Category: Big 4

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

Is Mary Schapiro Talking About a Certain Lehman Brothers Auditor?

Maybe! After last week’s settlement with Team Jehovah and the financial reform bill allowing for a few more hands on deck, the SEC chair says there are some other smackdowns in the works.

Unfortunately she doesn’t name names but use your imagination:

“We have investigations in the pipeline, across products, across institutions, coming out of the financial crisis,” SEC Chairman Mary Schapiro said after testifying before a House of Representatives subcommittee hearing.

Asked if the bulk of the cases have already been brought to light, she said: “Not necessarily, not necessarily.”

So it’s a grab bag really. Although, as you may recall, Dick Fuld is on the record that E&Y was on board with whatever the dorks in accounting were doing. Or maybe MS is just messing with Congress. The situation remains fluid.

SEC chairman says more post-crisis cases in pipeline [Reuters]

Exodus Watch: Some Are Concerned About the Direction of KPMG’s Headcount

Granted, this does not take into effect the 23 soon-to-be KPMG Kampers jumping over from Grant Thornton but at least one Klynveldian was concerned enough to send us this:

Our source told us, “Linkedin.com gives these updates to those listed as KPMG employees.” Thinking this over, this may be trailing the movement we’ve seen over the last couple of months (since no one updates their LinkedIn accounts). Or this could just be the latest round of ship jumpers. With comp adjustments coming up relatively soon, you’d think people would sit tight for just a smidge longer to see how things shake out. OR maybe these LinkedIn numbers are just a bunch of malarkey and our source is going ape for no reason. We’re not really at liberty to say.

Discuss the latest bodycount in your office.

KPMG Acquires Grant Thornton’s Supply Chain Advisory Services Practice

KPMG’s Advisory practice will take over Grant Thornton’s Supply Chain Advisory Services practice, the firm announced today, in a deal that closed on July 16th. The purchase includes “the addition of 23 highly-skilled, experienced professionals to KPMG” and the firm will also take over the existing projects “at select Fortune 500 companies.”

This is certainly appears to be a nice little boost for KPMG’s Advisory practiceclear whether this will be a big part of the advisory practice or an area for potential growth in jobs and revenues, TPTB seem pretty excited about it (see boilerplate after the jump).


But we think the more interesting aspect of this particular deal is the strategy of Grant Thornton. Back in January when Stephen Chipman gave his first firmwide call to the troops, he discussed many things including the not so subtle warning that some people would not be “joining us on the next stage of our journey.” That’s a pretty clear message but nowhere in the message to the firm was the slightest indication given that this, dare we say, firesale would be occurring.

This is the fifth major move that we have covered involving Grant Thornton just this year. We have reported on sales of GT’s Albuquerque, Honolulu offices as well as the closure of the Madison and Greensboro offices.

This is the first sale of a practice that we have covered and KPMG is the largest firm to be involved in one of these transactions. Moss Adams purchased GT’s Albuquerque office and partners in the Honolulu office purchased the practice to become an affiliate of PKF.

Perhaps this part of the journey was too sensitive to share with the troops or maybe it was communicated in code that could only be deciphered with a secret book with all the definitions OR maybe the majority of people at GT weren’t paying attention to anything SC said unless it included the words “compensation,” “promotion,” or “bonus.” We can’t really say.

That being said, we are still hearing rumors of other office sales by GT. Nothing we’re permitted to share with you now but if you are aware of any talk about a possible sale in your city, get in touch with us. And if you’ve got thoughts or knowledge on this particular deal – from the perspective of either firm – share below.

NEW YORK, July 19 /PRNewswire/ — KPMG LLP, the U.S. audit, tax and advisory firm, today announced it has expanded its restructuring capabilities through acquisition of the Supply Chain Advisory Services practice of Grant Thornton LLP, U.S. member firm of Grant Thornton International Ltd.

The acquisition strengthens KPMG’s existing restructuring services practice in the automotive, pharmaceuticals, aerospace and defense and other manufacturing industries by expanding current capabilities in financial and operational restructuring, supply chain advisory, supplier services, technology and performance improvement. The transaction also includes Grant Thornton LLP’s Vontik software system.

