Category: Big 4

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

Compensation Watch: Deloitte Tax Sets a Date

Rejoice Deloitte Tax Troops. Your wait is nearly at an end, although from the sounds of it, you might be disappointed:

Word from our office tax managing partner has been that the compensation pool for raises is about 4-5%, which I think is going to make a lot of people pretty unhappy. But I guess with all the rumors out there and with Deloitte being the last of the Big 4 to release comp numbers, they decided to hold this forum. I’m expecting the same song and dance (weak revenue, highlighting all the other benefits besides comp) to try to stem the tide of people leaving. Since January, we’ve lost about 15 people (at all levels) out of about 110 in our office tax practice, and I doubt the news regarding comp will keep others from jumping ship.

Who: All US Employees

What: Overview of FY11 US employee compensation, including:

• Review the objectives and strategy of our compensation program
• Review the components of compensation
• Review the FY10 annual incentive plan
• Review the Tax compensation process and next steps
• Answer your questions

When: Tuesday, August 17, 2010

Time: 8 am to 8:30 am –regional compensation town hall
8:30 to 9:00 am -optional local office debrief with practice lead

Depending on how the town hall goes, the “optional” debrief could be an extremely interesting discussion. If audit or advisory have receive similar communiques, send them our way and we’ll continue to keep you updated on the countdown.

Ernst & Young Striving for Fewer “Cookie Cutter” Engagement Teams

E&Y’s annual intern conference invaded Orlando yesterday and the ‘Berg had Director of Campus Recruiting, Dan Black on to discuss Gen Y and why they are pre-tay, pret-tay, pret-tay important to the future of the firm.


Despite their technology savviness, it appears that Gen Y is still relying on rock-paper-scissors as a key decision-making tool. Apparently, darts and jigsaw puzzles are important too.

Oh, and the time you put in as a line cook at Applebees’s in college really doesn’t translate into anything useful so don’t be too concerned about that.

(UPDATE) CPA Status and Promotions: What Is Your Firm’s Policy?

With all the news on raises, promotions etc. etc., a reader got in touch, asking the following:

Can we start a thread to discuss when you need the CPA designation if you want to move up at various firms by practice (audit, tax, specialty groups, etc.) and what exceptions there are?


The idea jumped off of a recent comment on yesterday’s post discussing E&Y’s raises keeping pace with PwC:

From what I can derive, PwC was bleeding staff in the early part of the year to the best of my knowledge, requires more time to get promoted up the ranks (3 years to senior compared to 2 at all other firms) and the requirements are higher (must have passed the CPA exam). The higher raises, at least from PwC’s perspective, may be their way of staying competitive with the market because, without higher pay, PwC is not competitive. E&Y may also be attempting to compensate but I am not entirely sure what for.

So three years to earn a promotion to SA at PwC isn’t news to us and some – dare we say, many – may argue that should be the standard timeline for associates in the Big 4/second tier firms. You can debate that all you want but what about the CPA requirement? If PwC does in fact require their associates to have their license before making SA, that’s nothing if not a motivation to finish the CPA ASAP. At the same time, there are many SAs that don’t have their license that do excellent work but for whatever reason are still stalling on obtaining the CPA.

The reader continues by asking:

For instance, if you have an Enrolled Agent, can you still make manager if you’re in tax, etc. [?] I’m also curious about any place that will demote anyone of a certain level who hasn’t gotten their CPA in the last couple of years. KPMG has threatened it for managers in tax who are qualified to sit for the exam (U.S. accounting degree with enough hours), but I wonder if that’s more empty talk.

That’s the first we’ve heard of a demotion for not having a CPA but frankly, that seems appropriate. If the manager has an EA, then perhaps that’s a suitable exception, although the idea of a Big 4 tax manager without a CPA just doesn’t seem right. For many, the lack of the those three precious letters means the end of their careers at the Big 4, so it’s definitely an issue.

So indulge our reader and let us know your firm’s policy regarding promotions and CPA license status. Does it matter? Are there exceptions? Should your performance make up for your uncanny ability to fail FAR? Talk it out.

UPDATE: We obtained a copy of the KPMG policy mentioned above and it appears to be FSF with a few exceptions for those that are “CPA Eligible” and certain “waivers.” Also there’s this, “In circumstances of noncompliance without appropriate waiver, professionals may be subject to disciplinary action, including but not limited to demotion or termination from the firm.”

