Category: Big 4

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

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]

Exodus Watch ’10: KPMG New York

From somewhere deep inside 345 Park Ave:

“Damage control beginning – 3 managers and 3 SAs out.”


It’s our understanding that this is the audit side of the house in financial services. No indication at this point whether it’s promotion de-nied related or if it’s has something to do with the unconfirmed compensation rumors we’re hearing.

If you’ve got details on comp, promotions, or lack thereof, email us with the details.

Allegedly, a Few Ernst & Young Partners Just So Happened to Join PwC

Never having the pleasure of attending a partner-only soiree, we don’t have much knowledge about the haps at these events but we do imagine catering slightly better than what you would find at an in-house training but served by oompa loompas. And an open bar, natch.

Likewise, we’ve never heard about Big 4 partner mixers where, for example, an PwC partner might chat up a E&Y partner talking IFRS, where they fall on the staff’s hottie list and “oh by the way, waddaya say you join our firm?” To save face, we imagine said E&Yer responding with a “No, I will not make out with you” retort followed by open-faced slaps and ripped Jos. A. Bank until the beefy security pulled the two apart (at which point the P. Dubs partner gives his target the “call me” sign).


We bring all this up because the Times Online reports that there has been a fair amount of defection from Ernst & Young to PricewaterhouseCoopers in the Middle East (no sissies allowed). PwC’s Middle East practice was purchased by the UK firm last year and now the Times reports that 20 E&Y partners have been poached by P. Dubs:

According to people familiar with the situation, the defections — amounting to almost a fifth of Ernst & Young’s partners in the Middle East — were in several locations across the region. Most were from Ernst & Young’s consulting business, The moves began last summer but were kept secret because of a settlement between the two firms. PwC agreed that it would not approach any more Ernst & Young staff in return for Ernst & Young agreeing not to take legal action to block the departures.

Neither firm would comment for the Times article except to boast about their numbers in the region, “PwC confirmed that it had recruited 25 new partners and 400 staff in its Middle East offices in the past 12 months,” and “A spokesman for Ernst & Young said that it remained ‘easily the largest’ of the Big Four in the Middle East,” so both firms’ communication departments seem to be operating as normal.

Whether such (alleged) deliberate defections have happened in the States, we don’t know but we hear it is quite the spectacle (marched out by the OMP the second the news got dropped) when one partner notifies his/her intent to leave for a competitor, so all out war could reasonably be expected.

PwC raids rival before Middle East step [Times Online]

KPMG’s Leadership Is Not Determined By Rock-Paper-Scissors

KPMG Leadership has been on a communication rampage this month, answering questions from inquiring Klynveldians about the firm’s performance and compensation.

This time around, thd by COO Henry Keizer) discuss their roles in the firm and the election process because, presumably, it might make for a good ice breaker at your upcoming Memorial Day BBQ.

Inquisitor 1: Congratulations on your new roles – Chairman and Deputy Chairman. What can you tell us about the process that you go through in having that occur? And what’s the differentiation between your two roles?

Flynn: The board has a responsibility to have a succession planning process in place to elect the Chairman and Deputy Chairman. That is then put to an up or down vote of the partners for ratification. Chairman and Deputy Chairman are – today – a five-year term jointly and then a three-year second term, should they so choose. The board elects them to a second term.

John and I were elected in June of 2005, for a five-year term. I was elected as Global Chairman on October 1, 2007. I came to the conclusion through the fall that I really couldn’t do both roles full time.

In recognizing that in a complex, changing world today, we really need a full-time U.S. Chairman and Deputy Chairman to take care of what has to get done here in the world that we’re in—and as well, we’ll talk more about it, but we have to evolve the global firm, a $20 billion organization – shouldn’t there be a full-time executive team that wakes up every day on how to carry out the responsibilities of a $20 billion organization?

