We continue to receive details about the layoffs at E&Y’s Columbus office. The first bit of information is that one of the unlucky few — a recently promoted SA — was given one day to consider taking a transfer to another office. According to our source, the client the SA was serving caught wind of the dismissal and the client’s reaction convinced TPTB to let the SA stay on an additional week to finish his/her work.
Our source also indicated that new manager training was going on at the time and “those [managers] with potentially the best chance to speak on the behalf of those to be axed were all in sunny Florida oblivious to the proceedings.”
Oh and the dollar beers thing. As you may remember, the layoffs occurred the day before the office’s holiday get-down. The rumor is that the festivities had a tab in the nabe of $1,200, which included $1 beers.
This causes us to wonder a few things: A) No open bar? B) Beast or Natty Light? and C) we realize Columbus is a college town but $1 beers? Were there penny pitchers and $3 Jager shots too?
For reasons that escape us, we’re completely enamored with details that continue to emerge from this. Continue to keep us updated.
Earlier:
E&Y Columbus Layoffs Update
Layoff Watch ’09: Update on Ernst & Young’s November Round
Category: Big 4
If it happens at a Big 4 accounting firm, we’re talking about it here.
PwC’s Moritz: ‘We Will Have Base Increases Next Year’
Now we’re talking! Nothing like calling your shot.
Moritz did his best Joe Namath today on PwC’s firm wide webcast today (is it over?) so all that speculation of P. Dubs phoning in 2010 can be put to rest. WRITE. IT. DOWN.
If you’ve got other thoughts or details on the web cast, get in touch and discuss in the comments.
E&Y Columbus Layoffs Update
Just a little more context on the latest E&Y layoffs that we reported on this morning.
A new source has indicated to us the cuts were absolutely based on utilization:
The staff confirmed that no counselor was addressed.
The staff confirmed that no personnel with whom the individual worked within the past 6-8 months was consulted, including manager and above.
The staff confirmed that no performance reviews since April 2009 were referenced.
You better have a strong anchor client that keeps you going year round, and good luck if you lose them. So much for people.
We don’t feel further comment is necessary but if you have any thoughts, please share them in the comments.
Layoff Watch ’09: Update on Ernst & Young’s November Round
It’s been a couple of weeks since we last heard any details from last month’s layoffs at E&Y, so we just assumed this particular story had run its course.
Well now, we have received word of (and confirmed) layoffs in the Columbus, Ohio office. One source indicates it was 2 – 3 staff and possibly one manager in the assurance practice. This would put the number of layoffs in the North Central region in the nabe of 25. Our source indicated that it seemed that Columbus had been spared for the round last month, so this may be their attempt to catch up.
Annnnnnd it’s our understanding that the cuts happened the day before the holiday party in Columbus. So there’s that.
If you have additional details, continue to pass them along and continue to keep us updated on any layoffs you hear for your office.
Rumor Mill: KPMG Debunking ‘Six Year Manager’ Rumors?
While many Klynveldians are getting amped to cobble together some bears for the kids this morning we’ll pass along a little rumor about a rumor.
The rumor that the KPMG bigwigs have been considering a six year timeline to make manager in the audit practice has been kicked around for at least a couple years. Naturally, there were two schools of thought:
• Managers thought it was good idea
• SAs thought it was a terrible idea
According to a tip we received, apparently there is an email floating around that says the rumors about a “six year program are not true and that the firm will continue with existing promotion timing.”
A friend of GC told us that while it’s entirely possible that such an email exists, it’s definitely not coming down from 345 Park and could be some local office trying to calm down those SAs that are considered flight risks.
Regardless of the rumored debunking, the path to partner is certainly becoming longer as we reported earlier this week, and early promotions will still happen based on need or political maneuvering.
If you’ve been notified that your promotion timing is still on track, by email or otherwise, pass the info along or discuss in the comments.
Deloitte Gets into the Ribbon-Cutting
More giant scissor danger today as Deloitte had its own ribbon-cutting in Arlington, VA to open their new Federal headquarters. According to the firm’s press release will serve as the “hub for Deloitte’s Federal Government Services.”
The firm’s press release explains how this year’s BearingPoint acquisition provided Big D with many plunders:
“The opening of our new Federal headquarters today is the final milestone in the integration of Deloitte and BearingPoint,” said Robin Lineberger, principal, Deloitte Consulting LLP, and leader of Deloitte Federal Government Services. “Deloitte was already a leader in the Federal marketplace, and the acquisition marked an aggressive expansion into the U.S. federal space, gave us increased market share, strengthened our global position and altered the entire competitive landscape. With the integration of the teams now complete, we’re thrilled to continue serving our clients in the important work they do.”