KPMG Tax Promotion Policy

Email Reminds KPMG Tax Group That You Best Remain Chargeable in the Summer-Fall Busy Season

As summer creeps to a close, that means one thing for Big 4 tax compliance folks – Busy Season 2.0. In a lot of ways, this time of year can be worse than the late winter/early spring as the drop deadlines approach and your deadbeat clients that never get you what you need on time remind you why they are your deadbeat clients.

It also means the return of mandatory 50+ hour weeks (that’s on the low end). Typically a simple communication from one of the higher-ups in your group should suffice but sometimes a few extra instructions get included. This was the case in an email sent to the troops in KPMG’s Fed Tax Group in the Dallas office yesterday afternoon:

From:

Sent: Wednesday, August 04, 2010 2:42 PM

To:

Subject: 2010 Fall Busy Season Hours

The summer-fall busy season is now upon us. Effective immediately through September 15th, all senior associates and associates in the Fed Tax practice should have a minimum of 50 hours of chargeable work per week. If you don’t have work to fill this time, please contact Elizabeth Emerson immediately with your availability and she will work to assign your time to projects. New this year, if you have any unassigned time, the expectation is that you will send a short email to your manager and copy [redacted] on a daily basis with the number of available hours (out of 10) that you have to work on projects. As you are assigned please remember that it is imperative to keep [your timesheet] updated and accurate.

Thanks in advance for all your hard work and efforts during this busy season.

The “short email” probably won’t apply to many SAs but there are probably more than a few A1s and A2s that will find gaps in their day and a quick typing of “I’m unassigned for X hours” today will probably suffice. Annoying? Yes. Necessary? Perhaps. As everyone knows, if you’re not fully chargeable, it could mean the end of your illustrious Big 4 career (and even if you are, that might not save you) and Fed Tax compliance is known a popular group for layoffs come post-October 15th.

But our source interpreted the email this way:

I guess we will have to start asking for permission to check emails and take bathroom breaks, otherwise we will have to “send a short email on a daily basis” explaining why we were unchargeable for 30 minutes a day…

So tax people – how do you read this email? A friendly reminder with a simple request or just one more thing to lump on your pile? Discuss.

Comp Watch: Early Returns at Ernst & Young Keeping Pace with PwC

So far there are several reports of low to mid-teens and some as high as 20%, which some simply don’t believe.

We do have some specific details for assurance associates in New York and they don’t sound terrible:

NYC first year associate went from $55k to $64k, associate raises [are] coming in around 11-18%


So if you’re keeping score at home (and we know you are) it appears that the partner at E&Y who prognosticated that raises at his firm would beat PwC’s Raises appears to be right in some cases but perhaps not all.

Sooo, Ernie troops – are you happy? Disappointed? Suicidal? Ready to jump ship? Or calling your friends at PwC to brag how you’re keeping the pace? Discuss.

Earlier:
Are Ernst & Young and PwC Neck and Neck in the Compensation Race?

Ex-Deloitte Partner, Son To Shell Out $1.1 Million to Settle SEC Insider Trading Charges

Last we had heard of Thomas Flanagan, Deloitte had just taken him to the woodshed, successfully suing him for breach of fiduciary duty, fraud, and breach of contract related to Tom’s insider trading activities of Deloitte clients.

Now it’s the SEC’s turn to get in on this sweet action. The Commission charged Flanagan and his son, Patrick Flanagan for insider trading of Deloitte clients including Best Buy, Sears, Walgreens and Motorola.

Why Flanagan, the 38-year veteran of Deloitte and Vice Chairman of Clients and Markets, who thought that in the twilight of his career, the best move would be to engage in some insider trading is still a mystery. Since he was presumably pushing 60, one couldn’t help but wonder if perhaps his memory was going and he just totally spaced the independence thing.

But actually, no. Turns out, Tom Flanagan is just a liar:

According to the SEC’s complaint, Thomas Flanagan concealed his trades in the securities of Deloitte’s clients and circumvented Deloitte’s independence controls. He failed to report the prohibited trades to Deloitte, lied to Deloitte about his compliance with its independence policies, and provided false information to Deloitte’s personal income tax preparers about the identity of the companies whose securities he traded.

Flanagan & Son will be paying over $1.1 million in disgorgement and fines for their little stunt. And Robert Khuzhami had a little reminder for anyone else out there that thinks they can get cute, “Flanagan’s insider trading violated one of the most fundamental rules of public accounting. All audit firms should learn from this unfortunate episode and employ vigorous controls designed to ensure compliance with the SEC’s auditor independence rules.”

