Category: Big 4

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

Is Citi One of the Issuers in the PCAOB’s Inspection Report of KPMG?

The long-awaited PCAOB inspection report of KPMG came out on Friday and while we were excited for this unveiling, the Board managed to issue the report at around 4 pm on Friday. Since the Board lacks any sense of timing whatsoever, we opted to punt on our respective post until today because well, we’re human and not a soulless blogging robot as likely perceived by TPTB at the PCAOB.

It’s worth mentioning that this is the first PCAOB report that has been issued since the SEC’s final rule on the inspections that allows audit firms to postpone the release of the report simply by taking issue with any of the findings. Since any appeal could reportedly delay the report by “30 to 100 days,” it’s safe to assume that, with a report date of October 5th, KPMG didn’t have a beef with the findings. You could also assume that since the SEC is taking a peek at these reports now, there’s going to be a ten day lag on the release of the report to allow the Commission enough time to give it their extra-special sniff test.

Anyway, back to the matter at hand –

KPMG had eight issuers noted in the Board’s inspection report and the first two are doozies. “Issuer A” runs approximately two pages and includes failure on testing of “allowance for loan losses” to “test[ing] the issuer’s estimates of fair values of financial instruments” and goodwill impairment.

“Issuer B” is a little more interesting since one of the failures the Board found was related to deferred tax assets which makes us wonder if this is Citi, since analyst Mike Mayo was loudly questioning the bank’s treatment of its DTA. Francine McKenna not-so-subtly solicited guesses on Friday as to who this “bank” might be (even though no issuer is identified as such) but it does make us wonder.

The Board cites run-of-the-mill failures for the rest of the issuers (e.g. fair value testing, pension plan testing, failure to confirm cash[!]) and the House of Klynveld’s response letter was cordial and anticlimactic.

But if you’re KPMG, do you really care what the PCAOB thinks when you’ve got an adorable gnome-ish looking analyst giving you the tepid thumbs-up (despite not knowing your name)? That’s the only endorsement we would need.

2010_KPMG_LLP

Big 4 Manager Would Like Staff to Get Some Perspective Re: Raises

Now that compensation season has passed for the major firms and most of the belly aching has died down, we’ll present some thoughts from a friend of GC and a Big 4 senior manager who shared the following with us earlier in the summer.

Hey Caleb,

A few of us were talking today at lunch about compensation and how we like reading how much everyone bitches about what % raise they got and what they feel they should have been entitled too. An A1 thinks they deserve a $10,000 raise, and that would make them happy, c’mon give us a break?

It is easy to understand this is a prime area to feel you have been cheated in, however, we thought it might be interesting for some net dollar coeffect, for those complainers who feel they were cheated with their raise %.


Interesting idea, we thought. Our muse suggested the following assumptions: 1) 40% tax rate – federal and state combined 2) 24 annual paychecks.

Our friend/source continues:

Would be interesting to see and shed a different light on a cash pay basis what the real difference is in pay for those who think they got cheated from a 8% raise and only got 6% or something, does the $35 per paycheck really require a personal vendetta or hours of frustrated Facebook status updates? Probably not.

My guess is that on an after-tax, per paycheck basis, some of these raises are equivalent to cutting out the morning Starbucks run, or latest iTunes download.

So we decided to dust off the Excel skills and crunch a few numbers to see if our Senior Manager friend was onto something.

We took a humdrum salary of $70k and applied the 8%, 6% comparison and tabled it:

Salary $70,000 $70,000
% Raise 8% 6%
$ Raise (Annual) $5,600 $4,200
Taxes withheld 40% 40%
Net Raise $3,360 $2,520
Bi-monthly # of paychecks 24 24
Net $/paycheck $140 $105

BFD you say? You got a 6% raise while some clown who couldn’t audit their way out of a paper bag got 14%? Fine, we’ll take a look at that too:

Salary $70,000 $70,000
% Raise 14% 6%
$ Raise (Annual) $9,800 $4,200
Taxes withheld 40% 40%
Net Raise $5,880 $2,520
Bi-monthly # of paychecks 24 24
Net $/paycheck $245 $105

So let’s say you’re the average shmo with the 6% raise and your friend/sworn enemy is getting the 14%. Are you really spitfire pissed that you’re missing out on $280 a month? We’re not talking life-changing sums here. If you’re consistently average over your career, maybe this will add up but hopefully your better sense will grab ahold and you’ll either A) step up your game B) move on with your life C) eliminate the competition (not condoning violence here, just pointing out that it’s a variable in the equation and maybe that it’s an option).