Still feels like Deloitte might be dancing on the BP grave a little bit but maybe that’s just us.
Anyhoo, now that Deloitte is well positioned to get some lobbying done better serve its Fed clients, all the blue collar efforts can focus on The U.
Deloitte Opens New Federal Headquarters In Arlington [Press Release]
Are You Ready to Build Some Bears KPMG?
“Tim, you really shouldn’t have. Seriously. I’m a King, for crying out loud.”
In case you’ve forgotten, KPMG’s bear-building extravaganza is tomorrow and word around the campfire is that everyone is psyched.
At least one office is dedicating the better part of the morning to the “Town Hall” portion of festivities which sounds like it could be a real hoot. We’re guessing there might be a little session regarding stationery controls, given the whole Canopy sitch.
Since all the offices are having their get-downs tomorrow keep us updated throughout the day on anything interesting that comes up.
(UPDATE) KPMG’s Letterheadgate May Require the Firm to Revisit Stationery Controls or Get Rid of the Blue Squares
All right Klynveldians, we don’t know which one of you was a little generous with the letterhead but you’ve really done it.
Jeremy Blackburn, COO and President of Canopy Financial was able to raise $75 million for Canopy Financial based on bogus audit reports he provided to investors and pocketed more than $2 million for himself, according to the SEC’s complaint against Blackburn and the Company.
We’ll give the man cred ew the script:
Blackburn sent [Canopy CEO, Vikram] Kashyap an email dated June 30, 2009, attaching the KPMG Audit Report and the audited Canopy financial statements, with an email subject heading of “Audit Finally Complete,” and email text stating “I never wanna [sic] go through this again!!”
Kashyap apparently wasn’t in on the little secret that KPMG was not engaged to audit squat for Canopy. Nice work staying on top of everything, Vik. Meanwhile, Canopy’s investment bank, Financial Technology Partners, didn’t need an email telling them the audit was hell. They just ran to VCs with the notion that everything was on the up and up.
The bank is all bent out of shape because they’re taking heat and claim ‘We clearly had no clue about any such wrongdoing.’ Who wants to bother with the auditors? As Michael Arrington of Tech Crunch notes, “A 10 second phone call could have cleared this up before investors plowed $85 million into the company.”
The whole thing finally went south when Canopy’s new general counsel contacted an acquaintance at KPMG to help him find a new CFO. Canopy’s general counsel then sent over the “audit report.”
KPMG quickly responded to Canopy and advised Canopy in a “Cease-and-Desist Demand” letter dated November 3, 2009, that Canopy used KPMG’s name without KPMG’s authorization and consent. Further, KPMG told Canopy that it: (1) had never been retained nor agreed to audit any of Canopy’s financial statements; and (2) did not issue the audit opinion dated June 29, 2009. KPMG demanded, among other things, that Canopy “immediately CEASE AND DESIST from using the subject report and/or the unauthorized use of the KPMG name….”
It’s seems obvious that KPMG did nothing wrong here but this is still a big bowl of awkward. The firm’s name is all over the complaint and who knows how many other companies are running around with the firm’s letterhead throwing their “audited” financials around.
As we’ve indicated, this may call for a completely new look for KPMG. That means no more blue squares. We realize that’s a horrifying thought but the whole firm may be compromised. If you’ve got suggestions for the look (other than pink) or any thoughts on this snafu, discuss in the comments.
UPDATE: A tiny clarification/correction here: The original post over at Tech Crunch states, “Multiple sources have told us that Canopy was absolutely making up their financial statements, even forging audited statements with fake KMPG [sic] letterhead.” One could get the impression from our post here that genuine KPMG letterhead was used. That does not seem to be the case. The SEC’s complaint states that the audit report was “falsified” or “forged” without mentioning the authenticity of letterhead.
Nevertheless, we still stand by our conclusion that the Firm has no choice to either revisit stationery controls (since it’s obvious you can’t just get the shit anywhere) or change the entire logo as a precautionary measure. Similarly, we will continue to address this particular scandal as “Letterheadgate” to best follow the tradition of any scandal happening in the post-Nixon era to be suffixed with “gate”. We’re done here.
