Anyone who has taken Roger for CPA review knows his tired old joke in partnerships about the partner he went home with — he is still telling that joke, isn't he? — but this is not that.
Awkward.
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Layoff Watch ’20: About 40 People In KPMG’s Marketing Department Got Some Bad News to Start the Week
In addition to the 350 or so people who we were told lost their jobs […]
Rumor of the Day: KPMG Freezes Hiring of Support Professionals
Earlier this week, we were tipped off about a hiring freeze of Client Service Support (“CSS”) professionals at KPMG. Our tipster also indicated that a “major reorg” was happening but did not elaborate. For those not hip to the House of Klynveld vernacular, this is your HR, Marketing, Ops, IT, Admins, et al. Regardless of their overhead status, they make your lives infinitely better. But for now, it sounds like the doors to any newbies is closed.
This rumor was confirmed by another source who simply “heard there was [a freeze in place]” but had no details. If you’re in the know, please email us. Emails to KPMG’s communications team were not immediately returned, most likely because they were immediately deleted (that is speculation on my part).
SO! Since we don’t have much to go on, we’ll take this opportunity to present some theories:
1. The response to the Early Career Investment Bonus program has been better than anticipated and there is concern that there won’t be enough money to pay these all-of-a-sudden loyal employees. Accordingly, “the help” won’t be getting any additional resources.
2. Settlement negotiations have begun in the sex discrimination lawsuit and things are not looking good.
3. John Veihmeyer is just toying with everyone because “This is Notre Dame’s year,” and plans to lift the freeze after the Irish win their first game.
4. Two words: Omaha Steaks.
5. Your ideas.
Did KPMG Really Warn HSBC About Madoff Fraud Risks?
A report in Bloomberg apparently thinks so.
From the ‘Berg:
HSBC Holdings Plc (HSBA), Europe’s biggest lender, was warned twice by auditors that entrusting as much as $8 billion in client funds to Bernard Madoff opened it up to “fraud and operational risks.”
KPMG LLP told the London-based bank about the risks in 2006 and 2008 reports. The firm was hired to review how Madoff invested and accounted for the funds, for which HSBC served as custodian. KPMG reported 25 such risks in 2006, and in 2008 found 28, according to copies of the reports obtained by Bloomberg News.
Okay l there for two before everyone gets too excited. Let’s just get one thing straight right off the bat – KPMG probably leaked these reports to Bloomberg (I only say probably because I don’t know for an absolute fact but – COME ON – who else?). Secondly, even though the report says “warned twice by auditors” this was not an audit performed by KPMG; it was “[a] review how Madoff invested and accounted for the funds.” What exactly that entails isn’t clear; possibly agreed-upon procedures? Anyway, here’s what the story says were in the two reports:
In the list of risks in KPMG’s report, number 2 was that “BLM embezzles client funds,” using the initials as shorthand for Bernard L. Madoff. To prevent it, KPMG recommended in both 2006 and 2008 that HSBC “establish a process to monitor monthly statements” and reconcile them with contributions from clients.
[…]
The 2006 report listed fraud risk number 5 as “client cash is diverted for personal gain” and risk number 18 as “trade is a sham in order to divert client cash.” It went on to say there were concerns “Madoff LLC falsely reports buy/sell trades without actually executing in order to earn commissions” and “BLM falsifies accounting records which are provided to HSBC.”
KPMG reviewed samples of trades and account statements for both its 2006 and 2008 reports to test the risks and detected no discrepancies, the reports said. Even so, the firm suggested HSBC “consider undertaking a periodic review which includes tracing a sample of client trades back to the bulk order.”
After reading that you might think that KPMG hit a home run but what if the “risk factors” listed are just standard boilerplate risks that are included in every single one of these reports? If that’s the case, then KPMG was slapping in the applicable information as it related to BLM, handed it over and collected a nice fee. Maybe KPMG was all over this but there’s no way to know because A) Bloomberg didn’t republish the reports in full; B) Other KPMG teams close to Madoff are getting their asses sued which means they either ignored the risks or couldn’t get a hold of these two reports and C) HSBC throws KPMG under the bus, essentially saying that they were duped by Berns:
HSBC confirmed hiring KPMG in 2005 and 2008 to review Madoff’s firm, adding it now believed Madoff had tricked the auditors. “It appears from U.S. government filings that Madoff and his employees foiled these reviews by, among other things, providing forged documentation to KPMG,” the bank said in an e- mailed statement.
“KPMG did not conclude in either of its reports that a fraud was being committed by Madoff,” HSBC said. “HSBC did not know that a fraud was being committed and lost $1 billion of its own assets as a victim.”
So did KPMG warn HSBC or not? This Bloomberg story seems to think so but there are is a lot of evidence that KPMG was just as clueless as as everyone else who didn’t walk – or run away screaming, arms flailing – away from Madoff.
HSBC Was Told About Madoff ‘Fraud Risks’ in Two KPMG Reports [Bloomberg]