Category: Big 4

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

Lowering the Bar – How the Big 4 Can Raise Morale by Reducing Starting Salaries

Last Friday’s post by Caleb surrounding the Bonus Watch at Deloitte sparked a handful of intuitive comments from GC readers.

In case you didn’t read the post and subsequent commentary, Commenter Anon51 responded to the question “what do readers suggest firms do to retain practitioners” with the following:

1. treat every team member with respect

2. you can’t just force your team to work harder year after year with fewer people and a smaller budget

3. pay 4-7 year people more, pay new hires less, so it seems there is an incentive to working harder

4. reward your people with an extra day off without having to utilize vacation time, especially after a really busy month/audit

Point 3 is bolded because it resulted in the following comment from Guest:

“That’s a really good idea, and I’m not being sarcastic. There is no reason why new hires fresh out of college need to make $59k ($55k + $4k sign-on bonus), when they would happily work for $50k. Then, a $5k bump every year would be a reward, with maybe a higher bump during promotion years…Pay disparity is a bigger issue than actual pay.”

Well said, Guest and Anon51.

I’ve said it before and I’ll say it again – the Big 4 are constantly in cahoots with one another with regards to hiring benchmarks. So I propose that TBig4PTB get together and reassess their starting salaries. Behold, a template for all Big Wigs to follow:

1. Decrease starting total packages (salary + sign on) by seven percent. Lower the bar from the get-go.

2. Now is the time – blame the decrease on “a firm wide strategic response to the economic risks of being a major player in the professional services industry. Unofficial response – did you see the DOW sink like the Titanic the other day?!”

3. Spread gap created by initial decrease in salary over the next two years. This will create an artificial sense of accomplishment and praise.

4. Send internal emails stressing the “increase in raises for well deserving employees.” Everyone cheers.

5. In three years college graduates will not know the difference; this “decrease” becomes a non-issue.

Guest’s comment that “pay disparity is a bigger issue than actual pay” can become a non-issue with very little effort. Is this fair or ethical? Mehhhhh. I personally think it would be a slap in the face to those of you who have busted your humps and sacrificed career and personal opportunities all in the name of KPDeloitterhouseErnstMG. But it certainly wouldn’t be the most desperate attempt made by one of the firms in recent memory.

Raising morale – hardly. What are your thoughts?

KPMG Is Getting Hot Over Some of Your Comments on Summer Blast

We don’t need to remind you that there is a long weekend coming up. In fact, some of you may be bolting later today so you could get a jump on a weekend full of bad decisions.

Sensing your anxiety, KPMG wanted to let you know, that contrary to what some people are saying, there are plenty of Klynveldians who are pleased – nay – ecstatic about the KPMG’s Summer Blast.

It’s been suggested to us that “[The] Radio Station engages in masturbation over Summer Blast” which seems about right. The only other thought we had was of John Veihmeyer printing out the most glowing comments and writhing around in them on a conference table (with the Notre Dame fight song playing in the background).


We received the communiqué and have included some of the comments for your own pleasuring purposes:

“I am a long-time employee of KPMG, over 23 years, and have seen a lot of changes occur over that time. I most appreciate the Employer of Choice initiatives that have transformed this firm and made it truly a great place to work. I think it’s the best campaign ever devised by the firm.”

“I’m so happy to see some of what makes KPMG a great place to work is back! It really made my week – made me feel more confident about the future, made me feel like all the hours and hard work are appreciated, and made me even prouder to say that I work for KPMG.”

“Great news to receive on a Monday morning! Thanks so much for the Summer Blast email; I must admit that it has been quite the buzz since the first teaser email was sent. Good to see colleagues hypothesizing about what it could be. Thanks again for the benefits provided through Summer Blast!”

“KPMG ROCKS!!” [Submitted by Tim Flynn]

“I think this is AWESOME that KPMG cares this much about their employees. While other companies are more into ‘what is best for the company,’ OUR firm is saying ‘what is best for our people.’ That goes a long way with me!” [Easy on the caps, Kanye]

“This is such great news! There has been lots of speculation of what Summer Blast would be. The entire package has exceeded our expectations! What an awesome way to start the summer! The staff really appreciate the acknowledgment of our hard work these past few years! Thank you!” [Speaking on behalf of the staff seems presumptuous]

If you don’t see your thoughts here but would like share, fire away.

PwC, Ernst & Young Building Defenses Against Each Other’s Spies, Peeping Toms

Ernst & Young had a nice little buffer zone from the other Big 4 in their London office until PricewaterhouseCoopers decided they’d set up camp next door and now the two firms are strategerizing.