Veihmeyer: In terms of specific responsibilities – as Chairman, I’m the CEO. Henry chairs the Management Committee and a lot of what we talked about in terms of executing effectively and making sure that we are – from an operational standpoint – a very high-performance organization, Henry will lead through his role as Chief Operating Officer.

In other words – the process at KPMG isn’t exactly the electoral college. It’s basically a fight until the (near) death and the winner gets the thumbs up/thumbs down, Gladiator style, from the Board. Then they shake hands, slap each other on the ass, etc. and get back to work.

For this past cycle it does sound like T Fly was a little burned out from the globe trotting and keeping the peace Stateside so it was natural for JVeih to step up to the big chair for the U.S. after the terms expired. A $20 billion company is nothing to sneeze at so we thought that maybe we should start taking this “global firm” thing seriously (even though we’re all independent of each other and are legally not one firm) and let somebody tackle it full time.

Inquisitor 2: How will the succession process work within the next three months?

Veihmeyer: In terms of the specific things that have to take place, obviously we have some things around the leadership team that we have to get in place. Henry comes out of his role leading our Audit practice. So we will get all that in place as we lead up to early June, what team will be in place as we go forward post-June 10th, leading the firm. Henry…

Keizer: The transition that Tim and John described sets us up in a very good position to make sure as we move through fiscal 2010, we won’t be focused internally. It will allow us not only to continue to build on the foundation that we’ve built over the past several years, but more importantly, to really stay focused on making sure when we look back on 2010, it will be a year where everyone could say we’re on our way to recovery. The things that we all want, in terms of a more vibrant business, more rewards for our people, are all beginning to come back into the picture, and that that’s what we’re all committed to, I’m sure.

We’re taking applications for Hank’s position. You have to be able to stick to talking points, send out a mass amount of emails (via admin assistant natch) and smile a lot. Oh, and you can’t gush when Phil shows up for photo ops; you’ve got to keep it cool.

Deloitte’s Walt Disney World Dream Ends: Firm Going “Virtual” in Orlando

Deloitte Disney World joins PwC’s tax practice which took the dirt nap effective May 3rd. The Orlando Business Journal reports that the office will become “virtual,” a term that still has not been defined to our satisfaction.


We called Deloitte Orlando for more information but the employee we spoke to “was not authorized to comment.” We were forwarded to a voicemail box of someone else and we haven’t heard back. According to the report in the OBJ, Deloitte is the third largest firm in the area; according to Deloitte’s website the location has 60 employees.

One source familiar with Deloitte told us that this could possibly be a move by D (and possibly other firms) to “centralize their operations in an effort to cuts costs,” while still maintaing a minimum “physical presence” in a city. Whatever the reasoning the most likely scenario is that no one wants to be within a stone’s throw of a certain resident.

Accounting firms rumored to be paring down area operations [Orlando Business Journal (subscription)]

PwC Chimes in on How Companies Can Retain Top Talent

It was only a few weeks ago when Deloitte threw their two Lincolns into the mix; now it’s PricewaterhouseCoopers offering advice on how to retain workers during this economic recovery. So, in an effort to not play favorites:

1. The financial crisis and ensuing recession have quickened the pace of structural changes already underway in many industries. As companies rethink the way they operate, they should assess the talent pool and look for opportunities to add new skills while keeping their existing employees motivated and engaged.

DWB: Because nothing says your job is safe with us like hiring new workers, right? The cojones on Dubs to lead off with this statement. Essentially Dubs is suggesting that companies poach talent from competitors; the exact action the article is intended to prevent.


2. With budgets expected to remain tight, it makes sense to focus on non-financial incentives such as training and mentoring programs, challenging assignments and other opportunities for growth and flexible work schedules.

DWB: Whoa, whoa, whoa. Did they really just lump (mandatory) trainings and (mandatory) mentoring programs together with “challenging assignments?” Does anyone else think that last one is code for “your staff has been cut in half due to layoffs and departures?” Umm…no…neither did I.