SEC Charges Former Deloitte Partner and Son With Insider Trading [SEC Press Release]
SEC Complaint Against Thomas Flanagan and Patrick Flanagan [SEC Complaint]

Compensation Watch ’10: The Teasing Continues as News from Deloitte Inches Closer

By now everyone is borderline freaking out due to Deloitte partners’ ability to remain coy throughout this process, using words like “substantial” and “better than last year” which, considering the love shown last year, is ironically accurate.

Annnnnnddd it continues. A source dropped us part of an email from Nick Tommasino, Deloitte’s Chairman and CEO of audit and enterprise risk services:

Understand your compensation package
• Deloitte provides a comprehensive Total Rewards package, which is designed to:
· Attract, retain, motivate, recognize, & reward high-performing talent
· Demonstrate the value of individual contributions as it relates to business performance
• When your individual compensation discussions occur in mid-Aug, keep in mind these main financial components of the Total Rewards package:
· Base salary
· AIP*, aimed at eligible high-performing seniors, managers, & senior managers (Reminder: AIP payouts will be subject to taxation & 401k deductions)
· Rewards & Recognition program, which includes Applause Awards, Outstanding Performance Awards, Promotion Awards, & Service Anniversary Awards
• Key compensation dates include:
· Mid-Aug: Compensation discussions begin
· Sun, Aug 22: New salaries effective
· Thu, Sep 2: Updated compensation statements available on DeloitteNet
· Fri, Sep 3: New base salary & AIP award amounts reflected in pay statements available on DeloitteNet

The motivation behind such a message is subject to interpretation. Some may think this is a friendly reminder (one of several, no doubt) of the upcoming discussions OR it’s a friendly reminder that doubles as a reality check that this isn’t 2005-2006.

Meanwhile, in the consulting part of the house, one commenter is claiming that news is going to be extra good, courtesy of some Punit Renjen prognostication:

Punit said “Compensation will be highest in history” via video for Consulting…

So who knows! The good news is that you will know soon enough but numbers remain a mystery. Unless someone finally coughed up a range. In that case, we strongly encourage that you share.

The Restatement That Never Ends: KPMG Hasn’t Received Necessary Docs for Satyam

Back in June we told you about Satyam requesting just a wee bit more time to nail down their restatement of their financial statements. It wasn’t because KPMG and Deloitte weren’t working their asses off, it was more of commitment to get things right. Putting good numbers out there, repairing broken trust, so on and so forth.

Well! The three month extension ends next month but as you might expect, there’s a bit of a problem. More specifically, KPMG is now saying that they haven’t received the documentation necessary to finish the job. Unless everyone is okay with some wild-ass guesses, in which case they can proceed.

[F]or all its documents, KPMG had to depend on the [Central Bureau of Investigation (“CBI”), which is investigating the scam.

NDTV has learnt that KPMG’s analysis of the documents don’t match with the CBI’s. There is a discrepancy between the two which amounts to over [$200 million].

CBI has based its calculations on estimates of Satyam’s assets and liabilities while KPMG says they need documentation to base their estimates.

KPMG says that they didn’t get all the documents needed to make a clear assessment which is why the accounts are likely to be re-stated full of riders.

But again, if you’re cool with some double-entry hocus-pocus, that can be arranged. There’s a merger at stake after all, “This confusion in the numbers could hold up Satyam’s merger with Tech Mahindra, which needs the go ahead from market regulators in India and the US, since Satyam is also listed in the US.”

Good luck getting that U.S. approval.

Satyam accounts restatement: KPMG’s analysis differs with CBI’s [NDTV]

(UPDATE) Comp Watch ’10: Ernst & Young Numbers Coming Out This Week?

Last time we checked in on E&Y in the comp department, convos on promotions and ratings were to have gone down by last Friday. That appears to have happened right on cue and now we’re told that starting this week, the numbers will be coming down from 5 Times Square:

Latest regarding compensation (exact $ amount) in both FSO/New York and Northeast/New York regions is discussions should start today and run for 2 weeks. Big push right now in all business units to try and appear to care about people; people advisory board members have been reaching out for ways the firm can improve.


Feel free to speculate as to why the “caring” and “reaching out” is happening at this particular time of year (and if the Facebook downloading is at all related). Also, if you’ve had the talk and have great/disappointing news to report, do share or get in touch with us.

UPDATE: Word is that meetings are still being had this week and the numbers are still good. One source (Manager) in the assurance practice reported a 5 rating and a 21% bump. Not too shabby.