P. Dubs is finishing up the construction on their new digs and the Telegraph reports that “At their closest point the two offices are roughly 10 [meters] apart.” This proximity (not to mention the obnoxious tendency of Big 4 types to be competitive just for the sake of being competitive) has apparently led to rampant paranoia at the two firms about spying.


Getting up in E&Y’s shit seems to be bean counting as usual at PwC, as this latest move more or less correlates with the alleged poaching of 20 E&Y partners in the Middle East.

The Telegraph is insinuating hilarious war-esque undertones, saying, “First blood in the battle has gone to PwC with the installation of blinds that close automatically whenever audio-visual presentation equipment is switched on and an office layout that ensures no computer screens face windows.” The obvious concern being that PwC’s secret “we provide the absolute best client service” plan would be imitated by E&Y, which would mean an all-out war.

However, the real concern should be voyeurs scoping out the office sexcapades. As we’ve mused in the past, the odds of fornication for accountants are slim as it is and work relationships are a convenient option. With this development, some E&Y and PwC minions will be denied the opportunity for office sex. This is not as much of a problem for the exhibitionists at the firm, however, that cross section is likely small.

E&Y is reportedly “evaluating a number of options,” to combat P. Dubs’ tactics, which may or may not include the following:

A) A group mooning that will involve the most portly E&Y employees.

B) Placing inflatable bozos in the windows.

C) Draping the entire building with a photo of Susan Boyle in Beckham’s PwC undies.

D) Your idea.

Blackout curtains beckon as accountancy rivals find themselves too close for comfort [Telegraph]

John Veihmeyer Wins One for the Gipper

[caption id="attachment_10529" align="alignright" width="150" caption="But how does he feel about Charlie Weis getting fired?"][/caption]

A few weeks back we presented the BusinessWeek ranking of accounting programs that found Notre Dame at the top. At first we just figured Touchdown Jesus had something to do with it but now we have reason to speculate that a divine carpenter had nothing to do with it.

Since KPMG Chairman-elect John Veihmeyer was recently named alumnus of the year by Notre Dame’s accounting department, some people might assume that JVeih did a little lobbying of the BusinessWeek folks in order to earn the top spot and perhaps this is South Bend’s thank you for the kind words.


Whether this back-scratching theory has any weight to it is up for a debate but what we know for sure is that some lucky Irish students/future Klynveldians got to hear JV speak recently at Notre Dame Stadium and some inspiring words were shared:

During his remarks, Veihmeyer used his own educational roots and career experiences to remind students what a unique opportunity they have had at Notre Dame and how it will benefit them on the road ahead. His audience listened in rapt attention. While the average college student would have paid just to have dinner in Notre Dame Stadium, these students knew that getting career advice from the Alumnus of the Year and CEO and future Chairman of a Big Four Accounting Firm was priceless.

From the sounds of it, the speech was the KPMG equivalent of this:

Porn-Extortion Plot Didn’t Turn Out Too Well for Ex-Deloitte Partner

This story goes back before GC’s time so we’ll give you some background: Steven Klig was a hotshot tax partner at Deloitte until he was arrested for extorting an ex-lover back in January 2009.

Since most tax partners we know have to beat off the ladies with a stick in each hand, this seems unbelievable but apparently, Klig didn’t have the typical IRC wonky charm and was a little miffed that a lover wasn’t interested in him any more.


His frustration reached critical levels which resulted in emails to the lover, who he tracked down on the web and claimed that he had a DVD of them getting down. Lucky for us, the Post just so happened to get its hands on a copy of the email back in January ’09:

“Just to give you a head’s up. I’ve been doing a little editing on our video. Mostly some blurring of myself so that I won’t be recognized,” he wrote in one e-mail, according to the criminal complaint. You, on the other hand, can be seen very clearly having the time of your life being f—ed by me.”

Despite the good times, the woman went to the FBI after Klig emailed her husband trying to get a hold of her email address. An agent posing as the woman responded to Klig:

[A]sking what he wanted and pleading, “I want to keep my family out of this.”

He allegedly responded, “I don’t need money. What I really want is something new to look at.”

Klig then allegedly detailed his preferences for the “first installment” as: “(1) fully clothed; (2) without your shirt; (3) without your shirt and pants (in just a bra and panties); (4) without the bra and (5) fully nude.”

