Last fall, we reported that KPMG had issued an internal preservation notice to its employees in regards to "General Electric's Loan Staff Arrangements." As you may remember, this arrangement consisted of KPMG employees being loaned to GE to help supplement the work of the world's best tax law firm. Oh, and KPMG is the auditor for GE. Last year, Francine McKenna reported that this sketchy arrangement included KPMG employees, "having GE email addresses, are supervised by GE managers – there is no KPMG manager or partner on premises – and have access to GE employee facilities." In short, she wrote, "KPMG should know better" than try to pull this type of stunt on the PCAOB.
This morning, McKenna reports on the latest development on this little arrangement:
KPMG will no longer loan tax professionals to GE during busy season, according to a source close to the situation. KPMG was billing an extra $8-10 million, over and above the audit each year, for the service. It looks like a regulator got to both KPMG and GE, but quietly. I doubt we’ll ever see a public sanction or fine from the PCAOB or the SEC for KPMG.
It's not immediately clear when the arrangement ended but I can't imagine any of the staff being too broken up about this. The partners, on the other hand…well, yeah, that's $10 million in fees that will probably go away. If you ever worked under this arrangement or have worked for another client under something similar, email us your story and any background you might have.
Relatively ominous link on our internal homepage saying “get ready” “the next level is coming” as of 6.6.11.
We’ve confirmed this “next level” with several people and also that there is a video that Klynveldians are watching. We’d really like to see some screen shots of this, just to get some context. In the meantime, we encourage you to speculate about this “next level” and why you have to “get ready.” I’ll kick things off:
A) Tim Flynn’s retirement party is going to be epic.
B) Omaha Steaks announces a special “KPMG Package” that will drive the other, non-meaty firms crazy.
C) KPMG seeks revenge on PwC with their own competitive poaching efforts by offering the head of the mailroom at 300 Madison a 10% raise and a Phil Mickelson autographed hat.
D) Your ideas.
UPDATE:
Supposedly, this is the transcript to the video (still no screen shots, it’s called “Print Screen” people!). Our tipster wrote, “Interesting video that gives very little hint to what the ‘Next Level’ is other than lots of talk of a ‘high-performance’ culture. Maybe it has something to do with changing performance review structure a la PwC. The video definitely gives an ominous feeling as if the KPMGers in it are running out of time and people aren’t adapting to the changing market fast enough for their liking. All in all pretty strange vibes.”
Welcome to the Next Level – Video Transcript
[VARIOUS VOICES DELIVERING SHORT PHRASES]:
The market’s changed…
In order to compete in today’s world we have to keep up with change…
It’s a mindset… It’s a way of behaving…
It’s about a continuous journey…
Our ambition is greater than where we are today…
The attitude is contagious…
We’re not satisfied…
It’s really about taking it to that next level.
Keep us updated.
UPDATE 2:
Another tipster hears that it has something to do with the-next-level.com but “[I] don’t really know what they plan to do with it.” Poking around the site, it appears that it would be related to “Developing the Next Wave of Senior Leaders” but I’ve checked out for the week and don’t have the will to dig further right now.
UPDATE 3:
Well, the video finally made it’s way into my inbox and I’ve posted it on the next page for your viewing pleasure (I realize Klynveldians have seen it already).
After watching it a number of times I still can’t make heads or tails about what the “next level” will be but hopefully it’s does just to this movie trailer-esque video.
