Big 4 professionals.
Need to know what to expect for your first busy season? Looking for pointers on how to subtly attract your rival’s employees? Want ideas that aren’t über-lame for your team’s next happy hour? Email us at advice@goingconcern.com and we’ll put our heads together like the Stooges.
Back to our aspiring Big 4 rube (KIDDING, we know some of you are sensitive):
What should I expect at an office visit for the Big 4? Also, how do I behave at a dinner or lunch?
Simple enough. The Big 4 office visit is standard operating procedure in the recruiting process and we asked our resident Kool-Aid™ mixer, DWB to give his take on these show and tell excursions:
I apologize in advance if my answer comes off as salty; someone must have spit in my Cheerios this morning. But really – what kind of question is this? I’ll remind everyone about my rant the other day about providing Caleb with greater details when submitting questions. So with that, I have some questions for you – are you a college recruit? What practice? What office? Is this a one-off tour or is it part of an official recruiting program?
Because your submitted question was useless, I will make the assumption that you’re going on an official visit. Expect a tour, an interview (I hope – why else would you be going?), and the normal HR run-around of work-life balance, salary growth, etc. I advise you to talk to as many individuals as possible – on the record, off the record, etc. Get business cards, and follow up with questions you might have later. NETWORK your ass off. The people you meet in the “casual” settings have just as much of an influence on whether you receive an offer as your interviewer does.
Well, the bad accountant angle is obviously out, so regarding your behavior at chowtime, some good rules of thumb:
1) No booze. We realize this sucks but you don’t get bonus points for being able to hold your liquor.
2) CHEW WITH YOUR MOUTH CLOSED.
3) Don’t be too chatty or too quiet. Nobody likes someone who talks without breathing throughout the entire meal but you will be noticed if you say nothing.
4) Topics of conversation to avoid: recent campus ragers; office visits that you’ve gone to at other firms; negative news about the firm you’re currently visiting; the hot server’s physical attributes.
These are just a few but in general, if you have to ask yourself, “could this make things awkward?” then avoid the behavior. If that doesn’t clear things up then ask Emily Post.
If we’re way off base here or anything crucial is missing, let us know in the comments.
From the mailbag by way of a Deloittian in Rahmville:
[O]ur PPD (Principal, Partner, Direct) group has received word that PWC is going to send recruiting letters to every [Financial Services Industry] senior in the Chicago and New York offices. Apparently the letter states PWC is willing to offer $15,000 more than what Deloitte is paying.
The PPD group had a meeting with all of the FSI managers in Chicago yesterday regarding this situation. On top of that, all Seniors in FSI received a meeting request today from the PPD group. The meeting is schedule for Monday morning and according to the managers, the topic of dicussion is going to be these letters. Now I can’t speak for anyone in New York but in Chicago the PPD group is not taking this lightly. Word as it that one of our senior ranking partners actually called over to PWC. Again this is all a rumor, I have not seen one of these letter but apparently one of our partners said he/she has.
If you happen across this letter, do share it with us.
Earlier:
Experienced Recruiting Amongst The Big 4 Gets Aggressive
Buffalo. City Mission. Tuesdays. For a year. Unless you’re really hard up for some nourishment, we would avoid with extreme prejudice. This will make the Denny’s freebies look like a mess hall at Fort Bragg.
Joseph J. Jacobbi, 57, operator of Casa-Di-Pizza, a popular Elmwood Avenue restaurant, was spared a jail term on his massive sales tax fraud case, but the judge Monday ordered him to deliver 12 sheet pizzas to the City Mission once a week on Tuesdays for the next 52 weeks, beginning [yesterday].
After Jacobbi turned over a check for $25,000 — part of the $104,295.31 court officials said he withheld from the state between March 2004 and the end of May 2008 — the judge ordered the weekly pizza deliveries as a form of community service.
“I will leave the choice of toppings up to you,” he told the nonplussed restaurant owner.
Not that we don’t appreciate the judge’s creative sentence but shouldn’t the people at the mission get to choose the toppings?
