Category: Big 4

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

Deloitte Is Totally Cool with You Jumping Ship

A GC reader from Deloitte emailed me the notes from a recent meeting for management on the health of its staff levels. Our source had the following to say:

I’m a senior in D&T (making manager in the fall) and thought the minutes from a recent manager meeting were interesting in terms of HR’s take on attrition. It does match what you’ve said in your column, i.e. they plan for a certain level of attrition, but I don’t think they even want to consider that there could be a cause for concern.

Management Community Feedback

Retention: Previous S. Manager / Manager Practice meeting unity is seeking additional clarity as to where the firm is heading, in the short term and long term (i.e., economics, compensation, etc.).

HR Audit Update: As of the time of the meeting, specific numbers are not known

DWB: Staff complaints, questions, and concerns, are summed up with the phrase “community is seeking additional clarity.” People want to know what the *#&! to expect in these still-somewhat-unclear times. Oh, and HR? They can run their “numbers” in minutes. Why they were not shared is a mystery; a concerning one at that.

Senior Turnover: Managers feel concerned with the leadership leaving at the senior level – potential for additional turnover in the fall

HR Audit Update: Turnover is comparative to 2 – 3 years ago so not considered a concern.

• Recent increase in the number of seniors that are voluntarily leaving the firm when compared to those trends seen in the last 12 – 18 months
• Region is looking at approximately 75 new hires
• Restrictions on inter-office transfers are being lifted

DWB: A lot to take away from this.

1) Managers are vocalizing the fact that people are leaving; this goes beyond the typical public accounting attitude of “good riddance.”

2) Turnover in 2007 was incredible. Do you remember what the market was doing in 2007?! It was a rip-roaring success. To compare it to that time frame and say it is “not considered a concern” is troubling. The difference between then and now is D&T was hiring like gang-busters themselves at that time so the attrition was not “felt” as severely as it’s being felt now. Layoffs and frozen hiring budgets make the recent staff losses more significant.

3) More people quitting now than during the recession? What research expert included that bullet point?

4) Inter-office transfers being reintroduced is a positive point; expect an announcement about this spun in the HR-style of “woo-hoo, now you can work in St. Louis!” And by St. Louis they mean Branson, Missouri.

What to do?

• Create a positive environment for the seniors and staff
• Leverage personal experiences to keep seniors/staff motivated
• Express advantages a “manager” position can add to one’s career path when looking at long-term goals.
• HR Advisory Update: National recruiting expects a good group in the Mid-West. Comparative attrition trends are taking place even though it may feel that the turnover rate is higher than normal.

DWB: Talking about the glory days of D&T audits doesn’t sound exciting, but sometimes it’s enough of a Kool-Aid effort to keep staff motivated. And look! Attrition rates are right where they want them to be. So all of you on under-staffed, over-worked projects? Yeah, this is the type of environment they plan for.

I’ll let our anonymous tipster finish off the commentary:

At least they might try to “create a positive environment” for me. I’d be really concerned if HR actually believes this or if they just don’t want to panic the managers. (Incidentally, I will be leaving after they give me the promotion.)

Apparently Ernst & Young Doesn’t Buy the “C’s Get Degrees” Mantra

We know that lots of you out there are perfectionists, so this could never happen to you but for you mere mortals, you can sympathize a little bit.

Courthouse News Service reports that a class action suit in California has been filed against E&Y claiming that the contracts signed by graduating seniors “compel” them to work for the firm but allow the company “to legally renege or cancel the offer of employment” if the senior does not maintain “continued strong academic standing.” Apparently this means if you slack off your senior year and slip a couple of C’s in there, you could be out on the street.


Yunjung Gribben, 43, is the named plaintiff in the suit and she is seeking damanges for wrongful termination, age discrimination, breach of employment, specific performance and violations of the Labor Code.

Ms. Gribben claims that she graduated from Cal State Fullerton with a 3.6 grade point average but, “After working for Ernst & Young for a month, Gribben says, she got a call from human resources, questioning her about the C’s she got in her senior year. She says she was fired the next days [sic].”

She claims that “continued strong academic standing” was not defined in her contract, although she admits that there is a “hazy reference” to the term on the firm’s website.

Dale Fiola is representing Ms. Gribben and he us, “No student should be under the impression that they have an employment agreement once they graduate. Most of the time when people sign offers of employment they think they’ve got something.”

