Category: PwC

Allegedly, a Few Ernst & Young Partners Just So Happened to Join PwC

Never having the pleasure of attending a partner-only soiree, we don’t have much knowledge about the haps at these events but we do imagine catering slightly better than what you would find at an in-house training but served by oompa loompas. And an open bar, natch.

Likewise, we’ve never heard about Big 4 partner mixers where, for example, an PwC partner might chat up a E&Y partner talking IFRS, where they fall on the staff’s hottie list and “oh by the way, waddaya say you join our firm?” To save face, we imagine said E&Yer responding with a “No, I will not make out with you” retort followed by open-faced slaps and ripped Jos. A. Bank until the beefy security pulled the two apart (at which point the P. Dubs partner gives his target the “call me” sign).


We bring all this up because the Times Online reports that there has been a fair amount of defection from Ernst & Young to PricewaterhouseCoopers in the Middle East (no sissies allowed). PwC’s Middle East practice was purchased by the UK firm last year and now the Times reports that 20 E&Y partners have been poached by P. Dubs:

According to people familiar with the situation, the defections — amounting to almost a fifth of Ernst & Young’s partners in the Middle East — were in several locations across the region. Most were from Ernst & Young’s consulting business, The moves began last summer but were kept secret because of a settlement between the two firms. PwC agreed that it would not approach any more Ernst & Young staff in return for Ernst & Young agreeing not to take legal action to block the departures.

Neither firm would comment for the Times article except to boast about their numbers in the region, “PwC confirmed that it had recruited 25 new partners and 400 staff in its Middle East offices in the past 12 months,” and “A spokesman for Ernst & Young said that it remained ‘easily the largest’ of the Big Four in the Middle East,” so both firms’ communication departments seem to be operating as normal.

Whether such (alleged) deliberate defections have happened in the States, we don’t know but we hear it is quite the spectacle (marched out by the OMP the second the news got dropped) when one partner notifies his/her intent to leave for a competitor, so all out war could reasonably be expected.

PwC raids rival before Middle East step [Times Online]

PwC Chimes in on How Companies Can Retain Top Talent

It was only a few weeks ago when Deloitte threw their two Lincolns into the mix; now it’s PricewaterhouseCoopers offering advice on how to retain workers during this economic recovery. So, in an effort to not play favorites:

1. The financial crisis and ensuing recession have quickened the pace of structural changes already underway in many industries. As companies rethink the way they operate, they should assess the talent pool and look for opportunities to add new skills while keeping their existing employees motivated and engaged.

DWB: Because nothing says your job is safe with us like hiring new workers, right? The cojones on Dubs to lead off with this statement. Essentially Dubs is suggesting that companies poach talent from competitors; the exact action the article is intended to prevent.


2. With budgets expected to remain tight, it makes sense to focus on non-financial incentives such as training and mentoring programs, challenging assignments and other opportunities for growth and flexible work schedules.

DWB: Whoa, whoa, whoa. Did they really just lump (mandatory) trainings and (mandatory) mentoring programs together with “challenging assignments?” Does anyone else think that last one is code for “your staff has been cut in half due to layoffs and departures?” Umm…no…neither did I.

3. This may be obvious, but determine whether your top talent feels well compensated.

DWB: How much does PwC charge to perform that survey?!? It continues:

“By freezing pay across the board or cutting bonuses and benefits during the recession, you may have inadvertently given key employees a reason to leave.”

DWB: Dubs, are you looking in the mirror again? Shameful.

4. To figure out the right mix of incentives, executives need to first determine what motivates their top performers and other key employees.

DWB: Common sense. As an HR professional, statements like three and four really bother me. They only perpetuate the “HR fluff” stereotype that is associated with our field of work. (Some of you might say the same about my posts, so I should probably be careful where I tread.)

pwc_pointofview_keeping_talent

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]

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]

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

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.

Compensation Watch ’10: PwC Puts a Number Out There

Multiple sources have told us that Bob Moritz has put a number out there for comp adjustments during the firm’s webcast today :

Sitting in the Bobby Mo Firmwide Townhall Webcast. Raises: 5% to 8%.

But don’t start high-fiving just yet:

PwC expected to be 5% to 8% raises this year, but still a “quarter to go” per Moritz on today’s townhall webcast.

