Category: Big 4

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

Promotion Watch ’10: KPMG Announcing New Managers This Week?

While the timing seems early (Klynveld is on a 9/30 FYE), there has been a lot of chatter about the announcement of this year’s class of new managers happening this week.

From a Tim Flynn foot soldier close to the situation:

Heard on Monday that national was supposed to communicate yesterday or today, with communication to us this week.


And as you might imagine, there is some anxiety out there:

I’ll tell you one thing, the SA3s that don’t get promoted, they better get a ridiculous compensation package at the time they tell us we’re getting fucked. Otherwise, we’re all leaving. Two years in a row taking it up the ass from Uncle Peat? No thank you.

That’s the word from an office in the western region. Back east, there seems to be less concern:

DC already [announced], or everyone already knows, at least. Anyone with the requisite number of years and their CPA was promoted but DC has been bleeding employees lately. Everyone’s quitting or going on rotation at the senior and manager levels. Mostly quitting.

And what about those SA3s that don’t get the bump because A) they aren’t particularly popular or B) don’t have their CPA? Turns out KPMG is prepared for that. We’ve learned that the firm is offering a new training this summer specifically for SA4s. Soooo, we imagine that training could have some discussions that goes like this:

SA4 #1: Skipped over?

SA4 #2: Failed FAR three times. You?

SA4 #1: Was told that I’m “not quite ready” (hand quotes, eye roll) and that the 4th year will better prepare me for manager.

SA4 #2: Sucks.

SA4 #1: Sucks.

Keep us posted if you get the yay or nay in your office.

UPDATE: To answer a question in the comments, this is for the audit side of the house. If you’re tax or advisory feel free to weigh in on your own promotion possibilities.

Compensation Watch ’10: More People at Deloitte Will Receive Raises This Year

Some straight talk from Barry Salzberg:

Barry had a [recent] session in LA at which time he said essentially the following about comp:

1. Raises and bonuses will be distributed this year
2. Raises and bonuses will be larger than last year, but are unlikely to return to “pre-recession” levels any time soon
3. More people will be receiving raises and bonuses this year


Unfortch, Deloitte doesn’t seem to be getting involved in the pissing match with E&Y and PwC by putting a number out there but “more people” and “larger” are both somewhat encouraging, no? Well, not really, according to our source:

To my knowledge, we’re not getting any more info. On the people side; the video didn’t say anything new and everybody knows that the economy’s getting better and that Deloitte’s doing better; so we all assumed it was going to be like he said. Without a number benchmark, words are pretty much useless.

Apparently PwC Partners Aren’t Eligible for Anti-Bullying Protection

When you become a partner at a Big 4 firm, the culture rewards you with certain privileges. Some of these include: 1) the ability to strut out the door before 5 pm and no one gives you the stink eye; 2) stealing food out of the fridge without fear of retribution; 3) “Black” Starbucks cards; 4) private bathrooms that blast “You’re the Best” when you walk in the door, among others.

Unfortunately, it turns out that sometimes you lose some privileges when you take seat at the big table.

We previously mentioned Colin Tenner, who is suing PricewaterhouseCoopers for disability discrimination, alleging that he was fired after taking time off due to depression and anxiety. His suffering was caused, he claims, by a client bullying him (e.g. taking his lunch money, using emails as TP and returning them) and PwC’s mishandling of the situation.

His fellow partners weren’t buying it, claiming that he was a total wuss, “partners simply do not get sick” and possibly just faking it.


At first, we thought this sounded a little harsh but the Times Online is now reporting that there is a perfectly good explanation for partners’ reaction. They had a policy to back them up:

Mr Tenner, 45, said that a junior member of his team had raised a formal complaint against the same individual, which was investigated by PwC.

Although he complained about his treatment from the individual on several occasions over six months and had asked PwC to implement specific procedures in its anti-bullying policy, “nothing was done”, it is alleged.

Instead, Mr Tenner said, several senior managers told him that he was not protected by the anti-bullying policy because he was a partner.

Now this makes sense. Had this been one of P. Dubs’ rank and file, certainly there would have been hell to pay for this type of treatment by a client. But since a partner was involved, they figure your bully tolerance should be at such a keen level that no protection is necessary.