Canopy Complaint.pdf
Canopy Financial Turns Into Sad, Comical Game Of Hot Potato [Tech Crunch]
Earlier: KPMG Will be Stingy with the Letterhead From Now On
Apparently Some Men at Deloitte Have Trouble Understanding Their Female Colleagues
If any Deloittians were even remotely concerned that Bloomberg would squash the BusinessWeek list franchise […]
Here’s a Good Example of How Not to Sue a Big 4 Firm
Were you at all concerned that you would never hear another story about a lawsuit related to the AOL/Time Warner merger from 2001? A merger described by BusinessWeek as possibly being the “worst of the worst.”
AOL’s revenue recognition practices for booking online ad revenue led to restatements of their financial results from 2000 to 2002. This led to hundreds of shareholder lawsuits, most of which were consolidated into a class action suit. All of the suits have been settled or dismissed.
E&Y, who audited the AOL portion of this little gem, has now had the final lawsuit against the them dismissed. Back in 2003, AOL shareholder Dominic Amarosa decided that he was going to file suit on his own rather join the class action. Problem was, he didn’t file suit on time and failed to connect his losses to statements that were made by E&Y. Those both sound kind of important.
On top of that, Judge Colleen McMahon didn’t really care for the plaintiff or his attorney Christopher Gray, calling Amarosa a ‘vexatious litigant pursuing clearly frivolous claims’ and Gray’s tactics, ‘shenanigans.’ Judge McMahon also indicated that she was considering sanctions against Gray for said shenanigans.
So if you’re looking for a blueprint on how to completely screw the pooch on a lawsuit against a Big 4 firm, this is probably a good place to start.
Lawsuit over Time Warner-AOL merger dismissed [Reuters]
Are Other Small Big 4 Offices at Risk of Closure?
Editor’s Note: Francine McKenna is a regular contributor to Going Concern
We came across a report in the Birmingham Business Journal (subscription required for full article) describing the reduction in professionals of the KPMG office there from 63 to 39 after two rounds of layoffs.
While there doesn’t seem to be any indication that the office will be closing, the reduction is significant enough to get us wondering if there hadn’t been talk about pulling the plug altogether.
On that note, we recalled the Manchester, NH closure we reported on last month and we called up the folks in Live Free or Die country to get the latest. While the receptionist was very helpful, the person we were eventually connected to decided that hanging up on us was the best course of action.
Undeterred, we reached out to E&Y’s national PR team and they provided us with the following statement:
After careful consideration and based on our analysis of the market, we have decided to close our Manchester office by the end of November. As part of that process, a number of our people will transfer to the Boston office, and our clients will be served from the Boston office.
Unfortunately, since “a number of our people will transfer to the Boston office” we can only assume that there will be a number of people that will not transfer to Boston.
We reached out to all the Big 4 firms regarding this issue, with E&Y being the only one to respond and they only addressed the Manchester office specifically. Wanting more perspective, we asked our contributor, Francine McKenna, for her thoughts:
Small office closures mirror the fortunes of local economies they operate in, including the limited number of clients some offices have been built on. Often just one/two parters wanting to be closer to home, have Managing Partner title.
There has been a considerable amount of chatter regarding office closures so we decided a thread on the issue was due. Discuss your thoughts/speculation on office closures (including any more details on E&Y Manchester) for your firm in the comments and keep us updated with your tips.
Deloitte, KPMG Will Make Out Okay on This Whole Dubai Thing
If you spent the last four days in a tryptophan-induced coma, you may have missed the news that there’s a bit of a problem in Dubai. A $59 billion problem.
Long/short: Dubai World, the state sponsored investment company, asked for a six month extension on repaying principal and interest maturities to its lenders.
While this spooked a lot of people, the latest reports indicate that Dubai is of the opinion that it’s NBD.
Despite the claims by DW that nothing is fucked, it’s being reported that at least two Big 4 firms will get to bill the hell out of the parties privy to this latest debt-related SNAFU.
Dubai World has hired Deloitte to help them restructure their house of cards debt while KPMG is representing banks that hold $30 billion of the Dubai World debt in the negotiations. Now while we’d like to imagine tense, smoked-filled rooms with fists being slammed on conferences tables and screaming into speaker phones, it’s likely that it will be a much more cordial affair but we remain hopeful.
As for the other two usual suspects, why E&Y has been left out of the proceedings altogether is a mystery but the PwC/Becks/Dubai World connection seems like a good enough reason to us to keep P. Dubs on the sidelines. Call it a hunch.
We’ll keep you updated on the Big 4 angle of this story as it continues long into 2010.
KPMG lined up in $30bn Dubai rescue mission [The Independent]
Also see: Duh, Dubai! [JDA]
Deloitte Versus KPMG in Dubai World Saga [The Big Four Blog]