3. This may be obvious, but determine whether your top talent feels well compensated.

DWB: How much does PwC charge to perform that survey?!? It continues:

“By freezing pay across the board or cutting bonuses and benefits during the recession, you may have inadvertently given key employees a reason to leave.”

DWB: Dubs, are you looking in the mirror again? Shameful.

4. To figure out the right mix of incentives, executives need to first determine what motivates their top performers and other key employees.

DWB: Common sense. As an HR professional, statements like three and four really bother me. They only perpetuate the “HR fluff” stereotype that is associated with our field of work. (Some of you might say the same about my posts, so I should probably be careful where I tread.)

pwc_pointofview_keeping_talent

John Veihmeyer Doesn’t Mind Repeating Himself if It’s About Raises at KPMG

While some people are still sweating out to hear if they’re part of the new manager class, John Veihmeyer and Henry Keizer did more casual chatting with the troops and this time it was about everyone’s favorite topic to bitch about – compensation.

Specifically, somee asking about raises for FY ’10 and 401k match. Strange thing is, JV has already addressed the issue of KPMG raises in a previous communiqué by saying:

“[B]y year-end, we fully expect that the pickup in market and business conditions will drive compensation increases for the vast majority of our people. Also, assuming we meet our plan, as we are on track to do, our goal is to enhance our variable compensation pool from last year—meaning higher bonuses than last year for EP performers as well as bonuses for deserving SP performers.”


Good thing he doesn’t mind repeating himself:

Inquisitor #1: I was just wondering, if it’s likely that employees will get raises this year?

Veihmeyer: We are very optimistic at this point that that is exactly what’s going to happen. We all need to stay really engaged in what’s going on in the marketplace at this point to make sure that the second six months of our fiscal year also tracks the plan that we put in place. If we do that, we are very committed to sharing the rewards appropriately across KPMG.

As we assess the market right now – means that the vast majority of our people will be getting compensation increases this year. We are just as committed to increasing that variable compensation pool to the maximum extent we can reflective of how our results play out over the next six months.

Keizer: And in terms of variable compensation at the EP level that will translate into larger rewards and our deserving SP performers will also receive compensation rewards.

I am confident – based on what we see out in the marketplace, the foundation we have within the firm, the indicators of economic vibrance that are coming back – that we will be able to reward our people better and to be able to restore some of the things that we had to eliminate in a very measured and prudent way.

And John Veihmeyer was just wondering why you didn’t read his previous statement (or websites where it might appear) on the matter. Since V seems like a nice guy he managed to say what he said before only this time without saying “Yes” outright. Whether the absence of this explicit confirmation is a cause for concern can only be determined by you. Hank chimes in about the bonuses, presumably so he doesn’t feel awkward (at least that’s how we picture it).

So what about the 401k match? Is that returning to pre-financial apocalyptic levels?

Inquisitor #2: You mentioned earlier that we recently brought back the Standing Ovation award into the Encore program. Can we expect to see a change in our 401K match?

Veihmeyer: With an eye toward maximizing the immediate financial rewards to our people – to a level that we all can feel good about – we have some goals and objectives around base and variable compensation that in our view will take precedence over 401K as we reinstate and are able to shift those rewards. But it’s something that if the circumstances change and our ability to reinstate some of those things evolve, we will continue to look at it.

In a word – No. First things first you rubes – We’ve going to get every single Klynveldian feeling great about their immediate financial rewards. Until that is accomplished, your retirement will have to wait. The time frame of “we all feel good” was not given.

Is It Possible That KPMG Isn’t Phil Mickelson’s Favorite Sponsor?

[caption id="attachment_10491" align="alignright" width="260" caption="Is that Five Guys?"][/caption]

We realize that the above statement will likely result in an army of KPMG lawyers threatening this here site with libel and possibly putting every single person associated with GC in mortal danger but the question needed to be asked.