Oh, wait…
Tax cheat sentenced to serve … pizzas [Buffalo News via TaxProf]
So you take a position on a tax issue. You don’t really know why or how you got there but your CFO says it’s legit. How does he/she know? “Johnson in the tax department told me.”
Does Johnson understand it? Of course not! It’s an uncertain tax position. It’s a shot in the dark at best.
Naturally, the IRS has gotten all nosy about this sort of thing so you have to formulate something that vaguely resembles an explanation that doesn’t read like Bittker & Eustice.
You can’t simply make it a copy and paste job since we’re guessing the IRS wouldn’t appreciate the bloggy approach. But you’ve got to come up with something. Oh, and try to keep it brief.
Almost half of senior executives polled are most concerned about the prospect of providing a concise description of their uncertain tax positions (UTPs) in order to comply with a new, much-discussed Internal Revenue Service disclosure requirement, according to a survey conducted by KPMG’s Tax Governance Institute (TGI).
This shouldn’t come as much of a surprise since we’re talking about interpreting the INTERNAL REVENUE CODE. But the BSDs out there are worried about explaining why they’re taking a stand on something that don’t understand one iota. Plus, if you’re already pret-tay sure that the IRS is going to call bullshit on you, that warrants an explanation as well [teeth being grit into dust].
According to the survey of 1100 business leaders conducted in early October, 44 percent of respondents said their biggest concern was providing the concise description for a disclosed UTP, defined by the IRS as a federal income tax position for which a taxpayer or related party has recorded a reserve in an audited financial statement (or for which no reserve was recorded because of an expectation to litigate). Other major concerns cited centered on the IRS’s ability to effectively administer the UTP program (20 percent) and on the scope of taxpayers required to file UTPs under the new rule (15 percent).
This could all be avoided if the IRS required companies to use Twitter as a guide for brevity. Just a suggestion.
Executives Anxious About IRS Reporting Requirements for Uncertain Tax Positions Schedule, KPMG Survey Reveals [PR Newswire]
As the days shorten, leaves fall and men waste hours in front of the talking box, it can only means one thing: The Holidays will soon be upon us. This also means that lots of traveling and family time – two things that can make the holidays a less-than desirable time of year.
Luckily for PwC employees in New York, two partners have opened their hearts and homes (not literally) so that you may avoid those two nuisances entirely:
To the People of the New York Metro Practice:
The upcoming Thanksgiving holiday break provides us with a wonderful opportunity to enjoy the company of family and friends and to reflect on all we have to be thankful for. However, we recognize that some of our people may be far from home (such as our people who are on tour from various other PwC offices) or may just not have somewhere to spend Thanksgiving Day. If you don’t have plans, Tim Ryan, Assurance Leader and Bill Cobourn, Sectors & Markets Leader will host (along with their families), a special Thanksgiving Day meal.
We would like to invite you and your friend, spouse, significant other, or children — and we can all celebrate this special day together. As some of you know, Tim has six children–so there will be fun for both adults and children. This festive meal will be held on Thanksgiving Day (Thursday, November 25) in the afternoon at a Manhattan venue to be announced. To help us plan for this event, please indicate your interest in attending using the link below. If you respond “yes” we will follow up shortly to provide additional details.
Please recognize that if you already have plans for the holiday, you are not being asked to change them.
This unprecedented display of generosity is quite welcome considering past behavior by some partners in other cities but we do have questions:
1. Is there a short list for the “Manhattan venue” and will attendees be allowed to vote on the locale?
2. Will the “kids table” consist of non-partners as well as kids or will all the adults be allowed to sit together regardless of title?
3. What’s the “saying grace” situation? Also, will there be assigned seats or is it going to be like boarding a Southwest flight?
4. Will table manners be of the Judith Martin or Emily Post persuasion?
5. What’s on the menu? Is going to be the typical fare or are we going non-tradish? Is it catered or are Tim and Bill going cheap and making it potluck?
6. Open bar?
7. Are certain topics of conversation off the table? Examples may include but are not exclusive to: A) The new logo B) AIG C) Deloitte’s ascension to #1.
8. Will there be an open call for entertainment or is the pianist from DC going to step up again?
You have to agree that all of the above are important but are we missing anything? If you’ve got more questions, leave them below.