“As organizations continue to reinvigorate their focus on growth, they are facing unprecedented pressures to transform their finance and operations functions,” said John Veihmeyer, Chairman and Chief Executive Officer, KPMG LLP. “This acquisition will enhance KPMG’s ability to help businesses address the four key drivers of business transformation: people, process, risk and control, and technology.”

The transaction, which closed on July 16, includes the addition of 23 highly-skilled, experienced professionals to KPMG. KPMG will also take over existing Grant Thornton LLP projects at select Fortune 500 companies.

“As the already strong demand for large scale transformation and restructuring assistance continues to grow, this acquisition helps us provide the functional breadth and depth needed by large organizations across several key industry sectors,” said Mark A. Goodburn, Vice Chairman and Head of Advisory, for KPMG LLP. “It’s also consistent with our continuing strategy to build superior large-scale transformation capabilities to serve the world’s top organizations.”

“Adding these tactical, operational restructuring and supply chain skills to KPMG’s strategic market position is a great fit, at the right time,” added Drew Koecher, partner and head of restructuring for KPMG LLP. “With the addition of this group, we broaden and deepen our client base and add to our already extensive advisory capabilities to serve businesses as they transform their business models to be successful in this new economy.”

Attention KPMG Kampers – Phil Mickelson Needs Your Help!

We’re dispensing with QOTD today to bring you an opportunity of a lifetime. Phil’s cozy little love nest in Santa Fe, CA is up for grabs and we think it’s a grand idea for a few Klynveldians to pool their resources together to take it off his hands. It’s been on the market for two years so obviously T Fly isn’t up for it an the freshly minted honchos.

So we leave it up to you, men and women of KPMG. Get some friends together and make the man an offer. It’s currently listed at just a shade under $9 mil so it’s completely unreasonable. What you do to celebrate your new home after the close is up to you. If you’ve got suggestions for theme parties, technical accounting trainings or simply a shrine to man himself, give your best shot in the comments. But of course take a gander first….


[caption id="attachment_14359" align="aligncenter" width="560" caption="Helicopter not included"][/caption]

[caption id="attachment_14362" align="aligncenter" width="560" caption="Come on in!"][/caption]

[caption id="attachment_14363" align="aligncenter" width="560" caption="When he gets sick of Five Guys (rare occurrence)"][/caption]

[caption id="attachment_14364" align="aligncenter" width="560" caption="The Phil is great room"][/caption]

[caption id="attachment_14370" align="aligncenter" width="560" caption="Where the magic happens"][/caption]

[caption id="attachment_14371" align="aligncenter" width="560" caption="Plenty of room for Tiger\'s friends"][/caption]

All photos: Redfin

KPMG’s Risk Management Ad Jumps, Climbs and Flies but Misses the Point

Just as Washington is finally passing a bill that will reduce unnecessary risk-taking by financial institutions, here comes this commercial from KPMG in the UK doing the opposite. KPMG parties like it was 2005 and sub-prime was a bad cut of steaks. The commercial celebrates risk-taking in a manner that only a BP executive could rationalize deepwater offshore drilling.

Almost everything is wrong with this commercial:


Its heroes, a man and a woman, presumably KPMG employees, are living in a risky world. Risk is all around them, from the moment they get up. But don’t worry. These two nitwits know how to engage in risk management. Mostly in jingle and parkour, in fact.

Wikipedia tells us that Parkour “is where participants jump, vault, and climb over obstacles in a fluid manner. Skills such as jumping and climbing, or the more specific parkour moves are employed. The object of parkour is to get from one place to another using only the human body and the objects in the environment. The obstacles can be anything in one’s environment but parkour is often seen practiced in urban areas because of the many suitable public structures available such as buildings and rails.”

The two heroes run, jump, flip over and take maniacal risks along the way to the office. Along the way the tag line, “Turn Risk Into Advantage”, is reinforced by embedded messages, in case we did not get the main theme”: “Know Risk, Know Reward”, “Do You Have The Risk Appetite For Success?” “Always Be Ready For The Unexpected.”

I actually like the “Turn Risk Into Advantage.” It is clever, memorable, and summarizes nicely what corporations are seeking in risk management advice. Yet it is completely overshadowed by the flip execution and the manner that suggests that KPMG employees, and by extension KPMG, take risks haphazardly.