And the best part? He sent some of these emails while he was on vacation. At Disney World. With his wife and kids. Can’t you see it? You’re walking around Epcot, surrounded by shrieking children, grown adults dressed as princesses, talking animals, and overgrown dwarves; what a perfect opportunity to extort some porn out of an uncooperative ex-lover!

According to the Post, Klig pleaded guilty to lesser charge in order to avoid serious time although the judge indicated he could face up to a year in prison where he may or may not have the time of his life.

Tax lawyer pleads guilty in porno-extort scheme [NYP]

Does It Matter That Deloitte Left the Rest of the Big 4 in the Dust on CNN Money’s MBA List?

Can we have a show of hands who takes a list of employers published by Time Warner seriously? Fine. To hell with you; for this particular exercise we’ll assume that the list is 100% accurate.

Here’s the breakdown for the Big 4 on the CNNMoney’s 100 Top MBA Employers, Where MBA students say they’d most like to work:

#12 – Deloitte
#44 – PricewaterhouseCoopers
#45 – Ernst & Young
#75 – KPMG


So Deloitte dominates when you look at the Big 4’s performance. To put it in a little bit of perspective, Deloitte ranks ahead of The Blackstone Group and Morgan Stanley while the rest of the Big 4 rank behind the State Department.

Is this possibly due to the fact that they are the only firm to keep their consulting (not Advisory) practice in-house? Do they simply do a better job of selling their firm? Or is it possibly because male-patterned baldness is not discriminated against in leadership positions?

Or maybe we’re making too much of this. All the firms have a spot on the list and Google beats everybody’s ass with extreme prejudice, so is this one of those “it’s just a thrill to be on the list” moments, which results in the fliers all over your office and in the halls of Career Services at B-schools?

But forget all that for a minute. What’s really surprising (or perhaps not) is that the expectation of MBA graduates whose preferred field is public accounting are expecting an average salary of $59,176 for their first job after graduation. That amount is less than those for academic research ($79,590), education/teaching ($76,138), government/public service ($77,943) and “Other” ($92,110). Oh, and it’s behind “Auditing/accounting/taxation (corporate)” at $64,841. The average salary for preferred fields is $90,990.

Five years after graduation, those same graduates expect to make $92,075. Again, dead last. The average salary being $157,324.

Whether this says more about the state of the accounting profession or the firms that court those seeking accounting focused MBAs, we’re not really sure.

But in the grand scheme of things, it might just say that Deloitte’s position on the list may be – gasp – meaningless.

100 Top MBA Employers [CNNMoney]

One Office Will Be Enjoying a Bonus Denim Day During KPMG’s Summer Blast

Last week we were notified that KPMG’s Summer Blast would soon be in full swing and that details would be forthcoming.

TPTB obviously sensed your anxiety about the details and we’re happy to report that we have the details via the Silicon Valley office. And KPMG SV seems pret-tay, pret-tay excited that two days out of your (presumably) five day week will be spent sporting only 50% of the biz casual uniform.

This Summer, Have a Blast on Us!

Our firm is slightly ahead of plan at this point in our fiscal year, and it’s due in large part to your hard work, teaming, and market development focus. Looking ahead, your continued commitment is critical as we push to meet our business objectives for the year.

In appreciation of your efforts, and to help you to recharge your batteries so we can meet the challenges ahead of us, we’re excited to announce KPMG’s Summer Blast!, a program of food, fun, and perks that lasts all summer long and features:

• A Summer BBQ gift that includes a selection of steaks, chicken breasts, sausage, burgers, and gourmet franks

• The return of Summer Weekend Jumpstart

• The introduction of firmwide Blue Jeans Fridays – Given our office already enjoys Blue Jeans Fridays, as part of Summer Blast, the Silicon Valley Office will also have Blue Jeans Mondays for the duration of Summer Blast!

• The return of the Vacation Photo Challenge

To redeem your BBQ gift and see what all the fun is about, visit our Summer Blast Web site. And keep checking out the site in the coming months to see what’s hot this summer.

We hope this Summer Blast! helps you to enjoy and recharge this summer, so we can all pull together as a team, do our best work, and finish 2010 even stronger than we started it.

Have a great summer! And thanks again for everything you do for the firm, no matter the season.

Typically there is some sort of acknowledgment of the vegetarian/kosher crowd but this particular message glaringly omits it. We’re sure there’s an alternative but in the event that you non-meat eaters are SOL, please inform.

Speaking of meat, some Klynveldians had made it known that they’d prefer to buy their own flesh for consumption by way of a bonus or something like that. If you’re staying with that narrative, kindly elaborate further.

