Category: Big 4

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

Ernst & Young Performance Ratings Are Super Top Secret…Most of the Time

top secret.jpgOne of the most diabolical of human traits is wanting to know everybody else’s biz-nass. Shoe size, your number, how much money you make, etc.
Trusted friends and colleagues usually will share some of their professional details with you but several people remain prudish with their ratings, merit increases, salaries, etc.
Continued, after the jump


Then there’s your sworn enemies. These people wouldn’t tell you their date of birth if their high-flying, glamorous number crunching lives depended on it. Smug bastards think they’re so special, when YOU KNOW they suck it big time. Wouldn’t you LOVE to know how officially shitty they are at their jobs? We thought so. But dammit, being nosy is really hard work and that information is tough to get.
Well, according to one of our sources, some at E&Y didn’t have to try hard at all:

So about a month ago after the ratings for everyone’s annual review were finalized, someone in HR screwed [up] big time and sent an e-mail out to the entire Banking Capital Market mass e-mail and attached a spread sheet with EVERYONE’S rating. When I mean EVERYONE I mean from Staff 1 through Senior Manager.

We’ll go on record here to say that this was probably an honest mistake but the fallout from this had to be all sorts of awesome. Knowing how that stupid ass first year manager that totally screwed the pooch on your engagement was rated could either end up being the sweet vindication you’ve been waiting for or it could open up a basket of rage not seen since the Old Testament.
Hey, maybe we’ve misunderstood the whole thing. Maybe E&Y is considering some bizarre open door policy when it comes to ratings and this was merely a test. We’d love to see the list, btw, so if you’ve still got it, send it our way.
Feel free to discuss any additional details or your thoughts on your Firm’s ability to KEEP SECRETS in the comments.

Jim Turley Traded F-Bombs with Rahm Emanuel Over Chicken Last Night

jim turley2.jpgWe’d like to think so anyway. Maybe JT isn’t a potty-mouth but Rahmbo has been known to drop a curse here and there.
JT was in DC last night with several other big wigs, at the Williard Intercontinental solving all our problems: “The participants provided updates on their businesses, discussed when the economy may rebound and offered advice on how to spur job growth.”
Right, because, in case some of you haven’t heard, we’re on a collision course with double-dig unemployment. Thank the Maker they’ve been thinking about hiring people again, “Over salad, chicken and a fruit desert, some of the business leaders said they would start hiring immediately once the economy began rebounding while others said they would wait for revenue growth in their own companies, according to one of the participants.”
This was a two hour date so it couldn’t have been all business. We’re guessing Jimbo tried to loosen everyone up with some inappropriate jokes (feel free to guess what kind) while gnawing on a drumstick like Fred Flintstone but that’s just our vision.
Give us your best ideas on what JT and Rahm talked about privately, just between buds, in the comments.
Emanuel, Jarrett Meet With CEOs From Intel, Time Warner, Dow [Bloomberg]

Ernst & Young Paid $400 Million to Settle Akai

That’s according to reports from Asia Sentinel. The liquidator of the now bankrupt Akai also, “extracted US$100 million from a local tycoon, Ho Wing-0n, who had allegedly conspired with the then chairman of Akai, James Ting, to strip the company of its assets. Ho himself was a former partner at Ernst & Young until 1990 and has been responsible for the Akai audit.”

Sounds like a nice little back-slapping/glad-handing/ass-grabbing arrangement and depending on how things progress, sounds like another one may be in place:

The size of the settlement against Ernst & Young reflects not only the size of losses sustained by Akai creditors but the years of organised sleaze attributable to Ernst and Young’s Hong Kong operation. If the civil settlements are not followed up by vigorous criminal prosecutions by the Hong Kong authorities, one can conclude that mutual back-scratching and old-boy principles override issues of corporate governance and the responsibilities of auditors.

As you may have noticed, we’re big fans of speculation so, for now, we’ll go along with whole HK Fuzz and auditors back-scratching scenario presented here if no criminal charges arise. E&Y has continually reiterated their willingness to cooperate in the investigation so you can make up your minds on what that all really means.

