Category: Big 4

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

Compensation Watch ’10: Early Returns from Deloitte Are In

The first reports of Deloitte raises for audit professionals have come in from the Mid-America Region:

I’m surprised to see absolutely nothing posted about Deloitte raises. We have had the raise discussions in my office for staff and seniors, no double digit raises in sight. AIP (bonus) for Seniors and above. Managers- TBA.

Mid America Region- it’s looking like 2-9% for staff/seniors. AIP is supposed to be in the range of 2-12%, but that is the range for both seniors and managers. I spoke with a friend in another office in my region and their raises are looking pretty consistent, if not lower. Starting salaries are frozen- start classes from fall 09, 10, 11 will all at the same rate.

This is the earliest word we’ve received and comments have suggested that more news would come early next week. The tax practice still has their town halls next Tuesday but that could be to explain the numbers if in fact they are similar to audit’s.

So this could be a John Kerry-esque exit polls effect or maybe this is a sign of things to come. Either way, if you’ve gotten word, discuss below and keep us updated with any developments.

Starting Salaries for The Big 4 Class of 2010

Per a request from our earlier post on full time offers for interns:

Hey Caleb,
I think it would be interesting to start a post on full time/internship compensation offers that have been rolling in and will continue coming to students for the next few months. Are the firms trying to lower starting compensation?

And a reader considering a mid-tier offer:

I am going into my fifth year this fall at a large university in the Southeast. I recently received an offer from mid-size firm to the tune of $49k, no signing bonus, and no CPA bonus (firm policy). My question is, in this market, is that what students are being offered in public accounting? I would just love to know what my friends at the Big 4 are getting! Because of these numbers, and me not being sure about whether or not I want to work for them, I am tinkering with the idea of going through another recruiting season. Do you think it’s a bad idea to keep this mid-size firm waiting?

So then. For those starting this fall in the Big 4, kindly enlighten the requesters with 1) your starting salary 2) your office 3) practice 4) signing bonus (if applicable) 5) Bonus for CPA (if applicable).

And give your thoughts on the reader’s question – should they keep the mid-tier firm waiting or take what they can get?

Or the commenter – are salaries looking lower from previous years or are the A1s already making A2s jealous?

Experienced Recruiting Amongst The Big 4 Gets Aggressive

As you know the Big 4 are extremely competitive when it comes to picking up talent. Now that the firms have amped up their experienced hiring, things appear to be taking an interesting turn.

Case in point, the following email went out to PwC professionals in the Southeast:

Hello. I work for Ernst & Young’s Assurance Recruiting Team and, through my networking, came across your name. I was wondering if you would be interested in making contact for professional networking purposes.

We are currently seeking managers and senior managers in our Southeastern markets. Your referrals would be greatly appreciated as you know the best people in this industry! We are expanding our Assurance Experienced talent pool and look forward to hiring only the best and brightest talent!

There are twelve more reasons to consider EY as a strong career option!! Ernst & Young was just named to FORTUNE’s “100 Best Companies to Work For” list for the 12th year in a row–and ranked highest among the global professional services organizations. The reason? Our people. Together, we’ve created a culture of learning, flexibility, inclusiveness and community responsibility that truly makes a difference.

I have been a finance/accounting recruiter for six years and assure you that not all Big 4 firms are cut from the same cloth……it never hurts to have a dialogue!!!

Thanks in advance for your time and consideration. Have a wonderful summer!

Say what you want about these particular tactics but if there is a need in a particular office or region, it is Big 4 recruiters’ job to go out and find the talent to fill that demand. Other Big 4 firms seem like a pretty good place to start since they have the “talent” that the firms want. Plus, the email does state that the intent of the message is to “open a dialogue” which, sure, could lead to someone switching firms but let’s be real – this happens.

And don’t forget! This isn’t confined to Dixieland. You may recall that PwC in the UK had been allegedly poaching E&Y partners, as reported by the Times Online.

So if you want to get all defensive about a rival firm going behind enemy lines to do their jobs, so be it, but your firm is likely doing the exact same thing.