The suit alleges that other students have cited the “continued strong academic standing” language and in Ms. Gribben case, “younger employees were allowed to stay at the company.”

Ernst & Young spokesman Charlie Perkins had no comment at the time our post was published.

Class Sues Ernst & Young Over Contract [Courthouse News Service]

In More Accounting Firm-Terrorism Related News, Some Taxi Driver Really Had It Out for Deloitte

After a sun-adverse family man tried to blow up the Viacom Building (and was close enough to E&Y to evacuate the area) and a former PwC Senior Manager was charged yesterday for supporting terrorism, now a taxi driver whose company serviced Deloitte in India has been arrested for attempting to set off a bomb in Hyderabad’s HITEC City:

Pakistan-based Lashkar-e-Taiba was planning bomb attacks on the HITEC City, a major IT township here, and the office of a multinational auditing firm.

Mohammad Zia Ul Haq, who was arrested yesterday following a tip off by the National Investigation Agency, was directed by his LeT handlers to bomb the Hyderabad office of Deloitte Touche Tohmatsu, one of the four largest auditors in the world, and was in the process of carrying out the plan, government sources said.

Interestingly, Haq works as a driver for a taxi service hired by Deloitte Touche Tohmatsu.

What kind a-holes do they have working at Deloitte in Hyderabad? Bad enough that this guy concluded that bombing a company that puts food in his mouth was an action that needed to be taken. Thankfully, they caught the guy.

Obviously the question now is, when does KPMG get its little terrorist related news?

LeT planning to attack Hyderabad’s HITEC City [Economic Times]

The Big 4 Continue to Impress College Students, Dominate Latest Universum List

It’s been far too long since we had a Big 4 dominated list to share with you. The last that we can dig up was PwC’s three-peat for Training 125. We were starting to get the shakes…

Thankfully the drought has ended with the latest list from Universum, who we last hear from in the fall with their 50 Most Attractive Employers.

This time around, it’s the Top 100 IDEAL Employers, that is described as “annual employer image survey…based on more than 163,246 employer evaluations, reflecting the opinions of approximately 56,900 Undergraduate students.” In the “Business” field of study, the Big 4 have, once again, landed high on the list:


Ernst & Young – #2
PricewaterhouseCoopers – #3
Deloitte – #4
KPMG – #6

Big 4 domination on a college student list is nothing new. Their recruiting strategy is aggressive and any company getting bested by Google in anything is exactly a surprise. Some other notables:

FBI – #11
IRS – #23 (IRS 2, Sarah Palin 0)
Grant Thornton – #30
Accenture – #66

Frankly, the number beside the firm name is irrelevant. The firms will boast the latest ranking in press releases and on campus visits per standard operating procedure. This continues to demonstrate that the firms are impressing college recruits effectively. They are presenting the image they want to present and they are doing so with an ever increasing online presence. We will continue to see them high on these lists.

The Universum American Student Survey [Universum]
Universum USA Presents the 2010 Top IDEAL Employers [Press Release]

Any Attempts by Accounting Firms to Boost Morale May Be Too Late

From an accountant familiar with E&Y:

We got two voicemails today, one from head of Banking and one from the Vice-Chair of people, both talking about compensation. I think the underlying fear is that we don’t have enough people anymore in our practice because they keep stressing all the things that the partners are going to do besides compensation to boost morale (like have a lunch with staff sometime around cinco de Mayo).


The last month and a half has been a bit, shall we say, tough on the E&Y and the troops. That being said, the news that Ernie would beat P. Dubs raises may or may not have got some people to relax but it appears that the firm’s leadership is still on the offensive to keep spirits high.

After discussing it with our resident HR expert, the problem with these little wine & dine events is that at this point they are too little, too late. People don’t want they faces fed. They want answers. They are crawling the walls with anxiety about three things:

1. What raises will be.
2. If there will be a bonus pool.
3. Who is getting promoted.

And they want to know the answers ASAP. Raises have been triple-reassured at all the firms and people want to know that number; they want to know if there’s a bonus pool.

Everyone at the point of promotion has made up their minds about what they will do if they get promoted or not. Plus everyone who is not up for promotion is talking about who will get promoted, who won’t and the reactions that will result (e.g. storming out of the office or a nervous breakdown).

The reality is that these things take time. The fact that PwC put a number out there was impressive (and some have said, desperate) shows that partners are aware of the anxiety and they’re trying to get people to relax.