(UPDATE): We’ve now learned that if you want vegetarian and/or kosher options, you’ll have to ring up Omaha Steaks yourself. You vegetarians can expect an uncooperative customer service rep subsequent to your, “I don’t eat meat,” revelation.

KPMG’s New Paperless Audit Is Going to Be the Best Thing Since Paper

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How about one more convo with the KPMG leadership this week? As one commenter mused earlier, the lack of past CEO spreadsheet-side chats were too few and far between so we figure we’re doing a you a favor by this passing ��������������������round, John Veihmeyer and Henry Keizer kick around lowballing fees, outsourcing and the firm’s new paperless audit technology:

Inquisitor 1: Can you talk a little bit more specifically about what we’re doing right now to compete with firms that are reducing their fees so drastically that you have to wonder how they are even covering costs?

Keizer: To me, the first and foremost guiding principle is – make sure you’re giving the most absolute best client service. I think to the extent that you do have great service, we’ve got to be able to have very transparent and open discussions with our clients as to what are our economics? Where are we? What is the competitive information? What is market pricing, as opposed to the offer that came in unsolicited? And find a way to meet the objectives of what we need, and what our client needs.

Maybe we will, in fact, have to drop a price in, let’s say, our audit offering. But then are able to say, but why can’t we maintain the same or higher KPMG spend? Let’s look at who’s doing your tax compliance work. Let’s look at who’s doing your SAS70? Those types of discussions do allow us to compete successfully without having a case where it’s just about price.

Not sure who transcribed this thing but it’ll work for a Friday. First off, Inquisitor numero uno is obviously under the impression that KPMG would never lowball its fees. Even though other people have suggested exactly that.

Keizer Soze then reminds his little friend that it’s really not about the money, it’s about providing the best client service imaginable (sacrificing life, limb and/or dignity) which will result in more work for the firm. It’s a self-perpetuating cycle, really.

Inquisitor 2: Is there more plans to outsource positions in the U.S. to India?

Veihmeyer: I think as you look across the entire scope of our activities, and I think the most important one is – how do we serve our global clients – making sure that we are competitive in the marketplace and can think about how we execute a lot of our engagements differently to be successful. I think we will continue to look for opportunities to source talent, source resources, source skills, anywhere in the world it makes sense. I don’t see it as exchanging a position here for something offshore.

I think we see this as a very key strategy to make sure we are as competitive as we can possibly be in the marketplace—which I think will have one primary impact to the U.S. firm and that is create more opportunities for our people here. And why is that the case? Because we will win more work, we will be competitive in situations that we otherwise wouldn’t be competitive in, if we didn’t have that capability. And that’s what creates opportunities for our people.

In a word: Yes. As for why – Dammit, we’re a $20 billion firm (but not really, we’re actually a network of independent firms operating under a global cooperative. Ask Tim Flynn; he’ll tell you) and our competitors play hard ball. We’ve got to create other jobs overseas to keep up with those guys. Will that affect you? No chance, Blanche! If it does, it just means your life will be infinitely better because KPMG has business it didn’t have before.

Inquisitor 3: eAudIT – how is it going? What challenges have we faced? And how are clients, employees, and recruits receiving the deployment?

Keizer: e-AudIT is on track for deployment. We released the software in April, the 2010 version. Training schedules will be rolling out over the next several months.

It is the tool that accomplishes three major things. One, it allows us to do things more efficiently. It moves us from a work paper format to a work flow.

And lastly, there’s always been a great appetite of our professionals, how do I tap into the knowledge that KPMG has? e-AudIT is the platform now, to actually make that knowledge available to our professionals.

I think e-AudIT puts us in front of our competitors in terms of a platform that’s truly the best that’s out there. I believe when we look back, it will be the single most important ingredient to us providing the type of service, meeting our regulatory and professional requirements, and having our people feel good at how we have enabled them to really be high performance professionals.

[Jesus, easy with the rapid fire, Inquisitor tres; Hank isn’t a speed listener]. Paperless auditing has moved into KPMG lock, stock and barrel. We’re only 10 years into the 21st Century and we’re ready to start fixing bugs in this thing for the next ten years.

It’s far superior to anything the other firms have because you’ve been training on it over in Monty and we haven’t heard a single complaint. Someday you’ll be able to tell your grandstaff that this was the absolutely most exciting time to be at KPMG because that was when things got serious.