Besides being out of context and lacking a narrative, the commercial ends on a cheesy note: upon arriving into the KPMG office and performing obligatory back flips, the couple race up the stairs, looks over the rail, look at each other, smile, and decide not to jump and take the elevator instead. This is a sensible move, perhaps the first one in this commercial.

Risk management is an essential practice, and perhaps as this advertising suggests, more in need than ever. Yet, it is not clear to me why the issue cannot be addressed heads on and intelligently. The irrelevant “packaging” simply detracts from the appeal of the practice.

Avi Dan is President & CEO of Avidan Strategies, a New York based consultancy specialized in advising professional service companies on marketing and business development. Mr. Dan was previously a board member with two leading advertising agencies and managed another.

Lots of Appointing Going on at KPMG Today

Namely Jim Liddy the new Vice Chair – Audit; Tom Duffy – National Managing Partner – Audit; Scott Ozanus Vice Chair – Tax; and Jeff LeSage National Managing Partner – Tax.


And on such a grand occasion, John Veihmeyer gets to say lots of nice things about all these guys even though at least one of these guys is probably gunning for his position.

Jimbo: “Jim Liddy has a remarkable record of providing deep insights to financial service clients and companies in other sectors about their businesses and growth strategies, and is a proven leader. I’m confident that with his intense focus on audit quality, Jim will build on the strong audit practice that Henry Keizer created over the past five years to help ensure KPMG’s continued success.”

Tom: “As the newly named national managing partner – audit, Tom Duffy will team with Jim Liddy to lead our audit practice. Tom has considerable industry experience and a proven track record of delivering audit quality and exceptional service to our clients.”

Scottie: “We’re looking forward to Scott’s leadership during this important period for our tax practice and KPMG’s clients – as companies cope with legislative and regulatory changes, and seek clarity in complex challenges related to transfer pricing, restructuring, renewable energy and a variety of other areas.”

Jeff: “As the new national managing partner – tax, Jeff LeSage will team with Scott Ozanus to lead tax, bringing global tax experience, industry insight and outstanding client service skills to this important role.”

Congrats gentlemen. Not sure if these particular positions get you 18 with Phil or not but we’re sure they are sweet gigs all the same.

KPMG Appoints Jim Liddy Vice Chair – Audit [PR Newswire]
KPMG LLP Appoints Scott Ozanus Vice Chair – Tax [PR Newswire]

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

From the mailbag:

I heard some scoop and wanted to share with my fellow indentured servants in the big 4 field. Word on the street is that P-dubs gave 10% raises to staff 2s becoming senior 1s (early promote) and 16% raises to staff 3s becoming senior 1s.

However, P-dubs doesn’t hand out the 5k bonus that Uncle Ernies offers to its staff 2s becoming senior 1s. I’d like to see how EY will top this, per an earlier promise from a partner that EY raises will be higher than P-dubs (maybe can some low performing partners?). In addition, the variance between average performers and high performers at P-dubs is only .6% (not significant at all).


If you forgot what this is referring to, back in April we reported a tip out of the Ernstiverse that a partner had claimed that the raises at E&Y would beat PwC’s. The reports out of PwC have been better than expected, although not for everyone.

So if this partner’s prognostication holds up, how will they pull it off down the stretch? Seems like a good question. Conversations are going on right now and the official news will reportedly be out in a couple weeks.

Since we’ve got half of the Big 4 involved here we’ll just mention that the belly aching at KPMG is in full force on the bonus front but maybe there’s hope for a strong move down the stretch?

As for Deloitte, apparently communication has occurred for promotions but it sounds like word on comp could be more than a month out. If you’ve got the scoop get in touch with the details and discuss this four horse race but as it stands right now, it looks as if PwC has E&Y by a nose.

KPMG Partner Thinks It’s Really Unfair That Audit Firms Keep Getting Sued

You know what sucks? Getting sued. Ask Bill Michael, KPMG’s UK head of FS. He’s pretty sick and tired of all the sue-happiness going on in the world today. Sure, the financial crisis nearly destroyed the world as we know it but dammit, blaming auditors is downright ludicrous. Why? Because it’s unfair.

Bill Michael, UK head of financial services at KPMG, attacked what he described as “unfair”, “deep pocket” lawsuits which pay “little or no attention to the balance of responsibility between auditor and management”.