The liquidator, Borelli Walsh seems to be the catalyst of this case as the Sentinel speculates that if, “it been one of the other of the Big Four auditing firms it is likely that some clubby backroom deal would have been done which would have kept criminal activities well hidden and involved a settlement a fraction of that obtained by Borrelli Walsh.”

‘Clubby backroom deal’? You mean those are real? We’d be curious to know if E&Y in the States has even brought this up internally to address the press coverage. If those of you in the Ernstiverse are getting love letters from JT on this, kindly pass them along or discuss in the comments.

No Accounting for Accountants [Asia Sentinel]

Earlier: Raid at E&Y Hong Kong Was Probably Really Boring
Earlier: EY Doesn’t Want to Be Outdone By Anyone So They Went to Hong Kong for a Scandal

PwC Global Revenue Was Down or Flat, Your Choice

Thumbnail image for Thumbnail image for Thumbnail image for pwclogo.thumbnail.jpgThe spin continues in accounting firm earnings season, this time courtesy of P. Dubya. The Firm reported global revenues of $26.2 billion, according to today’s press release. This was down from fiscal year 2008 by approximately $2 billion from $28.2 billion in global revenues when adjusted for foreign exchange fluctuations.

Assurance services increased slightly, rising 4.8% while tax and advisory revenues both declined 7.5% and 11.4%, again, when considering the foreign exchange fluctuations.

North America’s revenues held up well, only dropping 3.2% ($9.3b to $9.0b) while Western Europe, PwC’s largest region in terms of revenue, had a 11.6% drop in revenues. The drop for this region was primarily due to the strength of the U.S. Dollar.

Denny Nally remains stoic despite Satyam the challenges out there:

“The past 12 months have been challenging for our network, with most PwC member firms facing tough economic conditions. While PwC’s results for FY 2009 are not as good as we would have liked, they have held up well in the circumstances,” said PwC Global Chairman Dennis M. Nally. “In addition the combination of first rate customer service and very competitive pricing has allowed us to increase our market share in many of our markets around the world.

“The ability of so many PwC member firms to successfully sustain their business and their people through this difficult period provides us with a strong platform from which to serve clients in the recovery and to continue to invest in our own growth. While we cut our costs substantially, the PwC network also hired about 30,000 new people and increased its total workforce to more than 163,000 demonstrating a commitment to attracting the right people to serve clients around the world.”

Data for number of employees in fiscal year 2009 isn’t up yet on the global website but we’ve got no reason to not believe Denny when he says that they’re attracting the right people and getting rid of people that cost too much.

Discuss the revenue results and Denny’s vision of the ‘PwC Experience’, which is probably nothing like an acid flashback, for the future in the comments.

PricewaterhouseCoopers* post FY2009 global revenues of US$26.2 billion [Press Release]

*PwC just wants everyone to know that there’s this thing called PricewaterhouseCoopers International Limited (PWCIL) that doesn’t provide services to clients and doesn’t act as an agent for the member firms. PWCIL is NOT LIABLE for anything that these member firms f*ck up because that’s just ridiculous. If they screw the pooch, they are TOTALLY ON THEIR OWN. Don’t come crying to us about an audit failure because we will deny ’til we die. This has nothing to do with Satyam, btw. It doesn’t. We swear.

If KPMG Had Just Made Her Feel Like a Prostitute, They Would Have Gotten Off Way Cheaper

8ball.jpgKPMG has been ordered to pay £45,000 to a former employee who failed The Institute of Chartered Accountants in England and Wales’s (ICAEW) computerized qualifying exams due to her dyslexia.
According to Accountancy Age, “[Dhrupa] Bid failed her first exam and was given permission by the firm to defer her retake so that a dyslexia assessment could be obtained from the ICAEW. She was warned by the firm if she failed she would have to be dismissed.”
More, after the jump


Previously, Ms. Bid had taken paper exams scoring in the 80s before taking the computerized exam and scoring 40% lower. She only found out that she had dyslexia until after she had failed the exam the second time. Her condition warranted her to an extension of time and to be given a paper exam.
It seems a little odd that she would take the exam again and fail, before finding out she had dyslexia since she was allowed to defer her re-take of the exam to determine if she had dyslexia.
Maybe the ICAEW was dragging on the assessment or KPMG didn’t have the patience to wait for the results but since Ms. Bid failed the second time she has had to return to Kenya since she no longer held a work visa.
KPMG issued the following statement:

“KPMG believes it acted properly and fairly at all times and did what was required of a responsible employer in supporting Ms Bid once the probability of her having dyslexia was made known to us.”

