Category: Big 4

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

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]

Raid at E&Y Hong Kong Was Probably Really Boring

We don’t know what to make of the raid at the E&Y offices in Hong Kong that occurred yesterday. We’d like to think that it was something out of 24 where Jack Bauer was “forced” into an impossible situation where he had to shoot a sheisty auditor in the leg to find out where the “certain documents” were.

Alas, it sounds as though it was considerably less dramatic, falling way short of anything worthy of the Absurd-o-meter.


The HK Fuzz probably even talked it over before going to the E&Y digs and said, “We’re going where? Accountants? We don’t even need our guns for this one. Let’s just take coffee and bagels and they’ll probably do whatever we ask.”

We’re probably not far off as E&Y was sure to reiterate their intent to ‘engage with and further investigations into the Akai matter’. Bor-ing.

Not that we were expecting much but it would have been nice that if just once we’d hear about accountants stonewalling some authority figures. Instead, the Head of E&Y China is stepping down, which is hardly the same as a vast conspiracy that may or may not involve the President of the United States. Sigh. There’ll be a next time soon enough.

Hong Kong Police Raid Ernst & Young [WSJ]
HK police raid E&Y offices over documents [FT]
Earlier: EY Doesn’t Want to Be Outdone By Anyone So They Went to Hong Kong for a Scandal

KPMG Layoffs Part II Follow-up

It’s been fairly quiet since this past Tuesday’s layoffs but it sounds like lots of cuts occurred in national support services in Montvale, NJ. We also received a tip that the Richmond office let go a few professionals from their Internal Audit Risk & Compliance team which adds to the advisory cuts that were reported last week.
We also got more details on the Chicago office’s layoffs of tax professionals:

In addition to the 5 from ICS there were at least these:
• 4 in Fed Tax (Consumer Markets) – 1 manager, 2 seniors, 1 associate
• 1 in SALT – manager
• 1 in EVS – senior manager
• 3 in Fed Tax (Real Estate) – 1 managing director, 2 seniors

There were lots of rumors of it continuing this week, so continue to keep us updated. The bright side is today is New Year’s Day in the land of Klynveld.

KPMG…Raises…Still…No…Word…

So it’s October 1st, and several Klynveldians have got ants in their pants. Here’s one source that echoes many:

I work in the SE and they haven’t mentioned raises at all and I was promoted to senior in july. We usually have some sort of idea or at least have our meeting scheduled. However nothing…

We touched on this two weeks ago and other than some sit-downs in the Mid-Atlantic, it’s all been speculation about what the Radio Station will actually be doing re: merit increases.
The debate was polarizing, with some claiming the incommunicado was typical and others saying something should have been communicated by now.
Promotees, non-promotees, whatever your sitch, discuss your anxiety (and continue speculating) in the comments. Email us if your region gets word, for better, for worse.
UPDATE, 12:36 pm: Email has been sent to those in the Mid-Atlantic that discussions with ‘designated partners’ will be had next week.

(UPDATE) Deloitte Still Stalling on Global Revenue Numbers

DTa.jpgThe U.S. numbers are out, $10.7 billion, according to Deloitte’s U.S. website but the global page still only has the fiscal year ’08 numbers. The U.S. numbers are essentially flat from fiscal year ’08 revenue of approximately $11 billion.
We don’t really know what the problem is but we understand that math is hard sometimes so we’ll just wait patiently until the global numbers come out. God knows we’d have pandemonium if Deloitte was a SEC registrant filing the 10-K but hey, that’s one big advantage to a private company: We’ll report our revenue when we’re damn good and ready so you can all piss off.
Fine. We can wait.
In the meantime, some interesting data that is presented on the U.S. page so far includes:
• “Staff” dropping 1,490 while “Partners” went up 14 from FY ’08 to FY ’09
• Two offices were either closed or consolidated as the number went from 92 to 90
• Total number of CPA’s went up over 3200 from approximately 8,700 to just under 8,900
So at first glance, it appears that Big D had a similar ho-hum year to E&Y but we’ll withhold final judgment until the global numbers come out. Feel free to speculate on the delay of the global numbers or if you dare to eat donuts that look like a Smurf/Braveheart reenactment occurred on them.

Layoff Watch: PwC

Editor’s note: Francine McKenna is a regular contributor for Going Concern

We’ve gotten reports of recent layoffs of over 100 professionals in the Advisory practice and 40 in U.S. IT. The IT professionals were out of the Tampa office, including some that were Lotus Notes developers. Right. We didn’t know anyone still used Lotus Notes either.
Sources indicate that this was more “forced ranking” layoffs as many were high performers that were dismissed because of suddenly ‘less than expected’ ratings. We’ve covered PwC’s less than clear approach in the past.

PwC has not immediately responded to our requests for comment.

We reached out to Francine McKenna, of Re: The Auditors and she provided this comment:

“PwC is the biggest abuser of the “forced ranking” approach, artificially downgrading folks to make them feel lousy, alone, and uncomfortable discussing or otherwise reacting to getting let go. They refuse to admit they are overstaffed because they would view it as a direct indication of their inability to manage effectively (notice I said manage, not lead).”

If you have more details on these layoffs, send us an email to our tips address and discuss in the comments.

Deloitte Still Holding Back on Global Revenue Numbers

DTa.jpgThe U.S. numbers are out, $10.7 billion, according to Deloitte’s U.S. website but the global page still only has the fiscal year ’08 numbers. The U.S. numbers are essentially flat from fiscal year ’08 revenue of approximately $11 billion.
We don’t really know what the problem is but we understand that math is hard sometimes so we’ll just wait patiently until the global numbers come out. We all know what happens when SEC registered companies reports late.
Advantage to a private company: We’ll report our revenue WHENEVER THE F*(K WE WANT.
Some interesting data that is presented on the U.S. page so far includes:
• “Staff” dropping 1,490 while “Partners” went up 14 from FY ’08 to FY ’09
• Two offices were either closed or consolidated as the number went from 92 to 90
• Total number of CPA’s went up over 300
So at first glance, it appears that Big D had a similar year to E&Y but withhold judgment until the global numbers come out.