Earlier:
Grant Thornton Picks Up Four Tax-Exempt Experts from WTAS

KPMG Decides That Travel Time Is No Longer On the Clock

A member of the Phil Mickelson fan club is a little peeved with a recent decision (or not so much, you’ll have to tell us) regarding travel time:

I am in an office that covers a significant region that includes TN, KY, GA, MS and AL. Previously, it was office policy (and in most cases area policy) that at a minimum half of the travel time to and from client was considered chargeable. Well, management in its infinite wisdom has decided that will no longer be the case. Therefore, those 40, 50 or 60 hour weeks are now 50, 60, or 70 hour weeks when the travel time is excluded for management’s purposes but included in the “real world” (which management has clearly lost touch with).


Why the change? Our source has a theory:

In this year of increased emphasis on internal profitability (which is a joke for a fixed fee revenue generating business), management needed some mechanism to make up for all the hours that are going to be wasted messing around with this “awesome” tool (which malfunctions daily) [Ed. note: he/she is referring to the new paperless audit tool]. This is also in response to the area management’s inability to win clients. So, instead of [leadership] making the tough decisions and forcing those responsible for the poor results, loss of clients, and improper planning to bear the weight of the lack of profitability (and reduce their income), it totally makes sense to squeeze the staff even further. I guess the philosophy may go something like this: “well, they are already pissed because we don’t pay them properly, we are forcing them to use this eAudit tool that doesn’t work and isn’t ready for deployment, and we are making them work ridiculous hours because we fired too many people (keep in mind the exodus is just beginning so this is just going to get worse), so we might as well just making even madder by telling them that those hours they used to spend in the air or car in the service of KPMG don’t really matter for crap either”.

Sound about right, Klynveldians? Discuss, debunk and whathaveyou.

All This Talk of Deloitte’s “Double Digit Growth” Has People Wondering

On Monday we learned that Deloitte Tax had a STD and now there’s more chatter about the firm’s performance that could maybe, possibly affect comp for this year:

A new set of video blogs came out from the northeast regional managing partner. He announced double digit growth in perdiods [sic] 9-13 of FY10 and a plan for “continued double digit growth through FY11”. I know everyone is getting antsy over compensation (discussions are supposed to take place beginning next week, with raises hitting on the 9/3/10 payroll), and they keep dropping comments about “substantial raises” and “double digit growth.”


So while some people remain skeptical, it appears that Deloitte is warming you up the troops for a nice surprise next week. Deride if you must but can Dr. Phil & Co. really afford to come in with lower raises than PwC and E&Y?

For a firm that talks like they’ll be numero uno in a few short years, it would be pretty embarrassing to bring in some paltry raises while the firm they’re chasing managed to make it up to at least a few of their people. Discuss the latest and keep us informed.

Confidential to KPMG: If Phil Mickelson Wins the PGA Championship, Don’t Send Him Omaha Steaks

[caption id="attachment_15841" align="alignright" width="260" caption="Not thinking about Five Guys...Not thinking about Five Guys...Not thinking about Five Guys"][/caption]

As we briefly mentioned this morning, KPMG Poster Boy Phil Mickelson is only about 90% for this week’s PGA Championship because he’s been suffering from psoriatic arthritis for the last two months.

While this may have hampered his game in the last couple of tournaments, there’s been a far more serious development. Phil has gone vegetarian.

We can only imagine what kind of frenzy this development this has sent the KPMG Phil-handlers into. There’s no doubt in our minds that Omaha Steaks are the go to “FTW Phil!” gift that he receives before after every tournament he wins. But now what? This veggie thing is serious.

“I know this is crazy,” he said Tuesday. “For the last two months now, I’ve been a vegetarian. Can you believe that?”

This puts Mickelson in an awkward position. Not only is he a connoisseur of all things beef, but he is part of an ownership group that has purchased the rights for Five Guys burger and fries franchises in Orange County, Calif.

“The real test is driving by a Five Guys and not stopping,” he said. “I don’t know if I can do that yet, but we’ll see.”

Since it’s only been a couple of months, we doubt that Phil has gotten over the meat sweats yet but if he happens to pull out a victory in this last major, you can expect the big guy will be dumping those Five Guys franchises ASAP.

Mickelson a Strait shooter [Milwaukee Journal Sentinel]

Judge Grants Preliminary Approval in New Century Shareholder Settlement: KPMG to Pay $44.75 Million

Not to be confused with the settlement that KPMG reached with the Trustee of New Century that we reported on back in June. This particular lawsuit was brought by New York State Teachers’ Retirement System and shareholders in New Century.