At the Players Championship, the freshly jacketed Phil said the following, “I grew up on In-N-Out. I thought that was the best burger until I had Five Guys. That is hands down the best burger I’ve ever had.”


At first this may seem like an over-eager chubby man enjoying a newfound joy in life. The guy is happily married, so he’s not going to make like Tiger and bang all the Laker Girls or anything. Anyhoo, it turns out that Phil failed to mention that he hearts Five Guys so much (apparently he went there SIX DAYS IN A ROW last week) that he dropped some coin into the franchise.

Fellow duffer Stewart Cink caught wind of Mick’s little endorsement of FG and took it upon himself to let the cat out of the bag:

We don’t watch a lot of golf but we do know that Phil pulls some decent scratch putting those four squares on his head. And we’ve never heard him say a single word about the kick ass professional services put forth by all you Klynveldians out there.

Of course this doesn’t really mean anything, Phil could have a special place in his heart saved just for KPMG but he’s just not able to verbalize it. That’s probably what it is.

Phil Disclosure: Mickelson Owns Five Guys Rights [CNBC]

Survey: CFOs Don’t Think You Should Start Your Career at a Big 4 Firm

Accountemps released the results of a survey today that shows many Chief Financial Officers think that the best place for accounting graduates to start their careers is in a “small to midsize company.” The surprising thing about this particular survey is that the numbers aren’t even close.

When CFOs were asked, “In which one of the following employment environments would you recommend today’s accounting graduates begin their careers?” Their responses were:

Small to midsize company 56%
Small to midsize public accounting firm 16%
Large corporation 14%
Large public accounting firm 8%
Other/don’t know 6%


“Small to midsize public accounting firm” dropped 14% from 2005.

Oh right. And “large public accounting firm” came in dead last. So, for the CFOs surveyed, they’re not really hot on public accounting like they were five years ago and they’re really not crazy about the Big 4 and next tier firms.

Accountemps Chairman Max Messmer says, “At smaller companies, employees often must wear many hats because workloads are spread between fewer workers. Having a wider range of duties enables new hires to quickly build skills, gain exposure to diverse areas of the business and assume strategic roles earlier in their careers.”

From a personal standpoint, we’ve seen both the small and the freakishly large so we’ll try to provide some perspective here.

Maximilian’s thoughts are accurate as it relates to smaller companies. They do have more of a sink or you’re out on your ass approach that will help you grow up quick in that company. Additionally, small businesses have the tendency to be a little more flexible when it comes to your work/life balance. There aren’t any fancy initiatives or bombardments of emails; it’s more of the behavior of those around you. In small companies, you see people taking vacation for days and weeks at at time. That should encourage you to do the same.

At large companies, you hear about people that are losing their accrued vacation, mostly because they are lunatics, but also because it’s likely a widespread occurrence at the company. People in large firms have the asinine notion that somehow the wheels would fall off if they were to disappear for two days, forget about a week. This sounds ridiculous but it’s true.

However, large firms and companies do have resources and opportunities that smaller shops simply cannot provide. Want to move to San Francisco? Your large firm has an office there. Think you might want to spend two years in Australia? Your large company can make that happen. Small shops? Not so much.

What the press release doesn’t say is why the CFOs think you should start at a small/midsize company. Max’s opinion is fine but did he conduct all 1,400 of those phone interviews himself? Of course not. The survey was “a random sample of [CFOs at] U.S. companies with 20 or more employees.” Chances are, most of those CFOs have never worked at a big company so their perspective is likely skewed.

The other thing is – trying not to overstate this – you’ve got to make up your own damn mind about what you want to do with yourself. Do you want Big 4 experience? Then go for it. Do you want a flexible schedule that doesn’t involve a multi-level bureaucracy? Then a small company is probably more your speed.

No survey can answer those questions for you.

THINK SMALL: CFOs Recommend Accounting Grads Start Their Careers at Smaller Companies [Accountemps PR]