“We operate in a highly litigious environment where the balance of risk and reward has driven us to a world of caveats,” said Mr Michael. “Any corporate failure or financial loss invariably carries with it the risk of suing the auditor.”

Right. Because in law school they teach future litigators to “pay attention to the balance of responsibility between auditor and management.” Supposedly Bill Mike would like everyone to start respecting the Big 4 business model and leave them alone to do their work. Because in case you hadn’t heard, this is a life and death matter for accounting firms, you know:

“I can tell you, we are acutely aware of risk management and its consequences from both an individual and a firm perspective.

“You only have to look at what happened to a great firm like Arthur Anderson after its audit of Enron,” said Mr Michael. Arthur Anderson was eventually cleared after its audit of the collapsed energy trader, but the accountancy has already folded as a result.

He also criticised the “enormous rewards for failure” in the banking industry, drawing attention to the way some of those responsible for the collapse of major firms were able to move to other banks or hedge funds.

“The risk-reward relationship is not only lop-sided; it impairs our ability to provide broader observations,” said Mr Michael.

Describing the sometimes tense relationship between accountants and the firms they are auditing, he said that each review often started with the premise of “we don’t trust you”.

So in other words, get your witch hunt on with the banks and hedgies but leave us the hell alone. Nobody likes us the way it is.

Litigation culture is ‘unfair’ warns KPMG accounting head [Telegraph]

(UPDATE) PwC Houston Happy Hours Still May Not Be Safe

It’s been a couple of weeks since we reported on the alleged incident at a PwC happy hour that involved a drunk (or roofied, depending on who you ask) partner who made his fondness for an associate known only to follow it up with a knuckle sandwich (we’re picturing a right cross).

Well, we decided to check in with a source down in H-town to see if there was any blowback from this whole situation.

I heard that PwC wasn’t going to do anything because of his client relationship and only offered the guy the chance to get off the job.

Well! Not exactly what we expected hear and we decided to check things out. Through a friend of capable means, we were able to verify the partner’s employment with the firm.

So then we emailed PwC spokesman Jon Stoner again about the incident but we have yet to hear back. Then we called the partner-in-question and left him a voicemail, asking very nicely to call us back. So far, he hasn’t returned our call but there isn’t any evidence by his greeting that he has left the firm.

So…you can see the conundrum here. What are Houston assurance associates going to do if they can’t drink beer on company dime without fearing a punch in the mouth (and possible getting an unwanted tongue down their throat)? Spend their own money? God forbid. If you know more about this, get in touch.

UDPATE: Just a few more details to share with you – we’ve heard from multiple sources that there were multiple kissing incidents at the happy hour. So while it sounds like more love (albeit unwelcome) was being spread than violence, that doesn’t mean you should be risking the invasion of your personal space for a few cocktails.

For Starters, PwC Pays Their Attorneys a Lot of Money

“How can any self-respecting attorney still argue – and any lucid judge still believe – that PwC’s global firm is not just a sham legal construct, an artificial vehicle for the strongest member firms to control and potentially exploit their weaker ones, all under the guise of ‘improving quality and seamless delivery to multinational clients…’ ?”

~ Francine McKenna still isn’t buying it.

Forced Rankings Appear to Be in Full Effect at Ernst & Young

Confirming some discussion in the comments from last Friday’s Ernst & Young compensation post, a source got in touch with us with more details on some rankings getting chopped:

I’ll confirm what your sources are saying about reviews being available in fso. Not only that, but forced rankings are in full effect. While [there] was less pushback during roundtables earlier (which was accurrate at the time), the ratings for at least 5 people were lowered by a notch from what was agreed to by the full committee at the end of may. (5 to 4, 4 to 3) While they do say after all people are discussed they’ll assess the levels to ensure the same criteria is being used, I firmly belive its being used as a way to lower ratings (and raises). Why have the formal review committees (roundtables) if the partners are going to have the ability to act unilateraly to ‘right size’ the ratings?

We’ll still have to wait a couple more weeks before we find out if the forced rankings actually translate into disappointing raises, as the official communication won’t come until August but this news surely doesn’t bode well. If you got knocked down a peg, discuss below and as always, keep us updated.