Rebuttal? Agree? Let it rip.

Former Deloitte Employee Wants to Know If Returning to Public Accounting Is a Good Idea

Back with more from the accounting career mailbag: a former Deloitte employee left the firm recently only to discover that life outside public accounting isn’t all that it’s cracked up to be. Should they return to the Greed Dot???

Have a question about your career? Looking for guidance on how to give your firm some honest feedback? Need some pointers on Twitter etiquette? Email us at advice@goingconcern.com and will whip something up for you.

Back to our ex-Del

Caleb,

I am writing to you in the hopes that you can provide some insight. Here is my situation, I worked at Deloitte for about four years now in the Pacific Southwest region of the US. I recently quit and took a job at one of the big public Companies in my city. After being there for a couple of months I’ve realized that I am kind of bored and am considering going back to public accounting.

The partner I worked for at DT told me to call him anytime. Before I make that call I wanted to get some input. If I go back I’ll be a manager within a year, does the job function change that much like they are telling me? I’m single and in the long term I’m not sure what I want, for now I just want to work get some more experience and then figure it out.

Considering Going Back

Dear Considering,

Your problem is not an uncommon one. Many people have spent their entire careers bitching about life inside public accounting only once they leave, they come to the conclusion that they never had it so good. There are a couple of ways to interpret this:

1. You really do love public accounting and you truly believe it is your calling in life.

2.

Of course every situation is different and in your case, you’re looking at a promotion to manager in a year. Let’s give the partner the benefit of the doubt here and consider your question about life as a manager. Personally, we didn’t have the pleasure of reaching the rank but know plenty of friends and colleagues who did and many, many, many of them said it was their toughest year of their career to date.

What happens is that your auditing skills become less important and your time management and people skills begin to take center stage. Can you handle staffing issues? Prepare a presentation for a RFP? Convince a partner that a client really isn’t that pissed and you’re not getting fired (when, in fact, the opposite is true)? This is just a taste of your responsibilities. OH! And do you like reviewing other people’s work? Because you’ll have to squeeze that in as well.

Now that we’ve scared the living daylights out of you – it sounds like you’re more concerned with enjoying your job and getting good experience rather than money. That’s rare around these parts, so good for you.

Bottom line is this – if you’re not happy at your current job and think that career bliss awaits you back at the Green Dot with Sharon and the Costanza Twins, you should go back.

Peanut gallery – what do we think here? Back into the belly of the beast or is it a huge mistake? Fire away.

John Veihmeyer Wants to Know: How Can KPMG Become a More Awesome Place to Work?

‘Cause – DAMN! – it’s already pretty solid, right? Sure, Irish football isn’t having the best of seasons but JV isn’t going to let that perpetual disappointment keep him from making the House of Klynveld even better than it is already.

Please Complete the 2010 Employee Work Environment Survey

A Message from John Veihmeyer and Henry Keizer
October 11, 2010

Today is the start of the 2010 Employee Work Environment Survey, which gives you the opportunity to provide us with your frank and direct feedback about the KPMG work experience. Please take the time to participate in this important survey. We are interested in both our strengths and our weaknesses, and we are especially interested in your ideas about how we can become a better place to work and a higher performing organization.

2010 has been a pivotal year. We have aimed to take advantage of market opportunities that have emerged in the wake of the economic crisis while renewing our commitment to our Employer of Choice initiatives. We see great opportunities in the marketplace in the year ahead and our partners are focused on growth—and that combination causes us to be very optimistic about the future. But we also understand that the business climate continues to be challenging and we’re all working extremely hard to meet our goals. Thus, your feedback is especially important as we assess our progress and ensure we are focused on the most important issues.

We are proud that KPMG continues to be recognized externally as a great place to work. We have earned designations on prestigious rankings such as FORTUNE’s 100 Best Companies to Work For, DiversityInc’s Top 50 Companies, and Training magazine’s Top 125. While this external recognition is significant, most important to us are the views of our people.

Please use the log-in information below to access the survey between now and Monday, October 25. Your responses will go directly to our external survey vendor for tabulation and will remain anonymous and confidential. Key results will be shared with all employees later this year.

Note: At the end of the survey you will have an opportunity to enter a drawing in which five randomly selected respondents will receive a $200 American Express gift card. See the survey site for instructions

We humbly suggest you crtl+c, crtl+v your responses from the survey in the comments below to best ensure that they get read by the KPMG Internet reputation team. Keep it honest.