Deloitte is up first, as their fiscal ends 5/31 and we’ve heard that there has been generosity passed around there but it will ultimately depend on the the merit increases. We hear their all hands webcast is coming up soon and that discussions are occurring this month so it won’t be long.

No amount of margaritas, $100 bonuses or NHL playoff hockey tickets will change the fact that people have worked it out in their heads about what they will do when they get the news. And once that news is known, people will act fast. We would encourage everyone to be patient, try and be rational etc. etc. but we also know that’s an futile request.

(UPDATE) Friendly Reminder to TierOne Bank: Today Is the Last Day to Get Your Act Together

Catch up, we covered this on Sunday night: In a bizarre piece of auditing news released late on a Sunday night, KPMG has verbally resigned as Nebraska-based TierOne Bank’s independent auditor, withdrawn its audit opinion for 2008 and taken back its review of TierOne’s financials for the quarter ended March 31, 2009. Citing risk of material misstatement, KPMG has also warned the audit committee that TierOne’s financials are not to be relied upon by investors.


Well today is April 30th and that means TierOne has run out of time to get its shit together to please the OTS. Meanwhile, KPMG is still paddling away in the lifeboat before the ship sinks but with a week’s head start, we’re sure they’ve gotten far enough away from the scene of the crime to be entirely unaffected by the outcome, whatever it may be.

In a textbook case of he said/she said, TierOne is a little butthurt that KPMG would suddenly change its tune and bail on the bank so close to such an important deadline. Adding insult to injury, KPMG claims that TierOne destroyed a document on specific reserves required by the OTS, even though the auditors had requested the document more than once. TierOne claims that it gave the document to both the OTS and KPMG as requested. TierOne also enthusiastically states that not once did KPMG express any concerns about the bank’s condition until just before bailing on the bank and resigning from the audit.

We’ll update if the FDIC moves in later this afternoon and takes down TierOne.

UPDATE: TierOne tried to sell itself to Great Western Bank but the deal was shot down by the OTS. The $2+ billion bank is sort of just sitting there exposed in the open without an auditor and no real plan, you can pretty much guess what happens from here. Meanwhile, it was a busy Bank Fail Friday but TierOne was not among them. See you next week?

TierOne sale plan due today [Lincoln Journal Star]

Ernst & Young’s Raises Will Be Better Than PricewaterhouseCoopers’

I said it on Tuesday and I’ll say it again. HERE. WE. GO.

Caleb ran a post yesterday about Ernst & Young raises that as of deadline time had no comments. Zilch. Nadda. I was surprised by this because if anything guarantees comments on GC posts it’s talk about layoffs, Overstock.com shenanigans, and money (not in that order). Needless to say, I think this update will change things.


GC received a tidbit from an EY reader about the recent phone call:

“I did receive a voicemail from Steve reassuring compensations but, it appears that the firm will concentrate giving raises to its “high performers”. So, this potentially could mean that only EYers rated a 5 (need to catch a fraud to get this or have really sore knees) or 4s (need to be well liked all the way up the pipeline on an audit) will have a respectable raise.”

So – if you burned through busy season working yourself to the bone for Uncle Steve but stopped short of needing knee pads (it should also be noted that the parts in parentheses above are part of the original email…) you might be shit out of luck for a respectable raise.

Continuing…

“In addition, I checked with a partner and the August 1st early pay increase is a rumor. The rumor appeared believable since EY is a monkey see monkey do type of firm but, our partner said that EY’s raises although be start on October 1st, will be higher than what PwC will offer to its auditors.”

Boom. To quote my man and crime fighting detective Marcus Burnett, “Shit just got real.”

Shit. Just. Got. Real.

Is there any credibility to this? Sure there is. To think that the upper leadership from every firm does not talk to one another about compensation targets is ridiculous. Merely for the sake of the partners’ bottom line, it’s necessary to know what ones competitors peers are paying in compensation. Why some loose-lipped partner is sharing this information is beyond me, but hey, it’s dedicated readers fed up with their own compensation that forward these tips on. Now, let’s talk it out.

Which would you prefer – every 10 key cruncher receiving a mediocre payout or just the stars receiving something slightly-better-than-insulting? Comment below, regardless of which firm you work for. Be sure to shed some light on the timing of EY’s payouts if you know any details.