Bullying ‘did not apply’ to PwC partner [Times Online]

KPMG Chips in as Countrywide Picks up $600 Million in Settlement

Investors who lost money in King Oompa Loompa’s house of no hassle mortgages announced that they have reached a $624 million settlement with KPMG and Countrywide. Maybe that’s why the Kaptains of Klynveld were in such an optimistic mood.


KPMG’s share of the settlement was $24 million which hardly seems worth it. Think about it. Bank of America could probably cough up an extra $24 mil without any trouble and KPMG would probably be fine not cutting a check at all. It’s just like your friend that hassles with you over the check at, “My share was only $18.25.” Eventually you just tell them to f**k off and pay for the whole thing yourself.

BofA’s Countrywide in $624 mln lawsuit settlement [Reuters]

John Veihmeyer and Tim Flynn Would Love To Tell You How KPMG Is Doing

This time of year, the leadership at your firms are on a communication offensive because you all just went through hell. They want to whisper sweet words in your ears so that you keep the faith in them and your firm.

Today we bring you a little taste of some of those sweet words courtesy of the C-suite at KPMG.

Newlynveld, John Veihmeyer was joined by Tim Flynn, COO Henry Keizer, along with some inquisitors for a grueling Q&A that should re-energize you for summer.

Conversations with Leadership
How Are We Doing?

Flynn: First one up gets the mike.

[Prepackaged Inquisitor #1]: Are we on track? How is it going? What challenges have we faced?

Flynn: I think the foundation for recovery is being laid. And I think it started, obviously, in Asia. It’s moving its way through the U.S. Things are better than people had predicted three or four months ago. And we saw retail sales today came out with improvement – consumer confidence being up. So all of those things are signs that we’re on a path for recovery. And now the question is, how does that translate into our business?

Veihmeyer: We’ve built a plan that was consistent with our expectation of what that marketplace was going to be. First half of the year continuing to be a very challenging marketplace, with a gradual increase in marketplace activity as we got into the second six months of our fiscal year. So what have we seen to date? Our results have tracked what we expected. We are actually slightly ahead of plan, six months through our fiscal year, which is the great news.

And I think everyone should feel really good about that, particularly as you look at what we’re seeing in some of the businesses – Advisory, which was clearly hard hit by the lack of spending and the curtailing of a lot of initiatives on the part of our clients, have had very strong months the last several months. And that corner seems to have absolutely turned.

And we are just beginning to see, I think, the things that really impact Audit and Tax around some of the transactional activity that really drives those incremental services that make a big difference in Audit and Tax – that’s starting to come. We expect that to translate into greater revenue over the second six months.

Quite the trifecta of vague brainteasers PI #1 had. But without being very specific, and using a couple of banal metaphors, JV and T Fly are confident that everything is cool, thanks to China and India. Europe isn’t worth mentioning, that’ll blow over. Advisory was on its deathbed but things are bouncing back. Audit and Tax are far less sexy but they’re cash cows. They might see a little more action if Advisory started showing more skin.

[Prepackaged Inquisitor #2]: My name’s [Prepackaged Inquisitor #2]. I just wanted to ask about the new role of the office managing partners, focusing on just going to market.

Keizer: By focusing the office managing partners really on two areas: one, growth of our business, and also our people. So the office managing partners teamed with the functional leaders, and the professionals within geographies, and looked outside into the marketplace, and which companies fit that criteria—impactful to our brand, our people, great growth, and profitability opportunity.

From that exercise, across the country, over 1,600 companies were identified. A process was then undertaken to actually assign specific resources. As we sit today, and we take that population of companies and say, how are we doing? The revenue growth that has been realized in our first six months, in that population, has exceeded our normal portfolio of clients. So it’s showing, again, at an early stage, focus, and a prioritization of where we want to strategically go, does translate into opportunity and revenue.

Flynn: If there’s one message that comes out of this, just one message to everybody here listening – is that the one thing we know for certain—we are not short of opportunities.

We have tremendous opportunities what’s happening around the world. The key is, how do we align our resources, look at our investments, develop our people’s skills to capitalize on those opportunities? So from a standpoint of the future – there’s tremendous opportunity for all of you, and for our businesses, as we go forward.