Michel Barnier: The Big 4 Audit Model Is a Failure

Okay, those weren’t the EU financial services commissioner’s exact words but you get the sincere impression that he’s had it up to his silver coif with how things are going.

“The crisis highlighted failings in the audit sector,” Barnier said today. “These need to be explored and we need to see what improvements can be made. I believe it is important to approach this discussion in a frank and open manner. No subject should be taboo.”

Right! No subject is off limits. So what will be discussed? Well, for starters this Big 4 thing has to stop. The Telegraph reports, “If one of the Big Four – PricewaterHouseCoopers, KPMG, Deloitte and Ernst & Young – were to collapse the Paper suggests it could create systemic risk for the financial markets.”

Secondly, the notion of independence and “putting shareholders” first is a sham. ‘Berg reports:

Restrictions on auditor choice may reduce “distortion within the system” caused by auditing firms acting in the interests of their clients rather than shareholders when compiling reports on a companies’ financial health, the commission said in a report outlining possible measures.

[…]

The commission said it’s also considering rules that would force companies to change their auditing firms after a fixed period of time.

Forcing companies to rotate their auditors would “enhance the independence of auditors” and “operate as a catalyst to introduce more dynamism and capacity into the audit market,” the commission said.

Lastly, can a Frenchman get some choice up in this mofo?

The top four accounting firms have a market share of about 90 percent in the majority of EU member states, according to the commission’s report.

“The market appears to be too concentrated in certain segments and deny clients sufficient choice when deciding on their auditors,” the commission said.

Barnier isn’t asking for a full-blown cafeteria but for crissakes, the choices right now are chicken, chicken, and….chicken. Sure, they might have slightly different recipes (e.g. KPMG a little spicy/sweet, PwC is in a cream sauce) but it’s all chicken. And Barnier HATES chicken.

Companies May Lose Right to Pick Auditing Firms Under European Union Plans [Bloomberg]
EU markets chief Barnier plans radical overhaul of audit industry [Telegraph]

Deloitte’s Sharon Allen Never Misses Date Night, Discovered Early on That She Wasn’t Meant to be a Car Hop

The L.A. Times ran a brief sit-down with Sharon Allen, the Deloitte Board Chairman (her preferred term) over the weekend and it has the typical clichéd whathaveyous about her background – education is important; her great-grandmother was an early role ght-talker, values are important, yada yada yada.

Anyway, despite those snoozy details, there are a few interesting bits to share including that she doesn’t live in New York (gasp), everyone in her entourage is in a different city and some profound insight into differences between her home state – Idaho – and her current state:

The former Midwesterner chooses to live in Pasadena instead of New York, where Deloitte maintains its headquarters. “California is quite different when you think that the whole state of Idaho has [1.5] million people,” Allen said [WOW!]. She’s lived in Southern California for years. Before being elected chairman, Allen was based in Los Angeles as Deloitte’s managing partner for the Pacific Southwest region. Technology and careful coordination allow Allen and other members of her team to live across the map: Her executive assistant is in Portland, Ore.; her chief of staff lives in New York; and her speechwriter is in Charlotte, N.C.

For now, let’s just say for the sake of argument that the head of the largest professional services firm on Earth can live somewhere other than New York. We realized that for a lot of you this is contrary to everything you stand for but apparently Deloitte is pulling it off.

As for her childhood, Sharon gave the more physical labor intensive and service industry path a shot but soon discovered that agriculture nor a career on roller skates were in her future:

She worked for a time on the farm as a kid and then as a car hop in high school, but said she lacked talent at both. “I learned very early that I wasn’t very good on the farm,” she said. “And as a car hop, I dumped an entire tray of soft drinks into someone’s car once.”

As for how she got hooked on accounting, it was like smack for her. One taste was all it took:

[H]er roommate was an accounting major and talked her into dipping a toe into the business world. “I was hooked from the time I took the first class,” she said. She switched her major to accounting soon after.

And she managed to resist the 1970s accounting firm boys’ club:

Allen was often the lone female in her accounting courses. The trend continued once she started at Touche Ross, a predecessor to Deloitte. Allen turned it to her advantage. “People found a way to recognize and notice me,” she said. “While being a woman in a predominantly male profession early in my career, it would have been easy to adjust my style and focus on doing stuff like the men did. I learned I could be successful by doing it my own way.”

Without more details, it’s difficult to determine what she means by “doing it my way.” It’s unlikely that they were asking her to pee standing up. Or that they expected her to go bald, like some people.