Law.com reports:

A federal judge on Monday granted preliminary approval to a $125 million cash settlement for shareholders of bankrupt New Century Financial Corp., one of the largest lenders to collapse during the subprime mortgage meltdown.

The settlement involves three stipulations: Auditor KPMG LLP will pay $44.75 million; the underwriter defendants will pay $15 million; and New Century’s former officers and directors collectively will pay more than $65 million.


Along with the undisclosed sum from the Trustee of New Century, KPMG also paid $24 million to settle with the shareholders of Countrywide. Since we have no idea what the firm paid to settle with the Trustee we can’t give a ballpark number for settlements for the last 3-ish months but on the low end it’s at least $69 million.

If we put the over/under at $100 million, what are you taking? Throw in your ballpark figure just for fun.

$125 Million Shareholder Settlement in New Century Financial Collapse [Law.com]

Earlier:
A Few People Noticed That New Century Execs Settled with SEC

People Are Still Talking About Those PwC Layoffs

Remember those PwC layoffs in Tampa a week or so back? Right. Anyway, the St. Petersburg Times decided to poke around this story a little bit more and discovered some things that most of you have known for awhile: there are two very different sides to large accounting firms and PwC is no exception.

PricewaterhouseCoopers has cultivated an image as one of corporate America’s upper-tier workplaces. Competitive pay. Great benefits. A perennial on Fortune’s list of Best Places to Work.

Human resources experts with the company have preached to clients about effectively managing workers and using layoffs as thes of crisis.

However, interviews with a half-dozen current and former Pricewaterhouse employees support a different picture of a financial evolution within the company in recent years. The accounting and professional services giant, known as PwC, has quietly and methodically slashed hundreds if not thousands of well-paying jobs, offshoring many functions to cheaper labor overseas.

A perennial on the Fortune list! It’s impressive to see the MSM catch on to the Big 4 M.O. so quickly. Anyway, the article goes on to explain that the accounting firms aren’t like regular corporations because, as we know, the “shareholders” are the partners of the firm:

Pricewaterhouse and the other top global accounting firms “make a lot of money, and they’ve had an increase in revenue for many years,” said Christopher Ames, president and CEO of the Ames Research Group, which analyzes financial data of the world’s largest professional services firms.

“These firms work differently than a publicly traded company. In the firms, the shareholders are the firm and there’s not that many of them. From the partners’ perspective, they want to keep that money … and they’ve done pretty well.”

Not only do the partners do well, St. Pete’s reveals a couple of other things we all know and that is 1) that getting a firm to admit that layoffs have even occurred is nothing short of water into wine and 2) the process and numbers involved are a complete mystery:

Confirmation of the latest layoffs was unusual. Many cuts happen below the radar. PwC has not filed any WARN layoff notices with the state this year for any cuts, including the latest one.

Consultant Francine McKenna, a former PwC employee who tracks the Big Four audit firms in her award-winning blog, re: TheAuditors, was shocked the company even confirmed the layoffs publicly. “They just don’t issue press releases,” said McKenna, who broke news of a previous PwC layoff in November.

Several PwC veterans said that is partly due to the process. A mass layoff is not typical; cuts come in small groups. Workers receive messages to “touch base” with a partner, a telltale sign they are about to lose their jobs. The total numbers are also murky, workers say, because a percentage of dismissed employees are offered either lateral jobs or lesser-paying jobs to stay with the firm.

Remember the November layoffs? If you don’t, it got ugly. The PwC loyalists got their claws out on that one.

PricewaterhouseCoopers spokesman Jon Stoner is quoted throughout but it’s mostly bites from the firm’s previous statement and he stonewalls reporter Jeff Harrington on any meaningful details.

For readers of this here fine publication, none of these tactics are new but Harrington dug up all the right dirt which is refreshing. He includes a quote from a former employee that probably sums it up for a lot of you, “It used to be a great place to work. They took care of their workers. “[Now,] it’s a company of bean counters, and all they care about is saving a few pennies.”

For PricewaterhouseCoopers, layoffs pad bottom line [St. Petersburg Times]

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.