Fulltime Offer Watch ’10: Big 4 Class of 2011

Now that it’s officially August, that means a few things:

1) Everyone around starts bitching how summer is almost over

2) The tax compliance folks take a field trip to the nearest Radio Shack to stock up on their batteries for the two and a half month stretch and

3) This year’s interns starting getting their offers for fulltime employment.


This of course means that your coffee jockeys and Xerox operators will start stressing over everything that they’ve ever done this summer and whether it’s good enough to be blessed with the honor and privilege to attain fulltime Big 4 employment.

So if you veterans out there have been doing your job, you’ve shaped some fine, young, booze-drenched minds into someone that is going to your new associate next fall. If you feel like giving them some credit below. And interns, if you’ve gotten some good news (official or otherwise) jump for joy below and share your experiences – the good, the bad, the truly mortifying (extra bonus points here).

UPDATE: Straight out of the rumor mill, we’ve heard that some E&Y interns have already found out that they won’t be partying with Mickey & the Gang:

There was a round of interns who were let go on Friday. They were told to come in to the office and terminated, offers not given. Saves the expense of sending them down to Disney (the interns that remain leave this Wednesday). There were at least 3 let go in NY.

What if Deloitte Moved Out of New York City?

What happens when you’re the Prized Catch of the New York City real estate market? You threaten to move your operations to New Jersey or Connecticut, of course!

Per a report on GlobeSt.com: “According to IDA documents, Deloitte notes that it is ‘currently assessing options’ for its metro area real estate strategy, ‘including the evaluation of existing in New York, New Jersey and Connecticut.’”

One could assume that this is just a ploy by Deloitte to frighten the IDA into approving $21 million in tax benefits, but Deloitte – currently in four different buildings around the city – bit back with teeth:

In New Jersey, Deloitte US firms “have significant operations, including recently expanded, underutilized class A office space.” Similarly, Deloitte has more than 30,000 square feet of “underutilized” office space in Connecticut, and adds that “various other jurisdictions are being considered” for future growth.

Now before you East Village wannabe socialites and Park Slope stroller pushers freak, let’s break this down.

Deloitte isn’t going anywhere. Corporate Tax breaks are nothing new, right baseball fans?

Even if it were to move across the Hudson to New Jersey, it is doubtful the firm would go farther than Jersey City. Sure, there are comrades in Parsippany; but it would be very difficult to maintain a city presence from exit 45 off of Rte 80. But from a staffing perspective, this would be corporate suicide. What University of Texas (“at Austin” – sure, sure) graduate wants to move to New York City and Not. Actually. Be. In. New York. City?

Recruitment – shot.

Talent retention – HAHAHA.

A handful of current employees thankful their NJ Transit days are over – okay, I’ll give you that one.

Listen – in reality, this is a rather simple case. Manhattan is bleeding vacant office space; Deloitte is promising 2,100 new jobs; no one really wants to take the PATH train to work every morning. This should be a rather slam dunk case.

Unless, of course, Connecticut governor Jodi Rell catches wind that the Green Dot is looking for a new home.

Why Would E&Y Download 100 Million Facebook Profiles off BitTorrent?

Good question! In case you didn’t hear, someone – his name is Ron Bowes – created a “crawler” (resident tech expert Nick told us it’s “a bot that has directives and algorithms based on known patterns in a webpage it ‘visits’ a webpage and pull information from selected places in that structure.”) that pulled data on 100 million Facebook profiles.

Since it only pulled the data that was publicly available, you could claim that this is NBD as Nick told us, “[A]ll the crawler did was collect it and put it into a single place, presumably in a format that is searchable and very ordered.”


And Engadget agrees, “There’s nothing illegal about any of this, of course — we put our information out there into the public forum that Facebook is, after all — but there’s still something creepy about the idea of someone torrenting our profile.”

What may be even more creepy is that lots of corporations – including E&Y – are downloading the data.

Nick told us that any corporation could have done this anyway but since someone else did, these companies figured, “why the hell not?” and downloaded the data. But E&Y? Maybe it’s just some back office guy stalking ex-girlfriends, as Gizmodo suggests, or Zitor collecting names for future abductions but it certainly makes you wonder.

So much so, we emailed E&Y spokesman Charlie Perkins to ask him about it (and if nothing else, we may have introduced him to a new website!) but we haven’t heard back and we don’t have our hopes up.

Major Corporations Are Downloading Those 100 Million Facebook Profiles off BitTorrent [Gizmodo]