Bonus Watch ’10: “Performers” Getting More Love at Deloitte

Last month we told you about some Deloitte partners in the Northeast that were dropping some “Applause Awards” on “strong performers,” possibly to help calm some nerves.

At that time, our sources indicated that “partners have also hinted at more money coming their way.” It now sounds like those hints are resulting in some greased palms:

[S]ome $1,000 [Outstanding Performance Awards] have been circulating in NE AERS for “performers”. Similar to the $100 applause awards for the larger segment of consultants, I think partners are trying to head off a mass exodus; not sure if the 1k will make a difference; but it does seem to be keeping people from quitting prior to hearing about their year-end comp adjustments

So regardless of what some Deloitte HR types might think, there are partners out there that are worried about people leaving and they seem to understand that throwing a little cash around does wonders for cooling some anxious heads.

Follow Up on KPMG Compensation and Promotion News

It’s been, in the words of one source, “a hell of a week” at KPMG. John Veihmeyer & Co. have been on a whirlwind communications tour, people up for promotion are getting the good/bad news and the whole summer blast thing has people soiling themselves with excitement.

Since they’ve been on such a tear, we’ll update you with a little more news out of the House of Klynveld, returning to promotion and compensation news.


First the bad news – we’ve learned from multiple sources that newly promoted SAs in the audit practice won’t be getting much of a merit increase for their new positions. The news is that the new promotees will receive an early 1.25% increase later this summer that will be followed up by another increase, although those raises will be subject to the firm’s performance in the last part of the fiscal year.

Now the good news – After hearing from a couple offices in the west, most of the SA3s that are up for the promotion to manager seem to be getting the bump. From one office in the northwest:

Despite rampant speculation about widespread non-promotion of seniors to manager, only 3 (of around 15) 3rd year seniors didn’t get the bump. One CPA licence issue, and two performance issues. Nothing out of the ordinary even in a regular year, let alone in one where the holdbacks are supposed to be so numerous that they are creating a new 4th year senior training.

The percentage of SA3s in a Rocky Mountain office that are getting promoted is a little lower with approximately two-thirds of the class getting the bump. So far, only the (un)lucky (i.e. non-promotees) ones have received the news while the new managers continue to sweat it out. For this particular office, the decision to promote/not promote was a little more confusing that its counterpart in the northwest.

Based on the information we’ve gathered, each office is essentially given a number of promotees by the boys at 345 Park and the local office leadership is tasked with figuring it out from there. Criteria for promotion to manager (as we understand it) is that 1) the eligible SA needs to be “ready to be a manager” and 2) they need a business case (i.e. have clients to serve).

In the case of this office, it sounds like this was scrapped. Rather, it was decided that historical rating was the determining factor and not the criteria we outlined above. In other words, if you received high ratings (“EP” at KPMG) as an SA1 and SA2, that was more important than whether you actually have clients to work on as a manager. If you were in the meaty part of the curve (“SP” at KPMG), despite your strong “business case” you are SOL. Our source told us that, in the past, they were always told that “my historical rating would not be a determining factor when it came to promotions.”

So basically it boils down to how your particular office is doing. If you’ve got a strong market with plenty of clients, things should go fairly smooth (with a few exceptions). If you’ve got a competitive or shrinking market, your odds of getting the bump go down, in some cases, way down.

As always, keep us updated with your office’s developments, and congratulations and good luck to the new SAs and Managers!

PricewaterhouseCoopers Suggests You Put Your Money on Brazil to Win the World Cup

Leave it to an accounting firm to make a conservative pick on the biggest sporting event in the world. The firm tries to make the point that wealthy countries do not outperform poorer ones in the football tournament. The most poignant (and blatantly obvious) example being that the United States sucks and Brazil is a heavyweight:

“The US football team performs well below expectations based on the size of its economy or population relative, for example, to Brazil. This reflects the ascendency of football in Brazil as contrasted to the greater popularity of sports such as American football and baseball in the US.”


However, P. Dubs manages to give England a fighting chance, “England seems a reasonable bet to reach the quarter finals based on its current FIFA world ranking and past World Cup performance, but it will do well to get beyond that point – which it has never done before when playing outside Europe.” That’s especially shocking since the firm has a vested interest in at least one English lad.

But as we mentioned at the outset, P. Dubs suggests the safe money is on Brazil, “Brazil remains the favourite to lift the World Cup this summer as the number one ranked footballing nation and the only country that has won the tournament outside its home region.” If you want some sweet action, take the home team.

Power v passion: Wealth comes second to location and tradition when projecting World Cup winners [PwC]