Category: Big 4

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

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]

Unfounded Rumor of the Afternoon: PwC Making Mid-year Salary Adjustments?

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?

What’s With This AADB Investigation of KPMG?

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 hopinforgotten 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]

Some Early Returns From Deloitte Salary Adjustment 2.0

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

PwC Doubling Headcount in China

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]

Jim Turley Explains Why You Should Work at Ernst & Young Rather Than Facebook

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.

Ernst & Young CEO speaks at Stern [WSN]

Compensation Watch ’10: Deloitte Wants to Keep Up with the Joneses

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.

Listen to voice message here

KPMG Silicon Valley Office Dangles “November Jeans Month” To Help Boost Poor Employee Survey Response Rate

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.