What’s not clear is whether the Radio Station would have preferred paying out less in damages and ended up being perceived as a pimp. Pretty tough call but it looks as though shelling out the additional £45,000 was worth it to the Firm.
The bright side for Ms. Bid is that she wasn’t made to feel like a prostie and she got paid way better than one too. Silver lining people. Silver lining.
KPMG forced to pay £45,000 in discrimination case [Accountancy Age]

Is AMC Auditor Shopping?

popcorn.jpgMaybe! But the movie theater company did dump PwC on October 1st according to a filing with the SEC after just two years.
According to the filing, P. Dubs had only been engaged as AMC’s auditors for the last two fiscal years (4/3/08 and 4/2/09) and the audit committee decided that KPMG will now get the pleasure of opining, also effective on October 1st (congrats, we guess?).
As is typical in these auditor swaps, AMC’s filing states that they had no disgreements with PwC “on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.”
We’d like to think this came down to a PwC partner making some sort of stand against the asinine concession prices that are borderline unethical but that’s just our personal vision. If you’ve got your own ideas about the reasons for the dismissal, discuss them in the comments.
AMC Entertainment hires KPMG to replace PricewaterhouseCoopers [Kansas City Business Journal]

KPMG Comp Discussions: Mid-Atlantic Says ‘No topic is off-limits’ and Possible Cuts in the Midwest

We’ve heard of at least one instance in the Detroit office where a manager’s pay was cut approximately 4%. At this time, it’s not clear if it will affect the entire Midwest region or just the Detriot office, so let us know the details for your office, regardless of location.
Meanwhile in the Mid-Atlantic, we received the text of an email that states that “no topic is off limits” in the comp discussion, which will hopefully invite some colorful discussion. If any other regions have a similar communiqu&eacute, kindly pass it along. We love reading emails. The text of the email that lists things that you should be prepared to discuss, appears after the jump.

During the week of October 4, our Midatlantic area Audit partners will be conducting Project Future discussions to address your individual compensation as well as personal and professional growth opportunities at KPMG. Project Future is an initiative that allows you to discuss various topics with firm leadership.
While the current state of the economy is on everyone’s mind, I encourage you to take this opportunity to share your experiences, interests, and short- and long-term career goals. You should also use this time to discuss the firm’s plan for growth, including new client opportunities and recent wins.
Remember, no topic is off-limits during the Project Future meetings, so bring your list of items to discuss. Here are a few items you should be prepared to talk about:
• Compensation
• Future engagement assignments, including your utilization, chargeability, and overtime hours
• Industry and career interests
• Your experience working for KPMG
• Personal and professional growth
• Tips on how to build a great career at KPMG
• Sabbatical program
• Promotion outlook
During the week of October 4, your assigned Project Future partner will contact you to schedule a convenient time to meet. If you don’t hear from your partner, please contact your local HR manager.
This is the fourth year we have conducted Project Future discussions, and I hope you continue to find value in meeting with your partners.
Thank you.

If you’re more comfortable discussing the points above here, please do so in the comments. And if you’ve got other suggestions of what you’d like to discuss, or care to expand on “Project Future” mention them as well and of course, share your euphoria or lack thereof with us after your sit-down.

Apparently $2 Mil Is Enough to Keep Deloitte in Dallas

DTa.jpgEarlier this year, the Deloitte Dallas and Irving offices were ready to copulate and move the combined digs to Irving. Apparently this was going to save the two offices bookoo dollars.
Problem for the City of Dallas is that if a big shot spendy tenant like Deloitte bolts, Dallas’s Central Business District would not be good, especially since the vacancy rate is already high. The City pondered this and came to the conclusion that offering Deloitte a $2 Million “economic development grant” should convince them that moving to Irving is the WORST IDEA EVER.
More, after the jump