Barry Minkow Would Like to Remind Everyone, Especially PwC, That InterOil Has Never Found Any Oil or Gas

Barry Minkow has a message for InterOil auditors at PwC and it appears as though he would really, really like for P. Dubs to remember its fiduciary responsibility. So much so that he even made a video to help drive the point home so let’s hope this lands where it is supposed to and PwC considers Barry’s friendly suggestions.

Peep the press release:

“InterOil and its CEO have shown a troubling pattern of behavior that goes back to the company’s founding in 1997,” Minkow said. “We’ve seen inflated assets, a missing report from world-class Netherland Sewell, no major partners willing to put up cash for its proposed LNG plant, a recent bad-faith bankruptcy filed by CEO Phil Mulacek for a company he controls, and unreported $5.7 million commission, insiders dumping tons of stock last month, hyped press releases, and the list goes on. In fact, the only thing we haven’t seen from InterOil is any commercial oil or gas.”

Previously: Let’s Take a Closer Look at This Shia LaBeouf and InterOil Situation

Compensation Watch ’10: Ernst & Young Re-reassures Merit Increases

About a month ago, we heard about an E&Y town hall in Chicago that was meant to rally the troops after the last two weeks of March saw ubiquitous Lehman Brothers/Repo 105/bankruptcy examiner’s report coverage.

Plus, it was the end of busy season so people were likely at their wits end. At said town hall, the raises promised by Americas Managing Partner Steve Howe back in January were reassured.


Despite this message, Steve Howe sent out a triple-reassuring message yesterday to everyone that wasn’t listening and/or didn’t get the communiqué:

Stevie Howe just sent out another long VM confirming raises this year. On a related note, FSO sent out a note about accelerating the annual review process to account for the expedited compensation review process.

Another source told us that more details are to come on an upcoming webcast, and because of the “expedited comp review” process, it has been suggested that the merit adjustments may occur earlier than usual. Right now, our source speculates that it will go down in August but no hard date has been thrown out there. Keep us updated.

PwC Reminds Us All to Be Realistic Come Raise Time

HERE. WE. GO.

With PricewaterhouseCoopers’ communication about raises behind us, the proverbial dam of anticipation, expectation, and hopefulness gets closer to cresting. From the sound of things though, disappointment and frustration might be joining the flooding the gates as well.

Debate all you want about how much gravy is (or isn’t) on the train, but the partners in your respective firm will tell you that times are still tight. And to be, they’re probably not stretching the truth too far. Here’s what we know:


Revenues were down in 2009 for everyone. Want a re-cap?

Professional service firms are lagging in the market. When Wall Street (and the rest of America) began melting in 2008, accounting firms were still collecting on contractually agreed upon procedures fees. Fees were slashed when contracts were negotiated over the course of the next year, and it was these cuts in services and fees that cost employees their raises, bonuses and sometimes even their jobs. Fees might be back on the uptick; you would know better than me. But the general consensus in staffing camps around the country is that teams are doing more work with less billable hours in the budget. Less billable hours means…less revenue. Less revenue means…double digit bonus season? Doesn’t add up.

Expenses were cut but will the savings make enough of a difference? Recruiting budgets, headcounts, national trainings, corporate donations, and holiday parties – all areas of cost-savings. The financial faucets to many of these areas were adjusted; how soon they’re opened up again is hard to gauge. “Slowly” is the first word that comes to mind.

Raises will be purpose-driven – The vast majority of – if not all – well performing employees will receive raises this year. The pot will be spread out, but don’t be surprised when more love is thrown at strategic groups. Sorry, healthcare auditor, you’re simply not generating as much revenue as your firm’s M&A tax group. Fatter raises will be given to those that the leadership thinks are vital to generating continued revenues and/or will be expensive to replace should they move into the private sector.

The one upside to raises, small as they may be, is that they will drive up your base salary. If you do decide to test the job market, the last two years of effort in public accounting will be mostly represented in your new target number which will lead to a higher base elsewhere.

Stay tuned as we learn more about the state of raises across public accounting. As always, share your thoughts in the comments.

Some Feedback for PwC

From a source at 300 Mad House:

“I just took the firm wide pulse survey and I laid into them. I told them to stop falsely advertising work life balance.”

Not being intimately familiar the work/life whathaveyous that comes by way of Bobby Mo emails but acutely aware of the motivation techniques employed, we can understand the frustration. Especially judging by some of your reactions to last week’s number. If you feel like sharing your feedback for the year that was at P. Dubs, let it rip.