Early reports also are that internal firm services (IFS) will be getting 3-5%.

Thoughts? Your move, KPErnstDeloitteMG.

Some People Would Like to Know Why PwC Is Mum on The Alleged Morgan Keegan Fraud

Last week, the SEC continued its “Bustin’ Up Fraud” tour by charging Memphis-based Morgan Keegan & Company, Morgan Asset Management, and two employees, James C. Kelsoe, Jr. and Joseph Thompson Weller with “fraudulently overstating the value of securities backed by subprime mortgages.”

The long/short of it is that SEC’s Enforcement Divish alleges that Kelsoe “arbitrarily instructed the firm’s Fund Accounting department to make ‘price adjustments’ that increased the fair values of certain portfolio securities.” Weller didn’t do a damn thing to remedy this, Morgan published fraudulent net asset values (NAVs) based on these valuations and investors ended up losing something like $2 billion. Typical stuff in this day and age.


While Khuzhami and Co. gave the usual spiel about “lies” and whatnot, Jonathan Weil over at Bloomberg is wondering why PricewaterhouseCoopers is being totally left out of this ordeal (our emphasis):

Now that the Securities and Exchange Commission has accused Morgan Keegan & Co. of fraudulently overvaluing subprime-mortgage bonds in several of its mutual funds, there’s still one major player in this saga that hasn’t uttered a peep.

That would be PricewaterhouseCoopers LLP, the Big Four auditor that blessed the funds’ year-end financial statements for fiscal 2007. Funny thing is, officially at least, PwC is still clinging to its position that there wasn’t anything wrong with the funds’ numbers. That’s a lot harder to believe now than it might have been before last week.

Not to take issue with Jonathan Weil (who we think is great, btw) but we aren’t surprised at all that PwC is standing by their audited numbers. “Deny ’til you die” is Big 4 101, even if that denial is through complete and utter silence. They’re better at holding out on guilt than Pete Rose.

JW ends up addressing his own inquiry saying, “Perhaps PwC is awaiting the final outcome of the SEC’s case, which might take years to litigate. While the SEC didn’t name PwC as a defendant, the firm is being sued in court by fund investors. So PwC has a clear incentive to avoid acknowledging that any of its audit conclusions may have been wrong.” Jackpot! And if there’s one advantage that PwC and the rest of the Big 4 have on the road to failure, it’s time.

Ultimately, this detecting fraud. The public want auditors to find it. Auditors claim that’s not their job. The “expectations gap” as the leadership likes to say. And while Big 4 leaders cling to this “gap” like a security blanket, Weil brings up the question that more people have been asking lately, “if auditors can’t detect fraud, what good are they?”

Bond-Fund Fraud Suits Leave Auditor Speechless [Bloomberg/Jonathan Weil]
SEC Charges Morgan Keegan and Two Employees With Fraud Related to Subprime Mortgages [SEC Press Release]
SEC Complaint

PwC Report: We’re Not Getting Sued for Accounting Issues Nearly as Much

That goes for the rest of you Big 4 and non-Big 4 too! Okay, the report doesn’t come out and state that CPA firms are the ones getting slapped around by plaintiffs but it seems like a logical conclusion since we’re talking about, ya know, accounting.


The PricewaterhouseCoopers report states that of the 155 federal lawsuits in 2009, only 37% of them were related to accounting issues, compared to 41% in 2008. To clarify just a little bit, the decline was because “many of the cases were connected to the financial crisis and tended to focus more on disclosure issues not having to do with whether the defendants followed generally accepted accounting principles.” In other words, the accounting is wrong as much but apparently people are forgetting to bring up certain important details. Like say, repos?

Plus the lawsuits that do involve accounting issues are the most expensive settlements. The reports states that out of the top ten lawsuits, seven of them had an accounting component to them. The total value of settlement in ’09 was $2.3 bil.

So what causes all the problems? Lots of bad guessing for starters. According to the report, 57% of the cases mentioned issues related to estimates, while 43% of the suits cited internal controls. Unfortunately, those two things are right in the wheelhouse of auditors. Bright side is that revenue recognition isn’t citied nearly as much. Don’t let anyone tell you different, screwing up less is a good thing.

Accounting-Related Lawsuits Fall [CFO]