Your local bigwigs are out there digging up biz because things have gotten a little more competitive than we would like. We can’t simply rely on a sexy Masters Champion in every RFP so they’re getting their hands dirty for a change. Plus, from where we stand, there’s plenty of business out there so if they don’t get the job done, we’ll probably go to the bullpen.

Deloitte Manages to Tone Down Its Response to This Year’s PCAOB Inspection Report

The PCAOB has released its 2009 Inspection Report for Deloitte and out of 73 audits inspected, 15 deficiencies were cited in this year’s review.

The Board writes that deficiencies are “failures by the Firm to identify or appropriately address errors in the issuer’s application of GAAP, including, in some cases, erikely to be material to the issuer’s financial statements. In addition, the deficiencies included failures by the Firm to perform, or to perform sufficiently, certain necessary audit procedures.”


Issues cited by the PCAOB in the report included goodwill impairment, deferred tax assets, inventory valuation, a failure to identify a “departure from GAAP,” among others. The Big 4 Blog rightly notes that this is the first time that the PCAOB has provided the sample size of the inspections which allows for some surprising error rates:

The error rate in this situation is quite high, almost one of every five audits has errors. Obviously, Deloitte performs thousands of audit each year and extrapolating from a small sample is quite dangerous, nonetheless, even at half of 20%, the natural conclusion is that one in ten audits has an error, and would have gone unnoticed had not the PCAOB done a good post-audit on the audit.

You could really make a fuss about what auditors did and did not do but the fact remains, audits are never perfect. Some are just more unperfect than others. What’s especially interesting is how Deloitte’s attitude has changed with regards to the PCAOB’s findings as compared to last year.

In last year’s inspection report, the Board cited seven audit deficiencies which resulted in a three page letter from Deloitte that, in no uncertain terms, told the PCAOB to get bent and keep their Monday Morning QBing to themselves. This was about as an aggressive of a response from an accounting firm as we had seen so it was definitely a surprise to see a firm lose their cool.

This year, despite the fact that Deloitte was cited for over twice as many deficiencies, the firm is considerably less defensive (read: boring) and put together a concise one page response to the Board’s findings that included the following:

“We have evaluated the matters identified by the Board’s inspection team for each of the Issuer audits described in Part I of the Draft Report and have taken actions as appropriate in accordance with D&T’s policies and PCAOB standards.”

It’s nice to see the firm playing nice with their regulator this year but we’re curious as to how the change in attitude came about. We hope that at least one of the remaining Big 4 will include a little more color in their response.

PCAOB_2010_Deloitte_Touche_LLP
PCAOB Inspection of Deloitte Audit – 20% Error Rate?? [Big 4 Blog]
Audit Deficiencies at Deloitte [WSJ]

Stressed Out PwC Partner Was Criticized By Fellow Partners for Being a Total Pansy

On Monday we briefly mentioned the unfortunate case of Colin Tenner, a former PricewaterhouseCoopers partner that is suing the firm for disability discrimination. He is claiming that after he took a leave from the firm after “mismanagement by PwC and bullying by a client,” after which, negotiations for him to return to the firm fell apart and he was let go.

Now the Times Online is reporting some of the feelings of Tenner’s fellow partners. In January 2007, Mr Tenner took sick leave for a couple of days and that did not sit well with his fellow partner Hugh Crossey:

While Mr Tenner was on sick leave in January 2007, his managing partner, Hugh Crossey, e-mailed a third partner to say that he had heard that Mr Tenner was ill again and that the firm needed to point out that “real partners simply do not get sick”, it was alleged.

Depression? Anxiety? Apparently those aren’t real sicknesses, according to Hugh. But wait! Hugh wasn’t the only ones that thought Tenner was a total wuss. The tribunal also heard that a member of PwC’s “partner affairs team” (which probably has nothing to do with treating people like whores) wrote to the firm’s chief medical officer (?) “that there was a ‘very strongly held view that [Mr Tenner] was not as unwell’ as he claimed.” So not only is he total sissy, he’s also a faker.

Tenner claimed that his health had deteriorated to the point that it led him to “actively research ways of committing suicide,” although he actually never made any attempts on his own life.

PwC maintains that this mental health thing is all bullshit, sticking with the standard communiqué, “We believe that his claim is completely without merit and we will vigorously contest it.”

PwC manager told Colin Tenner ‘real partners do not get sick’ [Times Online]

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]