Category: Big 4

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

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.

Bonus Watch ’10: There are Some Unhappy KPMG Kampers in California

At least it was a short week!

Looks like promotion bonuses are available to view under Self Service Connection for those who got promoted. 2nd year promote to senior (high SP rated) in specialty advisory (N. California) = 1.25% or $700 in my case. What a fucking joke…working for 2 years and I’ve been making progressively less and less money every year when you factor in a signing bonus in 2008 and a CPA bonus in 2009.

Keep in mind that the promotion bonuses are only for the “stub period” of July-September until the full year bonus/raise come into effect. I’ve also been told by numerous people not to extrapolate the stub period amount to a full year amount. Good thing they said that cause if 5% is my full year raise after 2 years of nothing, I’m out of here before you can spell GAAP.

Five Major Differences Between Small Accounting Firms and the Big 4

Ed. note: The following was submitted by a reader of Going Concern who wished to remain nameless.

As a casual fan of Going Concern, and a senior auditor of a small to mid size local firm, I feel the site is quite comical and a vast insight into the world of “bigger and better” feelings. I read the site for humor, comparison, and overall knowledge on the country’s accounting bureaucracy. I would like to dive into some of the obvious�������������������� the big boys and us local mid-market droids.

Busy season – For most, January 5th is the start date and lets up by April 1st. Busy season is usually the hours of eight-thirty to seven-thirty. The midnight coffee runs are infrequent and somewhat discouraged. (That might be just our firm, so if yours is different, chime in). Busy season does not end with a celebration, spot bonus, or dinner; we get an e-mail saying thank you for making us (the Partners) rich.


The Rank and File – The caliber of employees is different. We get a few people that could of have gone Big 4 but primarily our employees are the ones who worked through college, made mostly B’s drizzled with some C’s, or they went to Big 4 and then realized it wasn’t a good fit. A fair amount of the staff obtain the CPA license but hardly ever do they walk in with it. With that, some might think the staff is seen as not equivalent. I differ from that viewpoint. This leads me to the next difference.

Responsibilites – The degree of responsibility of a Big 4 staff auditor and a mid-size staff auditor are drastically different. It appears the people we hire from the Big 4 know a specific section of the audit to a tee but when it comes to another section they are a lost puppy. For example, the small time auditor has to draft the engagement, complete ninety five percent of the fieldwork and finish with all the management representation letters, disclosure checklist, etc. It’s a complete engagement overview, not just the cash section. This might be because of the size of the engagements but regardless, when it comes to closing the deal, the small time auditor seems to perform like Jeter in October. You might argue this is because our niche is smaller but on the SEC engagements we tackle, the same criteria takes effect. Staff do the work, manager reviews, and partner signs. No middle ground to speak of.

Money – I constantly look at GC to see what the salaries in the rest of the country appear to be and honestly, we don’t come close. It’s very much a disappointment. We probably all start off close to the same (50k plus or minus 5k), but in all actuality, the bigger accounting firms bump people up a lot faster than us local guys. Again, this might parallel to the caliber of employees we hire, or it might not. I tend to think we follow a very specific old fashion business model. We pay our staff just enough so they are complacent, and the partners bring the money home to afford the private schools, three plus luxury cars, the farms, and the multi million dollars home. If someone doesn’t want to put in the fifteen to twenty plus years it takes to get there, then tough, we will find someone else. The door is a constant revolving machine. No emotion goes into it what so ever.

Pick up a tax return! – The last item is the close ties between audit and tax. It is very common for someone in my shoes to finish all my audit responsibilities by mid-March, and then pick up the married couple with two kids tax return. It’s merely done for enjoyment and to help out the overall firm. This also helps with keeping on your toes when talking to clients about what your firm can offer. We get an incentive for bringing in clients and since our niches are smaller, it’s easier than bringing in a 100k plus job.

Bottom line is that it’s a different culture. I guess it’s always up to the staff if they like the eleven o’clock coffee run, sleep deprivation, 65k salary, or if they like the 58k salary, have a life, and come home at seven-thirty careers. It really just depends on the person. Some people strive either way but nothing should be taken away or discouraged because of the decision. I would just know what you’re getting into when you walk in the door. If you go to a smaller firm out of college, don’t expect the huge pay increases, or the spot bonuses, just expect to work and not get much for it.

Promotion and Compensation Watch: Ernst & Young Communication to Come Eventually, Someday

Straight out of the Bubba Gump Shrimp location up the street from 5 Times Square:

Ernst & Young, Financial Services Office, NY
Received communication that our annual ratings were finalized and discussions between counselors and counselees to occur by July 30. Promotions are still not final, but promotions and compensation will start to be communicated in August (to be effective October).


So t-minus three weeks (give or take a day here or there) until “you’re not going to be disappointed with raises” which apparently could mean that they will make PwC’s raises look like chump change (for auditors anyway).

BUT! In case you need a refresher on the numbers so far: 3-5% is what we last heard for those in the meaty part of the curve. No word on what top performers are getting but speculation is welcome. Keep us updated.

PwC Would Appreciate It if the FASB, IASB Would Cool Their Jets on the Accounting Standards

Christ, guys! PricewaterhouseCoopers thinks it’s nice that you’re trying to turn the entire accounting world upside down since you decided the BSDs at the G-20 were serious about this June 2011 deadline.

But then you admitted that it can’t be done and it turns out they (or the SEC) don’t give a rat’s ass. For some reason, you’re still committed to getting the job done by the end of 2011 and PwC would like you take it easy.


For starters, everyone knows that the world is ending in 2012, so this is really a futile exercise. Secondly, you’re really not being rational about the whole thing. Your gusto is admirable but you’re looking like the kid that reminds the teacher to assign homework. KNOCK IT OFF:

PricewaterhouseCoopers Calls for Slowing Down Pace of Accounting Standard Setting

NEW YORK, July 8 /PRNewswire/ — PricewaterhouseCoopers, responding to the Financial Accounting Standards Board’s (FASB) and the International Accounting Standards Board’s (IASB) ambitious agenda to complete about a dozen new accounting standards (about half of which are major projects) by the end of 2011, said the current timeline is not sufficient to produce standards that meet the boards’ high thresholds for quality.

Mike Gallagher, PwC’s U.S. National Office Leader, said, “it is of utmost importance that adequate time be given to complete an effective, thorough analysis of the accounting, business and operational impacts of the proposals.” Gallagher added, “given the boards’ missions of issuing high quality standards, we believe the proposed timeline will need to be further extended to allow for appropriate due process.”

In a Point of View article released today, PwC said it fully supports an aggressive timeline and the goal of attaining a single set of high quality global standards. Yet, the firm also expressed significant concern that the current pace of standard setting does not provide enough time for companies to fully analyze the proposals and respond comprehensively. In the article, the firm’s leadership called upon standard setters to “reevaluate the current timeline and set more reasonable expectations.”

Explaining the firm’s concern about the ambitious timelines, Gallagher pointed out that “even the largest of companies won’t have the resource bandwidth to properly evaluate and respond to so many complex standards in such a limited period of time.”

The projects underway by the FASB and IASB to improve both U.S. generally accepted accounting principles and international financial reporting standards are part of a wider goal to converge U.S. and international standards in key areas.