Not quite sure what Deloitte will do with that money (our suggestion is for more donut giveaways) but here’s the back scratching they’ll do for the City, according to the Dallas Observer:

Subject to City Council approval of the proposed economic development grant, Deloitte LLP has agreed to execute a 10-year lease extension at 2200 Ross Avenue (Chase Tower) beginning 2011 and will:
•Commit to maintain a minimum of 1,111 jobs at this location
•Ensure approximately $19.9 million is invested for tenant improvements

So it looks like Deloitte is down for this but we’re not exactly sure how they came up with 1,111 for the minimum number of jobs. At the very least, it’s kind of a cool looking number.
Regardless of the figures, we doubt that Deloitte would be taking the $2 mil if wasn’t going to be a good deal for them. So greasing Deloitte to keep them in Dallas seems to be a good deal since, “[the City of Dallas] believes the $2 million investment will yield $31 million in ‘net city fiscal impact.'”. So, yeah. Not too shabby.
However, we’re guessing that more than a few people in Irving that might be a little bent out of shape about this, so if you’ve got any more information on this deal, let us know.
When Deloitte Did the Math, It Needed $2 Mil From Dallas, Or Else It Was Going to Irving [Dallas Observer]

Former KPMG Partner Sues Firm for $30 Million

prison.jpgThis whole tax shelter problem for KPMG is back from the dead, as a former partner who was indicted and later exonerated of the charges has sued the firm for “attorney fees, lost wages, and future earnings,” according to the L.A. Times.
David Greenberg’s lawsuit alleges that “[he] was singled out as a rogue employee to cover up the company’s own widespread practice of tax evasion and conspiracy. The suit says KPMG publicly accused Greenberg of committing crimes and allegedly tried to divert attention from its illegal practices.”
So, yeah, that kinda sounds ugly. Nineteen people were originally indicted in 2005 for the tax shelter schemes and the lawsuit alleges that Greenberg is the only person whose legal fees have not been paid by KPMG. He also claims that he’s still being named in lawsuits and has amassed $10 million in legal fees. Dude’s probably a little pissed.
Continued, after the jump


Natch, KPMG isn’t amused by the whole accusation of ‘widespread practice of tax evasion and conspiracy’ and released the following statement:

“The claims throughout this lawsuit are baseless,” KPMG spokesman Dan Ginsburg said. “We will use all appropriate measures to defend ourselves…This lawsuit attempts to revive issues that are long dead,” Ginsburg said. “Mr. Greenberg released KPMG from any obligation to pay his legal expenses in a 2003 agreement which has been upheld by the court.”

Hell, if that’s true, then this thing should get thrown out, no prob, right? WTFK really but it’ll be fun following how nasty this gets.
Oh and just for fun, Greenberg is suing for an additional $20 million for “…defamation and emotional distress from spending five months in jail.” Not sure where Greenberg did his time but if the digs qualify as PMITA prison, then $4 million a month is probably fair.
We realize that it’s still early in LA for a Monday but if you’ve got insider information on this story, shoot it our way. You know, the ugly stuff.
Former KPMG partner sues accounting firm for $30 million [Los Angeles Times]

Will Deloitte’s Diversity Push Work?

Thumbnail image for small salzberg.jpgAwhile back we told you about Salz’s dissatisfaction of the diversity at Deloitte, regardless of their long-standing commitment to it.
After the Web CPA piece, Dr. Phil is steppincussing Deloitte’s recruitment of students on community college campuses in last Friday’s Business Week. The article points out up front that, “Deloitte CEO Barry Salzberg likes to talk about the value of diversity. But of the 4,500 partners and other top executives at his firm, 92% are white.” We did the math, that’s less than 500 non-white partners.
So this is obviously a public relations problem that the firms would rather not have, since as we’ve noted, they love, love, love to point out how diverse they are, regardless of what others are saying. The facts simply seem to be that accounting, as an industry, doesn’t seem to be that diverse:
Continued, after the jump

For Deloitte, the hope is to reach high-potential people of color at community colleges, interest them in accounting, and then shepherd them through a university to a job upon graduation. If it works, it could turn around a troubling trend. In 2004, African Americans represented 1% of all CPAs, Latinos 3%, and Asians 4%, according to a U.S. Treasury Dept. report on the profession. By 2007 the figures were unchanged, if not down slightly.