Now that she’s a bigwig at a Big 4 firm that has to jet all over the world doing…things, you might think it would be easy for her to forget where she came from. NOPE! No matter where she is, Sharon is always back in SoCal for Friday date night to make sure the man of the house isn’t just lying around, letting himself go while she’s out moving and shaking:

Friday date nights are sacred. No matter where Allen is in the world, she places top priority on flying home every week to spend time with her husband, Rich (they’ve been married for 38 years), who was also her high school sweetheart.

In other words, she’s heading back home to ensure that Richard chases off the freeloading friends and babes that are hanging out at the manse all week. Or maybe it’s love. Either way, it sounds like she runs a tight ship.

And no doubt, that obsession/love translated into something that helped SA become the highest ranking woman at a Big 4 firm. An impressive feat no matter where you stand. But frankly, from Deloitte’s perspective, she’s the most visible leader that’s not pulling a Costanza. You can’t put a price on that.

Accounting for her success [Los Angeles Times]

Bedbug Scare at KPMG’s New York Office?

Summer of 2010 had its share of gripping stories: Islamic community centers, “pink-faced halfwits” whipping the masses into a frenzy, Lindsey Lohan.

All of these stories grabbed ahold of American’s two-second attention span far longer than you would expect. But the thing that really transfixed the nation was a tiny insect that was, as one time, merely a fun game for kids to play so their parents could smoke grass in the basement. BEDBUGS.


With all the bedbug hysteria that’s been going on, we’re surprised that we haven’t ANY news about accounting firms having their offices invaded with bedbugs. Finally, we’ve gotten word of what probably amounts to just a scare at KPMG in New York.

We were tipped off this morning to the news that there was a “bed bug issue” over the weekend at one of the KPMG’s offices in New York. We asked around and discovered that the “issue” was at the 345 Park location and that “only one bedbug” was found. Everything that has happened since then have been “precautionary measures.” This no doubt involved scores of people crawling around with magnifying glasses until the bedbug dogs could be called in.

A message and voicemail left with KPMG spokesman Dan Ginsburg had not been returned at the time of posting.

Of course, the real concern is that if there’s one bedbug, there are likely more. And in New York, there have been no shortage of bedbug cases including at the nearby MetLife Building. So far nothing we’ve heard indicates that it’s a full-blown infestation over at 345 Park but do get in touch if you hear more.

Let’s Speculate About: The Oddly Similar Logos of PwC and The Gap

Last month we learned about PwC’s new look to welcome that portrayed beauty and majesty of autumn. That and it reminded us something that Harry Pitfall might encounter if aliens landed.

Anyway, people have their opinions on the new look and Bob Moritz is okay with that as long as it doesn’t concern the color or shape.

The latest twist in this seemingly unending logo-mama drama was brough to our attention by a reader who saw an eery resemblance between PwC pwc’s new look at the new look of recently rebranded and ridiculed retailer The Gap.

Caleb,

Does is strike you as odd that soon after PWC changes their logo the GAP changes theirs to a similar style? Although Deloitte is currently GAP Inc. auditors, the company may be opinion shopping. Changing the company logo to look like their would be auditors’ is a surefire way to get the desired opinion.

This may be a total coincidence. However should GAP grab headlines in the style of the Universal Travel Group and hop over to PWC, at least now you won’t be surprised.

Our reader brings up an excellent point. We admit that the new logos aren’t identical but there’s more than a slight chance that they are brothers from another mother. So what’s the deal here? Maybe it is a coinky-dink. But then again, you would think that the cheap denim, khakis and plain t’s business would be thriving in this economy. If our reader is to be believed, Gap may be trying to find an auditor that’s willing to look the other way on [ideas on financial reporting chicanery are welcome]. And it just so happens that a certain professional service provider has also been recently taken some heat for their rebranding.

The only thing we can be sure of is that if Ernst & Young is serious about their makeover, they should resist the temptation to stick with squares.

Like we said, the motives here are not obvious and it’s imperative that we get to the bottom of this mystery, so that involves getting your ideas. Nothing is too crazy.

Will Ernst & Young Be the Next Firm to Get a Makeover?

[caption id="attachment_18945" align="alignright" width="150" caption="No more square?"][/caption]

It sounds like it!

Judging by the article over at Marketing Week ideas are being kicked around and since Audits the Emmys!” Perhaps, “Zitor works for us!” Or simply, “Our opinion indicated that Lehman’s financial statements for that year were fairly presented in accordance with GAAP!”

Even a more important questions – should they incorporate a mascot? Maybe an E&Y Phanatic? A live animal may do the trick. Or this.

Let’s hear some ideas.

Ernst & Young looks to stand out among “big four” [Marketing Week]