Okay, so those numbers aren’t good for anyone. They’re especially not good for the image of the firms or the profession. Deloitte’s plan is to recruit on six community college campuses to try and convince the students that accounting is a kick ass career. Obviously that’s easier said than done:

Deloitte will have to do a fair amount of myth-busting. Many students believe accountants don green eyeshades and plunk away at calculators all day. So Deloitte is sending a brigade of up to eight staffers, including at least one senior partner, to enlighten, mentor, and ultimately guide potential recruits toward an accounting career. In visits to the campus classrooms, the partners plan to share workplace perspectives and explanations of how the industry has broadened to include financial, management, technology, and human capital consulting. “I don’t think students realize the vastness of what you can do in accounting,” says Gregory Brookins, a CPA and associate professor at Santa Monica Community College. “They feel like it’s a boring bean-counting job.”

‘They feel like it’s a boring bean-counting job’? GASP. How’d they get that impression?
Not everyone is on board with this plan, specifically, E&Y, “…it recruits from four-year universities where students get credits toward the CPA exam. That’s something “a two-year program doesn’t offer,” says Ken Bouyer, Americas Director of Inclusiveness Recruiting for Ernst & Young.”
Plus, since accounting firms like to pitch their professionals’ merits when courting new clients, there is a worry that community college grads are jumping up and down to brag about their less-prestigious education regardless of the accomplishments they’ve made professionally.
So accounting firms and the accounting industry appear to have an old white boy’s club problem. Is Deloitte taking the right approach? Is E&Y’s attitude short-sighted? Discuss your thoughts in the comments.
Deloitte’s Diversity Push [BW]

(UPDATE) Rumor Mill: KPMG Compensation Discussions Starting

PomeranianSP1324.jpgYour patience is unmatched, Klynveldians.
Rumor is that the Advisory practice in the Southeast region is having a conference call today (which is slightly more awkward than a voicemail) with all the non-exceptional managers and staff to communicate their banishment to compensation-Siberia. Our source indicated that this has never been done before, in case it sounds strange.
If you’ve got more details on this call or if you’re in another region and have details drop us a line. In the meantime, you’ll probably have to live with the official silence until at least Monday.
UPDATE, 4:02 pm: All right you guys. Sounds like it was a pretty awesome call. If you’re not above under an “SP5” you might actually get a pay cut and there’s no chance in HELL that you’re getting a raise. Also, apparently the HR rep phoned in from home and his dog was barking in the background which just crosses the line of appropriateness in all kinds of awesome ways. We’re picturing a pomeranian (can’t leave them alone, they eat the bloody furniture) but if we’ve got it wrong, please let us know.

Accountants Raiding Accountants Probably Makes for a Hilariously Awkward Scene

gun_awkward.jpgJesus, that was fast. After Wednesday’s snoozer raids at the E&Y office in Hong Kong, Icelandic police have raided the offices of KPMG and PwC in Reykjavik, Iceland, according to the Daily Telegraph.
More, after the jump

Police have raided the offices of KPMG and PricewaterhouseCoopers (PwC) in Reykjavik, seizing documents and computer data as part of an investigation into alleged criminal activity at three collapsed Icelandic banks…The office of Olafur Thor Hauksson, the Icelandic investigator charged with examining the collapse of
the three banks a year ago, confirmed that 22 policemen and six foreign accountants took part in the searches yesterday.

Six accountants? Whoa, this thing was way more serious. No coffee and bagel strategy here as it would have totally distracted the investigating accountants from their jobs.
Likewise, we doubt anyone was strapped for this raid. Especially the number crunchers. We can definitely picture them begging the police though, “C’mon, they don’t even have to be loaded. We’ll just leave them in the holsters. WE SWEAR.”
The most excitement that we can envision was some bean counter trash talk that may have escalated into open-hand slaps and flailing arms and legs. The real police, after enjoying this hilarious scene for a few moments, would have had no choice but to break up the nerd fight as it began encroaching on the investigation and other people’s personal space.
KPMG and PwC Reykjavik offices are raided by Icelandic police [The Daily Telegraph]